[X]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware | 20-5456087 |
(State of jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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10801 Johnston Road, Suite 210
Charlotte, North Carolina
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28226 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: | (866) 950-6669 |
•
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the timing and success of our acquisition strategy;
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the timing and success of expanding our market presence in our current locations, successfully entering into new markets, adding new services and integrating acquired businesses;
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•
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the timing, magnitude and terms of a revised credit facility to accommodate our growth;
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•
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competition within our industry; and
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•
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the availability of additional capital on terms acceptable to us.
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(a) | Brookridge’s current website (not including any rights or interest with respect to the Brookridge name, web address or domain name); and |
(b) | the Sherburne Account (described below). |
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Faster application process since factoring is focused on credit worthiness of the accounts receivable as security and not the financial performance of the company;
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Unlimited funding based on “eligible” and “credit worthy” accounts receivable; and
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No financial covenants.
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Acquire companies that provide factoring services to small businesses.
One of our strategies is to increase revenues and profitability by acquiring the accounts receivable portfolios and possibly the business development and management teams of other local and regional factoring firms, primarily firms in the United States with revenues of generally less than $10 million. Significant operating leverage and reduced costs are achieved by consolidating back office support functions. Increased revenues across a larger accounts receivable portfolio is anticipated to lead to lower costs of capital, which may enhance profitability. We intend to evaluate acquisitions using numerous criteria including historical financial performance, management strength, service quality, diversification of customer base and operating characteristics. Our senior management team has prior experience in other service industries in identifying and evaluating attractive acquisition targets and integrating acquired businesses.
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Expand our service offerings by acquiring related specialty finance firms that serve small businesses.
These specialty firms will broaden the services that we provide so that we can fulfill additional financial service needs of existing clients and target additional small businesses in different industries. The following are types of specialty finance firms that we will target and is not all-inclusive:
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o
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Purchase order and import/export financing;
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o
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Government contract financing; and
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o
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Transportation / freight invoice financing
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Expand our discount factoring business by creating a national factoring brand. Inform and educate small businesses owners that factoring can increase cash flow and outsource credit risk and accounts receivable management.
Our experience has been that many small businesses have limited awareness that factoring exists and is a viable financing alternative option for them. We have a marketing strategy that focuses on creating a national factoring brand identity. This is expected to be accomplished through various marketing initiatives and business alliances. These marketing strategies include:
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o |
Media advertising in key metropolitan markets;
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Increase our pay-per-click internet advertising which in the past has been a successful strategy for Anchor; and | ||
Radio spot advertising on talk radio and sports oriented programming whose primary demographic are small business owners. | ||
o | Establish cross-selling alliances with other small business providers including: | |
Small business accounting and tax preparation service firms; | ||
Small business service centers, providing packing and shipping; and | ||
Commercial insurance brokers. | ||
o | Develop a referral network of business brokers, consultants, accountants and attorneys; |
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Expand our discount factoring business by hiring Business Development Officers (BDOs) in key metropolitan markets.
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o |
Traditionally, factors have expanded their businesses by having quality BDOs network with accountants, lawyers, brokers and other referral sources to obtain accounts. We are looking for quality BDOs in certain markets.
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o
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Limited growth capital for small factors.
Small factoring firms may have credit availability constraints limiting the business volume which they can factor. The financial leverage that banks typically provide a finance company is a function of the capital in the business. The opportunity to combine their businesses with Anchor’s capital and possible lower cost of funds, back office support and potentially a larger credit facility are incentives to sell their business, particularly where they would receive our capital stock in return as part or all of the transaction price.
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o
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Anchor would provide an exit strategy for owners of small factoring firms who may have much of their personal wealth tied to the business and want to retire.
A cash sale of a factoring firm would provide liquidity to the owner of a factoring firm and the opportunity to receive a price over the factoring firm’s book value.
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o
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Background and credit checks are performed on the owners.
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o
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Personal or validity guarantees are sometimes obtained from the owners.
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We “Notify” all accounts that are purchased. Anchor is a notification factor, which means that we notify in writing all accounts purchased that we have purchased the account and payments are to be made to Anchor’s central lockbox. Our clients’ invoices also provide Anchor’s lockbox as address for payments. We typically also have a notification statement on our clients’ invoices that indicate we have purchased the account and payment is to be made to Anchor.
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o
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Initially we attempt to verify most of a new customer’s accounts. Verification may include review of third-party documentation, telephone discussions or email correspondence with the client’s customer so that we may substantiate that invoices are valid and without dispute.
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We typically evaluate the creditworthiness on accounts with more than a $2,500 balance.
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o
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Other standard diligence testing includes payroll tax payment verification, company status with state of incorporation, pre and post filing lien searches and review of prior years’ corporate tax returns. For TruckerFunds.com accounts we do not verify payroll tax payments or review prior years’ tax returns.
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We require that our clients enter into a factoring and security agreement or purchase order finance agreement and file a first senior lien on purchased accounts, and on a case-by-case basis, sometimes on all of our clients’ tangible and intangible assets. For purchase order financings we also have a senior lien on inventory.
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Expand our discount factoring business by hiring Business Development Officers (BDOs) in key metropolitan markets. These BDOs network with other small business providers including traditional bankers, accountants, lawyers and insurance brokers.
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Media advertising in key metropolitan markets; increase our internet advertising which in the past has been a successful strategy for Anchor; and
radio spot advertising on talk radio and sports oriented programming whose primary demographic are small business owners.
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Establish cross-selling alliances with other small business providers including: small business accounting and tax preparation service firms, and
commercial insurance brokers.
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Develop a referral network of business brokers, consultants and accountants and attorneys;
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regulate credit granting activities, including establishing licensing requirements, if any, in various jurisdictions,
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•
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require disclosures to customers,
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govern secured transactions,
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set collection, foreclosure, repossession and claims handling procedures and other trade practices,
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prohibit discrimination in the extension of credit, and
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regulate the use and reporting of information related to a seller’s credit experience and other data collection.
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the diversion of our management's attention from our everyday business activities;
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the contingent and latent risks associated with the past operations of, and other unanticipated problems arising in, the acquired business; and
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the need to expand management, administration, and operational systems.
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we will be able to successfully integrate the operations and personnel of any new businesses into our business;
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we will realize any anticipated benefits of completed acquisitions;
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there will be substantial unanticipated costs associated with acquisitions, including potential costs associated with liabilities undiscovered at the time of acquisition; or
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stockholder approval of an acquisition will be sought.
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potentially dilutive issuances of our equity shares;
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the incurrence of additional debt;
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restructuring charges; and
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the recognition of significant charges for depreciation and amortization related to intangible assets.
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• experience significant variations in operating results;
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• have narrower product lines and market shares than their larger competitors;
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• be particularly vulnerable to changes in customer preferences and market conditions;
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• be more dependent than larger companies on one or more major customers, the loss of which could materially impair their business, financial condition and prospects;
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• face intense competition, including from companies with greater financial, technical, managerial and marketing resources;
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• depend on the management talents and efforts of a single individual or a small group of persons for their success, the death, disability or resignation of whom could materially harm the client’s
financial condition or prospects;
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• have less skilled or experienced management personnel than larger companies; and/or
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• do business in regulated industries, such as the healthcare industry, and could be adversely affected by policy or regulatory changes.
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directing the proceeds of collections of its accounts receivable to bank accounts other than our established lockboxes;
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failing to accurately record accounts receivable aging;
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overstating or falsifying records showing accounts receivable or inventory;
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providing inaccurate reporting of other financial information;
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falsifying purchase orders to suppliers and from customers or;
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stealing inventory that we have purchased.
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problems with the client’s underlying product or services which result in greater than anticipated returns or disputed accounts;
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unrecorded liabilities such as rebates, warranties or offsets;
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the disruption or bankruptcy of key customers who are responsible for material amounts of the accounts receivable; and
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• | the client misrepresents, or does not keep adequate records of, important information concerning the accounts receivable. |
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specialty and commercial finance companies; and
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national and regional banks that have factoring and purchase order divisions or subsidiaries.
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Quarters Ended
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High | Low | ||||||
June 30, 2009 | $ | 1.25 | $ | 0.60 | ||||
September 30, 2009 | $ | 1.25 | $ | 0.15 | ||||
December 31, 2009 | $ | 1.05 | $ | 0.30 | ||||
March 31, 2010 | $ | 0.83 | $ | 0.28 | ||||
June 30, 2010 | $ | 0.50 | $ | 0.35 | ||||
September 30, 2010 | $ | 0.75 | $ | 0.50 | ||||
December 31, 2010 | NT(1) | NT(1) | ||||||
March 31, 2011 | $ | 0.50 | $ | 0.20 | ||||
June 30, 2011 | $ | 0.35 | $ | 0.15 | ||||
September 30, 2011 | $ | 1.01 | $ | 0.30 | ||||
December 31, 2011 | $ | 1.01 | $ | 0.50 | ||||
(1)NT - No Trades |
Year Ended December 31,
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||||||||||||||||
2011
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2010
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$ Change
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% Change
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|||||||||||||
Finance revenues
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$ | 2,404,542 | $ | 2,514,394 | $ | (109,852 | ) | (4.4 | ) | |||||||
Interest income (expense), net and commissions
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(517,129 | ) | (826,347 | ) | 309,218 | 37.4 | ||||||||||
Net finance revenues
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1,887,413 | 1,688,047 | 199,366 | 11.8 | ||||||||||||
(Provision) for credit losses
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(11,970 | ) | (25,645 | ) | 13,675 | 53.3 | ||||||||||
Finance revenues, net of interest expense and credit losses
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1,875,443 | 1,662,402 | 213,041 | 12.8 | ||||||||||||
Operating expenses
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1,596,218 | 1,651,138 | (54,920 | ) | (3.3 | ) | ||||||||||
Net income from continuing operations before income taxes
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279,225 | 11,264 | 267,961 | 2,379.0 | ||||||||||||
Income tax (provision) benefit:
|
- | - | - | - | ||||||||||||
Income from continuing operations
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279,225 | 11,264 | 267,961 | 2,379.0 | ||||||||||||
Loss from discontinued operations
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(4,000 | ) | (481,834 | ) | 477,834 | (99.2 | ) | |||||||||
Net income (loss)
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275,225 | (470,570 | ) | 745,795 | - | |||||||||||
Less: Noncontrolling interest share
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- | (92,656 | ) | 92,656 | - | |||||||||||
Controlling interest share
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$ | 275,225 | $ | (377,914 | ) | $ | 653,139 | - |
Percentage of Accounts Receivable
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Percentage of Revenues For
|
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Portfolio As of
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The Twelve Months Ended
|
|
Entity
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December 31, 2011
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December 31, 2011
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Food Service Company in Missouri
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11.82%
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5.85%
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Transportation Company in Virginia
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7.82%
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4.52%
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Medical Staffing Agency in New York
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6.32%
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4.54%
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Transportation Company in Michigan
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6.50%
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4.15%
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1) | Fixed Transaction Fee. Fixed transaction fees are a fixed percentage of the purchased invoice and purchase order advance. This percentage does not change from the date the purchased invoice is funded until the date the purchased invoice is collected. | |
2) | Variable Transaction Fee. Variable transaction fees are variable based on the length of time the purchased invoice and purchase order advance is outstanding. As specified in its contract with the client, the Company charges variable increasing percentages of the purchased invoice or purchase order advance as time elapses from the purchase date to the collection date. |
YEARS ENDED DECEMBER 31, 2011 AND 2010 | PAGE | |
FINANCIAL STATEMENTS | ||
Report of Independent Registered Public Accounting Firm | F-1 | |
Consolidated Balance Sheets as of December 31, 2011 and 2010 | F-2 | |
Consolidated Statements of Operations | F-3 | |
Consolidated Statements of Stockholders' Equity | F-4 | |
Consolidated Statements of Cash Flows | F-5 | |
Notes to Consolidated Financial Statements | F-6 - F-17 |
Preferred
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Common
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Additional
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Accumulated
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Noncontrolling
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||||||||||||||||||||
Stock
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Stock
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Paid in Capital
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Deficit
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Interest
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Total
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Balance, January 1, 2010
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$ | 5,212,719 | $ | 1,409 | $ | 2,916,552 | $ | (5,747,917 | ) | $ | 301,151 | $ | 2,683,914 | |||||||||||
Provision for compensation expense related to issued stock options
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- | - | 22,276 | - | - | 22,276 | ||||||||||||||||||
Benefit for compensation expense related to expired stock options
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- | - | (17,905 | ) | - | - | (17,905 | ) | ||||||||||||||||
Conversion of 908,262 preferred shares to 4,541,310 common shares
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(4,541,310 | ) | 454 | 4,540,856 | - | - | - | |||||||||||||||||
Distributions
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- | - | - | - | (10,000 | ) | (10,000 | ) | ||||||||||||||||
Fair value of noncontrolling interest sold
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- | - | - | - | (198,495 | ) | (198,495 | ) | ||||||||||||||||
Net loss, year ended December 31, 2010
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- | - | - | (377,914 | ) | (92,656 | ) | (470,570 | ) | |||||||||||||||
Balance, December 31, 2010
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671,409 | 1,863 | 7,461,779 | (6,125,831 | ) | - | 2,009,220 | |||||||||||||||||
Provision for compensation expense related to issued stock options
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- | - | 4,738 | - | - | 4,738 | ||||||||||||||||||
Benefit for compensation expense related to expired stock options
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- | - | (1,131 | ) | - | - | (1,131 | ) | ||||||||||||||||
Net income, year ended December 31, 2011
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- | - | - | 275,225 | - | 275,225 | ||||||||||||||||||
Balance, December 31, 2011
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$ | 671,409 | $ | 1,863 | $ | 7,465,386 | $ | (5,850,606 | ) | $ | - | $ | 2,288,052 |
CASH FLOWS FROM OPERATING ACTIVITIES:
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2011
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2010
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||||||
Net income (loss)
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$ | 275,225 | $ | (470,570 | ) | |||
Loss from discontinued operations
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4,000 | 481,834 | ||||||
Adjustments to reconcile net loss to net cash
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used in operating activities:
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Depreciation and amortization
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20,563 | 30,266 | ||||||
Compensation expense related to issuance of stock options
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3,607 | 4,371 | ||||||
Allowance for uncollectible accounts
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11,970 | 25,645 | ||||||
Decrease (increase) in retained interest in purchased
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||||||||
accounts receivable
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1,298,827 | (2,431,723 | ) | |||||
Decrease (increase) in earned but uncollected
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45,998 | (88,470 | ) | |||||
Decrease (increase) in prepaid expenses and other
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29,706 | (17,950 | ) | |||||
Increase in accounts payable
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(13,010 | ) | 14,214 | |||||
(Decrease) increase in accrued payroll and related taxes
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5,363 | 9,775 | ||||||
Decrease in collected but not earned
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(2,681 | ) | (12,810 | ) | ||||
Decrease in accrued expenses
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(43,493 | ) | (233,464 | ) | ||||
Net cash provided by (used in) operating activities - continuing operations
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1,636,075 | (2,688,882 | ) | |||||
Net cash provided by (used in) operating activities - discontinued operations
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(4,000 | ) | 1,116,577 | |||||
Net cash provided by (used in) operating activities
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1,632,075 | (1,572,305 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES:
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Purchases of property and equipment
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(18,595 | ) | (18,075 | ) | ||||
Net cash used in investing activities
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(18,595 | ) | (18,075 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
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(Payments to) proceeds from financial institution, net
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(1,180,229 | ) | 1,310,971 | |||||
(Payments to) proceeds from lender
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(290,000 | ) | 290,000 | |||||
Net cash (used in) provided by financing activities - continuing operations
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(1,470,229 | ) | 1,600,971 | |||||
Net cash (used in) financing activities - discontinued operations
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- | (301,151 | ) | |||||
Net cash (used in) provided by financing activities
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(1,470,229 | ) | 1,299,820 | |||||
INCREASE (DECREASE) IN CASH
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143,251 | (290,560 | ) | |||||
CASH, beginning of period
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163,320 | 453,880 | ||||||
CASH, end of period
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$ | 306,571 | $ | 163,320 | ||||
1.
BACKGROUND AND DESCRIPTION OF BUSINESS:
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2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
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1.
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Fixed Transaction Fee.
Fixed transaction fees are a fixed percentage of the purchased invoice and purchase order advance. This percentage does not change from the date the purchased invoice is funded until the date the purchased invoice is collected.
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2.
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Variable Transaction Fee.
Variable transaction fees are variable based on the length of time the purchased invoice and purchase order advance is outstanding. As specified in its contract with the client, the Company charges variable increasing percentages of the purchased invoice or purchase order advance as time elapses from the purchase date to the collection date.
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3.
RETAINED INTEREST IN PURCHASED ACCOUNTS RECEIVABLE:
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December 31, 2011
|
December 31, 2010
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|||||||
Purchased invoices
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$ | 7,655,933 | $ | 9,447,586 | ||||
Purchase order advances
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105,000 | 29,883 | ||||||
Reserve account
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(1,412,277 | ) | (1,755,016 | ) | ||||
Allowance for uncollectible invoices
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(17,500 | ) | (80,500 | ) | ||||
$ | 6,331,156 | $ | 7,641,953 |
December 31, 2011
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December 31, 2010
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Staffing
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$ | 548,031 | $ | 471,612 | ||||
Transportation
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1,831,051 | 1,632,265 | ||||||
Publishing
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- | 1,463,411 | ||||||
Construction
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- | 5,218 | ||||||
Service
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3,969,574 | 3,651,815 | ||||||
Other
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- | 498,132 | ||||||
$ | 6,348,656 | $ | 7,722,453 |
Adjustments to the allowance for uncollectible invoices were as follows:
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For the years ending December 31,
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||||||||
2011
|
2010
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|||||||
Balance - beginning of year
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$ | 80,500 | $ | 57,102 | ||||
Provision for credit losses
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11,970 | 25,645 | ||||||
Write-offs
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(74,970 | ) | (2,247 | ) | ||||
Balance - end of year
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$ | 17,500 | $ | 80,500 |
For the years ending December 31,
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||||||||
2011
|
2010
|
|||||||
Purchased invoices
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$ | 75,426,252 | $ | 90,148,535 | ||||
Purchase order advances
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3,091,834 | 1,227,368 | ||||||
$ | 78,518,086 | $ | 91,375,903 |
Estimated
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|||||||||
Useful Lives
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December 31, 2011
|
December 31, 2010
|
|||||||
Furniture and fixtures
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2-5 years
|
$ | 44,731 | $ | 44,731 | ||||
Computers and software
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3-7 years
|
172,561 | 153,966 | ||||||
217,292 | 198,697 | ||||||||
Less: accumulated depreciation
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(200,262 | ) | (179,699 | ) | |||||
$ | 17,030 | $ | 18,998 |
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Depreciation expense was $20,563 and $30,266 for the years ended December 31, 2011 and 2010, respectively.
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7.
CAPITAL STRUCTURE:
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Series 1 Convertible
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Common
|
|||||||
Preferred Stock
|
Stock
|
|||||||
Balance, January 1, 2010
|
1,284,633 | 14,092,967 | ||||||
Preferred Stock Conversions
|
(908,262 | ) | - | |||||
Common Stock Issuances
|
- | 4,541,402 | ||||||
Balance, December 31, 2010
|
376,371 | 18,634,369 | ||||||
Preferred Stock Conversions
|
- | - | ||||||
Common Stock Issuances
|
- | - | ||||||
Balance December 31, 2011
|
376,371 | 18,634,369 |
|
8. RELATED PARTY TRANSACTION:
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9. EMPLOYMENT AND STOCK OPTION AGREEMENTS:
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●
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The employment agreement with M. Rubin currently retains his services as Co-chairman and Chief Executive Officer through January 31, 2013.
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An annual salary of $1 until, the first day of the first month following such time as the Company, shall have, within any period beginning on January 1 and ending not more than 12 months thereafter, earned pre-tax net income exceeding $1,000,000, M. Rubin’s base salary shall be adjusted to an amount, to be mutually agreed upon between M. Rubin and the Company, reflecting the fair value of the services provided, and to be provided, by M. Rubin taking into account (i) his position, responsibilities and performance, (ii) the Company’s industry, size and performance, and (iii) other relevant factors. M. Rubin is eligible to receive annual bonuses as determined by the Company’s compensation committee. M. Rubin shall be entitled to a monthly automobile allowance of $1,500.
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●
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10-year options to purchase 650,000 shares exercisable at $1.25 per share, pursuant to the Company’s 2007 Omnibus Equity Compensation Plan. Vesting of the fair value of the options is one-third immediately, one-third on February 29, 2008 and one-third on February 28, 2009, provided that in the event of a change in control or M. Rubin is terminated without cause or M. Rubin terminates for good reason, all unvested options shall accelerate and immediately vest and become exercisable in full on the earliest of the date of change in control or date of M. Rubin’s voluntary termination or by the Company without cause.
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The employment agreement with B. Bernstein currently retains his services as President through January 31, 2013.
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An annual salary of $240,000. The Board may periodically review B. Bernstein’s base salary and may determine to increase (but not decrease) the base salary in accordance with such policies as the Company may hereafter adopt from time to time. The Board approved an annual bonus program for Mr. Bernstein commencing with the 2011 fiscal year and ending with the 2014 fiscal year. The annual bonus is equal to 5% of annual net income provided net income is equal to or greater than $200,000. The bonus is calculated on the Company’s audited GAAP financial statements. B. Bernstein shall be entitled to a monthly automobile allowance of $1,000.
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10-year options to purchase 950,000 shares exercisable at $1.25 per share, pursuant to the Company’s 2007 Omnibus Equity Compensation Plan. Vesting of the fair value of the options is one-third immediately, one-third on February 29, 2008 and one-third on February 28, 2009, provided that in the event of a change in control or B. Bernstein is terminated without cause or B. Bernstein terminates for good reason, all unvested options shall accelerate and immediately vest and become exercisable in full on the earliest of the date of change in control or date of B. Bernstein’s voluntary termination or by the Company without cause.
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●
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The employment agreement retains their services as Co-Presidents of Brookridge for a five-year period.
|
●
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An annual salary of $120,000 per year.
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●
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Each is to receive 10-year options to purchase 112,500 shares exercisable at $1.00 per share, pursuant to the Company’s 2007 Omnibus Equity Compensation Plan. Vesting of the fair value of the options is equally over 5 years in arrears.
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●
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10-year options to purchase 280,000 shares exercisable at $1.25 per share, pursuant to the Company’s 2007 Omnibus Equity Compensation Plan. Vesting of the fair value of the options is one-third immediately, one-third one year from the grant date and the remainder 2 years from grant date. If any director ceases serving the Company for any reason, all unvested options shall terminate immediately and all vested options must be exercised within 90 days after the director ceases serving as a director.
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●
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10-year options to purchase 50,000 shares exercisable at prices of $1.00 and $1.25 per share, pursuant to the Company’s 2007 Omnibus Equity Compensation Plan. The grant dates range from September 28, 2007 to November 30, 2009. Vesting periods range from one to four years. If any employee ceases being employed by the Company for any reason, all vested and unvested options shall terminate immediately.
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Exercise
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Number
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Remaining
|
Number
|
||||||||
Price
|
Outstanding
|
Contractual Life
|
Exercisable
|
||||||||
$ | 1.25 | 1,885,000 |
5 years
|
1,883,750 | |||||||
$ | 1.00 | 45,000 |
7 years
|
17,500 | |||||||
$ | 0.62 | 500,000 |
7 years
|
500,000 | |||||||
2,430,000 | 2,401,250 |
Exercise price
|
$ | 1.00 | ||
Term
|
10 years
|
|||
Volatility
|
.85 | |||
Dividends
|
0 | % | ||
Discount rate
|
3.73 | % |
2011
|
2010
|
|||||||
Fully vested stock options
|
$ | 2,014 | $ | 411 | ||||
Unvested portion of stock options
|
2,724 | 21,865 | ||||||
$ | 4,738 | $ | 22,276 |
2011
|
2010
|
2009
|
||||||||||||||||||||||
Options
|
Price
|
Options
|
Price
|
Options
|
Price
|
|||||||||||||||||||
Outstanding at beginning of year
|
2,440,000 | 1.10 | 2,691,500 | 1.10 | 2,074,000 | 1.25 | ||||||||||||||||||
Granted
|
- | - | - | - | 856,500 | 0.78 | ||||||||||||||||||
Canceled
|
(10,000 | ) | 1.00 | (251,500 | ) | 1.00 | (239,000 | ) | 1.20 | |||||||||||||||
Exercised
|
- | - | - | - | - | - | ||||||||||||||||||
Outstanding at end of year
|
2,430,000 | 1.12 | 2,440,000 | 1.12 | 2,691,500 | 1.10 | ||||||||||||||||||
Exercisable at end of year
|
2,401,250 | 1.12 | 2,397,500 | 1.12 | 2,349,167 | 1.12 |
Exercise price
|
$ | 1.10 | ||
Term
|
5 years
|
|||
Volatility
|
2.5 | |||
Dividends
|
0 | % | ||
Discount rate
|
4.70 | % |
Weighted Average
|
|||||||||||
Exercise
|
Number
|
Remaining
|
Number
|
||||||||
Price
|
Outstanding
|
Contractual Life
|
Exercisable
|
||||||||
$ | 1.10 | 1,342,500 |
1 Month
|
1,342,500 | |||||||
$ | 1.00 | 2,000,004 |
8 years
|
2,000,004 |
Industry
|
For the year ending December 31,
|
|||||||
2011
|
2010
|
|||||||
Staffing
|
$ | 147,103 | $ | 206,182 | ||||
Transportation
|
670,090 | 694,641 | ||||||
Service
|
1,351,193 | 1,036,682 | ||||||
Other
|
141,760 | 102,520 | ||||||
Publishing
|
94,396 | 474,369 | ||||||
$ | 2,404,542 | $ | 2,514,394 |
For the year ending December 31,
|
||||||||
2011
|
2010
|
|||||||
To a financial institution
|
$ | 489,631 | $ | 673,265 | ||||
To a related party
|
16,669 | 152,918 | ||||||
Total
|
$ | 506,300 | $ | 826,183 |
2011
|
2010
|
|||||||
Tax expense (benefit) at statutory rate
|
95,000 | $ | (4,000 | ) | ||||
State tax expense (benefit)
|
11,000 | (1,000 | ) | |||||
Change in valuation allowance
|
(106,000 | ) | 5,000 | |||||
Income taxes
|
$ | - | $ | - |
2011
|
2010
|
|||||||
Stock based compensation
|
$ | 77,000 | $ | 76,000 | ||||
Allowance for doubtful accounts
|
7,000 | 32,000 | ||||||
Net operating loss carry-forwards
|
1,624,000 | 1,706,000 | ||||||
Gross deferred tax assets
|
1,708,000 | 1,814,000 | ||||||
Valuation reserve
|
(1,708,000 | ) | (1,814,000 | ) | ||||
Income taxes
|
$ | - | $ | - |
Amount
|
Expiration
|
|||||||
Federal
|
$ | 4,035,000 | 2022 - 2025 | |||||
State
|
$ | 1,300,000 | 2022 - 2025 |
2012
|
$ | 27,456 | ||
2013
|
13,129 | |||
$ | 40,585 |
Year Ended
|
Year Ended
|
|||||||
December 31, 2011
|
December 31, 2010
|
|||||||
Net finance revenues
|
$ | - | $ | 689,010 | ||||
Net income (loss)
|
$ | (4,000 | ) | $ | (481,834 | ) |
(a)
|
Brookridge’s current website (not including any rights or interest with respect to the Brookridge name, web address or domain name); and (b) the Sherburne Account
|
|
Report of Management on Internal Control Over Financial Reporting
|
|
* George Rubin is the father of Morry F. Rubin.
|
(1)
|
Directors are elected at the annual meeting of stockholders and hold office until the following annual meeting.
|
●
|
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
|
●
|
Full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities & Exchange Commission and in other public communications made by the Company;
|
●
|
Compliance with applicable governmental law, rules and regulations;
|
●
|
The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
|
●
|
Accountability for adherence to the code.
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Options
Awards
($)(1)
|
Non-Equity
Incentive Plan
Compensation ($)
|
Non-qualified
Deferred
Compensation
Earnings ($)
|
All Other
Compen-
sation
($) (2)(3)
|
Total ($)
|
|||||||||||||||||||||||||
Morry F. Rubin
|
2010
|
$ | 1.00 | $ | -0- | $ | -0- | $ | -0- | $ | -0- | $ | -0- | $ | 18,000 | $ | 18,000 | ||||||||||||||||
Chief Executive Officer (4) |
2011
|
$ | 1.00 | $ | -0- | $ | -0- | $ | -0- | $ | -0- | $ | -0- | $ | 18,000 | $ | 18,000 | ||||||||||||||||
Brad Bernstein
|
2010
|
$ | 240,000 | $ | -0- | $ | -0- | $ | -0- | $ | -0- | $ | -0- | $ | 12,000 | $ | 252,000 | ||||||||||||||||
President |
2011
|
$ | 240,000 | $ | 14,486 | $ | -0- | $ | -0- | $ | -0- | $ | -0- | $ | 12,000 | $ | 266,486 |
(1)
|
FAS 123R requires the company to determine the overall full grant date fair value of the restricted stock awards and options as of the date of grant based upon the Black-Scholes method of valuation which total amounts are set forth in the table above under the year of grant, and to then expense that value over the service period over which the restricted stock awards and options become vested. As a general rule, for time-in-service-based restricted stock awards and options, the company will immediately expense any restricted stock awards and option or portion thereof which is vested upon grant, while expensing the balance on a pro rata basis over the remaining vesting term of the restricted stock awards and options. For a description FAS 123R and the assumptions used in determining the value of the restricted stock awards and options under the Black-Scholes model of valuation, see the notes to the consolidated financial statements included with this Form 10-K.
|
(2)
|
Includes all other compensation not reported in the preceding columns, including (i) perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is less than $10,000; (ii) any “gross-ups” or other amounts reimbursed during the fiscal year for the payment of taxes; (iii) discounts from market price with respect to securities purchased from the company except to the extent available generally to all security holders or to all salaried employees; (iv) any amounts paid or accrued in connection with any termination (including without limitation through retirement, resignation, severance or constructive termination, including change of responsibilities) or change in control; (v) contributions to vested and unvested defined contribution plans; (vi) any insurance premiums paid by, or on behalf of, the company relating to life insurance for the benefit of the named executive officer; and (vii) any dividends or other earnings paid on stock or option awards that are not factored into the grant date fair value required to be reported in a preceding column.
|
(3)
|
Includes compensation for service as a director described under Director Compensation, below.
|
(4)
|
Does not include monies paid to Mr. Rubin on an investment in the Company as described under "Item 13".
|
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options(#)
Unexercisable
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price ($)
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
|
Equity
Incentive Plan
Awards:
Market or
Payout Value
Of Unearned
Shares, Units
Or Other Rights
That Have Not
Vested
|
||||||||||||||||||||||||
Morry F. Rubin
|
650,000 | - 0 - | -0- | 1.25 |
01/31/2017
|
-0- | N/A | -0- | N/A | ||||||||||||||||||||||||
Morry F. Rubin
|
250,000 | - 0 - | - 0- | .62 |
03/23/2019
|
-0- | N/A | -0- | N/A | ||||||||||||||||||||||||
Brad Bernstein
|
250,000 | - 0 - | -0- | .62 |
03/23/2019
|
-0- | N/A | -0- | N/A | ||||||||||||||||||||||||
Brad Bernstein
|
950,000 | - 0 - | -0- | 1.25 |
01/31/2017
|
-0- | N/A | -0- | N/A |
N/A – Not applicable.
|
Name
|
Position
|
2011
Annual Salary(1)
|
Bonus (2)
|
|||||
Morry F. Rubin
|
Chief Executive Officer
|
$
|
1 (1)
|
Annual bonuses at the discretion of the Board in an amount determined by the compensation committee.
|
||||
Brad Bernstein
|
President
|
$
|
240,000 (2)
|
Annual bonus equal to 5% of annual net income provided net income is equal to or greater than $200,000.
|
|
N/A – Not applicable.
|
(1)
|
Effective commencing on the first day of the first month following such time as the Company shall have, within any period beginning on January 1 and ending not more than 12 months thereafter, earned pre-tax net income exceeding $1,000,000, Mr. Rubin’s Base Salary shall be adjusted to an amount, to be mutually agreed upon between Employee and the Company, reflecting the fair value of the services provided, and to be provided, by Employee taking into account (i) Employee’s position, responsibilities and performance, (ii) the Company’s industry, size and performance, and (iii) other relevant factors.
|
(2)
|
The Company shall pay Mr. Bernstein a fixed base salary of $205,000 during the first year of the Employment Term (commencing January 31, 2007), $220,000 during the second year of the Employment Term and $240,000 during the Third Year and any additional year of the Employment Term. The Board may periodically review Mr. Bernstein’s Base Salary and may determine to increase (but not decrease) the Base Salary, in accordance with such policies as the Company may hereafter adopt from time to time, if it deems appropriate. The Board approved an annual bonus program for Mr. Bernstein commencing with the 2011 fiscal year and ending with the 2014 fiscal year. The annual bonus is equal to 5% of annual net income provided net income is equal to or greater than $200,000. The bonus is calculated on the Company’s audited GAAP financial statements.
|
●
|
Each Executive shall receive a base salary and bonuses as described above. M. Rubin and Bernstein shall be entitled to a monthly automobile allowance of $1,500 and $1,000, respectively;
|
●
|
M. Rubin and Bernstein were granted on January 31, 2007 10-year options to purchase 650,000 and 950,000 shares, respectively, exercisable at $1.25 per share, pursuant to the Company’s 2007 Omnibus Equity Compensation Plan. All options granted to them have vested.
|
●
|
The Agreement shall be automatically renewed for additional one year terms unless either party notifies the other, in writing, at least 60 days prior to the expiration of the term, of such party’s intention not to renew the Agreement. On December 2, 2011, each Agreement renewed for one additional year through the close of business on January 31, 2013;
|
●
|
Each Executive shall be required to devote his full business time and efforts to the business and affairs of the Company. Each executive shall be entitled to indemnification to the full extent permitted by law. Each executive is subject to provisions relating to non-compete, non-solicitation of employees and customers during the term of the Agreement and for a specified period thereafter (other than for termination without cause or by the Executive for good reason).
|
●
|
Each Executive shall be entitled to participate in such Executive benefit and other compensatory or non-compensatory plans that are available to similarly situated executives of the Company and shall be entitled to be reimbursed for up to $25,000 of medical costs not covered by the Company’s health insurance per year.
|
●
|
The Company shall, to the extent such benefits can be obtained at a reasonable cost, provide the Executive with disability insurance benefits of at least 60% of his gross Base Salary per month; provided that for purposes of the foregoing, prior to the date on which M. Rubin’s Base Salary is adjusted above $1.00 as described above, M. Rubin’s Base Salary shall be deemed to be $300,000. In the event of the Executive’s Disability, the Executive and his family shall continue to be covered by all of the Company’s Executive welfare benefit plans at the Company’s expense, to the extent such benefits may, by law, be provided, for the lesser of the term of such Disability and 24 months, in accordance with the terms of such plans; and
|
·
|
The Company shall, to the extent such benefits can be obtained at a reasonable cost, provide the Executive with life insurance benefits in the amount of at least $500,000. In the event of the Executive’s death, the Executive’s family shall continue to be covered by all of the Company’s Executive welfare benefit plans, at the Company’s expense, to the extent such benefits may, by law, be provided, for 12 months following the Executive’s death in accordance with the terms of such plans.
|
DIRECTOR COMPENSATION
|
|||||||||||||||||||||||
Name and
Principal
Position
|
Fees
Earned
or Paid
in Cash
($)
|
Stock
Awards
($) (1)
|
Option
Awards ($)
(1)
|
Non-Equity
Incentive Plan
Compensation
($) (2)
|
Nonqualified
Deferred
Compensation
Earnings ($)
|
All Other
Compensation
($) (3)
|
Total ($)
|
||||||||||||||||
Kenneth Smalley, Director
|
$
|
9,500
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
9,500
|
|||||||||
George Rubin, Director (4)
|
$
|
9,500
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
9,500
|
|||||||||
E. Anthony Woods,
Director
|
$
|
9,500
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
9,500
|
(1)
|
FAS 123R requires the company to determine the overall full grant date fair market value of the restricted stock awards and the options as of the date of grant based upon the Black-Scholes method of valuation which total amounts are set forth in the table above under the year of grant, and to then expense that value over the service period over which the restricted stock awards and the options become exercisable vested. As a general rule, for time-in-service-based restricted stock awards and options, the company will immediately expense any restricted stock award or option or portion thereof which is vested upon grant, while expensing the balance on a pro rata basis over the remaining vesting term of the restricted stock award and option. For a description FAS 123 R and the assumptions used in determining the value of the restricted stock awards and options under the Black-Scholes model of valuation, see the notes to the financial statements included with this Form 10-SB/A.
|
(2)
|
Excludes awards or earnings reported in preceding columns.
|
(3)
|
Includes all other compensation not reported in the preceding columns, including (i) perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is less than $10,000; (ii) any “gross-ups” or other amounts reimbursed during the fiscal year for the payment of taxes; (iii) discounts from market price with respect to securities purchased from the company except to the extent available generally to all security holders or to all salaried employees; (iv) any amounts paid or accrued in connection with any termination (including without limitation through retirement, resignation, severance or constructive termination, including change of responsibilities) or change in control; (v) contributions to vested and unvested defined contribution plans; (vi) any insurance premiums paid by, or on behalf of, the company relating to life insurance for the benefit of the director; (vii) any consulting fees earned, or paid or payable; (viii) any annual costs of payments and promises of payments pursuant to a director legacy program and similar charitable awards program; and (ix) any dividends or other earnings paid on stock or option awards that are not factored into the grant date fair value required to be reported in a preceding column.
|
(4)
|
All other compensation includes the payment of health insurance which is not provided to other non-employee directors. Mr. Rubin's compensation excludes monies earned as an investor. See "Item 13" for a description of certain transactions involving George Rubin.
|
2007 Omnibus Equity Compensation Plan
|
||||||||
Name and Position
|
Dollar Value ($)
|
Number of Options
|
||||||
Morry R. Rubin, Chief Executive Officer (2)
|
-0- | (1) | 900,000 | |||||
Brad Bernstein, President (2)
|
-0- | (1) | 1,200,000 | |||||
Executive Group (two persons) (2)
|
-0- | (1) | 2,100,000 | |||||
Non-Executive Director Group (two persons) (2)
|
-0- | (1) | 280,000 | |||||
Non-Executive Officer Employee Group (three persons)
|
-0- | (1) | 50,000 |
(1)
|
The dollar value of these options is based upon the fair market value of our common stock as of the close of business on December 31, 2011, less the exercise price of each respective option.
|
(2)
|
We have a stock option plan covering 4,200,000 shares and granted non-statutory stock options to purchase 950,000, shares and 650,000 shares to Brad Bernstein and Morry F. Rubin, respectively, exercisable at $1.25 per share and granted non-statutory stock options to purchase 180,000 shares to each of Kenneth Smalley and Frank DeLape, a former director, exercisable at $1.25 per share. These options have a term of ten years and vest one-third on the date of grant, one-third on February 29, 2008 and one-third on February 28, 2009. On December 2, 2008, Mr. DeLape resigned from the Board. He had a period of 90 days to exercise his vested options, which options expired unexercised on March 2, 2009. On May 28, 2008, we granted E. Anthony Woods options to purchase 100,000 shares, exercisable at $1.25 per share from the vesting date through May 28, 2018, with one-third vesting on May 28, 2008, one third vesting on May 28, 2009 and the remaining one-third vesting on May 28, 2010.
|
•
|
the acquisition by any person of direct or indirect ownership of securities representing more than 50% of the voting power of our then outstanding stock;
|
|
•
|
a consolidation or merger of our Company resulting in the stockholders of the Company immediately prior to such event not owning at least a majority of the voting power of the resulting entity’s securities outstanding immediately following such event;
|
|
•
|
the sale of substantially all of our assets; or
|
|
•
|
The liquidation or dissolution of our Company.
|
|
each of our stockholders who is known by us to beneficially own more than 5% of our common stock;
|
|
each of our executive officers; and
|
|
each of our directors.
|
Name of Beneficial Owner
|
Shares of
Common Stock Beneficially Owned
|
% of Shares
of Common Stock
Beneficially Owned
|
||||||
Morry F. Rubin (1)
|
6,071,340 | 29.7 | ||||||
George Rubin (1)
|
3,987,840 | 20.7 | ||||||
Ilissa and Brad Bernstein (2)
|
3,450,000 | 17.2 | ||||||
E. Anthony Woods (4)
|
100,000 | .5 | ||||||
Kenneth Smalley (3)
|
180,000 | 1.0 | ||||||
All officers and directors as a group (five persons) (5)
|
13,527,180 | 61.2 | ||||||
Buechel Family Ltd Partnership (6)
|
1,254,926 | 6.7 | ||||||
Buechel Patient Care Research & Education Fund (6)
|
1,254,926 | 6.7 | ||||||
Marc Malaga
|
2,205,100 | 11.8 |
*
|
Represents less than 1% of the outstanding shares.
|
(1)
|
Morry Rubin’s beneficial ownership includes options/warrants to purchase 1,816,672 shares of Common Stock granted to him and 262,000 shares in which Morry Rubin’s wife and George Rubin are co-trustees of certain family trusts. George Rubin’s beneficial ownership includes 262,000 shares in which Morry Rubin’s wife and George Rubin are co-trustees of certain family trusts and warrants to purchase 666,672 shares.
|
|
|
(2)
|
Of the 3,450,000 shares beneficially owned by them, 2,000,000 common are owned by Ilissa Bernstein, Brad Bernstein’s wife. The remaining 1,450,000 shares represent vested options to purchase a like amount of shares of Common Stock granted to Brad Bernstein.
|
|
(3)
|
Includes options to purchase 180,000 shares of Common Stock.
|
|
(4)
|
Includes options to purchase 100,000 options granted to Mr. Woods.
|
(5)
|
Includes all options and warrants to purchase 3,546,672 shares.
|
|
|
(6)
|
This person beneficially owns 31,812 shares of Series 1 Preferred Stock convertible into 162,241 shares of Common Stock, with the voting rights of 184,118 shares. Each beneficial owner has the right to vote at each stockholder meeting the equivalent of 1,276,840 shares of Common Stock. These beneficial owners are under common control of Frederick Buechel.
|
|
Independent Directors
|
(a)
|
Financial Statements
|
2.1
|
Exchange Agreement
|
|
3.1
|
Certificate of Incorporation-BTHC,INC.
|
|
3.2
|
Certificate of Merger of BTHC XI, LLC into BTHC XI, Inc.
|
|
3.3
|
Certificate of Amendment
|
|
3.4
|
Designation of Rights and Preferences-Series 1 Convertible Preferred Stock
|
|
3.5
|
Amended and Restated By-laws
|
|
4.1
|
Form of Placement Agent Warrant issued to Fordham Financial Management
|
|
10.1
|
Directors’ Compensation Agreement-George Rubin
|
|
10.2
|
Employment Contract-Morry F. Rubin
|
|
10.3
|
Employment Contract-Brad Bernstein
|
|
10.4
|
Agreement-Line of Credit
|
|
10.5
|
Fordham Financial Management-Consulting Agreement
|
|
10.6
|
Facilities Lease – Florida
|
|
10.7
|
Facilities Lease – North Carolina
|
|
10.8
|
Loan and Security Agreement (1)
|
|
10.9
|
Revolving Note (1)
|
|
10.10
|
Debt Subordination Agreement (1)
|
|
10.11
|
Guaranty Agreement (Morry Rubin) (1)
|
|
10.12
|
Guaranty Agreement (Brad Bernstein)(1)
|
|
10.13
|
Continuing Guaranty Agreement (1)
|
|
10.14
|
Pledge Agreement (1)
|
|
10.16
|
Asset Purchase Agreement between the Company and Brookridge Funding LLC (2)
|
|
10.17
|
Senior Credit Facility between the Company and MGM Funding LLC (2)
|
|
10.18
|
Senior Credit Facility Guarantee - Michael P. Hilton and John A. McNiff III (4)
|
|
10.19
|
Employment Agreement - Michael P. Hilton (4)
|
|
10.20
|
Employment Agreement - John A. McNiff (4)
|
|
10.21
|
Accounts Receivable Credit Facility with Greystone Commercial Services LP (3)
|
|
10.22
|
Memorandum of Understanding - Re: Rescission Agreement*
|
|
10.23
|
Rescission Agreement and Exhibits Thereto (5)
|
|
10.24
|
Termination Agreement by and between Brookridge Funding Services LLC and MGM Funding LLC.(5)
|
|
10.25
|
First Amendment to Factoring Agreement (6)
|
|
10.26
|
Promissory Note dated April 26, 2011 between Anchor Funding Services, Inc. and MGM Funding, LLC (7)
|
|
10.27
|
Rediscount Facility Agreement with TAB Bank (8)
|
|
10.28
|
Form of Validity Warranty to TAB Bank (8)
|
|
21.21
|
Subsidiaries of Registrant listing state of incorporation (4)
|
|
31.1
|
Rule 13a-14(a) Certification – Principal Executive Officer *
|
|
31.2
|
Rule 13a-14(a) Certification – Principal Financial Officer *
|
|
32.1
|
Section 1350 Certification – Principal Executive Officer *
|
|
32.2
|
Section 1350 Certification – Principal Financial Officer *
|
|
99.1
|
2007 Omnibus Equity Compensation Plan
|
|
99.2
|
Form of Non-Qualified Option under 2007 Omnibus Equity Compensation Plan
|
|
99.3
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Amendment to 2007 Omnibus Equity Compensation Plan increasing the Plan to 4,200,000 shares *
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99.4
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Press Release – Year End Results of Operations *
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101.INS
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XBRL Instance Document,XBRL Taxonomy Extension Schema *
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101.SCH
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Document, XBRL Taxonomy Extension *
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101.CAL
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Calculation Linkbase, XBRL Taxonomy Extension Definition *
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101.DEF
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Linkbase,XBRL Taxonomy Extension Labels *
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101.LAB
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Linkbase, XBRL Taxonomy Extension *
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101.PRE
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Presentation Linkbase *
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___________________
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* Filed herewith.
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(1)
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Incorporated by reference to the Registrant’s Form 8-K filed November 24, 2008 (date of earliest event November 21, 2008).
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(2)
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Incorporated by reference to the Registrant's Form 8-K filed December 8, 2009 (date of earliest event -December 4, 2009).
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(3)
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Incorporated by reference to the Registrant's Form 8-K filed December 2, 2009 (date of earliest event -November 30, 2009).
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(4)
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Incorporated by reference to the Registrant's Form 10-K for the fiscal year ended December 31, 2009.
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(5)
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Incorporated by reference to the Registrant's Form 8-K filed October 12, 2010 (date of earliest event -October 6, 2010).
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(6)
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Incorporated by reference to the Registrant's Form 10-K for the fiscal year ended December 31, 2010.
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(7)
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Incorporated by reference to the Registrant's Form 8-K filed April 28, 2011 (date of earliest event -April 26, 2011).
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(8)
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Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended September 30, 2011.
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(b)
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Financial Statement Schedules
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ANCHOR FUNDING SERVICES, INC. | |||
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By:
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/s/ Brad Bernstein | |
Brad Bernstein, President | |||
and Principal Financial Officer | |||
Dated: Boca Raton, Florida
March 29, 2012
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Signature
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Title
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Date
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||
/s/ Brad Bernstein
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President and
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March 29, 2012
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||
Brad Bernstein
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Principal Financial Officer | |||
/s/ Morry F. Rubin
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Principal Executive Officer
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March 29, 2012
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||
Morry F. Rubin
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Director and Co-Chairman
of the Board
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|||
/s/
George Rubin
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Co-Chairman of the Board
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March 29, 2012
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||
George Rubin
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/s/
E. Anthony Woods
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Director
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March 29, 2012
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||
E. Anthony Woods
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||||
/s/
Kenneth Smalley
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Director
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March 29, 2012
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||
Kenneth Smalley
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I, Morry F. Rubin certifies that:
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||
1.
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I have reviewed this annual report on Form 10-K of Anchor Funding Services, Inc.;
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2
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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;
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3.
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Based on my knowledge, the consolidated 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 registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are 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 registrant and have:
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a)
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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 registrant, 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;
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b)
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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 consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’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
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:
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a)
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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 registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/
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Morry F. Rubin
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Morry F. Rubin
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|
Principal Executive Officer
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I, Brad Bernstein certifies that:
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||
1.
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I have reviewed this annual report on Form 10-K of Anchor Funding Services, Inc.;
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2
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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;
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3.
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Based on my knowledge, the consolidated 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 registrant as of, and for, the periods presented in this report;
|
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4.
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The registrant’s other certifying officer and I are 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 registrant 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 registrant, 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;
|
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b)
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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 consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
|
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c)
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Evaluated the effectiveness of the registrant’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
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:
|
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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 registrant’s ability to record, process, summarize and report financial information; and
|
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/
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Brad Bernstein
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Brad Bernstein
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Principal Financial Officer
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March 29, 2012
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/s/
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Morry F. Rubin
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Morry F. Rubin
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Principal Executive Officer
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March 29, 2012
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/s/
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Brad Bernstein
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Brad Bernstein
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Principal Financial Officer
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Section 4.
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Shares Subject to the Plan
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