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EX-23 - SAGEMARK COMPANIES LTD | v181069_ex23.htm |
EX-21 - SAGEMARK COMPANIES LTD | v181069_ex21.htm |
EX-31.1 - SAGEMARK COMPANIES LTD | v181069_ex31-1.htm |
EX-32.1 - SAGEMARK COMPANIES LTD | v181069_ex32-1.htm |
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-K
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
for the fiscal year ended December 31,
2009
Commission
file Number 0-4186
THE
SAGEMARK COMPANIES LTD.
(Name of
small business issuer as specified in its charter)
New
York
|
13-1948169
|
(State
of incorporation)
|
(IRS
Employer Identification
Number)
|
1221
Avenue of the Americas, Suite 4200
New York,
NY 10020
(Address
of principal executive offices)
Issuer’s
telephone number, including area code: (212) 554-4219
Securities
registered pursuant to Section 12(b) of the Exchange Act: None
Securities
registered pursuant to Section 12(g) of the Exchange Act: Common Stock, par
value $0.01 per share
Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act o
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes þ No o
Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act. Large accelerated filer o Accelerated
filer o Non-accelerated
filer o Smaller
reporting company þ
Indicate
by check mark whether the registrant is a shell company (as defined in rule
12b-2 of the Exchange Act). Yes o No þ
The
issuer’s revenues for the fiscal year ended December 31, 2009 was
$0.
The
aggregate market value of the common equity held by non-affiliates of the issuer
as of April 8, 2010 was approximately $129,500 computed on the basis of a
closing price of $0.02 per share on such date of the issuer’s common stock as
reported on the National Association of Securities Dealers, Inc.’s Over the
Counter Bulletin Board.
As of
April 15, 2010 there were 8,008,261 shares of the Company’s par value $0.01
common stock outstanding.
Transitional
Small Business Disclosure Format (check one): Yes þ No o
TABLE
OF CONTENTS
The
Sagemark Companies Ltd. ∙ Form 10K
PART
I
|
3
|
Item
1. Description
of Business
|
3
|
Item
2. Description
of Property
|
9
|
Item
3. Legal
Proceedings
|
9
|
Item
4. Submission
of Matters to a Vote of Security Holders
|
10
|
PART
II
|
10
|
Item
5. Market
for Common Equity and Related Stockholder Matters
|
10
|
Item
6.
Selected
Financial
Information.
|
10
|
Item
7.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
|
11
|
Item
8. Financial Information.
|
13
|
Report
of Independent Registered Public Accounting Firm
|
13
|
Audited
Financial Statements:
|
14
|
Consolidated
Balance Sheet
|
14
|
Consolidated
Statement of Operations
|
15
|
Consolidated
Statements of Shareholder Equity (Deficiency)
|
16
|
Consolidated
Statements of Cash Flows
|
17
|
Notes
to Consolidated Financial Statements
|
18
|
Item
9. Changes In and Disagreements With
Accountants on Accounting and Financial Disclosure
|
32
|
Item
9A. Controls and Procedures
|
32
|
Item
9B. Other Information
|
33
|
PART
III
|
34
|
Item
10. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(A) Of The Exchange Act
|
34
|
Item
11. Executive Compensation
|
35
|
Item
12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
|
37
|
Item
13. Certain Relationships and Related
Transactions
|
38
|
Item
14. Principal Accountant Fees and
Services
|
39
|
PART
IV
|
39
|
Item
15. Exhibits
|
39
|
SIGNATURES
|
41
|
PART
I
Item
1. Description of Business
Description
of the Company
As of
December 31, 2009, the Sagemark Companies Ltd (the “Company”) did not have any
business operations other than administrative operations related to shareholder,
creditor and tax matters.
Discontinued
Operations
In 2008
we sold or discontinued the operations of all of our out-patient medical
diagnostic imaging centers
that offered positron emission tomography (“PET”) and PET and computed
tomography (“CT”)
imaging
(“PET/CT”). Such operations consisted of eight such facilities
located in New York, New
Jersey,
Florida and Kansas.
Overview
Beginning
in 2001 we focused our efforts on the development of out-patient medical
diagnostic imaging centers that offered PET and PET/CT imaging
services. Although we had developed and were operating eight such
facilities as of January 2008, we continued to incur significant operating
losses from such operations and we were unable to generate revenue from our PET
imaging centers sufficient to support our significant debt obligations, on-going
operations and corporate overhead.
In
January 2008, our Board of Directors determined that it was in our best interest
and that of our shareholders and creditors to seek a divestiture of our PET
imaging centers in an attempt to satisfy our significant debt
obligations. Accordingly, by March 2008, all but one of such
facilities were sold or closed and the one remaining facility closed in June
2008. Additionally, we discontinued our efforts to develop radiation
therapy operations and disposed of our two radiation therapy ventures in April
2008. Both of such projects were in development and neither had been
operational prior to discontinuation. We closed our corporate office
in Boca Raton, Florida in November 2008 and terminated our remaining employees
at such time.
As of the
date of this Report, we have one member of the Board of Directors who also
serves as the Company’s Chief Executive Officer and its interim Chief Financial
Officer, and a corporate Secretary, neither of whom receive a salary for their
service in such capacities.
Employees
We have
no employees.
Additional
Information
Reports
Filed with the Securities and Exchange Commission
We are
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and, in accordance therewith, file
reports, proxy and information statements and other information with the
Securities and Exchange Commission (the “SEC”).
3
All
reports filed by us with the SEC are available free of charge via EDGAR through
the SEC web site at www.sec.gov. In addition,
the public may read and copy materials we file with the SEC at the public
reference facilities maintained by the SEC at its public reference room located
at 100 F Street, N.E. Washington, D.C. 20549. We will also
provide copies of such material to investors upon written request.
No person
has been authorized to give any information or to make any representation other
than as contained or incorporated by reference in this Annual Report and, if
given or made, such information or representation must not be relied upon as
having been authorized by us.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is American Stock Transfer
& Trust Company, 59 Maiden Lane, New York, New York 10038.
Risk
Factors
You
should carefully review and consider the following risks, as well as all other
information contained in this Annual Report or incorporated herein by reference,
including our consolidated financial statements and the notes to those
statements, before you decide to purchase any shares of our common stock. The
following risks and uncertainties are not the only ones facing us. Additional
risks and uncertainties of which we are currently unaware or which we believe
are not material could also nevertheless materially adversely affect our
business, financial condition, results of operations, or cash flows. In any
case, the value of the shares of our common stock could decline and you could
lose all or a portion of your investment in such shares. To the extent any of
the information contained in this Annual Report constitutes forward-looking
statements or information, the risk factors set forth below must be considered
cautionary statements identifying important factors that could cause our actual
results for various financial reporting periods to differ materially from those
expressed in any forward-looking statements made by or on our behalf and could
materially adversely affect our financial condition, results of operations or
cash flows. See also, “Statement Regarding Forward-Looking Statements” in Item
7.
Risks
Related to Our Current Financial Condition
We
have discontinued substantially all of our operating activities
Our
limited operations in 2009 consisted of administrative tasks related to
shareholder and creditor issues. During 2008 we sold or closed all
our PET imaging centers and sold or terminated our radiation therapy projects
that were in development. We do not currently have a plan for any future
operations. Until such time as we develop a new business, if ever, our
revenues, if any, will not be significant. The capital requirements associated
with developing a new business will be substantial and will require additional
outside financing. There can be no assurance that we will be able to continue as
an active corporation.
We
have a history of losses, do not have sufficient working capital, are in default
on all of our debt obligations, and may seek protection under available
bankruptcy laws
Debt and
guarantees at December 31, 2009 approximated $3.8 million, as compared to $3.2
million in 2008. We do not have sufficient capital to satisfy any
such debt or obligations.
4
Our
financial distress and significant obligations raise substantial doubt about our
ability to continue our operations and efforts to restructure our
business. If we are unable to resolve outstanding creditor claims, we
may have no other alternative than to seek protection under available bankruptcy
laws.
Our
ability to restructure our business will be dependent on the services of our
current executive officers. If we are unable to compensate our existing or
future executives, we may lack the required leadership to restructure our
business.
A
successful liability claim against us would harm our business
Prior to
March 31, 2008, we maintained commercial general liability insurance in the
amount of $1 million per incident and $2 million in the aggregate, excess
liability insurance in the amount of $5 million per incident and in the
aggregate, and medical professional liability insurance in the amount of $3
million per incident and $10 million in the aggregate. At an annual
cost of approximately $473,000, we were unable to maintain such coverage, and
all of such coverage was cancelled when we terminated our PET imaging operations
in 2008.
While we
have not been subjected to any claims to date, we do not know if any claims may
be asserted against us in the future arising from the use of the PET imaging
systems at our PET imaging centers. We will be unable to defend any
such claim and a successful claim against could materially harm us.
Risks
Related to our Securities and Capital Structure
We
are not in compliance with rules requiring the adoption of certain corporate
governance measures. This may result in shareholders having limited protections
against interested director transactions, conflicts of interest and similar
matters
The
Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the
SEC and the NASDAQ Stock Market as a result of Sarbanes-Oxley requires the
implementation of various measures relating to corporate governance. These
measures are designed to enhance the integrity of corporate management and the
securities markets. Some of these new requirements are reflected in the NASDAQ
listing requirements some of which we have not yet adopted due to limited
personnel and funds. We are in compliance with the requirement relating to the
adoption of a corporate Code of Ethics. However, as we only have one
member of our Board of Directors, we are not in compliance with the requirement
relating to maintain an audit committee consisting of all independent Board
members and the requirement to have independent members on the Board of
Directors. We have not established a Compensation Committee. We are
not yet in compliance with requirements relating to the distribution to
stockholders of annual and interim reports, solicitation of proxies, the holding
of stockholders meetings, quorum requirements for such meetings and the rights
of stockholders to vote on certain matters. Furthermore, until we comply with
such corporate governance measures, the absence of such standards of corporate
governance may leave our shareholders without protections against interested
director transactions, conflicts of interest and similar matters.
Failure
to maintain effective internal controls in accordance with Section 404 of the
Sarbanes-Oxley Act could have a material adverse effect on our business and
operating results. In addition, current and potential stockholders could lose
confidence in our financial reporting, which could have a material adverse
effect on our stock price
5
Effective
internal controls are necessary for us to provide reliable financial reports and
effectively prevent fraud. If we cannot provide reliable financial reports or
prevent fraud, our operating results could be harmed.
Beginning
with calendar year 2008 we were required to document and test our internal
control procedures in order to satisfy the requirements of Section 404 of the
Sarbanes-Oxley Act, which requires increased control over financial reporting
requirements, including annual management assessments of the effectiveness of
such internal controls. If we fail to maintain the adequacy of our
internal controls, as such standards are modified, supplemented or amended from
time to time, we may not be able to ensure that we can conclude on an ongoing
basis that we have effective internal controls over financial reporting in
accordance with Section 404 of the Sarbanes-Oxley Act. Failure to achieve and
maintain an effective internal control environment could also cause investors to
lose confidence in our reported financial information, which could have a
material adverse effect on our stock price.
We
do not intend to pay any dividends on our common stock in the foreseeable
future
We
currently intend to retain all future earnings, if any, to finance our business
activities and do not anticipate paying any cash dividends on our common stock
in the foreseeable future. Although there are only a small number of shares of
our preferred stock outstanding, the holders of our preferred stock have rights
senior to the holders of our common stock with respect to any
dividends.
The
liability of our officers and directors is limited
The
applicable provisions of the New York Business Corporation Law and our
Certificate of Incorporation limit the liability of our officers and directors
to the Company and our shareholders for monetary damages for breaches of their
fiduciary duties, with certain exceptions, and for other specified acts or
omissions of such persons. In addition, the applicable provisions of the New
York Business Corporation Law and of our Certificate of Incorporation and
By-Laws provide for indemnification of such persons under certain circumstances.
In addition, we entered into an indemnification agreement with our Chief
Executive Officer which provides for expanded indemnification rights for her. As
a result of the foregoing, shareholders may be unable to recover damages against
our officers and directors for actions taken by them which constitute
negligence, gross negligence or a violation of their fiduciary duties and may
otherwise discourage or deter our shareholders from suing our officers or
directors even though such actions, if successful, might otherwise benefit us
and our shareholders. Notwithstanding the foregoing, insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our
directors, officers and controlling persons pursuant to the foregoing provisions
or agreement, or otherwise, we have been advised that, in the opinion of the
SEC, any such indemnification is against public policy as expressed in the
securities laws and is, therefore, unenforceable.
The
limited public trading market may cause volatility in the price of our common
stock
Our
common stock is currently traded on the Over the Counter Bulletin Board
(“OTCBB”) under the symbol SKCO. The quotation of our common stock on
the OTCBB does not assure that a meaningful, consistent and liquid trading
market currently exists, and in recent years such market has experienced extreme
price and volume fluctuations that have particularly affected the market prices
of many smaller companies like ours. Our common stock is thus subject to this
volatility. Sales of substantial amounts of our common stock, or the perception
that such sales might occur, could adversely affect prevailing market prices of
our common stock. Approximately 99% of our outstanding shares of
common stock are freely tradable securities and trading volumes for our shares
of common stock is limited.
6
During
2009, the shares of our common stock traded on the OTCBB at prices ranging from
a low of $0.01 per share to a high of $0.08 per share and during 2008 at prices
ranging from a low of $0.01 per share to a high of $0.24 per share. The market
price of the shares of our common stock, like the securities of many other
over-the-counter publicly traded companies, may be highly volatile. Factors such
as changes in applicable laws and governmental regulations, loss of key company
executives, sales of large numbers of shares of our common stock by existing
stockholders and general market and economic conditions may have a significant
effect on the market price of our common stock. In addition, U.S. stock markets
have experienced extreme price and volume fluctuations in the past. This
volatility has significantly affected the market prices of securities of many
medical diagnostic imaging and other health care companies, for reasons
frequently unrelated or disproportionate to the operating performance of the
specific companies. These broad market fluctuations may adversely affect the
market price of our common stock.
The OTCBB
is an inter-dealer, over-the-counter market that provides significantly less
liquidity than NASDAQ, and quotes for stocks included on the OTCBB are not
listed in the financial sections of newspapers, as are those for the NASDAQ
Stock Market. The trading price of our common stock is expected to be subject to
significant fluctuations in response to variations in quarterly operating
results, changes in analysts’ earnings estimates, general conditions in the
industry in which we operate, our distressed financial condition, and other
factors. These fluctuations, as well as general economic and market conditions,
may have a material or adverse effect on the market price of our common
stock.
Trading
in our common stock is limited, so investors may not be able to sell as many of
their shares as they want at prevailing prices
Shares of
our common stock are traded on the OTCBB on a very limited basis with
approximately 260,000 shares traded during the year 2009, or an average of
approximately 22,000 shares per month, as compared to approximately 1,092,000
shares that traded during the year 2008, or an average of 91,000 shares per
month. If limited trading in our common stock continues, it may be
difficult for investors who purchase shares of our common stock to sell such
shares in the public market at any given time at prevailing prices. Also, the
sale of a large block of our common stock could depress the market price of our
common stock to a greater degree than a company that typically has a higher
volume of trading of its securities.
We cannot
predict whether an active market for our common stock will develop in the
future. In the absence of an active trading market:
|
·
|
Investors
may have difficulty buying and selling or obtaining market
quotations;
|
|
·
|
Market
visibility for our common stock may be limited;
and
|
|
·
|
Lack
of visibility for our common stock may have a depressive effect on its
market price.
|
Penny
stock regulations may impose certain restrictions on marketability of the
Company’s securities
7
The SEC
has adopted regulations which generally define a “penny stock” to be any equity
security that has a market price (as defined) of less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions. As a
result, our common stock is subject to rules that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000
together with their spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser’s written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a risk disclosure document mandated by the SEC relating to the
penny stock market. The broker-dealer must also disclose the commission payable
to both the broker-dealer and the registered representative, current quotations
for the securities and, if the broker-dealer is the sole market maker, the
broker-dealer must disclose this fact and the broker-dealer’s presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the “penny stock” rules may
restrict the ability of broker-dealers to sell our securities and may affect the
ability of investors to sell our securities in the secondary market and the
price at which such purchasers can sell any such securities.
Shareholders
should be aware that, according to the SEC, the market for penny stocks has
suffered in recent years from patterns of fraud and abuse. Such patterns
include:
|
·
|
Control
of the market for the security by one or a few broker-dealers that are
often related to the promoter or
issuer;
|
|
·
|
Manipulation
of prices through prearranged matching of purchases and sales and false
and misleading press releases;
|
|
·
|
“Boiler
room” practices involving high pressure sales tactics and unrealistic
price projections by inexperienced sales
persons;
|
|
·
|
Excessive
and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
|
|
·
|
The
wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the
inevitable collapse of those prices with consequent investor
losses.
|
Purchasers
of penny stocks may have certain legal remedies available to them in the event
the obligations of the broker-dealer from whom the penny stock was purchased
violates or fails to comply with the above obligations or in the event that
other state or federal securities laws are violated in connection with the
purchase and sale of such securities. Such rights include the right to rescind
the purchase of such securities and recover the purchase price paid for
them.
Additional
authorized shares of our common stock available for issuance may adversely
affect the market
We are
authorized to issue 25,000,000 shares of common stock. As of December 31, 2009,
there are 8,008,261 shares issued and outstanding. The total number of shares of
our common stock issued and outstanding does not include shares reserved for
issuance upon the exercise of outstanding options or warrants or shares reserved
for issuance under the Company’s 1999 Long-Term Incentive Stock Option Plan (the
“Stock Option Plan”).
As of
December 31, 2009, the Company had outstanding stock options and warrants to
purchase an aggregate of 1,842,500 shares of our common stock. We have reserved
shares of our common stock for issuance in connection with the potential
exercise of such options and warrants. To the extent additional
shares of our common stock are issued or options and warrants are exercised,
investors will experience further dilution. In addition, in the event that any
future financing should be in the form of, or be convertible into or
exchangeable for, equity securities, upon the issuance of such equity
securities, our shareholders will experience additional dilution. There are many
circumstances, including equity financings, acquisitions or other business
combinations, and other transactions between the Company and its vendors,
suppliers, employees, consultants, and others, in which our management can
approve the issuance of additional shares of our common stock without obtaining
shareholder approval for such issuances.
8
Shares
eligible for future sale may adversely affect the market
From time
to time, certain of our shareholders may be eligible to sell all or some of
their shares of our common stock by means of ordinary brokerage transactions in
the open market pursuant to Rule 144, subject to certain limitations. All of the
8,008,261 shares of our common stock outstanding have been issued for more than
six months.
In
general, pursuant to Rule 144, a stockholder (or stockholders whose shares are
aggregated) who has satisfied a six-month holding period may, under certain
circumstances, sell within any three-month period a number of securities which
does not exceed the greater of 1% of the then outstanding shares of common stock
or the average weekly trading volume of the class during the four calendar weeks
prior to such sale. Rule 144 also permits, under certain circumstances, the sale
of securities, without any limitation, by a non-affiliate of the Company that
has satisfied a six-month holding period. Any substantial sale of our common
stock pursuant to Rule 144 may have an adverse effect on the market price of our
publicly traded securities.
There
are certain provisions in our Certificate of Incorporation and By-Laws that may
entrench management and make their removal from office more
difficult
Our
Articles of Incorporation authorize the Board of Directors to issue preferred
stock in classes or series, and to determine voting, redemption and conversion
rights and other rights related to such class or series of preferred stock that,
in some circumstances, if approved by our Board, could have the effect of
preventing a merger, tender offer or other takeover attempt which the Board of
Directors opposes. Such provisions could also exert a negative influence on the
value of the shares of our common stock and of a shareholder’s ability to
receive the highest price for the shares of our common stock owned by them in a
transaction that may be hindered by the operation of these provisions. In the
event of the issuance of any shares of our preferred stock which contain any of
the above features, such features may serve to entrench management and make
their removal more difficult.
Item
1B. Unresolved Staff Comments
None.
Item
2. Description of Property
Our
office address is 1221 Avenue of the Americas, Suite 4200, New York, New York
10020 and is leased on a month to month basis pursuant to a Service Agreement
with Rockefeller Group Business Centers, an unaffiliated landlord, at an annual
all-inclusive lease arrangement of approximately $3,000.
Item
3. Legal Proceedings
In the
normal course of business, we may become subject to lawsuits and other claims
and proceedings. Such matters are subject to uncertainty and outcomes are not
predictable with assurance.
9
On
September 26, 2008, we commenced an action against Azad K. Anand, MD and a
number of entities owned and/or controlled by him (collectively, the “Anand
Defendants”) in the Supreme Court, State of New York, County of New York (the
“Action”). The Action seeks damages against the Anand Defendants for various
breaches and defaults of a number of different agreements between the parties
relating to the operations of our PET imaging center in East Setauket, New York,
as well as certain allegedly improper actions and omissions of the Anand
Defendants in connection therewith. A counter-claim was filed against us in such
Action, but we believe it to be without merit and have contested such
claim. Such Action is on-going and there can be no assurance as to
its outcome.
Item
4. Submission of Matters to a Vote of Security Holders
No
matters were submitted during the fiscal year covered by this Annual Report to a
vote of security holders, through the solicitation of proxies, or
otherwise.
PART
II
Item
5. Market for Common Equity and Related Stockholder Matters
Market
Information
Our
common stock is traded in the over-the-counter market on the NASDAQ OTC Bulletin
Board under the symbol SKCO. The following table sets forth, for the periods
indicated, the quarterly range of the high and low closing bid prices per share
of our common stock as reported by the National Daily Quotation Service and the
Over-The-Counter Bulletin Board. Quotations reflect inter-dealer prices, without
retail mark-up, markdown or commission and may not represent actual
transactions.
Quarter Ended
|
High Bid
|
Low Bid
|
||||||
March
31, 2009
|
$ | 0.02 | $ | 0.01 | ||||
June
30, 2009
|
$ | 0.01 | $ | 0.01 | ||||
September
30 2009
|
$ | 0.05 | $ | 0.02 | ||||
December
31, 2009
|
$ | 0.08 | $ | 0.01 | ||||
March
31, 2008
|
$ | 0.24 | $ | 0.02 | ||||
June
30, 2008
|
$ | 0.05 | $ | 0.01 | ||||
September
30, 2008
|
$ | 0.03 | $ | 0.01 | ||||
December
31, 2008
|
$ | 0.02 | $ | 0.01 |
On April
15, 2010, there were approximately 2,236 holders of record of our common
stock.
Dividends
We have
never paid any dividends on our common stock and we do not anticipate paying or
declaring any stock or cash dividends on our common stock in the foreseeable
future.
Item
6. Selected Financial Data
We did
not have any operations in year 2009 that generated revenues. In year
2009 we had approximately $63,000 in revenue from discontinued operations, all
of which resulted from operations prior to discontinuance in 2008. We
generated approximately $1.5 million of revenue in year 2008, all of which
resulted from operations discontinued in year 2008.
10
Item
7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The
Company currently does not have any operations other than administrative
operations related to shareholder, creditor and tax matters.
Prior to
the discontinuation of such operations by the second quarter 2008, the Company
owned, operated and/or managed eight out-patient medical diagnostic imaging
centers that offered positron emission tomography (“PET”) and PET and computed
tomography (“CT”) imaging (“PET/CT”), a medical imaging procedure used by
physicians in the diagnosis, staging and treatment of cancers and other illness
and disease.
Additionally,
the Company had been involved in the development of two radiation therapy
facilities, prior to discontinuing such efforts in the first quarter of 2008.
Our two radiation therapy ventures, both of which were disposed of in 2008, had
not become operational at the time of our disposal and had not generated any
revenue.
Results
of Operations
The
following discusses and compares the results of our business operations for the
years 2009 and 2008.
Revenues
Our prior
operations, which were discontinued in 2008, generated revenue from three
sources: (i) net patient service revenue from the PET imaging centers which we
owned; (ii) management fees from the PET imaging centers which we managed
pursuant to services agreements; and (iii) lease revenue from a PET imaging
center where we leased time on PET/CT equipment to physician
groups.
We had no
net patient service revenue in 2009 compared to 2008 during which we had net
patient service revenues of $142,000. The significant difference in
the revenue in the comparable periods was the result of the sale or termination
of all of our PET imaging centers operations in 2008, all but one of which had
been sold or closed as of March 31, 2008. The remaining center was
closed in June 2008.
Management
fee revenue in year 2009 from our discontinued operations was $63,000 as
compared to 2008 in which we had management fee revenues of $1,045,000, the
significant difference of which resulted from the sale or termination of all but
one of such imaging centers in the first quarter 2008. The remaining
center was closed in June 2008.
Lease
revenues were all previously generated by our PET imaging center located in
Jacksonville, Florida. We had no lease revenue in year 2009 and our
lease revenue in 2008 was $198,000. All lease revenue terminated as
of March 31, 2008 when we closed Premier PET Imaging of
Jacksonville.
Operating
Expenses
Consolidated
operating expenses in year 2009 were $604,000, of which $507,000 was from
continuing operations and $97,000 was from discontinued
operations. Comparatively, in 2008, $1,616,000 of such
expenses related to ongoing operations and $7,160,000 related to discontinued
operations. Expenses decreased significantly in 2009 as compared to
2008 as all of our eight PET imaging operations were terminated in 2008 and we
had no employees or any substantive operations in year 2009.
11
Interest
Expense
Interest
expense in 2009 was $213,000, of which $27,000 related to ongoing operations and
$186,000 of which related to discontinued operations. Comparatively,
in 2008, we had interest expense of $641,000, all of which related to
discontinued operations. The significant decrease in interest costs were
principally due to the termination and settlement of all of the Company’s
capitalized leases for its PET and PET/CT imaging equipment in 2008, and the
termination of other various debt instruments that were related to our PET
imaging operations, all of which previously accrued interest.
Investments
Accounted for Under the Equity Method
We have
no investments accounted for under the equity method in 2009 or
2008.
Minority
(Noncontrolling) Interests
During
2009 minority interests owned 49% of Suffolk PET Management LLC which is
involved in certain, legal proceedings (see Item 3). In 2008,
minority interests owned 49% of Suffolk PET Management as well as 11% of Morris
County PET Management, LLC and 22% of Hialeah PET Management,
LLC. Through February 12, 2008, minority interests owned 49% of PET
Management of Long Island, LLC, and 10% of PET Management of Queens, LLC . The
minority share of losses of our subsidiaries was $2,000 in 2009 compared to
$42,000 in 2008.
Off
Balance Sheet Arrangements
We do not
have any off balance sheet arrangements.
Financial
Condition – Liquidity and Capital Resources
As of
December 31, 2009 we do not have any operations other than basic administrative,
shareholder and creditor related activities and we have no operations that
generate revenue. We have approximately $3.8 million of current
liabilities and we do not have sufficient working capital to satisfy our
obligations to any of our creditors. Our financial distress, along with our
history of significant net losses, raises substantial doubt about our ability to
continue as a going concern.
Until
such time, if ever, that we resolve our remaining obligations to our secured and
unsecured creditors, substantially all of our efforts will be spent addressing
such matters. If we are able to continue as an active company after we resolve
our obligations with our creditors we anticipate that we would seek a new
business venture. Our plans could change significantly in the near term as new
events transpire. There can be no assurances that we will be able to accomplish
any of our objectives or that we will be able to continue in existence as an
active corporation and we may be required to seek protection under available
bankruptcy laws.
Special
Note Regarding Forward Looking Statements
Certain
statements contained in this Annual Report, including, without limitation,
statements containing the words “believes,” “anticipates,” “estimates,”
“expects,” “projections,” and words of similar import, constitute
“forward-looking statements.” You should not place undue reliance on
these forward-looking statements. Our actual results could differ
materially from those anticipated in these forward-looking statements for many
reasons, including risks faced by us which are described in this Report and the
other documents we file with the SEC. Any forward-looking statements speak
only as of the date on which they are made, and we do not undertake any
obligation to update any forward-looking statement.
12
Item
8. Financial Information.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Shareholders of
The
Sagemark Companies Ltd.
New York,
New York
We have
audited the accompanying consolidated balance sheets of The Sagemark Companies
Ltd. and subsidiaries (the “Company”) as of December 31, 2009 and 2008, and the
related consolidated statements of operations, shareholders’ deficiency and cash
flows for each of the years in the two-year period ended December 31, 2009.
These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company as
of December 31, 2009 and 2008, and the consolidated results of their operations
and their cash flows for each of the years in the two-year period ended
December 31, 2009, in conformity with accounting principles generally accepted
in the United States of America.
We were
not engaged to examine Management’s assessment of the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2009,
included in the accompanying Management’s Report on Internal Control over
Financial Reporting and, accordingly, we do not express an opinion
thereon.
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1
to the consolidated financial statements, the Company has ceased all operations
and has a working capital deficiency of $3,752,000 at December 31, 2009. In
addition, the Company is in default on substantially all of its outstanding debt
and without sufficient capital at December 31, 2009 to satisfy any of the
remaining debts or obligations. These conditions raise substantial doubt about
the Company’s ability to continue as a going concern. Management’s plans
regarding these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/
MSPC
MSPC
Certified Public Accountants and Advisors
A
Professional Corporation
Cranford,
New Jersey
April 14,
2010
13
Sagemark
Companies Ltd
CONSOLIDATED
BALANCE SHEETS
December 31
|
2009
|
2008
|
||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
|
$ | 3,000 | $ | 45,000 | ||||
Other
current assets (includes marketable securities with a cost of $3,000 which
are reported at fair value of $3,000 at December 2008 )
|
- | 3,000 | ||||||
Assets
of discontinued operations
|
-
|
92,000 | ||||||
TOTAL
ASSETS
|
$ | 3,000 | $ | 140,000 | ||||
LIABILITIES
AND SHAREHOLDERS’ DEFICIENCY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$ | 244,000 | $ | 126,000 | ||||
Accrued
consulting fee – related party
|
144,000 | - | ||||||
Notes
payable – related parties
|
311,000 | 272,000 | ||||||
Liabilities
of discontinued operations
|
3,056,000 | 2,795,000 | ||||||
Total
Current Liabilities
|
3,755,000 | 3,193,000 | ||||||
Commitments
and Contingencies
|
||||||||
Shareholders’
Deficiency:
|
||||||||
Preferred
stock, par value $1.00 per share; authorized and outstanding 2,962 in 2009
and 2008 (see Note 11)
|
3,000 | 3,000 | ||||||
Common
stock, par value $0.01 per share; 25,000,000 authorized; 8,008,261 shares
issued and outstanding in 2009 and 8,008,261 shares issued and 7,661,503
shares outstanding in 2008.
|
80,000 | 80,000 | ||||||
Additional
paid in capital
|
71,339,000 | 73,006,000 | ||||||
Accumulated
deficit
|
(75,314,000 | ) | (74,598,000 | ) | ||||
Less
common stock in Treasury (346,758 shares) at cost
|
-
|
(1,686,000 | ) | |||||
Total
Shareholders’ Deficiency
|
(3,892,000 | ) | (3,195,000 | ) | ||||
Noncontrolling
Interests
|
140,000 | 142,000 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
|
$ | 3,000 | $ | 140,000 |
The
accompanying notes are an integral part of the consolidated financial
statements
14
Sagemark
Companies Ltd
CONSOLIDATED
STATEMENTS OF OPERATIONS
Year Ended December 31
|
2009
|
2008
|
||||||
REVENUE
|
||||||||
Sublease
income
|
$ | - | 116,000 | |||||
OPERATING
EXPENSES
|
||||||||
Salaries,
payroll taxes and fringe benefits
|
- | 693,000 | ||||||
General
and administrative expenses
|
440,000 | 759,000 | ||||||
Legal
fees – related party
|
67,000 | 164,000 | ||||||
Total
Operating Expenses
|
507,000 | 1,616,000 | ||||||
Loss
from Operations
|
(507,000 | ) | (1,500,000 | ) | ||||
Gain
(loss) on sale of unconsolidated affiliate
|
- | 102,000 | ||||||
Other
(expense) income, net
|
(27,000 | ) | (37,000 | ) | ||||
Loss
from continuing operations
|
(534,000 | ) | (1,435,000 | ) | ||||
Loss
from discontinued operations
|
(182,000 | ) | (2,962,000 | ) | ||||
Gain
on disposal of discontinued operations (including gain on settlement of
liabilities of $ 0 and $717,000 respectively for the years ended December
31, 2009 and 2008)
|
-
|
4,274,000 | ||||||
Net
Loss
|
$ | (716,000 | ) | $ | (123,000 | ) | ||
Less:
Net Loss attributable to noncontrolling interest
|
(2,000 | ) | (42,000 | ) | ||||
Net
Loss attributable to the Company
|
(714,000 | ) | (81,000 | ) | ||||
Basic
and Diluted Loss Per Common Share
|
||||||||
Loss
from continuing operations
|
$ | (0.07 | ) | $ | (0.19 | ) | ||
Loss
from discontinued operations
|
(0.02 | ) | (0.38 | ) | ||||
Gain
on disposal of discontinued operations
|
-
|
0.56 | ||||||
Net
Loss
|
$ | (0.09 | ) | $ | (0.01 | ) | ||
Weighted
Average Number of Common Shares
|
7,910,409 | 7,661,503 |
The
accompanying notes are an integral part of the consolidated financial
statements
15
Sagemark
Companies Ltd
CONSOLIDATED
STATEMENTS OF SHAREHOLDER’S DEFICIENCY
Preferred
Shares
|
Preferred
Share Par Value
|
Common
Shares
|
Common
Shares Par Value
|
Additional
Paid-In Capital Common Stock
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Accumulated
Deficit
|
Less
Common
Stock in
Treasury |
Total
Shareholder’s
Deficiency
|
||||||||||||||||||||||||||||
BALANCE JANUARY 1,
2008
|
2,962 | $ | 3,000 | 8,008,261 | $ | 80,000 | $ | 72,844,000 | $ | (2,000 | ) | $ | (74,476,000 | ) | $ | (1,686,000 | ) | $ | (3,237,000 | ) | ||||||||||||||||
Components
of other comprehensive (loss):
|
||||||||||||||||||||||||||||||||||||
Net
(loss)
|
(83,000 | ) | (83,000 | ) | ||||||||||||||||||||||||||||||||
Unrealized
investment holding gains (losses)
|
2,000 | 2,000 | ||||||||||||||||||||||||||||||||||
Total
comprehensive loss
|
(81,000 | ) | ||||||||||||||||||||||||||||||||||
Stock
Compensation expense
|
162,000 | 162,000 | ||||||||||||||||||||||||||||||||||
Distribution
to minority interest investors (related parties)
|
(39,000 | ) | (39,000 | ) | ||||||||||||||||||||||||||||||||
BALANCE
DECEMBER 31, 2008
|
2,962 | 3,000 | 8,008,261 | 80,000 | $ | 73,006,000 | - | (74,598,000 | ) | (1,686,000 | ) | (3,195,000 | ) | |||||||||||||||||||||||
Reissuance
of Treasury Shares
|
(1,682,500 | ) | 1,686,000 | 3,500 | ||||||||||||||||||||||||||||||||
Issuance
of Warrants
|
15,500 | 15,500 | ||||||||||||||||||||||||||||||||||
Net
Loss
|
(716,000 | ) | (716,000 | ) | ||||||||||||||||||||||||||||||||
BALANCE
DECEMBER 31, 2009
|
2,962 | $ | 3,000 | 8,008,261 | $ | 80,000 | $ | 71,339,000 | $ | - | $ | (75,314,000 | ) | $ | - | $ | (3,892,000 | ) |
The
accompanying notes are an integral part of the consolidated financial
statements
16
Sagemark
Companies Ltd
CONSOLIDATED
STATEMENTS OF CASH FLOWS
Year end December 31,
|
2009
|
2008
|
||||||
Cash
Flow – Operating Activities
|
||||||||
Loss
from continuing operations attributable to the Company
|
$ | (534,000 | ) | $ | (1,435,000 | ) | ||
Adjustment
to reconcile Net Loss to Net Cash – Operating Activities:
|
||||||||
Depreciation
and amortization
|
- | 12,000 | ||||||
Share
of loss of unconsolidated affiliates
|
- | 29,000 | ||||||
Stock-based
compensation, employees
|
- | 162,000 | ||||||
Stock-based
compensation, officers
|
19,000 | - | ||||||
(Gain)
Loss on sale of marketable securities
|
3,000 | (2,000 | ) | |||||
(Gain)
loss on sale of unconsolidated affiliate
|
- | (102,000 | ) | |||||
Loss
on disposal of fixed assets
|
- | 32,000 | ||||||
Change
in assets and liabilities:
|
||||||||
Other
current assets
|
- | 31,000 | ||||||
Accounts
payable
|
118,000 | (25,000 | ) | |||||
Accrued
consulting fee – related party
|
144,000 | - | ||||||
Accrued
interest payable – related party
|
32,000 | - | ||||||
Accrued
expenses
|
- | (68,000 | ) | |||||
Net
Cash – Operating Activities
|
(218,000 | ) | (1,366,000 | ) | ||||
Cash
Flows – Investing Activities
|
||||||||
Purchase
of fixed assets
|
- | 3,000 | ||||||
Net
proceeds from disposal of segments
|
- | 1,445,000 | ||||||
Refund
(payment) or equipment deposits
|
-
|
105,000 | ||||||
Net
Cash – investing Activities
|
- | 1,553,000 | ||||||
Cash
Flows – Financing Activities
|
||||||||
Distributions
to minority (noncontrolling) interest investors
|
- | (39,000 | ) | |||||
Proceeds
from note payable – related party
|
7,000 |
-
|
||||||
Net
Cash – Financing activities
|
7,000 | (39,000 | ) | |||||
Discontinued
Operations
|
||||||||
Net
cash provided by (used in) operating activities
|
169,000 | (305,000 | ) | |||||
Net
cash provided by (used in) investing activities
|
- | - | ||||||
Net
cash provided by (used in) financing activities
|
- |
-
|
||||||
Net
Cash – Discontinued Operations
|
169,000 | (305,000 | ) | |||||
Net
Decrease in Cash
|
(42,000 | ) | (157,000 | ) | ||||
Cash
– Beginning of Year
|
45,000 | 202,000 | ||||||
Cash
– End of Year
|
$ | 3,000 | $ | 45,000 |
The
accompanying notes are an integral part of the consolidated financial
statements
17
Sagemark
Companies Ltd.
Notes
to the Consolidated Financial Statements
Note
1 - Description of Business and Basis of Presentation
Organization
and Nature of Operations
At
December 31, 2009, the Sagemark Companies Ltd (the “Company” or “We” or “Our”)
does not have any operations other than administrative operations related to
shareholder, creditor and tax matters.
Prior to
discontinuing all such operations as of the second quarter 2008, the Company
owned, operated and/or managed eight out-patient medical diagnostic imaging
centers that offered positron emission tomography (“PET”) and PET and computed
tomography (“CT”) imaging (“PET/CT”), a medical imaging procedure used by
physicians to assist in the diagnosis, staging and treatment of cancers and
other illness and disease. The PET imaging centers were
operated either through direct ownership or through Administrative Services
Agreements and we were responsible for obtaining premise leases, medical
diagnostic imaging equipment and maintenance agreements, supply agreements and
personnel.
Additionally
for over a year, the Company had been involved in the development of a number of
radiation therapy facilities, prior to discontinuing all of such operations and
activities in 2008.
Going
Concern
The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America,
which contemplate our continuation as a going concern. The Company
did not generate any revenue in year 2009, and has no current operations that
generate revenue. Further, as of December 31, 2009, the Company has a
negative working capital position of approximately $3.8 million.
These
circumstances, among others, raise substantial doubt about our ability to
continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
The
Company intends to continue to conduct limited administrative activities in
connection with its efforts to resolve outstanding creditor claims and other
contractual obligations as long as it is able to do so. However,
there can be no assurance that we will be successful and, if we are unable to
resolve outstanding creditor claims, we may seek protection under available
bankruptcy laws.
NOTE
2 - Summary of Significant Accounting Policies
Principles
of Consolidation
The
accompanying consolidated financial statements include our accounts and accounts
of our majority owned subsidiaries after eliminating all significant
intercompany balances and transactions.
For our
subsidiaries that are not wholly-owned, we eliminate the minority interest
portion of their profits and losses.
Cash
and Cash Equivalents
We
consider all highly liquid instruments purchased with an original maturity of
three months or less to be cash equivalents. As of December 31, 2009
and 2008, all of our cash represents bank deposits and we do not have any cash
equivalents.
18
Accounts
Receivables
All of
our accounts receivables are reported at their estimated, net collectible
amounts.
Marketable
Securities
All of
our investments that we classify as marketable securities have readily
determinable fair market values, are categorized as available-for-sale and are
recorded at fair market value. We adopted the fair value option pursuant to ASC
820, Fair Value Measurements
and Disclosures on January 1, 2008 as it relates to our available for
sale marketable securities. As a result, we will report unrealized gains and
losses on our available for sale marketable securities in earnings (loss) for
each reporting date. When management determines that a decline in the fair
market value of a marketable security is other than temporary, the cost basis of
the individual security is written down to fair value and the amount of the
write-down is charged to earnings as a realized loss. At December 31,
2009 we have no marketable securities. Our marketable securities at
December 31, 2008 were $3,000 and were included as part of our current
assets.
Fixed
Assets
Furniture,
fixtures, equipment and leasehold improvements are carried at cost less
allowances for accumulated depreciation. The cost of equipment previously held
under capital leases was equal to the lower of the net present value of the
minimum lease payments or the fair market value of the leased property at the
inception of the lease, less allowances for accumulated depreciation.
Depreciation is computed generally by the straight-line method at rates adequate
to allocate the cost of applicable assets over their expected useful lives which
ranges from 2-7 years for furniture, fixtures and equipment. Leasehold
improvements were amortized over periods not in excess of applicable lease terms
or useful lives. Amortization of capitalized leases and leasehold improvements
is included within depreciation expense.
Investments
in Unconsolidated Affiliates
Investments
in unconsolidated affiliates, jointly owned companies and other investments in
which we own 20% to 50% interest or otherwise exercises significant influence
are carried using the equity method of accounting, adjusted for the Company’s
proportionate share of their undistributed earnings or losses. At
December 31, 2009 we had no investments in unconsolidated
affiliates.
Long-Lived
Assets
Long-lived
assets are reviewed for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets may not be
recoverable. If such review indicates that the carrying amount of long-lived
assets is not recoverable, the carrying amount of such assets is reduced to the
estimated recoverable value.
Substantially
all of our long-term assets consisted of the net book value of the medical
equipment, office equipment and leasehold improvements related to our PET
imaging operations. Our divestiture of all of such operations during
2008 resulted in the liquidation, forfeiture or abandonment of all long-lived
assets and as of December 31, 2009 we have no long-lived assets.
Revenue
Recognition
Net
Patient Service Revenues
Net
patient service revenues from discontinued operations were reported at the
estimated net realizable amounts due from patients, third-party payors, and
others for services rendered, including provisions for estimated contractual
adjustments (based on historical experience) under our reimbursement agreements
with third-party payors. We were not engaged in the practice of
medicine. All operations that generated net patient service revenues
were discontinued on or before March 31, 2008. We had no net patient
service revenues in year 2009.
19
Management
Fees
Management
fee revenues from discontinued operations were derived from agreements with
contracted radiology practice group’s PET imaging centers. We
recorded management fee revenues based upon the monthly net cash (the practice
groups’ collections less amounts deducted for radiologists’ fees, technicians’
fees and salaries) we received from the practice groups, plus the net realizable
value of the practice groups’ outstanding patients accounts receivable, all
subject to agreed upon management fee ceilings. All operations that
generated management fees were discontinued as of June 1, 2008. We
had $63,000 of management fee revenue in 2009, all of which was related to
operations of our three imaging centers in Florida that discontinued operations
in 2008.
At
December 31, 2009 we have management fees due to us from our discontinued
operations in East Setauket, New York which are the subject of an ongoing legal
action, the amount of which is in dispute and is unknown as of the date of this
Annual Report (see Item 3 – Legal Proceedings).
Lease
Revenue
We
previously leased time on our PET/CT equipment at Premier PET Imaging of
Jacksonville to physician groups under lease agreements with terms ranging from
1 to 2 years, all of which were terminated as of March 31, 2008. We have had no
lease revenue since such period.
Income
Taxes
We
account for income taxes in accordance with ASC 740, Income Taxes. Under ASC 740,
deferred tax assets and liabilities are determined based on differences between
the financial statement and tax basis of assets and liabilities and net
operating loss and credit carryforwards using enacted tax rates in effect for
the year in which the differences are expected to impact taxable
income. A valuation allowance is established, when necessary, to
reduce deferred tax assets to the amount that is more likely than not to be
realized. If it becomes more likely than not that a deferred tax
asset will be used, the related valuation allowance on such assets would be
reversed. Management makes judgments as to the interpretation of the
tax laws that might be challenged upon an audit and cause changes to previous
estimates of tax liability. We operate within multiple taxing jurisdictions and
are subject to audit in these jurisdictions. In management’s opinion,
adequate provisions for income taxes have been made for all years. If actual
taxable income by tax jurisdiction varies from estimates, additional allowances
or reversals of reserves may be necessary.
On
January 1, 2007, we adopted the provisions of ASC 740, Income Taxes, as it relates
to the former FIN 48, Accounting for Uncertainty in Income
Taxes – an interpretation of FASB Statement No. 109 which provides a
financial statement recognition threshold and measurement attribute for a tax
position taken or expected to be taken in a tax return. Under FIN 48, we may
recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The tax
benefits recognized in the financial statements from such a position should be
measured based on the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement. FIN 48 also provides guidance on
derecognition of income tax assets and liabilities, classification of current
and deferred income tax assets and liabilities, accounting for interest and
penalties associated with tax positions, and income tax disclosures. The
adoption of FIN 48 did not have a material impact on our consolidated financial
statements.
20
Basic
and Diluted Loss Per Share
Basic
loss per share reflects the amount of loss for the period available to each
share of common stock outstanding during the reporting period. Diluted loss per
share reflects the basic loss per share, while giving effect to all dilutive
potential common shares that were outstanding during the period, such as common
shares that could result from the potential exercise or conversion of securities
(options or warrants) into common stock.
The
computation of diluted loss per share does not assume conversion, exercise, or
contingent issuance of securities that would have an anti-dilutive effect on
loss per share (i.e. reducing loss per share). The dilutive effect of
outstanding options and warrants and their equivalents are reflected in dilutive
earnings per share by the application of the treasury stock method which
recognizes the use of proceeds that could be obtained upon the exercise of
options and warrants in computing diluted earnings per share. It
assumes that any proceeds would be used to purchase common stock at the average
market price of the common stock during the period.
The
Company has 205,000 options and 1,637,000 warrants outstanding as December 31,
2009, which are anti-dilutive and therefore are excluded from the computation of
diluted loss per share for the year ended December 31, 2009.
Fair
Value of Financial Instruments
Accounting
principles generally accepted in the United States of America require disclosing
the fair value of financial instruments to the extent practicable for financial
instruments, which are recognized or unrecognized in the balance sheet. The fair
value of the financial instruments disclosed herein is not necessarily
representative of the amount that could be realized or settled, nor does the
fair value amount consider the tax consequences of realization or settlement. In
assessing the fair value of these financial instruments, we used a variety of
methods and assumptions, which were based on estimates of market conditions and
risks existing at that time. For certain financial instruments, including cash,
receivables, and current liabilities, it was estimated that the carrying amount
approximated fair value for the majority of these instruments because of their
short maturity. For investments in marketable securities, fair value is
estimated based on current quoted market price. The fair value of our property
and equipment is estimated to approximate their net book values. The fair value
of capital lease and note payable obligations as recorded approximate their fair
values as represented by the net present value of the future payments on the
underlying obligations.
Concentration
of Credit Risk
Financial
instruments that potentially subject us to significant concentrations of credit
risk include cash. As of December 31, 2009, all of our cash is placed with high
credit, quality financial institutions. As of December 31, 2009 we
had no cash balances in excess of federally insured limits.
Stock-based
Compensation
We
recognize the expense of options or similar instruments issued to employees
using the fair-value-based method of accounting for stock-based payments in
compliance with ASC 718 Compensation – Stock
Compensation. We recognized aggregate stock-based compensation related to
employees of $19,000 and $162,000, respectively, for the years ended December
31, 2009 and 2008. As of December 31, 2009, there was no unrecognized
compensation cost related to non-vested stock-based compensation arrangements
granted to employees.
21
On April
10, 2009 we issued to Cathy Bergman, our Chief Executive Officer, a warrant to
purchase up to 600,000 shares of the Company’s common stock at $0.01 per share,
such exercise price representing the market price per share of our common stock
on the date the warrant was issued. The warrant has a term of five
years and contains certain anti-dilution and piggy-back registration
rights. The warrant vests and is exercisable as
follows: the right to purchase up to 250,000 shares of the Company’s
common stock at issuance; the right to purchase up to 250,000 shares of the
Company’s common stock when the Company resolves certain debt, and the right to
purchase up to 100,000 share of the Company’s common stock when the Company’s
outstanding indebtedness has been reduced to an aggregate of $500,000 or
less. The Company assigned these warrants a fair market value of
$5,500 and recorded such amount as stock-based compensation during the second
quarter 2009.
On April
10, 2009, we issued to Robert L. Blessey, our Secretary and General Counsel, a
warrant to purchase up to 1,000,000 shares of the Company’s common stock, which
vested upon issuance and which was immediately exercisable. The
warrant has a term of five years and an exercise price of $0.01 per share, such
price representing the price per share of our common stock on the date the
warrant was issued. The warrant contains certain anti-dilution and
piggy-back registration rights. The Company assigned these warrants a
fair market value of $10,000 and recorded such amount as stock-based
compensation during the second quarter 2009.
The
following tables summarize our stock purchase options and warrants in the two
years ended December 31, 2009 and 2008:
Weighted Average
|
Weighted Average
|
|||||||||||||||
Shares
|
Exercise Price
|
Shares
|
Exercise Price
|
|||||||||||||
2009
|
2009
|
2008
|
2008
|
|||||||||||||
Outstanding
at beginning of year
|
1,315,000 | $ | 1.39 | 1,815,000 | $ | 1.36 | ||||||||||
Granted
|
1,600,000 | $ | 0.01 | - | - | |||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Forfeited
/ Expired
|
(1,072,500 | ) | (500,000 | ) | $ | 0.83 | ||||||||||
Outstanding
at end of year
|
1,842,500 | $ | 0.02 | 1,315,000 | $ | 1.39 | ||||||||||
Exercisable
at year end
|
1,495,000 | 1,315,000 | $ | 1.39 | ||||||||||||
Weighted
average fair value
|
$ | 0.01 | - | |||||||||||||
per
share of warrants granted
|
||||||||||||||||
during
the year
|
||||||||||||||||
Options
subject to Long Term
|
||||||||||||||||
Incentive
Plan
|
1,600,000 | 1,600,000 | ||||||||||||||
Options
issued pursuant to
|
||||||||||||||||
Long
Term Incentive Plan
|
205,000 | 1,290,000 | ||||||||||||||
Options
available under
|
||||||||||||||||
Long
Term Incentive Plan
|
1,385,000 | 310,000 |
Outstanding
|
Weighted Avg.
|
Weighted Avg.
|
Total Intrinsic
|
||||||||||
at 12/31/09
|
Exercise Price
|
Remaining Life
|
Value
|
||||||||||
Range of Exercise Prices
|
|||||||||||||
Under
$1
|
1,842,000 | $ | 0.02 |
4
years
|
$ | 16,000 |
22
Outstanding
|
Weighted Avg.
|
Weighted Avg.
|
Total Intrinsic
|
||||||||||
at 12/31/08
|
Exercise Price
|
Remaining Life
|
Value
|
||||||||||
Range of Exercise Prices
|
|||||||||||||
Under
$1
|
175,000 | $ | 0.14 |
4.65 years
|
$ | 111,000 | |||||||
Between
$1 and $2
|
1,105,000 | $ | 1.51 |
1.99 years
|
$ | 106,650 | |||||||
Over
$3
|
35,000 | $ | 3.91 |
1.07 years
|
$ | 0 | |||||||
1,315,000 | $ | 1.38 |
2.25 years
|
$ | 217,650 |
In
January 2005 we issued (i) warrants to private placement investors to purchase
up to 1,940,625 shares of common stock for $4 per share; and (ii) warrants to a
placement agent to purchase up to 945,000 shares of common stock for $2.00 per
share which are not reflected in the above schedule. All of such options and
warrants were deemed expired as of December 31, 2009 and were not
renewed.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Significant estimates we make include contractual
allowances, the estimated lives and recoverable value of property and equipment,
income taxes, our test of impairment for tangible and intangible assets and
assumptions used to calculate stock-based compensation. Actual results could
differ from those estimates.
Recently
Adopted Accounting Pronouncements
Life
of Intangible Assets
During
the first quarter of 2009, we adopted new accounting guidance issued by the FASB
for the determination of the useful life of intangible assets. The new guidance
amends the factors that should be considered in developing the renewal or
extension assumptions used to determine the useful life of a recognized
intangible asset. The new guidance also requires expanded disclosure regarding
the determination of intangible asset useful lives. The adoption of this
accounting guidance did not have a material impact on our consolidated financial
position, results of operations or financial condition.
Fair
Value of Financial Instruments and Other-Than-Temporary Impairment
During
the second quarter of 2009, we adopted three related sets of accounting guidance
issued by the FASB. The accounting guidance sets forth rules related to
determining the fair value of financial assets and financial liabilities when
the activity levels have significantly decreased in relation to the normal
market, guidance related to the determination of other-than-temporary
impairments to include the intent and ability of the holder as an indicator in
the determination of whether an other-than-temporary impairment exists and
interim disclosure requirements for the fair value of financial instruments. The
adoption of these three sets of accounting guidance did not have a material
impact on our consolidated balance sheet, results of operations or financial
condition.
Subsequent
Events
During
the second quarter of 2009, we adopted new accounting guidance issued by the
FASB related to subsequent events. The new requirement establishes the
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. The
adoption of this accounting guidance did not have a material impact on our
consolidated balance sheet position, results of operations or financial
condition.
23
Accounting
Standards Codification
In
June 2009, Accounting Standards Update (“ASU”) No. 2009-01 amended the FASB
Accounting Standards Codification for the issuance of FASB Statement No. 168,
The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles was issued as authoritative guidance which
replaced the previous hierarchy of GAAP and establishes the FASB Codification as
the single source of authoritative U.S. GAAP recognized by the FASB to be
applied by nongovernmental entities. This standard establishes only two levels
of U.S. generally accepted accounting principles (“GAAP”), authoritative and
non-authoritative. The FASB Accounting Standards Codification (the “ASC”) will
become the source of authoritative, nongovernmental GAAP, except for rules and
interpretive releases of the SEC, which are sources of authoritative GAAP for
SEC registrants. All other nongrandfathered, non-SEC accounting literature not
included in the ASC will become non-authoritative. This standard was effective
for financial statements for interim or annual reporting periods ending after
September 15, 2009. The Company adopted the new guidelines and numbering
system prescribed by the ASC for the period ended September 30, 2009, as
required, and adoption did not have a material impact on the Company’s
consolidated financial statements since the FASB Codification is not intended to
change or alter existing GAAP.
Recently
Issued Accounting Standards
Variable
Interest Entities
In June
2009, the FASB issued new accounting guidance which amends the evaluation
criteria to identify the primary beneficiary of a variable interest entity, or
VIE, and requires ongoing reassessment of whether an enterprise is the primary
beneficiary of the VIE. The new guidance significantly changes the consolidation
rules for VIEs including the consolidation of common structures such as joint
ventures, equity method investments and collaboration arrangements. The guidance
is applicable to all new and existing VIEs. The provisions of this new
accounting guidance are effective for interim and annual reporting periods
beginning after November 15, 2009. We do not believe the adoption of this new
accounting guidance will have a material impact on our consolidated balance
sheet, results of operations or financial condition.
Revenue
Recognition
In
September 2009, the FASB issued new accounting guidance related to the revenue
recognition of multiple element arrangements. The new guidance states that if
vendor specific objective evidence or third party evidence for deliverables in
an arrangement cannot be determined, companies will be required to develop a
best estimate of the selling price to separate deliverables and allocate
arrangement consideration using the relative selling price method. In addition,
the FASB also issued new accounting guidance related to certain revenue
arrangements that include software elements. Previously, companies that sold
tangible products with “more than incidental” software were required to apply
software revenue recognition guidance. This guidance often delayed revenue
recognition for the delivery of the tangible product. Under the new guidance,
tangible products that have software components that are “essential to the
functionality” of the tangible product will be excluded from the software
revenue recognition guidance. The new guidance will include factors to help
companies determine what is “essential to the functionality.” Software-enabled
products will now be subject to other revenue guidance and will likely follow
the guidance for multiple deliverable arrangements issued by the FASB in
September 2009.
24
This new
guidance is to be applied on a prospective basis for revenue arrangements
entered into or materially modified in fiscal years beginning on or after June
15, 2010, with earlier application permitted. If a company elects earlier
application and the first reporting period of adoption is not the first
reporting period in the company’s fiscal year, the guidance must be applied
through retrospective application from the beginning of the company’s fiscal
year and the company must disclose the effect of the change to those previously
reported periods. We do not believe that adoption of this accounting guidance
will have a material impact on our consolidated balance sheet, results of
operations or financial condition.
Improving
Disclosures About Fair Value Measurements
NOTE
4 - Marketable Securities
At
December 31, 2009 we have no available-for-sale marketable
securities.
NOTE
5 – Fixed Assets
At
December 31, 2009 we have no fixed assets, with the exception of those assets
which are subject to a legal action as more detailed in Item 3 - Legal
Proceedings. However, as such items are subject to the uncertainties of a legal
action they are no longer carried on our books.
NOTE
6 – Investment in Unconsolidated Affiliates
As of
December 31, 2009 we have no investments in unconsolidated
affiliates.
NOTE
7 – Notes Payable
At
December 31, 2009 we have a note payable of $272,000 to Robert L. Blessey, for
legal services provided to the Company in prior years. Such note accrues
interest at 10% per annum as of January 1, 2009 and is currently in default. At
December 31, 2009 the note payable, plus accrued interest, is approximately
$300,000.
Additionally,
at December 31, 2009, we have a note payable of $7,000 to Cathy Bergman, our
Chief Executive Officer, for funds loaned to the Company, and we owe a
consulting firm owned by Ms. Bergman $144,000 for services rendered in 2009
pursuant to an agreement with such entity.
NOTE
8 – Subordinated Notes Payable
At
December 31, 2009 we had no subordinated notes payable.
25
NOTE
9 – Income Taxes
For the
year ended December 31, 2009 we had no income tax provision and in 2008 our
income tax provision consisted of current state income tax expense of
$14,000.
As of
December 31, 2009, we have net operating loss carryforwards approximating $49
million. The loss carryforwards will expire at various dates from 2010 through
2027. The issuance of shares of our common stock for the acquisition of certain
assets limits the utilization of our tax net operating loss carryover for losses
incurred prior to the issuance of such shares, per Section 382 of the Internal
Revenue Code.
NOTE
10 – Commitments and Contingencies
Operating
Lease Obligations
We
previously leased real estate for our corporate offices and our PET imaging
center operations and office equipment under operating lease agreements, some
with related parties (see Note 12). In concert with the termination of our PET
imaging operations, we negotiated the premature termination of all of such
leases, including the lease of our former corporate office in Boca Raton,
Florida, with the exception of the premise lease for our former operations in
Forest Hills, New York and Jacksonville, Florida, both of which were assigned to
the third parties that operate medical imaging centers at such facilities and
who pay the landlord directly. As of December 31, 2009 we have not been notified
of any default under such leases.
Debt
Guarantees
We have
guaranteed certain debt obligations (see Note 14 - Subsequent
Events).
Long-term
Employment Commitments and Severance Compensation
Ms.
Bergman has served as our Chief Executive Officer and the sole member of our
Board of Directors since November 25, 2008 with an annual salary of $1 and a
$250 monthly allowance for use of her office.
On April
10, 2009, in connection with certain administrative tasks and responsibilities
performed for the Company by Taggart Resource Group, Ltd. (“Taggart”), an entity
owned by Ms. Bergman, we entered into an agreement with Taggart, pursuant to
which we agreed to pay Taggart a monthly fee of $15,000, beginning as of
December 1, 2008. To the extent that funds are available, $5,000 of such fee is
to be paid each month, and $10,000 is to be accrued until such time, if ever,
that the Company has such available funds, and, regardless, the Company agreed
that such fee will become due and payable in full if there is a change in
control of the Company or if Ms. Bergman is removed as Chief Executive Officer
or is no longer the Company’s sole Director, as well as other terms and
conditions related to the termination of the agreement. As of December 31, 2009,
we have accrued $144,000 of unpaid fees related to such agreement.
Legal
Proceedings
In the
normal course of business, we may become subject to lawsuits and other claims
and proceedings. Such matters are subject to uncertainty and outcomes are not
predictable with assurance.
26
On
September 26, 2008, we commenced an action against Azad K. Anand, MD and a
number of entities owned and/or controlled by him (collectively, the “Anand
Defendants”) in the Supreme Court, State of New York, County of New York (the
“Action”). The Action seeks damages against the Anand Defendants for various
breaches and defaults of a number of different agreements between the parties
relating to the operations of our PET imaging center in East Setauket, New York,
as well as certain allegedly improper actions and omissions of the Anand
Defendants in connection therewith. We are also seeking an inspection of books
and records and an accounting in the Action. A counter-claim was filed against
us in such Action, but we believe it to be without merit and have contested such
claim. Such Action is on-going and there can be no assurance as to its
outcome.
NOTE
11 – Capital Stock
Common
Stock
As of
December 31, 2009 and 2008, the authorized number of shares of common stock, par
value $0.01, is 25,000,000 shares of which 8,008,261 and 7,661,503 shares are
issued and outstanding as of December 31, 2009 and 2008,
respectively.
Preferred
Stock
As of
December 31, 2009 and 2008, the authorized number of shares of undesignated
preferred stock, par value $1.00 per share, is 2,000,000 shares of which 2,962
shares are issued and outstanding. The following provides information about each
series of designated preferred stock.
Series B
(170 shares issued and outstanding) - The Series B subordinated preferred stock
is redeemable at our option at the issue price of $87.50 per share. Each share
is entitled to a $3.50 annual dividend, which is contingent upon after tax
earnings in excess of $200,000. In the event of involuntary liquidation, the
holders are entitled to $87.50 per share and all accrued dividends. No dividends
were declared for the years ended December 31, 2009 and 2008.
Series E
(92 shares issued and outstanding) - The Series E preferred stock is entitled to
an annual dividend of $.10 per share contingent upon after tax earnings in
excess of $200,000. No dividends were declared for the years ended December 31,
2009 and 2008.
Series F
(2,700 shares issued and outstanding) - In 1984, in consideration for certain
creditors granting extensions on our former debts, we issued 2,700 shares of
preferred stock at $1.00 per share. The nonvoting preferred stock, designated
Series F, with a dividend rate of $8.00 per share, is redeemable at our option
after July 1993 for $1.00 per share. The dividend is non-cumulative and is
payable within 100 days from the close of any year in which net income after tax
exceeds $500,000, and all dividends due on the Series B preferred stock are paid
or provided for. No dividends were declared for the years ended December 31,
2009 and 2008.
NOTE
12 – Transaction with Related Parties
The
balance sheet effect of transactions with related parties is as
follows.
Officers
and Directors
Our Chief
Executive Officer
We incur
fees for services rendered to Taggart Resource Group, Ltd., a consulting firm
owned by Cathy Bergman,
our Chief Executive Officer. As more detailed in Note 10 – Long Term Employment
Agreements, as the Company has no employees or support staff, in connection with
certain administrative tasks and responsibilities performed by Taggart, we
agreed to pay Taggart a monthly fee of $15,000, beginning as of December 1,
2008. To the extent that funds are available, $5,000 of such fee is to be paid
each month, and $10,000 is to be accrued until such time, if ever, that the
Company has such available funds. We were not able to pay Taggart the $5,000
monthly minimum due each month and as of December 31, 2009 we owe Taggart
$144,000 in connection with such agreement.
27
On April
13, 2009, the Company issued the 346,585 shares of its common stock in its
treasury to Ms. Bergman at $0.01 per share, the then market price per share of
our common stock. The issuance of the shares offset a portion of the then
outstanding amount due to Ms. Bergman.
In
addition to rendering services to us for which we do not have the funds to
compensate Taggart, the Company borrowed approximately $7,000 from Ms. Bergman
in 2009 to pay certain operating expenses. Such amount bears interest at a rate
of 5% and is due on demand.
Our
Secretary
We incur
fees for legal services provided by Robert L. Blessey who serves as our
Secretary and General Counsel and who served on our Board of Directors from May
1, 2001 until July 2, 2007.
We
incurred legal fees due to Mr. Blessey of $67,000 in year 2009 and $164,000 in
year 2008. Additionally, we owe Mr. Blessey $272,000 for prior legal services
and in July 2007 issued to him a non- Interest bearing promissory note in such
amount that was due June 30, 2008 on which we are in default. In consideration
of Mr. Blessey’s agreement to forebear from enforcing his rights thereunder, we
agreed to begin to accrue interest on such note at a rate of 10% per annum,
beginning as of January 1, 2009, and as and to the extent that funds are
available, pay such interest as incurred. As of December 31, 2009 the promissory
note remains in default and we have been unable to make any payment toward the
interest due thereon.
Additionally,
in consideration of Mr. Blessey’s agreement to defer payment by the Company for
legal services rendered by him from time to time on behalf of the Company, the
Company issued a warrant to Mr. Blessey in April 2009 to purchase up to
1,000,000 shares of the Company’s common stock with a term of five years at an
exercise price of $0.01 per share, such price representing the price per share
on the date the warrant was issued. Such warrant contains certain anti-dilution
and piggy-back registration rights.
Marketing
Fees (Discontinued Operations)
We paid
fees to certain marketing entities and individuals that are related to us via
employee or investor relationships, all of which were discontinued on or before
March 31, 2008. In year 2009 we paid no marketing fees to any related individual
or entity and in 2008 we paid $35,000 in related party marketing
fees.
Management
Fees (Discontinued Operations)
Prior to
our sale of our interest in Premier PET of Long Island, LLC and PET Management
of Queens, LLC in February 2008, through such subsidiaries, we earned fees from
the management of Rockville PET Imaging, PC and Forest Hills PET Imaging, PC,
both of which are owned by Lucille Taverna, M.D., a radiologist who owned a
percentage of our subsidiaries that managed such entities. In 2008, we earned
approximately $561,000 from such entities and have had no revenue from such
entities since the sale of our interest in such subsidiaries.
28
Our
subsidiary Hialeah PET Management LLC formerly earned fees from the management
of Premier PET Imaging of Hialeah, LLC, and our subsidiaries, Premier PET
Imaging of Jacksonville, LLC and Premier PET Imaging of Tamarac, LLC earned fees
from the management of PET Imaging centers pursuant to an agreement with Eiber
Radiology. Albert Eiber, M.D., a radiologist who is the principal owner of both
Eiber Radiology and PET Imaging of Hialeah, Inc., owned 17% of Hialeah PET
Management, LLC. All of such operations were discontinued in 2008. In 2009 we
received $63,000 in management fees that were generated prior to the
discontinuation of operations, and in 2008 earned approximately
$358,000.
Our
subsidiary Suffolk PET Management, LLC earned fees from the management of
Advanced PET Imaging. Anna Associates LLC owns 49% of Suffolk PET Management.
Both Advanced PET Imaging and Anna Associates LLC are owned or controlled by
Azad K. Anand, M.D., a radiologist. Operations at such facility were
discontinued in March 2008. In 2008 we had management revenues of approximately
$126,000. In September 2008 we commenced a legal action against Dr. Anand, and
related entities, in connection with certain management fees due to us, among
other claims. As the amount due is unknown, and an accurate projection is not
possible due to the complexity of the litigation, we cannot be certain of the
balance due to us as of December 31, 2009. The legal action is on-going and
there can be no assurance as to its outcome.
NOTE
12 – Discontinued Operations
In 2008
we discontinued all of our PET and PET/CT imaging operations and closed our
corporate offices in Boca Raton, Florida, terminating all of our employees. The
following table provides information regarding the net liabilities of our
discontinued operations as of December 31, 2009 and December 31,
2008.
December 31,
|
||||||||
2009
|
2008
|
|||||||
Assets:
|
||||||||
Cash
|
$ | - | $ | 17,000 | ||||
Management
fees receivable - related parties
|
- | 75,000 | ||||||
Assets
to be disposed
|
- | 92,000 | ||||||
Liabilities:
|
||||||||
Accounts
payable
|
255,000 | 179,000 | ||||||
Judgments
and liens
|
1,801,000 | 1,616,000 | ||||||
Limited
Guaranty Default
|
1,000,000 | 1,000,000 | ||||||
Liabilities
to be disposed
|
3,056,000 | 2,795,000 | ||||||
Net
liabilities to be disposed
|
$ | (3,056,000 | ) | $ | (2,703,000 | ) |
29
For
the Year Ended December 31,
|
2009
|
2008
|
||||||
Revenues:
|
||||||||
Management
fee revenues - related parties
|
$ | 63,000 | $ | 1,045,000 | ||||
Net
patient service revenue
|
- | 142,000 | ||||||
Lease
revenue
|
- | 198,000 | ||||||
Total
revenues
|
63,000 | 1,385,000 | ||||||
Operating
expenses:
|
||||||||
Patient
service costs and expenses
|
- | 342,000 | ||||||
Equipment
maintenance
|
- | 227,000 | ||||||
Salaries,
payroll taxes and fringe benefits
|
- | 298,000 | ||||||
Professional
fees
|
- | 217,000 | ||||||
General
and administrative expenses
|
97,000 | 1,097,000 | ||||||
Liability
for limited guarantee
|
- | 1,000,000 | ||||||
Liability
for judgments and liens
|
- | 1,616,000 | ||||||
Impairment
of fixed assets
|
- | 1,688,000 | ||||||
Depreciation
and amortization
|
- | 675,000 | ||||||
Total
operating expenses
|
97,000 | 7,160,000 | ||||||
Loss
from operations
|
(34,000 | ) | (5,775,000 | ) | ||||
Interest
expense
|
(186,000 | ) | (641,000 | ) | ||||
Other
income (expense), net
|
38,000 | 3,454,000 | ||||||
Loss
from operations before noncontrolling interest
|
(182,000 | ) | (2,962,000 | ) | ||||
Noncontrolling
interest in income of subsidiaries
|
(2,000 | ) | (42,000 | ) | ||||
Loss
from discontinued operations
|
$ | (180,000 | ) | $ | (2,920,000 | ) |
NOTE
14 – Subsequent Events
We
formerly owned an 80% equity interest in P.E.T. Management of Queens LLC (the
“Queens LLC”), through our wholly owned subsidiary, Premier P.E.T. Imaging
International, Inc. (“Premier”), which managed a PET Imaging center in Forest
Hills, New York (the “Queens Center”). In February 2008, Premier sold its equity
interest in the Queens LLC to an entity owned by a former employee of the
Company (the “Queens Purchaser”). In connection with that sale, the Queens LLC
assumed the Company’s obligations under the capital lease financing documents
(the “Financing Documents”), between the Company and General Electric Capital
Corp. (“GECC”) pursuant to which GECC financed the PET/CT imaging equipment,
ancillary medical equipment and leasehold improvements at the Queens
Center.
As a
condition of such sale, GECC required the Company to execute a limited guaranty
to GECC (the “Limited Guaranty”) pursuant to which the Company guaranteed
$1,000,000 of the then approximately $1,700,000 indebtedness under the Financing
Documents for a period of 24 months, which period expired in February 2010. In
connection therewith and also as a condition of such sale, the Queens Purchaser
agreed to indemnify the Company against any losses it incurred under the Limited
Guaranty (the “Purchaser Indemnity”) and assumed our obligations under the
premise lease for the Queens Center.
On April
1, 2009 the Company received a notice from counsel for GECC advising us that the
Queens Purchaser had failed to make certain payments, when due, under the
Financing Documents, that the current amount past due thereunder was $122,454
and that unless such default was cured by April 15, 2009, GECC would exercise
its rights to accelerate the balance due under the Financing Documents of
approximately $1,600,000 and seek to recover from us the $1,000,000 maximum
amount due under the Limited Guaranty. We promptly notified GECC that we were
unable to honor such Limited Guaranty and GECC did not pursue us in connection
with such Limited Guaranty.
The
default was not cured as GECC had demanded and in June 2009 GECC brought a legal
action against Queens LLC in an attempt to recover the amount due to it under
the Financing Agreements. We were not named as a party to such
action.
30
In March
2010, GECC repossessed the PET/CT imaging equipment from Queens LLC and entered
into a stipulation of settlement with it. It is our position that our Limited
Guaranty expired in February 2010 by its term and was further extinguished
pursuant to the settlement stipulation entered into by Queens LLC and
GECC.
As of the
date of this Report, the Queens Center has ceased operations and has abandoned
the premises in Forest Hills, New York. We have not been notified of any default
under the premise lease which, subsequent to the sale in February 2008, had been
paid by the Queens Purchaser directly to the landlord.
We have
evaluated subsequent events through April 14, 2010, the date the consolidated
financial statements were issued.
31
Item
9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure
None.
Item
9A. Controls and Procedures
Disclosure
Controls and Procedures
Our
management is responsible for establishing and maintaining disclosure controls
and procedures that are designed to ensure that information required to be
disclosed in our reports under the Securities Exchange Act of 1934 (the
“Exchange Act”) is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange
Commission (the “SEC”), and that such information is accumulated and
communicated to our management, including the individual who is both our Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure based closely on the definition of
“disclosure controls and procedures” in Rule 15d-15(e) under the Exchange Act.
In designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and
procedures.
At the
end of the period covered by this Annual Report, we carried out an evaluation,
under the supervision and with the participation of our management, including
the individual who is both our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based upon the foregoing, the individual who is both
our Chief Executive Officer and Chief Financial Officer concluded that, as of
December 31, 2009, a material weakness (as defined in Public Company Accounting
Oversight Board Standard No. 2) existed in our internal control over financial
reporting regarding a lack of adequate segregation of duties. Accordingly, based
on that evaluation of our disclosure controls and procedures as of December 31,
2009, we have concluded that, as of that date, our controls and procedures were
not effective for the purposes described above. Due to the inherent limitations
of the effectiveness of any established disclosure controls and procedures, even
on those systems determined to be effective, the individual who is both our
Chief Executive Officer and Chief Financial Officer cannot provide absolute
assurance that the objectives of their respective disclosure controls and
procedures will be met.
Management's
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Our internal control over financial reporting is
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Our internal control
over financial reporting includes those policies and procedures that are
intended to:
|
1.
|
Pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our
assets;
|
|
2.
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being
made only in accordance with authorizations of our management and
directors; and
|
32
|
3.
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of our assets that could
have a material effect on our financial
statements.
|
Because
of inherent limitations, internal control over financial reporting may not
prevent or detect all misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.
A
material weakness in internal controls is a deficiency in internal control, or
combination of control deficiencies, that adversely affects our ability to
initiate, authorize, record, process, or report external financial data reliably
in accordance with accounting principles generally accepted in the United States
of America such that there is more than a remote likelihood that a material
misstatement of our annual or interim financial statements that is more than
inconsequential will not be prevented or detected. In the course of making our
assessment of the effectiveness of internal controls over financial reporting,
we identified a material weakness in our internal control over financial
reporting. This material weakness consisted of inadequate staffing and
supervision within the bookkeeping and accounting operations of our company. The
relatively small number of individuals who have bookkeeping and accounting
functions prevents us from segregating duties within our internal control
system. The inadequate segregation of duties is a weakness because it could lead
to the untimely identification and resolution of accounting and disclosure
matters or could lead to a failure to perform timely and effective
reviews.
As we are
not aware of any instance in which we failed to identify or resolve a disclosure
matter or failed to perform a timely and effective review, we determined that
the addition of personnel to our bookkeeping and accounting operations is not an
efficient use of our very limited resources at this time and not in the interest
of our shareholders. If at some time in the future the Company has the financial
resources to do so, it will remedy this material weakness.
The
foregoing report shall not be deemed to be filed for purposes of Section 18 of
the Exchange Act or otherwise subject to the liabilities of that
section.
This
report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.
Changes
in Internal Control Over Financial Reporting
There
were no changes in internal controls over financial reporting that occurred
during the year ended December 31, 2009, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
Item
9B. Other Information
None
33
PART
III
Item
10. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(A) Of The Exchange Act
Directors
and Executive Officers
The
following table presents information regarding our directors, executive officers
and other significant employees as of December 31, 2009
Name
|
Age
|
Position
|
||
Cathy
Bergman
|
50
|
Director,
Chief Executive Officer
|
||
Robert
L. Blessey
|
64
|
Secretary
|
Cathy Bergman has been
our Chief Executive Officer and sole member of our Board of Directors since
November 25, 2008. Prior to serving in such capacity, Ms. Bergman was an
employee and/or consultant to the Company since 2001 and for the past two
decades has served as a management consultant for a number of private and public
companies.
Robert L. Blessey has served
as our Secretary since May 2001 and as a member of our Board of Directors from
May 2001 through July 2, 2007. For more than the past five years, Mr. Blessey
has practiced law and is of counsel to the New York based law firm of Gusrae,
Kaplan, Bruno & Nusbaum, PLLC.
Board
of Directors
All
Directors serve for one year or such longer period until their successors are
elected and qualify. The Board of Directors appoints our officers and their
terms of office are, unless otherwise provided in employment contracts, at the
discretion of the Board of Directors. There are no family relationships between
or among any of our directors or executive officers.
Certain
Corporate Governance Matters
The Board
of Directors established an Audit Committee to assist in our governance. The
Audit Committee was established to function under a Charter empowering it to,
among other things, appoint the independent auditors, approve the auditor’s
fees, evaluate performance of the auditors, review financial statements and
management’s discussion and analysis thereof, review all Securities and Exchange
Commission reports and press releases of a financial nature, oversee internal
audit processes, oversee new audit reviews performed by the auditors, and
receive management and other reports from the auditors. In July 2007 the sole
member of the audit committee resigned from the Board of Directors and with his
resignation we were left with no audit committee. We have not reconstituted our
audit committee.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 as amended (the "Exchange Act")
requires our officers and directors, and persons who own more than ten percent
of our common stock to file reports of ownership and changes of ownership with
the Securities and Exchange Commission. These persons are also required to
furnish us with copies of all forms filed under Section 16(a). Based solely on
our review of the copies of those forms received by us, or written
representations from such persons we are not aware of any noncompliance with
regards to Section 16(a).
34
Item
11. Executive Compensation
We do not
have a compensation committee. Our Board of Directors and/or our Chief Executive
Officer approves and establishes the terms of employment for our executives
whether written or unwritten.
Ms.
Bergman has served as our Chief Executive Officer and the sole member of our
Board of Directors since November 25, 2008 with an annual salary of $1 and a
$250 monthly allowance for use of her office. In further compensation
thereof, in January 2009 the Company agreed to the sale to Ms. Bergman of
346,758 shares of the Company’s common stock held by it in its treasury for a
purchase price of $3,467 (the fair market value of such securities), and the
issuance of a warrant to Ms. Bergman to purchase up 600,000 shares of the
Company’s common stock at $0.01 per share, with a term of five years, with
anti-dilution and piggy back registration rights and certain incentive based
vesting terms.
Additionally,
as the Company has no employees or support staff, in connection with certain
administrative tasks and responsibilities performed by Taggart Resource Group,
Ltd., an entity owned by Ms. Bergman (“Taggart”), the Company agreed to pay
Taggart, a monthly fee of $15,000, beginning as of December 1, 2008. To the
extent that funds are available, $5,000 of such fee is to be paid each month,
and $10,000 is to be accrued until such time, if ever, that the Company has such
available funds, and, regardless, the Company agreed that such fee will become
due and payable in full if there is a change in control of the Company or if Ms.
Bergman is removed as Chief Executive Officer or is no longer the Company’s sole
Director. The Company also agreed to pay Taggart a lump sum severance payment in
an amount equal to $15,000 times the number of months of service by it,
commencing in November 2008 (with a minimum of $90,000 and a maximum of
$180,000) if there is a change in control of the Company or if Ms. Bergman is
removed as the Chief Executive Officer or is no longer the sole Director of the
Company. Further, Taggart will also be entitled to an annual bonus as determined
by a compensation committee of the Board of Directors or, if none, by an
independent outside qualified third party. We were not able to pay Taggart the
$5,000 monthly minimum due each month and as of December 31, 2009 we owe Taggart
$144,000 in connection with such agreement.
The table
below sets forth certain compensation for officers and directors serving as of
December 31, 2009. See “Employment Agreements” for a description of compensation
arrangements entered into by us with certain of our executive officers and
directors.
Summary
Compensation Table
Annual Compensation
|
Long Term Compensation
|
|||||||||||||||||
AWARDS
|
||||||||||||||||||
Name & Principal Position
|
Year
|
Salary
|
Other Annual
Compensation
|
Securities Underlying
Options/ Warrants
|
All Other
Compensation
|
|||||||||||||
|
||||||||||||||||||
Cathy
Bergman
|
2009
|
- | $ | 180,000 | (a) | 600,000 | $ | 3,460 | (b) | |||||||||
Chief
Executive Officer
|
2008
|
$ | 13,500 | (c) | $ | 97,000 | (a) | - | ||||||||||
Director
|
||||||||||||||||||
Robert
L. Blessey
|
2009
|
- | - | 1,000,000 | $ | 67,000 | (d) | |||||||||||
Secretary
|
2008
|
- | - | - | $ | 164,000 | (d) |
35
(a)
|
Represents
fees earned by Taggart Resource Group, Ltd., a consulting firm in which
Ms. Bergman is a principal, in connection with consulting services
rendered to the Company and its subsidiaries. At December 31, 2009
$144,000 of such amount is accrued and remains unpaid as of the date of
this Report.
|
(b)
|
Represents
stock in lieu of cash compensation
|
(c)
|
Salary
paid to Ms. Bergman prior to her service as the Company’s Chief Executive
Officer.
|
(d)
|
Mr.
Blessey serves as our Secretary and also serves as our general counsel.
Mr. Blessey does not receive compensation for service as the Company’s
Secretary. Fees for legal services rendered are included as other
compensation. At December 31, 2009, $89,000 of such fees are accrued and
remain unpaid as of the date of this
Report.
|
Stock
Option Plan
Our stock
option plan provides for the grant of options to purchase shares of our common
stock to eligible employees, officers and directors, and other persons who we
believe may have made a valuable contribution to us. Our stock option plan
covers a maximum of 1,600,000 shares of common stock and provides for the
granting of both incentive stock options (as defined in Section 422 of the
Internal Revenue Code of 1986) and nonqualified stock options (options which do
not meet the requirements of Section 422). Under our stock option plan, the
exercise price of shares of common stock subject to options granted thereunder
may not be less than the fair market value of the common stock on the date of
the grant of the option.
Currently,
our Board of Directors administers and interprets our stock option plan and is
authorized to grant options to any of our eligible employees, including our
officers. The Board of Directors designates the optionees, the number of shares
subject to the options, and the terms and conditions of each option. Each option
granted under our stock option plan must be exercised, if at all, during a
period established in the grant which may not exceed 10 years from the later of
the date of the grant or the date the option first becomes exercisable. An
optionee may not transfer or assign any option granted, and may not exercise any
options after a specified period subsequent to the termination of the optionee’s
employment with us.
DIRECTOR
COMPENSATION
Our sole
director in year 2009 did not receive any compensation for serving in such
capacity. In 2008, $3,333
was paid to Steven Katz, prior to his resignation from the Board in April
2008.
Indemnification
of Our Officers and Directors
Our
Articles of Incorporation provide for the indemnification of all persons who
serve as our directors, officers, employees or agents to the fullest extent
permitted under New York law. In addition, we entered into an indemnification
agreement with our Chief Executive Officer pursuant to which we granted her
certain additional indemnification rights. We maintained officer and director
liability insurance coverage through December 31, 2009, but did not have the
funds to renew such coverage, which expired as of such date. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions or agreement, or otherwise, we have been advised that, in
the opinion of the Securities and Exchange Commission, any such indemnification
is against public policy as expressed in the securities laws and is, therefore,
unenforceable.
36
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
The
following table sets forth certain information regarding the ownership of our
common stock as of December 31, 2009 by our officers and directors and all those
known by us to be beneficial owners of more than five percent of our common
stock.
Name of Beneficial Owner
|
Ownership
|
Percentage of Class (a)
|
||||||
Cathy
Bergman
|
1,033,381 | (b) | 10.49 | % | ||||
1221
Avenue of the Americas, Suite 4200
|
||||||||
New
York, NY 10020
|
||||||||
Robert
L. Blessey
|
1,321,811 | (c) | 13.41 | % | ||||
1221
Avenue of the Americas, Suite 4200
|
||||||||
New
York, NY 10020
|
||||||||
Marton
Grossman
|
736,473 | 7.46 | % | |||||
1461
53rd
Street
|
||||||||
Brooklyn,
New York 11219
|
||||||||
Knight
Equity Markets, L.P.
|
409,836 | 4.16 | % (d) | |||||
545
Washington Blvd, 3rd
Floor
|
||||||||
Jersey
City, NJ 07310
|
||||||||
All
Executive Officers and Directors as a group (2 persons)
|
2,355,192 | (e) |
(a) Based
on a total of 9,850,761 shares of common stock, which includes: (i) 8,008,261
shares of common stock issued and outstanding as of December 31, 2009; (ii)
options to purchase 205,000 shares of our common stock; and, (iii) warrants to
purchase 1,637,500 shares of our common stock.
(b)
Includes 85,000 shares underlying two options that are fully vested and
exercisable and 600,000 shares underlying
a warrant of which 250,000 shares have vested and are exercisable as of December
31, 2009.
(c)
Includes 1,012,500 shares underlying two warrants that are fully vested and
exercisable and 275,977 shares owned by
Bocara Corp. in which Mr. Blessey owns a 25% interest and his spouse owns a 75%
interest.
(d) Based
on 8,008,261 shares of common stock outstanding at December 31, 2009, undiluted
by options and
warrants
issued and outstanding, percentage ownership is 5.11%
(e)
Includes Ms. Bergman and Mr. Blessey
The
forgoing table is based upon information supplied by the officers, directors and
principal stockholders, our transfer agent, and Forms 5 and Schedules 13D and
13G filed with the SEC. Unless otherwise indicated in the footnotes to this
table and subject to community property laws where applicable, we believe that
each of the stockholders named in this table has sole voting and investment
power with respect to the shares indicated as beneficially owned.
We are
not aware of any arrangement that might result in a change of control in the
future.
37
Item
13. Certain Relationships and Related Transactions
The
following table summarizes related party transactions.
Officers
and Directors
Our Chief
Executive Officer
We incur
fees for services rendered by Taggart Resource Group, Ltd., a consulting firm
owned by Cathy Bergman,
our Chief Executive Officer (See Note 10 – Long Term Employment Agreements). We
owe Taggart $144,000 in connection with such agreement and approximately $7,000
for funds Ms. Bergman loaned to the Company in 2009 to pay certain operating
expenses.
Our
Secretary
We incur
fees for legal services provided by Robert L. Blessey who serves as our
Secretary and general
counsel and who served on our Board of Directors from May 1, 2001 until July 2,
2007.
We
incurred legal fees due to Mr. Blessey of $67,000 in year 2009 and $164,000 in
year 2008. Additionally,
we owe Mr. Blessey $272,000 for prior legal services and in July 2007 issued to
him a non-Interest
bearing promissory note in such amount that was due June 30, 2008 and on which
we defaulted in 2008.
In consideration of Mr. Blessey’s agreement to forebear from enforcing his
rights thereunder, the
Company agreed to begin to accrue interest on such note at a rate of 10% per
annum, beginning as of
January 1, 2009, and as and to the extent that funds are available, pay such
interest as incurred. As of December
31, 2009 the promissory note remains in default and we have been unable to make
any payment
toward the interest due thereon.
Marketing
Fees (Discontinued Operations)
We
previously paid fees to certain marketing entities and individuals that are
related to us via employee or investor relationships, all of which were
discontinued on or before March 31, 2008. In year 2009 we paid no marketing fees
to any related individual or entity and in 2008 we paid $35,000 in related party
marketing fees.
Management
Fees (Discontinued Operations)
Prior to
our sale of our interest in Premier PET of Long Island, LLC and PET Management
of Queens, LLC in February 2008, through such subsidiaries, we earned fees from
the management of Rockville PET Imaging, PC and Forest Hills PET Imaging, PC,
both of which are owned by Lucille Taverna, M.D., a radiologist who owned a
percentage of our subsidiaries that managed such entities. In 2008, we earned
approximately $561,000 from such entities and have had no revenue from such
entities since the sale of our interest in such subsidiaries.
Our
subsidiary Hialeah PET Management LLC formerly earned fees from the management
of Premier PET
Imaging of Hialeah, LLC, and our subsidiaries, Premier PET Imaging of
Jacksonville, LLC and Premier PET
Imaging of Tamarac, LLC earned fees from the management of these PET Imaging
centers pursuant to an
agreement with Eiber Radiology. Albert Eiber, M.D., a radiologist who is the
principal owner of both
Eiber Radiology and PET Imaging of Hialeah, Inc., owned 17% of Hialeah PET
Management. All of such
operations were discontinued in 2008. In 2009 we received $63,000 in management
fees that were
generated prior to the discontinuation of operations, and in 2008 earned
approximately $358,000 from such
operations.
38
Our
subsidiary Suffolk PET Management, LLC earned fees from the management of
Advanced PET Imaging.
Anna Associates LLC owns 49% of Suffolk PET Management, LLC. Both Advanced PET
Imaging and Anna
Associates LLC are owned or controlled by Azad K. Anand, M.D., a radiologist.
Operations at such
facility were discontinued in March 2008. In 2008 we had management revenues of
approximately $126,000
from such operations. In September 2008 we commenced a legal action against Dr.
Anand, and
related entities, in connection with management fees due to us, among other
claims. As the amount
due is unknown, and an accurate projection is not possible due to the complexity
of the litigation,
we cannot be certain of the balance due to us as of December 31,
2009.
Item
14. Principal Accountant Fees and Services
MSPC
Certified Public Accountants and Advisors (“MSPC”), serves as our principal
accountant. The following table presents fees billed to us by MSPC for services
performed in 2009 and 2008:
For
the year ended December 31
|
2009
|
2008
|
||||||
Audit
and review fees
|
$ | 26,000 | $ | 104,000 | ||||
Tax
fees
|
12,000 | 10,000 | ||||||
Other
fees
|
- | - | ||||||
$ | 38,000 | $ | 114,000 |
The Board
of Directors approves the engagement of an accountant to render all audit and
non-audit services prior to the engagement of the accountant based upon a
proposal by the accountant of estimated fees and scope of the engagement. Our
Board of Director’s has received the written disclosure and the letter from MSPC
required by Independence Standards Board Standard No. 1, as currently in effect,
and has discussed with MSPC their independence.
PART
IV
Item
15. Exhibits
No.
|
Description
|
|
3.1
|
Certificate
of Incorporation. (Filed with the U.S. Securities and Exchange Commission
as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal
year ended July 31, 1994 and incorporated herein by reference
thereto.)
|
|
3.2
|
By-laws.
(Filed with the U.S. Securities and Exchange Commission as an exhibit to
the Company’s Annual Report on Form 10-K for the fiscal year ended July
31, 1994 and incorporated herein by reference thereto.)
|
|
10.15
|
Promissory
Note dated July 2, 2007 issued by The Sagemark Companies Ltd. to Robert L.
Blessey, Esq. in connection with legal fees owed to him. (Filed with the
Securities and Exchange Commission on July 10, 2007 as an exhibit to Form
8-K and incorporated herein by reference
thereto.)
|
39
10.37
|
Purchase
Agreement dated as of February 11, 2008 by and between The Sagemark
Companies, Ltd., Premier P.E.T. Imaging International, Inc., Sagemark
Rockville, LLC and Sagemark Forest, LLC. (Filed with the Securities and
Exchange Commission on February 27, 2008 as an exhibit to Form 8-K and
incorporated herein by reference thereto.)
|
|
10.38
|
Purchase
Agreement dated as of April 14, 2008 by and between Premier PET Imaging of
Tamarac, LLC and Ascent Diagnostic Imaging of Tamarac, LLC (filed with the
Securities and Exchange Commission on May 1, 2008 as an exhibit to Form
8-K and incorporated herein by reference thereto).
|
|
10.39
|
Purchase
Agreement dated as of April 14, 2008 by and between Premier PET Imaging of
Tamarac, LLC and Ascent Diagnostic Imaging of Tamarac, LLC (filed with the
Securities and Exchange Commission on May 1, 2008 as an exhibit to Form
8-K and incorporated herein by reference thereto).
|
|
10.40
|
Assignment
and Assumption Agreement dated April 24, 2008 by and between The Sagemark
Companies, Ltd. and Ascent Diagnostic Imaging of Jacksonville, LLC (filed
with the Securities and Exchange Commission on May 1, 2008 as an exhibit
to Form 8-K and incorporated herein by reference
thereto).
|
|
10.41
|
Assignment
and Assumption Agreement dated April 24, 2008 by and between The Sagemark
Companies Ltd. and Ascent Diagnostic Imaging of Tamarac, LLC (filed with
the Securities and Exchange Commission on May 1, 2008 as an exhibit to
Form 8-K and incorporated herein by reference thereto).
|
|
10.42
|
Termination
Agreement dated April 15, 2008 by and between Michael Fagien, MD and The
Sagemark Companies Ltd. (filed with the Securities and Exchange Commission
on May 1, 2008 as an exhibit to Form 8-K and incorporated herein by
reference thereto).
|
|
10.43
|
Waiver
dated April 17, 2008 by and between The Sagemark Companies Ltd. and
Michael Fagien, MD (filed with the Securities and Exchange Commission on
May 1, 2008 as an exhibit to Form 8-K and incorporated herein by reference
thereto).
|
|
10.45
|
Agreement
For Cancellation Of Leasehold Interest dated March 31, 2008 by and between
Tamarac Center, LLC and the Sagemark Companies Ltd. (filed with the
Securities and Exchange Commission on May 1, 2008 as an exhibit to Form
8-K and incorporated herein by reference thereto).
|
|
10.46
|
Amended
and Restated by-Laws of The Sagemark Companies Ltd as amended through May
8, 2008 (filed with the Securities and Exchange Commission on July 17,
2008 as an exhibit to Form 8-K and incorporated herein by reference
thereto).
|
|
10.47
|
Lease
Termination Agreement by and between Memphis, Ltd. and The Sagemark
Companies Ltd. dated July 25, 2008 (filed with the Securities and Exchange
Commission on July 31, 2008 as an exhibit to Form 8-K and incorporated
herein by reference thereto).
|
|
21
|
List
of Subsidiaries
|
|
23
|
Consent
of Independent Accountants
|
|
31.1
|
Principal
Executive Officer Registration
|
|
31.2
|
Principal
Financial and Accounting Officer Certification.
|
|
32
|
Certification
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of
2002.
|
40
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
The
Sagemark Companies Ltd.
|
|
Dated:
April 15, 2010
|
||
By:
|
/s/
Cathy Bergman
|
|
Cathy
Bergman
|
||
Chief
Executive Officer
|
In accordance with the Exchange
Act, this Report has been signed below by the following persons on behalf of the
registrant on April 15, 2010 in the capacities indicated below.
Signature
|
Title
|
|
/s/ Cathy Bergman
|
Chief
Executive Officer, interim Chief Financial Officer and
Director
|
|
Cathy
Bergman
|
(Principal
Executive Officer)
|
41