Delaware
|
88-0464853
|
(State or other jurisdiction of incorporation)
|
(I.R.S. Employer Identification Number)
|
Common Stock, $0.0001 par value
|
OTC Bulletin Board
|
(Title of each class)
|
(Name of each exchange on which registered)
|
Yes
o
|
No
þ
|
Yes
o
|
No
þ
|
Yes
þ
|
No
o
|
Yes
þ
|
No
o
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
þ
|
Yes
o
|
No
þ
|
|
1
|
||
Item 1.
|
1
|
||
Item 1A.
|
12
|
||
Item 1B.
|
24
|
||
Item 2.
|
24
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||
Item 3.
|
25
|
||
Item 4.
|
26
|
||
|
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||
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27
|
||
Item 5.
|
27
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Item 6.
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28
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Item 7.
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28
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||
Item 7A.
|
43
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||
Item 8.
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43
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Item 9.
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43
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||
Item 9A.
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43
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||
Item 9B.
|
44
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||
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44
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|||
Item 10.
|
44
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||
Item 11.
|
48
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||
Item 12.
|
53
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||
Item 13.
|
55
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||
Item 14.
|
56
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||
58
|
|||
Item 15.
|
58
|
PA
RT I
|
ITEM 1.
|
BUSIN
ESS
|
|
·
|
Are prevalent in any organization;
|
|
·
|
Cost health plans and employers a disproportionate amount of money;
|
|
·
|
Have higher rates of absenteeism and lower rates of productivity; and
|
|
·
|
Who have co-morbid medical conditions incur increased costs for the treatment of these conditions compared to a non-substance dependent population.
|
|
·
|
A comprehensive physical examination, including specific laboratory tests, prior to initiation of treatment by the treating physician, to determine if the patient is appropriate for PROMETA;
|
|
·
|
Prescription medications delivered in a unique dosing algorithm administered in a physician-supervised setting. The initial treatment occurs during three consecutive daily visits of about two hours each, followed by a two-day follow-up treatment three weeks later;
|
|
·
|
A nutritional plan and recommendations, designed to help facilitate and maintain the other aspects of recovery; and
|
|
·
|
One month of prescription at-home medications and nutritional supplements and education following the initial treatment.
|
|
·
|
The PROMETA Treatment Program includes medically directed and supervised procedures designed to address neurochemical imbalances in the brain that may be caused or worsened by substance dependence. The rationale for this approach is that by addressing the underlying physiological balance thought to be disrupted by substance dependence, dependent persons may be better able to address the behavioral/psychological and environmental components of their disease;
|
|
·
|
By first addressing the physiologic components of the disease, substance dependent patients may have a better opportunity to address the behavioral and environmental components, enabling them to progress through the various stages of recovery;
|
|
·
|
The PROMETA Treatment Program is designed to address a spectrum of patient needs, including physiological, nutritional and psychological elements in an integrated way;
|
|
·
|
Treatment using the PROMETA Treatment Program generally can be performed on an outpatient basis and does not require long periods away from home or work; and
|
|
·
|
The PROMETA Treatment Program may be initiated at various stages of recovery, including initiation of abstinence and during early recovery, and can complement other treatment modalities.
|
|
·
|
Demonstrating the potential for improved clinical outcomes and reduced cost associated with using our OnTrak programs with key managed care and other third-party payors;
|
|
·
|
Educating third-party payors on the disproportionately high cost of their substance dependent population;
|
|
·
|
Providing our Catasys integrated substance dependence solutions to third-payors for reimbursement on a case rate, monthly fee, savings generated or a combination thereof; and
|
|
·
|
Generating outcomes data from our OnTrak program to demonstrate cost reductions and utilization of this outcomes data to facilitate broader adoption.
|
|
·
|
A specific program aimed at addressing high-cost conditions by improving patient care and reducing overall healthcare costs can benefit health plans that do not have or do not wish to dedicate the capacity, ability or focus to develop these programs internally;
|
|
·
|
Increased worker productivity by reducing workplace absenteeism, compensation claims and job related injuries;
|
|
·
|
Decreased emergency room and inpatient utilization;
|
|
·
|
Decreased readmission rates; and
|
|
·
|
Healthcare cost savings (including medical, behavioral and pharmaceutical).
|
|
·
|
Detoxification, which is typically conducted in medically directed and supervised environments;
|
|
·
|
Rehabilitation, which is often conducted through short- or long-term therapeutic facilities or programs, most of which do not offer medical management options; and
|
|
·
|
Psychosocial care that is provided via structured outpatient treatment programs.
|
|
·
|
The addiction medication naltrexone, an opiate receptor antagonist, is marketed by a number of generic pharmaceutical companies as well as under the trade names ReVia
®
and Depade
®
for treatment of alcohol dependence;
|
|
·
|
VIVITROL
®
, an extended release formulation of naltrexone manufactured by Alkermes, is administered via monthly injections for the treatment of alcohol dependence in patients who are able to abstain from drinking in an outpatient setting, and are not actively drinking prior to treatment initiation. Alkermes reported that in clinical trials, when used in combination with psychosocial support, VIVITROL was shown to reduce the number of drinking days and heavy drinking days and to prolong abstinence in patients who abstained from alcohol the week prior to starting treatment;
|
|
·
|
Campral
®
Delayed-Release Tablets (acamprosate calcium), an NMDA receptor antagonist taken two to three times per day on a chronic or long-term basis and marketed by Forest Laboratories. Clinical studies supported the effectiveness in the maintenance of abstinence for alcohol-dependent patients who had undergone inpatient detoxification and were already abstinent from alcohol; and
|
|
·
|
Tropiramate (Topamax
®
), a drug manufactured by Ortho-McNeill Jannssen, which is approved for the treatment of seizures. A multi-site clinical trial reported in October 2007 found that tropiramate significantly reduced heavy drinking days in alcohol-dependent individuals.
|
|
·
|
OnTrak
®
;
|
|
·
|
eOnTrak
®
|
|
·
|
PROMETA
®
.
|
ITEM 1A.
|
RISK
FACTORS
|
|
·
|
the addiction medication naltrexone, an opiate receptor antagonist, is marketed by a number of generic pharmaceutical companies as well as under the trade names ReVia
®
and Depade
®
, for treatment of alcohol dependence;
|
|
·
|
VIVITROL
®
, an extended release formulation of naltrexone manufactured by Alkermes, administered via monthly injections for the treatment of alcohol dependence in patients who are able to abstain from drinking in an outpatient setting, and are not actively drinking prior to treatment initiation. Alkermes reported that in clinical trials, when used in combination with psychosocial support, VIVITROL was shown to reduce the number of drinking days and heavy drinking days and to prolong abstinence in patients who abstained from alcohol the week prior to starting treatment;
|
|
·
|
Campral
®
Delayed-Release Tablets (acamprosate calcium), an NMDA receptor antagonist taken two to three times per day on a chronic or long-term basis and marketed by Forest Laboratories. Clinical studies supported the effectiveness in the maintenance of abstinence for alcohol-dependent patients who had undergone inpatient detoxification and were already abstinent from alcohol; and
|
|
·
|
Tropiramate (Topamax
®
), a drug manufactured by Ortho-McNeill Jannssen, which is approved for the treatment of seizures. A multi-site clinical trial reported in October 2007 found that tropiramate significantly reduced heavy drinking days in alcohol-dependent individuals.
|
|
·
|
announcements of new products or services by us or our competitors; current events affecting the political, economic and social situation in the United States and other countries where we operate;
|
|
·
|
trends in our industry and the markets in which we operate;
|
|
·
|
changes in financial estimates and recommendations by securities analysts;
|
|
·
|
acquisitions and financings by us or our competitors;
|
|
·
|
the gain or loss of a significant customer;
|
|
·
|
quarterly variations in operating results;
|
|
·
|
the operating and stock price performance of other companies that investors may consider to be comparable;
|
|
·
|
purchases or sales of blocks of our securities; and
|
|
·
|
issuances of stock.
|
ITEM 1B.
|
UNRESOLVED STAFF COMM
ENTS
|
ITEM 2.
|
Location
|
Use
|
Approximate
Area in
Square Feet
|
||||
11150 Santa Monica Blvd.
Los Angeles, California
|
Principal executive and administrative offices
|
10,700 | ||||
1315 Lincoln Blvd.
Santa Monica, California
|
Medical office space for The Center to Overcome Addiction
|
2,700 | ||||
Surrendered Office Space
1700 Montgomery St.
San Francisco, California
|
Medical office space
|
4,000 |
ITEM 3.
|
LEGAL PROCEED
ING
S
|
ITEM 4.
|
REMOVED AND RESE
RVED
|
PA
RT II
|
MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
|
Closing Sales Price
|
||||||||
2010
|
High
|
Low
|
||||||
4th Quarter
|
$ | 0.11 | $ | 0.03 | ||||
3rd Quarter
|
0.16 | 0.05 | ||||||
2nd Quarter
|
0.30 | 0.16 | ||||||
1st Quarter
|
0.58 | 0.22 | ||||||
Closing Sales Price
|
||||||||
2009
|
High
|
Low
|
||||||
4th Quarter
|
$ | 0.77 | $ | 0.27 | ||||
3rd Quarter
|
0.44 | 0.24 | ||||||
2nd Quarter
|
0.36 | 0.23 | ||||||
1st Quarter
|
0.68 | 0.18 |
(a)
|
(b)
|
(c)
|
||||||||||
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and right
|
Weighted-average exercise price of outstanding options, warrants and rights
|
Number of Securities
remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|||||||||
Equity compensation plans approved by security
|
207,914,510 | $ | 0.07 | 22,190,886 | ||||||||
Equity compensation plans not approved by security
|
- | - | ||||||||||
Total
|
207,914,510 | $ | 0.07 | 22,190,886 |
ITEM 6.
|
SELECT
ED
FINANCIAL DATA
|
|
·
|
Demonstrating the potential for improved clinical outcomes and reduced cost associated with using our OnTrak programs with key managed care and other third-party payors;
|
|
·
|
Educating third-party payors on the disproportionately high cost of their substance dependent population;
|
|
·
|
Providing our Catasys integrated substance dependence solutions to third-payors for reimbursement on a case rate, monthly fee, savings generated or a combination thereof; and
|
|
·
|
Generate outcomes data from our OnTrak program to demonstrate cost reductions and utilization of this outcomes data to facilitate broader adoption.
|
Twelve Months Ended
|
||||||||
(In thousands, except per share amounts)
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
Revenues
|
||||||||
Healthcare services revenues
|
$ | 28 | $ | - | ||||
License & Management revenues
|
420 | 1,530 | ||||||
Total revenues
|
$ | 448 | $ | 1,530 | ||||
Operating expenses
|
||||||||
Cost of healthcare services
|
255 | 509 | ||||||
General and administrative
|
12,784 | 18,034 | ||||||
Impairment losses
|
- | 1,113 | ||||||
Depreciation and amortization
|
882 | 1,248 | ||||||
Total operating expenses
|
13,921 | 20,904 | ||||||
Loss from operations
|
(13,473 | ) | (19,374 | ) | ||||
Interest and other income
|
131 | 941 | ||||||
Interest expense
|
(1,025 | ) | (1,142 | ) | ||||
Loss on extinguishment of debt
|
- | (330 | ) | |||||
Gain on the sale of marketable securities
|
696 | 160 | ||||||
Other than temporary impairment of marketable securities
|
- | (185 | ) | |||||
Change in fair value of warrant liability
|
(6,303 | ) | 341 | |||||
Loss from continuing operations before provision for income taxes
|
(19,974 | ) | (19,589 | ) | ||||
Provision for income taxes
|
22 | 18 | ||||||
Loss from continuing operations
|
$ | (19,996 | ) | $ | (19,607 | ) | ||
Discontinued Operations:
|
||||||||
Results of discontinued operations, net of tax
|
- | 10,449 | ||||||
Net income (loss)
|
$ | (19,996 | ) | $ | (9,158 | ) | ||
Basic and diluted net income (loss) per share:
|
||||||||
Continuing operations
|
$ | (0.23 | ) | $ | (0.34 | ) | ||
Discontinued operations
|
- | 0.18 | ||||||
Net income (loss) per share
|
$ | (0.23 | ) | $ | (0.16 | ) | ||
Weighted number of shares outstanding
|
86,862 | 57,947 |
·
|
Decrease in general and administrative expenses by $5.2 million due to the the streamlining of operations during 2009 and 2010.
|
·
|
There were no impairment losses in 2010 compared to $1.1 million in 2009. The 2009 amount was due to $758K in fixed assets impairments and $356K in intangible assets impairments, there were no such impairments in 2010.
|
·
|
There were no other than temporary impairment of marketable securities for the year-ended December 31, 2010 compared to $185,000 for the year-ended December 31, 2009, due to the redemption of all Auction Rate Securities during 2010.
|
·
|
Interest expense decreased by $117,000 and cost of healthcare services also decreased by $254,000.
|
Twelve Months Ended
|
||||||||
(In thousands)
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
License and Management services
|
$ | (17,116 | ) | $ | (15,642 | ) | ||
Healthcare services
|
(2,272 | ) | (3,947 | ) | ||||
Loss from continuing operations before provision for income taxes
|
$ | (19,388 | ) | $ | (19,589 | ) |
(In thousands, except patient treatment data)
|
Twelve months ended
|
|||||||
December 31,
|
||||||||
2010
|
2009
|
|||||||
Revenues
|
||||||||
U.S. licensees
|
$ | 150 | $ | 559 | ||||
Managed treatment centers
|
270 | 837 | ||||||
Other revenues
|
- | 134 | ||||||
Total license and management services revenues
|
$ | 420 | $ | 1,530 | ||||
Operating expenses
|
||||||||
Cost of healthcare services
|
$ | 255 | $ | 509 | ||||
General and administrative expenses
|
||||||||
Salaries and benefits
|
8,029 | 9,485 | ||||||
Other expenses
|
1,869 | 5,443 | ||||||
Research and development
|
- | - | ||||||
Impairment losses
|
- | 355 | ||||||
Depreciation and amortization
|
882 | 1,165 | ||||||
Total operating expenses
|
$ | 11,035 | $ | 16,957 | ||||
Loss from operations
|
$ | (10,615 | ) | $ | (15,427 | ) | ||
Interest and other income
|
131 | 941 | ||||||
Interest expense
|
(1,025 | ) | (1,142 | ) | ||||
Loss on extinguishment of debt
|
- | (330 | ) | |||||
Gain on the sale of marketable securities
|
696 | 160 | ||||||
Other than temporary impairment on
marketable securities
|
- | (185 | ) | |||||
Change in fair value of warrant liabilities
|
(6,303 | ) | 341 | |||||
Loss before provision for income taxes
|
$ | (17,116 | ) | $ | (15,642 | ) | ||
PROMETA patients treated
|
||||||||
U.S. licensees
|
35 | 117 | ||||||
Managed treatment centers
|
24 | 85 | ||||||
Other
|
- | 11 | ||||||
59 | 213 | |||||||
Average revenue per patient treated
(a)
|
||||||||
U.S. licensees
|
$ | 4,281 | $ | 4,386 | ||||
Managed treatment centers
|
6,592 | 6,196 | ||||||
Other
|
- | - | ||||||
Overall average
|
5,221 | 5,511 | ||||||
(a) The average revenue per patient treated excludes administrative fees and other non-PROMETA patient revenues.
|
(in thousands)
|
For the year ended December 31,
|
|||||||
2010
|
2009
|
|||||||
Revenues
|
$ | 28 | $ | - | ||||
Operating Expenses
|
||||||||
General and administrative expenses
|
||||||||
Salaries and benefits
|
$ | 2,145 | $ | 2,651 | ||||
Other expenses
|
155 | 455 | ||||||
Impairment charges
|
- | 758 | ||||||
Depreciation and amortization
|
- | 83 | ||||||
Total operating expenses
|
$ | 2,300 | $ | 3,947 | ||||
Loss before provision for income taxes
|
$ | (2,272 | ) | $ | (3,947 | ) |
|
·
|
How long and by how much the fair value of the investments have been below cost;
|
|
·
|
The financial condition of the issuers;
|
|
·
|
Any downgrades of the investment by rating agencies;
|
|
·
|
Default on interest or other terms; and
|
|
·
|
Our intent and ability to hold the investments long enough for them to recover their value.
|
ITEM 7A.
|
Q
UAN
TITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINAN
CIA
L STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM 9.
|
CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
C
ONT
ROLS AND PROCEDURES
|
|
·
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
|
·
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and
|
|
·
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
|
ITEM 9B.
|
OTHER INFORM
ATIO
N
|
PAR
T III
|
ITEM 10.
|
DIR
ECTOR
S, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Name
|
Age
|
Position
|
Officer or Director Since
|
|||
Terren S. Peizer
|
51
|
Director, Chairman of the Board and Chief Executive Officer
|
2003
|
|||
Richard A. Anderson
|
41
|
Director, President and Chief Operating Officer
|
2003
|
|||
Peter Donato
|
41
|
Chief Financial Officer
|
2010
|
|||
Andrea Grubb Barthwell, M.D.
|
56
|
Director, Chair of Compensation Committee, Member of the Audit and Nominations & Governance Committees
|
2005
|
|||
Kelly McCrann
|
55
|
Director, Chair of Nominations & Governance Committee, Member of the Audit Committee, Member of Compensation Committee
|
2010
|
|||
Jay A. Wolf
|
37
|
Lead Director, Chair of Audit Committee, Member of Nominations and Governance Committee, Member of Compensation Committee
|
2008
|
|
·
|
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
|
|
·
|
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
|
|
·
|
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
|
|
·
|
been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
|
|
·
|
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
·
|
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
|
ITEM 11.
|
EXECUTIVE COMPEN
SATIO
N
|
Name and
Principal Position
|
Year
|
Salary
(4)
|
Bonus
|
Stock
Awards
|
Option
Awards
(1)
|
Non-
Equity
Incentive
Compen-
sation
|
Non-
Qualified
Deferred
Compen-
sation
Earnings
|
All
Other
Compen-
sation
(2)
|
Total
|
|||||||||||||||||||||||||
Terren S. Peizer,
|
2010
|
450,000 | - | - | 2,011,605 | - | - | 2,461,605 | ||||||||||||||||||||||||||
Chairman & Chief
|
2009
|
450,000 | - | - | 468,450 | - | - | 11,969 | (3) | 930,419 | ||||||||||||||||||||||||
Executive Officer
|
||||||||||||||||||||||||||||||||||
Richard A. Anderson,
|
2010
|
350,000 | - | - | 1,666,033 | - | - | 21,495 | 2,037,528 | |||||||||||||||||||||||||
President and
|
2009
|
350,000 | - | - | 522,064 | - | - | 20,489 | 892,553 | |||||||||||||||||||||||||
Chief Operating Officer
|
||||||||||||||||||||||||||||||||||
Christopher S. Hassan,
|
2010
|
100,792 | - | - | 71,323 | - | - | 172,115 | ||||||||||||||||||||||||||
Chief Strategy Officer
|
2009
|
302,377 | - | - | 408,960 | - | - | 17,754 | 729,091 | |||||||||||||||||||||||||
Maurice S. Hebert,
|
2010
|
41,956 | - | - | 3,343 | - | - | 45,299 | ||||||||||||||||||||||||||
Chief Financial Officer
|
2009
|
240,000 | - | - | 141,857 | - | - | 14,491 | 396,348 | |||||||||||||||||||||||||
Donato, Peter
|
2010
|
69,000 | - | - | 9,881 | - | - | - | 78,881 | |||||||||||||||||||||||||
Chief Financial Officer
|
2009
|
- | - | - | - | - | - | - | - |
(1)
|
Amounts reflect the compensation expense recognized in the Company's financial statements in 2010 and 2009 for stock option awards granted to the executive officers in accordance with FASB accounting rules. The grant-date fair values of stock options are calculated using the Black-Scholes option pricing model, which incorporates various assumptions including expected volatility, expected dividend yield, expected life and applicable interest rates. See notes to the consolidated financial statements in this report for further information on the assumptions used to value stock options granted to executive officers. The option award amounts include incremental compensation expense of $1,714,721 for Mr. Peizer and $1,478,897 for Mr. Anderson related to the December 9, 2010 Grants that vested immediately.
|
(2)
|
Includes group life insurance premiums and medical benefits for each officer.
|
(3)
|
Includes $11,969 in 2009 for automobile allowance, including tax gross-ups.
|
(4)
|
Amounts for Mr. Hebert and Mr. Donato represent pro-rata salary earned on annual salaries of $240,000 and $220,000, respectively.
|
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(1)
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexer-
cisable
|
Equity
Incentive
Plan
Awards:
No. of
Securities
Underlying
Unexer-
cised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date (3)
|
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
(#)
|
||||||||||||||||||||||||
Terren S. Peizer
|
1,000,000 | - | - | $ | 0.31 |
09/29/13
|
- | - | - | - | |||||||||||||||||||||||
460,000 | - | - | 0.31 |
02/07/18
|
- | - | - | - | |||||||||||||||||||||||||
525,000 | 15,000 | - | 0.31 |
06/20/18
|
- | - | - | - | |||||||||||||||||||||||||
506,139 | 452,861 | - | 0.48 |
10/27/19
|
- | - | - | - | |||||||||||||||||||||||||
48,147,000 | 11,253,000 | - | 0.044 |
12/06/20
|
- | - | - | - | |||||||||||||||||||||||||
50,638,139 | 11,720,861 | - | |||||||||||||||||||||||||||||||
Richard A. Anderson
|
120,000 | - | - | 0.28 |
09/29/13
|
- | - | - | - | ||||||||||||||||||||||||
255,000 | - | - | 0.28 |
04/28/15
|
- | - | - | - | |||||||||||||||||||||||||
15,000 | 10,000 | - | 0.28 |
07/27/16
|
- | - | - | - | |||||||||||||||||||||||||
293,000 | - | - | 0.28 |
02/07/18
|
- | - | - | - | |||||||||||||||||||||||||
334,915 | 9,585 | - | 0.28 |
06/20/18
|
- | - | - | - | |||||||||||||||||||||||||
262,833 | 235,167 | - | 0.44 |
10/27/19
|
- | - | - | - | |||||||||||||||||||||||||
46,113,917 | 13,286,083 | - | 0.04 |
12/06/20
|
|||||||||||||||||||||||||||||
47,394,665 | 13,540,835 | ||||||||||||||||||||||||||||||||
Christopher S. Hassan
|
240,000 | 160,000 | - | 4.77 |
07/27/16
|
- | - | - | - | ||||||||||||||||||||||||
165,410 | 29,590 | - | 2.65 |
02/07/18
|
- | - | - | - | |||||||||||||||||||||||||
127,780 | 102,220 | - | 2.63 |
06/20/18
|
- | - | - | - | |||||||||||||||||||||||||
533,190 | 291,810 | ||||||||||||||||||||||||||||||||
Maurice Hebert
|
54,000 | 36,000 | - | 0.28 |
11/15/16
|
- | - | - | - | ||||||||||||||||||||||||
52,216 | 10,284 | - | 0.28 |
02/07/18
|
- | - | - | - | |||||||||||||||||||||||||
36,756 | 36,744 | - | 0.28 |
06/20/18
|
- | - | - | - | |||||||||||||||||||||||||
36,114 | 63,886 | - | 0.59 |
11/10/18
|
- | - | - | - | |||||||||||||||||||||||||
6,667 | 113,333 | - | 0.44 |
10/27/19
|
- | - | - | - | |||||||||||||||||||||||||
185,753 | 260,247 | ||||||||||||||||||||||||||||||||
Peter Donato
|
- | 400,000 | - | 0.11 |
08/15/20
|
- | - | - | - | ||||||||||||||||||||||||
- | 7,749,000 | - | 0.04 |
12/06/20
|
- | - | - | - | |||||||||||||||||||||||||
8,149,000 |
(1)
|
The unvested stock options granted on February 7, 2008, June 20, 2008, November 10, 2008, and October 29, 2009 vest monthly over a thirty-six month period from the date of grant. All other awards vest 20% each year over five years from the date of grant.
|
(2)
|
Options granted on March 6, 2009 vested immediately.
|
Name
|
Fees
earned
or paid
in cash
(1)
|
Stock
awards
(3)
|
Option
awards
(2)(3)
|
Non-
equity
incentive
plan
compen-
sation
|
Non-
qualified
deferred
compen-
sation
earnings
|
All
other
compen-
sation
|
Total
|
|||||||||||||||||||||
Marc Cummins
|
$ | 13,750 | $ | - | $ | 97,683 | $ | - | $ | - | $ | - | $ | 111,433 | ||||||||||||||
Andrea Barthwell, MD
|
- | - | 251,329 | - | - | - | 251,329 | |||||||||||||||||||||
Jay Wolf
|
- | 816,000 | 236,398 | - | - | - | 1,052,398 | |||||||||||||||||||||
Kelly McCran
|
6,126 | 6,126 |
(1)
|
These are fees earned in 2009 but not yet paid.
|
(2)
|
Amounts reflect the compensation expense recognized in the Company's financial statements in 2010 for non-employee director stock options granted in 2010 and in previous years, in accordance with FASB accounting rules. As such, these amounts do not correspond to the compensation actually realized by each director for the period. See notesto consolidated financial statements in this report for further information on the assumptions used to value stock options granted to non-employee directors.
|
(3)
|
There were a total of 33,900,000 stock options granted to non-employee directors outstanding at December 31, 2010 with an aggregate grant date fair value of $2,539,509, the last of which will vest in December 2013. A total of 32,400,000 options to purchase common stock (10,800,000 per director), as well as 20,400,000 shares of restricted stock to Mr. Wolf in consideration of his services as lead director were granted to all non-employee directors on December 9, 2010. Outstanding equity awards by non-employee directors as of December 31, 2010 were as follows:
|
Options
outstanding
|
Aggregate
grant date
fair market value
options
outstanding
|
|||||||
Marc Cummins
|
500,000 | $ | 662,190 | |||||
Andrea Grubb Barthwell, MD
|
11,300,000 | 953,350 | ||||||
Jay Wolf
|
11,300,000 | 619,071 | ||||||
Kelly McCran
|
10,800,000 | 304,897 | ||||||
33,900,000 | 2,539,509 |
ITEM 12.
|
SECURITY OWNERSHIP OF CE
RTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
(1)
|
Except as set forth below, the mailing address of all individuals listed is c/o Catasys, Inc., 11150 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025
.
|
(2)
|
The number of shares beneficially owned includes shares of Common Stock in which a person has sole or shared voting power and/or sole or shared investment power. Except as noted below, each person named reportedly has sole voting and investment powers with respect to the Common Stock beneficially owned by that person, subject to applicable community property and similar laws.
|
(3)
|
On March 29, 2011, there were 834,419,950 shares of Common Stock outstanding. Common Stock not outstanding but which underlies options and rights (including warrants) vested as of or vesting within 60 days after March 29, 2011 is deemed to be outstanding for the purpose of computing the percentage of the Common Stock beneficially owned by each named person (and the directors and executive officers as a group), but is not deemed to be outstanding for any other purpose.
|
(4)
|
Consists of 242,862,541 shares and 50,638,139 shares issuable upon exercise of options to purchase common stock, 13,600,000, 207,045,924 and 22,216,628 shares are held of record by Reserva Capital LLC, Socius LLC and Bonmore, LLC, respectively, where Mr. Peizer serves as Managing Director and may be deemed to beneficially own or control. Mr. Peizer disclaims beneficial ownership of any such securities.
|
(5)
|
Includes 47,394,665 options to purchase common stock.
|
(6)
|
Includes 8,265,250 options to purchase common stock.
|
(7)
|
Consists of 41,086,740 shares and 6,765,900 options held by Jay Wolf. Family members, David Wolf and Mary Wolf, hold 2,068,674 shares and 5,171,685 shares, respectively.
|
(8)
|
Consists of 50,895,376 shares, 25,000,000 shares issuable upon warrants to purchase common stock. The address for Esousa Holdings LLC is 317 Madison Ave, Suite 1621, New York, NY 10017.
|
(9)
|
Consists of 208,867,397 shares, 23,460,000 shares issuable upon exercise of warrants to purchase common stock .The address for Mr. Smith is c/o Coast Asset Management, LLC, 2450 Colorado Avenue, Suite 100 E. Tower, Santa Monica, California 90404.
|
(10)
|
Includes 185,753 shares issuable upon exercise of options to purchase common stock.
|
(11)
|
Includes 533,190 shares issuable upon exercise of options to purchase common stock.
|
(12)
|
Consists of 67,234,490shares of common stock. The address for Superload Ltd. is c/o C. M. Hui & Co, Unit C, 7/F, Nathan Commercial Building, 430-436 Nathan Road, Kowloon, Hong Kong.
|
ITEM 13.
|
CERTAIN RE
LATIO
NSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SER
VICES
|
2010
|
2009
|
|||||||
Audit fees
|
$ | 48,266 | $ | 183,771 | ||||
Audit-related fees*
|
30,000 | 106,210 | ||||||
Tax fees
|
48,817 | 78,704 | ||||||
All other fees
|
||||||||
Total
|
$ | 127,083 | $ | 368,685 |
PART
IV
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCH
EDULES
|
(a)(1),(2)
|
Financial Statements
|
(a)(3)
|
Exhibits
|
Exhibit No.
|
Description
|
|
2.1
|
Stock Purchase Agreement between WoodCliff Healthcare Investment Partners, LLC and Core Corporate Consulting Group, Inc., dated January 14, 2009, incorporated by reference to Exhibit 10.1 of the Catasys Inc.’s current report on Form 8-K/A filed with the Securities and Exchange Commission on January 26, 2009.
|
|
3.1
|
Certificate of Incorporation of Catasys, Inc., filed with the Secretary of State of the State of Delaware on September 29, 2003, incorporated by reference to exhibit of the same number of Catasys Inc.’s Form 8-K filed with the Securities and Exchange Commission on September 30, 2003.
|
|
Certificate of Amendment to Certificate of Incorporation of Catasys, Inc. filed with the Secretary of State of the State of Delaware on March 9, 2011.
|
||
3.3
|
By-Laws of Catasys, Inc., a Delaware corporation, incorporated by reference to exhibit of the same number of Catasys, Inc.’s Form 8-K filed with the Securities and Exchange Commission on September 30, 2003.
|
|
4.1
|
Specimen Common Stock Certificate, incorporated by reference to exhibit of the same number to Catasys Inc.’s annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2005.
|
|
4.2
|
Secured Convertible Promissory Note issued to Socius Capital Group, LLC, incorporated by reference to exhibit 4.1 of Catasys, Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on October 20, 2010.
|
|
4.3
|
Secured Convertible Promissory Note issued to Esousa Holdings, LLC, incorporated by reference to exhibit 4.2 of Catasys, Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on October 20, 2010.
|
|
4.4
|
Form of Warrant incorporated by reference to Exhibit 4.2 of Catasys, Inc.’s Registrations Statement on Form S-1/A filed with the Securities and Exchange Commission on May 17, 2010.
|
|
4.5
|
Warrant issued to Socius Capital Group, LLC, incorporated by reference to exhibit 4.3 of Catasys, Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on October 20, 2010.
|
|
4.6
|
Warrant issued to Esousa Holdings, LLC, incorporated by reference to exhibit 4.4 of Catasys, Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on October 20, 2010.
|
|
Warrant issued on November 16, 2010.
|
||
10.1*
|
2003 Stock Incentive Plan, incorporated by reference to Exhibit 99.1 of Catasys Inc.’s Form 8-K filed with the Securities and Exchange Commission on September 30, 2003.
|
|
10.2*
|
Employment Agreement between Catasys, Inc. and Terren S. Peizer, dated September 29, 2003, incorporated by reference to exhibit of the same number to Catasys Inc.’s annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2005.
|
|
10.3*
|
Employment Agreement between Catasys, Inc. and Richard A. Anderson, dated April 19, 2005, incorporated by reference to exhibit of the same number to Catasys Inc.’s annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2005.
|
10.4*
|
Employment Agreement between Catasys, Inc. and Christopher Hassan., dated July 26, 2006, incorporated by reference to exhibit of the same number to Catasys Inc.’s annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2006.
|
|
10.5*
|
2007 Stock Incentive Plan, incorporated by reference to the Catasys Inc.’s Revised Definitive Proxy on Form DEFR14A filed with the Securities and Exchange Commission on May 11, 2007.
|
|
10.6
|
Redemption Agreement between Catasys, Inc. and Highbridge International, LLC., dated November 7, 2007, incorporated by reference to exhibit of the same number to Catasys, Inc.’s annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2007.
|
|
10.7
|
Securities and Purchase Agreement between Catasys, Inc. and Highbridge International, LLC, dated January 17, 2007, incorporated by reference to Exhibit 10.4 of Catasys Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on January 18, 2007.
|
|
10.8*
|
Registration Rights Agreement between Catasys, Inc. and Highbridge International, LLC, dated January 17, 2007, incorporated by reference to Exhibit 10.5 of Catasys Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on January 18, 2007.
|
|
10.9
|
Pledge Agreement between Catasys, Inc. and Highbridge International, LLC, dated January 17, 2007, incorporated by reference to Exhibit 10.8 of Catasys Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on January 18, 2007.
|
|
10.10
|
Security Agreement between Catasys, Inc. and Highbridge International, LLC, dated January 17, 2007, incorporated by reference to Exhibit 10.9 of Catasys Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on January 18, 2007.
|
|
10.11
|
Securities Purchase Agreement between Catasys, Inc. and Highbridge International, LLC, dated November 6, 2007, incorporated by reference to Exhibit 10.1 of Catasys Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2007.
|
|
10.12*
|
Amendment to Employment Agreement of Richard A. Anderson, dated July 16, 2008, incorporated by reference to Exhibit 10.1 of Catasys Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on July 18, 2008.
|
|
10.13
|
Amendment and Exchange Agreement with Highbridge International LLC, dated July 31, 2008, incorporated by reference to Exhibit 10.1 of the Catasys Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on August 1, 2008.
|
|
10.14
|
Amended and Restated Senior Secured Note with Highbridge International LLC, dated July 31, 2008, incorporated by reference to Exhibit 10.2 of the Catasys Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on August 1, 2008.
|
|
10.15
|
Amended and Restated Warrant to Purchase Common Stock with Highbridge International LLC, dated July 31, 2008, incorporated by reference to Exhibit 10.3 of the Catasys Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on August 1, 2008.
|
|
10.16*
|
Employment Agreement between Catasys, Inc. and Maurice Hebert, dated November 12, 2008, incorporated by reference to Exhibit 10.1 of the Catasys Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on November 14, 2008.
|
|
10.17*
|
Consulting Services Agreement between Catasys, Inc. and Chuck Timpe, dated November 12, 2008, incorporated by reference to Exhibit 10.2 of the Catasys Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on November 14, 2008.
|
|
10.18
|
Order for Settlement of Claims between Catasys, Inc. and The Trinity Group-I, Inc., dated January 21, 2010, incorporated by reference to exhibit of same number to Catasys Inc.’s annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2009.
|
|
10.19
|
Settlement Agreement between Catasys, Inc. and Lincoln PO FBOP Limited Partnership, dated March 23, 2010, incorporated by reference to exhibit of same number to Catasys Inc.’s annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2009.
|
|
10.20
|
Order Approving Stipulation for Settlement of Claims between Catasys, Inc. and The Trinity Group-I, Inc., dated April 8, 2010, incorporated by reference to exhibit of same number to Catasys Inc.’s annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2009.
|
10.21
|
2010 Stock Incentive Plan incorporated by reference to exhibit 10.1 of Catasys, Inc’s Form 8-K filed with the Securities and Exchange Commission on December 16, 2010.
|
|
Eighth Amendment to lease by and between Catasys, Inc. and the Irvine Company, LLC dated December 13, 2010. Related Party Sublease Agreement by and between Catasys, Inc. and Reserva LLC, affiliate of our Chairman and CEO, dated March 21, 2011 | ||
10.23
|
Securities Purchase Agreement between Catasys, Inc. and accredited investors dated October 19, 2010, incorporated by reference to Exhibit 4.1, 4.2, 4.3, 4.4, 10.1, 10.2, and 10.3 of Catasys Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on October 19, 2010.
|
|
10.24
|
Consulting Services Agreement between Catasys, Inc. and John V. Rigali, dated March 23, 2010, incorporated by reference to Exhibit 10.1 of Catasys, Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on March 29, 2010.
|
|
10.25
|
Seventh Amendment to Lease between Catasys, Inc. and The Irvine Company LLC, dated April 29, 2010, incorporated by reference to Exhibit 10.31 of Catasys Inc.’s quarterly report on Form 10-Q filed with the Securities and Exchange Commission on May 13, 2010.
|
|
10.26
|
Securities Purchase Agreement between Catasys, Inc. and investors, dated June 29, 2010, incorporated by reference to Exhibit 10.1 of Catasys, Inc.’s current report on Form 8-K filed with the Securities and Exchange Commission on June 30, 2010.
|
|
10.27*
|
Employment Letter between Catasys, Inc, and Peter Donato, dated August 19, 2010, incorporated by reference to Exhibit 10.33 of Catasys, Inc.’s current report on 8-K filed with the Securities and Exchange Commission on August 27, 2010.
|
|
10.28
|
Amendment No. 3 to Lease (3Net) between Catasys, Inc. and Lincoln Holdings, LLC, dated July 27, 2010, incorporated by reference to Exhibit 10.32 of Catasys. Inc.’s quarterly report filed with the Securities and Exchange Commission on August 16, 2010.
|
|
10.29 | Consulting Services Agreement between Catasys, Inc. and Marc Cummins dated March 30, 2011. | |
14.1
|
Code of Conduct and Ethics, incorporated by reference to exhibit of the same number to the Catasys Inc.’s annual report on Form 10-K filed with Securities and Exchange Commission for the year ended December 31, 2003.
|
|
14.2
|
Code of Ethics for CEO and Senior Financial Officers, incorporated by reference to exhibit of the same number to Catasys Inc.’s annual report on Form 10-K filed with the Securities and Commission for the year ended December 31, 2003.
|
|
Subsidiaries of the Company.
|
||
Consent of Independent Registered Public Accounting Firm – Rose, Snyder & Jacobs.
|
||
Certification by the Chief Executive Officer, pursuant to Rule 13-a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification by the Chief Financial Officer, pursuant to Rule 13-a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification by the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
Certification by the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
CATASYS, INC.
|
|
Date: March 31, 2011
|
By:
|
/s/ TERREN S. PEIZER
|
|
|
Terren S. Peizer
|
|
|
Chief Executive Officer
|
Signature
|
Title(s)
|
Date
|
||
/s/ TERREN S. PEIZER
|
Chairman of the Board of Directors
|
March 31, 2011
|
||
Terren S. Peizer
|
and Chief Executive Officer
|
|||
(Principal Executive Officer)
|
||||
/s/ PETER DONATO
|
Chief Financial Officer
|
March 31, 2011
|
||
Peter Donato
|
(Principal Financial and
Accounting Officer)
|
|||
/s/ RICHARD A. ANDERSON
|
President, Chief Operating Officer
|
March 31, 2011
|
||
Richard A. Anderson
|
and Director
|
|||
/s/ JAY A. WOLF
|
Lead Director
|
March 31, 2011
|
||
Jay A. Wolf
|
||||
/s/ KELLY McCRANN
|
Director
|
March 31, 2011
|
||
Kelly McCrann
|
||||
/s/ ANDREA GRUBB BARTHWELL, M.D.
|
Director
|
March 31, 2011
|
||
Andrea Grubb Barthwell, M.D.
|
Report of Independent Registered Public Accounting Firm
|
|
F-2
|
|
|
|
Consolidated Balance Sheets as of December 31, 2010 and 2009
|
|
F-4
|
|
|
|
Consolidated Statements of Operations for the Years Ended December 31, 2010 and 2009
|
|
F-5
|
|
|
|
Consolidated Statements of Stockholders’ Equity for Years Ended December 31, 2010 and 2009
|
|
F-6
|
|
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2010 and 2009
|
|
F-7
|
Notes to Consolidated Financial Statements
|
|
F-9
|
(In thousands,except for number of shares)
|
December 31,
|
December 31,
|
||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 4,605 | $ | 4,595 | ||||
Marketable securities, at fair value
|
- | 9,468 | ||||||
Receivables, net
|
73 | 308 | ||||||
Prepaids and other current assets
|
183 | 989 | ||||||
Total current assets
|
4,861 | 15,360 | ||||||
Long-term assets
|
||||||||
Property and equipment, net of accumulated depreciation of $5,864 and $6,697 respectively
|
194 | 877 | ||||||
Intangible assets, net of accumulated amortization of $1,938 and $1,702 respectively
|
2,423 | 2,658 | ||||||
Deposits and other assets
|
466 | 210 | ||||||
Total Assets
|
$ | 7,944 | $ | 19,105 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$ | 1,665 | $ | 2,266 | ||||
Accrued compensation and benefits
|
706 | 941 | ||||||
Other accrued liabilities
|
1,036 | 2,431 | ||||||
Short-term debt
|
- | 9,643 | ||||||
Total current liabilities
|
3,407 | 15,281 | ||||||
Long-term liabilities
|
||||||||
Long-term Liabilities
|
||||||||
Long-term Debt
|
5,824 | - | ||||||
Deferred rent and other long-term liabilities
|
- | 46 | ||||||
Warrant liabilities
|
8,890 | 1,089 | ||||||
Capital lease obligations
|
- | 48 | ||||||
Total liabilities
|
18,121 | 16,464 | ||||||
Stockholders' equity
|
||||||||
Preferred stock, $.0001 par value; 50,000,000 shares authorized; no shares issued and outstanding
|
- | - | ||||||
Common stock, $.0001 par value; 200,000,000 shares authorized; 181,711,000 and 65,283,000 shares issued and outstanding at December 31, 2010 and December 31, 2009, respectively
|
18 | 7 | ||||||
Additional paid-in-capital
|
192,578 | 184,715 | ||||||
Accumulated other comprehensive income
|
- | 696 | ||||||
Accumulated deficit
|
(202,773 | ) | (182,777 | ) | ||||
Total Stockholders' Equity
|
(10,177 | ) | 2,641 | |||||
Total Liabilities and Stockholders' Equity
|
$ | 7,944 | $ | 19,105 |
Twelve Months Ended
|
||||||||
(In thousands, except per share amounts)
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
Revenues
|
||||||||
Healthcare services revenues
|
$ | 28 | $ | - | ||||
License & Management revenues
|
420 | 1,530 | ||||||
Total revenues
|
$ | 448 | $ | 1,530 | ||||
Operating expenses
|
||||||||
Cost of healthcare services
|
255 | 509 | ||||||
General and administrative
|
12,784 | 18,034 | ||||||
Impairment losses
|
- | 1,113 | ||||||
Depreciation and amortization
|
882 | 1,248 | ||||||
Total operating expenses
|
13,921 | 20,904 | ||||||
Loss from operations
|
(13,473 | ) | (19,374 | ) | ||||
Interest and other income
|
131 | 941 | ||||||
Interest expense
|
(1,025 | ) | (1,142 | ) | ||||
Loss on extinguishment of debt
|
- | (330 | ) | |||||
Gain on the sale of marketable securities
|
696 | 160 | ||||||
Other than temporary impairment of marketable
securities
|
- | (185 | ) | |||||
Change in fair value of warrant liability
|
(6,303 | ) | 341 | |||||
Loss from continuing operations before provision
for income taxes
|
(19,974 | ) | (19,589 | ) | ||||
Provision for income taxes
|
22 | 18 | ||||||
Loss from continuing operations
|
$ | (19,996 | ) | $ | (19,607 | ) | ||
Discontinued Operations:
|
||||||||
Results of discontinued operations, net of tax
|
- | 10,449 | ||||||
Net income (loss)
|
$ | (19,996 | ) | $ | (9,158 | ) | ||
Basic and diluted net income (loss) per share:
|
||||||||
Continuing operations
|
$ | (0.23 | ) | $ | (0.34 | ) | ||
Discontinued operations
|
- | 0.18 | ||||||
Net income (loss) per share
|
$ | (0.23 | ) | $ | (0.16 | ) | ||
Weighted number of shares outstanding
|
86,862 | 57,947 |
(Dollars in thousands)
|
Common Stock
|
Additional
Paid-In
|
Other
Comprehensive
|
Accumulated
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Income
|
Deficit
|
Total
|
||||||||||||||||
Balance at December 31, 2008
|
54,965,000 | 6 | 174,721 | (173,619 | ) | 1,108 | |||||||||||||||
Common stock issued for outside services
|
971,000 | - | 265 | - | 265 | ||||||||||||||||
Common stock issued in registered direct placement, net of expenses
|
9,333,000 | 1 | 5,261 | 5,262 | |||||||||||||||||
Options and warrants issued for employee and outside services
|
- | - | 4,422 | - | 4,422 | ||||||||||||||||
Exercise of options and warrants
|
16 | 16 | |||||||||||||||||||
Common stock issued for employee stock
|
|||||||||||||||||||||
purchase plan
|
14,000 | - | 30 | - | 30 | ||||||||||||||||
Net loss
|
- | - | - | (9,158 | ) | (9,158 | ) | ||||||||||||||
Balance at December 31, 2009
|
65,283,000 | 7 | $ | 184,715 | $ | (182,777 | ) | $ | 1,945 | ||||||||||||
Common stock issued for outside services
|
695,000 | 1 | 270 | - | 271 | ||||||||||||||||
Common stock issued in registered direct placement, net of expenses
|
110,288,000 | 10 | 1,789 | 1,799 | |||||||||||||||||
Common stock issued for settlemnt on liabilities
|
5,445,000 | - | 1,234 | 1,234 | |||||||||||||||||
Options and warrants issued for employee and outside services
|
- | - | 4,570 | - | 4,570 | ||||||||||||||||
Exercise of options and warrants
|
- | ||||||||||||||||||||
Common stock issued for employee stock purchase plan
|
- | - | - | ||||||||||||||||||
Net loss
|
- | - | - | (19,996 | ) | (19,996 | ) | ||||||||||||||
Balance at December 31, 2010
|
181,711,000 | 18 | $ | 192,578 | $ | (202,773 | ) | $ | (10,177 | ) |
Twelve Months Ended
|
||||||||
(In thousands)
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
Operating activities
|
||||||||
Net loss
|
$ | (19,996 | ) | $ | (9,158 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
(Income) from Discontinued Operations
|
$ | - | (10,449 | ) | ||||
Depreciation and amortization
|
882 | 1,247 | ||||||
Amortization of debt discount and issuance costs included in interest expense
|
761 | 798 | ||||||
Other than temporary impairment on marketable securities
|
- | 185 | ||||||
Gain on sale of marketable securities
|
(696 | ) | (159 | ) | ||||
Provision for doubful accounts
|
36 | 526 | ||||||
Deferred rent
|
(362 | ) | 151 | |||||
Share-based compensation expense
|
4,969 | 4,621 | ||||||
Unrealized gain on Put Option
|
- | (758 | ) | |||||
Loss on debt extinguishment
|
- | 230 | ||||||
Fair value adjustment on warrant liabilitiy
|
6,303 | (341 | ) | |||||
Impairment losses
|
- | 1,113 | ||||||
Loss on disposition of assets
|
34 | 16 | ||||||
Changes in current assets and liabilities:
|
||||||||
Receivables
|
199 | (88 | ) | |||||
Prepaids and other current assets
|
164 | 284 | ||||||
Accounts payable
|
(728 | ) | (1,617 | ) | ||||
Long term accrued liabilities
|
- | - | ||||||
Net cash used in operating activities of continuing operations
|
(8,434 | ) | (13,399 | ) | ||||
Net cash used in operating activities of discontinued operations
|
- | (1,103 | ) | |||||
Net cash used in operating activities
|
(8,434 | ) | (14,502 | ) | ||||
Investing activities
|
||||||||
Proceeds from sales and maturities of marketable securities
|
$ | 10,225 | $ | 1,420 | ||||
Proceeds from sales of property and equipment
|
5 | 13 | ||||||
Proceeds from disposition of CompCare
|
- | 1,500 | ||||||
Restricted cash
|
- | 24 | ||||||
Purchases of property and equipment
|
(1 | ) | (20 | ) | ||||
Deposits and other assets
|
(246 | ) | 16 | |||||
Net cash from investing activities by continuing operations
|
9,983 | 2,953 | ||||||
Net cash from investing activities by discontinued operations
|
- | 39 | ||||||
Net cash provided by investing activities
|
9,983 | 2,992 |
Twelve Months Ended
|
||||||||
(In thousands)
|
December 31,
|
|||||||
2010 | 2009 | |||||||
Financing activities
|
||||||||
Proceeds from the issuance of common stock and warrants
|
$ | 3,153 | $ | 7,000 | ||||
Costs related to the issuance of common stock and warrants
|
(623 | ) | (689 | ) | ||||
Proceeds from financing note
|
5,465 | - | ||||||
Costs related to the issuance of notes
|
(151 | ) | - | |||||
Proceeds from bridge loan
|
500 | |||||||
Proceeds from line of credit
|
450 | 2,072 | ||||||
Paydown on line of credit
|
(6,908 | ) | (1,348 | ) | ||||
Paydown on senior secured note
|
(3,332 | ) | (1,668 | ) | ||||
Capital lease obligations
|
(93 | ) | (98 | ) | ||||
Exercises of stock options and warrants
|
- | 16 | ||||||
Net cash provided by (used in) financing activities.
|
(1,539 | ) | 5,285 | |||||
Net cash from (used in) financing activities by discontinued operations
|
- | (73 | ) | |||||
Net cash from (used in) financing activities
|
(1,539 | ) | 5,212 | |||||
Net decrease in cash and cash equivalents for continuing operations
|
10 | (5,161 | ) | |||||
Net decrease in cash and cash equivalents for discontinued operations
|
- | (1,137 | ) | |||||
Net decrease in cash and cash equivalents
|
10 | (6,298 | ) | |||||
Cash and cash equivalents at beginning of period
|
4,595 | 10,893 | ||||||
Cash and cash equivalents at end of period
|
$ | 4,605 | $ | 4,595 | ||||
Supplemental disclosure of cash paid
|
||||||||
Interest
|
$ | 154 | $ | 247 | ||||
Income taxes
|
52 | 93 | ||||||
Supplemental disclosure of non-cash activity
|
||||||||
Common stock issued for outside services
|
$ | 371 | $ | 266 | ||||
Common stock issued for settlement of payables
|
1,235 | - | ||||||
Property and equipment acquired though capital leases and other financing
|
- | 22 |
2010
|
2009
|
||
Expected volatility
|
112%
|
82%
|
|
Risk-free interest rate
|
1.76%
|
2.16-2.78%
|
|
Weighted average expected lives in years
|
5-6
|
5-6
|
|
Expected dividend
|
0%
|
0%
|
For Year Ended
|
||||||||
(In thousands)
|
December 31,2010
|
|||||||
2010
|
2009
|
|||||||
Net income (loss)
|
$ | (19,996 | ) | $ | (9,158 | ) | ||
Other comprehensive gain:
|
||||||||
Net unrealized gain (loss) on marketable securities available for sale
|
- | $ | 696 | |||||
Net realized gain on marketable securities included in loss from continuing operations
|
$ | (696 | ) | $ | - | |||
Comprehensive income (loss)
|
$ | (20,692 | ) | $ | (8,462 | ) |
|
·
|
How long and by how much the fair value of the securities have been below cost
|
|
·
|
The financial condition of the issuers
|
|
·
|
Any downgrades of the securities by rating agencies
|
|
·
|
Default on interest or other terms
|
|
·
|
Whether it is more likely than not that we will be required to sell the securities before they recover in value
|
(in thousands)
|
Fair Market
|
Less than
|
More than
|
|||||||||
Value
|
1 Year
|
10 Years
|
||||||||||
Balance at December 31, 2009
|
||||||||||||
Certificates of deposit
|
$ | 133 | $ | 133 | $ | - | ||||||
Auction-rate securities
|
9,468 | 9,468 | - | |||||||||
Balance at Dectember 31, 2010
|
||||||||||||
Certificates of deposit
|
$ | 133 | $ | 133 | $ | - |
Level Input:
|
Input Definition:
|
|
Level I
|
Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
|
|
Level II
|
Inputs, other than quoted prices included in Level I, that are observable for the asset or liability through corroboration with market data at the measurement date.
|
|
Level III
|
Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
|
2009
|
||||||||||||||||
(Dollars in thousands)
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Variable auction-rate securities
|
$ | - | $ | - | $ | 9,468 | $ | 9,468 | ||||||||
Put option
|
- | - | 758 | 758 | ||||||||||||
Certificates of deposit (1)
|
133 | - | - | 133 | ||||||||||||
Total assets
|
$ | 133 | $ | - | $ | 10,226 | $ | 10,359 | ||||||||
Warrant liabilities
|
$ | - | $ | - | $ | 1,089 | $ | 1,089 | ||||||||
Total liabilities
|
$ | - | $ | - | $ | 1,089 | $ | 1,089 |
(Dollars in thousands)
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Intangible assets
|
- | - | 2,658 | 2,658 | ||||||||||||
Total assets
|
$ | - | $ | - | $ | 2,658 | $ | 2,658 |
2010
|
||||||||||||||||
(Dollars in thousands)
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Certificates of deposit (1)
|
133 | - | - | 133 | ||||||||||||
Total assets
|
133 | - | - | 133 | ||||||||||||
Warrant liabilities
|
- | - | 8,890 | 8,890 | ||||||||||||
Total liabilities
|
- | - | 8,890 | 8,890 |
(Dollars in thousands)
|
||||||||||||||||
Intangible assets
|
- | - | 2,423 | 2,423 | ||||||||||||
Total assets
|
- | - | 2,423 | 2,423 |
(Dollars in thousands)
|
Level III
ARS &
Put Option
|
Level III
Warrant
Liabilities
|
|||||||||
Balance as of December 31, 2008
|
$ | 10,072 |
Balance as of December 31, 2008
|
$ | - | ||||||
Change in value
|
758 |
(c)
|
Transfers in/out of Level III
|
157 | |||||||
Net purchases (sales)
|
(1,275 | ) |
Initial valuation of warrant liabilities
|
1,273 |
(b)
|
||||||
Net unrealized gains (losses)
|
696 |
Change in fair value of
warrant liabilities
|
(341 | ) | |||||||
Net realized gains (losses)
|
(25 | ) |
(a)
|
||||||||
Balance as of December 31, 2009
|
$ | 10,226 |
Balance as of December 31, 2009
|
$ | 1,089 |
|
(a)
|
Includes other-than-temporary loss on auction-rate securities.
|
|
(b)
|
Represents initial valuation of warrants issued in conjunction with the Registered Direct Placement in
|
|
September 2009 and adjustment related to the modification of the Highbridge Senior Secured Note in
|
|
August 2009.
|
|
(c)
|
Auction Rate Securities Put Option recorded in prepaids and other current assets
|
(Dollars in thousands)
|
Level III
ARS
& Put
|
Level III
Warrant
Liabilities
|
||||||
Balance as of December 31, 2009
|
$ | 10,226 | $ | 1,089 | ||||
Transfers in/(out) of Level III
|
- | 1,498 | ||||||
Change in Fair Value
|
- | 6,303 | ||||||
Net purchases (sales)
|
(10,226 | ) | - | |||||
Net unrealized gains (losses)
|
(696 | ) | - | |||||
Net realized gains (losses)
|
696 | - | ||||||
Balance as of December 31, 2010
|
$ | - | $ | 8,890 |
|
·
|
general administrative support services;
|
|
·
|
information systems;
|
|
·
|
recordkeeping;
|
|
·
|
scheduling;
|
|
·
|
billing and collection; marketing and local business development; and
|
|
·
|
obtaining and maintaining all federal, state and local licenses, certifications and regulatory permits
|
(in thousands)
|
2010
|
2009
|
||||||
License fees
|
$ | 97 | $ | 724 | ||||
Patient fees receivable
|
7 | 50 | ||||||
Other
|
5 | 39 | ||||||
Total receivables
|
109 | 813 | ||||||
Less allowance for doubtful accounts
|
(36 | ) | (505 | ) | ||||
Total receivables, net
|
$ | 73 | $ | 308 |
(in thousands)
|
2010
|
2009
|
||||||
Furniture and equipment
|
$ | 3,468 | $ | 4,624 | ||||
Leasehold improvements
|
2,590 | 2,950 | ||||||
Total property and equipment
|
6,058 | 7,574 | ||||||
Less accumulated depreciation and amortization
|
(5,864 | ) | (6,697 | ) | ||||
Total property and equipment, net
|
$ | 194 | $ | 877 |
(in thousands)
|
2010
|
2009
|
Amortization Period
(in years)
|
||||||
Intellectual property
|
$ | 4,360 | $ | 4,360 |
10 to 15
|
||||
Less accumulated amortization
|
(1,937 | ) | (1,702 | ) | |||||
Total Intangibles, net
|
$ | 2,423 | $ | 2,658 |
December 31
2010
|
December 31,
2009
|
|||||||
Short-term debt
|
||||||||
Senior secured note due July 15, 2010; interest payable quarterly at prime plus 2.5% (5.75% at December 31, 2009). $3,332,000 principal net of $147,000 unamortized discount at December 31, 2009.
|
||||||||
Debt fully eliminated in July 2010
|
$
|
-
|
$
|
3,185
|
||||
UBS line of credit, payable on demand, interest payable monthly at 90-day T-bill rate plus 120 basis points 1.237% at December 31, 2009
|
||||||||
Debt fully eliminated in July 2010
|
-
|
6,458
|
||||||
Total Short-term debt
|
$
|
-
|
$
|
9,643
|
||||
(dollars in thousands, except where otherwise noted)
|
December 31
2010
|
December 31,
2009
|
||||||
Long-term debt
|
||||||||
Secured Convertible Promissary Note due November 9, 2012; interest payable at maturity (12% at December 31, 2010). $5,965,000 principal net of $141,000 unamortized discount at December 31,2010.
|
$
|
5,824
|
$
|
-
|
||||
Total Short-term debt
|
$
|
5,824
|
$
|
-
|
(in thousands)
|
Amount
|
|||
Year ending December 31,
|
||||
2011
|
$ | 15 | ||
2012
|
- | |||
Total minimum lease payments
|
15 | |||
Less amounts representing interest
|
(1 | ) | ||
Capital lease obligations, net of interest
|
14 | |||
Less current maturities of capital lease obligations
|
(14 | ) | ||
Long-term capital lease obligations
|
$ | - |
(in thousands)
|
2010
|
2009
|
||||||
Federal, state and foreign net operating losses
|
$ | 59,551 | $ | 55,581 | ||||
Stock-based compensation
|
5,797 | 4,062 | ||||||
Accrued liabilities
|
150 | 367 | ||||||
Other temporary differences
|
289 | (734 | ) | |||||
Valuation allowance
|
(65,787 | ) | (59,276 | ) | ||||
$ | - | $ | - |
2010
|
2009
|
|||||||
Federal statutory rate
|
-34.0 | % | -34.0 | % | ||||
Share-based compensation
|
0.8 | % | 5.6 | % | ||||
State taxes
|
-4.7 | % | -5.6 | % | ||||
Other
|
2.8 | % | 0.0 | % | ||||
Nondeductible goodwill
|
0.0 | % | 0.0 | % | ||||
Change in valuation allowance
|
35.1 | % | 34.0 | % | ||||
Effective tax rate
|
0.0 | % | 0.0 | % |
Shares
|
Weighted Avg.
Exercise Price
|
|||||||
Balance, December 31, 2008
|
8,260,000 | $ | 3.07 | |||||
2009
|
||||||||
Granted
|
3,815,000 | 0.43 | ||||||
Transfered *
|
- | |||||||
Exercised
|
(56,000 | ) | 0.28 | |||||
Cancelled
|
(1,106,000 | ) | 5.10 | |||||
Balance, December 31, 2009
|
10,913,000 | $ | 1.95 | |||||
2010
|
||||||||
Granted
|
197,670,000 | 0.04 | ||||||
Transfered *
|
||||||||
Exercised
|
||||||||
Cancelled
|
(2,164,400 | ) | 2.19 | |||||
Balance, December 31, 2010
|
206,418,600 | $ | 0.11 |
Options Outstanding
|
Options Exercisable
|
||||||||||||||||||||
Range of Exercise Prices
|
Shares
|
Weighted Average Remaining Life (yrs)
|
Weighted Average Price
|
Shares
|
Weighted Average Price
|
||||||||||||||||
$0.51 to $1.50 | 205,201,000 | 9.80 | $ | 0.05 | 5,418,000 | $ | 0.33 | ||||||||||||||
$1.51 to $2.50 | 550,000 | 7.80 | 0.60 | 388,000 | 0.60 | ||||||||||||||||
$2.51 to $3.50 | 664,000 | 4.50 | 2.50 | 644,000 | 2.55 | ||||||||||||||||
$7.51 to $8.56 | 3,000 | 6.10 | 8.00 | 2,200 | 7.41 | ||||||||||||||||
206,418,000 | 9.78 | $ | 0.06 | 6,452,200 | $ | 0.57 |
Shares
|
Weighted avg.
exercise price
|
|||||||
Balance, December 31, 2008
|
2,095,000 | $ | 3.91 | |||||
2009
|
||||||||
Granted
|
60,000 | 0.52 | ||||||
Transfered *
|
- | |||||||
Exercised
|
||||||||
Cancelled
|
(465,000 | ) | 4.68 | |||||
Balance, December 31, 2009
|
1,690,000 | $ | 3.57 | |||||
2010
|
||||||||
Granted
|
- | |||||||
Transfered *
|
- | - | ||||||
Exercised
|
- | - | ||||||
Cancelled
|
(153,000 | ) | 4.68 | |||||
Balance, December 31, 2010
|
1,537,000 | $ | 3.46 |
Description
|
Shares
|
Weighted Average Exercise Price
|
||||||
Warrants issued for intellectual property
|
372,000 | $ | 2.50 | |||||
Warrants issued in connection with equity offering
|
90,825,000 | 0.17 | ||||||
Warrants issued in connection with debt agreement
|
3,260,000 | 0.28 | ||||||
Options and warrants issued to consultants
|
36,000 | 5.30 | ||||||
94,493,000 | $ | 0.18 |
(in thousands)
|
Period from
January 1 to
January 20,
2009
|
|||
Revenues:
|
||||
Behavioral managed health care revenues
|
$ | 710 | ||
Expenses:
|
||||
Behavioral managed health care operating expenses
|
$ | 703 | ||
General and administrative expenses
|
711 | |||
Other
|
50 | |||
Income (loss) from discontinued operations before provision for income tax
|
$ | (754 | ) | |
Provision for income taxes
|
$ | 1 | ||
Income (loss) from discontinued operations, net of tax
|
$ | (755 | ) | |
Gain on sale
|
$ | 11.204 | ||
Results from discontinued operations, net of tax
|
$ | 10.449 |
(in thousands)
|
||||
Year ending December 31,
|
Amount
|
|||
2011
|
$ | 440 | ||
2012
|
413 | |||
2013
|
463 | |||
$ | 1,316 |
HYTHIAM, INC.
|
||
By:
|
/s/ Peter Donato
|
|
Peter Donato
|
||
Chief Financial Officer
|
Warrant No. 1116101
|
Date of Original Issuance: November 16, 2010
|
HYTHIAM, INC.
|
||
By:
|
/s/
PETER DONATO
|
|
Peter L. Donato
|
||
Chief Financial Officer
|
PLEASE INSERT SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER | ||
(Please print name and address) | ||
Confirmed:
|
||
HYTHIAM, INC.
|
||
By:
|
||
Name:
|
||
Title:
|
||
Date:
|
(Signature must conform in all respects to name of holder as specified on the face of the Warrant)
|
|
Address of Transferee
|
|
In the presence of: | ||
Sincerely,
|
|||
CATASYS, INC.
|
|||
By:
|
/s/ PETER DONATO
|
||
Peter L. Donato | |||
Chief Financial Officer |
AGREED AND ACKNOWLEDGED:
|
|||
Reserva LLC
|
|||
By:
|
/s/ Terren S. Peizer | ||
Terren S. Peizer
|
|||
Chief Executive Officer
|
Months of Term
or Period
|
Monthly Rate Per Rentable Square Foot
|
Monthly Basic Rent (rounded to the nearest dollar)
|
||||||
1/1/11 - 12/31/11
|
$ | 3.05 | $ | 32,598.00 | ||||
1/1/12 - 12/31/12
|
$ | 3.19 | $ | 34,095.00 | ||||
1/1/13 - 12/31/13
|
$ | 3.33 | $ | 35,591.00” |
LANDLORD:
|
TENANT:
|
|||
THE IRVINE COMPANY LLC
|
HYTHIAM, INC.
|
|||
By
|
/s/ STEVEN M. CASE
|
By
|
/s/ PETER DONATO
|
|
Steven M. Case
|
Peter L. Donato
|
|||
Senior Vice President
|
Chief Financial Officer
|
|||
Office Properties
|
||||
By
|
/s/ CHRISTOPHER J. POPMA
|
By
|
/s/ RICHARD ANDERSON
|
|
Christopher J. Popma
|
Richard Anderson
|
|||
Vice President, Operations
|
President and Chief Operating Officer
|
|||
Office Properties
|
|
a.
|
Investor relations
|
|
b.
|
Fundraising activity
|
c.
|
Board transitional
|
d.
|
Other, as mutually determined by the parties
|
|
a.
|
8,344,199 options with a $0.071 strike price and vesting monthly over four years
|
/s/ Terren S. Peizer
|
3/30/11
|
||
Terren S. Peizer, Chief Executive Officer
|
Date
|
|
|
||
Marc Cummins
|
Date
|
Name
|
Jurisdiction of Incorporation
|
Catasys Health Minnesota, Inc.
|
Minnesota
|
Anxiolitix, Inc.
|
Delaware
|
Catasys International (Cayman), Ltd.
|
Cayman Islands
|
Catasys Switzerland, Sarl
|
Switzerland
|
Catasys Health, Inc.
|
Delaware
|
Date: March 31, 2011
|
/s/ TERREN S. PEIZER
|
|
Terren S. Peizer
|
|
Chief Executive Officer
(Principal Executive Officer)
|
Date: March 31, 2011
|
/s/ PETER DONATO
|
Peter Donato
Chief Financial Officer
(
Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ TERREN S. PEIZER
|
|
March 31, 2011
|
Terren S. Peizer
Chief Executive Officer
|
|
Date
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ PETER DONATO
|
|
March 31, 2011
|
Peter Donato
|
|
Date
|
Chief Financial Officer
|
|
|