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EX-31.1 - CERTIFICATION - MEDICAL CONNECTIONS HOLDINGS, INC.mcth_ex311.htm
EX-31.2 - CERTIFICATION - MEDICAL CONNECTIONS HOLDINGS, INC.mcth_ex312.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K/A
(Amendment No. 1)

ANNUAL REPORT
PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
þ
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2010
OR
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                      to                     
 
Commission file number: 333-72376
 
Medical Connections Holdings, Inc.
(Exact name of registrant as specified in its charter)
 
Florida
(State or other jurisdiction
of incorporation or organization)
 
65-0920373
(I.R.S. Employer
Identification No.)
     
4800 T-Rex Ave., Suite 310, Boca Raton, FL
(Address of principal executive offices)
 
33431
(Zip Code)
 
Registrant’s telephone number, including area code: (561) 353-1110
 
Securities registered pursuant to Section 12(b) of the Act:
     
Title of Each Class
 
Name of each exchange on which registered
Common Stock, $0.001 par value
 
NASDAQ Over the Counter Bulletin Board
 
Securities registered pursuant to Section 12(g) of the Act: NONE
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No þ
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o Not Applicable
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)
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 aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 30, 2010 was $15,777,498.
 
As of March 7, 2011, there were 113,617,674 shares of Common Stock, $.001 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:
None



 
 
 

EXPLANATORY NOTE
 
Medical Connections Holdings, Inc. (the "Company," "we" or "us") originally filed its Annual Report on Form 10-K for the year ended December 31, 2010 (the “Original 10-K”) with the Securities and Exchange Commission (“SEC”) on March 31, 2011 (the “Original Filing Date”). The purpose of this Amendment No. 1 on Form 10-K/A (“Form 10-K/A”) is to revise Item 3 – Legal Proceedings, Item 10- Directors, Executive Officers and Corporate Governance and Item 15 – Exhibits, Financial Statement Schedules.  As required by Rule 12b-15 of the Securities Exchange Act of 1934, as amended, new certifications by our Chief Executive Officer and Chief Financial Officer are filed as exhibits to this Amendment.
 
 This Form 10-K/A amends and restates Item 3, Item 10 and Item 15 and no other information in our Original 10-K is amended hereby.  This Form 10-K/A continues to speak as of the Original Filing Date (unless explicitly identified as of another date).  Other events or circumstances occurring after the Original Filing Date or other disclosures necessary to reflect subsequent events have not been updated subsequent to the date of the Original 10-K. Accordingly, this Form 10-K/A should be read in conjunction with our periodic filings, including any amendments to those filings, as well as any Current Reports on Form 8-K filed with the SEC, subsequent to the Original Filing Date of our Original 10-K.
 
Item 3.  Legal Proceedings.
 
In December 2010, the Company and Anthony J. Nicolosi, Jr., the Company's President, were served with a Cease and Desist Order with a Notice of Right to a Hearing from the Alabama Securities Commission (Adm. Order No. CD-2010-0062).  The Company is in the process of trying to resolve the matters described in the Order.  For more information about the Order, please see "Item 10. Directors, Executive Officers and Corporate Governance – Involvement in Certain Legal Proceedings."
 
As of December 31, 2010, the Company was not a party to any material legal proceedings, except as noted above.  The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its business, financial condition or results of operations. However, the results of these matters cannot be predicted with certainty and we cannot assure you that the ultimate resolution of any legal or administrative proceedings or disputes will not have a material adverse effect on our business, financial condition and results of operations.
 
Item 10.  Directors, Executive Officers and Corporate Governance
 
The name, age and position of the Company's directors and executive officers are as follows. Our directors serve for a term of one (1) year, or until their successors are elected and qualified.
 
Name
 
Age
 
Position(s)
Jeffrey S. Rosenfeld 
 
50
 
CEO/Director
Anthony J. Nicolosi, Jr. 
 
40
 
President/Director 
Albert G. Biehl
 
65
 
Director
Robert B. Taylor Jr.
 
70
 
Director
James Wallace
 
62
 
Director
Brian R. Neill 
 
57
 
Chief Financial Officer
 
Jeffrey S. Rosenfeld, has served as a Director since July 2008 and Chief Executive Officer since July 2010.  Mr. Rosenfeld has more than 15 years of business development and sales experience. In January 2007, he joined CBIZ, an international accounting and consulting firm as its East Coast Market Leader and served as its nationwide vice president of sales and marketing. Prior to joining CBIZ, Mr. Rosenfeld held several different executive positions where he was involved with client acquisition, business development and strategic planning. Mr. Rosenfeld earned a B.S. in finance from Boston University.
 
 
 
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Anthony J.  Nicolosi, Jr. has served as the President and Director of the Company since December 2005. Mr. Nicolosi has more than 12 years experience in investment banking and brokerage service companies.   Mr. Nicolosi co-founded Medical Connections, our principal operating subsidiary in November 2002. He previously served as president and CEO of Capital Market Partners, Inc., a brokerage firm, in Pompano Beach, Florida. Mr. Nicolosi also served as a Financial Executive with Citicorp Investment Services of Dania Beach, Florida.  Mr. Nicolosi attended Southern Connecticut University for two years and Florida Atlantic University for two years.
 
Brian R. Neill has served as our Chief Financial Officer since April 2008.  He has over 25 years of experience providing leadership in finance and operations to various companies ranging in size from privately held middle market companies to a Fortune 1000 publicly held corporation in the fields of biotech, engineering, data technology, retail and banking. He has worked as the executive vice president and chief financial officer for Lithia Motors, Inc. and Powersports, Inc. Mr. Neill holds a Bachelor of Science from Northwest Christian College and has been active over the years with Financial Executives Institute and has served on the executive committees of local United Way agencies.
 
Dr. Albert G. Biehl has served as a Director since July 2008.  He currently serves as the Vice President of Medical Affairs at Bethesda Memorial Hospital located in Boynton Beach, Florida. Prior thereto, from 1982 through 1999 he was a partner with Boca Surgical Associates located in Boca Raton, Florida.
 
Robert B. Taylor, Jr. has served as a Director since July 2008.  From 1979 through 2006, Mr. Taylor held various positions at the Bethesda Memorial Hospital including that of Senior Vice President of Finance and Treasurer. Currently, Mr. Taylor serves as a management consultant and analyst for the hospital.
 
James Wallace has served as a Director since August 2010.  He is the founder and President of Wallace Employee Benefits, which specialized in employee benefits, group health insurance, disability coverage, life insurance, salary continuation plans and executive pension plans for executives from 1974-2007 and Wallace Pension and Actuaries, which designed, implemented and administered pension plans for high income professional and corporations from 1975-2007.  He has also been involved with several venture capital companies, including Advanced Spinal Care of Georgia, which provides rehabilitation specialists for patients with back, spine or joint problems and MUS of the Georgia Surgery Center, a noninvasive surgical center
 
Family Relationships
 
There are no family relationships between any of our directors or executive officers.
 
Involvement in Certain Legal Proceedings and Name Change
 
In December 2010, the Company and Mr. Nicolosi were served with a Cease and Desist Order (the "Order"), with a Notice of Right To Hearing, from the Alabama Securities Commission styled "In the Matter of  Medical Connections Holdings, Inc., Anthony Nicolosi," (Adm. Order No. CD-2010-0062).  The Order requires the cessation of offering or selling securities into, within or from the State of Alabama during the pendency of the Order.  The Cease and Desist Order alleges that Mr. Nicolosi omitted material facts in the sale of a security to single Alabama investor and violated the agent registration requirements in Alabama.  The Company made a rescission offer to the Alabama investor which included information that the Alabama Securities Commission alleged should have been disclosed to the investor relating to the name change of Mr. Nicolosi and his regulatory history concerning a disciplinary proceeding instituted by FINRA and settled by means of an Acceptance Waiver and Consent.  The Alabama investor rejected the rescission offer.  The Company had an informal meeting with the Alabama Securities Commission in March 2011 in the process of attempting to resolve the matter. There has been no adjudication as to the truth of the allegations upon which the Order was based.
 
 
 
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In May 2005, the Pennsylvania Securities Commission issued a cease and desist order against Anthony Nicolosi and Medical Connections for violating certain provisions of the Pennsylvania Securities Act in connection with the sale of its common stock. On September 27, 2005, Anthony Nicolosi and Medical Connections (collectively, the Respondents") entered into a settlement agreement with the Pennsylvania Securities Commission, Docket No. 2005-05-16, without admitting or denying the facts, in which the cease and desist order was prospectively rescinded as to the Respondents, the Respondents were subject to a 3 month bar from contacting investors in Pennsylvania and were assessed $10,000 in legal and administrative costs.
 
In June 2001, Mr. Anthony J. Nicolosi, formerly known as Anthony J. Peluso, voluntarily entered into a Letter of Acceptance, Waiver and Consent with the Financial Industry Regulatory Authority, formerly known as the National Association of Securities Dealers ("FINRA"), No. C07010043-AWC, in which he agreed to be barred from association with any FINRA member in any capacity. Without admitting or denying the allegations or findings and solely for the purpose of the proceeding with FINRA, Mr. Nicolosi consented to the entry of findings that he violated Section 2110 of the FINRA Rules by using improper sales tactics in connection with the sale of securities in 1999.  The name on
 
With respect to his name change, the name on Mr. Nicolosi's original birth certificate was Anthony Joseph Nicolosi. When he was three, his parents divorced and his mother subsequently remarried and changed his name to Anthony Joseph Peluso, taking the last name of her new husband, in 1983 in the New York courts. When his twin-sons were born in 2003, Mr. Nicolosi legally changed his name back to Anthony Joseph Nicolosi, Jr., in the Florida state courts.
 
Code of Ethics
 
The Company has adopted a Code of Ethics that meets the requirements of Section 406 of the Sarbanes-Oxley Act of 2002.   All officers, directors and employees are bound by the Code of Ethics.  A copy of our Code of Ethics is posted on our website at www.mcthcorporate.com.
 
Independence, Board Committees and Audit Committee
 
Our Board of Directors presently consists of five directors whose terms expire at this Annual Meeting. The Board of Directors has determined that all of the directors, with the exception of Jeffrey Rosenfeld and Anthony Nicolosi are "independent directors" as that term is defined in the NASDAQ listing standards. Mr. Rosenfeld and Mr. Nicolosi are not considered independent directors because they are employed as our Chief Executive Officer and President, respectively.
 
We do not have any formal requirements for Board membership. However, we believe that our Board of Directors as whole should be diverse and consist of individuals with various and relevant career experience, relevant technical skills, industry knowledge and experience, financial expertise and local or community ties.
 
We currently do not have separately designed audit, nominating or compensation committees.  Based on our size, early development stage and limited financial and human resources, we do not believe that creating committees separate and distinct from our full board of directors would be cost-effective at this time.   At this stage in our development, these functions can be adequately performed by our Board of Directors.  Further, we are currently quoted on the OTC Bulletin Board, which does not have any listing requirements mandating the establishment of any particular committees.  Currently, our entire Board acts as the audit committee.  Our board has determined that Mr. Taylor and Mr. Wallace are ‘‘audit committee financial experts’’ as defined under the SEC rules and regulations.
 
 
 
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Skills and Qualifications of the Directors
 
The Board believes that the qualifications of the directors as set forth in their biographies which are listed above and briefly summarized in this section, gives them the qualifications and skills to serve as directors of our Company. Jeffrey Rosenfeld and Anthony Nicolosi have each served as executive officers of companies in the healthcare staffing industry. Mr. Wallace has experience in the healthcare industry through his venture capital investments and Dr. Biehl is practicing physician with direct experience in the healthcare field. Mr. Taylor has handled high-level financial matters for hospitals and is a financial expert.
 
The Board also believes that each of the directors or nominees to serve as a director has other key attributes that are important to an effective Board: integrity and demonstrated high ethical standards; sound judgment; analytical skills; the ability to engage management and each other in a constructive and collaborative fashion and the commitment to devote significant time and energy to service on the Board and its Committees.
 
Board Leadership Structure
 
The Chairman of the Board presides at all meetings of the Board. The Chairman is elected to serve by the remaining directors. Currently, the offices of Chairman of the Board and Chief Executive Officer are separated. Jeffrey S. Rosenfeld, the Chief Executive Officer, and Anthony J. Nicolosi, Jr., the Chairman and President, currently serve as the only members of management on the Board. Based on the current size, organizational structure and nature of operations of the Company, the Board believes that maintaining the separation of the offices of the Chairman of the Board and Chief Executive Officer is in the best interests of the Company.
 
Risk Oversight
 
The Board is actively involved in oversight of risks that could affect the Company. The Board satisfies this responsibility through reports from officers and employees responsible for oversight of particular risks within the Company.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
We have no equity securities registered under Section 12(g) of the Securities Exchange Act of 1934, and accordingly, our officers, directors and principal shareholders are not required to file reports under Section 16(a) of the Exchange Act.
 
Item 15. Exhibits and Financial Statement Schedules
 
(a)(1)  The financial statements are included in the Original Filing.
 
(a)(2)  The financial statement schedules are included in the Original Filing.
 
(a)(3)  Exhibits

2.1  Share for Share Exchange Agreement between the Company and Medical Connections, Inc. (incorporated by reference to Schedule A of the Company’s Definitive Proxy Statement filed with the SEC on October 7, 2005).

3.1.1  Articles of Incorporation filed with the Florida Secretary of State on May 11, 1999 (incorporated by reference to Exhibit 3.1 of the Company's registration statement on Form SB-2 filed with the SEC on October 29, 2001).

3.1.2  Amendment to Articles of Incorporation filed with the Florida Secretary of State on June 25, 1999 (incorporated by reference to Exhibit 3.2 of the Company's registration statement on Form SB-2 filed with the SEC on October 29, 2001).
 
3.1.3  Articles of Amendment to Articles of Incorporation filed with the Florida Secretary of State on August 10, 1999 (incorporated by reference to Exhibit 3.3 of the Company's registration statement on Form SB-2 filed with the SEC on October 29, 2001).

3.1.4  Articles of Share Exchange of Webb Mortgage Depot, Inc. with Webb Mortgage Services Corporation and Webb Mortgage Corp. filed with the Florida Secretary of State on March 13, 2000 (incorporated by reference to Exhibit 3.4 of the Company's registration statement on Form SB-2 filed with the SEC on October 29, 2001).
 
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3.1.5  Amendment to the Articles of Incorporation filed with the Florida Secretary of State (incorporated by reference to Exhibit 3.1 of the Company's Form 8-K filed with the SEC on December 29, 2005).

3.1.6  Amendment to the Articles of Incorporation filed with the Florida Secretary of State on March 31, 2008 (incorporated by reference to Exhibit 3.7 of the Company's Form 10-KSB filed with the SEC on April 15, 2008).

3.1.7  Designation of Series C Preferred Stock filed with the Florida Secretary of State on November 12, 2009 (incorporated by reference to Exhibit 3.1 in the Company's Form 8-K filed with the SEC on November 13, 2009).
 
3.1.8 Amendment to the Articles of Incorporation of Medical Connections Holdings, Inc. filed with the Florida Secretary of State on June 30, 2001 (Incorporated by reference to Exhibit 2.1 in the Company's Quarterly Report on Form 10-Q filed with the SEC on August 11, 2010)
 
3.2  Bylaws (incorporated by reference to Exhibit 3.5 of the Company's registration statement on Form SB-2 filed with the SEC on October 29, 2001).

10.1  Amended and Restated Employment Agreement dated October 5, 2010 between the Company and Jeffrey S. Rosenfeld (incorporated by reference to Exhibit 10.1 in the Company's Form 8-K filed with the SEC on October 5, 2010).+

10.2  Amended and Restated Employment Agreement dated October 5, 2010 between the Company and Anthony Nicolosi (incorporated by reference to Exhibit 10.2 in the Company's Form 8-K filed with the SEC on October 5, 2010).+

10.3  Amended and Restated Employment Agreement dated October 5, 2010 between the Company and Brian Neill (incorporated by reference to Exhibit 10.3 in the Company's Form 8-K filed with the SEC on October 5, 2010).+

10.4  2010 Stock Incentive Plan (incorporated by reference to Annex A attached to the Company's definitive proxy statement filed with the Commission on June 2, 2010).+
 
10.5  Office Lease dated June 22, 2009 between BRE/BOCA Corporate Center, LLC. and Medical Connections, Inc. (incorporated by reference to Exhibit 10.5 in the Company's Form 10-Q filed with the SEC on August 13, 2008)
 
10.6  Separation and Release Agreement dated July 16, 2010 between Medical Connection Holdings, Inc. and Joseph Azzata (incorporated by reference from Exhibit 10.2 in the Company's Form 8-K filed with the SEC on July 21, 2010).
 
14.1  Code of Ethics (incorporated by reference to Exhibit 3.8 of the Company's Annual Report Form 10-KSB filed with the SEC on April 15, 2008).
 
23.1 Consent of DeMeo, Young McGrath, Independent Certified Public Accountants (incorporated by reference from Exhibit 23.1 in the Company's Annual Report on Form 10-K filed with the SEC on March 31, 2011).
 
31.1 Certificate of the Chief Executive Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002*

31.2 Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32 .1 Certificate of the Chief Executive Officer  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 32.1 in the Company' Annual Report on Form 10-K filed with the SEC on March 31, 2011).

32 .2 Certificate of the Chief Financial Officer  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 32.2 in the Company' Annual Report on Form 10-K filed with the SEC on March 31, 2011).

*Filed Herewith
+Management Compensation Plan or Agreement
 

 
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SIGNATURES
 

 
In accordance with Section 13 or 15(d) f the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
MEDICAL CONNECTIONS HOLDINGS, INC.
 
       
 
By:
/s/ Jeffrey S. Rosenfeld
 
 
 
Jeffrey S. Rosenfeld
 
 
 
Chief Executive Officer and Director
 
Date:  April 20, 2011

 
 
 
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