SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
__________________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) of the
SECURITIES
EXCHANGE ACT OF 1934
BERMAN
CENTER, INC.
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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58-1865733
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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211
East Ontario, Suite 800, Chicago Illinois
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60611
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(Address
of principal executive offices)
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(Zip
code)
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Registrant’s
telephone number, including area code:
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(312)
255-8088
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Bio-Dyne
Corporation
5400
Bucknell Dr. S.W., Atlanta Georgia 30336
(Former
Name or Former Address, If Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act
(17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
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| o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
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ITEM
2.01 COMPLETION
OF ACQUISITION OR DISPOSITION OF ASSETS
On
June
3, 2005, Berman Center, Inc. (f/k/a “LB Center, Inc.” and “Bio-Dyne Corporation”
and referred to herein as the “Company”) along with LBC MergerSub, Inc., a
Nevada corporation and wholly owned subsidiary of the Company (“Merger Sub”) and
certain existing stockholders of the Company entered into an Agreement and
Plan
of Merger (the “Merger Agreement”) with Berman Health and Media, Inc., a
privately held Delaware corporation (“BHM”), pursuant to which the Company would
be acquired by BHM in a merger transaction wherein Merger Sub would merge
with
and into BHM, with BHM being the surviving corporation (the “Merger”).
On
June
16, 2005, the Merger closed and BHM became a wholly-owned subsidiary of the
Company.
Principal
Terms of the Merger
At
the
Effective Time of the Merger (as defined in the Merger Agreement), Merger
Sub
was merged with and into BHM, the separate existence of Merger Sub ceased,
and
BHM continued as the surviving corporation (the “Surviving Corporation”). The
transactions contemplated by the Merger Agreement were intended to be a
“tax-free” reorganization pursuant to the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended. The Certificate of Incorporation
and
Bylaws of BHM as in effect immediately prior to the Effective Time of the
Merger
became the Certificate of Incorporation and Bylaws of the Surviving Corporation.
Each
share of BHM’s common stock outstanding immediately prior to the Effective Time
was converted into 1.535999487 shares of the Company’s common stock as of the
Effective Time. The Company assumed all outstanding warrants and stock options
of BHM exercisable into shares of BHM common stock upon consummation of the
Merger. Each such warrant and stock option exercisable into one share of
BHM’s
common stock is now exercisable into 1.535999487 shares of the Company’s common
stock. Such warrants and stock options continue to have, and be subject to,
the
same terms and conditions of such stock options and warrants immediately
prior
to the Effective Time.
Pursuant
to the Merger Agreement, the Company deposited 2,303,999 shares of its common
stock into an escrow account, which shall cover any claims for breach of
representations, warranties, covenants and agreements of the Company contained
in the Merger Agreement during the 24-month period following the closing
of the
Merger.
The
Merger resulted in a change-in-control of the Company by BHM and its
stockholders and the assumption of BHM’s assets, operations and liabilities.
Following the Merger, Samuel P. Chapman, Laura A.C. Berman, Allan Charles,
Alger
Chapman, Stuart Cornew, Jan Fawcett, Robert Goodmen and Michael Romano, each
of
whom are directors of BHM, were appointed to the Board of Directors of the
Company. In addition, the Company appointed Samuel P. Chapman as the Company’s
Chairman and Chief Executive Officer, Laura A.C. Berman as President and
William
McDunn as Chief Financial Officer.
In
connection with the closing of the Merger, the Company reincorporated from
the
State of Georgia to the State of Delaware and changed its corporate name
from
“LB Center, Inc.” to “Berman Center, Inc.”
A
copy of
the press release announcing the closing of the Merger is attached as Exhibit
99.1 to this Current Report on Form 8-K.
A
copy of
the Merger Agreement is attached as Exhibit 2.1 to this Current Report on
Form
8-K.
The
foregoing description is not a description of all of the material terms of
the
Merger. Investors should read the documents that are referenced in this Current
Report for a more complete understanding of the transaction.
THE
COMPANY
Berman
Center, Inc. is a multimedia enterprise specializing in women’s health, active
across the domains of radio, television, and print media, including books,
magazines and newspapers. Dr. Laura Berman is a premier name in women’s sexual
health, a leading researcher in the field and has created a multi-faceted
platform for reaching out to consumers in a variety of settings, including
the
entertainment medium, product sales, medical services and online subscription
services.
The
Company’s Chicago location is housed in a state-of-the-art facility, comprising
approximately 10,000 square feet and located in downtown Chicago near
Northwestern Memorial Hospital and the Magnificent Mile shopping district.
The
Company’s clinical staff works to improve every patient’s quality of life,
health and relationships. The Company operates a full-scale hormonal management
clinic, counseling center and sexual function testing center, marketed through
a
diversified media platform based on Dr. Laura Berman’s reputation as a female
sexual health and relationship expert. The Company anticipates entering the
on-line dating market and the home video market in addition to supplementing
its
current efforts in publishing, continuing medical education courses and medical
research. The Company also intends to open additional clinics in other large
cities and suburbs.
COMPANY
HISTORY
The
Company was incorporated in October 1989 under the laws of the State of Georgia
under the name William E. York, Inc. for the purpose of acquiring Bio-Dyne
Corporation, a Georgia corporation formed in 1986 ("Bio-Dyne") and ECBB Body
Building, Ltd., a New York corporation formed in 1979 ("ECBB"), which
collectively manufactured, marketed and distributed multi-station home gyms,
exercise machines, weight benches and specialty free weight
equipment.
In
November 1989, the Company acquired all of the issued and outstanding shares
of
capital stock of Bio-Dyne and ECBB. Following the closing of the transaction,
Bio-Dyne was formally dissolved and a Certificate of Dissolution of ECBB
was
filed with the Department of State of New York. Thereafter, the Company used
the
trade name Bio-Dyne and in January 1991, changed its name from William E.
York,
Inc. to Bio-Dyne Corporation.
The
Company ceased active operations after the filing of bankruptcy in
1996.
In
May
2005, the Company changed its name to LB Center, Inc.
On
June
3, 2005, the Company entered into an Agreement and Plan of Merger with Berman
Health and Media, Inc. (f/k/a The Berman Center, Inc.), a privately held
Delaware corporation (“BHM”), pursuant to which the stockholders of BHM acquired
approximately 87% of the Company’s issued and outstanding common stock through a
merger transaction, with the Company’s existing stockholders continuing to own
the remaining 13% of the Company’s issued and outstanding common stock after the
merger. The merger was consummated through the merger of the Company’s
wholly-owned subsidiary, LBC MergerSub, Inc., a Nevada corporation, with
and
into BHM, with BHM being the surviving corporation. The merger was intended
to
be a "tax-free" reorganization pursuant to the provisions of Section 368(a)
of
the Internal Revenue Code of 1986, as amended. As a result of the merger,
BHM is
a wholly-owned subsidiary of the Company.
BHM
was
formed on January 16, 2003 and operated as a privately held Delaware limited
liability company under the name Berman Center LLC until June 2005, when
it
reorganized into corporate form under the name The Berman Center, Inc. in
accordance with the provisions of the Delaware Limited Liability Company
Act. On
June 20, 2005, BHM changed its name to Berman Health and Media,
Inc.
RECENT
DEVELOPMENTS
Immediately
after the merger, the Company reincorporated from the State of Georgia to
the
State of Delaware and changed its name to Berman Center, Inc.
Following
the merger, shares of the Company’s common stock are quoted under the symbol
“LBCT” on the Pink Sheets.
In
May,
2005, BHM began offering for sale through Hunter World Markets, Inc. on a
“best
efforts” basis units of its common stock and warrants (the “Units”), each
consisting of (i) two shares of its common stock, (ii) one three-year warrant
exercisable into one share of its common stock at an exercise price of $1.05
and
(iii) one three year warrant exercisable into one share of its common stock
at
an exercise price of $1.575. The price per Unit was $1.05. In June 2005,
2,952,381 Units were sold to certain of the selling security
holders.
THE
COMPANY’S BUSINESS AND OPERATIONS
The
Company is a multimedia enterprise specializing in women’s health, active across
the domains of radio, television, and print media, including books, magazines
and newspapers. Dr. Laura Berman, a premier name in women’s sexual health and a
leading researcher in the field, has created a multi-faceted platform for
reaching out to consumers in a variety of settings, including the entertainment
medium, product sales, medical services and online subscription opportunities
that the Company’s management team is in the process of capitalizing on. The
Company has already accomplished producing its own radio show, a weekly column
in the Chicago Sun-Times, and a monthly column in Ladies Home Journal and
ad-hoc
contributions to the USA Today opinion page. Dr. Berman is also a correspondent
for Good Morning America on ABC, the star of her own reality television show,
A
More Perfect Union, for which the pilot episode is currently being produced
for
Showtime Network, the host of a recent Lifetime Network television special
entitled Secrets of the Sexually Satisfied Woman and Co-host of Berman &
Berman on Discovery Health Channel.
Dr.
Berman is the author of three books: For Women Only: A Revolutionary Guide
to
Overcoming Sexual Dysfunction and Reclaiming Your Sex Life, a New York Times
Best Seller; The Secrets of the Sexually Satisfied Woman, recently released;
and
Passion Prescription, which she recently completed and has been accepted
by her
publisher, Hyperion. Dr. Berman is a source for a wide range of media outlets.
Dr. Berman has appeared in a wide variety of magazines, newspapers, television
and radio shows, including Oprah, CNN, Good Morning America, New York Times,
Wall Street Journal, Fortune Magazine, Cosmopolitan, Marie Claire, Fitness,
Redbook, and Ladies Home Journal. She also is featured in publications and
television programs internationally.
The
Company’s Chicago location is housed in a state-of-the-art facility, comprising
approximately 10,000 square feet and located in downtown Chicago near
Northwestern Memorial Hospital and the Magnificent Mile shopping district.
Soothing colors and a clean, spa-like decor make the clinic an inviting facility
for on-camera use. The clinic also serves as a tranquil, therapeutic
environment, where the clinical staff works to improve every patient’s quality
of life, health and relationships. The clinic is a full-scale hormonal
management clinic, counseling center and sexual function testing center,
marketed through a diversified media platform based on Dr. Berman’s reputation
as a female sexual health and relationship expert.
As
a well
known and trusted brand in women’s sexual health and well-being, the Company is
set to capitalize on a market opportunity by helping women genuinely improve
their lives and enhance their relationships. The Company’s treatment for female
sexual dysfunction employs a holistic approach. The clinic offers a full
line of
services to women with sexual dysfunction, addressing the physical,
psychological and relationship challenges that they may face. Recent technology
measures sexual response, genital blood flow and pelvic floor health. A
psychosexual evaluation assesses emotional health, relationship quality and
patient history. Based on each woman’s needs, individualized treatment plans may
include: medical intervention (e.g., hormone therapy, topical creams, Viagra),
individual or couples therapy, and educational recommendations.
In
keeping with a holistic philosophy, the Company’s Menopause Program consists of
four components of menopause management: customized bio-identical hormone
therapy, nutrition, talk therapy and fitness. Yoga and Pilates promote pelvic
floor fitness and teach stress management. In addition to medical and physical
interventions, a psychosexual evaluation assesses current symptoms, relationship
quality and patient history, with individual or couples therapy prescribed
as
needed to complement medical treatment.
Many
women have been thrown into crisis with few options for easing the symptoms
of
menopause. The Company believes that there is a lack of information around
the
effectiveness of commercial hormone therapy and the factual risks it poses
to
women’s health. The Company fills this need by offering an alternative known as
bio-identical hormone therapy. Bio-identical hormones are identical to the
body’s own chemistry and are customized to each woman’s needs. Unlike commercial
hormone therapy, bio-identical hormones are constantly regulated to deliver
the
lowest level of hormones required to relieve symptoms. The use of bio-identical
hormone therapy is a natural treatment for menopausal complications, including
hot flashes, sleep loss, female sexual dysfunction, mood swings, depression
and
night sweats.
The
Company does not accept insurance, as the majority of the services provided
are
not covered by third party reimbursement. The Company’s practitioners do not
accept Medicare or Medicaid, thereby avoiding a wide variety of legal and
financial risks. Collection of fees for services occurs at the time of
visit.
Omnimedia
Platform
Dr.
Berman has a substantial media platform in television, radio and print,
including newspapers, magazines and books. Access to so many channels for
public
awareness represents a substantial market opportunity. The Company believes
that
book publishing and radio syndication opportunities represent promising
alternative revenue sources, and more importantly contribute to patient
awareness and marketing. The Company believes that electronic dating, home
videos and product and literature sales represent other promising revenue
streams. Healthcare delivery will be both supplemented and supported by all
other lines of business.
A
coordinated media strategy, including television, radio, print media, research,
and authorship continues to bring existence of the clinic to the attention
of
many women. Clinical trials and the latest research are conducted at the
clinic
in a for-profit setting. Dr. Berman has relationships with companies that
manufacture drugs in the sexual dysfunction realm and has been a lead
investigator on key research in this arena, including that study on the
effectiveness of Viagra in women. Both drug manufacturing and consumer products
companies have engaged the Company and Dr. Berman in an effort to develop
research in the arena of female sexual health.
Books
and Publishing
Dr.
Berman is a best-selling author. Her first book, For Women Only: A Revolutionary
Guide to Reclaiming Your Sex Life achieved a top ranking on the New York
Times
Best Seller’s List when it was released in 2001, and is now available in
paperback. Her second book, Secrets of the Sexually Satisfied Woman, was
just
promoted in a nationwide multimedia tour. A third book, Passion Prescription,
has been completed and is slated for release in January 2006.
The
future advances and back-end profits on any books written in conjunction
with
Dr. Berman will become the Company’s property as part of Dr. Berman’s employment
contract with the Company. A variety of other books are planned, with each
book
targeting a different facet of female health and relationships. In addition
to
being a profit center, the Company believes that publishing will keep Dr.
Berman
and the Company’s name connected to its patients in an intimate way and will
serve as a substantial marketing vehicle in addition to enhancing the clinic’s
medical reputation.
Newspaper
and Magazine Columns
Dr.
Berman currently publishes columns in the Chicago Sun-Times, USA Today and
Ladies Home Journal. The columns provide consistent, highly credible and
free
branding across its targeted consumer base. Dr. Berman’s weekly Chicago
Sun-Times column, “The Language of Love,” takes an entertaining, light-hearted
approach to relationships and sex. The 500-word column is meant to be
insightful, but accessible for the Monday-morning commuter to read. The column
is also featured online at www.suntimes.com, with an archive of columns from
the
previous six weeks. A monthly Ladies Home Journal column presents Dr. Berman’s
answers to real women’s questions. The advice format delivers useful information
that every woman can relate to for herself or her relationship. USA Today
is the
nation’s largest circulated newspaper. Dr. Berman contributes to the
publication’s opinion page, “The Forum,” with cutting-edge, new-thinking opinion
pieces that engage Dr. Berman in timely discussions of sexual health
controversies.
Reality
Shows
Dr.
Berman recently finished taping the pilot episode for A More Perfect Union,
a
show designed to help couples have a better relationship and sex life. The
show
follows three couples through an intensive week of relationship therapy designed
to enhance their intimacy, connection and communication. Cameras capture
the
couples in sessions with Dr. Berman at the clinic, on therapeutic dates around
the city of Chicago and at home completing intimate “homework” assignments each
night. The audience watches couples go from conflict to resolution and increased
intimacy, for a reality show that is truly uplifting.
The
reality television show is being supported by a high caliber team of
professionals, including the critically acclaimed Gantz Brothers—directors and
producers of HBO’s Taxicab Confessions. The Emmy award-winning Gantz Brothers
are well known for capturing provocative and highly entertaining real-life
situations through their discrete, hidden cameras. The show is expected to
air
in the fourth quarter of 2005 and will provide substantial visibility to
the
Company and Dr. Berman.
Radio
Dr.
Berman hosts a weekly syndicated radio show that currently airs across the
United States. Through a call-in format, The Dr. Laura Berman Show explores
women’s sexual health and relationship issues, with caller-selected topics. The
two-hour show features Dr. Berman speaking one-on-one with women about topical
concerns and questions, as well as celebrity guest experts who specialize
in the
field. Dr. Berman’s radio show began in the third quarter of 2004 in Chicago,
the nation’s third largest market on WCKG-FM. The show has since expanded to 7
markets including the largest satellite radio network. The show is currently
produced and distributed by Matrix Media in Chicago, Illinois, which also
houses
the recording studio.
Internet
Initiatives
The
Company sees an opportunity to create and grow an online dating business
built
around Dr. Berman and her intellectual property. The site would be designed
to
be of special interest to women looking for more than the usual unsatisfying
online dating experience. The Company plans to design and implement the Berman
dating site in cooperation with an existing online dating partner so that
the
Company will not have to recreate the technological foundation for the business.
The site will provide a self-help environment to improve self image and
confidence of its members, featuring books and articles written by Dr. Berman
designed to improve quality of life. Online diagnosis templates and treatment
suggestions for problems such as depression, anxiety, and other common
conditions that prevent people from being successful in their romantic lives.
From
dating coaching to medical and mental health referrals, the Company’s dating
site will be a source of information and networking to form new relationships
and to build self-confidence. Online group discussions will create a community
support group for members and contribute to social interaction on the site.
Psychological
profiling created by Dr. Berman will be used as the “secret formula” for making
the successful match at the Company’s site. Profiles will be used to find
compatible dating partners and to weed out undesirable candidates. The site
will
communicate the message that Dr. Berman has clinical experience with thousands
of women and knows what they want romantically. That knowledge will be
incorporated into the selection process to assure the best possible match.
Products and books by Dr. Berman will be available online and members will
receive a continuous stream of new information in their particular areas
of
interest or concern. The self-help component will be targeted at both men
and
women and will focus on mental health, relationships, and sexuality.
Online
dating is a growing segment of the e-commerce market and has relatively low
barriers to entry. Online dating websites often struggle with generating
enough
paying women users. Dr. Berman’s online dating site will attempt to remedy that
problem through trusted name-recognition among women and with an emphasis
on
relationships, instead of casual dating. Attracting a large female base will
help drive male participation. The Company’s dating site will also be a venue
for sales of related products in addition to Dr. Berman’s intellectual property.
The
Company currently operates its website at www.bermancenter.com, and provide
the
content for the website of the Network for Excellence in Women’s Sexual Health
(“NEWSHE”) at www.newshe.com. Dr. Berman is the director of NEWSHE, which is
owned by Dr. Berman and several other colleagues. It is anticipated that
the
Company will purchase the site in the near future.
Instructional
DVDs
The
Company intends to produce a new series of DVDs hosted by Dr. Berman. The
Endless Passion Series will help women and couples deal with issues of intimacy
and sexuality throughout their lifetime. From cutting-edge medical and
therapeutic advice to usable tips for the bedroom, viewers will receive
life-changing information in an easy-to-use format. Hallmarks of the series
will
include:
| · |
Situations,
featuring real women and couples sharing important
issues;
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Storylines
men and women can identify with, presented at an exciting
pace;
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Usable,
practical advice from Dr. Berman;
and
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Medical
and anatomical information displayed using state-of-the-art technology
and
graphics.
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Key
Business Relationships
Key
partners involved in the Company and Dr. Berman’s media career include her book
agency International Creative Management (ICM), her talent agency, United
Talent
Agency (UTA) and her public relations firm, Caffeine Communications. In
addition, Northwestern Memorial Hospital and Meeting Achievements produces
the
Company’s continuing medical education courses.
Corporate
Relationships
Corporate
interests fund the Company’s research studies, underwrite publishing projects
and pay for satellite media tours to announce research, thereby getting the
Company’s name in the press. The Company has turned corporate funded research
into books and other publications, enhancing the Company’s reputation as a
thought leader in menopause management and female sexual medicine. The Company’s
corporate partners seek to advertise across the Dr. Laura Berman media platform
to tap into her loyal, robust clientele and fan-base to sell their products
and
services. The omnimedia concept is successfully integrated into the Company’s
advertising sales channels and business model.
Dr.
Berman has relationships with several major drug company and a variety of
consumer product companies, including Bayer, Johnson & Johnson, Vivus,
Quality Life Pharmaceutical, Pharmacia, Next Med, Eli Lily, Pfizer, Dechuttes
Medical, Nastech, Inspire Pharmaceutical, Proctor & Gamble, C.B. Fleet,
Summer’s Eve, Drugstore.com, and Seasonale.
The
Clinic Process
During
many years in full-time academic medicine and research, Dr. Berman had a
range
of unique opportunities to explore and develop a multi-disciplinary plan
for
treating sexual dysfunction in women. The Company’s clinical model is a
culmination of the past five years of Dr. Berman’s work and is an expression of
what she has learned is the ideal method of treating female sexual dysfunction.
An extensive initial work-up of each new patient delivers a complete diagnosis
from up to five different clinicians utilizing trusted therapeutic techniques
and the latest medical devices. A beautiful, spa-like environment is designed
to
be comfortable and inviting.
For
each
patient visiting the clinic, the experience is far removed from the typical
doctor’s visit. Upon entering the clinic, the patient is directed to the waiting
room or the Resource Library, whichever she prefers, as she completes her
questionnaires, which are sent home to each patient prior to her visit. The
questionnaires cover demographics, but are also part of the assessment for
psychological factors impacting on sexual function; a depression inventory,
a
general stress scale, a sexual function scale, a relationship satisfaction
scale, a body-image scale, and a genital self-image scale. The therapist
is able
to review the questionnaires before interviewing the patient. This way she
can
be aware of any important red flags that may need to be attended to during
the
evaluation.
Psychosexual
Evaluation
Every
new
patient who comes to the clinic undergoes a Psychosexual Evaluation with
a
trained sex therapist. Upon reviewing the patient’s questionnaires, the
therapist meets with the patient to get a sense of the scope and duration
of the
problems the patient has been having, how symptoms started, how she is managing
individually and how her relationships have been impacted. A sex history
is
taken including the patient’s sexual development, sexual message received while
growing up and history of abuse or trauma. The evaluation helps to engage
the
patient in the process, by reviewing the goals of the treatment, what is
entailed in the medical evaluation and testing, and plans for moving forward.
Whenever
possible, women are encouraged to bring their partners to the initial
evaluation. The couples section of the history is intended to get a sense
of the
couple’s dynamics and the impact of the sexual issues on the relationship.
Another goal of the couples’ piece is to educate the partner about the patient’s
symptoms, and validate the impact the sexual dysfunction is having on him
and
the relationship.
When
the
evaluation is finished, the therapist has gained a sense of what the goals
of
psychosexual treatment should be (individual therapy, couples therapy, group
therapy, supportive therapy or some combination thereof) and reviews them
with
the patient. While the patient is preparing for the next step of her evaluation,
the medical exam, the therapist confers with the medical professional and
patient concierge about the salient psychosexual issues and what her treatment
goals are for the patient and her partner.
Medical
Evaluation
Every
new
patient receives a medical evaluation to rule out physiological causes for
her
sexual function complaints. After the psychosexual history, patients meet
with
the medical practitioner for a medical and surgical history, which considers
past surgeries, pelvic injuries, medical conditions, and medications which
may
be negatively impacting on her sexual function. A simple physical is performed
including heart, lungs, ENT, breast exam, thyroid, and a brief genital exam
to
check for vulovaginal health, prolapse and evaluate Kegel muscle strength.
Blood
pressure is taken and the patient’s blood is drawn for a homopanal panel, which
measures thyroid function, free and total Testosterone, and lipids, SHBG,
ALT
(liver function), which are the primary hormonal components of sexual function
in women.
For
female sexual dysfunction patients, there are two additional testing instruments
designed to assess the physical sexual response. Women who come to the clinic
for menopause management do not undergo these exams. The first is a blood
flow
measurement, using a Duplex Doppler Ultrasound (or laser sonogram), to measure
blood flow to the genitals and surrounding tissue. The findings enable the
medical practitioner to identify any occlusions that may be blocking the
blood
flow to the genital area and to determine if overall blood flow is adequate
for
baseline sexual function. The second test determines sensory thresholds to
identify any nerve sensory impairment in the genital area, with a specialized
device designed for this purpose. The medical practitioner is able to
immediately review the results with the patient. While the patient is changing,
the medical practitioner briefs the patient concierge on her findings and
recommendations, with the exception of hormone recommendations which await
test
results.
Menopause
management patients are administered a second measure of hormone levels,
known
as a saliva test. While most physicians routinely perform blood tests only,
many
experts agree that saliva testing may be more precise, since it offers a
measure
of bioavailable hormone levels, or the hormones that are not bound up in
a
woman’s cells and therefore available for her body to use. Sexual function, in
particular, depends on this. Patients are sent home with a saliva-test kit,
which they are instructed to complete during the appropriate time in their
cycle. The results are used in conjunction with blood test results to determine
the best bio-identical hormone regimen, customized to the patient’s individual
needs. Women complete a second at-home saliva test six to eight weeks after
beginning their prescribed hormone regimen to reassess levels. A follow-up
visit
with the nurse practitioner, either at the Center or over the phone, checks
in
with the patient about hormone levels and any other symptom changes, modifying
the prescription if necessary.
Once
she
is finished, the patient meets with the patient concierge who discusses the
current prescribed treatment plan. Treatment plans typically include ongoing
individual, couples or group therapy as well as medical intervention, including
medications, yoga and physical therapy. The patient concierge also provides
tailored educational and sexual device/lubricant recommendations, depending
on
the woman’s needs. Necessary referrals are made for ongoing gynecological care,
gynecological surgery, urologic ongoing care, and male sexual function
evaluations. The patient is given the opportunity to have all of her questions
answered and leaves with an individualized plan for addressing her sexual
concerns.
The
Treatments
Medical
Treatment
Medications:
Depending
on the diagnosis, medications that may be used to treat women include
bio-identical hormones, vasodilators (like Viagra and others which enhance
blood
flow and therefore lubrication and sensation in women), SSRI’s or SNRI’s,
sensation enhancing creams and gels, and lubricants.
Fitness:
Assessment
and exercises for pelvic floor strength, as well as relaxation and stress
management techniques. The Company’s fitness expert will lead a series of
classes focused on relaxation and flexibility, weight training for muscle
maintenance, and exercises for pelvic floor restoration and
strengthening.
Nutrition:
Review
of
overall exercise regimen and brief food diary, tailored, gradual diet
recommendations that hit key health points.
Psychological
Treatment:
If
it is
determined during the evaluation that the patient is suffering from an emotional
issue (e.g. depression, anxiety, phobias) or has a history of sexual, emotional
or physical abuse or trauma, she will undergo individual therapy on an ongoing
basis with a trained psychotherapist. This may include general individual
therapy, sex therapy or some combination of the two. General therapy is used
when the patient is struggling with depression or anxiety or when a past
history
or trauma issue outside the relationship needs to be addressed. Sex therapy
is
used in combination with general therapy in cases of sexual abuse or trauma,
and
alone in cases of women who need education, guidance, or resolution of
inhibitions that negatively impact on their sexual function. Sex therapy
is all
talk therapy, but behavioral in nature in that the emotional resistance to
sexual activity is addressed and the patient is given homework assignments
specific to her sexual complaints and psychological issues. The duration
of
therapy can range from several months to several years, depending on the
nature
of the issues being treated. Individual therapy will often be combined with
couples therapy.
Couples
Therapy:
If
it is
determined during the evaluation that there are some couples issues contributing
to the sexual function complaint (e.g. hostility, lack of communication,
even an
emotional rift as a result of struggling with medically induced sexual
problems), the patient will undergo couples therapy with her partner. This
may
include general couples therapy, couples sex therapy, or some combination
of the
two. General couples therapy would address communication styles, conflict
resolution, or crisis intervention (when the couple is about to separate
or is
going through a crisis like an affair or serious illness). Couples sex therapy
is typically combined with general couples therapy and consists of talk therapy
where education and guidance are provided. Resistances to sexual activity
are
addressed and homework is given to the couple to enhance sexual receptivity,
openness, communication and response. The duration of therapy can range from
several months to several years, depending on the nature of the issues being
treated.
Group
Therapies and Programs:
Group
therapies are very effective treatment and allow for billing up to twelve
patients while utilizing just one therapist. In addition to four private
talk
therapy rooms, the clinic has two large group therapy rooms, a yoga room
and a
conference room, all of which can accommodate large patient groups in therapy.
Directing treatment towards a group therapy model will help drive profit
and
build a sense of community with the Company’s patients. Studies on the
effectiveness of group therapy have demonstrated a positive effect on women’s
ability to cope with a medical condition, knowledge about that condition,
stress
levels associated with that condition, family functioning, quality of life,
emotional growth, and even longevity.
Research
and Clinical Trials
The
Company’s clinic strives to be a research center and think-tank for advancing
the science of female sexuality and sexual dysfunction. Dr. Berman was one
of
the lead principle investigators in the first multi-center clinical trial,
which
found Viagra to be effective in women with arousal disorder. She consulted
with
Pfizer to design the protocol, and also spearheaded the team to train the
sex
therapists to carry out the eligibility screening at over twenty different
sites. The findings of the study, published in the Journal of Sex and Marital
Therapy, reported a statistically significant improvement in arousal,
lubrication, sexual satisfaction and ease and facility for reaching orgasm
with
Viagra as compared to placebo. Ongoing clinical and scientific research projects
continue to be carried out at the clinic many of which will be sponsored
by
different companies, with whom Dr. Berman consults or has relationships.
The
Company generates revenue and brand equity by conducting selective research
studies. The Company believes that studies add credence to Dr. Berman’s
professional reputation within the medical community and generate substantial
media exposure. Interesting findings from the studies are tapped for television
and radio appearances, as well as assorted newspaper and magazine features,
with
credit to Dr. Berman and/or the Company.
It
should
be noted that all research is done based on real science and driven by patient
needs. The commercial aspect of the financing and promotion of the research
is
not allowed to compromise the integrity or accuracy of the results. All research
carried out at the clinic (both clinical trials and general research) is
approved by a centralized internal review board (IRB) office for the protection
of human subjects. Use of a centralized IRB to review and approve all research
ensures its legitimacy and provides outside supervision of adherence to ethical
guidelines.
Continuing
Medical Education Courses
In
September 2004, the Company hosted “Women’s Sexual Health State-of-the-Art
Series” through Northwestern Memorial Hospital’s Continuing Medical Education
Office. This meeting was targeted to a national group of health care
professionals (nurses, therapists, physicians, etc) who were interested in,
or
currently treating female sexual function complaints. The course emphasized
cutting-edge information on the evaluation, diagnosis, and treatment of female
sexual function complaints, including pelvic pain, perimenopause and menopause,
sexual challenges of special populations of women, and couples issues. The
two
day multi-disciplinary course will be held annually in Chicago, with the
next
scheduled for September 17-18, 2005. The Company has expanded the series
to
include meetings in Los Angeles in April of 2006 and in New York City in
June of
2006.
The
Company benefits greatly from its role as host of this educational series
on
many levels. First, it heightens exposure of the clinic among other
professionals in the field. Secondly, it promotes the professional reputation
of
the clinic in the Northwestern Memorial community and well beyond by acting
as a
voice of authority in the science and cutting-edge research of female sexual
dysfunction.
As
the
Company’s representatives, the Company believes the clinical staff will continue
to grow its professional reputation by attending all major meetings in the
field
to present the Company’s research and network with other professionals. These
include the American Association of Sex Educators and Therapists (AASECT),
the
Society for the Scientific Study of Sexuality (SSSS), the American Psychological
Association (APA), the International Society for the Study of Women’s Sexual
Health (ISSWSH), the American Urologic Association (AUA), and the American
College of Obstetrics and Gynecologists (ACOG).
Growth
Strategies
With
respect to growth inside an individual market or city, the Company plans
to move
beyond one large downtown center, to open satellite centers in various cities
and suburbs. The satellite centers would be wholly owned and managed by the
existing team. The plan is to have talk therapy and physical therapy comprise
the bulk of the revenue at the satellites. In Illinois, the most likely first
satellite to open would be in the Northern suburbs such as Barrington and
the
Western suburbs such as Naperville. Other major cities are also under
consideration for the first satellite locations such as New York and San
Francisco. International locations in Europe and Asia will be considered
for
years three and four of the roll-out strategy.
Competition
Illinois
1.
Loyola
University Sexual Dysfunction Center, Chicago, IL
This
program is organized under the direction of Loyola’s Department of Psychiatry
and Behavioral Neurosciences and is directed by Dr. Domeena Renshaw, a sex
therapist. Married couples and individuals with sexual problems are provided
seven weeks of counseling, while single patients may receive individual therapy
or instead attend a 6-week all female or all male counseling group. Patients
are
typically seen by a group of trainees who are under supervision by Dr. Renshaw
and her staff. The short term therapy model does not allow for treating couples
or individuals with significant emotional or relationship issues. There is
no
medical evaluation or ongoing treatment for sexual problems.
2.
The
Family Institute, Northwestern University, Evanston, IL
The
Midwest’s largest center devoted to couples and family therapy, the professional
staff is comprised of 30 therapists plus support staff. Thirteen of those
therapists specialize in couples therapy, one, Bill Pinsoff, the president
of
the Institute, has a specialty in sex therapy. The rest of the staff specializes
in anxiety disorders, family relationships, adolescents, eating disorders,
etc.
The center reports that they see more than 2,400 families, couples or
individuals each year. While this program is well established and offers
comprehensive psychological services, they only report one therapist who
has a
clinical interest in sex therapy and they offer no medical evaluation or
treatment for sexual function complaints
3.
Other
Sex Therapists in the Chicago area (sex therapy only)
Richard
Carroll, PhD, Northwestern Memorial Hospital, Department of
Psychiatry
Shirley
Barron, PhD, University of Chicago Hospital, Department of
Psychiatry
Karen
Donhey, PhD, private practice, Chicago
Other
States
1.
The
Sexual Medicine Program, Department of Urology, Well Medical College of Cornell
University, New York Presbyterian Hospital, New York, NY
This
program is headed by Dr. John Mulhall, an urologist. The program has been
primarily focused on male sexual dysfunction, since that is Dr. Mulhall’s area
of expertise. He also runs the Sexual Medicine Research Laboratory, which
carries out basic science research, primarily focused in male sexual
dysfunction. Beyond two support staff (including a clinical trial coordinator
and a practice manager), Dr. Michael Perelman is the sex therapist affiliated
with the Sexual Medicine Program. He is the Co-Director of the Human Sexuality
Program, Payne Whitney Clinic of the New York Presbyterian Hospital. Dr.
Perelman does offer ongoing therapy as part of a training program for psychiatry
residents at the hospital. Medical testing and treatment of women primarily
consists of hormonal testing and management.
2.
New
York Institute of Human Sexuality, Columbia University, Department of Urology,
New York, NY
The
institute includes two Centers: the New York Center for Men's Sexual Health
and
the New York Center for Women's Sexual Health. The Women’s Sexual Health program
is run by Dr. Ridwan Shapsigh, a male urologist and Dr. Hilda Hutcherson,
a
female OBGYN. They consult with a team of sex therapists to whom they refer
patients. While there is no sex therapist on staff, they do employ a director
of
research, nurse, clinical research coordinator and medical assistant. The
primary ongoing medical evaluation and treatment they do is hormonal
management.
3.
Department of Psychiatry and Behavioral Sciences Reproductive and Sexual
Medicine Clinic, University of Washington School of Medicine, Seattle,
WA
This
program is run by Dr. Julia Heiman, a sex therapist, and a team of trainees.
She
refers patients to outside medical experts when needed. The clinic is mostly
focused on training researchers and therapists in treating different kinds
of
individual and couples sexual challenges. They are not targeted specifically
at
women, and see both male and female patients. While they collaborate with
other
medical departments, the program does not provide ongoing medical evaluation
or
treatment.
4.
Center
for Sexual and Marital Health, Robert Wood Johnson University Medical Group,
Piscataway, NJ
This
program is run by Dr. Sandra Leiblum, a sex therapist. She provides ongoing
couples and individual treatment for men and women. Patients may be seen
in a
variety of treatment formats, including individual, couple, and group sessions.
Workshop programs are offered at times to enhance and extend individual therapy.
Referrals are made to medical professionals for medical evaluation and treatment
when deemed necessary. This program is primarily focused on training for
therapists and researchers.
5.
Masters and Johnson Institute, St. Louis, MO
This
program was started in the 1950’s and is presently directed by Dr. Mark
Schwartz, a sex therapist. He and four other therapists focus their treatment
on
couples counseling, eating disorders, sexual compulsion and recovering from
sexual trauma. They provide no medical evaluation or ongoing medical
treatment.
6.
Program in Human Sexuality, Department of Family Practice and Community Health,
University of Minnesota Medical School, Minneapolis, MN
This
program, directed by Dr. Eli Coleman, sex therapist, is run by a team sex
therapy supervisors and trainees under his supervision. The program is focused
on post-doctoral training and provides ongoing sex therapy for a range of
male
and female disorders from cross-dressing to HIV. No ongoing medical evaluation
or care is provided.
7.
Kinsey
Institute Sexual Health Clinic, Indiana University Health Center, Bloomington,
IN
This
program is run by Dr. John Bancroft, a sex therapist. The institute provides
sex
therapy to individuals and couples. Some medical evaluation and treatment
is
carried out on male patients with erectile dysfunction, but none is available
for female patients.
8.
Connecticut Surgical Group, Hartford, CT
This
program is run by nurse practitioner, Jill Siskind. The only other employee
is a
female ultrasound technician. Ms. Siskind also refers to a consulting sex
therapist when needed. The program is folded into a general Urology Clinic
with
no dedicated space, so all other patients at the center are male with general
urologic conditions. Ms. Siskind does offer medical/psychological evaluations
for women with sexual problems and some ongoing medical treatment.
9.
Institute for Sexual Medicine, Boston Medical Center, Boston, MA
Perhaps
the largest facility in the field today, the Institute for Sexual Medicine
is a
combination research and treatment facility. A five million dollar grant
from
Bayer Corporation to fund basic science primarily in the realm of erectile
dysfunction helped to create the laboratory for sexual medicine research
at the
Institute. Located within the Boston Medical Center, the institute is currently
staffed with thirteen employees including two doctors, one sex therapist,
one
nurse, one ultrasound tech, two secretaries and one center coordinator; the
lab
is staffed with one director, one assistant director, two technicians and
one
administrator. The Institute is run by Dr. Irwin Goldstein, a former colleague
of Dr. Berman’s. Dr. Berman founded the Women’s Sexual Health Clinic at Boston
Medical Center, in 1998, which was folded into the Institute after her
departure. While the Institute has had its successes, they have principally
been
in the realm of male sexual dysfunction. The program is designed to service
male
sexual problems primarily. The entire medical staff, including the sex therapist
and the nurse, are men. The center has treated about 1,350 women since 1998
versus 14,000 men.
Legal
Environment
Because
of its involvement in Medicare and Medicaid, the Federal Government regulates
much of the medical field. The Company’s physicians do not accept Medicare and
Medicaid and should therefore not fall within the Medicare/Medicade Fraud
Act or
its penalties.
Physicians
are required under a series of laws, called the Stark Laws, to function in
a
regulated fashion regarding referrals. The physicians practice inside the
clinic
but conduct their own practice for all legal purposes. Legally segmenting
these
two portions of the business allows the remainder of the practitioners to
function outside of the purview of these restrictions. Masters of social
work
and masters of marital and family therapy are not restricted under either
the
Stark Laws or the Medicare and Medicaid rules in the context of their practice
at the clinic.
Although
the Company is structured as a corporation, physicians practice inside separate
companies known as professional corporations (PC’s). The PC’s have management
agreements with the Company and rental or lease agreements regarding the
space
they occupy. The PC’s themselves are owned by the various physicians who
practice at the clinic.
Technology
Technology
plays a significant role in the operations and finances of the business.
The
Company has created a significant internet presence, including a website
complete with on-line scheduling capabilities, credit card payment abilities
and
important health information for women. A patient is able to log onto the
Company’s website (www.bermancenter.com) and schedule her appointment
on-the-spot. The Company believes it is important for a patient to be able
to
schedule in privacy and not have to speak to anyone if she chooses. At the
moment, only initial assessments and Bio Identical HT appointments can be
scheduled on-line.
The
clinic is equipped with a practice-management software package that has full
capabilities for patient scheduling, patient registration and physician
documentation, along with statistical data for clinical research. Other
technology features include on-line scheduling via the Company’s website, a
complete network and audio and visual components for training and therapeutic
sessions. Scanning of doctors’ written notes incorporates the notes into the
electronic files.
Access
to
computers is a key component of the clinic. Every group room and the yoga
room
is equipped with a drop-down screen connected to the Company’s computer network
so that presentations and videos can be shown as part of the group sessions
or
for other kinds of presentations. Each exam and treatment room has a computer
in
it, networked to the Company’s system, so that specialists can have easy access
to patient files, notes and scheduling. A computer is also housed in the
Wellness Resource Library so that patients can have access to the internet
and
utilize the computer for research purposes.
While
the
group rooms and yoga room all have their own stereo systems, the common areas
and hallways are equipped with speakers so that soothing music can be heard
throughout the center from a central stereo, enhancing the spa-like
atmosphere.
Intellectual
Property
Dr.
Berman’s current and past media projects including books, television, and radio
are all owned by the Company through a multi year employment agreement with
Dr.
Berman. Under the employment agreement, Dr. Berman has agreed to contribute
the
proceeds from all intellectual property to the Company (other than proceeds
derived from honorarium fees and speaking engagements).
Berman
Center Intimate Accessories Line products manufactured by California Exotics
have not been patented nor are they patentable in management’s opinion.
Employees
and Labor Relations
Legislative
Actions and Potential New Accounting Pronouncements
In
order
to comply with the newly adopted Sarbanes-Oxley Act of 2002 and proposed
accounting changes by the Securities and Exchange Commission, the Company
may be
required to increase its internal controls, hire additional personnel and
additional outside legal, accounting and advisory services, all of which
could
cause the Company’s general and administrative costs to increase. Proposed
changes in the accounting rules, including legislative and other proposals
to
account for employee stock options as compensation expense among others,
could
increase the expenses that the Company report under Generally Accepted
Accounting Practices and could adversely affect its operating
results.
Property
The
Company’s executive offices are located at 211 East Ontario, Suite 800, Chicago,
Illinois 60611. Base rent is $23 per square foot in year one or $172,500
in the
first year. The rent escalates at 3% per year, except in year 3 when the
extra
square footage becomes chargeable.
All
of
the Company’s facilities are in good repair. The Company believes that its
existing facilities will be adequate to meet its needs for the foreseeable
future. Should the Company need additional space, the Company believes it
will
be able to secure additional space at commercially reasonable
rates.
Dividend
Policy
The
Company, to its knowledge, has never paid cash dividends on its common stock.
The Company intends to keep future earnings if any, to finance the expansion
of
its business. The Company does not anticipate that any cash dividends will
be
paid in the foreseeable future.
Legal
Proceedings
Neither
the Company, its subsidiary nor any of their respective properties are a
party
to any pending legal proceeding.
RISK
FACTORS
Any
investment in the Company’s common stock involves a high degree of risk. You
should carefully consider the risks described below and all of the information
contained in this Current Report on Form 8-K before deciding whether to purchase
the Company’s common stock. The Company’s business, financial condition or
results of operations could be materially adversely affected by these risks
if
any of them actually occur. The trading price of the Company’s common stock
could decline due to any of these risks, and you may lose all or part of
your
investment. Some of these factors have affected the Company’s financial
condition and operating results in the past or are currently affecting the
Company. This Current Report on Form 8-K also contains forward-looking
statements that involve risks and uncertainties. The Company’s actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the risks faced by the
Company described below and elsewhere in this Current Report on Form
8-K.
The
Company has a history of losses and the Company anticipates that its expenses
will dramatically increase as the Company execute its business plan. Thus,
the
Company will likely experience continued losses in the near future, may not
be
able to continue as a going concern, and may not ever achieve or maintain
profitability.
Berman
Health and Media, Inc. has incurred significant losses since its inception
in
January 2003. In addition, the Company anticipates that its expenses will
dramatically increase as the Company prepare to leverage its media platform
to
exploit opportunities in the female sexual medicine industry. If its revenues
grow more slowly than anticipated or if its operating expenses exceed
expectations, the Company will continue to operate at a loss, may not be
able to
continue as a going concern and may not be able to achieve or consistently
maintain profitability.
In
addition, the Company’s independent registered public accounting firm has added
an explanatory paragraph to their audit opinion issued in connection with
the
financial statements for the year ended December 31, 2004 relative to the
Company’s ability to continue as a going concern. The Company’s ability to
obtain additional funding in year 2005 and thereafter will determine its
ability
to continue as a going concern. The Company’s financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
The Company’s financial statements and related notes are not attached to this
Current Report on Form 8-K but will be filed by an amendment to this Current
Report no more than 71 days from the date that this Current Report is required
to be filed.
The
Company’s historical financial information does not reflect its current primary
business strategy for achieving revenue growth.
Historically,
Berman Health and Media, Inc. has derived the substantial majority of its
revenues from clinic patients. The Company anticipates that media and product
revenue from licensing its products and services that the Company plan to
develop will constitute an increasing portion of its revenues. Accordingly,
historical financial information should not be construed as the basis from
which
to judge the Company’s future operations.
The
Company is dependent upon one person, Dr. Laura Berman, for achieving revenue
growth. The loss of services of Dr. Berman would result in significant financial
loss for the Company.
The
Company is uniquely dependent on one individual, Dr. Laura Berman, for its
reputation and branding. Dr. Berman’s talents, efforts, personality and
leadership have been, and continue to be critical to the Company’s success. The
diminution or loss of services of Dr. Berman, and any negative market or
industry perception arising from that diminution or loss, could have a material
adverse effect on the Company’s business and the various business lines
functioning at the Company. The
Company has an exclusive, royalty-free license from Dr. Berman with respect
to
her name, likeness, image and voice for use in its business. If the Company
was
to terminate Dr. Berman’s employment without cause or if Dr. Berman were to
terminate her employment for good reason, the license would cease to be
exclusive. In addition, under this circumstance, Dr. Berman could compete
against the Company and the Company would have to pay Dr. Berman royalties
on
revenues relating to her name. If Dr. Berman were to compete with the Company
or
if the Company was to lose its right to use this intellectual property, its
business would be materially adversely affected.
In
addition, the Company’s business would be adversely affected if Dr. Berman’s
public image or reputation were tarnished. Dr. Berman, as well as her name,
her
image and the intellectual property rights relating to these, are integral
to
the Company’s marketing efforts and form a significant portion of its brand
name. The Company’s success and the value of its brand depend in large part on
the reputation of Dr. Berman.
The
market for female sexual health products and services is at an early stage
and
if market demand does not develop, the Company may not achieve or sustain
revenue growth.
The
market for the
Company’s
products
and services is at an early stage. If the Company and its licensees are unable
to develop demand for its products and services, the Company may not achieve
or
sustain revenue growth. The Company cannot accurately predict the growth
of the
markets for these products and services, the timing of product and service
introductions or the timing of acceptance of them.
Even
if
the
Company’s
and its
licensees’ products and services are ultimately adopted, widespread adoption may
take a long time to occur. The timing and amount of royalties and product
sales
that the Company receives will depend on whether the products and services
marketed achieve widespread adoption, and, if so, how rapidly that adoption
occurs. The Company expects to pursue extensive and expensive marketing and
sales efforts to educate prospective institutional customers about the uses
and
benefits of the Company’s products and services. If
these
institutions are unwilling to budget for such products and services or reduce
their budgets as a result of an economic slowdown, cost-containment pressures
or
other factors, the Company may not be able to achieve widespread adoption
of its
products and services at a satisfactory rate. If the Company is unable to
increase sales of its products and services, the
Company’s business,
financial condition and results of operations may be adversely
affected.
If
the Company fails to protect and enforce its intellectual property rights
or if
licensors who license intellectual property rights to the Company fails to
protect and enforce such licensors’ intellectual property rights, the Company’s
ability to license its technologies and to generate revenues would be
impaired.
The
Company’s business depends in part on generating revenues by licensing its
intellectual property and by selling products and services that incorporate
its
specialty.
The
Company might be unable to recruit or retain necessary personnel, which could
slow the development and deployment of its products and
services.
The
Company’s future success and ability to sustain its revenue growth depend upon
the continued service of the Company’s executive officers, and other key
personnel and upon hiring additional key personnel and staff for the clinic.
Competition for these individuals is intense and the Company may not be able
to
attract, assimilate or retain additional highly qualified personnel in the
future. The loss of services of the Company’s executive officers and other key
personnel and the failure to successfully attract, assimilate or retain
sufficiently qualified personnel could harm the business and its ability
to
achieve or maintain profitability.
The
Company projects rapid growth and change in its business and the Company’s
failure to successfully manage this change could harm its
business.
Any
future periods of rapid growth may place significant strains on the Company’s
managerial, financial and other resources. The rate of any future expansion,
in
combination with the Company’s diverse products and services, may demand an
unusually high level of managerial effectiveness in anticipating, planning,
coordinating and meeting the Company’s operational needs as well as the needs of
its licensees.
Product
liability claims could expose the Company to losses and could be time-consuming
and costly to defend.
Claims
that consumer products have flaws or other defects that lead to personal
or
other injury are possible, in particular for the Berman Center Intimate
Accessories Collection. Berman Health and Media, Inc. has not experienced
any
product liability claims to date. Although the Company seeks to limit its
exposure to product liability claims by using certain provisions in licensing
agreements and through the Company’s manufacturer’s, California Exotic
Novelties, liability insurance, existing or future laws or unfavorable judicial
decisions could limit or invalidate such provisions. If products sold by
the
Company or by its licensees cause personal injury, financial loss or other
injury to the Company’s or its licensees’ customers, the customers, or the
Company’s licensees, may seek damages or other recovery from the Company. These
claims would be time-consuming and expensive to defend, distracting to
management and could result in substantial damages to the Company. In addition,
the assertion of these claims, even if unsuccessful, could damage the Company’s
reputation or that of its licensees or their products. This damage could
limit
the market for the Company’s products and services and harm its business,
financial condition and results of operations.
The
Company may become involved in costly and time consuming litigation over
malpractice or violation of Stark Laws.
Hormone
therapy has demonstrated risks, as found by the recent cessation of the Women’s
Health Initiative launched by the National Institutes of Health in the United
States. While full information and medical disclaimers are signed by all
patients of the Company’s clinic, there is a risk that hormone therapy will be
perceived to have some link to other illness and would generate potential
liability for the clinic and its practitioners.
The
medical portion of the Company’s affiliated businesses is subject to the Stark
Laws in the United States regarding revenues and referrals. There is the
possibility that the Company will at some time be ruled in violation of the
Stark Laws, which would have an adverse economic impact on the
Company.
The
medical portion of the business must be separated into a separate entity
known
as a professional corporation. We must maintain an appropriate arms-length
relationship with various professional corporations that function around
the
Company (i.e., the practice). The Company is not licensed to practice medicine,
but may be subject to review by the licensing boards in the state of Illinois.
While the majority of clinic revenue is not derived from medical services,
there
is a risk that the Company’s relationships with medical professionals will be
viewed as improperly maintained and the Company is in violation of the corporate
medicine doctrine.
Malpractice
insurance maintained at the professional corporation level or the clinician
level may not successfully cover the corporate entity and though the Company
itself is not engaged in the practice of corporate medicine, it may be named
in
any potential malpractice suits, as well.
The
Company and its officers, directors and employees have limited experience
in
marketing, licensing and selling the products and services offered by the
Company’s clinic,
have no experience in the online dating industry and may not be able to operate
the business effectively.
The
Company and its officers, directors and employees have limited experience
in
marketing, licensing and selling the products and services offered by the
Company’s clinic, in operating and managing the clinic and in developing
products and services related to the female sexual medicine industry. In
addition, offering and developing an online dating site is a substantial
departure from the Company’s current business of offering product development
and services related to the female sexual medicine industry. The Company
and its
officers, directors and employees have no experience in developing, producing,
pricing, marketing, selling or distributing online dating products and services
and the Company will rely on its ability to employ persons that have such
experience to carry out its business strategy with respect to developing
an
online dating site and the other areas of its business. Because of its
inexperience in these areas, the Company may not be effective in achieving
success that may otherwise be attainable by more experience.
Legislative
actions, higher insurance cost and potential new accounting pronouncements
are
likely to impact the Company’s future financial position and results of
operations.
There
may
potentially be new accounting pronouncements or regulatory rulings which
will
have an impact on the Company’s future financial position and results of
operations. The Sarbanes-Oxley Act of 2002 and other rule changes as well
as
proposed legislative initiatives following the Enron bankruptcy are likely
to
increase general and administrative costs. In addition, insurers are likely
to
increase premiums as a result of high claims rates, which the Company expects
will increase its premiums for insurance policies. Further, proposed initiatives
are expected to result in changes in certain accounting rules, including
legislative and other proposals to account for employee stock options as
a
compensation expense. These and other potential changes could materially
increase the expenses the Company report under generally accepted accounting
principles, and adversely affect its operating results.
Changes
in general economic conditions, especially interest rates and business cycles,
may significantly affect the Company’s income and
revenues.
Any
substantial deterioration in general political or economic conditions,
particularly in the United States, may adversely affect the Company’s financial
performance. The terrorist attacks that took place in the United States on
September 11, 2001, along with the U.S. military campaign against terrorism
in
Iraq, Afghanistan and elsewhere and continued violence in the Middle East
have
created many economic and political uncertainties, some of which may materially
harm demand for the Company’s products and services and the Company’s business
and revenues. The long-term effects of these events on the Company’s industry,
the market for its products and the U.S. economy as a whole are uncertain.
The
consequences of any additional terrorist attacks, or any expanded-armed
conflicts are unpredictable, and the Company may not be able to foresee these
events that could have an adverse effect on its markets or
business.
The
Company may become involved in costly and time consuming litigation over
misused
or misinterpreted advice.
A
portion
of the Company’s media, from radio to television to books and columns, focuses
on giving advice in the therapeutic and medical realms. In delivering such
advice, there is risk it will be improperly followed or improperly blamed
for
damage that a listener, viewer or reader may have suffered, and consequently
the
Company could be subject to lawsuits on that basis. The negative publicity
resulting from filing of any such lawsuit could adversely affect the Company’s
marketing efforts. In addition, it is possible that the Company’s financial
resources would be insufficient to satisfy the alleged claims in any
lawsuit.
The
Company may become involved in costly and time consuming litigation over
clinical trials conducted at the Berman Center.
Clinical
trials conducted at the Berman Center carry with them inherent risk because
of
the experimentation on human subjects. While independent review board (IRB)
approvals will be achieved before any clinical trial testing is done, the
risk
of litigation and malpractice claims is present.
If
the Company’s television shows fail to maintain a sufficient audience and if
adverse trends develop in the television production business generally, that
business could become unprofitable.
The
Company’s television production business generates a growing portion of its
revenues, but is subject to a number of uncertainties. Television production
is
a speculative business because revenues and income derived from television
depend primarily on the continued acceptance of that programming from the
public, which is difficult to predict. Public acceptance of particular
programming is dependent upon, among other things, the content and quality
of
that programming, the strength of stations on which that programming is
broadcast, promotion of that programming, the quality and acceptance of
competing television programming and other sources of entertainment and
information.
While
Showtime Networks has approved the pilot for A More Perfect Union, it is
not
obliged to continue with the first season as a series. Showtime Networks
is in
the process of reviewing the pilot in order to determine if it will proceed
with
a 10-episode series. If Showtime Networks accepts the series, it will be
under
prearranged terms negotiated at the time of the pilot agreement.
In
addition, television revenues and income may also be affected by a number
of
factors beyond the Company’s control. These factors include a general decline in
broadcast television viewers, pricing pressure in the television advertising
industry, strength of the stations on which the Company’s programming is
broadcast, general economic conditions, availability of other forms of
entertainment and leisure time activities and other factors. All of these
factors may quickly change and these factors cannot be predicted with certainty.
Accordingly, if these changes were to occur, the revenues the Company generates
and anticipates generating from television programming could
decline.
The
Company is reliant upon outside production companies to produce a successful
television product, and the Company may not be able to control the final
output.
The
nature of the entertainment business is such that the Company, to the extent
that the Company is not in charge of production, is not necessarily in charge
of
the quality of the final output. Success of the entertainment product is
contingent upon working with producers who provide quality services. The
Company
is reliant upon different production companies to produce a successful product;
and those production companies may not succeed on any given project. Due
to
factors beyond the Company’s control, some of the media projects may not succeed
in producing long-term revenue.
Future
acquisitions might dilute stockholder value, divert management attention
or
cause integration problems.
As
part
of its business strategy, the Company might in the future acquire, businesses
or
intellectual property that the Company feel could complement its business,
enhance its products and services or increase its intellectual property
portfolio. If the Company consummate acquisitions through an exchange of
the
Company’s securities, its stockholders could suffer significant dilution.
Acquisitions could create risks for the Company, including:
| · |
unanticipated
costs associated with the
acquisitions;
|
| · |
use
of substantial portions of the Company’s available cash to consummate the
acquisitions;
|
| · |
diversion
of management’s attention from other business concerns;
and
|
| · |
difficulties
in assimilation of acquired personnel or
operations.
|
Any
future acquisition, even if successfully completed, might not generate any
additional revenue or provide any benefit to the Company’s
business.
The
Company anticipates raising additional capital in the
future.
The
Company anticipates raising additional funds through public or private
financing, strategic relationships or other arrangements in the near future
to
carry out its business strategy. The Company cannot be certain that any
financing will be available on acceptable terms, or at all, and the Company’s
failure to raise capital when needed could limit its ability to expand its
business. Additional equity financing may be dilutive to the holders of the
Company’s common stock, and debt financing, if available, may involve
restrictive covenants. Moreover, strategic relationships, if necessary to
raise
additional funds, may require that the Company relinquish valuable
rights.
The
Company’s executive officers, directors and major stockholders have significant
control over the Company, which may lead to conflicts with other stockholders
over corporate governance matters.
The
Company’s current directors, officers and more than 10% stockholders, as a
group, own approximately 49.53% of the Company’s outstanding common stock.
Acting together, these stockholders would be able to significantly influence
all
matters that the Company’s stockholders vote upon, including the election of
directors, approvals of acquisitions and financing and other
transactions.
If
the Company fails to maintain effective internal controls over financial
reporting, the price of its common stock may be adversely affected.
The
Company is required to establish and maintain appropriate internal controls
over
financial reporting. Failure to establish those controls, or any failure
of
those controls once established, could adversely impact the Company’s
disclosures regarding its business, financial condition or results of
operations. In addition, management’s assessment of internal controls over
financial reporting at such time may identify weaknesses and conditions that
need to be addressed in the Company’s internal controls over financial reporting
or other matters that may raise concerns for you. Any actual or perceived
weaknesses and conditions that need to be addressed in the Company’s internal
controls over financial reporting, disclosure of management's assessment
of its
internal controls over financial reporting or disclosure of its public
accounting firm's attestation to or report on management's assessment of
its
internal controls over financial reporting may have an adverse impact on
the
price of the Company’s common stock.
The
Company may not be able to achieve the benefits the Company expects to result
from the merger.
There
can
be no assurance that any of the anticipated benefits of the recent merger
of the
Company and Berman Health and Media, Inc. will be realized. In addition,
the
attention and effort devoted to consummating and achieving the benefits of
the
merger could significantly divert management’s attention from other important
issues, which could materially and adversely affect the Company’s operating
results or stock price in the future.
Standards
for compliance with Section 404 of the Sarbanes-Oxley Act of 2002 are uncertain,
and if the Company fails to comply in a timely manner, its business could
be
harmed and its stock price could decline.
Rules
adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002
require annual assessment of a company’s internal control over financial
reporting, and attestation of its assessment by the company’s independent
registered public accountants. On March 2, 2005, the SEC extended the compliance
dates for non-accelerated filers, as defined by the SEC, by one year.
Accordingly, the Company believes that this requirement will eventually be
applicable to the Company. The standards that must be met for management
to
assess the internal control over financial reporting as effective are new
and
complex, and require significant documentation, testing and possible remediation
to meet the detailed standards. The Company may encounter problems or delays
in
completing activities necessary to make an assessment of its internal control
over financial reporting. In addition, the attestation process by its
independent registered public accountants is new and the Company may encounter
problems or delays in completing the implementation of any requested
improvements and receiving an attestation of the Company’s assessment by its
independent registered public accountants. If the Company cannot assess its
internal control over financial reporting as effective, or its independent
registered public accountants are unable to provide an unqualified attestation
report on such assessment, investor confidence and share value may be negatively
impacted.
The
Company has not voluntarily implemented various corporate governance measures,
in the absence of which, stockholders may have more limited protections against
interested director transactions, conflicts of interest and similar
matters.
Recent
Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted
in
the adoption of various corporate governance measures designed to promote
the
integrity of the corporate management and the securities markets. Some of
these
measures have been adopted in response to legal requirements. Others have
been
adopted by companies in response to the requirements of national securities
exchanges, such as the NYSE or The Nasdaq Stock Market, on which their
securities are listed. Among the corporate governance measures that are required
under the rules of national securities exchanges and Nasdaq are those that
address board of directors’ independence, audit committee oversight, and the
adoption of a code of ethics. The Company has not yet adopted any of these
corporate governance measures and, since its securities are not yet listed
on a
national securities exchange or Nasdaq, the Company is not required to do
so. It
is possible that if the Company was
to adopt
some or all of these corporate governance measures, stockholders would benefit
from somewhat greater assurances that internal corporate decisions were being
made by disinterested directors and that policies had been implemented to
define
responsible conduct. For example, in the absence of audit, nominating and
compensation committees comprised of at least a majority of independent
directors, decisions concerning matters such as compensation packages to
the
Company’s senior officers and recommendations for director nominees may be made
by a majority of directors who have an interest in the outcome of the matters
being decided. Prospective investors should bear in mind the Company’s current
lack of corporate governance measures in formulating their investment decisions.
There
is no assurance of an established public trading market.
Although
the Company’s common stock is quoted in the Pink Sheets, a regular trading
market for the securities may not be sustained in the future. Quotes for
stocks
listed on the Pink Sheets are not listed in the financial sections of newspapers
and newspapers generally have very little coverage of stocks listed solely
on
the Pink Sheets. Accordingly, prices for and coverage of securities traded
solely on the Pink Sheets may be difficult to obtain. In addition, stock
traded
solely on the Pink Sheets tend to have a limited number of market makers
and a
larger spread between the bid and ask prices than those listed on the NYSE,
AMEX
or NASQAQ exchanges. All of these factors may cause holders of the Company’s
common stock to be unable to resell their securities at or near their original
offering price or at any price. Market prices for the Company’s common stock
will be influenced by a number of factors, including:
| · |
changes
in interest rates;
|
| · |
competitive
developments, including announcements by competitors of new products
or
services or significant contracts, acquisitions, strategic partnerships,
joint ventures or capital
commitments;
|
| · |
variations
in quarterly operating results;
|
| · |
changes
in financial estimates by securities
analysts;
|
| · |
the
depth and liquidity of the market for the Company’s common
stock;
|
| · |
investor
perceptions of the Company after the merger with Berman Health
and Media,
Inc. and the women’s sexual health industry generally;
and
|
| · |
general
economic and other national
conditions.
|
Provisions
of the Company’s certificate of incorporation and bylaws may be deemed to have
anti-takeover effects, and may delay, defer or prevent a takeover attempt.
In
addition, certain provisions of the Delaware General Corporation Law also
may be
deemed to have certain anti-takeover effects.
Shares
eligible for future sale may adversely affect the market price of the Company’s
common stock, as the future sale of a substantial amount of its stock in
the
public marketplace could reduce the price of the Company’s common stock.
Substantial
sales of the Company’s common stock in the public market, or the perception that
such sales could occur, could result in the drop in the market price of its
securities and make it more difficult for the Company to complete future
equity
financings on acceptable terms, if at all, by introducing a large number
of
sellers to the market. From time to time, certain of the Company’s stockholders
may be eligible to sell all or some of their shares of common stock by means
of
ordinary brokerage transactions in the open market pursuant to Rule 144,
promulgated under the Securities Act of 1933, as amended (“Rule 144”), subject
to certain limitations. In general, pursuant to Rule 144, a stockholder (or
stockholders whose shares are aggregated) who has satisfied a one-year holding
period may, under certain circumstances, sell within any three-month period
a
number of securities which does not exceed the greater of 1% of the then
outstanding shares of common stock or the average weekly trading volume of
the
class during the four calendar weeks prior to such sale. Rule 144 also permits,
under certain circumstances, the sale of securities, without any limitations,
by
a non-affiliate of the Company that has satisfied a two-year holding period.
In
addition, Berman Health and Media, Inc. recently completed a private placement,
whereby they granted the investors in the private placement certain registration
rights with respect to the shares of common stock underlying their securities.
Those securities are included in the securities being offered in this
prospectus. Hunter World Markets, Inc. may also, in its sole discretion,
permit
certain of the Company’s current stockholders who are subject to contractual
lock-up agreements to sell shares prior to the expiration of their lock-up
agreements. The Company cannot estimate the number of shares of common stock
that may actually be resold in the public market because this will depend
on the
market price for its common stock, the individual circumstances of the sellers
and other factors. Any substantial sale of common stock pursuant to Rule
144 or
pursuant to any resale prospectus may have an adverse effect on the market
price
of the Company’s securities.
The
Company’s common stock is considered to be a “penny
stock.”
The
Company’s common stock is considered to be a "penny stock" as it meets one or
more of the following definitions. A stock is generally considered to be
a penny
stock if it meets one or more of the definitions in Rules 15g-2 through 15g-6
promulgated under Section 15(g) of the Securities Exchange Act of 1934, as
amended. These include but are not limited to the following: (i) the stock
trades at a price less than $5.00 per share; (ii) it is NOT traded on a
"recognized" national exchange; (iii) it is NOT quoted on the NASDAQ Stock
Market, or even if so, has a price less than $5.00 per share; or (iv) is
issued
by a company with net tangible assets less than $2.0 million, if in business
more than a continuous three years, or with average revenues of less than
$6.0
million for the past three years. The principal result or effect of being
designated a "penny stock" is that securities broker-dealers cannot recommend
the stock but must trade in it on an unsolicited basis.
Broker-dealer
requirements may affect trading and liquidity.
Section
15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
promulgated thereunder by the SEC require broker-dealers dealing in penny
stocks
to provide potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the document
before effecting any transaction in a penny stock for the investor's
account.
Potential
investors in the Company’s common stock are urged to obtain and read such
disclosure carefully before purchasing any shares that are deemed to be "penny
stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve
the account of any investor for transactions in such stocks before selling
any
penny stock to that investor. This procedure requires the broker-dealer to
(i)
obtain from the investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably determine,
based on that information, that transactions in penny stocks are suitable
for
the investor and that the investor has sufficient knowledge and experience
as to
be reasonably capable of evaluating the risks of penny stock transactions;
(iii)
provide the investor with a written statement setting forth the basis on
which
the broker-dealer made the determination in (ii) above; and (iv) receive
a
signed and dated copy of such statement from the investor, confirming that
it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it
more
difficult for holders of the Company’s common stock to resell their shares to
third parties or to otherwise dispose of them in the market or
otherwise.
The
Company does not foresee paying cash dividends in the foreseeable future.
The
Company does not plan to pay cash dividends on its stock in the foreseeable
future.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Current Report on Form 8-K contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, including
the plans and objectives of management for the business, operations, and
economic performance of the Company. These forward-looking statements generally
can be identified by the context of the statements or the use of words such
as
the “Company” or its management "believes," "anticipates," "intends," "expects,"
"plans" or words of similar meaning. Similarly, statements that describe
the
Company’s future operating performance, financial results, plans, objectives,
strategies, or goals are forward-looking statements. Although management
believes that the assumptions underlying the forward-looking statements are
reasonable, these assumptions and the forward-looking statements are subject
to
various factors, risks and uncertainties, many of which are beyond the Company’s
control. Accordingly, actual results could differ materially from those
contemplated by the forward-looking statements.
These
risks and uncertainties include, without limitation, those described under
“Risk
Factors,” above.
The
assumptions used for purposes of the forward-looking statements specified
in the
following information represent estimates of future events and are subject
to
uncertainty as to possible changes in economic, legislative, industry, and
other
circumstances. As a result, the identification and interpretation of data
and
other information and their use in developing and selecting assumptions from
and
among reasonable alternatives require the exercise of judgment. To the extent
that the assumed events do not occur, the outcome may vary substantially
from
anticipated or projected results, and, accordingly, no opinion is expressed
on
the achievability of those forward-looking statements. The Company cannot
guarantee that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and the Company assumes
no
obligation to update any such forward-looking statements.
ITEM
3.02 UNREGISTERED
SALES OF EQUITY SECURITIES.
Berman
Health and Media, Inc. recently closed a private placement offering of common
stock and warrants (the “Units”) each consisting of (i) two shares of common
stock, (ii) one three-year warrant exercisable into one share of common stock
at
an exercise price of $1.05 and (iii) one three year warrant exercisable into
one
share of common stock at an exercise price of $1.57.
The
Units
were offered solely to persons who qualified as “accredited investors” within
the meaning of Rule 501 of the Securities Act of 1933, as amended (the “Act”),
“Qualified Institutional Buyers” within the meaning of Rule 144A of the Act and
to certain persons in offshore transactions in reliance on Regulation S of
the
Act.
The
price
per Unit was $1.05. In June 2005, Berman Health and Media, Inc. sold an
aggregate of 2,952,381 Units and received $3,100,000 in gross proceeds from
such
sale. The securities were issued in reliance upon an exemption from registration
with the SEC as provided by Section 4(2) of the Act and Regulation D and
Regulation S promulgated thereunder and similar provisions under applicable
state laws which provide exemptions from the securities registration provisions.
The Company has agreed to assume the warrants issued by Berman Health and
Media,
Inc. in the private placement Each share of common stock underlying such
warrants is now exercisable into 1.535999487 shares of the Company’s common
stock. These warrants are currently exercisable into an aggregate of 9,069,714
shares of the Company’s common stock.
In
connection with the private placement, Berman Health and Media, Inc. entered
into a placement agent agreement with Hunter World Markets, Inc. (“HWM”), the
Company’s former controlling stockholder and one of the Company’s current
stockholders, pursuant to which HWM offered for sale the Units on a “best
efforts” basis. As consideration for HWM’s services, the Company is now
obligated to pay HWM or HWM is entitled to receive (i) a $310,000 commission
on
the sale of the Units, (ii) reimbursement of up $62,000 in non-accountable
expenses and (iii) three year warrants exercisable into 906,971 shares of
the
Company’s common stock. The warrants were issued in reliance upon an exemption
from registration with the SEC as provided by Section 4(2) of the Act and
Regulation D promulgated thereunder and similar provisions under applicable
state law which provides exemptions from the securities registration provisions.
Prior
to
converting into corporate form, Berman Health and Media, Inc. sold in 2003,
2004
and 2005 an aggregate of 3,767,390 membership interests in Berman Center
LLC,
solely to persons who qualified as “accredited investors” within the meaning of
Rule 501 of the Act. Berman Health and Media, Inc. received an aggregate
of
$2,966,223 in proceeds from such sales. These securities converted into
19,730,504 shares of the Company’s common stock upon consummation of the merger
in June 2005. The securities were originally issued in reliance upon an
exemption from registration with the SEC as provided by Section 4(2) of the
Act
and Regulation D promulgated thereunder and similar provisions under applicable
state laws which provide exemptions from the securities registration
provisions.
In
addition, prior to converting into corporate form, Berman Health and Media,
Inc.
issued to certain “accredited investors” providing $400,000 in working capital
to Berman Center LLC, three and a half year warrants exercisable into 117,315
membership interests in the Berman Center LLC at an exercise price of
$1.074034786. These warrants converted into warrants exercisable into 400,000
shares of Berman Health and Media, Inc.’s common stock at an exercise price of
$0.315 upon the reorganization of Berman Center LLC into corporate form.
The
Company agreed to assume these warrants in connection with the merger. Each
share of common stock underlying such warrants is now exercisable into
1.535999487 shares of the Company’s common stock. These warrants are currently
exerciseable into an aggregate of 614,400 shares of the Company’s common stock.
The securities were originally issued in reliance upon an exemption from
registration with the SEC as provided by Section 4(2) of the Act and Regulation
D promulgated thereunder and similar provisions under applicable state laws
which provide exemptions from the securities registration
provisions.
The
forms
of warrants issued by Berman Health and Media, Inc. to investors and to HWM
are
attached as Exhibits 4.1, 4.2 and 4.3 to this Current Report on Form
8-K.
A
copy of
the Placement Agent Agreement between Berman Health and Media, Inc. and HWM
is
attached as Exhibit 10.2
ITEM
4.01 CHANGES
IN REGISTRANT’S CERTIFYING ACCOUNTANT.
The
Company recently engaged Singer Lewak Greenbaum & Goldstein LLP as its
independent registered public accountant to audit the consolidated financial
statements of the Company for the year ended December 31, 2004.
ITEM
5.01 CHANGES
IN CONTROL OF REGISTRANT.
On
June
3, 2005, the Company, along with LBC MergerSub, Inc., a Nevada corporation
and
wholly owned subsidiary of the Company (“Merger Sub”) and certain existing
stockholders of the Company entered into an Agreement and Plan of Merger
(the
“Merger Agreement”) with Berman Health and Media, Inc., a privately held
Delaware corporation, pursuant to which the Company would be acquired by
BHM in
a merger transaction wherein Merger Sub would merge with and into BHM, with
BHM
being the surviving corporation (the “Merger”).
The
Merger resulted in a change-of-control by BHM and its stockholders and the
assumption of BHM’s operations and liabilities. At the effective time of the
Merger:
| · |
The
Company merged Merger Sub with and into BHM and the separate corporate
existence of Merger Sub has ceased;
and
|
| · |
The
Company had issued 19,730,504 shares of its restricted common stock,
and
314,230 options and 614,400 warrants to purchase additional shares
of its
restricted common stock to the stockholders of BHM in exchange
for 100% of
the issued and outstanding shares of common stock and warrants
to purchase
shares BHM’s common stock.
|
Also
in
connection with the Merger, the Company has deposited 2,303,999 shares of
its
common stock into an escrow account, which shall cover any claims for breach
of
warranties, indemnities, covenants or undertakings contained in the Merger
Agreement raised by BHM during the two-year period following the closing
of the
Merger. In addition, the Company has reincorporated from
the State
of Georgia to the State of Delaware and has changed its corporate name from
“LB
Center, Inc.” to “Berman Center, Inc.”
As
a
result of the Merger, the Company has become the parent corporation of BHM,
and
the stockholders of BHM have become shareholders of the Company. At the
effectiveness of the Merger, the remaining shareholders of the Company owned
approximately 13% of the issued and outstanding shares of the Company’s common
stock, based on 22,725,703 shares outstanding after the Merger.
Following
the Merger, Samuel P. Chapman, Laura A.C. Berman, Allan Charles, Alger Chapman,
Stuart Cornew, Jan Fawcett, Robert Goodmen and Michael Romano, each of whom
are
directors of BHM, were appointed to the Board of Directors of the Company.
In
addition, the Company appointed Samuel P. Chapman as the Company’s Chairman and
Chief Executive Officer, Laura A.C. Berman as President and William McDunn
as
Chief Financial Officer. Todd Ficeto resigned from all of his officer and
director positions.
The
transaction contemplated by the Merger Agreement is intended to be a “tax-free”
incorporation pursuant to the provisions of Section 351 and 368(a)(i)(A)
of the
Internal Revenue Code of 1986, as amended.
The
securities issued in connection with the Merger were issued in reliance upon
an
exemption from registration with the SEC as provided by Section 4(2) of the
Act
and Regulation D promulgated thereunder and similar provisions under applicable
state law which provides exemptions from the securities registration provisions.
In
May,
2005, BHM began offering for sale units of its common stock and warrants
(the
“Units”), each consisting of (i) two shares of its common stock, (ii) one
three-year warrant exercisable into one share of its common stock at an exercise
price of $1.05 and (iii) one three year warrant exercisable into one share
of
its common stock at an exercise price of $1.575. The price per Unit was $1.05.
In June 2005, 2,952,381 Units were sold to certain of the selling security
holders at an initial closing of the sale of the Units. In addition, BHM
issued
a warrant to purchase common stock to the placement agent in exchange for
services provided to BHM in connection with the offering. After issuance
of
shares of common stock and warrants to purchase shares of common stock related
to the private offering in June 2005, the Company had 31,795,415 shares of
common stock outstanding and warrants and options to purchase 10,905,315
shares
of common stock.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT PRIOR TO THE
MERGER
The
following table sets forth information regarding the beneficial ownership
of the
shares of the Company’s common stock as of June 14, 2005, except as noted in the
footnotes below, by:
| · |
Each
person who the Company knows to be the beneficial owner of 5% or
more of
its outstanding common stock;
|
| · |
All
of the Company’s executive officers and directors as a group.
|
Beneficial
ownership is determined in accordance with the rules of the SEC. In computing
the number of shares beneficially owned by a person and the percentage of
ownership of that person, shares of common stock subject to options held
by that
person that are currently exercisable or become exercisable within 60 days
of
June 14, 2005 are deemed outstanding even if they have not actually been
exercised. Those shares, however, are not deemed outstanding for the purpose
of
computing the percentage ownership of any other person. As of June 14, 2005,
2,995,199 shares of the Company’s common stock were issued and outstanding.
Unless otherwise indicated in the table, the persons and entities named in
the
table have sole voting and sole investment power with respect to the shares
set
forth opposite the shareholder’s name, subject to community property laws, where
applicable. The address of each shareholder is listed in the table.
|
Name
and Address Of Beneficial Owner
|
|
|
Amount
Of
Beneficial
Ownership
|
|
|
Percent
Of
Class
|
|
|
Todd
Ficeto(1)
|
|
|
1,204,210
|
|
|
40.2
|
%
|
|
Corporate
Advisors Group
|
|
|
1,000,000
|
|
|
33.4
|
%
|
|
Petr
Ondrousek
|
|
|
400,000
|
|
|
13.4
|
%
|
|
Loman
International SA
|
|
|
350,000
|
|
|
11.7
|
%
|
|
All
directors and named executive officers as a group (one person)
|
|
|
1,204,210
|
|
|
40.2
|
%
|
| |
|
|
|
|
|
|
|
__________
| (1) |
Includes
(i) 25,210 shares of the Company’s common stock owned by Hunter World
Markets, Inc. (“HWM”), (ii) 1,159,000 shares of the Company’s common stock
owned by Todd Ficeto, the President of Hunter World Markets, Inc.,
(v)
10,000 shares of the Company’s common stock owned by Hunter Ficeto, a
family member of Todd Ficeto and (vi) 10,000 shares of the Company’s
common stock owned by Natalia Ficeto, a family member of Todd
Ficeto.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT FOLLOWING THE
MERGER
The
following table sets forth information with respect to the levels of beneficial
ownership of the Company’s common stock owned upon the effectiveness of the
Merger by:
| · |
Each
person who the Company knows to be the beneficial owner of 5% or
more of
its outstanding common stock;
|
| · |
All
of the Company’s executive officers and directors as a group.
|
Prior
to
the Merger, the Company had 2,995,199 shares of its common stock issued and
outstanding. After the Merger and the private offering taking place in June
2005, as of June 16, 2005, the Company had 31,795,415 shares of its common
stock
issued and outstanding, in addition to options and warrants to purchase
10,905,315 shares of the Company’s common stock, which could result in up to
42,700,730 shares of common stock outstanding.
Beneficial
ownership is determined in accordance with the rules of the SEC. In computing
the number of shares beneficially owned by a person and the percentage of
ownership of that person, shares of common stock subject to options held
by that
person that are currently exercisable or become exercisable within 60 days
of
the closing date of the Merger, June 16, 2005, are deemed outstanding even
if
they have not actually been exercised. Those shares, however, are not deemed
outstanding for the purpose of computing the percentage of any other person.
Unless indicated otherwise, the address for each person named is c/o Berman
Center, Inc., 211 East Ontario, Suite 800, Chicago, Illinois 60611.
|
Name
and Address of Beneficial Owner or Identity of Group
(1)
|
|
|
Amount
of
Beneficial
Ownership
|
|
|
Percent
of Class
|
|
| |
|
|
|
|
|
|
|
|
Samuel
P. Chapman and Laura A. Berman (2)
|
|
|
5,747,419
|
|
|
18.08
|
%
|
| |
|
|
|
|
|
|
|
|
Alger
Chapman
|
|
|
436,431
|
|
|
1.37
|
%
|
| |
|
|
|
|
|
|
|
|
Stuart
Cornew
|
|
|
157,115
|
|
|
*
|
|
| |
|
|
|
|
|
|
|
|
Robert
Goodman
|
|
|
157,115
|
|
|
*
|
|
| |
|
|
|
|
|
|
|
|
Michael
Romano
|
|
|
157,115
|
|
|
*
|
|
| |
|
|
|
|
|
|
|
|
Allan
Charles (3)
|
|
|
157,115
|
|
|
*
|
|
| |
|
|
|
|
|
|
|
|
Jan
Fawcett (4)
|
|
|
157,115
|
|
|
*
|
|
| |
|
|
|
|
|
|
|
|
Esarbee
Investment Group
1170
Peel
Montreal,
Quebec
Canada
H3B4P2
|
|
|
2,007,586
|
|
|
6.31
|
%
|
| |
|
|
|
|
|
|
|
|
European
Capitalist Fund
c/o
Ogier Fiduciary Services (Cayman) Limited
P.O.
Box 1234GT Queensgate House
South
Church Street
George
Town
Grand
Cayman, Cayman Islands (5)
|
|
|
18,954,283
|
|
|
45.16
|
%
|
| |
|
|
|
|
|
|
|
|
Hunter
World Markets, Inc.
9300
Wilshire Boulevard
Penthouse
Suite
|
|
|
2,495,181
|
|
|
7.54
|
%
|
| |
|
|
|
|
|
|
|
|
All
current directors and officers as a group
|
|
|
6,969,425
|
|
|
21.92
|
%
|
________________
*
indicates less than 1%.
| 1. |
The
persons named in this table have sole voting and investment power
with
respect to all shares of common stock listed. Beneficial ownership
also
includes that number of shares, which an individual has the right
to
acquire within 60 days (such as through the exercise of warrants
and
options) of the date of this Current Report on Form
8-K.
|
| 2. |
Mr.
Samuel P. Chapman owns together with his wife Dr. Laura A. Berman
2,897,906 shares of the Company’s common stock. Berman Center Holdings
LLC, which is owned by Mr. Samuel P. Chapman and Dr. Laura A. Berman,
owns
2,849,513 shares of the Company’s common
stock.
|
| 3. |
Represents
157,115 shares of Common Stock issuable upon exercise of stock
options
that are currently exercisable or exercisable within 60 days of
the date
of this Current Report on Form 8-K.
|
| 4. |
Represents
157,115 shares of Common Stock issuable upon exercise of stock
options
that are currently exercisable or exercisable within 60 days of
the date
of this Current Report on Form 8-K.
|
| 5. |
This
amount includes (i) 4,388,572 shares of the Company’s common stock owned
by European Capitalist Fund (“ECP”), (ii) 4,388,569 shares of the
Company’s common stock owned by Absolute Return Europe Fund, an affiliate
of ECP, (iii) 1,000,000 shares of the Company’s common stock owned by
Corporate Advisors Group, an affiliate of ECP, (iv) warrants held
by
Corporate Advisors Group, an affiliate of ECP, currently exercisable
into
4,388,572 shares of common stock , (v) 400,000 shares of the Company’s
common stock owned by Peter Ondrousek, an affiliate of ECP and
(vi)
warrants held by Peter Ondrousek, an affiliate of ECP, currently
exercisable into 4,388,570 shares of common
stock.
|
| 6. |
This
amount includes (i) 25,210 shares of the Company’s common stock owned by
Hunter World Markets, Inc. (“HWM”), (ii) warrants held by HWM currently
exercisable into 906,971 shares of the Company’s common stock, (iii)
warrants held by The Hunter Fund Ltd., an affiliate of HWM, currently
exercisable into 384,000 shares of the Company’s common stock, (iv)
1,159,000 shares of the Company’s common stock owned by Todd Ficeto, the
President of Hunter World Markets, Inc., (v) 10,000 shares of the
Company’s common stock owned by Hunter Ficeto, a family member of Todd
Ficeto and (vi) 10,000 shares of the Company’s common stock owned by
Natalia Ficeto, a family member of Todd
Ficeto.
|
EXECUTIVE
OFFICERS, DIRECTORS AND KEY EMPLOYEES
The
following discussion sets forth information regarding the Company’s executive
officers and directors prior to and following the Merger.
Executive
Officers and Directors Prior to the Merger
|
Name
|
|
|
Age
|
|
|
Year
First Appointed
Director
|
|
|
Positions
|
|
|
Todd
Ficeto
|
|
|
38
|
|
|
2004
|
|
|
Sole
Director, Chief Executive Officer, Chief Financial Officer and
Secretary
|
|
TODD
FICETO
Todd
M.
Ficeto, age 38, became the Company's sole Director, Chief Executive Officer,
Chief Financial Officer and Secretary in December 2004 in connection with
his
acquisition of the majority of the Company's common stock. Mr. Ficeto founded
Hunter World Markets, Inc. in 1995 and is currently its President and Chairman.
Mr. Ficeto has been in the investment banking industry since 1989.
Executive
Officers and Directors Following the Merger
The
following new executive officers of the Company will be elected annually
by the
Board of Directors and the following new members of the Company’s Board of
Directors will serve one year terms until the earlier of their death,
resignation or removal by the Board of Directors:
|
Name
|
|
|
Age
|
|
|
Position
|
|
|
Year
First Appointed Executive Officer and/or Director of Berman Health
and
Media, Inc.
|
|
|
Samuel
P. Chapman
|
|
|
40
|
|
|
Chairman,
Chief Executive Officer
|
|
|
2003
|
|
|
Laura
A.C. Berman, LICSW, PHD.
|
|
|
36
|
|
|
President,
Director
|
|
|
2003
|
|
|
William
McDunn
|
|
|
48
|
|
|
Chief
Financial Officer
|
|
|
2004
|
|
|
Allan
Charles, M.D.
|
|
|
76
|
|
|
Director
|
|
|
2004
|
|
|
Alger
Chapman
|
|
|
73
|
|
|
Director
|
|
|
2004
|
|
|
Stuart
Cornew
|
|
|
47
|
|
|
Director
|
|
|
2004
|
|
|
Jan
Fawcett, M.D.
|
|
|
71
|
|
|
Director
|
|
|
2004
|
|
|
Robert
Goodman
|
|
|
49
|
|
|
Director
|
|
|
2004
|
|
|
Michael
Romano
|
|
|
50
|
|
|
Director
|
|
|
2004
|
|
The
following information describes the business experience during the past
five
years of the executive officers and directors named above and certain other
persons who are expected to make significant contributions to the business
of
the Company.
SAMUEL
P.
CHAPMAN
Samuel
P.
Chapman has been President of Parson Capital Corporation for the past thirteen
years. Parson Capital is a venture capital boutique firm specializing in
start-up companies. He is also a Director of HDO, Inc. During his career
with
Parson Capital he founded several companies playing the role of financier
and Co
Chairman of the Board along with his partner. One of the companies he co-founded
was Parson Group LLC, a consulting firm that achieved the number one ranking
by
Inc. Magazine as the fastest growing private company in America in the year
2000. Parson Group was sold the following year to a British Company for $55
million cash.
Mr.
Chapman formerly worked for both Dillon Read & Co., Inc. (now owned by UBS)
and Lehman Brothers as a mergers and acquisitions specialist in New York.
He is
a member of the Board of Directors and former Cochairman of HDO Production
a
nationwide tent rental company. He is also a member of the Young
Presidents Organization (YPO) and of the Economics Club of Chicago. He was
formerly Co Chairman of Cantilever Technologies LLC, a software company he
helped found, a past member of the Board of Trustees and the Executive Committee
of the Rehabilitation Institute of Chicago, the top rehabilitation hospital
in
the world. Mr. Chapman graduated with a BA from Williams College in
1986.
LAURA
A.C. BERMAN, LICSW, PHD.
Dr.
Laura
Berman has been working as a sex educator and therapist for over fifteen
years.
After obtaining her Master's in Clinical Social Work and Doctorate in Health
Education and Therapy (specializing in human sexuality) at New York University,
she went on to complete a training fellowship in Sexual Therapy with the
Department of Psychiatry at New York University Medical Center. Dr.
Berman
is currently an Assistant Clinical Professor of OBGYN and Psychiatry in the
Feinberg School of Medicine at Northwestern University.
Dr.
Berman is chair of the Women’s Sexual Health State-Of-The-Art Series, an
accredited program for the Council of Continuing Medical Education and currently
serves on the foundation board of the Society for the Scientific Study of
Sexuality (SSSS). She is also a member of the American Association of Sex
Educators Counselors and Therapists (AASECT), the National Association of
Social
Workers (NASW), and is one of the few non-physician members of the American
Urologic Association (AUA). She has been involved in numerous clinical sexual
pharmacology trials, including acting as lead investigator for testing the
effectiveness of Viagra on women's sexual complaints.
Dr.
Berman has authored over 25 articles published in peer reviewed journals,
and
has been an invited speaker at over 45 venues in the United States and abroad.
She recently wrote the chapter on female sexuality in Obstetrics and Gynecology,
the definitive medical school text on the subject, edited by Dr. Sciarra,
the
past chair of the Department of OBGYN at Northwestern Memorial Hospital.
Dr.
Berman is also the recipient of many awards and honors, including Rising
Star of
the Year, (National Association of Women Business Owners, Los Angeles, February
2002), Women of Action Award (Israel Cancer Research Fund, August 2002) and
Women Who Make A Difference (Los Angeles Business Journal, August 2002).
In
July,
1998, Dr. Berman founded the Women’s Sexual Health Center in the Department of
Urology at Boston Medical Center. She was Co-Director there and established
the
first comprehensive protocol for treating female sexual dysfunction. In spring
of 2000, she was recruited to UCLA Medical Center to start the Female Sexual
Medicine Center, also within the department of Urology. She was Director
of this
Center until December 2002 when she moved to Chicago to join the clinical
faculty of Northwestern Memorial Hospital and start Berman Center LLC.
ALLAN
CHARLES, M.D.
Allan
Charles is retired Chief of OBGYN at Michael Reese Hospital and Medical Center,
retired Chairman of the Board of Directors for the Research and Education
Foundation of the Michael Reese Medical Staff and presently Attending Physician
in the Department of OBGYN at the same institution.
ALGER
CHAPMAN
Alger
Chapman is Director of the Cambridge Group. He is also the recently retired
Chairman of ABN AMRO Financial Services, Inc. Prior to that Mr. Chapman was
Chairman and CEO of the CBOE from 1986 to 1997. He is also on the Board of
IArlington Capital, HDO Productions and Prime Insurance Holdings.
STUART
CORNEW
Stuart
Cornew is Managing Director of Pattern Associates which he founded ten years
ago. Pattern is a database mining and consulting company specializing in
finding
answers in large data sets for the financial services industry. Currently
he
also serves on the board of Harlem Furniture and the advisory board of the
Northwestern University Cancer Center.
JAN
FAWCETT, M.D.
Jan
Fawcett is Professor at the University of New Mexico school of Medicine and
the
recently retired chairman of the Department of Psychiatry at
Rush-Presbyterian-St. Luke’s Medical Center.
ROBERT
GOODMAN
Robert
Goodman is Chairman and CEO, Asia/Pacific Hudson Highland Group. The Hudson
Highland Group is a world wide staffing, outsourcing and executive search
firm,
headquartered in Chicago, IL.
MICHAEL
ROMANO
Michael
Romano is immediate past CEO of Romano Brothers Beverage Company. Romano
Brothers is the leading wine and spirits distributor in the State of Illinois.
Mr. Romano sold his Company to Southern Wine and Spirits in late
2002.
WILLIAM
MCDUNN
William
McDunn has over 15 years of experience in Finance and Accounting. He was
the
Controller for Parson Group for five years, managing a staff of 15 and reporting
directly to the CFO. Prior to Parson Consulting, he was Division Controller
for
Stone Container Corporation and responsible for oversight of accounting
activities in his business unit. Mr. McDunn received a BA in Accounting and
Liberal Arts from University of Illinois in Chicago in 1979. He received
his CPA
in 1981 and an MBA from Loyola University in 1989.
The
following contains biographical information of other persons that are expected
to make a significant contribution to the business of the
Company.
KATHRYN
L. MONKE
Kathryn
L. Monke, age 38, has served as Manager, Center Operations of Berman Center
since 2005. Ms. Monke has over eight years of experience with internal
operations and systems. She was employed at Parson Group and most recently
was a
Senior Project Manager in internal operations and system implementation.
Throughout her career she has gained experience in recruiting, interviewing,
hiring, human resources, marketing, office management, training and
documentation. Kathy received her Bachelor of Science in Marketing from Northern
Illinois University.
DANA
DEMAS
Dana
Demas, age 29, is a writer for Berman Center since 2004. Ms. Demas is the
author
of two books: Women’s Health and Wellness: An Illustrated Guide and Dog Breeds:
An Illustrated Guide. She has a variety of writing and editing experience,
including feature-length articles, newsletter and website content for clients
from a diverse range of industries. Dana received her Bachelor of Arts in
English and Psychology from the University of Vermont in 1998.
SUZANNE
ROTH, MSN, APRN, BC
Suzanne
Roth, age 46, has served as Nurse Practitioner of Berman Center since 2004.
Ms.
Roth was most recently employed at Men’s Health Boston as a clinical study
coordinator responsible for conducting/directing three clinical trials for
patients with erectile dysfunction under the supervision of Abraham Morgentaler,
M.D. She started her professional life at Massachusetts General Hospital
as a
Urological, Registered Professional Nurse. Suzanne received her Masters of
Science in Nursing, Adult Primary Care and Women’s Health, from Simmons College.
REBECCA
JEFFERS
Rebecca
Jeffers, age 32, has served as a Fitness Expert of Berman Center since 2004.
Ms.
Jeffers has been a yoga instructor for six years and is also certified in
mat
Pilates. She was trained at the N. U. Yoga Center in Chicago, IL, where she
was
exposed to all the different yoga systems, serials, and sequencing of poses.
She
has also had training in diet and nutrition and holistic health, and experience
in developing and delivering specialized programs.
KERRIE
GROW MCLEAN, PSYD, LPC
Kerrie
Grow McLean, age 31, has served as Psychotherapist of Berman Center since
2004.
Ms. McLean received her undergraduate degree in Psychology from Michigan
State
University, and received her Masters and Doctoral degrees in Clinical Psychology
from Chicago School of Professional Psychology. She completed her
training
at Northwestern University’s Counseling and Psychological Services where she was
a predoctoral intern. Dr. Grow McLean also trained as a sex therapist
at
the Loyola University Medical Center Sexual Dysfunction Clinic. Her
experience includes individual, couples and sex therapy. Dr. Grow
McLean
specializes in treating women’s health issues including sexual health and
functioning, body image, genital image, and menopausal health. She
is
currently a member of the American Association of Sex Educators Counselors
and
Therapists as well as the American Psychological Association.
MARTHA
WEINFURTER, BSN
Martha
Weinfurter, age 47, has served as Patient Concierge of Berman Center since
2004.
Ms. Weinfurter was most recently employed at Highland Park Hospital in Highland
Park, IL as a Discharge Planner. She started her professional life at St.
Luke's
Hospital in Milwaukee, WI, where she worked on a medical unit and Kidney
Dialysis. Martha then spent three years on a tertiary unit of Labor and Delivery
at St. Joseph's Hospital in Milwaukee. She has experience as a community
health
nurse in the Washington D.C. area and received her Bachelor of Arts degree
in
Nursing from Marquette University in Milwaukee, Wisconsin.
Director
Compensation
The
Company does not have an established policy to provide compensation to members
of its Board of Directors for their services in that capacity. Directors
are
reimbursed for reasonable out-of-pocket expenses incurred in connection with
attendance at Board meetings. Each of the Company’s outside directors (other
than Jan Fawcett and Allan Charles) owns 157,115 shares of the Company’s common
stock.
In
December 2004, Berman Center LLC granted options to two of its outside
directors, Jan Fawcett and Allan Charles, exercisable into an aggregate of
60,000 units of Berman Center, LLC. These options become exercisable into
204,578 shares of common stock of BHM upon the reorganization of Berman Center
LLC into BHM. The Company agreed to assume the options upon closing of the
merger and these options are now exercisable into an aggregate of 314,230
shares
of the Company’s common stock
The
Board of Directors and Committees
The
Company’s Board of Directors does not maintain a separate audit, nominating or
compensation committee. Functions customarily performed by such committees
are
performed by the Company’s Board of Directors as a whole. The Company is not
required to maintain such committees under the rules applicable to companies
listed on the Pink Sheets. None of the Company’s independent directors qualify
as an "audit committee financial expert."
Family
Relationships
Samuel
P.
Chapman is the husband of Dr. Laura A. Berman. In addition, Samuel P. Chapman
is
related to Alger Chapman.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table sets forth information concerning the compensation for fiscal
year 2003 and 2004 of the Company’s chief executive officer and one other
executive officer whose annual salary and bonus exceeded $100,000 in such
fiscal
years (collectively, the “Named Executive Officers”). The amounts disclosed for
fiscal year 2003 and 2004 for each of the Named Executive Officers relate
to
such person’s compensation received as an executive officer of BHM.
|
|
|
Annual
Compensation(1)
|
|
Name
and Principal Position
|
|
|
Year
|
|
|
Salary($)
|
|
|
Bonus($)
|
|
|
Samuel
P. Chapman - Chairman and Chief Executive Officer
|
|
|
2003
|
|
$
|
0
|
|
$
|
0
|
|
| |
|
|
2004
|
|
$ |
110,769
|
|
$ |
0
|
|
|
Laura
A. C. Berman - President
|
|
|
2003
|
|
$
|
0
|
|
$
|
|
|
| |
|
|
2004
|
|
$ |
110,769
|
|
$ |
0
|
|
(1) The
amounts disclosed exclude perquisites and other personal benefits, securities
or
property, which, for fiscal year 2003 and 2004 aggregated less than the lower
of
$50,000 or 10% of the total of annual salary and bonus reported for each
Named
Executive Officer.
Employment
Agreements
The
Company and Dr. Laura Berman have entered into a three-year employment
agreement. Pursuant to such agreement, Dr. Berman will receive an annual
salary
of $200,000, provided that under certain circumstances the Company’s Board of
Directors may increase her salary. In addition, Dr. Berman has also agreed
to
contribute to the Company all income, revenue and other compensation received
by
Dr. Berman in connection with activities related to the business operations
of
the Company during her employment, including, without limitation, all revenue
from media sources, talent agreements with television production companies
or
other media sources and authorship royalties. These items are the Company’s sole
property and may not be removed from the Company without approval of at least
a
majority in interest of the Company’s stockholders and adequate compensation to
the Company. The contribution of income and revenues describe above, however,
does not include income, revenue and other compensation derived by Dr. Berman
from honorarium fees and speaking engagements.
A
copy of
Dr. Berman’s Employment Agreement is attached as Exhibit 10.1 to this Current
Report on Form 8-K.
Certain
Relationships and Related Transactions
None.
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Under
Section 145 of the General Corporation Law of the State of Delaware, the
Company
can indemnify its directors and officers against liabilities they may incur
in
such capacities, including liabilities under the Securities Act of 1933,
as
amended (the “Securities Act”). The Company’s certificate of incorporation
provides that, pursuant to Delaware law, its directors shall not be liable
for
monetary damages for breach of the directors’ fiduciary duty of care to the
Company and its stockholders. This provision in the certificate of incorporation
does not eliminate the duty of care, and in appropriate circumstances equitable
remedies such as injunctive or other forms of nonmonetary relief will remain
available under Delaware law. In addition, each director will continue to
be
subject to liability for breach of the director’s duty of loyalty to the Company
or its stockholders, for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of the law, for actions leading
to
improper personal benefit to the director, and for payment of dividends or
approval of stock repurchases or redemptions that are unlawful under Delaware
law. The provision also does not affect a director’s responsibilities under any
other law, such as the federal securities laws or state or federal environmental
laws.
The
Company’s bylaws provide for the indemnification of its directors to the fullest
extent permitted by the Delaware General Corporation Law. The Company’s bylaws
further provide that its Board of Directors has sole discretion to indemnify
its
officers and other employees. The Company may limit the extent of such
indemnification by individual contracts with its directors and executive
officers, but have not done so. The Company is required to advance, prior
to the
final disposition of any proceeding, promptly on request, all expenses incurred
by any director or executive officer in connection with that proceeding on
receipt of an undertaking by or on behalf of that director or executive officer
to repay those amounts if it should be determined ultimately that he or she
is
not entitled to be indemnified under the Company’s bylaws or otherwise. The
Company is not, however, required to advance any expenses in connection with
any
proceeding if a determination is reasonably and promptly made by its Board
of
Directors by a majority vote of a quorum of disinterested Board members that
(a)
the party seeking an advance acted in bad faith or deliberately breached
his or
her duty to the Company or its stockholders and (b) as a result of such actions
by the party seeking an advance, it is more likely than not that it will
ultimately be determined that such party is not entitled to indemnification
pursuant to the applicable sections of its bylaws.
The
Company has been advised that in the opinion of the Securities and Exchange
Commission, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to the Company’s directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, such
indemnification is against public policy as expressed in the Securities Act
and
is therefore unenforceable. In the event a claim for indemnification against
such liabilities (other than the Company’s payment of expenses incurred or paid
by its director, officer or controlling person in the successful defense
of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether
such indemnification by the Company is against public policy as expressed
in the
Securities Act and will be governed by the final adjudication of such
issue.
POST
MERGER DESCRIPTION OF CAPITAL STOCK
The
Company is authorized to issue 100,000,000 shares of common stock, $0.001
par
value per share and 50,000,000 shares of preferred stock, $0.001 par value
per
share. The following description of the Company’s capital stock does not purport
to be complete and is governed by and qualified by the Company’s certificate of
incorporation and bylaws, which are included as exhibits to this Current
Report
on Form 8-K, forms a part, and by the provisions of applicable Delaware
law.
Preferred
Stock
As
of
June 16, 2005, the Company had no shares of preferred stock outstanding.
The
Board of Directors of the Company has the power to issue shares of preferred
stock from time to time in one or more series. Pursuant to the Company’s
Certificate of Incorporation, the Board of Directors is authorized to fix
or
alter the designations, powers, preferences and other rights and restrictions
of
the preferred stock, including, without limitation, the dividend rights,
conversion rights and voting rights of the preferred stock. The Company’s Board
of Directors can issue preferred stock without any stockholder approval with
voting, conversion and other rights that could adversely affect the voting
power
and other rights of the holders of common stock. The issuance of preferred
stock
in certain circumstances may have the effect of delaying, deferring or
preventing a change in control of the Company, may discourage bids of the
Company’s common stock at a premium over the market price of the common stock
and may adversely affect the market price of its common stock.
Common
stock
As
of
June 16, 2005, the Company had 31,795,415 shares of common stock outstanding,
which were held of record and beneficially by approximately 66 stockholders.
As
of June 16, 2005, there were 10,591,085 shares of common stock underlying
outstanding warrants and 314,230 shares of common stock underlying outstanding
stock options.
The
holders of the Company’s common stock are entitled to one (1) vote per share on
all matters submitted to a vote of its stockholders. In addition, subject
to the
preferences applicable to any shares of preferred stock outstanding, such
holders are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Company’s Board of Directors out of funds
legally available therefore. In the event of the dissolution, liquidation
or
winding up of the Company, the holders of common stock are entitled to share
ratably in all assets remaining after payment of all liabilities of the Company
and any preferences applicable to any shares of preferred stock outstanding.
The
holders of common stock do not have any subscription, redemption or conversion
rights, nor do they have any preemptive or other rights to acquire or subscribe
for additional, unissued or treasury shares.
Pursuant
to the Company’s bylaws, except for any matters which pursuant to Delaware law
require a greater percentage vote for approval, the holders of a majority
of the
outstanding shares of common stock, if present in person or by proxy, are
sufficient to constitute a quorum for the transaction of business at meetings
of
its stockholders. Except as to any matters which pursuant to Delaware law
require a greater percentage vote for approval, the affirmative vote of the
holders of a majority of the shares of common stock present in person or
by
proxy at any meeting (provided a quorum is present) is sufficient to authorize,
affirm or ratify any act or action, including the election of the Company’s
Board of Directors.
The
holders of the Company’s common stock do not have cumulative voting rights.
Accordingly, the holders of more than half of the outstanding shares of common
stock can elect all of the directors to be elected in any election, if they
choose to do so. In such event, the holders of the remaining shares of common
stock would not be able to elect any directors. The purchasers of a majority
of
interests of the units that BHM recently sold in a private placement have
the
right to designate one member to the Board for a period of one year following
the closing of the merger with BHM. The Company’s Board of Directors is
empowered to fill any vacancies on the Board created by the resignation,
death
or removal of directors.
In
addition to voting at duly called meetings at which a quorum is present in
person or by proxy, Delaware law and the Company’s bylaws provide that
stockholders may take action without the holding of a meeting by written
consent
or consents signed by the holders of a majority of the outstanding shares
of the
Company’s capital stock entitled to vote thereon. Prompt notice of the taking of
any action without a meeting by less than unanimous consent of the stockholders
will be given to those stockholders who do not consent in writing to the
action.
The purposes of this provision are to facilitate action by stockholders and
to
reduce the corporate expense associated with special meetings of
stockholders.
Warrants
BHM
issued to certain of the selling security holders three and a half year warrants
to purchase 400,000 shares of its common stock at an exercise price of $0.315.
The Company has agreed to assume these warrants in connection with the
merger.
BHM
issued to certain of the selling security holders three year warrants
exercisable into 2,952,381 shares of its common stock at an exercise price
of
$1.05 (the “Class A Warrants”). The
Company agreed to assume these warrants in connection with the merger. The
Class
A Warrants are currently exercisable into 4,534,856 shares of the Company’s
common stock. The Class A Warrants are redeemable by the Company at a price
of
$.05 per Class A Warrant in the event (i) there is an effective registration
statement covering the shares of common stock underlying the Class A Warrants
and (ii) the closing market price of shares of common stock listed on a national
securities market equals or exceeds $1.575 for twenty of the thirty consecutive
trading days immediately preceding the Company’s notice of redemption to the
holders of the Class A Warrants.
BHM
issued to certain of the selling security holders three year warrants
exercisable into 2,952,381 shares of its common stock at an exercise price
of
$1.575 (the “Class B Warrants”). The Company agreed to assume these warrants in
connection with the merger. The Class B Warrants are currently exercisable
into
4,534,856 shares of the Company’s common stock. The Class B Warrants are
redeemable by the Company at a price of $.05 per Class B Warrant in the event
(i) there is an effective registration statement covering the shares of common
stock underlying the Class B Warrants and (ii) the closing market price of
shares of common stock listed on a national securities market equals or exceeds
$2.10 for twenty of the thirty consecutive trading days immediately preceding
the Company’s notice of redemption to the holders of the Class B
Warrants.
BHM
issued three year warrants to Hunter World Markets, Inc. exercisable into
590,476 shares of its common stock. The Company agreed to assume these warrants
in connection with the merger. These warrants are currently exercisable 906,971
shares of the Company’s common stock.
Stock
Options
In
December 2004, Berman Center LLC granted options to two of its outside
directors, Jan Fawcett and Allan Charles, exercisable into an aggregate of
60,000 units of Berman Center, LLC. These options become exercisable into
204,578 shares of common stock of BHM upon the reorganization of Berman Center
LLC into BHM. The Company agreed to assume the options upon closing of the
merger and these options are now exercisable into an aggregate of 314,230
shares
of the Company’s common stock. The options are fully vested and expire ten years
from the date of grant.
The
price
of the Company’s common stock will likely fluctuate in the future. The stock
market in general has experienced extreme stock price fluctuations in the
past
few years. In some cases, these fluctuations have been unrelated to the
operating performance of the affected companies. Many companies have experienced
dramatic volatility in the market prices of their common stock. The Company
believes that a number of factors, both within and outside its control, could
cause the price of the Company’s common stock to fluctuate, perhaps
substantially. Factors such as the following could have a significant adverse
impact on the market price of its common stock:
| · |
The
Company’s ability to obtain additional financing and, if available, the
terms and conditions of the
financing;
|
| · |
The
Company’s financial position and results of
operations;
|
| · |
Concern
as to, or other evidence of, the safety or efficacy of the Company’s
proposed products and services or its competitors’ products and
services;
|
| · |
Announcements
of technological innovations or new products or services by the
Company or
its competitors;
|
| · |
U.S.
and foreign governmental regulatory
actions;
|
| · |
The
development of litigation against the
Company;
|
| · |
Period-to-period
fluctuations in the Company’s operating
results;
|
| · |
Changes
in estimates of the Company’s performance by any securities
analysts;
|
| · |
Possible
regulatory requirements on the Company’s
business;
|
| · |
The
issuance of new equity securities pursuant to a future
offering;
|
| · |
Changes
in interest rates;
|
| · |
Competitive
developments, including announcements by competitors of new products
or
services or significant contracts, acquisitions, strategic partnerships,
joint ventures or capital
commitments;
|
| · |
Variations
in quarterly operating results;
|
| · |
Change
in financial estimates by securities
analysts;
|
| · |
The
depth and liquidity of the market for the Company’s common
stock;
|
| · |
Investor
perceptions of the Company and Dr. Berman;
and
|
| · |
General
economic and other national
conditions.
|
Delaware
Anti-Takeover Law and Charter and Bylaw Provisions
The
Company is subject to Section 203 of the Delaware General Corporation Law.
This
provision generally prohibits a Delaware corporation from engaging in any
business combination with any interested stockholder for a period of three
years
following the date the stockholder became an interested stockholder, unless:
| · |
prior
to such date, the Board of Directors approved either the business
combination or the transaction that resulted in the stockholder
becoming
an interested stockholder;
|
| · |
upon
consummation of the transaction that resulted in the stockholder
becoming
an interested stockholder, the interested stockholder owned at
least 85%
of the voting stock of the corporation outstanding at the time
the
transaction commenced, excluding for purposes of determining the
number of
shares outstanding those shares owned by persons who are directors
and
also officers and by employee stock plans in which employee participants
do not have the right to determine confidentially whether shares
held
subject to the plan will be tendered in a tender or exchange offer;
or
|
| · |
on
or subsequent to such date, the business combination is approved
by the
Board of Directors and authorized at an annual meeting or special
meeting
of stockholders and not by written consent, by the affirmative
vote of at
least 66 2/3% of the outstanding voting stock that is not owned
by the
interested stockholder.
|
Section
203 defines a business combination to include:
| · |
any
merger or consolidation involving the corporation and the interested
stockholder;
|
| · |
any
sale, transfer, pledge or other disposition of 10% or more of the
assets
of the corporation involving the interested stockholder;
|
| · |
subject
to certain exceptions, any transaction that results in the issuance
or
transfer by the corporation of any stock of the corporation to
the
interested stockholder;
|
| · |
any
transaction involving the corporation that has the effect of increasing
the proportionate share of the stock of any class or series of
the
corporation beneficially owned by the interested stockholder; or
|
| · |
the
receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided
by or
through the corporation.
|
In
general, Section 203 defines an “interested stockholder” as any entity or person
beneficially owning 15% or more of the outstanding voting stock of a
corporation, or an affiliate or associate of the corporation and was the
owner
of 15% or more of the outstanding voting stock of a corporation at any time
within three years prior to the time of determination of interested stockholder
status; and any entity or person affiliated with or controlling or controlled
by
such entity or person.
The
Company’s certificate of incorporation and bylaws contain provisions that could
have the effect of discouraging potential acquisition proposals or making
a
tender offer or delaying or preventing a change in control of the Company,
including changes a stockholder might consider favorable. In particular,
the
Company’s certificate of incorporation and bylaws, as applicable, among other
things, will:
| · |
provide
the Company’s board of directors with the ability to alter its bylaws
without stockholder approval;
|
| · |
provide
for an advance notice procedure with regard to the nomination of
candidates for election as directors and with regard to business
to be
brought before a meeting of
stockholders;
|
| · |
provide
that vacancies on the Company’s board of directors may be filled by a
majority of directors in office, although less than a quorum.
|
Such
provisions may have the effect of discouraging a third-party from acquiring
the
Company, even if doing so would be beneficial to its stockholders. These
provisions are intended to enhance the likelihood of continuity and stability
in
the composition of the Company’s board of directors and in the policies
formulated by them, and to discourage some types of transactions that may
involve an actual or threatened change in control of the Company. These
provisions are designed to reduce the Company’s vulnerability to an unsolicited
acquisition proposal and to discourage some tactics that may be used in proxy
fights. The Company believes that the benefits of increased protection of
its
potential ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to acquire or restructure the Company outweigh the
disadvantages of discouraging such proposals because, among other things,
negotiation of such proposals could result in an improvement of their terms.
However, these provisions could have the effect of discouraging others from
making tender offers for the Company’s shares that could result from actual or
rumored takeover attempts. These provisions also may have the effect of
preventing changes in the Company’s management.
| ITEM
5.02 |
DEPARTURE
OF DIRECTORS AND PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT
OF
PRINCIPAL OFFICERS.
|
Following
the merger with BHM, Samuel P. Chapman, Laura A.C. Berman, Allan Charles,
Alger
Chapman, Stuart Cornew, Jan Fawcett, Robert Goodmen and Michael Romano, each
of
whom are directors of BHM, were appointed to the Board of Directors of the
Company. In addition, the Company appointed Samuel P. Chapman as the Company’s
Chairman and Chief Executive Officer, Laura A.C. Berman as President and
William
McDunn as Chief Financial Officer. Todd Ficeto resigned from all of his officer
and director positions.
For
more
information regarding the directors and principal officers of the Company,
please refer to Item 5.01, above.
In
connection with the reincorporation, the Company adopted new Bylaws to conform
to the corporate laws of the State of Delaware. A copy is attached hereto
as
Exhibit 3.2.
ITEM
9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a)
Financial
Statements of Business Acquired. No financial statements are filed herewith.
The
Company will file the required financial statements by amendment hereto not
later than 71 days after the date this Current Report on Form 8-K must be
filed.
(b)
Pro
Forma
Financial Statements. No pro forma financial statements are filed herewith.
The
Registrant will file the required pro forma financial statements by amendment
not later than 71 days after the date this Current Report on Form 8-K must
be
filed.
|
2.1
|
Agreement
and Plan of Merger dated June 3, 2005 by and among Berman Center,
Inc.,
LBC MergerSub, Inc. and Berman Health and Media, Inc.
|
|
3.1
|
|
|
3.2
|
|
|
4.1
|
Form
of Stock Purchase Warrant (Class A) dated as of June 16, 2005 issued
by
the Registrant to the Warrant Holders indicated on the schedule
thereto.
|
|
4.2
|
Form
of Stock Purchase Warrant (Class B) dated as of June 16, 2005 issued
by
the Registrant to the Warrant Holders indicated on the schedule
thereto.
|
|
4.3
|
Form
of Stock Purchase Warrant dated as of June 16, 2005 issued by the
Registrant to Hunter World Markets, Inc.
|
|
10.1
|
|
|
10.2
|
Placement
Agent Agreement dated April 11, 2005 by and among Berman Health
and Media,
Inc. and Hunter world Markets, Inc.
|
|
99.1
|
Press
Release.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
|
|
| |
BERMAN
CENTER, INC. |
|
|
|
| Date: June
22, 2005 |
By: |
/s/ Samuel
P. Chapman |
| |
|
| |
Name Samuel
P. Chapman
Title: Chief
Executive Officer
|
