10-K 1 rac-0810k.txt RIDGFIELD 12/31/2009 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2008 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _______ Commission File Number 0-16335 RIDGEFIELD ACQUISITION CORP. --------------------------------------------------------- (Name of Small Business Issuer in its Charter) Nevada 84-0922701 ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1 North Federal Highway, Suite 201, Boca Raton, Florida 33432 -------------------------------------------------------------- (Address of principal executive offices) (561) 362-4199 ---------------------------------------------------- (Registrant's telephone number, including area code) Securities registered under Section 12(b) of the Act: None Securities registered under Section 12(g) of the Act: None Indicate by check mark whether the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark whether the registrant is not required to file reports Pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [X] No [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2008 was $268,836. For this computation, the registrant has excluded the market value of all shares of its Common Stock reported as beneficially owned by executive officers and directors of the registrant; such exclusion shall not be deemed to constitute an admission that any such person is an "affiliate" of the registrant. As of March 13, 2009, there were issued and outstanding 1,194,773 shares of the registrant's common stock, par value $.001 per share. 2 RIDGEFIELD ACQUISITION CORP. FORM 10-K Table of Contents Page PART I 4 ITEM 1. BUSINESS. 4 ITEM 1A. RISK FACTORS. 6 ITEM 2. PROPERTIES. 12 ITEM 3. LEGAL PROCEEDINGS. 13 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 13 PART II 13 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. 13 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDIAITON AND RESULTS OF OPERATIONS. 14 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA. 17 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. 18 ITEM 9A. CONTROLS AND PROCEDURES. 18 ITEM 9B. OTHER INFORMATION. 20 PART III 21 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. 21 ITEM 11. EXECUTIVE COMPENSATION. 23 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS. 25 ITEM 13. CERTAIN RELATIONAHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. 26 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. 27 ITEM 15. EXHIBITS. 27 SIGNATURES. 29 3 PART I ITEM 1. BUSINESS. Ridgefield Acquisition Corp. (the "Company") was incorporated as a Colorado corporation on October 13, 1983 under the name Ozo Diversified, Inc. On June 23, 2006, the Company filed Articles of Merger with the Secretary of State of the State of Nevada that effected the merger between the Company and a wholly-owned subsidiary formed under the laws of the State of Nevada ("RAC-NV"), pursuant to the Articles of Merger, whereby RAC-NV was the surviving corporation. The merger changed the domicile of the Company from the State of Colorado to the State of Nevada. Furthermore, as a result of the Articles of Merger the Company is authorized to issue 35,000,000 shares of capital stock consisting of 30,000,000 shares of common stock, $.001 par value per share and 5,000,000 shares of preferred stock, $.01 par value per share. On March 9, 1999, the Company completed the sale of substantially all of its assets to JOT Automation, Inc. (the "JOT Transaction"). As a result of the JOT Transaction, the Company's historical business, the depaneling and routing business, was considered to be a "discontinued operation" and, consequently, provides no benefit to persons seeking to understand the Company's financial condition or results of operations. Following the JOT Transaction the Company devoted its efforts to the development of a prototype micro-robotic device (the "micro-robotic device") to manipulate organic tissues on an extremely small scale. Due to the inability to complete the micro-robotic device, the Company determined that it would cease the development of the micro-robotic device and, as of June 30, 2000, the capitalized costs related to the patent underlying the micro-robotic device were written off by the Company. On March 19, 2002, the Company was awarded United States Patent No. US 6,358,749 B1 for the "Automated System for Chromosome Microdissection and Method of Using Same" (the "Patent"). During the first quarter of 2003, the Board of Directors of the Company authorized the formation of a wholly-owned subsidiary of the Company for the purposes of owning, developing and exploiting the Patent. On March 3, 2003, the Company filed Articles of Incorporation with the Secretary of State of the State of Nevada to form Bio-Medical Automation, Inc., a Nevada corporation wholly-owned by the Company ("Bio-Medical" or the "Subsidiary"). In May 2003, the Company transferred the Patent to the Subsidiary in exchange for 100% of the outstanding shares of the common stock of the Subsidiary. The Company never derived any revenues from the micro-robotic device. As of December 31, 2008, Bio-Medical had 45,000,000 shares of capital stock authorized for issuance consisting of (1) 40,000,000 share of common stock par value $.001 per share; and (2) 5,000,000 shares of preferred stock par value $.01 per share. Bio-Medical has 1,140,773 shares of its common stock issued and outstanding, all of which are owned by the Company. Bio-Medical has no shares of preferred stock issued or outstanding. A copy of the Articles of Incorporation and bylaws of Bio-Medical are attached to the Company's Annual Report on Form 10-KSB for the year ended December 31, 2005 as Exhibit 3.6 and Exhibit 3.7, respectively, and such documents are incorporated herein by reference. Since July 2000, the Company has suspended all operations, except for necessary administrative matters relating to the timely filing of periodic reports as required by the Securities Exchange Act of 1934. Accordingly, during the year ended December 31, 2008 and the period from January 1, 2000 through December 31, 2008, the Company has earned no revenues other than interest income and income from investments. 4 Acquisition Strategy -------------------- The Company's plan of operation is to arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. The Company has not identified a viable operating entity for a merger, acquisition, business combination or other arrangement, and there can be no assurance that the Company will ever successfully arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. The Company anticipates that the selection of a business opportunity will be a complex process and will involve a number of risks, because potentially available business opportunities may occur in many different industries and may be in various stages of development. Due in part to depressed economic conditions in a number of geographic areas, rapid technological advances being made in some industries and shortages of available capital, management believes that there are numerous firms seeking either the limited additional capital which the Company will have or the benefits of a publicly traded corporation, or both. The perceived benefits of a publicly traded corporation may include facilitating or improving the terms upon which additional equity financing may be sought, providing liquidity for principal shareholders, creating a means for providing incentive stock options or similar benefits to key employees, providing liquidity for all shareholders and other factors. In some cases, management of the Company will have the authority to effect acquisitions without submitting the proposal to the shareholders for their consideration. In some instances, however, the proposed participation in a business opportunity may be submitted to the shareholders for their consideration, either voluntarily by the Board of Directors to seek the shareholders' advice and consent, or because of a requirement of state law to do so. In seeking to arrange a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity, management's objective will be to obtain long-term capital appreciation for the Company's shareholders. There can be no assurance that the Company will be able to complete any merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. The Company may need additional funds in order to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity, although there is no assurance that the Company will be able to obtain such additional funds, if needed. Even if the Company is able to obtain additional funds there is no assurance that the Company will be able to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity. Investment Strategy ------------------- On August 25, 2003, the Board of Directors of the Company authorized the Company to invest a portion of the Company's cash in marketable securities in an effort to realize a greater rate of return than the Company had been earning in light of historically low interest rates. The Board directed that management maintain at least $40,000 of the Company's cash in a federally insured bank or money market account. 5 In furtherance of the Company's investment strategy, the Company opened a brokerage account with Catalyst Financial LLC ("Catalyst"), a broker-dealer registered with the U.S. Securities and Exchange Commission and a member in good standing with the National Association of Securities Dealers, Inc. Catalyst is owned and controlled by Steven N. Bronson, the Company's President. Catalyst has agreed to charge the Company commissions of no more that $.02 per share with a minimum of $75 per trade on securities transactions. The Board approved the commission structure to be charged by Catalyst. Mr. Bronson abstained from voting on all Board resolutions concerning the Company's investment strategy and the Company's arrangements with Catalyst. On January 12, 2007, the Company acquired 50,000 shares of Argan, Inc. ("Argan") common stock in a private transaction at a cost of $4.25 per share or an aggregate amount of $212,500. On April 26, 2007, the Company sold all of its 50,000 shares of Argan at an average price of $6.26 for proceeds of $312,484. On June 1, 2007, the Company purchased 57,500 shares of Argan common stock at an average price of $5.40 per share or $311,082. At December 31, 2008 the Company's 57,500 shares of Argan common stock were valued at $10.90 or $626,750. While the Company will endeavor to invest in securities that have a potential for gain, there can be no assurances that the Company will not suffer losses based on its Investment Strategy. Employees --------- As of March 13, 2009, the Company had 1 employee, Steven N. Bronson, who serves as the Company's President. The Company does not have any employees that are represented by a union or other collective bargaining group. ITEM 1A. RISK FACTORS. Potential investors should carefully consider the risks described below before making an investment decision concerning the common stock of the Company. The risks and uncertainties described below are not the only ones we face. If any of the following risks actually occur, our business, financial condition or results of operations could be materially and adversely affected. In that case, the trading price of our common stock could decline, and investors may lose all or part of their investment. 6 The Company Has Limited Resources --------------------------------- The Company has limited resources and has had no revenues from operations for the fiscal years ended December 31, 2008 and December 31, 2007. On March 9, 1999, the Company sold substantially all of its assets and essentially ceased all operations. Currently, the primary source of revenue for the Company is interest income. The Company will only earn revenues through the acquisition of or merger(an "Acquisition") with a target company (a "Target"). There can be no assurance that any Target, at the time of the Company's consummation of an Acquisition of the Target, or at any time thereafter, will derive any material revenues from its operations or operate on a profitable basis. The current revenues of the Company may not be sufficient to fund further Acquisitions. Based on the Company's limited resources, the Company may not be able to effectuate its business plan and consummate an Acquisition. There can be no assurance that determinations ultimately made by the Company will permit the Company to achieve its business objectives. The Company Will Need Additional Financing in Order to Execute Its Business Plan -------------------------------------------------------------------------------- The Company has had only nominal revenues to date and will be entirely dependent upon its limited available financial resources to implement its business plan to complete an Acquisition. The Company cannot ascertain with any degree of certainty the capital requirements for the execution of its business plan. In the event that the Company's limited financial resources prove to be insufficient to implement its business plan, the Company will be required to seek additional financing. In addition, in the event of the consummation of an Acquisition, the Company may require additional financing to fund the operations or growth of the Target. Additional Financing May Not Be Available to the Company -------------------------------------------------------- There can be no assurance that additional financing will be available to the Company on acceptable terms, or at all. To the extent that additional financing proves to be unavailable when needed, the Company would be limited in its attempts to complete Acquisitions. The inability of the Company to secure additional financing, if needed, could also have a material adverse effect on the continued existence of RAC. The Company has no arrangements with any bank or financial institution to secure financing and there can be no assurance that any such arrangement, if required or otherwise sought, would be available on terms deemed to be commercially acceptable and in the best interests of the Company. The Company May Not Be Able to Borrow Funds ------------------------------------------- While there currently are no limitations on the Company's ability to borrow funds, the limited resources of the Company and limited operating history will make it difficult to borrow funds. The amount and nature of any borrowings by the Company will depend on numerous considerations, including the Company's capital requirements, the Company's perceived ability to meet debt service on any such borrowings and the then prevailing conditions in the financial markets, as well as general economic conditions. There can be no assurance that debt financing, if required or sought, would be available on terms deemed to be commercially acceptable by and in the best interests of the Company. The inability of the Company to borrow funds required to effect or facilitate an Acquisition may have a material adverse effect on the Company's financial condition and future prospects. Additionally, to the extent that debt financing ultimately proves to be available, any borrowings may subject the Company to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest. Furthermore, a Target may have already incurred borrowings and, therefore, the Company will be subjected to all the risks inherent thereto. 7 Competition for Acquisitions ---------------------------- The Company expects to encounter intense competition from other entities having business objectives similar to those of the Company. Many of these entities, including venture capital partnerships and corporations, blind pool companies, large industrial and financial institutions, small business investment companies and wealthy individuals, are well-established and have extensive experience in connection with identifying and effecting Acquisitions directly or through affiliates. Many of these competitors possess greater financial, technical, human and other resources than the Company and there can be no assurance that the Company will have the ability to compete successfully. The Company's financial resources will be limited in comparison to those of many of its competitors. This inherent competitive limitation may compel the Company to select certain less attractive acquisition prospects. There can be no assurance that such prospects will permit the Company to achieve its stated business objectives. The Company May Be Subject to Uncertainty in the Competitive Environment of a Target ------------------------------------------------------ In the event that the Company succeeds in effecting an Acquisition, the Company will, in all likelihood, become subject to intense competition from competitors of the Target. In particular, certain industries which experience rapid growth frequently attract an increasingly large number of competitors, including competitors with greater financial, marketing, technical, human and other resources than the initial competitors in the industry. The degree of competition characterizing the industry of any prospective Target cannot presently be ascertained. There can be no assurance that, subsequent to a consummation of an Acquisition, the Company will have the resources to compete effectively in the industry of the Target, especially to the extent that the Target is in a high growth industry. The Company May Pursue an Acquisition with a Target Operating Outside the United States: Special Additional Risks Relating to Doing Business in a Foreign Country -------------------------------------------------------------------------------- The Company may effectuate an Acquisition with a Target whose business operations or even headquarters, place of formation or primary place of business are located outside the United States. In such event, the Company may face the significant additional risks associated with doing business in that country. In addition to the language barriers, different presentations of financial information, different business practices, and other cultural differences and barriers that may make it difficult to evaluate such a Target, ongoing business risks may result from the internal political situation, uncertain legal systems and applications of law, prejudice against foreigners, corrupt practices, uncertain economic policies and potential political and economic instability that may be exacerbated in various foreign countries. 8 The Uncertain Structure of an Acquisition May Result in Risks Relating to the Market for the Company's Common Stock --------------------------------------------------------------------- The Company may form one or more subsidiary entities to effect an Acquisition and may under certain circumstances, distribute the securities of subsidiaries to the stockholders of the Company. There cannot be any assurance that a market would develop for the securities of any subsidiary distributed to stockholders or, if it did, any assurance as to the prices at which such securities might trade. Taxation Considerations May Impact the Structure of an Acquisition and Post-merger Liabilities ------------------------------------------------------- Federal and state tax consequences will, in all likelihood, be major considerations for the Company in consummating an Acquisition. The structure of an Acquisition or the distribution of securities to stockholders may result in taxation of the Company, the Target or stockholders. Typically, these transactions may be structured to result in tax-free treatment to both companies, pursuant to various federal and state tax provisions. The Company intends to structure any Acquisition so as to minimize the federal and state tax consequences to both the Company and the Target. Management cannot assure that an Acquisition will meet the statutory requirements for a tax-free reorganization, or that the parties will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes, which may have an adverse effect on both parties to the transaction. Steven N. Bronson is Critical to the Future Success of the Company ------------------------------------------------------------------ Steven N. Bronson is the Chairman, C.E.O. and President of the Company. The ability of the Company to successfully carry out its business plan and to consummate additional Acquisitions will be dependent upon the efforts of Mr. Bronson and the Company's directors. Notwithstanding the significance of Mr. Bronson, the Company has not obtained any "key man" life insurance on his life. The loss of the services of Mr. Bronson could have a material adverse effect on the Company's ability to successfully achieve its business objectives. If additional personnel are required, there can be no assurance that the Company will be able to retain such necessary additional personnel. Mr. Bronson Has Effective Control of the Company's Affairs ---------------------------------------------------------- As of March 13, 2009, Mr. Bronson beneficially owns and controls 980,049 shares of common stock of the Company, representing approximately 82% of the issued and outstanding shares of common stock and approximately 82% of the voting power of the issued and outstanding shares of common stock of the Company. In the election of directors, stockholders are not entitled to cumulate their votes for nominees. Accordingly, as a practical matter, Mr. Bronson may be able to elect all of the Company's directors and otherwise direct the affairs of the Company. 9 There Exist Conflicts of Interest Relating to Mr. Bronson's Time Commitment to the Company -------------------------------------------------------- Mr. Bronson is not required to commit his full time to the affairs of the Company. Mr. Bronson will have conflicts of interest in allocating management time among various business activities. As a result, the consummation of an Acquisition may require a greater period of time than if Mr. Bronson devoted his full time to the Company's affairs. However, Mr. Bronson will devote such time as he deems reasonably necessary to carry out the business and affairs of the Company, including the evaluation of potential Targets and the negotiation and consummation of Acquisitions and, as a result, the amount of time devoted to the business and affairs of the Company may vary significantly depending upon, among other things, whether the Company has identified a Target or is engaged in active negotiation and consummation of an Acquisition. Indemnification of Officers and Directors ----------------------------------------- The Company's Certificate of Incorporation provides for the Indemnification of its officers and directors to the fullest extent permitted by the laws of the State of Nevada. It is possible that the indemnification obligations imposed under these provisions could result in a charge against the Company's earnings and thereby affect the availability of funds for other uses by the Company. There Exist Risks to Stockholders Relating to Dilution: Authorization of Additional Securities and Reduction of Percentage Share Ownership Following Merger -------------------------------------------------------- The Company's Certificate of Incorporation authorizes the issuance of 30,000,000 shares of common stock. As of March 13, 2009, the Company had 1,194,773 shares of common stock issued and outstanding and 28,805,227 authorized but unissued shares of common stock available for issuance. Except for the Company's obligations under the Consulting Agreement with Catalyst Financial, LLC, dated June 6, 2008 (See Item 12 below), the Company has no commitments as of this date to issue its securities. However, the Company will, in all likelihood, issue a substantial number of additional shares in connection with or following an Acquisition. To the extent that additional shares of common stock are issued, the Company's stockholders would experience dilution of their ownership interests in the Company. Additionally, if the Company issues a substantial number of shares of common stock in connection with or following an Acquisition, a change in control of the Company may occur which may affect, among other things, the Company's ability to utilize net operating loss carry forwards, if any. Furthermore, the issuance of a substantial number of shares of common stock may adversely affect prevailing market prices, if any, for the common stock and could impair the Company's ability to raise additional capital through the sale of its equity securities. The Company may use consultants and other third parties providing goods and services. These consultants or third parties may be paid in cash, stock, options or other securities of the Company. The Company may in the future need to raise additional funds by selling securities of the Company which may involve substantial additional dilution to the investors. 10 The Company is Authorized to Issue Preferred Stock -------------------------------------------------- RAC's Articles of Incorporation authorizes the designation and issuance of 5,000,000 shares of preferred stock (the "Preferred Stock"), with such designations, powers, preferences, rights, qualifications, limitations and restrictions of such series as the Board, subject to the laws of the State of Colorado, may determine from time to time. Accordingly, the Board is empowered, without stockholder approval, to designate and issue Preferred Stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of Common Stock. In addition, the Preferred Stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control. Although we do not currently intend to designate or issue any shares of Preferred Stock, there can be no assurance that we will not do so in the future. It is likely however, that following a merger, new management may issue such preferred stock, and it is possible that one or more series of preferred stock will be designated and/or issued in order to effectuate a merger or financing. As of this date, we have no outstanding shares of Preferred Stock and we have not designated the rights or preferences of any series of preferred stock. The Company Expects to Pay No Cash Dividends -------------------------------------------- The Company presently does not expect to pay dividends. The payment of dividends, if any, will be contingent upon the Company's revenues and earnings, if any, capital requirements, and general financial condition. The payment of any dividends will be within the discretion of the Company's then Board of Directors. The Company presently intends to retain all earnings, if any, to implement its business plan, accordingly, the Board does not anticipate declaring any dividends in the foreseeable future. The Company May Be Deemed an Investment Company and Subjected to Related Restrictions --------------------------------------------- The regulatory scope of the Investment Company Act of 1940, as amended (the "Investment Company Act"), which was enacted principally for the purpose of regulating vehicles for pooled investments in securities, extends generally to companies engaged primarily in the business of investing, reinvesting, owning, holding or trading in securities. The Investment Company Act may, however, also be deemed to be applicable to a company which does not intend to be characterized as an investment company but which, nevertheless, engages in activities which may be deemed to be within the definitional scope of certain provisions of the Investment Company Act. The Company believes that its Investment Strategy may subject the Company to regulation under the Investment Company Act. If the Company is deemed to be an investment company, the Company may be forced to divest its investments or become subject to certain restrictions relating to the Company's activities, including restrictions on the nature of its investments and the issuance of securities. In addition, the Investment Company Act imposes certain requirements on companies deemed to be within its regulatory scope, including registration as an investment company, adoption of a specific form of corporate structure and compliance with certain burdensome reporting, record keeping, voting, proxy, disclosure and other rules and regulations. In the event of the characterization of the Company as an investment company, the failure by the Company to satisfy such regulatory requirements, whether on a timely basis or at all, would, under certain circumstances, have a material adverse effect on the Company. 11 Risks Associated with the Company's Investment Strategy ------------------------------------------------------- The Company's decision to invest a portion of its cash in marketable securities exposes the Company to potential losses. The Company's investments in marketable securities carry a risk of loss. While the Company will endeavor to invest in securities that have a potential for gain, there can be no assurances that the Company will not suffer losses based on its Investment Strategy. Investors Should Not Rely on Forward-Looking Statements Because They Are Inherently Uncertain ------------------------------------------------ This document contains certain forward looking statements that involve risks and uncertainties. We use words such as "anticipate," "believe," "expect," "future," "intend," "plan," and similar expressions to identify forward-looking statements. These statements are only predictions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this document. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us and described on the preceding pages and elsewhere in this document. We believe it is important to communicate our expectations to our investors. However, there may be events in the future that we are not able to predict accurately or over which we have no control. The risk factors listed above, as well as any cautionary language in this document, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Before you invest in our common stock, you should be aware that the occurrence of the events described in these risk factors and elsewhere in this document could have a material adverse effect on our business, operating results, financial condition and stock price. ITEM 2. PROPERTIES. Between January 5, 2004 and December 31, 2008, the Company maintained its principal offices at 100 Mill Plain Road, Danbury, Connecticut 06811. The Company was using a portion of the premises occupied by Catalyst Financial LLC, a full service brokerage, investment banking and consulting firm, located at 100 Mill Plain Road, Danbury, Connecticut 06811. Steven N. Bronson, the President of the Company, is the principal and owner of Catalyst Financial LLC. Catalyst Financial LLC has agreed to waive the payment of any rent by the Company for use of the offices. Subsequent event. Effective January 1, 2009 the Company relocated its principal offices to 1 North Federal Highway, Suite 201 Boca Raton, Florida 33432. The Company pays a monthly fee of $100 per month BKF Capital Group, Inc. for the use of the office and facilities. Steven N. Bronson, the Company's President, Chairman and controlling shareholder, is the president and chairman of BKF Capital Group, Inc. 12 ITEM 3. LEGAL PROCEEDINGS. There are no pending legal proceedings to which the Company is a party or of which any of its property is the subject as of the date of this report and there were no such proceedings during the years ended December 31, 2008 and December 31, 2007. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matter was submitted to a vote of the Company's security holders during the fourth quarter of the year ended December 31, 2008. PART II ITEM 5. MARKET FOR REGITRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECUTITIES. (a) MARKET INFORMATION. The Company's common stock is quoted on the Over-The-Counter Bulletin Board and traded under the symbol "RDGA". The following table sets forth the range of high and low prices for the Company's common stock for the periods indicated. These prices represent reported transactions between dealers that do not include retail markups, markdowns or commissions, and do not necessarily represent actual transactions. COMMON STOCK ------------------------------------------------------------------ Year/Fiscal Period High ($) Low ($) ------------------ ------------ ----------- 2008 First Quarter 2.00 1.50 Second Quarter 1.50 1.50 Third Quarter 1.50 1.50 Fourth Quarter 1.50 1.50 2007 First Quarter 3.00 3.00 Second Quarter 3.00 1.50 Third Quarter 1.75 1.50 Fourth Quarter 2.20 1.50 As of March 13, 2009, the bid and ask price of the Company's common stock was $1.50 and $2.90, respectively. (b) HOLDERS. As of March 13, 2009, the Company had approximately 655 shareholders of record of its common stock, $0.001 par value. (c) DIVIDENDS. The Company has not declared cash dividends on its common stock since its inception, and the Company does not anticipate paying any dividends in the foreseeable future. There are no contractual restrictions on the Company's ability to pay dividends. 13 Section 15(g) of the Exchange Act The Company's shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rules 15g-1 through 15g-6 promulgated thereunder, which impose additional sales practice requirements on broker-dealers who sell our securities to persons other than established customers and accredited investors. Rule 15g-2 declares unlawful any broker-dealer transactions in penny stocks unless the broker-dealer has first provided to the customer a standardized disclosure document. Rule 15g-3 provides that it is unlawful for a broker-dealer to engage in a penny stock transaction unless the broker-dealer first discloses and subsequently confirms to the customer the current quotation prices or similar market information concerning the penny stock in question. Rule 15g-4 prohibits broker-dealers from completing penny stock transactions for a customer unless the broker-dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction. Rule 15g-5 requires that a broker-dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales person's compensation. The Company's common stock may be subject to the foregoing rules. The application of the penny stock rules may affect our stockholder's ability to sell their shares because some broker-dealers may not be willing to make a market in our common stock because of the burdens imposed upon them by the penny stock rules. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANICAL CONDITION AND RESULTS OF OPERATIONS. The following discussion provides information which the Company's management believes to be relevant to an assessment and understanding of the Company's results of operations and financial condition. This discussion should be read together with the Company's financial statements and the notes to financial statements, which are included in this report. Disclosure Regarding Forward Looking Statements ----------------------------------------------- Except for historical information contained herein, the statements in this report are forward-looking statements that are made pursuant to the safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements when you see words such as "expect," "anticipate," "estimate," "may," "believe," and other similar expressions. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Actual results could differ materially from those projected in the forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. These and other risks are described elsewhere herein and in the Company's other filings with the Securities and Exchange Commission. 14 Acquisition Strategy -------------------- The Company's plan of operation is to arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. The Company has not identified a viable operating entity for a merger, acquisition, business combination or other arrangement, and there can be no assurance that the Company will ever successfully arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. The Company anticipates that the selection of a business opportunity will be a complex process and will involve a number of risks, because potentially available business opportunities may occur in many different industries and may be in various stages of development. Due in part to depressed economic conditions in a number of geographic areas, rapid technological advances being made in some industries and shortages of available capital, management believes that there are numerous firms seeking either the limited additional capital which the Company will have or the benefits of a publicly traded corporation, or both. The perceived benefits of a publicly traded corporation may include facilitating or improving the terms upon which additional equity financing may be sought, providing liquidity for principal shareholders, creating a means for providing incentive stock options or similar benefits to key employees, providing liquidity for all shareholders and other factors. In some cases, management of the Company will have the authority to effect acquisitions without submitting the proposal to the shareholders for their consideration. In some instances, however, the proposed participation in a business opportunity may be submitted to the shareholders for their consideration, either voluntarily by the Board of Directors to seek the shareholders' advice and consent, or because of a requirement of state law to do so. In seeking to arrange a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity, management's objective will be to obtain long-term capital appreciation for the Company's shareholders. There can be no assurance that the Company will be able to complete any merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. The Company may need additional funds in order to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity, although there is no assurance that the Company will be able to obtain such additional funds, if needed. Even if the Company is able to obtain additional funds there is no assurance that the Company will be able to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity. Competition to RAC's Acquisition Strategy ----------------------------------------- In connection with its Acquisition Strategy, the Company expects to encounter intense competition from other entities having business objectives similar to those of the Company. Many of these entities, including venture capital firms, blind pool companies, large industrial and financial institutions, small business investment companies and wealthy individuals, are well-established and have extensive experience in connection with identifying and effecting acquisitions directly or through affiliates. Many of these competitors possess greater financial, technical, human and other resources than the Company and there can be no assurance that the Company will have the ability to compete successfully with such entities. The Company's financial resources will be limited in comparison to those of many of its competitors. The Company's limited financial resources may compel the Company to select certain less attractive acquisition prospects. 15 The Spin-Off of Subsidiary --------------------------- In furtherance of the Company's plan to exploit the Patent, in April 2006, the Board of Directors of the Company authorized the spin-off of 100% of the Company's wholly-owned subsidiary Bio-Medical Automation, Inc. ("Bio-Medical") to the Company's shareholders on a pro rata basis. On or about May 30, 2006, the Company mailed to its shareholders of record as of April 28, 2006, an Information Statement containing the information concerning the Company and the Spin Off called for by Regulation 14C under the Securities Exchange Act of 1934. The Information Statement on Schedule 14C is incorporated herein by reference. To consummate the Spin-Off, Bio-Medical was required to file a registration statement on Form 10-SB to register all of the issued and outstanding shares of Bio-Medical. On April 27, 2007, the Board of Directors of the Company voted to terminate the proposed spin-off of Bio-Medical. Investment Strategy ------------------- On August 25, 2003, the Board of Directors of the Company authorized the Company to invest a portion of the Company's cash in marketable securities in an effort to realize a greater rate of return than the Company had been earning in light of historically low interest rates. The Board directed that management maintain at least $40,000 of the Company's cash in a federally insured bank or money market account. In furtherance of the Company's investment strategy the Company opened a brokerage account with Catalyst Financial LLC ("Catalyst"), a broker-dealer registered with the U.S. Securities and Exchange Commission and a member in good standing with the National Association of Securities Dealers, Inc. Catalyst is owned and controlled by Steven N. Bronson, the Company's President. Catalyst has agreed to charge the Company commissions of no more that $.02 per share with a minimum of $75 per trade on securities transactions. The Board approved the commission structure to be charged by Catalyst. Mr. Bronson abstained from voting on all Board resolutions concerning the Company's investment strategy and the Company's arrangements with Catalyst. On January 12, 2007, the Company, acquired 50,000 shares of Argan, Inc. ("Argan") common stock in a private transaction at a cost of $4.25 per share or an aggregate amount of $212,500. On April 26, 2007, the Company sold all of its 50,000 shares of Argan at an average price of $6.26 for proceeds of $312,484. On June 1, 2007, the Company purchased 57,500 shares of Argan common stock at an average price of $5.40 per share or $311,082. At December 31, 2008 the Company's 57,500 shares of Argan common stock were valued at $10.90 per share or $626,750. While the Company will endeavor to invest in securities that have a potential for gain, there can be no assurances that the Company will not suffer losses based on its Investment Strategy. Results of Operations --------------------- During the year ended December 31, 2008 ("Fiscal 08"), the Company earned no revenues from operations and generated interest income of $2,596 compared to no revenues from operations and interest income in the amount of $6,254 for the year ended December 31, 2007 ("Fiscal 07"). 16 During Fiscal 08, the Company incurred expenses of $134,146, an increase of $87,884 compared to expenses of $46,262 for Fiscal 07. The increase was due primarily to the Company's entry into the Consulting Agreement with Catalyst Financial, LLC. As of December 31, 2008, the Company had investment income of $0 and other comprehensive loss of $140,875 based on its investment in securities. For Fiscal 08, the Company incurred a net operating loss of $131,549 compared to a net operating gain of $59,976 for Fiscal 07. Liquidity and Capital Resources ------------------------------- During Fiscal 08, the Company satisfied its working capital needs from cash on hand at the beginning of the year. As of December 31, 2008, the Company had working capital of $734,627. While this working capital will satisfy the Company's immediate financial needs, it may not be sufficient to provide the Company with sufficient capital to finance a merger, acquisition or business combination between the Company and a viable operating entity. The Company may need additional funds in order to complete a merger, acquisition or business combination between the Company and a viable operating entity. There can be no assurances that the Company will be able to obtain additional funds if and when needed. The Company's future financial condition will be subject to its ability to arrange for a merger, acquisition or a business combination with an operating business on favorable terms that will result in profitability. There can be no assurance that the Company will be able to do so or, if it is able to do so, that the transaction will be on favorable terms not resulting in an unreasonable amount of dilution to the Company's existing shareholders. The Company may need additional funds in order to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity, although there is no assurance that the Company will be able to obtain such additional funds, if needed. Even if the Company is able to obtain additional funds there is no assurance that the Company will be able to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating entity. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The consolidated financial statements and related notes are included as part of this report as indexed in the appendix on pages F-1 through F-17. 17 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On September 23, 2008 the registrant dismissed Carlin, Charron & Rosen, LLP as its independent accountants and engaged Mark Bailey & Company, Ltd. as its new independent accountants, as of September 23, 2008. This change was reported by the Company on a current report on Form 8-K, which was filed on September 25, 2008 Item 9A. CONTROLS AND PROCEDURES. Disclosure Controls and Procedures ---------------------------------- We maintain "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our principal executive officer to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, the Company recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance of achieving the desired control objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. Evaluation of disclosure and controls and procedures ---------------------------------------------------- Based on his evaluation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this annual report on Form 10-K the Company's principle executive officer has concluded that the Company's disclosure controls and procedures did operate in an effective manner as of December 31, 2008. 18 Management's Annual Report on Internal Control over Financial Reporting ----------------------------------------- Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Internal control over financial reporting is defined, under the Exchange Act, as a process designed by, or under the supervision of, the issuer's principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: o Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer; o Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and o Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer's assets that could have a material effect on the financial statements. The Company's principal executive officer has assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2008. In making this assessment, the Company's principal executive officer was guided by the releases issued by the SEC and to the extent applicable the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's principal executive officer has concluded that based on his assessment, as of December 31, 2008, the Company's procedures of internal control over financial reporting was effective. 19 Readers are cautioned that internal control over financial reporting, no matter how well designed, has inherent limitations and may not prevent or detect misstatements. Therefore, even effective internal control over financial reporting can only provide reasonable assurance with respect to the financial statement preparation and presentation. This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this annual report. This report shall not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. Changes in Internal Control over Financial Reporting ---------------------------------------------------- There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2008 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION On June 3, 2008, the Board of Directors duly authorized and approved the Company's entry into a consulting agreement with Catalyst Financial LLC ("Catalyst Financial"), a full service securities brokerage, investment banking and consulting firm, owned by Steven N. Bronson, the President and Chairman of the Company. Steven N. Bronson abstained from the vote. On June 6, 2008, the Company entered into an agreement with Catalyst Financial (the "Consulting Agreement"). The Consulting Agreement is for a term of twenty months and terminates on January 31, 2010. Pursuant to the Consulting Agreement, Catalyst Financial agreed to provide consulting services to the Company relating to the management and administration of the Company's business affairs and in connection with the Company's acquisition strategy, Catalyst Financial shall assist the Company in identifying and investigating prospective target companies for mergers, acquisitions, business combinations and similar transactions, and, if investigation warrants, advising the Company concerning the negotiation of terms and the financial structure of such transactions. 20 In consideration for the consulting services rendered and to be rendered by the Catalyst Financial, the Company shall: (1) pay Catalyst Financial a monthly fee in the amount of $5,000 commencing on June 6, 2008 and continuing thereafter on the first day of each successive month until January 1, 2010, and (2) the Company shall issue Catalyst Financial a total of 120,000 shares of the Company's common stock, $.001 par value (the "Shares"). The Shares shall be issued to Catalyst Financial and shall vest at a rate of 6,000 shares per month commencing on June 30, 2008 and an additional 6,000 shares shall vest on the last day of each successive month thereafter until January 31, 2010. The Shares will be issued at fair value based upon the closing price on the date of issuance when earned by Catalyst Financial. The Shares are restricted securities as that term is described in the Securities Act of 1933 (the "Act") and are issued by the Company in reliance of Section 4(2) of the Act. The Consulting Agreement commences on June 6, 2008 and shall terminate on January 31, 2010. The above is just a summary of the Consulting Agreement, readers are referred to the actual Consulting Agreement for all of its terms and conditions. A copy of the Consulting Agreement is attached as Exhibit 10.19 to a Form 8-K, dated June 9, 2008. Subsequent Event ---------------- In accordance with the Consulting Agreement, on January 31, 2009 the Company delivered 6,000 shares of the Company's common stock, $.001 par value, to Catalyst Financial and on February 28, 2008 the Company delivered 6,000 shares of the Company's common stock, $.001 par value, to Catalyst Financial. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The following table sets forth the name, age and position of each of our directors, executive officers and significant employees as of December 31, 2008. Each director will hold office until the next annual meeting of our stockholders or until his or her successor has been elected and qualified. Our executive officers are appointed by, and serve at the discretion of, the Board of Directors. Name Age Position ------------------ ----- -------------------- Steven N. Bronson 43 Chairman, Chief Executive Officer and President Leonard Hagan 57 Director Kenneth Schwartz 53 Director Steven N. Bronson has served as a director of the Company since June 1996. From September 1998 to August 11, 2000, Mr. Bronson was the sole officer of the Company. From September 1998 to March 17, 2000, Mr. Bronson was also the sole director of the Company. In September 1996, Mr. Bronson became the Chief Executive Officer and President of the Company. Mr. Bronson is also the President of Catalyst Financial LLC, a privately held full service securities brokerage and investment banking firm. Mr. Bronson has held that position since September 24, 1998. During the period of 1991 through September 23, 1998, Mr. Bronson was President of Barber & Bronson Incorporated, a full service securities brokerage and investment banking firm. Mr. Bronson acts as the manager of the Catalyst Fund, L.P., a Delaware limited partnership, that is a privately held hedge fund. In addition, Mr. Bronson is an officer and director of 4net Software, Inc. and BKF Capital Group, Inc. both publicly traded corporations. 21 Leonard Hagan has served as a director of the Company since March 17, 2000. Mr. Hagan is a certified public accountant and for the past fifteen years has been a partner at Hagan & Burns CPA's, PC in New York. Mr. Hagan received a Bachelors of Arts degree in Economics from Ithaca College in 1974, and earned his Masters of Business Administration degree from Cornell University in 1976. Mr. Hagan is registered as the Financial and Operations Principal for the following broker-dealers registered with the Securities and Exchange Commission: Mallory Capital Group, LLC, Empire Asset Management Company, Inc. Fieldstone Services Corp., Avatar Trading, LLC, Livingston Securities, LLC, Coastal 1 Trading, LLC and Danske Markets, Inc. Mr. Hagan is also a director of 4net Software, Inc. and BKF Capital Group, Inc. both publicly traded corporations. Dr. Kenneth Schwartz has served as a director of the Company since March 25, 2000. Dr. Schwartz has been self-employed as a dentist in New York, New York. Dr. Schwartz received his Bachelor of Sciences from Brooklyn College in 1977 and earned his D.D.S. from New York University College of Dentistry in 1982. No director, executive officer, promoter or control person of the Company has, within the last five years: (i) had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (ii) been convicted in a criminal proceeding or is currently subject to a pending criminal proceeding (excluding traffic violations or similar misdemeanors); (iii) been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; (iv) been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission (the "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. There are no family relationships among any directors and executive officers of the Company. Meetings and Committees of the Board of Directors ------------------------------------------------- During the year ended December 31, 2008, the Board of Directors held two meetings. In view of the Company's lack of operations, during the year ended December 31, 2008, the Board of Directors did not form any committees. During the year ended December 31, 2008, all of the directors then in office attended 100% of the total number of meetings of the Board of Directors and the Committees of the Board of Directors on which they served. Audit Committee ---------------- The Audit Committee of the Company consists of Steven N. Bronson and Leonard Hagan. The functions of the Audit Committee are to recommend to the Board of Directors the appointment of independent auditors for the Company and to analyze the reports and recommendations of such auditors. The committee also monitors the adequacy and effectiveness of the Company's financial controls and reporting procedures. The Audit Committee does not meet on a regular basis, but only as circumstances require. Due the size of the Company and its lack of current operations, the Audit Committee has not designated a financial expert. 22 Code of Ethics --------------- At a meeting of the Board of Directors of the Company held on March 25, 2004, the Company adopted a Code of Ethics. A copy of the Code of Ethics is attached as Exhibit 14 to the Company's Form 10-KSB for the year ended December 31, 2003. Section 16(a) Beneficial Ownership Compliance --------------------------------------------- Section 16(a) of the Exchange Act requires the Company's directors and executive officers, and persons who own more than 10% of a registered class of the Company's equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than 10% shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely upon a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the year ended December 31, 2008, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with. ITEM 11. EXECUTIVE COMPENSATION Summary Compensation Table(1) The following summary compensation table sets forth information Concerning the annual and long-term compensation earned by the Company's chief Executive officer and each of the other most highly compensated executive officers(collectively, the "Named Executive Officers"). Name/Position Fiscal year Annual Salary Stock Grants Option Grants -------------------------------------------------------------------------------- Steven N. Bronson CEO and President 2008 $0 0 0 2007 $0 0 0 2006 $0 0 0 ---------------------- (1) The Columns designated by the SEC for the reporting of certain bonuses, long term compensation, including awards of restricted stock, long term incentive plan payouts, and all other compensation have been eliminated as no such bonuses, awards, payouts, grants or compensation were awarded during any fiscal year covered by the table. 23 Option/SAR Grants in Last Fiscal Year The following table contains certain information regarding grants of stock options to Named Executive Officers during the year ended December 31, 2008. The stock options listed below were granted without tandem stock appreciation rights. We have no freestanding stock appreciation rights outstanding. Number of Percent of Securities Total Options/ Underlying SARs Granted to Name Options/SARs Employees Exercise or Expiration Granted (#) in Fiscal Year Base Price ($/Sh) Date ------------------ ----------- --------------- ----------------- ---------- Steven N. Bronson 0 0 - - ------------------ Other Plans. The Company does not currently have any bonus, profit sharing, pension, retirement, stock option, stock purchase, or other remuneration or incentive plans in effect. Long Term Incentive Plan. The Company has no long-term incentive plan. Aggregate Option Exercises in Fiscal 08 and Fiscal 08 Option Values The following table contains certain information regarding stock options exercised during and options to purchase common stock held as of December 31, 2008, by each of the Named Executive Officers.
Number Number of Securities Value of Unexercised Of Shares Underlying Unexercised In-the-Money Options Name/ Acquired Value Options at Fiscal Year End at Fiscal Year End Position On Exercise Realized Exercised/Unexercised Exercised/Unexercised (1) ------------------ ----------- -------- -------------------------- ------------------------- Steven N. Bronson Chairman, CEO and President 0 0 0 $0 -------------------
(1) Calculated on the basis of the closing share price of the common stock on the over-the-counter market on the date exercised, less the exercise price payable for such shares. 24 Compensation of Directors ------------------------- For the year ended December 31, 2008, no cash compensation was paid to our directors for their services as directors. Employment Contracts -------------------- On March 28, 2006, the Company entered into a new employment agreement with Steven N. Bronson appointing Mr. Bronson to serve as the chief executive officer and the president of the Company for the period April 1, 2006 through March 31, 2007. The agreement provides that Mr. Bronson will not receive a salary, however, the Board of Directors may determine to compensate Mr. Bronson. The term of the agreement is for a one (1) year period and the agreement automatically renews for additional one (1) year periods provided it is not terminated. A copy of the agreement is attached as Exhibit 10.17, to the Form 10-KSB for the year ended December 31, 2005 and is incorporated herein by reference. Mr. Bronson's employment agreement automatically renewed for one year periods April 1, 2007 and April 1, 2008. The terms of such Employment Agreement include the following: Name Title Salary/Year Term ----------------------------------------------------------------- Steven N. Bronson CEO & President 0 1 year ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth as of March 13, 2009 certain information regarding the beneficial ownership of the common stock outstanding by (i) each person who is known to the Company to own 5% or more of the common stock, (ii) each director of the Company, (iii) certain executive officers of the Company and (iv) all executive officers and directors of the Company as a group. Unless otherwise indicated, each of the stockholders shown in the table below has sole voting and investment power with respect to the shares beneficially owned. Unless otherwise indicated, the address of each person named in the table below is c/o Ridgefield Acquisition Corp., 1 North Federal Highway, Suite 201, Boca Raton, Florida 33432. Number of Percent Name and Address Company Position Shares owned of class ---------------- ---------------- ------------ -------- Steven N. Bronson Chairman, CEO 980,049(2) 82% and President Kenneth Schwartz Director 32,500(3) 2.7% Leonard Hagan Director 15,000 1.1% All directors and executive officers a group (3 persons) 1,027,549 85.8% ----------------------------- (1) As used in this table, a beneficial owner of a security includes any person who, directly or indirectly, through contract, arrangement, understanding, relationship or otherwise has or shares (a) the power to vote, or direct the voting of, such security or (b) investment power which includes the power to dispose, or to direct the disposition of, such security. In addition, a person is deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership of such security within 60 days. 25 (2) This amount also includes 34,211 shares of common stock owned by Mr. Bronson's spouse. This amount does not include the additional 66,000 shares that Mr. Bronson will receive pursuant to the Consulting Agreement, during the period March 31, 2009 to January 31, 2010, at the rate of 6,000 shares per month. (3) This amount includes 17,500 shares of common stock owned by Dr. Schwartz's spouse, and Dr. Schwartz expressly disclaims beneficial ownership of the shares owned by his spouse. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. Steven N. Bronson is the owner and principal of Catalyst Financial LLC ("Catalyst Financial"), a full service securities brokerage, investment banking and consulting firm. The Company entered into a Mergers and Acquisitions Advisory Agreement, dated as of November 13, 2001, with Catalyst Financial (the "M&A Advisory Agreement"). Pursuant to the M&A Advisory Agreement, Catalyst Financial agreed to provide consulting services to the Company in connection with the Company's search for prospective target companies for mergers, acquisitions, business combinations and similar transactions, and, if investigation warrants, advising the Company concerning the negotiation of terms and the financial structure of such transactions. For the services rendered pursuant to the M&A Advisory Agreement, Catalyst Financial is entitled to receive a fee in the amount of five percent (5%) of the total consideration of the specific transaction (the "M&A Fee"). The maximum amount of the M&A Fee is $500,000 for any single transaction. The M&A Advisory Agreement expired by its own terms in November 2005. On March 25, 2006, the Board of Directors authorized the renewal of the M&A Advisory Agreement for an additional three years commencing on April 1, 2006. Additionally, the Board modified the M&A Advisory Agreement to provide that the Company shall pay to Catalyst Financial a monthly retainer fee in the amount of $1,000 per month commencing on April 1, 2006 and continuing throughout the term of the M&A Advisory Agreement. On January 31, 2006, the Board of Directors of the Company directed the officers of the Company to amend the M&A Advisory Agreement to provide sub-paragraph 3.(A)(entitled Monthly Fee) to provide that a monthly fee payable by the Company to Catalyst Financial during the one year period from February 1, 2006 though January 31, 2007 shall be increased from $1,000 per month to $5,000 per month. Thereafter, the Company shall pay a monthly fee in the amount of $1,000 to Catalyst Financial on the first day of each month commencing on February 1, 2007 and continuing through March 1, 2008. A copy of the Addendum to the M&A Advisory Agreement is attached hereto as Exhibit 10.18 and is incorporated herein by reference. As noted above, on June 6, 2008, the Company entered into the Consulting Agreement with Catalyst Financial. Pursuant to the Consulting Agreement, Catalyst Financial agreed to provide consulting services to the Company relating to the management and administration of the Company's business affairs and in connection with the Company's acquisition strategy, Catalyst Financial shall assist the Company in identifying and investigating prospective target companies for mergers, acquisitions, business combinations and similar transactions, and, if investigation warrants, advising the Company concerning the negotiation of terms and the financial structure of such transactions. In consideration for the consulting services rendered and to be rendered by the Catalyst Financial, the Company shall: (1) pay Catalyst Financial a monthly fee in the amount of $5,000 commencing on June 6, 2008 and continuing thereafter on the first day of each successive month until January 1, 2010, and (2) the Company shall issue Catalyst Financial a total of 120,000 shares of the Company's common stock, $.001 par value (the "Shares"). The Shares shall be issued to Catalyst Financial and shall vest at a rate of 6,000 shares per month commencing on June 30, 2008 and an additional 6,000 shares shall vest on the last day of each successive month thereafter until January 31, 2010. The above is just a summary of the Consulting Agreement, readers are referred to the actual Consulting Agreement for all of its terms and conditions. A copy of the Consulting Agreement is attached as Exhibit 10.19 to a Form 8-K, dated June 9, 2008. 26 Between January 5, 2004 and December 31, 2008, the Company maintained its principal offices at 100 Mill Plain Road, Danbury, Connecticut 06811. The Company was using a portion of the premises occupied by Catalyst Financial LLC, a full service brokerage, investment banking and consulting firm, located at 100 Mill Plain Road, Danbury, Connecticut 06811. Steven N. Bronson, the President of the Company, is the principal and owner of Catalyst Financial LLC. Catalyst Financial LLC has agreed to waive the payment of any rent by the Company for use of the offices. Subsequent Events. Since January 1, 2009, pursuant to the Consulting Agreement, the Company paid Catalyst Financial $15,000 and issued Catalyst Financial 12,000 shares of the Company's common stock. Effective January 1, 2009 the Company relocated its principal offices to 1 North Federal Highway, Suite 201 Boca Raton, Florida 33432. The Company pays a monthly fee of $100 per month BKF Capital Group, Inc. for the use of the office and facilities. Steven N. Bronson, the Company's President, Chairman and controlling shareholder, is the president and chairman of BKF Capital Group, Inc. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Audit Fees. ---------- The aggregate fees billed to the Company for professional services rendered by principal accountants for the audit of our annual consolidated financial statements and review of our quarterly consolidated financial statements was $10,000 for 2008 and $9,100 2007. Audit-Related Fees. ------------------ None. Tax Fees. -------- The aggregate fees billed to the Company for professional services rendered by accountants for tax related services is zero for fiscal years 2008 and $900 for 2007. All Other Fees. -------------- None. The audit committee approved the engagement of Mark Bailey & Co., Ltd. in the preparation of the Company's tax returns for fiscal year 2008. ITEM 15. EXHIBITS The following exhibits are hereby filed as part of this Annual Report on Form 10-KSB or incorporated by reference. 2 Plan of Merger, dated May 11, 2006 by and between Ridgefield Acquisition Corp., a Colorado corporation, and Ridgefield Acquisition Corp., a Nevada corporation, incorporated by reference to the Company's Schedule 14A filed on May 26, 2006. 3.1 Articles of Incorporation, incorporated by reference to Registration Statement No. 33-13074-D as Exhibit 3.1. 3.2 Amended Bylaws adopted June 1, 1987, incorporated by reference to Annual Report on Form 10-K for the fiscal year ended December 31, 1987 as Exhibit 3.2. 27 3.4 Articles of Amendment to Restated Articles of Incorporation dated March 7,1991. Incorporated by reference to Annual Report on Form 10-K for fiscal year ended December 31, 1990 as Exhibit 3.4. 3.5 Articles of Amendment to Restated Articles of Incorporation dated March 17, 1999, incorporated by reference to the Company's Current Report on Form 8-K reporting an event of March 9, 1999. 3.6 Articles of Incorporation of Bio-Medical Automation, Inc. a Nevada corporation, the Company's wholly owned subsidiary. 3.7 By-laws of Bio-Medical Automation, Inc. a Nevada corporation, the Company's wholly owned subsidiary. 3.8 Articles of Incorporation of Ridgefield Acquisition Corp., filed on May 12, 2006, with the State of Nevada, incorporated by reference to the Company's Schedule 14A filed on May 26, 2006. 3.9 By-laws of Ridgefield Acquisition Corp., incorporated by reference to the Company's Schedule 14A filed on May 26, 2006. 10.1 OEM Purchase Agreement dated January 15, 1990, between the Company and Ariel Electronics, Inc. incorporated by reference to Annual Report on Form 10-K for the fiscal year ended December 31, 1989 as Exhibit 10.1. 10.2 Form of Convertible Promissory Note, 12/30/93 Private Placement incorporated by reference to Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993 as Exhibit 10.2. 10.3 Form of Non-Convertible Promissory Note, 12/30/93 Private Placement incorporated by reference to Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993 as Exhibit 10.3. 10.4 Form of Note Purchaser Warrant Agreement and Warrant, 12/30/93 Private Placement incorporated by reference to Annual Report on Form 10-KSB for the fiscal year ended December 31, 1993 as Exhibit 10.4. 10.5 Form of Promissory Note, April 1, 1996. 10.6 Form of Security Agreement, April 1, 1996. 10.7 Form of Common Stock Purchase Warrant, April 1, 1996. 10.8 Form of Promissory Note, July 1, 1996. 10.9 Form of April 1, 1996 Promissory Note Extension, October 17, 1996. 10.10 Form of Common Stock Purchase Warrant, October 10, 1996. 10.11 Asset Purchase Agreement with JOT incorporated by reference to Form 8-K reporting an event of November 4, 1998, and amendment thereto incorporated by reference to Form 8-K reporting an event of December 15, 1998. 10.12 Stock Purchase Agreement, between Bio-Medical Automation, Inc. and Steven N. Bronson, incorporated by reference to the Current Report on Form 8-K filed on April 6, 2000. 10.13 Employment Agreement between Bio-Medical Automation, Inc. and Steven N. Bronson, dated as of March 24, 2001, incorporated by reference to Quarterly Report on Form 10-QSB for the quarter ended March 31, 2001. 10.14 Mergers and Acquisitions Advisory Agreement, dated as of November 13, 2001, between Bio-Medical Automation, Inc. and Catalyst Financial LLC incorporated by reference to the Annual Report on Form 10-KSB for the year ended December 31, 2001. 10.15 Mergers and Acquisitions Advisory Agreement, dated as of April 1, 2006, between Ridgefield Acquisition Corp. and Catalyst Financial LLC. 28 10.16 Appointment of Atlas Stock Transfer Agent Corporation as the transfer Agent for Ridgefield Acquisition Corp. 10.17 Employment Agreement between Ridgefield Acquisition Corp. and Steven N. Bronson, dated as of March 28, 2006. 10.18 Addendum, dated as of February 1, 2006, to Mergers and Acquisitions Advisory Agreement, dated as of April 1, 2006, between Ridgefield Acquisition Corp. and Catalyst Financial LLC, incorporated by reference to the Annual Report on Form 10-KSB for the year ended December 31, 2007. 10.19 Consulting Agreement, dated as of June 6, 2008, between Ridgefield Acquisition Corp. and Catalyst Financial LLC incorporated by reference to the Form 8-K, dated June 9, 2008. 14 Code of Ethics 31* President's Written Certification Of Financial Statements Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32* President's Written Certification Of Financial Statements Pursuant to 18 U.S.C. Statute 1350. -------------------------------- * Filed herewith SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: March 27, 2009 RIDGEFIELD ACQUISITION CORP., a Nevada corporation By: /s/ Steven N. Bronson ------------------------------------ Steven N. Bronson, CEO and President Principle Executive Officer as Registrant's duly authorized officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: /s/ Steven N. Bronson /s/ Kenneth Schwartz ---------------------------------- ---------------------------------- Steven N. Bronson Kenneth Schwartz President, Chief Executive Director Officer and Chairman March 27, 2009 of the Board of Directors Principal Executive Officer March 27, 2009 /s/ Leonard Hagan --------------------------------- Leonard Hagan Director March 27, 2009 29 EXHIBIT INDEX The following Exhibits are filed herewith: Exhibit Number Description of Document ------ ----------------------- 31 President's Written Certification Of Financial Statements pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 President's Written Certification Of Financial Statements pursuant to 18 U.S.C. Statute 1350. RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firms F - 2 Consolidated Balance Sheets December 31, 2008 and 2007 F - 4 Consolidated Statements of Operations and Comprehensive Income (Loss) Years Ended December 31, 2008 and 2007 F - 5 Consolidated Statements of Stockholders' Equity Years Ended December 31, 2008 and 2007 F - 6 Consolidated Statements of Cash Flows Years Ended December 31, 2008 and 2007 F - 7 Notes to Consolidated Financial Statements F - 9 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Ridgefield Acquisition Corp. We have audited the accompanying consolidated balance sheet of Ridgefield Acquisition Corp. (the "Company") as of December 31, 2008, and the related consolidated statements of operations and comprehensive income, stockholders' equity and cash flows for the period then ended. Ridgefield Acquisition Corp.'s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ridgefield Acquisition Corp. as of December 31, 2008, and the results of its operations and its cash flows for the period then ended in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has no principal operations or significant revenue producing activities which raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Mark Bailey & Company, Ltd. Reno, Nevada March 27, 2009 F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Ridgefield Acquisition Corp. We have audited the accompanying consolidated balance sheet of Ridgefield Acquisition Corp. and subsidiary (the "Company") as of December 31, 2007, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ridgefield Acquisition Corp. and subsidiary as of December 31, 2007, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has no principal operations or significant revenue producing activities which raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Carlin Charron & Rosen LLP Glastonbury, Connecticut March 28, 2008 F-3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
December 31, 2008 2007 ----------- ----------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 123,162 $ 186,287 Investments 626,750 767,625 ----------- ----------- TOTAL ASSETS $ 749,912 $ 953,912 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 15,285 $ 9,861 ----------- ----------- TOTAL CURRENT LIABILITIES 15,285 9,861 ----------- ----------- COMMITMENTS AND CONTINGENCIES -- -- STOCKHOLDERS' EQUITY Preferred stock, $.01 par value; authorized - 5,000,000 shares Issued - none -- -- Common stock, $.001 par value; authorized - 30,000,000 shares Issued and outstanding - 1,182,773 on December 31, 2008 and 1,140,773 shares on December 31, 2007 1,183 1,141 Capital in excess of par value 2,155,961 2,093,003 Accumulated deficit (1,738,185) (1,606,636) Accumulated other comprehensive gain 315,668 456,543 ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 734,627 944,051 ----------- ----------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 749,912 $ 953,912 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. F-4 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) Years Ended December 31, 2008 2007 ----------- ----------- REVENUES Interest income $ 2,597 $ 6,254 Realized gain on investments -- 99,984 ----------- ----------- Total Revenues 2,597 106,238 ----------- ----------- OPERATING EXPENSES General and administrative 134,146 46,262 Employee stock options -- -- Write-off of patent -- -- ----------- ----------- Total Expenses 134,146 46,262 ----------- ----------- NET INCOME (LOSS) (131,549) 59,976 ----------- ----------- OTHER COMPREHENSIVE INCOME (LOSS) Unrealized gain (loss) on investments (140,875) 556,527 Reclassification adjustment for realized gain/loss -- (99,984) ----------- ----------- Other comprehensive income (loss) (140,875) 456,453 ----------- ----------- COMPREHENSIVE INCOME (LOSS) $ (272,424) $ 516,519 =========== =========== NET INCOME (LOSS) PER COMMON SHARE Basic $ (.11) $ .05 =========== =========== Dilutive $ (.11) $ .05 =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - Basic 1,151,458 1,140,773 =========== =========== Dilutive 1,151,458 1,290,773 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. F-5 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Accumulated Common Stock Capital in Other ------------------------- Excess of Note Deferred Accumulated Comprehensive Shares Amount Par Value Receivable Compensation Deficit Income/(Loss) Totals ----------- ----------- ----------- ---------- ------------ ----------- ------------- --------- Balance, December 31, 2006 1,140,773 $ 1,141 $ 2,093,003 -- -- ($1,666,612) -- $ 427,532 =========== =========== =========== ========= =========== =========== =========== ========= Other Comprehensive Income Changes in unrealized Gain -- -- -- -- -- -- 456,543 456,543 Net Income -- -- -- -- -- 59,976 -- 59,976 ----------- ----------- ----------- --------- ----------- ----------- ----------- --------- Balance, December 31, 2007 1,140,773 $ 1,141 $ 2,093,003 -- -- ($1,606,636) $ 456,543 $ 944,051 =========== =========== =========== ========= =========== =========== =========== ========= Issuance of Common Stock 42,000 42 62,958 63,000 Other Comprehensive Income Changes in unrealized Gain -- -- -- -- -- -- (140,874) (140,875) Net Income -- -- -- -- -- (131,549) -- (131,549) ----------- ----------- ----------- --------- ----------- ----------- ----------- -------- Balance, December 31, 2008 1,182,773 $ 1,183 $ 2,155,961 -- -- ($1,738,185) 315,668 $734,627 =========== =========== =========== ========= =========== =========== =========== ========
The accompanying notes are an integral part of these consolidated financial statements. F-6 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2008 2007 --------- --------- CASH FLOWS FROM OPERATING ACTIVITES Net income (loss) $(131,549) $ 59,976 Adjustments to reconcile net income (loss) to net cash used in operating activities: Stock issuance for salary -- -- Stock issuance for professional services 63,000 -- Stock options compensation -- -- Realized gain on investments -- (99,984) Write-off of patent -- -- Changes in assets and liabilities Decrease in note and interest receivable -- -- Increase/(decrease) in accounts payable and accrued expenses 5,424 2,226 --------- --------- Net cash used in operating activities (63,125) (37,782) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investments -- (523,582) Proceeds from sales of investments -- 312,484 --------- --------- Net cash used in investing activities -- (211,098) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Exercise of common stock warrants -- -- Issuance of common stock -- -- --------- --------- Net cash provided by financing activities -- -- --------- --------- NET DECREASE IN CASH AND CASH EQUIVALENTS (63,125) (248,880) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 186,287 435,167 --------- --------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 123,162 $ 186,287 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. F-7 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) YEARS ENDED DECEMBER 31, 2008 AND 2007 SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES During the year ended December 31, 2008 the Company incurred $63,000 in expenses related to the issuance of 42,000 shares for consulting fees paid to Catalyst Financial, see Note 7. The accompanying notes are an integral part of these consolidated financial statements. F-8 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Ridgefield Acquisition Corp. (the "Company") was incorporated under the laws of the State of Colorado on October 13, 1983. Effective June 23, 2006, the Company was reincorporated under the laws of the State of Nevada through the merger of the Company with a wholly-owned subsidiary of the Company. The Company had been engaged in the design, manufacture and marketing of robotic workstations for the electronics industry, including routing and depaneling workstations predominately to entities in North America and the Pacific Rim. In November 1998, the Company entered into an Asset Purchase Agreement (the "JOT Agreement") with JOT Automation, Inc. (JOT) a wholly-owned Texas subsidiary of JOT Automation Group OYJ, a Finnish corporation. Pursuant to the agreement, the Company sold JOT all of its assets relating to its depaneling and routing business in exchange for $920,000 and the assumption of the operating liabilities related to the Company's business assets. The sale was completed on March 9, 1999. Subsequent to the sale to JOT, the Company's sole continuing operation was the continuation of research and development activities on a prototype micro-robotic device to manipulate organ tissues on an extremely small scale. The Company had filed for a patent application for the device. As of December 31, 1999, the Company's research and development activities for the device were suspended, pending assessment of the economic benefit of continuing research and development activities or sale of the patent, as well as assessment of other corporate opportunities. In June 2000, the Company determined not to pursue further development or sale of the proto-type device and has written-off the associated patent costs. On April 18, 2006, the Board of Directors of the Company voted to hold a special meeting of stockholders to change the domicile of the Company from the State Colorado to the State of Nevada (the "Reincorporation"). At the special meeting, held on June 16, 2006, the shareholders voted to approve the Reincorporation. Furthermore, as a result of the plan of merger the Company is authorized to issue 35,000,000 shares of capital stock consisting of 30,000,000 shares of common stock, $.001 par value per share and 5,000,000 shares of preferred stock, $.01 par value per share. On June 28, 2006, the Company filed a Statement of Merger with the Secretary of State of the State of Colorado, which effectively dissolved the Company's existence as a Colorado corporation. The changes in the Company's par value of common stock was recorded as a decrease to common stock and a corresponding increase to capital in excess of par value totaling $112,936. On January 31, 2006, the Board of Directors of the Company directed the officers of the Company to take and approve certain corporate action with respect to the Company's wholly owned subsidiary Bio-Medical Automation, Inc., a Nevada corporation (the "Subsidiary"). Those actions included the appointment of Steven N. Bronson, Alan Rosenberg and Louis Meade to be on the Board of Directors of the Subsidiary for a term of one year or until their successor is appointed and duly qualified, the appointment of Steven N. Bronson as the president, treasurer and secretary of the Subsidiary, the opening of a bank account at Bank of America or some other banking institution for the Subsidiary and the ratification of the bylaws of the Subsidiary in the form that was presented to the Board. Additionally, the Board of Directors authorized the officers of the Company to deposit $50,000 of the Company's assets in the Subsidiary's bank account. The Company took the foregoing action to further its plans to exploit the Patent owned by the Subsidiary. Additionally, in furtherance of the Company's plan to exploit the Patent, the Board of Directors of the Company authorized the spin off of the Subsidiary to the Company's shareholders on a pro rata basis, so that the Subsidiary may be better able to exploit the Patent, by among other things being able to attract financing. On April 27, 2007, the Board of Directors of the Company voted to terminate the proposed spin-off of Bio-Medical, based on current market conditions and the risks associated with the business prospects of Bio-Medical. Effective October 1, 2008, the Company ceased to be treated as a development stage company as defined by Statement of Financial Accounting Standards (SFAS) No.7, "Accounting & Reporting by Development Stage Enterprises." F-9 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) PRINCIPLES OF CONSOLIDATION The consolidated financial statements of Ridgefield Acquisition Corp. include the accounts of Bio-Medical Automation, Inc., its wholly-owned subsidiary. All inter-company transactions have been eliminated in consolidation. In 1999, the Company sold all of its assets relating to its historical line of business and in 2000 abandoned its research and development efforts on a micro-robotic device. As of December 31, 2008, the Company has no principal operations or revenue producing activities. The Company is now pursuing an acquisition strategy whereby it is seeking to arrange for a merger, acquisition or other business combination with a viable operating entity. INCOME TAXES The Company has adopted the provisions of SFAS 109, "Accounting for Income Taxes". SFAS 109 requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, the deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company has also adopted FIN 48, "Accounting for Uncertainty in Income Taxes," which clarifies and sets forth rules for accounting for uncertain tax positions in accordance with SFAS 109. INCOME (LOSS) PER COMMON SHARE Basic income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the year. Diluted income per common share is calculated by adjusting outstanding shares, assuming conversion of all potentially dilutive convertible equity instruments consisting of options. There is no difference in the calculation of basic and diluted loss per share for 2008. CASH EQUIVALENTS For purposes of reporting cash flows, the Company considers as cash equivalents all highly liquid investments with a maturity of three months or less at the time of purchase. OTHER COMPREHENSIVE INCOME (LOSS) The Company presents other comprehensive income in accordance with SFAS No. 130, "Reporting Comprehensive Income." This statement requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid in capital in the equity section of a statement of position. The Company reports its unrealized gains and losses on investments in securities as other comprehensive income (loss) in its financial statements. F-10 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. STOCK BASED COMPENSATION The Company grants stock options for a fixed number of shares to employees and directors with an exercise price equal to the fair value at the date of grant. Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123(R) "Share-Based Payment," ("SFAS No. 123(R)"), which establishes accounting for equity instruments exchanged for employee services. Under the provisions of SFAS No. 123(R), share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee's requisite service period (generally the vesting period of the equity grant). FAIR VALUE OF FINANCIAL INSTRUMENTS The Company adopted SFAS 157, "Fair Value Measurements" on January 1, 2008. This statement prioritizes the inputs used in measuring fair value into the following hierarchy: Level 1 - Quoted market prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - Inputs other than quoted market prices included within Level 1 that are either directly or indirectly observable; Level 3- Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. The implementation of SFAS 157 did not materially affect the carrying value of cash and cash equivalents, accounts payable and accrued expenses Investments were valued using Level 1 inputs. F-11 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CONCENTRATIONS OF CREDIT RISK Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and investments. The Company maintains cash and cash equivalents accounts at two financial institutions. The Company periodically evaluates the credit worthiness of financial institutions, and maintains cash accounts only in large high quality financial institutions, thereby minimizing exposure for deposits in excess of federally insured amounts. The investments are concentrated in one company stock at December 31, 2008, which are subject to risks of the market as a whole. NEW ACCOUNTING STANDARDS In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115" which is effective for fiscal years beginning after November 15, 2007. This statement permits an entity to choose to measure many financial instruments and certain other items at fair value at specified election dates. Subsequent unrealized gains and losses on items for which the fair value option has been elected will be reported in earnings. Fas 159 was adopted on January 1, 2008. The adoption of FAS 159 had no impact on the Company's financial statements, because the Company has elected not to adopt the Fair Value Option. In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" (SFAS 141(R)), which replaces SFAS 141, "Business Combinations." SFAS 141(R) retains the underlying concerpts of SFAS 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting but SFAS 141(R) changed the method of applying the acquisition method in a number of significant aspects. Acquisition costs will generally be expensed as incurred; non-controlling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. SFAS 141(R) is effective on a prospective bases for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. SFAS 141(R) amends SFAS 109 such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS 141(R) would also apply the provisions of SFAS 141(R). Early adoption is not permitted. This new statement will not have a significant impact on the Company's financial statements F- 12 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NEW ACCOUNTING STANDARDS (continued) In December 2007, the FASB issued Financial Accounting Standards No. 160, "Non-controlling Interests in Consolidated Financial Statements - an amendment of ARB No. 51." This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, with earlier adoption prohibited. This statement requires the recognition of a non-controlling interest (minority interest) as equity in the consolidated financial statements and separate for the parent's equity. The amount of net income attributable to the non-controlling interest will be included in consolidated net income on the face of the income statement. It also amends certain of ARB No. 51's consolidation procedures for consistency with the requirements of SFAS 141(R). The statement also includes expanded disclosure requirements regarding the interests of the parent and its non-controlling interest. This new statement will not have a significant impact on the Company's financial statements. In December 2007, the Emerging Issues Task Force (EITF) issued Issue No. 07-1, "Accounting for Collaborative Arrangements." This Issue is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years, and shall be applied retrospectively to all prior periods presented for all collaborative arrangements existing as of the effective date. This Issue requires that transactions with third parties (i.e., revenue generated and costs incurred by the partners) should be reported in the appropriate line item in each company's financial statement pursuant to the guidance in EITF Issue No. 99-19, "Reporting Revenue Gross as a Principal versus Net as an Agent." This Issue also includes enhanced disclosure requirements regarding the nature and purpose of the arrangement, rights and obligations under the arrangement, accounting policy, amount and income statement classification of collaboration transactions between the parties. We are currently evaluating this new Issue and anticipate that the Issue will not have a significant impact on the consolidated financial statements. F- 13 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 - BASIS OF ACCOUNTING / GOING CONCERN The accompanying consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern which contemplates the realization of assets and extinguishment of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements, the Company has accumulated a deficit of $1,738,185 through December 31, 2008. As discussed in Note 1, the Company, in 1999, sold all of its assets relating to its historical line of business and abandoned, in 2000, its efforts in the research and development of a micro-robotic device. As of December 31, 2008, the Company has no principal operations or revenue producing activities. These factors indicate that the Company may be unable to continue in existence. The Company's financial statements do not include any adjustments related to the carrying value of assets or the amount and classification of liabilities that might be necessary should the Company be unable to continue in existence. The Company's ability to establish itself as a going concern is dependent on its ability to merge with another entity or acquire revenue producing activities. NOTE 3 - INVESTMENTS Investments are classified as available-for-sale according to the provisions of Financial Accounting Standards Board Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Accordingly, the investments are carried at fair value with unrealized gains and losses reported separately in other comprehensive income. Realized gains and losses are calculated using the original cost of those investments. On June 1, 2007, the Company purchased 57,500 shares of Argan, Inc., a publicly traded holding company, at a price of $5.40 per share or $311,082. These investments had a fair market value of $626,750 and cumulative unrealized gains of $315,688 at December 31, 2008. On April 26, 2007, the Company sold all of its investment (50,000 shares) in Argan, Inc., a publicly traded holding company at an average price of $6.26 for proceeds of approximately $313,000. NOTE 4 - STOCKHOLDERS' EQUITY COMMON STOCK Common shares issued for non-cash consideration are valued at the trading price of the Company's common stock as of the date the shares are approved for issuance. During 2008, the Company issued 42,000 shares of its common stock to Catalyst Financial for consulting fees. F-14 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 - STOCKHOLDERS' EQUITY (CONTINUED) OPTIONS In 2003, the Company issued an option to Steven N. Bronson to purchase 150,000 shares of the Company's common stock at the purchase price of $1.65, which was 110% percent of the closing bid price on March 21, 2003 and such option is exercisable for a period of 5 years. The status of outstanding options granted by the Company is as follows: No. Weighted Avg. of Exercise Shares Price Options Outstanding - December 31, 2006 150,000 1.65 (150,000 exercisable) ------- Options Granted in 2007 - -- -- Options Exercised in 2007 - -- -- Options Forfeited in 2007 - -- -- ------- Options Outstanding - December 31, 2007 150,000 1.65 (150,000 exercisable) ------- Options Granted in 2008 - -- -- Options Exercised in 2008 - -- -- Options Forfeited in 2008 - 150,000 1.65 ------- Options Outstanding - December 31, 2007 -- -- ------- At December 31, 2008, the number of options exercisable was zero. At December 31, 2007, the number of options exercisable was 150,000, the weighted average exercise price of these options was $1.65, and the weighted average remaining contractual life of the options was 0.25 years. F-15 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 - INCOME TAXES At December 31, 2008, the Company has Federal net operating loss carryforwards totaling approximately $1,300,000, that may be offset against future taxable income through 2028 and begin to expire in 2009. Due to the change in control of the Company in March 2000, the Company's ability to realize the tax benefits from the net operating losses and research and development credits prior to that date may be significantly limited. The Company has fully reserved the tax benefits of these operating losses and credits because the likelihood of realization of the tax benefits cannot be determined. These carryforwards and credits are subject to review by the Internal Revenue Service. The approximately $453,000 tax benefit of the loss carryforward has been offset by a deferred tax liability of approximately $107,000 related to unrealized investment gains and a valuation allowance of $346,000. Therefore, there is no current or deferred tax expense for the years ended December 31, 2008 and 2007. The Company has considered the implication of FIN 48 and believes that all of its positions taken in tax filings are more likely than not to be sustained upon examination by tax authorities. NOTE 6 - RELATED PARTY TRANSACTIONS In November 2001, the Company entered into a Mergers and Acquisitions Advisory Agreement with Catalyst Financial LLC ("Catalyst"), an entity whose owner and principal is the President of the Company. Under the terms of the agreement, Catalyst will earn a fee, as outlined in the agreement, in the event the Company completes a merger. The agreement is for a three year period, terminating November, 2004. On March 25, 2005, the Board of Directors approved the renewal of the Mergers and Acquisitions Advisory Agreement (the "M&A Advisory Agreement") between the Company and Catalyst Financial LLC ("Catalyst") for a period of three (3) years commencing on April 1, 2005 and modified the M&A Advisory Agreement to provide that Catalyst shall receive a monthly retainer fee in the amount of $1,000 commencing on April 1, 2005 and continuing throughout the term of the M&A Advisory Agreement On January 31, 2006, the Board of Directors of the Company directed the officers of the Company to amend the M&A Advisory Agreement to provide sub-paragraph 3.(A)(entitled Monthly Fee) of the M&A Advisory Agreement shall be amended to provided that monthly fee payable by the Company to Catalyst Financial during the one year period from February 1, 2006 through January 31, 2007 shall be increased from $1,000 per month to $5,000 per month. Thereafter, the Company shall pay a monthly fee in the amount of $1,000 to Catalyst Financial on the first day of each month commencing on February 1, 2007 and continuing through March 1, 2008. The M&A Advisory Agreement terminated on March 31, 2008. F-16 RIDGEFIELD ACQUISITION CORP. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 - RELATED PARTY TRANSACTIONS (continued) On June 6, 2008, the Company entered into a Consulting Agreement with Catalyst Financial. Pursuant to the Consulting Agreement, Catalyst Financial agreed to provide consulting services to the Company relating to the management and administration of the Company's business affairs and in connection with the Company's acquisition strategy, Catalyst Financial shall assist the Company in identifying and investigating prospective target companies for mergers, acquisitions, business combinations and similar transactions, and, if investigation warrants, advising the Company concerning the negotiation of terms and the financial structure of such transactions. As consideration for the consulting services rendered and to be rendered by the Catalyst Financial, the Company shall: (1) pay Catalyst Financial a monthly fee in the amount of $5,000 commencing on June 6, 2008 and continuing thereafter on the first day of each successive month until January 1, 2010, and (2) the Company shall issue Catalyst Financial a total of 120,000 shares of the Company's common stock, $.001 par value (the "Shares"). The Shares shall be issued to Catalyst Financial and shall vest at a rate of 6,000 shares per month commencing on June 30, 2008 and an additional 6,000 shares shall vest on the last day of each successive month thereafter until January 31, 2010. During 2008, the Company paid fees to Catalyst Financial of $36,000 and issued 42,000 shares of the Company's stock to Catalyst Financial with an associated expense of $63,000. During 2003, the President was granted options to purchase 150,000 shares of the Company's common stock at an exercise price of 110% of the closing market price as of the date of grant, for a period of five years. The options were not exercised and expired on March 20, 2008. The Company used a portion of the premises occupied by Catalyst Financial LLC, a full service brokerage, investment banking and consulting firm, as its principal office in 2008 and 2007. Steven N. Bronson, the President of the Company, is the principal and owner of Catalyst Financial LLC. The Company did not pay any rent to Catalyst Financial LLC for the use of the offices in 2008 and 2007. Catalyst Financial LLC has agreed to waive the payment of any rent by the Company for use of the offices. Subsequent Event. Since January 1, 2009, pursuant to the Consulting Agreement, the Company paid Catalyst Financial $15,000 and issued Catalyst Financial 12,000 shares of the Company's common stock. Effective January 1, 2009 the Company relocated its principal offices to 1 North Federal Highway, Suite 201 Boca Raton, Florida 33432. The Company pays a monthly fee of $100 per month to BKF Capital Group, Inc. for the use of the office and facilities. Steven N. Bronson, the Company's President, Chairman and controlling shareholder, is the president and chairman of BKF Capital Group, Inc. F-17