UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 2005.
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File No. -- 0-16335
Colorado 84-0922701
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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As of August 8, 2005, the Registrant had outstanding 920,773 shares of common stock, par value $.10
RIDGEFIELD ACQUISITION CORP.
(A Development Stage Company)
FORM 10-QSB
Page
PART I - FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Consolidated Balance Sheets as of June 30, 2005 (unaudited)
and December 31, 2004 (audited) 3
Consolidated Statements of Operations and Comprehensive Loss
for the Three Months Ended June 30, 2005
and 2004 (unaudited) 4
Consolidated Statements of Operations and Comprehensive Loss for the
Six Months Ended June 30, 2005 and 2004, Cumulative
Amounts from January 1, 2000 to June 30, 2005 (unaudited) 5
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2005 and 2004, Cumulative Amounts from
January 1, 2000 through June 30, 2005 (unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2. Management Discussion and Analysis and Plan of Operations 9
Item 3. Controls and Procedures 13
PART II - OTHER INFORMATION 14
Item 1. Legal Proceedings 14
Item 5. Other Information 14
Item 6. Exhibits & Reports on Form 8-K 14
SIGNATURES 15
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2005 2004
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash $ 128,513 $ 246,970
Prepaid expenses 1,000 --
----------- -----------
Total Current Assets 129,513 246,970
Investments 139,275 56,850
----------- ----------
Total Assets $ 268,788 $ 303,820
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 3,450 $ 111,187
----------- -----------
Total Current Liabilities 3,450 111,187
----------- -----------
STOCKHOLDERS' EQUITY
Preferred Stock, $.10 par value; authorized - 1,000,000 shares
Issued - none -- --
Common Stock, $.10 par value; authorized - 5,000,000 shares
Issued and outstanding - 920,773 and 813,028 shares
as of June 30, 2005 and December 31, 2004,
respectively 92,077 81,303
Capital in excess of par value 1,697,867 1,595,509
Accumulated (deficit) (947,820) (947,820)
(Deficit) accumulated during the development stage (561,716) (540,356)
Accumulated other comprehensive (loss) gain (15,070) 3,997
----------- -----------
265,338 192,633
----------- -----------
$ 268,788 $ 303,820
=========== ===========
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See accompanying notes to consolidated financial statements.
RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(UNAUDITED)
Three Months Ended
June 30,
2005 2004
REVENUES
Interest Income $ 849 $ 158
Realized gain on Investment -- 1,729
--------- ---------
Total Income 849 1,887
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OPERATING EXPENSES
General and administrative 5,289 18,953
--------- ---------
Net Loss (4,440) (17,066)
--------- ---------
OTHER COMPREHENSIVE LOSS
Unrealized losses on investments (19,267) (3,309)
Reclassification Adjustments -- 10,255
--------- ---------
Other Comprehensive (Loss)Income (19,267) 6,946
--------- ---------
Net Comprehensive Loss $ (23,707) $ (10,120)
========= =========
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NET LOSS PER COMMON SHARE
Basic $ (0.005) $ (0.02)
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic 920,773 813,028
========= =========
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See accompanying notes to consolidated financial statements
RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(UNAUDITED)
Cumulative
Six Months Ended Amounts from
June 30, January 1, 2000 to
June 30,
2005 2004 2005
REVENUES
Interest income $ 1,741 $ 330 $ 27,608
Realized gain on investments -- 1,729 27,871
--------- --------- ---------
Total Income 1,741 2,059 55,479
OPERATING EXPENSES
General and administrative 23,101 39,544 467,846
Employee stock options -- -- 130,625
Patent write-off -- -- 18,724
--------- --------- ---------
Total Operating Expenses 23,101 39,544 617,195
--------- --------- ---------
Net Loss (21,360) (37,485) (561,716)
--------- --------- ---------
OTHER COMPREHENSIVE LOSS
Unrealized losses on investments (19,067) (3,309) (12,161)
Reclassification Adjustments -- 2,095 (2,909)
--------- --------- ---------
Other Comprehensive Loss (19,067) (1,214) (15,070)
--------- --------- ---------
Net Comprehensive Loss $ (40,427) $ (38,699) $(576,786)
========= ========= =========
NET LOSS PER COMMON SHARE
Basic $ (0.02) $ (0.05) $ (0.71)
========= ========= =========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
Basic 872,556 813,028 796,511
========= ========= =========
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See accompanying notes to consolidated financial statements.
RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Cumulative
Six Months Ended Amounts from
June 30, January 1, 2000 to
June 30,
2005 2004 2005
CASH FLOWS FROM OPERATING ACTIVITES
Net loss $ (21,360) $ (37,485) $(561,716)
Adjustment to reconcile net loss to net cash
used in operating activities
Stock issuance for salary 11,912 -- 107,912
Stock issued for professional services -- -- 18,200
Stock options compensation -- -- 130,625
Write-off of patent -- -- 18,724
Realized gain on investments -- (1,729) (27,871)
Changes in assets and liabilities
Increase in prepaid expenses (1,000) -- (1,000)
Decrease in note and interest receivable -- -- 50,000
(Decrease) Increase in Accounts Payable
and Accrued Expenses (6,517) 20,169 89,278
--------- --------- ---------
Net Cash Used in Operating Activities (16,965) (19,045) (175,848)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of Investments (101,492) (132,032) (564,605)
Proceeds from Sale of Investments -- 90,527 438,130
--------- --------- ---------
Net Cash used in Investing Activities (101,492) (41,505) (126,475)
CASH FLOWS FROM FINANCING ACTIVITIES
Exercise of common stock warrants -- -- 5,625
--------- --------- ---------
Net Cash Provided by Financing Activities -- -- 5,625
--------- --------- ---------
NET DECREASE IN CASH (118,457) (60,550) (296,698)
CASH, BEGINNING OF PERIODS 246,970 246,418 425,211
--------- --------- ---------
CASH, END OF PERIODS $ 128,513 $ 185,868 $ 128,513
========= ========= =========
Non-cash operating activities:
Stock issuance for salary in
satisfaction of accrued salary
included in accounts payable
and accrued expenses 101,220 -- --
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See accompanying notes to consolidated financial statements.
RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The unaudited financial statements included herein were prepared from the records of the Company in accordance with accounting principles generally accepted in the United States of America and reflect all adjustments which are, in the opinion of management, necessary to provide a fair statement of the results of operations and financial position for the interim periods. Such financial statements generally conform to the presentation reflected in the Company's Form 10-KSB filed with the Securities and Exchange Commission for the year ended December 31, 2004. The current interim period reported herein should be read in conjunction with the Company's Form 10-KSB subject to independent audit at the end of the year.
The results of operations for the three month and six month periods ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Ridgefield Acquisition Corp. (the "Company") was incorporated under the laws of the State of Colorado on October 13, 1983. The Company had been engaged in the design, manufacture and marketing of robotic workstations for the electronics industry, including routing and depaneling workstations predominately to entities in North America and the Pacific Rim. In November 1998 the Company entered into an Asset Purchase Agreement (the "JOT Agreement") with JOT Automation, Inc. (JOT) a wholly owned Texas subsidiary of JOT Automation Group OYJ, a Finnish corporation. Pursuant to the agreement, the Company sold JOT all of its assets relating to its depaneling and routing business in exchange for $920,000 and the assumption of the operating liabilities related to the Company's business assets. The sale was completed on March 9, 1999.
Subsequent to the sale to JOT, the Company's sole continuing operation was the continuation of research and development activities on a prototype micro-robotic device to manipulate organ tissues on an extremely small scale. The Company had filed for a patent application for the device. As of December 31, 1999, the Company's research and development activities for the device were suspended, pending assessment of the economic benefit of continuing research and development activities or sale of the patent, as well as assessment of other corporate opportunities. In June 2000, the Company decided not to pursue further development or sale of the proto-type device and has written-off the associated patent costs.
Commencing January 1, 2000, the Company is considered a development stage company as defined by Statement of Financial Accounting Standards (SFAS) No.7, as it has no principal operations or revenue from any source.
Certain reclassifications have been made to the March 31, 2005 consolidated statements of cash flows to conform with the current presentation.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of Ridgefield Acquisition Corp. include the accounts of Bio-Medical Automation, Inc., its wholly owned subsidiary. All inter-company transactions have been eliminated in consolidation.
The accompanying financials statements as of June 30, 2005 and for the three month and six month periods then ended include the accounts of the Company and its wholly owned subsidiary. All inter-company accounts and transactions have been eliminated in consolidation.
PRINCIPLES OF CONSOLIDATION (cont.)
The Company has accumulated a deficit since reentering the development stage, on January 1, 2000, of $561,716 through June 30, 2005. In 1999, the Company sold all of its assets relating to its historical line of business and in 2000 abandoned its research and development efforts on a micro-robotic device. As of June 30, 2005, the Company has no principal operations or revenue producing activities. The Company is now pursuing an acquisition strategy whereby it is seeking to arrange for a merger, acquisition or other business combination with a viable operating entity.
Note 2 - NEW ACCOUNTING STANDARD
In December 2004, the Financial Accounting Standards Board issued SFAS No. 123 (revised 2004), "Share-Based Payment". SFAS 123 (revised 2004) requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award, usually the vesting period. Subsequent changes in fair value during the requisite service period, measured at each reporting date, will be recognized as compensation cost over that period. In April 2005, the SEC extended the effective date for SFAS No. 123 (revised 2004) for public companies, to the beginning of a registrant's next fiscal year that begins after June 15, 2005. The Company will be required to adopt SFAS No. 123 (revised 2004) in its first quarter of fiscal 2006. Adoption of this SFAS is not expected to have a material impact on the Company's consolidated financial condition or results of operations.
NOTE 3 - RELATED PARTY TRANSACTIONS
On March 25, 2005, the Board of Directors renewed the President's employment agreement through March 23, 2006 with the modification that the President will no longer receive an annual salary of $48,000. The Board also agreed to pay the President's accrued salary of $113,132 through the issuance of 107,745 shares at fair value of the Company's common stock.
On March 25, 2005, the Board of Directors approved the renewal of the Mergers and Acquisitions Advisory Agreement (the "M&A Advisory Agreement") between the Company and Catalyst Financial LLC ("Catalyst") for a period of three (3) years commencing on April 1, 2005 and modified the M&A Advisory Agreement to provide that Catalyst shall receive a monthly retainer fee in the amount of $1,000 commencing on April 1, 2005 and continuing throughout the term of the M&A Advisory Agreement
On March 25, 2005, the Company issued an option to purchase 10,000 shares of the Company's common stock at the purchase price of $1.16, which was 110% percent of the closing bid price on March 25, 2005, to Leonard Hagan one of the Company's independent directors, for his services to the Company. On March 25, 2005, the Company issued an option to purchase 10,000 shares of the Company's common stock at the purchase price of $1.16, which was 110% percent of the closing bid price on March 25, 2005, to Kenneth Schwartz one of the Company's independent directors, for his services to the Company. Such options are exercisable for a period of 5 years commencing on March 25, 2005. On March 25, 2005, the Company issued to Steven N. Bronson, the Company's President, an option to purchase 100,000 shares of the Company's common stock at the purchase price of $1.16, which was 110% percent of the closing bid price on March 25, 2005. All of the above described options are exercisable for a period of 5 years and resulted in no expense to the Company.
Since January 5, 2004, for its principal office the Company is using a portion of the premises occupied by Catalyst Financial LLC, located at 100 Mill Plain Road, Danbury, Connecticut 06811. Steven N. Bronson, the President of the Company, is the principal and owner of Catalyst Financial LLC. Catalyst Financial LLC has agreed to waive the payment of any rent by the Company for use of the offices. The Company has not paid any rent for its principal office for the three month and six month periods ended June 30, 2005 and 2004.
Item 2. Management Discussion and Analysis or Plan of Operation
The following discussion and analysis provides information which the Company's management believes to be relevant to an assessment and understanding of the Company's results of operations and financial condition. This discussion should be read together with the Company's financial statements and the notes to financial statements, which are included in this report, as well as the Company's Annual Report on Form 10-KSB for the year ended December 31, 2004.
Ridgefield Acquisition Corp. ("RAC" or the "Company") was incorporated as a Colorado corporation on October 13, 1983. On March 9, 1999, the Company completed the sale of substantially all of its assets to JOT Automation, Inc. (the "JOT Transaction"). As a result of the JOT Transaction, the Company's historical business, the depaneling and routing business, is considered to be a "discontinued operation" and, consequently, provides no benefit to persons seeking to understand the Company's financial condition or results of operations.
Following the JOT Transaction the Company devoted its efforts to the development of a prototype micro-robotic device (the "micro-robotic device") to manipulate organic tissues on an extremely small scale. Due to the inability to complete the micro-robotic device, the Company determined that it would cease the development of the micro-robotic device and, as of June 30, 2000, the capitalized costs related to the patent underlying the micro-robotic device have been written off by the Company. The Company has never derived any revenues from the micro-robotic device.
Since July 2000, the Company has suspended all operations, except for necessary administrative matters relating to the timely filing of periodic reports as required by the Securities Exchange Act of 1934. Accordingly, during the three month and six month periods ended June 30, 2005 and 2004 and the period from January 1, 2000 through June 30, 2005, the Company has earned no revenues other than interest income from cash investments.
The Company is primarily engaged in seeking to arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. The Company has not identified a viable operating entity and there can be no assurance that the Company will ever successfully arrange for a merger, acquisition, business combination or other arrangement.
The Company anticipates that the selection of a business opportunity will be a complex process and will involve a number of risks, because potentially available business opportunities may occur in many different industries and may be in various stages of development. Due in part to depressed economic conditions in a number of geographic areas, rapid technological advances being made in some industries and shortages of available capital, management believes that there are numerous firms seeking either the limited additional capital which the Company will have or the benefits of a publicly traded corporation, or both. The perceived benefits of a publicly traded corporation may include facilitating or improving the terms upon which additional equity financing may be sought, providing liquidity for principal shareholders, creating a means for providing incentive stock options or similar benefits to key employees, and providing liquidity for all shareholders and other factors.
In some cases, management of the Company will have the authority to effect acquisitions without submitting the proposal to the shareholders for their consideration. In some instances, however, the proposed participation in a business opportunity may be submitted to the shareholders for their consideration, either voluntarily by the Board of Directors to seek the shareholders' advice and consent, or because of a requirement of state law to do so.
In seeking to arrange a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity, management's objective will be to obtain long-term capital appreciation for the Company's shareholders. There can be no assurance that the Company will be able to complete any merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity.
The Company may need additional funds in order to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity, although there is no assurance that the Company will be able to obtain such additional funds, if needed. Even if the Company is able to obtain additional funds there is no assurance that the Company will be able to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity.
Following the sale of substantially all of the Company's assets in 1999, the Company devoted its efforts to the development of a prototype micro-robotic device (the "micro-robotic device") to manipulate organic tissues on an extremely small scale for microdissection. The Company filed a patent application in February 1998, to protect certain features of the system and method of the micro-robotic device. However, due to the inability of the Company to complete the micro-robotic device, the Company determined that it would cease development of the micro-robotic device and, as of June 30, 2000, the capitalized costs related to the patent underlying the micro-robotic device have been written off by the Company.
On March 19, 2002, the Company was awarded United States Patent No. US 6,358,749 B1 for the "Automated System for Chromosome Microdissection and Method of Using Same" (the "Patent").
The Patent covers an automated system and method for microdissection of samples such as chromosomes or other biological material, and in particular, it relates to a robotic assisted microdissection system and method that significantly reduces the time and skill needed for cellular and sub-cellular dissections. Microdissection is defined as dissection under the microscope; specifically: dissection of cells and tissues by means of fine needles that are precisely manipulated by levers. The system and method covered by the Patent attempts to provide reliability and ease of operation thereby making microdissection widely available to laboratories. While the Company has never derived any revenues from the micro-robotic device, the Company plans to attempt to license or sell the technology covered by the Patent. There can be no assurances that the Company will be able to successfully market the technology covered by the Patent or that the Company will ever derive any revenues from the Patent or the technology covered by the Patent.
During the first quarter of 2003, the Board of Directors of the Company authorized the formation of a wholly owned subsidiary of the Company for the purposes of owning, developing and exploiting the Patent. On March 3, 2003, the Company filed Articles of Incorporation with the Secretary of State of the State of Nevada to form Bio-Medical Automation, Inc., a Nevada corporation wholly owned by the Company (the "Subsidiary"). A copy of the Articles of Incorporation of Bio-Medical Automation, Inc. a Nevada corporation are attached as an Exhibit to the Company's Current Report on Form 8-K filed on March 7, 2003 which is incorporated herein by reference. The Board of Directors of the Company has authorized management of the Company to transfer the Patent to the Subsidiary in exchange for 5,000,000 shares of the common stock of the Subsidiary. The transfer of the Patent to the Subsidiary became effective in the quarter ended June 30, 2003. The Company plans to develop and exploit the Patent through the Subsidiary. There can be no assurances that the Subsidiary will successfully develop and/or exploit the technology covered by the Patent.
On August 25, 2003, the Board of Directors of the Company authorized the Company to invest a portion of the Company's cash in marketable securities in an effort to realize a greater rate of return than the Company is currently earning in light of historically low interest rates. The Board directed that management maintain at least $40,000 of the Company's cash in a federally insured bank or money market account.
In furtherance of the Company's investment strategy the Company opened a brokerage account with Catalyst Financial LLC ("Catalyst"), a broker-dealer registered with the U.S. Securities and Exchange Commission and a member in good standing with the National Association of Securities Dealers, Inc. Catalyst is owned and controlled by Steven N. Bronson, the Company's President. Catalyst has agreed to charge the Company commissions of no more that $.02 per share with a minimum of $75 per trade on securities transactions. The Board approved the commission structure to be charged by Catalyst. Mr. Bronson abstained from voting on all Board resolutions concerning the Company's investment strategy and the Company's arrangements with Catalyst.
The Company has investments in a brokerage account with Catalyst. As of June 30, 2005, the Company owned securities valued at $139,275. Such securities had an accumulated other comprehensive loss totaling $15,070 at June 30, 2005. The Company's investment in securities is subject to all of the risks associated with equity investing, including a loss of monies invested. There can be no assurance that the Company will be able to obtain a profitable return on its investments.
For the three months ended June 30, 2005, the Company has not earned any revenues, except for interest income of $849. For the same period the Company incurred general and administrative expenses of $5,289 resulting in a net loss from operations equal to $4,440. General and administrative expenses were and have been directed to maintaining the Company's status as a public company, including (without limitation) filing reports with the Securities and Exchange Commission. On June 30, 2005, the Company had invested $139,275 in accordance with its Investment Strategy. Such securities had an unrealized loss of $19,267 for the quarter ended June 30, 2005.
For the six month periods ended June 30, 2005 and 2004, the Company had revenue of $1,741 and $2,059, respectively. Operating expenses for the six month periods ended June 30, 2005 and 2004 were $23,101 and $39,544, respectively. For the six month periods ended June 30, 2005 and 2004, the Company had net operating losses of $21,360 and $37,485 respectively.
During the six months ended June 30, 2005, the Company satisfied its working capital needs from cash on hand and cash generated from interest income during the year. As of June 30, 2005, the Company had on hand cash in the amount of $128,513.
The Company's future financial condition will be subject to: (1) its ability to arrange for a merger, acquisition or a business combination with an operating business on favorable terms that will result in profitability, or (2) its ability to successfully develop and exploit the Patent. There can be no assurance that the Company will be able to do so or, if it is able to do so, that the transaction will be on favorable terms not resulting in an unreasonable amount of dilution to the Company's existing shareholders.
The Company may need additional funds in order to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity, although there is no assurance that the Company will be able to obtain such additional funds, if needed. Even if the Company is able to obtain additional funds there is no assurance that the Company will be able to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity.
The Company may need additional funds in order to develop and commercially exploit the Patent, although there is no assurance that the Company will be able to obtain such additional funds, if needed. Even if the Company is able to obtain additional funds there is no assurance that the Company will be able to develop and commercially exploit the Patent.
Except for historical information contained herein, the statements in this report are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements when you see words such as "expect," "anticipate," "estimate," "may," "believe," and other similar expressions. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Actual results could differ materially from those projected in the forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially, from forecasted results. These and other risks are described elsewhere herein and in the Company's other filings with the Securities and Exchange Commission, namely the Company's Annual Report on Form 10-KSB for the year ended December 31, 2004.
Item 3. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officer, as appropriate to allow timely decisions regarding required disclosure.
Evaluation of disclosure and controls and procedures. Based on their evaluation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-QSB the Company's chief executive officer has concluded that the Company's disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and are operating in an effective manner.
Changes in internal controls over financial reporting. There were no changes in the Company's internal controls over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
During the quarter ended June 30, 2005, the Company was not a party to any material legal proceedings.
Item 5. Other Information
On March 24, 2001, the Company entered into an Employment Agreement with Steven N. Bronson, the President of the Company. A copy of Mr. Bronson's Employment Agreement is attached as an Exhibit to the Company's Form 10-QSB for the quarter ended March 31, 2001 and is incorporated by reference. On March 25, 2005, the Board of Directors authorized the renewal of Mr. Bronson's employment agreement with the Company for another one (1) year term through March 23, 2006, and modified the agreement to provide that Mr. Bronson shall no longer entitled to receive an annual salary.
On March 25, 2005, the Board of Directors authorized management of the Company to enter into a three year Mergers and Acquisitions Advisory Agreement (the "M&A Advisory Agreement") with Catalyst Financial LLC ("Catalyst Financial"), a full service securities brokerage, investment banking and consulting firm, owned by Steven N. Bronson, the Company's president commencing on April 1, 2005. Pursuant to the M&A Advisory Agreement, Catalyst Financial agreed to provide consulting services to the Company in connection with the Company's search for prospective target companies for mergers, acquisitions, business combinations and similar transactions, and, if investigation warrants, advising the Company concerning the negotiation of terms and the financial structure of such transactions. For the services rendered pursuant to the M&A Advisory Agreement, Catalyst Financial is entitled to receive a fee in the amount of five percent (5%) of the total consideration of the specific transaction (the "M&A Fee"). The maximum amount of the M&A Fee is $500,000 for any single transaction. In addition to the M&A Fee the Company shall pay to Catalyst Financial a monthly retainer fee in the amount of $1,000 per month commencing on April 1, 2005 and continuing throughout the term of the M&A Advisory Agreement. The M&A Advisory Agreement replaces a previous mergers and acquisitions advisory agreement the Company had with Catalyst Financial, which expired by its terms in November 2004. The M&A Advisory Agreement is attached as an exhibit hereto and incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
The following exhibits are hereby filed as part of this Quarterly Report on Form 10-QSB or incorporated herein by reference.
3.1 Articles of Incorporation, incorporated by reference to Registration Statement No. 33-13074-D as Exhibit 3.1.
3.2 Amended Bylaws adopted June 1, 1987, incorporated by reference to Annual Report on Form 10-K for the fiscal year ended December 31, 1987 as Exhibit 3.2.
3.4 Articles of Amendment to Restated Articles of Incorporation dated March 7, 1991. Incorporated by reference to Annual Report on Form 10-K for fiscal year ended December 31, 1990 as Exhibit 3.4.
3.5 Articles of Amendment to Restated Articles of Incorporation dated March 17, 1999, incorporated by reference to Form 8-K reporting an event of March 9, 1999.
10.1 OEM Purchase Agreement dated January 15, 1990, between the Company and Ariel Electronics, Inc. incorporated by reference to Annual Report on Form 10-K for the fiscal year ended December 31, 1989 as Exhibit 10.1.
10.2 Form of Convertible Promissory Note, 12/30/93 Private Placement incorporated by reference to Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993 as Exhibit 10.2.
10.3 Form of Non-Convertible Promissory Note, 12/30/93 Private Placement incorporated by reference to Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993 as Exhibit 10.3.
10.4 Form of Note Purchaser Warrant Agreement and Warrant, 12/30/93 Private Placement incorporated by reference to Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993 as Exhibit 10.4.
10.5 Form of Promissory Note, 4/1/96.
10.6 Form of Security Agreement, 4/1/96.
10.7 Form of Common Stock Purchase Warrant, 4/1/96.
10.8 Form of Promissory Note, 7/1/96.
10.9 Form of 4/1/96 Promissory Note Extension, 10/17/96.
10.10 Form of Common Stock Purchase Warrant, 10/10/96.
10.11 Asset Purchase Agreement with JOT incorporated by reference to Form 8-K reporting an event of November 4, 1998, and amendment thereto incorporated by reference to Form 8-K reporting an event of December 15, 1998.
10.12 Stock Purchase Agreement, between Bio-Medical Automation, Inc. and Steven N. Bronson, incorporated by reference to the Current Report on Form 8-K filed on April 6, 2000.
10.13 Employment Agreement between Bio-Medical Automation, Inc. and Steven N. Bronson, dated as of March 24, 2001, incorporated by reference to Quarterly Report on Form 10-QSB for the quarter ended March 31, 2001.
10.14 Mergers and Acquisitions Advisory Agreement, dated as of November 13, 2001, between Bio-Medical Automation, Inc. and Catalyst Financial LLC incorporated by reference to the Annual Report on Form 10-KSB for the year ended December 31, 2001.
10.15*Mergers and Acquisitions Advisory Agreement, dated as of April 1, 2005, between Ridgefield Acquisition Corp. and Catalyst Financial LLC.
14 Code of Ethics incorporated by reference to the Annual Report on Form
10-KSB for the year ended December 31, 2003.
31* President's Written Certification Of Financial Statements Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32* President's Written Certification Of Financial Statements Pursuant to 18
U.S.C. Statute 1350
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* Filed herewith
b) Reports on Form 8-K.
The Company did not file a current report on Form 8-K, during the quarter ended June 30, 2005.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: August 9, 2005
RIDGEFIELD ACQUSITION CORP.
By: /s/ Steven N. Bronson
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Steven N. Bronson, President
(Principle Executive Officer),
as Registrant's duly authorized officer
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EXHIBIT INDEX
The following Exhibits are filed herewith:
Exhibit
Number Description of Document
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10.15 Mergers and Acquisitions Advisory Agreement, dated as of April 1,
2005, Ridgefield Acquisition Corp. and Catalyst Financial LLC.
31 President's Statement Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32 President's Written Certification Of Financial Statements
Pursuant to 18 U.S.C. Statute 1350.
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Exhibit 10.15
MERGERS AND ACQUISITIONS ADVISORY AGREEMENT
THIS MERGERS AND ACQUISTIONS ADVISORY AGREEMENT is made as of the 1st day of April 2005, by and between Ridgefield Acquisition Corp., a Colorado corporation, having an address at 100 Mill Plain Road, Danbury, Connecticut 06811 (hereinafter referred to as the "Company"), and Catalyst Financial LLC, a New York limited liability company, having an address at 100 Mill Plain Road, Danbury, Connecticut 06811 (hereinafter referred to as the "Consultant").
RECITALS
WHEREAS, the Company is a publicly traded company engaged in seeking out and identifying prospective target companies for mergers, acquisitions, business combinations, and similar transactions, and if investigation warrants, to negotiate and complete such a transaction with the target company; and
WHEREAS, the Consultant is an investment banking firm and licensed broker dealer. The Company desires to engage the Consultant to identify prospective target companies for mergers, acquisitions, business combinations, or similar transactions, and to advise the Company in connection with the negotiations and financial structure of such transactions.
NOW, THEREFORE, in consideration of the mutual promises set forth herein, the parties hereto agree as follows:
1. Term. The term of this Agreement shall be for three (3) years commencing on April 1, 2005 and terminating on March 31, 2008 (the "Term"). However, this Agreement may be terminated by either party on thirty (30) days written notice.
2. Mergers & Acquisitions Consulting Services. During the Term of the Agreement, the Consultant shall provide consulting services to the Company in connection with the Company's identifying and investigating prospective target companies for mergers, acquisitions, business combinations and similar transactions, and, if investigation warrants, advising the Company concerning the negotiation of terms and the financial structure of such transactions. The services to be provided by the Consultant include but are not limited to, (i) preparing a document concerning the Company which can be presented to prospective target companies, (ii) identifying and investigating companies which may be acquisition candidates for the Company, (iii) meeting with prospective target companies on behalf of the Company, (iv) analyzing and evaluating prospective target companies, and (v) advising the Company as to how to structure and finance transactions.
3. Fee for Services.
A. Monthly Fee. The Company shall pay a monthly fee in the amount of $1,000.00 to Consultant on the first day of each month commencing on April 1, 2005 and continuing through March 1, 2008.
B. Performance Fee. In the event that the Company completes a merger, acquisition business combination or similar transaction (a "Transaction"), as a result of an introduction made by the Consultant, during the Term of this Agreement or within one (1) year from the termination, for any reason, of this Agreement, then the Company hereby agrees to pay the Consultant a fee (the "M&A Fee") equal to 5% of the gross consideration. The M&A Fee payable to the Consultant pursuant to this Agreement shall not exceed five hundred thousand dollars ($500,000).
The M&A Fee set forth above shall be due and payable by the Company to the Consultant in cash on the closing date of the transaction.
For purposes of this Agreement, "consideration" shall mean the value of the Transaction described herein and shall include the aggregate value of all cash, securities, and other property and consideration of every kind, including but not limited to assumption and forgiveness of indebtedness, the amount received under the terms of an "earn-out" provision, rights to receive periodic payments and all other rights that may be at any time either (i) transferred or contributed to the Company, its affiliates or shareholders in connection with an acquisition of equity or assets thereof, or (ii) transferred or contributed by the Company, its affiliates or shareholders in any transaction involving an investment in or acquisition of any third party, or acquisition of the equity or assets thereof, by the Company or any affiliate thereof, or (iii) transferred or contributed by the Company, its affiliates or shareholders and any other parties entering into any joint venture or similar joint enterprise or undertaking with the Company or any affiliate thereof. The aggregate value of all such cash, securities and other property shall be the aggregate fair market value thereof as determined jointly by the Consultant and the Company, or by an independent appraiser jointly selected by the Consultant and the Company. The cost of such independent appraiser shall be borne entirely by the Company.
4. Expenses. The Company shall reimburse the Consultant for its out-of-pocket expenses in connection with the services to be performed hereunder; provided however, that expenses are approved in writing by the Company.
5. Representations of the Company. The Company hereby represents and warrants that any and all information supplied hereunder to the Consultant in connection with any and all services to be performed hereunder by the Consultant for and on behalf of the Company shall be, to the best of the Company's knowledge, true, complete and correct as of the date of such dissemination and shall not fail to
state a material fact necessary to make any of such information not misleading. The Company hereby acknowledges that the ability of the Consultant to adequately provide services as described herein is dependent upon the prompt dissemination of accurate, correct and complete information to the Consultant. The Company further represents and warrants hereunder that this Agreement has been, or will be, duly and validly authorized by all requisite corporate action; that the Company has the full right, power and capacity to execute, deliver and perform its obligations hereunder; and that this Agreement, upon execution and delivery of the same by the Company, will represent the valid and binding obligation of the Company and shall be enforceable by the Consultant in accordance with its terms. The representations and warranties set forth herein shall survive the termination of this Agreement.
6. Indemnification.
(a) the Company hereby agrees to indemnify, defend and hold harmless the Consultant, its officers, directors, principals, employees, partners, consultants, affiliates, and shareholders, and their successors and assigns from and against any and all claims, damages, losses, liability, deficiencies, actions, suits or proceedings (collectively the "Losses") arising out of or resulting from: (i) any breach of a representation, or warranty by the Company contained in this Agreement; or (ii) any activities or services performed hereunder by the Consultant, unless such Losses were the result of the intentional misconduct or gross negligence of the Consultant or were the result of any information supplied by the Consultant; or (iii) any and all costs and expenses (including reasonable attorneys' and paralegals' fees) related to the foregoing, and as more fully described below. The Consultant hereby agrees to indemnify, defend and hold harmless the Company, and its officers, directors and shareholders, and their successors and assigns from and against any and all Losses arising out of or resulting from (i) the intentional misconduct or gross negligence of the Consultant, unless such Losses were the result of any information supplied by the Company; or (ii) any and all costs and expenses (including reasonable attorneys' and paralegals' fees) related to the foregoing, and as more fully described below.
(b) If the Consultant or the Company (in each case, the "Indemnified Party") receives written notice of the commencement of any legal action, suit or proceeding with respect to which the Company or the Consultant (in each case, the "Indemnifying Party") is or may be obligated to provide indemnification pursuant to this Section 6, the Indemnified party shall, within thirty (30) days of the receipt of such written notice, give the Indemnifying Party written notice thereof (a "Claim Notice"). Failure to give such Claim Notice within such thirty (30) day period shall not constitute a waiver by the Indemnified Party of its right to indemnity hereunder with respect to such action, suit or proceeding if the Indemnifying Party is not materially adversely affected by such delay. Upon receipt by the Indemnifying Party of a Claim Notice from the Indemnified Party with respect to any claim for indemnification which is based upon a claim made by a third party ("Third Party Claim"), the Indemnified Party may assume
the defense of the Third Party Claim with counsel of its own choosing, as described below. The Indemnifying Party and the Indemnified party shall cooperate with each other in the defense of the Third Party Claim and shall furnish such records, information and testimony and attend all such conferences, discovery proceedings, hearings, trial and appeals as may be reasonably required in connection therewith. The Indemnified Party shall have the right to employ its own counsel in any such action, but the fees and expenses of such counsel shall be at the expense of the Indemnifying Party unless the Indemnifying Party shall not have promptly employed counsel to assume the defense of the Third Party Claim, in which event such fees and expenses shall be borne solely by Indemnifying Party. The Indemnifying Party shall not satisfy or settle any Third Party Claim for which indemnification has been sought and is available hereunder, without the prior written consent of the Indemnified Party unless such claim can be settled entirely for cash and the Indemnified Party shall be given a full release from all parties in connection therewith. If the Indemnifying Party shall fail with reasonable promptness either to defend such Third Party Claim or to satisfy or settle the same, the Indemnified Party may defend, satisfy or settle the Third Party Claim at the expense of the Indemnifying Party and the Indemnifying Party shall pay to the Indemnified Party the amount of any such Loss within ten (10) days after written demand therefore. The indemnification provisions hereunder shall survive the termination of this Agreement.
7. Confidentiality. The Consultant agrees that all non-public information
pertaining to the prior, current or contemplated business of the Company are
valuable and confidential assets of the Company. Such information shall include,
without limitation, information relating to customer lists, bidding procedures,
intellectual property, patents, trademarks, trade secrets, financing techniques
and sources and such financial statements of the Company as are not available to
the public. The Consultant, its officers, directors, employees, agents and
shareholders shall hold all such information in trust and confidence for the
Company and shall not use or disclose any such information for other than the
benefit of the Company's business and shall be liable for damages incurred by
the Company as a result of the use or disclosure of such information by the
Consultant, its officers, directors, employees, agents or shareholders for any
purpose other than the benefit of the Company's business, either during the term
of the attached Agreement or after the termination or expiration thereof, except
(i) where such information is publicly available or later becomes publicly
available other than through a breach of this Agreement, or (ii) where such
information is subsequently lawfully obtained by the Consultant from a third
party or parties who are not under an obligation of confidentiality to the
Company, or (iii) if such information is known to the Consultant prior to the
execution of this Agreement, or (iv) as may be required by law. These
confidentiality obligations shall service termination of this Agreement.
8. Independent Contractor. It is expressly understood and agreed that the Consultant shall, at all times, act as an independent contractor with respect to the Company and not as an employee or agent of the Company, and nothing contained in this Agreement shall be construed to create a joint venture,
partnership, association or other affiliation, or like relationship, between the parties. It is specifically agreed that the relationship is and shall remain that of independent parties to a contractual relationship and that the Consultant shall have no right to bind the Company in any manner. In no event shall either party be liable for the debts or obligations of the other except as otherwise specifically provided in this Agreement.
9. Amendment. No modification, waiver, amendment, discharge or change of this Agreement shall be valid unless the same is evidence by a written instrument, executed by the party against which such modification, waiver, amendment, discharge or change is sought.
10. Notices. All notices, demands or other communications given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person or transmitted by facsimile transmission or on the third calendar day after being mailed by the United States registered or certified mail, return receipt requested, postage prepaid, to the addresses herein above first mentioned or to such other address as any party hereto shall designate to the other for such purpose in the manner hereinafter set forth.
11. Severability. The invalidity, illegality or unenforceability of any provision or provisions of this Agreement will not affect any other provision of this Agreement, which will remain in full force and effect, not will the invalidity, illegality or unenforceability of a portion of any provision of this Agreement affect the balance of such provision. In the event that nay one or more of the provisions contained in this Agreement or any portion thereof shall for any reason be held to be invalid, illegal or unenforceable in any respect, this Agreement shall be reformed, construed and enforced as if such invalid, illegal or unenforceable provision had never been contained herein.
12. Construction and Enforcement. This Agreement shall be construed in accordance with the laws of the State of New York, without application of the principles of conflicts of laws.
13. Binding Nature. The terms and provision of this Agreement shall be binding upon and inure to the benefit of the parties, and their respective successors and assigns.
14. Counterparts. This Agreement may be executed in any number of counterparts, including facsimile signatures, which shall be deemed as original signatures. All executed counterparts shall constitute one Agreement, notwithstanding that all signatories are not signatories to the original or the same counterpart.
15. Entire Agreement. This Agreement contains all of the understanding and agreements of the parties with respect to the subject matter discussed herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
RIDGEFIELD ACQUISITION CORP. CONSULTANT
By: /s/ Leonard Hagan By: /s/ Steven N. Bronson
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Leonard Hagan, Director Steven N. Bronson, President
Ridgefield Acquisition Corp. Catalyst Financial LLC
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Exhibit 31
Statement Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 By Principal Executive Officer and Principal Financial Officer Regarding Facts and Circumstances Relating to Exchange Act Filings
I, Steven N. Bronson, certify that:
1. I have reviewed this Quarterly Report on Form 10-QSB for the quarter ended June 30, 2005 of Ridgefield Acquisition Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
c. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Dated: August 9, 2005
/s/ Steven N. Bronson
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Steven N. Bronson, President
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Exhibit 32
President's Written Certification Of Financial Statements Pursuant to 18 U.S.C. Statute 1350
Pursuant to 18 U.S.C. Statute 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned hereby certifies in his capacity as president of Ridgefield Acquisition Corp. (the "Company") that
(a) the Quarterly Report of the Company on Form 10-QSB for the period ended June 30, 2005 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and
(b) the information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such period and the results of operations of the Company for such period.
Dated: August 9, 2005
/s/ Steven N. Bronson
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Steven N. Bronson, President
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