UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
———————
FORM
10-K
———————
FOR
ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark
One)
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Annual
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
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for
the fiscal year ended December 31, 2009
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Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
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for
the transition period from _______ to
_______
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Commission
file number: 001-14494.
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Golf Trust of
America, Inc.
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(Exact name of registrant as
specified in its charter)
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Maryland
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33-0724736
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(State
or Other Jurisdiction of Incorporation)
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(I.R.S.
Employer Identification Number)
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10
North Adger’s Wharf
Charleston,
SC 29401
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(843) 723-4653
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(Address
of principal executive offices) (Zip Code)
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(Telephone
number)
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Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
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Name
of each exchange on which registered
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Common
Stock, par value $0.01 per share
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Preferred
Stock Purchase Rights
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Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes
o
No
þ
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes
o
No
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Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes
þ
No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
þ
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer
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o
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o
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Non-accelerated
filer
(Do
not check if a smaller
reporting
company)
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o
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Smaller
reporting company
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þ
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes
o
No
þ
On
February 22, 2010, the registrant Golf Trust of America, Inc., or GTA, had
7,317,163 shares of its common stock outstanding. On June 30, 2009, which
was the last business day of GTA’s most recently completed second fiscal
quarter, GTA’s public float was approximately $5,417,997 (based on 4,334,398
shares of common stock then held by non-affiliates and a closing price that day
of $1.25 per share of common stock on the NYSE Amex ). These public float
calculations exclude shares held on the stated dates by GTA’s officers,
directors and 10% or greater stockholders. (Exclusion from these public float
calculations does not imply affiliate status for any other
purpose.)
Documents
Incorporated By Reference: Certain exhibits to GTA’s prior reports on
Forms 10-K, 10-Q and 8-K, Registration Statements of Employee Stock
Purchase Plan and Employee Stock Option Plans on Forms S-8
(nos. 333-46659 and 333-46657), and Registration Statements on
Form S-11 (nos. 333-15965 and 333-36847) are incorporated by reference
in Part IV hereof.
The Exhibit Index begins on
page 31
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GOLF
TRUST OF AMERICA, INC.
Annual
Report on Form 10-K for the Year Ended December 31, 2009
TABLE
OF CONTENTS
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Page
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Part I
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Item
1.
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Business
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1
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Item
1A.
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Risk
Factors
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2
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Item
1B.
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Unresolved
Staff Comments
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3
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Item
2.
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Properties
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4
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Item
3.
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Legal
Proceedings
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4
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Item
4.
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Submission
of Matters To a Vote of Security Holders
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4
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Part
II
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Item
5.
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Market For Registrant’s
Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity
Securities
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5
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Item
6.
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Selected Financial
Data
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5
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Item
7.
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Management’s Discussion and
Analysis of Financial Condition and Results of Operations
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5
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Item
7A.
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Quantitative
and Qualitative Disclosures About Market Risk
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11
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Item
8.
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Financial
Statements and Supplementary Data
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11
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Item
9.
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Changes In
and Disagreements With Accountants on Accounting and Financial
Disclosure
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11
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Item
9A.
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Controls
and Procedures.
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11
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Item
9B.
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Other
Information
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11
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Part III
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Item 10.
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Directors,
Executive Officers and Corporate Governance
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12
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I
tem 11.
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Executive
Compensation
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20
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Item 12.
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Security Ownership of Certain
Beneficial Owners and Management and Related
Stockholder
Matters
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24
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Item
13.
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Certain
Relationships, Related Transactions and Director
Independence
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26
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Item 14.
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Principal
Accounting Fees and Services
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27
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Part IV
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Item 15.
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Exhibits,
Financial Statement Schedules
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28
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Signatures
And Powers Of Attorney
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29
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Exhibit Index
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31
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Cautionary
Note Regarding Forward-Looking Statements
The
following report contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act.
Forward-looking statements are statements that predict or describe future events
or trends and that do not relate solely to historical matters. All of our
projections in this Annual Report are forward-looking statements. You can
generally identify forward-looking statements as statements containing the words
“believe,” “expect,” “will,” “anticipate,” “intend,” “estimate,” “project,”
“assume” or other similar expressions. You should not place undue reliance on
our forward-looking statements because the matters they describe are subject to
known (and unknown) risks, uncertainties and other unpredictable factors, many
of which are beyond our control. Our forward-looking statements are based on the
limited information currently available to our company and speak only as of the
date on which this report was filed with the Securities Exchange Commission, or
SEC. Our continued internet posting or subsequent distribution of this dated
Annual Report does not imply continued affirmation of the forward-looking
statements included in it. We undertake no obligation, and we expressly disclaim
any obligation, to issue any updates to our forward- looking statements, even if
subsequent events cause our expectations to change regarding the matters
discussed in those statements. Future events are inherently uncertain. Moreover,
it is difficult to predict the ultimate impact on the Company of the pending
merger or if it will close as and when anticipated. Accordingly, our
projections in this Annual Report are subject to uncertainty. Our projections
should not be regarded as legal promises, representations or warranties of any
kind whatsoever. Over time, our actual results, performance or achievements will
likely differ from the anticipated results, performance or achievements that are
expressed or implied by our forward-looking statements, and such difference
might be significant and harmful to our stockholders’ interests. Many important
factors that could cause such a difference are described under the caption “Risk
Factors,” in Item 1A of this Annual Report, which you should review
carefully.
PART I
ITEM 1.
BUSINESS
Significant
Events Since the Filing of Our Last Quarterly Report
The only
significant event occurring since November 3, 2009 (the filing date of our
Form 10-Q for the third quarter of 2009) is our filing of a
definitive proxy statement February 8, 2010 asking our shareholders to approve
the proposed merger and the related 2 for 1 reverse stock-split with Pernix
Therapeutics, Inc. (“Pernix”) and several other related
matters. For further details regarding this merger, see Item 7.
Management’s Discussion and
Analysis of Financial Condition and Results of Operations
herein.
General
Description of Our Business
GTA was
originally formed to capitalize upon consolidation opportunities in the
ownership of upscale golf courses throughout the United
States. Incorporated in Maryland on November 8, 1996, we were
structured as an “UPREIT,” which is a structure in which a publicly held REIT
acts as general partner of an operating partnership. From 1997
through 1999, we acquired interests in 47 golf courses. However, we
have not qualified as a REIT since 2002. Our interests in the golf
courses were held through Golf Trust of America, L.P., a Delaware limited
partnership that we control, and through other wholly-owned subsidiaries of GTA
and Golf Trust of America, L.P. We refer to this partnership and its
subsidiaries as our operating partnership. In this Annual Report, the
term “Company,” “we” or “us” generally includes GTA, the operating partnership
and all of our subsidiaries.
On
February 25, 2001, our board of directors adopted, and on May 22, 2001, the
holders of our common and preferred stock approved, a plan of liquidation (the
“POL”) for GTA. The POL contemplated the sale of all of our assets and the
payment of, or provision for, our liabilities and expenses, and authorized us to
establish a reserve to fund our contingent
liabilities. Subsequently, we sold all 47 (18-hole equivalent)
golf courses in which we once held interests. On January 23,
2009, we completed the sale of the Wildwood Country Club and the Country Club of
Woodcreek Farms by a wholly-owned subsidiary, GTA-Stonehenge, LLC, for
approximately $4,100,000. GTA-Stonehenge, LLC had an approximately
$4,100,000 outstanding debt which was retired with the proceeds of that
sale. Since that date, we have not owned any golf properties or had
any material corporate debt, and we have been focused on the process of
examining other strategic opportunities. As of December 16, 2009, our only
remaining real estate asset is approximately 118 acres of undeveloped land, also
containing commercially harvestable timber, in Charleston County, South
Carolina, which we obtained in the legal settlement of a matter referred to as
the Young Complaints.
At
December 31, 2009, our cash balance was approximately $6,714,000. We
also expect to continue to receive cash payments pursuant to a promissory note
which was executed in the settlement of the Young Complaints due in
installments of $100,000 due May 31, 2008, and three annual payments of $133,333
commencing on January 1, 2009. The Company agreed to extend the due
date for $66,333 of the January 1, 2010 installment to May 1,
2010. In the event the balance of the note is not paid in full by
January 1, 2011, the note provides for an additional installment of
approximately $3,377,000 in principal, plus interest. Also, the board
continues to assess future plans for the land in Charleston County, South
Carolina, which could provide additional liquidity. Due to the
current low interest rates, we realize only a nominal amount of interest income
on our cash balances at the present time.
Our
executive offices are located at 10 North Adger’s Wharf, Charleston, South
Carolina 29401 and our telephone number is (843) 723-GOLF
(4653).
Employees
At
February 22, 2010, our only three employees were the two corporate
full-time employees (our Chief Executive Officer and our Chief Financial
Officer) and one part-time corporate accounting supervisor. Our staff has been
downsized as part of the cost reduction initiatives related to our corporate
overhead. We are the co-employer of our employees as we lease the employees’
services from an independent employee leasing company, or a “professional
employer organization.”
Environmental
Matters
As of January 23, 2009, we no
longer owned any golf properties and, therefore, disclosure under Environmental
Matters is not applicable. We do own a parcel of undeveloped land but are not
aware of any environmental matters as it relates to this asset.
Government
Regulation
As of January 23, 2009, we no
longer own any golf properties and, therefore, disclosure under Government
Regulation is not applicable. We do own a parcel of undeveloped land but
are not aware of any Government Regulation matters as it relates to this
asset.
Competition
As of January 23, 2009, we no
longer own any golf properties and, therefore, disclosure under Competition is
not applicable.
Seasonality
As of January 23, 2009, we no
longer own any golf properties and, therefore, disclosure under Seasonality is
not applicable.
Foreign
Operations
We do not
engage in any foreign operations or derive any revenue directly from foreign
sources.
Web
Site Access to our Periodic SEC Reports
Our
primary Internet address is www.golftrust.com. We make our periodic SEC Reports
(Forms 10-Q and Forms 10-K), current reports (Form 8-K) and our
directors and officers beneficial ownership reports (Forms 3, 4
and 5) available free of charge through our Web site (by hyperlink to
the SEC’s Web site) as soon as reasonably practicable after they are filed
electronically with the SEC. We may from time to time provide important
disclosures to investors by posting them in the news releases section of our Web
site, as allowed by SEC rules. These disclosures may include amendments to and
waivers of our Code of Ethics.
Materials
we file with the SEC may be read and copied at the SEC’s Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. Information on the operation
of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet Web site at www.sec.gov that
contains reports, proxy and information statements, and other information
regarding our company that we file electronically with the SEC.
As
described in Part II, Item 7,
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
, a proposal to terminate
the plan of liquidation was approved at the special meeting on November 8,
2007. There are significant risks associated with terminating the plan of
liquidation and pursuing alternative growth strategies. These risks include, but
are not limited to, the following:
We
may be confronted by significant challenges as we attempt to grow our
operations.
If the
merger with Pernix Therapeutics, Inc. and the merger-related proposals in the
proxy statement we have submitted to our shareholders in connection with the
merger are not approved by our shareholders, we will continue to seek to grow
within areas of historical expertise and areas that our management considers to
be of logical interest, but will also pursue acquisitions and other business
combinations. While we believe that there are numerous potential
target businesses that we could evaluate and pursue, our ability to consummate a
transaction may be limited by our available financial resources. We
may be unable to obtain additional financing, if required, to complete a
business combination or to fund the operations and growth of the target
business, which could compel us to restructure or abandon a particular business
combination.
We may
also issue shares of common stock, preferred stock or debt securities to
complete a business combination. We may grant options or other equity
awards to our new management or the management of a target business in a
business combination, both of which would reduce the equity interest of our
current stockholders and could cause a change in control.
Our
ability to successfully effect a business combination or otherwise expand our
business will be dependent upon the efforts of our key personnel, all of whom
joined us following the termination of the plan of liquidation, or those who
would prospectively join in conjunction with a business
combination.
Finally,
our financial resources may initially dictate that we will only be able to
complete one business combination or growth initiative, which will cause us to
be increasingly dependent on a single business and its products or
services. In this case, we may not be able to satisfactorily
diversify our operations or benefit from the possible spreading of risks or
offsetting of losses, unlike other entities, which may have the resources to
complete several business combinations in different industries or different
areas of a single industry.
Our
ability to utilize NOLs to offset future taxable income will be reduced
significantly, or eliminated, as a result of the proposed merger with Pernix
Therapeutics, Inc. This reduction may be greater in this merger than
for other possible combinations.
We
currently have approximately $85 million in federal income tax net operating
losses (NOLs). How much a combination like a merger reduces the
ability to utilize NOLs to offset future taxes varies depending on the
businesses, assets and share ownership of the of the combining companies and
transaction terms. We believe the reduction in our ability to utilize
NOLs to reduce future taxable income will be greater in connection with this
proposed merger than would be the case with some possible alternative
combinations. The factors that will affect the reduction in our
ability to utilize our NOLs to reduce future taxes are (i) whether a 50% or
greater change in ownership by current 5% stockholders occurs (ii) whether the
percentage of total assets consisting of assets not used in the business exceeds
33-1/3% and (iii) whether the combined company continues to operate GTA's
historical business for at least two years. The reasons we believe
these factors will result in substantial reduction of the combined company's
ability to utilize GTA's NOLs, and the probable amounts of such reductions, are
described in our proxy statement relating to the Special Meeting of Stockholders
filed with the Securities and Exchange Commission on February 8,
2010.
The
market price of our common stock has been, and is likely to continue to be,
highly volatile.
The
average daily trading volume of our common stock has historically been
relatively low and is likely to continue to be low. As a result of
this relatively low trading volume, our stock price can be highly
volatile. Any large sales could have a negative effect on our stock
price and its volatility.
If
we cease to meet NYSE Amex listing standards in the future, the NYSE Amex could
delist our securities from quotation on its exchange, which could limit
investors’ ability to complete transactions in our securities and cause a
decline in the trading price of our common stock.
Our
common stock is listed on the NYSE Amex. The delisting of our common
stock from trading on the NYSE Amex could have adverse consequences, including a
limited availability of market quotations for our common stock, a reduction in
the amount of news coverage for us, a decreased ability to issue additional
securities or obtain additional financing in the future, reduced attractiveness
as a business combination partner, and a decline in the trading price of our
common stock.
If
we are unable to retain certain key executives, our financial results may be
negatively impacted, as well as our ability to remain a timely
filer.
Our
ability to continuously maintain operations depends to a large extent on the
experience and ability of our Chairman, President and Chief Executive Officer,
Michael C. Pearce. We believe that a loss of Mr. Pearce’s services
could materially harm our ability to maximize existing assets and develop
avenues for expansion.
We are
highly dependent on the services of Tracy S. Clifford, our Chief Financial
Officer. If Ms. Clifford were to resign, we would likely seek to hire
a replacement for her, the cost of which would depend on our determination of
the experience and skills that must be possessed by her replacement in light of
our financial condition, our assets, and the complexity of any issues bearing on
us at that time.
If we are
unable to retain these two key executives, ordinary business operations and
regulatory compliance timeliness may be jeopardized. Additionally, we
anticipate that if we do not complete the proposed merger, our ability to retain
these two key employees, and attract new, valuable employees, may be further
hindered.
ITEM
1B.
UNRESOLVED
STAFF COMMENTS
Not
Applicable.
ITEM
2.
PROPERTIES
As of
January 23, 2009, we no longer own any golf course properties. Property
holdings as of February 22, 2010, consist of approximately 118 acres of
undeveloped land in Charleston County, South Carolina (which we obtained titled
to on March 5, 2008 in the final settlement of certain litigation known as
the Young Complaints).
ITEM
3.
LEGAL
PROCEEDINGS
We
currently do not have any outstanding legal proceedings.
ITEM 4.
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
We did
not hold an Annual Meeting of Stockholders in 2009 due to the pending merger
with Pernix Therapeutics, Inc. and the related Special Meeting of Stockholders
currently scheduled to be held March 8, 2010. The directors appointed
to the board of the combined company following consummation of the merger will
serve until our 2010 Annual Meeting of Stockholders.
PART
II
ITEM
5.
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
Market
Information
Our
common stock is listed on the NYSE Amex under the symbol “GTA.” Since our
inception, we completed two underwritten public offerings. On February 22, 2010,
the most recent practicable date prior to the filing of this Annual Report, the
closing price of our common stock as reported on the NYSE Amex was $1.91 per
share. The following table sets forth, for the fiscal quarters indicated, the
high and low intra-day sales prices per share of our common stock as quoted on
the NYSE Amex.
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Price
range of
common
shares
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High
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Low
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2008:
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First
Quarter
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2.27
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1.11
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Second
Quarter
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1.99
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1.45
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Third
Quarter
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1.87
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1.35
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Fourth
Quarter
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1.50
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.30
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2009:
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First
Quarter
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1.36
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0.85
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Second
Quarter
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1.49
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1.03
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Third
Quarter
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1.85
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1.21
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Fourth
Quarter
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2.87
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1.68
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Stockholder
Information
On
February 22, 2010, we had 7,317,163 shares of common stock
outstanding. As of February 22, 2010, those shares were held of
record by 68 registered holders and by an estimated 811 beneficial
owners.
Dividends
We did
not make any distributions for the year ended December 31,
2009.
Recent
Sales of Unregistered Securities
There have been no sales of
unregistered securities since the filing of our 2008 Annual Report on Form 10-K
on March 20, 2009.
Securities
Authorized for Issuance under Equity Compensation Plans
See
Item 12 in this Annual Report for a discussion of securities authorized for
issuance under our equity compensation plans.
ITEM 6.
SELECTED
FINANCIAL DATA
Not
applicable.
ITEM
7.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
following description of our financial condition and results of operations
should be read in conjunction with our Consolidated Financial Statements
appearing elsewhere in this Annual Report.
The
following report contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act.
Forward-looking statements are statements that predict or describe future events
or trends and that do not relate solely to historical matters. All of our
forecasts in this Annual Report are forward-looking statements. You can
generally identify forward-looking statements as statements containing the words
“believe,” “expect,” “will,” “anticipate,” “intend,” “estimate,” “project,”
“assume” or other similar expressions. You should not place undue reliance on
our forward-looking statements because the matters they describe are subject to
known (and unknown) risks, uncertainties and other unpredictable factors, many
of which are beyond our control. Our forward-looking statements are based on the
limited information currently available to our company and speak only as of the
date on which this report was filed with the Securities Exchange Commission, or
SEC. Our continued internet posting or subsequent distribution of this dated
Annual Report does not imply continued affirmation of the forward-looking
statements included in it. We undertake no obligation, and we expressly disclaim
any obligation, to issue any updates to our forward- looking statements, even if
subsequent events cause our expectations to change regarding the matters
discussed in those statements. Future events are inherently uncertain.
Accordingly, our forecasts in this Annual Report, are subject to uncertainty.
Our forecasts should not be regarded as legal promises, representations or
warranties of any kind whatsoever. Over time, our actual results, performance or
achievements will likely differ from the anticipated results, performance or
achievements that are expressed or implied by our forward-looking statements,
and such difference might be significant and harmful to our stockholders’
interests. Many important factors that could cause such a difference are
described under the caption “Risk Factors,” in Item 1A of this Annual
Report, which you should review carefully.
Overview
Golf
Trust of America, Inc. was incorporated in Maryland on November 8,
1996. As previously discussed, on February 25, 2001, our board of directors
adopted, and on May 22, 2001, the holders of our common and preferred stock
approved, the POL for GTA. The POL contemplated the sale of all of our assets
and the payment of, or provision for, our liabilities and expenses, and
authorized us to establish a reserve to fund our contingent
liabilities. Subsequently, we sold all 47 (18-hole equivalent)
golf courses in which we once held interests. As of February 22,
2010, our only remaining real estate asset is the undeveloped land obtained in
the settlement of certain litigation formerly known as the Young
complaints. However, as previously announced and described more fully
below, we have recently entered in to an Agreement and Plan of Merger with
Pernix Therapeutics, Inc. (“Pernix”) as a strategic option to maximize
stockholder value.
Termination
of the Plan of Liquidation and Execution of Merger Agreement
The Board
adopted a resolution declaring that the termination of the Plan of Liquidation,
or the POL, was in the best interest of the Company’s stockholders and the
Company’s stockholders approved such proposal to terminate the POL on
November 8, 2007.
The Board
believes that the termination of the POL affords the Company flexibility in
maximizing value for its stockholders. Operating the Company as a going concern
outside of the POL allows the Company to pursue alternative business strategies,
including a merger, capital stock exchange, asset acquisition or other growth
initiative which resulted in the execution of the Agreement and Plan of Merger
noted above.
On October 6, 2009, we entered
into an Agreement and Plan of Merger with Pernix. Under the Agreement, a
wholly owned subsidiary of the Company will merge with Pernix and we will issue
41,800,000 shares of our common stock to Pernix’s stockholders, representing
approximately 84% of the combined Company’s outstanding common stock on a fully
diluted basis. On the closing date of the Agreement, (i) Pernix will
become a wholly owned subsidiary of the Company, (ii) the President of Pernix
will be appointed President and Chief Executive Officer of the Company and (iii)
our Board will be reconstituted, with three Board members selected by Pernix and
two of our existing directors will be retained.
The
transaction is subject to approval by the Company’s stockholders, regulatory
approvals and other customary closing conditions. Upon closing, it is
anticipated that the combined company will adopt the name Pernix Therapeutics
Holdings, Inc. The Company will pursue approval from NYSE Amex for
continued listing status, which is a condition to closing.
There can
be no assurance that we will successfully close this transaction. We
have limited financial and management capacity, are competing with organizations
possessing far greater resources, and are subject to specific industry and macro
economic factors, many of which may prove outside of our control or sphere of
influence.
Discontinued
Operations
On
January 23, 2009, the Company completed the sale of the business and the
related assets of the Country Clubs of Wildewood and Woodcreek Farms, or
Stonehenge, representing two private golf courses operating under one club
structure located in South Carolina. The sale was made to WCWW Committee, LLC,
pursuant to the Purchase and Sale Agreement dated September 26, 2008 (the
“Agreement”). The rights of the WCWW Committee, LLC were assigned to The Members
Club at Woodcreek and Wildewood, which completed the transaction as
Purchaser.
The
purchase price received by us from the Purchaser was (a) approximately
$4,100,000 in cash subject to certain credits, adjustments and prorations
pursuant to the Agreement, (b) the assumption of certain liabilities and
(c) contingent value rights. The Agreement provided for a post-closing
settlement sixty days from the closing date which has been concluded. The
Company realized a gain on this sale of approximately $1,158,000.
The
Company’s outstanding balance of $4,100,000 on its revolving credit line with
Textron Financial Corporation (“Textron”) was paid in full concurrent with the
closing of this sale. This loan was collateralized by a security interest in
Stonehenge. With the retirement in full of the Textron revolving credit line,
the Company has no outstanding corporate indebtedness.
At
December 31, 2009, the Company’s only remaining real estate asset is the
undeveloped land obtained in the legal settlement of a matter referred to as the
Young Complaints (see Note 4 to our Notes to Consolidated Financial Statements
in Item 15 of this Annual Report).
The
operations of Stonehenge are accounted for as discontinued operations as of the
signing of the purchase and sale agreement on September 26, 2008. The title to
Stonehenge was held by Golf Trust of America, L.P., a Delaware limited
partnership and the Company’s operating partnership.
Other
Matters
On
March 3, 2009, the Company received certification of inadvertent
acquisition from Odyssey Value Advisors, LLC, pertaining to Company shares
acquired in excess of a threshold described in the Shareholder Rights Agreement
of 1999. On March 9, 2009, the Company board of directors, with William
Vlahos recused due to his position as general partner of Odyssey, unanimously
approved a resolution to accept the certification of inadvertent acquisition
from Odyssey. The aforementioned resolution incorporates modification to vesting
schedule for stock options originally issued on January 23, 2008, to
Mr. Vlahos for service as a member of the board of directors. This
modification specifies that said options will vest upon the later to occur of
(a) the date on which such vesting would not cause Odyssey to become an
Acquiring Person under the Rights Agreement, and (b) the date on which such
options would have vested in accordance with the original vesting
schedule.
On
October 9, 2009, in consideration of the Company’s minimal number of employees
and the pending merger with Pernix, the Company’s Board voted to terminate its
401k plan as an employee benefit and the plan assets were distributed as
instructed by the participants as of December 31, 2009.
Stock
Repurchase Authorization
On
November 11, 2008, the Company’s Board of Directors authorized the repurchase of
up to $500,000 in shares of the Company's common stock. Stock
repurchases under this authorization may be made through open market and
privately negotiated transactions at times and in such amounts as management
deems appropriate. The timing and actual number of shares repurchased will
depend on a variety of factors, including price, cash balances, general business
and market conditions, the dilutive effects of share-based incentive plans,
alternative investment opportunities and working capital needs. The stock
repurchase authorization does not have an expiration date and may be limited or
terminated at any time without prior notice. The purchases will be funded from
available cash balances and repurchased shares will be returned to the status of
authorized but un-issued shares of common stock. No shares have been
repurchased under this authorization as of February 22, 2010.
Application
of Critical Accounting Policies
Long-lived
Assets
The Company reviews property and
equipment for impairment whenever events or changes in circumstances indicate
the carrying amount of an asset may not be recoverable. This analysis
is highly subjective. If the property and circumstances indicate the carrying
amount of an asset may not be recoverable, the asset is considered to be
impaired. If property and equipment are considered to be impaired,
the impairment to be recognized equals the amount by which the carrying value of
the asset exceeds its fair market value. During 2009, we recognized
an impairment charge of approximately $80,000 on the Company’s only remaining
real estate asset.
Income Taxes
The
Company provides for income taxes using the asset and liability method. Deferred
tax assets or liabilities at the end of each period are determined using the
enacted tax rates. Income tax expense will increase or decrease in the same
period in which a change in tax rates is enacted. The Company records a
valuation allowance against deferred tax assets when the weight of available
evidence indicates it is more likely than not that the deferred tax asset will
not be realized at its initially recorded value; however, due to the high degree
of subjectivity in these estimates, they may change based on expectations in the
future.
Stock
based compensation
Compensation
expense is determined by reference to the fair market value of an award on the
date of grant and is amortized on a straight-line basis over the vesting period.
In December 2004, the Financial Accounting Standards Board (“FASB”) issued
guidance under ASC 718,
Accounting for Stock Options and
Other Stock Based Compensation
, which was effective for interim and
annual reporting periods beginning after December 15, 2006. As
discussed in Note 7 to the Notes to the Company’s Consolidated Financial
Statements, the Company uses the Black-Sholes-Merton model to calculate the
value of the option. Several inputs utilized in this calculation are
subjective. ASC 718 establishes standards for the accounting for
transactions in which an entity exchanges its equity instruments for goods or
services.
Recent
Accounting Pronouncements
See Note
2—“Summary of Significant Accounting Policies” of our Notes to Consolidated
Financial Statements in Item 15 of this Annual Report.
Discontinued
Operations
As
discussed in Note 1 of our Notes to Consolidated Financial Statements in Item 15
of this Annual Report, the Company signed a purchase and sale agreement for the
disposition of Stonehenge on September 26, 2008; therefore, the operations
of Stonehenge were accounted for as discontinued operations as of the signing of
this agreement.
Membership Initiation Fees
-
Certain memberships previously sold at Stonehenge have initiation fees totaling
approximately $1,326,000 that were refundable (without interest) based on
specific conditions generally upon conclusion of a thirty-year required
membership term, as defined in the Club Membership Manual. These refundable
initiation fees may have been refundable prior to the expiration of the
thirty-year term under specific membership replacement conditions. The estimated
present value of these potential refunds was $317,000, which was recorded as an
accrued liability at December 31, 2008. The calculation of the
net present value related to this obligation is highly subjective.
An
initiation fee was required to be paid on all memberships at Stonehenge. The
majority of the membership fees were not refundable and were deferred and
recognized over the average expected life of an active membership. Membership
initiation fees were deferred and recognized as revenue on a straight-line basis
over the average expected life of an active membership, which based on
historical information was deemed to be an average nine years for all membership
categories.
Executive
Summary
We
reported a net loss of approximately $521,000 ($0.07 per basic share) and
$538,000 ($0.07 per basic share) for the years ended December 31, 2009 and
2008. Given that Stonehenge, a significant majority of our operations, was
considered discontinued operations as of September 26, 2008 and was sold on
January 23, 2009, consolidated results of operations and consolidated cash
flow comparisons with prior periods are not meaningful and, thus, are not
provided. However, the summarized comparative operating results for Stonehenge
for the year ended December 31, 2008 and the period January 1, 2009 to
January 22, 2009 which are included in our consolidated financial results are
provided in the table below.
Summary
results of discontinued operations for the period January 1, 2009 to January 22,
2009 and for the year ended December 31, 2008.
|
|
Period
January 1,
2009
to
January
22,
2009
|
|
|
Year
Ended
December
31, 2008
|
|
Revenues
from discontinued operations
|
|
$
|
148,829
|
|
|
$
|
4,064,669
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from discontinued operations, net of tax
|
|
$
|
(130,336
|
)
|
|
$
|
(716,308
|
)
|
|
|
|
|
|
|
|
|
|
Gain
on sale of discontinued operations, net of tax
|
|
$
|
1,158,414
|
|
|
$
|
—
|
|
Results
of Operations
Our
consolidated net loss for the years ended December 31, 2009 and 2008 is
primarily due to the fact that the operations of the Company
including Stonehenge in 2008 did not realize sufficient net income to cover the
public company operating costs of the corporate office. The operating expenses
of the corporate office were; however, offset by the recognition of a gain from
(i) the sale of Stonehenge in the year ended December 31, 2009 of approximately
$1,158,000 and (ii) the settlement of certain litigation formerly
known as the Young Complaints in the year ended December 31, 2008. In connection
with this settlement, a note receivable was recorded at its estimated fair value
on the date of the settlement of approximately $432,000 and undeveloped land and
timber was recorded at its estimated fair value of approximately
$1,032,000. Further, in 2008, the Company recognized approximately
$177,000 in income from the resolution of the property tax lawsuit related to a
former resort property which we owned until it was sold on July 16, 2007.
For the year ended December 31, 2009 an impairment charge of
$80,000 was recorded against the value of the undeveloped to adjust
the value of the land to its estimated fair value based on a current
appraisal. Net interest income for the year ended December 31,
2009 and 2008 was approximately $96,000 and $188,000, respectively.
For the
years ended December 31, 2009 and 2008, operating expenses from the
continuing operations of the Company totaled approximately $1,566,000 and
$1,644,000, respectively. These operating expenses for the years ended December
31, 2009 and 2008, primarily consisted of approximately
(i) $128,000 and $251,000 in tax, audit and accounting consulting fees,
(ii) $424,000 and $476,000 in wages and benefits, (iii) $47,000 and
$109,000 in legal fees, (iv) $156,000 and $195,000 in directors and
officers insurance, (v) $-0- and $183,000 in settlement fees and expenses
related to certain claims now resolved, (vi) $178,000 and $145,000 in
stock option expense, (vii) $124,000 and $133,000 for shareholder related
expenses such as the annual NYSE Amex fee, shareholder transfer agent fees,
board fees and printing costs for SEC required reports, $394,000 and
$12,000 expenses incurred in our efforts to identify a growth
opportunity and execute the merger with Pernix such as legal, accounting and
travel incurred for this purpose and (viii) $115,000 and $140,000 in other
fees and operating expenses such as rent and utilities, information technology
support, travel, certain annual taxes and fees, depreciation and other
miscellaneous operating expenses.
Employee
Stock Options and Awards
See Note
7—“Stock Options and Awards” of our Notes to Consolidated Financial Statements
in Item 15 of this Annual Report.
Inflation
Inflation
has not had a significant impact on us. As operating costs and expenses
increase, we generally attempted to offset the adverse effects of increased
costs by increasing prices in line with industry standards. Now that we have
sold Stonehenge, until we make an acquisition, the impact of inflation should
continue to be insignificant.
Seasonality
Seasonality
has not had a significant impact on us. Since Stonehenge was a private
membership club, the monthly member dues were the same throughout the year;
however, swim and tennis revenues and expenses were higher in the summer
months. Now that we have sold Stonehenge, until we complete the
pending merger, the impact of seasonality should continue to be
insignificant.
Liquidity
and Capital Resources
At
December 31, 2009, our cash balance was approximately
$6,714,000. In April 2008, we received the escrowed funds from the
Resort sale in the amount of $2,000,000 plus accrued interest of approximately
$31,000. We also expect to continue to receive cash payments pursuant to a
promissory note which was executed in the settlement of the Young Complaints
which is due in installments of $100,000 due May 31, 2008, and three annual
payments of $133,333 commencing on January 1, 2009. The Company
agreed to extend the due date for $66,333 of the January 1, 2010 installment to
May 1, 2010. In the event the balance of the note is not paid in full
by January 1, 2011, the note provides for an additional installment of
approximately $3,377,000 principal, plus interest. Also, the Board continues to
assess future plans for the land that we obtained title to in the settlement of
the Young Complaints (approximately 118 acres of undeveloped land in Charleston
County, South Carolina), which could provide additional liquidity.
We had a
$4,200,000 revolving credit line with Textron Financial Corporation (“Textron”),
which was paid in full concurrent with the closing of the sale of Stonehenge.
With the retirement in full of the Textron revolving credit line, the Company
has no outstanding corporate indebtedness.
Until the
pending merger with Pernix closes, we intend to pay corporate overhead from
current cash balances. We believe that we possess adequate liquidity and capital
resources to conduct our operations. During 2008, several cost
reduction initiatives were implemented at corporate headquarters to reduce
operating expenses including reduction of professional fees which have decreased
since we are no longer under the plan of liquidation, reduction of Board fees,
consolidation of office space, reduction of staff and elimination of certain
services. However, the corporate overhead expenses for 2009 have been impacted
by expenses incurred in the efforts to identify and execute a growth opportunity
which has culminated in the pending merger with Pernix.
Off
Balance Sheet Arrangements
As of
December 31, 2009, we have no unconsolidated subsidiaries.
We do not
have any relationships with unconsolidated entities or unconsolidated financial
partnerships of the type often referred to as structured finance or special
purpose entities, i.e., unconsolidated entities established for the purpose
of facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes. Further, we have not guaranteed any obligations of
unconsolidated entities nor do we have any commitment or intent to provide
additional funding to any such entities. Accordingly, we believe we are not
materially exposed to any market, credit, liquidity or financing risk that could
arise if we had engaged in such relationships.
Contractual
Obligations, Contingent Liabilities and Commitments
Operating Lease
Agreements.
At the Corporate office, we have lease agreements for our
office space and certain office equipment. Our lease agreement for office space
terminated on September 30, 2009 and since that date we occupy our space on a
month-to-month basis. At December 31, 2009, we had a
lease agreement for certain office equipment which expired on January 29,
2010. We are on a month-to-month basis until March 31, 2010 with a
thirty-day written notice requirement for termination. We have not
entered in to new lease agreements due to our pending merger with Pernix which
is expected to close during March 2010.
ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM
8.
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
The
consolidated financial statements and supplementary data required by
Regulation S-X are included in this Annual Report commencing on
page 29.
ITEM
9.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM
9A.
CONTROLS
AND PROCEDURES
Based on
the evaluation required by 17 C.F.R. Section 240.13a-15(b) or 240.15d-15(b)
of Company’s disclosure controls and procedures (as defined in 17 C.F.R.
Sections 240.13a-15(e) or 240.15d-15(e), the Company’s principal executive
officer and principal financial officer concluded that such controls and
procedures, as of the end of the period covered by this annual report, were
effective.
Management’s
Annual Report on Internal Control Over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act
Rule 13a-15(f). A system of internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles.
Under the
supervision and with the participation of management, including the principal
executive officer and the principal financial officer, the Company’s management
has evaluated the effectiveness of its internal control over financial reporting
as of December 31, 2009 based on the criteria established in a report
entitled “Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission” and the interpretive
guidance issued by the Commission in Release No. 34-55929. Based on this
evaluation, the Company’s management has evaluated and concluded that the
Company’s internal control over financial reporting was effective as of
December 31, 2009.
This
annual report does not include an attestation report of the Company’s
independent registered public accounting firm regarding internal control over
financial reporting because management’s report was not subject to attestation
by the Company’s registered public accounting firm pursuant to temporary rules
of the Securities and Exchange Commission that permit the Company to provide
only management’s report in this annual report.
There has
been no change in the Company’s internal control over financial reporting during
the most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
ITEM
9B.
OTHER
INFORMATION
See
earlier discussion of the matters relevant to this Item under the caption “
Significant Events since the filing
of our last Quarterly Report
,” in Part I, Item 1 of this Annual
Report on Form 10-K.
PART
III
ITEM
10.
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Role
of the Board of Directors
The Board
of Directors, which is elected by the stockholders, is the ultimate
decision-making body of the Company, except with respect to those matters
reserved to the stockholders. It selects the senior management team, which is
charged with the conduct of the Company’s business. Having selected the senior
management team, the Board acts as an advisor and counselor to senior management
and ultimately monitors its performance. See “Executive Officers” below for more
information about the senior management team.
Composition
of the Board of Directors
At
present, the Board of Directors consists of seven seats. The five directors who
were elected at the 2007 Annual Meeting of Stockholders on December 14,
2007 were re-elected at the 2008 Annual Meeting of Stockholders on
December 15, 2008 to serve another one year term. These directors are
Messrs. Loeb, Pearce, Couchman, Gottlieb and Vlahos for whom more
complete information is provided below. Two seats will remain vacant, to be
filled by the Board of Directors in accordance with our bylaws.
Attendance
of Directors at Board of Directors, Committee and Stockholders
Meetings
The Board
of Directors met five times in fiscal year 2009. The Audit and Compensation
Committees met four and one time(s), respectively, in fiscal year
2009. The Nominating Committee did not meet during 2009 due to the
merger announcement on October 8, 2009 and the related stipulation in the merger
agreement regarding composition of the Board of Directors which was considered
by the full Board of Directors. All members of the Board of Directors
during fiscal year 2009 either attended or participated by telephone in 100% of
the total number of meetings of the Board of Directors and of the committees of
the Board of Directors of which he was a member.
Set forth
below is information about our directors and executive officers.
Name
|
|
Age
|
|
Year First
Appointed
or Elected
to
the
Board
|
|
Position,
Principal Occupation,
Business
Experience and Directorships
|
|
|
|
|
|
|
|
Jan
H. Loeb
|
|
51
|
|
2006
|
|
Mr.
Loeb has been an independent director under the rules of the NYSE Amex
since November 17, 2006 and Chairman of the Audit Committee since
October 10, 2007. He is the Audit Committee’s financial
expert and also serves on the Nominating Committee. Mr. Loeb is currently
a portfolio manager for Leap Tide Capital Management, Inc., a position he
has held since February 2005. From February 2004
through January 2005, Mr. Loeb was a portfolio manager for Chesapeake
Partners. From January 2002 through December 2004,
Mr. Loeb was a Managing Director of Jefferies & Company, Inc., an
investment banking firm based in New York City. From 1994
through 2001, Mr. Loeb was a Managing Director of Dresdner Kleinwort and
Wasserstein, Inc., an investment banking firm based in New York City,
which was formerly known as Wasserstein Perella & Co.,
Inc. Mr. Loeb also serves on the board of directors of American
Pacific Corporation, a chemical and aerospace corporation, and TAT
Technologies, LTD, which provides services and products to the military
and commercial aerospace and ground defense industries. He
serves on the boards of numerous charitable organizations. Mr.
Loeb holds a Bachelor of Business Administration from Bernard M. Baruch
College.
|
|
|
|
|
|
|
|
Michael
C. Pearce
|
|
48
|
|
2007
|
|
Mr.
Pearce has been a director since September 17, 2007 and Chief
Executive Officer and President since November 8, 2007. He
has been Chairman of the board of directors since December 17,
2007. Mr. Pearce has been a private investor in various
companies since 2002, with emphasis in distressed securities of
publicly-traded entities. From late 1999 through 2001, he
served as Chief Executive Officer of iEntertainment
Network. From 1996 to 1998, he served as Senior Vice President
of Sales and Marketing of publicly-traded VocalTec Communications, later
returning in 1999 in a consulting capacity to its Chairman on matters
pertaining to strategic alternatives, business development and mergers and
acquisitions. From 1983 to 1996, he was employed in various
technology industry management positions, including Senior Vice President
of Sales and Marketing at Ventana Communications, a subsidiary of Thomson
Corporation, Vice President of Sales at Librex Computer Systems, a
subsidiary of Nippon Steel, and National Sales Manager at Hyundai
Electronics America. From 1979 to 1983, he attended Southern
Methodist University. Mr. Pearce also serves on the boards of
directors of AVP, Inc. and Spatializer Audio Laboratories,
Inc.
|
Name
|
|
Age
|
|
Year First
Appointed
or Elected
to
the
Board
|
|
Position,
Principal Occupation,
Business
Experience and Directorships
|
Jonathan M. Couchman
|
|
40
|
|
2007
|
|
Mr.
Couchman has been an independent director under the rules of the NYSE Amex
since December 14, 2007. Mr. Couchman serves on the Audit, Nominating
and Compensation Committees. He is the Managing Member of Couchman Capital
LLC, which is the investment manager of Couchman Investments LP and
Couchman International Ltd., private partnerships established in
2001. Couchman Capital LLC is also the general partner of
Couchman Partners LP, a private investment partnership established in
2001. In addition, Mr. Couchman is the President of Couchman
Advisors, Inc., a management advisory company. Mr. Couchman
currently serves as Chief Executive Officer and Chairman of the board of
directors of Footstar Inc., formerly a national footwear
retailer. He has held the position of Chairman of the board
since February 2006 and was appointed Chief Executive Officer in
January 2009. He is a member of the CFA Institute
and the New York Society of Security Analysts and holds a Bachelor of
Science in Finance from the California State University at
Chico.
|
|
|
|
|
|
|
|
Jay A. Gottlieb
|
|
65
|
|
2007
|
|
Mr.
Gottlieb has been an independent director under the rules of the NYSE Amex
since December 14, 2007 and Chairman of the Compensation Committee
since December 17, 2007. He also serves on the Audit
Committee. He has been a private investor in various companies
since 1998. He is involved in analysis and investment in
undervalued special situations and shell corporations. He
presently owns between 5% and 22% of 10 public companies and is a member
of the board of directors of Spatializer Audio Laboratories, Inc. and
Reliability, Inc. From 1992 to 1998 he was the editor of an
investment service that analyzed and published extensive data on companies
planning initial public offerings. From 1977 to 1991
Mr. Gottlieb was the President and Chairman of the board of The
Computer Factory, Inc., a NYSE listed nationwide organization involved in
retail and direct sales, servicing and leasing of personal
computers. From 1969 to 1988 he was President of National
Corporate Sciences, Inc., a registered investment advisory
service. Mr. Gottlieb holds a Bachelor of Arts from New York
University.
|
|
|
|
|
|
|
|
William Vlahos
|
|
44
|
|
2007
|
|
Mr.
Vlahos has been a member of the board of directors since December 14,
2007. He is an independent director under the rules of the NYSE
Amex, and serves as Chairman of the Nominating Committee and a member of
the Compensation Committee. He is the portfolio manager and
managing director of Odyssey Value Advisors, LLC. Odyssey Value
Advisors is a San Francisco based hedge fund investing in "deep value"
securities, special situations and other portfolio positions believed to
be trading at significant discount to intrinsic value. He is a
past president and past board member of The Guardsmen, a San Francisco
based non-profit serving at-risk children and a past board member of the
Koret Family House serving critically ill children. He holds a
Bachelor of Arts from the University of California, Los
Angeles.
|
|
|
|
|
|
|
|
Tracy S. Clifford
|
|
41
|
|
—
|
|
On
January 18, 2008, Ms. Clifford was appointed our Chief Financial
Officer. Previously, Ms. Clifford served as our Principal
Accounting Officer since February 5, 2007, and as our Corporate Secretary
since February 20, 2007. Ms. Clifford had been our Controller
since September 1999. Before joining GTA, Ms. Clifford
served as a Director of Finance (February 1999 to September 1999) and
Manager of Accounting and Financial Reporting (May 1995 to February 1999)
at United Healthcare of Georgia in Atlanta. From June 1993 to
May 1995, Ms. Clifford served as Manager of Accounting (January 1994 to
May 1995) and Senior Accountant (June 1993 to January 1994) at North
Broward Hospital District in Fort Lauderdale, Florida. Ms.
Clifford began her career at Deloitte & Touche in Miami, Florida,
where she was an auditor primarily for clients in the healthcare industry
from September 1991 to June 1993. Ms. Clifford holds a Bachelor of Science
degree in Accounting from the College of Charleston and a Master’s degree
in Business Administration with a concentration in finance from Georgia
State University. Ms. Clifford is a member of the South
Carolina Association of CPAs and the American Institute of CPAs and serves
as an adjunct faculty member in the School of Business and Economics at
the College of Charleston.
|
Committees
Audit
Committee.
Role.
Under its charter, the
Audit Committee’s responsibilities include:
|
·
|
The
appointment, compensation, retention, evaluation and oversight of the work
of the Company’s independent registered public accounting
firm.
|
|
·
|
Reviewing
the experience and qualifications of the senior members and lead partner
of the independent registered public accounting
firm.
|
|
·
|
Reviewing,
evaluating and approving the annual engagement proposal of the independent
registered public accounting firm.
|
|
·
|
The
pre-approval of all auditing services and all non-audit services permitted
to be performed by the independent registered public accounting
firm.
|
|
·
|
Determining
the independence of the Company’s independent registered public accounting
firm.
|
|
·
|
Reviewing
any audit problems or difficulties the independent registered public
accountants may encounter in the course of their audit
work.
|
|
·
|
Reviewing
all proposed “related person” transactions for potential
conflict-of-interest situations (see “Related Person Transaction Approval
Policy” below).
|
|
·
|
Reviewing
and discussing with management and the Company’s independent registered
public accounting firm annual audited financial statements, quarterly
financial statements, material accounting principles applied in financial
reporting and any other release of financial
information.
|
|
·
|
Reviewing
and discussing with management the Company’s policies with respect to risk
assessment and risk management.
|
|
·
|
Reviewing
the integrity, adequacy and effectiveness of Golf Trust’s accounting and
financial controls, both internal and external, with the assistance of
management and the Company’s independent registered public accounting
firm.
|
|
·
|
Discuss
with the Chief Executive Officer and Chief Financial Officer of the
Company the processes involved in, and any material required as a result
of, their Annual Report on Form 10-K and Quarterly Report on
Form 10-Q certifications regarding the operation of the internal
controls of the Company.
|
|
·
|
Reviewing
reports from management and the independent registered public accountants
relating to the status of compliance with laws, regulations and internal
procedures.
|
|
·
|
Approving
and monitoring the Company’s compliance with the Company’s Code of
Business Conduct and Ethics, which covers the conduct and ethical behavior
of the directors, officers and employees of, and consultants and
contractors to, the Company and its
subsidiaries.
|
|
·
|
Establishing
procedures for the receipt, retention and treatment, on a confidential
basis, of complaints received by the
Company.
|
Further
detail about the role of the Audit Committee may be found in “Audit Committee
Report” below.
Composition.
Our Audit
Committee consists of Messrs. Loeb, Couchman, and Gottlieb, each of whom is
independent under the rules of the NYSE Amex. Each member of our Audit Committee
also meets the criteria for independence set forth in Rule 10A-3(b)(1)
under the Exchange Act of 1934, as amended. Mr. Loeb was appointed Chairman
of the Audit Committee on October 10, 2007. None of the members of our
audit committee has participated in the preparation of our consolidated
financial statements or those of our subsidiaries during the past three years,
and all are able to read and understand fundamental financial statements and are
financially literate under the applicable rules of the NYSE Amex.
Audit Committee Financial
Expert.
The Securities and Exchange Commission defines “an audit
committee financial expert” as a person who has the following
attributes:
|
·
|
An
understanding of accounting principles generally accepted in the United
States and financial statements;
|
|
·
|
The
ability to assess the general application of those principles in
connection with the accounting for estimates, accruals and
reserves;
|
|
·
|
Experience
preparing, auditing, analyzing or evaluating financial statements that
present a breadth and level of complexity of accounting issues that are
generally comparable to the breadth and complexity of issues that can
reasonably be expected to be raised by the Company’s consolidated
financial statements, or experience actively supervising one or more
persons engaged in such activities;
|
|
·
|
An
understanding of internal control over financial reporting;
and
|
|
·
|
An
understanding of audit committee
functions.
|
The Securities and Exchange Commission
specifies that these attributes must be obtained through:
|
·
|
Education
and experience as a principal financial officer, principal accounting
officer, controller, public accountant or auditor or experience in one or
more positions that involve the performance of similar
functions;
|
|
·
|
Experience
actively supervising a principal financial officer, principal accounting
officer, controller, public accountant, auditor or person performing
similar functions;
|
|
·
|
Experience
overseeing or assessing the performance of companies or public accountants
with respect to the preparation, auditing or evaluation of financial
statements; or
|
|
·
|
Other
relevant experience.
|
The Board
of Directors has determined that Mr. Loeb is an “audit committee financial
expert” for purposes of the Securities and Exchange Commission’s
rules.
Charter.
The charter of the
Audit Committee was filed as Appendix A to the Company’s Definitive Proxy
Statement on Schedule 14A filed on October 16, 2006.
Audit
Committee Report
The Audit
Committee reviews the Company’s financial reporting process on behalf of the
Board of Directors. Management has the primary responsibility for the
consolidated financial statements and the reporting process, including the
system of internal controls.
In this
context, the Audit Committee has met and held discussions with management
regarding the assessment of the Company’s internal controls over financial
reporting. The Audit Committee has also met and held discussions with management
and the independent registered public accounting firm regarding the fair and
complete presentation of the Company’s results. The Audit Committee has
discussed significant accounting policies applied by Golf Trust in its
consolidated financial statements, as well as alternative treatments. Management
represented to the Audit Committee that the Company’s consolidated financial
statements were prepared in accordance with accounting principles generally
accepted in the United States of America, and the Audit Committee has reviewed
and discussed the consolidated financial statements with management and the
independent registered public accounting firm. The Audit Committee discussed
with the independent registered public accounting firm matters required to be
discussed by Statement on Auditing Standards No. 114.
In
addition, the Audit Committee reviewed and discussed with the independent
registered public accounting firm the auditor’s independence from Golf Trust and
its management. As part of that review, the Audit Committee received the written
disclosures and letter required by Public Company Accounting Oversight Board, or
PCAOB, Rule 3526 (Communication with Audit Committees Concerning
Independence) and by all relevant professional and regulatory standards relating
to the independent registered public accounting firm’s independence from the
Company. The Audit Committee also has considered whether the independent
registered public accounting firm’s provision of non-audit services to Golf
Trust is compatible with the auditor’s independence. The Audit Committee has
concluded that the independent registered public accounting firm is independent
from the Company and its management.
The Audit
Committee reviewed and discussed Company policies with respect to risk
assessment and risk management. The Audit Committee discussed with the Company’s
independent registered public accounting firm the overall scope and plans for
their respective audits.
The Audit
Committee meets with the independent registered public accounting firm, with and
without management present, to discuss the results of their examinations, and
the overall quality of the Company’s financial reporting.
In
reliance on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors, and the Board of Directors has approved,
that the audited consolidated financial statements be included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2009, for
filing with the Securities and Exchange Commission.
The Audit
Committee:
Jan H.
Loeb (Chairman)
Jonathan
M. Couchman
Jay
Gottlieb
The Audit
Committee Report does not constitute soliciting material, and will not be deemed
to be filed or incorporated by reference into any other Golf Trust filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent that the Company specifically incorporates the
Audit Committee Report by reference therein.
Compensation
Committee.
Role.
Under its charter, the
Compensation Committee’s responsibilities include:
|
·
|
Reviewing
the compensation practices and policies of the Company to ensure they
provide appropriate motivation for corporate performance and increased
stockholder value.
|
|
·
|
The
approval (or recommendation, where stockholder approval is required) of
any adoption, amendment or termination of compensation programs and
plans.
|
|
·
|
Overseeing
the administration of the Company’s compensation programs and plans,
including the determination of the directors and employees who are to
receive awards and the terms of those
awards.
|
|
·
|
The
periodic survey of compensation practices of comparable
companies.
|
|
·
|
The
annual review and approval of compensation and benefits to directors and
senior executives.
|
|
·
|
The
review and approval of compensatory agreements and
benefits.
|
|
·
|
The
review and approval of the Company’s policies and procedures with respect
to expense accounts and
perquisites.
|
|
·
|
The
review and approval of annual corporate goals and objectives for the
Company’s Chief Executive Officer.
|
|
·
|
The
review of the performance of the Company’s Chief Executive Officer with
regard to such goals and objectives with the independent members of the
Board of Directors and communication of the evaluation of the Board of
Directors to the Company’s Chief Executive
Officer.
|
|
·
|
The
review and recommendation to the Board of Directors of the “Compensation
Discussion and Analysis” to be included, as applicable, in the Company’s
Annual Report on Form 10-K, annual proxy statement or any information
statement.
|
|
·
|
Composition
of the “Compensation Committee Report” to be included in the Company’s
annual proxy statement.
|
|
·
|
Analyzing
and making recommendations to the Board of Directors regarding the
directors’ and officers’ indemnification and insurance
matters.
|
|
·
|
Conducting an annual performance evaluation of the Compensation
Committee.
|
Composition.
The Compensation
Committee of the Board of Directors consists of Messrs. Gottlieb, Couchman
and Vlahos, each of whom is independent under the rules of the NYSE Amex. The
Chairman of the Compensation Committee is Mr. Gottlieb.
Charter.
The charter of the
Compensation Committee was filed as Appendix B to the Company’s Definitive
Proxy Statement on Schedule 14A, filed on November 16,
2007.
Nominating
Committee.
Role.
Under its charter, the
Nominating Committee’s responsibilities include:
|
·
|
Establishing
criteria for selecting new
directors.
|
|
·
|
Considering
and recruiting candidates to fill new positions on the Board of Directors,
including any candidate recommended by the stockholders. Conducting
appropriate inquiries to establish a candidate’s compliance with the
qualification requirements established by the Nominating
Committee.
|
|
·
|
Conducting
appropriate inquiries to establish a candidate’s compliance with the
qualification requirements established by the Nominating
Committee.
|
|
·
|
The
assessment of the performance, contributions and qualifications of
individual directors, including those directors slated for
re-election.
|
|
·
|
The
recommendation of director nominees for approval by the Board of
Directors.
|
|
·
|
The
evaluation of the performance of the Board of Directors as a whole and of
the Nominating Committee at least
annually.
|
|
·
|
Reviewing
and making recommendations to the Board of Directors with respect to any
proposal properly presented by a stockholder for inclusion in the
Company’s annual proxy statement (which may be referred to any other
committee of the Board of Directors as appropriate in light of the subject
matter of the proposal).
|
The
Nominating Committee has established the following minimum qualifications that
must be satisfied by each director nominee recommended by it to the Board of
Directors:
|
·
|
Director
nominees should have a reputation for integrity, honesty and adherence to
high ethical standards.
|
|
·
|
Director
nominees should have experience and the ability to exercise sound judgment
in matters that relate to the current and long-term objectives of the
Company and should be willing and able to contribute positively to the
decision-making process of the
Company.
|
|
·
|
Director
nominees should have a commitment to understand the Company and its
industry and to regularly attend and participate in meetings of the Board
and its committees.
|
|
·
|
Director
nominees should have the interest and ability to understand and consider
the sometimes conflicting interests of the various constituencies of the
Company, which include stockholders, employees, customers, governmental
units, creditors and the general public, while acting in the interests of
the Company’s stockholders.
|
|
·
|
Director
nominees should not have, nor appear to have, a conflict of interest that
would impair the director nominee’s ability to represent the interests of
the Company’s stockholders and to fulfill the responsibilities of a
director.
|
In
addition to the minimum qualifications for each director nominee set out above,
the Nominating Committee will only recommend a director nominee to the Board of
Directors where, if the director nominee is elected or appointed:
|
·
|
A
majority of the Board of Directors will be independent under the rules of
the NYSE Amex.
|
|
·
|
Each
of the Audit, Compensation and Nominating Committees of the Board of
Directors will be comprised entirely of independent
directors.
|
|
·
|
At
least one member of the Audit Committee will have the experience,
education and other qualifications necessary to qualify as an “audit
committee financial expert” as defined by the rules of the Securities and
Exchange Commission.
|
Composition.
The Nominating
Committee of the Board of Directors consists of Messrs. Vlahos, Loeb, and
Couchman, each of whom is independent under the rules of the NYSE Amex. The
Chairman of the Nominating Committee is Mr. Vlahos.
Charter.
The charter of the
Nominating Committee is included as Appendix C to the Company’s Definitive
Proxy Statement on Schedule 14A, filed on November 16, 2007. The
charter is not available on the Company’s website.
Other
Committees
The Board
of Directors may, from time to time, form other committees as circumstances
warrant. Any additional committees will have authority and responsibility as may
be delegated by the Board of Directors, to the extent permitted by its charter,
its bylaws and Maryland law.
Directors’
and Officers’ Insurance
We
maintain directors’ and officers’ liability insurance to insure our officers and
directors against claims arising out of an alleged wrongful act while acting as
directors and officers of the Company, and to insure the Company to the extent
that we have indemnified the directors and officers for such loss.
Indemnification
Our
charter provides that we will indemnify our directors and officers against
certain liabilities to the fullest extent permitted under applicable law. The
charter also provides that our directors and officers will be exculpated from
monetary damages to us to the fullest extent permitted under applicable
law.
Code
of Business Conduct and Ethics
We have a
written Code of Conduct and Ethics that applies to the directors, officers and
employees of, and consultants and contractors to, the Company and its
subsidiaries, including the Company’s Chief Executive Officer and Chief
Financial Officer. The Code of Business Conduct and Ethics is a set of Golf
Trust’s policies on key integrity issues that will encourage representatives of
the Company to act ethically and legally. It includes the Company’s policies
with respect to conflicts of interest, compliance with laws, insider trading,
corporate opportunities, competition and fair dealing, discrimination and
harassment, health and safety, record-keeping, confidentiality, protection and
proper use of Company assets, payments to government personnel and reports to
and communications with the Securities and Exchange Commission and the public.
The Company will provide a copy of our Code of Business Conduct and Ethics to
any person, without charge, upon request to Golf Trust of America, Inc., 10
N. Adger’s Wharf, Charleston, South Carolina 29401, Attention:
Secretary.
Related
Person Transactions Approval Policy
The Board
of Directors has adopted a written Related Person Transaction Approval Policy
(referred to as the "Related Person Policy") that is administered by the Audit
Committee of the Board of Directors. The Related Person Policy applies to any
transaction or series of transactions in which the Company or a subsidiary is a
participant, the amount involved exceeds $120,000 and a “related person” as
defined by the Securities and Exchange Commission (Item 404 of
Regulation S-K) has a direct or indirect material interest.
Under the
Related Person Policy, the facts and circumstances of the proposed transaction
will be provided to senior management, which will determine whether the proposed
transaction is a related person transaction that requires further review.
Transactions that fall within the definition will be submitted to the Audit
Committee for approval, ratification or other action at the next Audit Committee
meeting or, in those instances in which senior management determines that it is
not practicable or desirable to wait until the next Audit Committee meeting, to
the Chairman of the Audit Committee. The Audit Committee or the Chairman, as
applicable, may approve, based on good faith consideration of all the relevant
facts and circumstances, only those related person transactions that are in, or
not inconsistent with, the best interests of the Company and its
stockholders.
In
addition, senior management will review quarterly reports of amounts paid or
payable to, or received or receivable from, any related person and determine if
there are any related person transactions that were not previously approved or
ratified under the Related Person Policy. The Audit Committee will evaluate all
options available, including, but not limited to, ratification, amendment,
termination or rescission and, where appropriate, take disciplinary action. The
Audit Committee will request that senior management evaluate the Company’s
controls to ascertain the reason the transaction was not submitted to the Audit
Committee for prior approval.
The
Company is not a party to any related person transactions, as defined by the
Securities and Exchange Commission (Item 404 of Regulation S-K), at
this time.
Code
of Ethics
We have
adopted a Code of Ethics that applies to our principal executive officer and our
principal accounting officer, as well as to all of our directors and our other
officers and employees. Our Code of Ethics is filed with the SEC as
Exhibit 14.1 to our Form 10-K filed for the year ended
December 31, 2003. Any waivers of the Code of Ethics for directors or
executive officers must be approved by our board of directors and disclosed in a
Form 8-K filed with the SEC within five days of the waiver. No such waivers
have been requested or grant
ed.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our directors
and officers, and persons who own more than ten percent of our common stock, to
file initial reports of ownership and changes in ownership with the Securities
and Exchange Commission and the American Stock Exchange. Directors and officers
and stockholders owning more than ten percent of our common stock are required
by the Securities and Exchange Commission to furnish us with copies of all
reports filed pursuant to Section 16(a).
Based on our review of
Section 16(a) reports filed by or on behalf of our directors, officers,
and stockholders owning greater than ten percent of our common stock,
it has come to our attention that, in prior years, reports covering grants of
stock options to certain of those individuals were not timely filed due
to a misunderstanding of the reporting requirements under which
reports were filed upon the vesting of stock options rather than upon the
grants of those options. Correcting reports were filed promptly after it was
discovered that the stock options previously had been incorrectly reported.
Reports covering the following individuals were not timely filed:
Mr. Couchman - two late reports covering two grants; Mr. Loeb - two
late reports covering two grants; Mr. Gottlieb - two late reports covering
two grants; Mr. Pearce - two late reports covering two grants;
Ms. Clifford - two late reports covering two grants; and Mr. Vlahos -
one late report covering one grant. We have previously disclosed all grants of
stock options in our Current Reports on Form 8-K, Annual Reports on
Form 10-K and proxy statements. Additionally, it has come to our attention
that, in prior years, other Section 16(a) reports were inadvertently filed
late as follows: Mr. Loeb - four reports covering seven transactions
and a report required to be filed when he became our director in 2006; and
Ms. Clifford - a report required to be filed following her appointment
as our executive officer in 2007.
ITEM
11.
EXECUTIVE
COMPENSATION
Compensation
Arrangement Changes Since the End of Fiscal Year 2008
Tracy
S. Clifford
On
February 27, 2009, the Board of Directors awarded to Ms. Clifford
10,000 stock options at an exercise price of $1.10, the closing NYSE Amex price
on February 27, 2009, which vest ratably over three years and have a
contractual term of three years from the vesting date. The vesting of these
options accelerates upon change of control.
Michael
C. Pearce
On
November 9, 2007, the Company and Mr. Pearce entered into an
Employment Agreement which is filed as Exhibit 10.2 to our 2007 Annual
Report on Form 10K filed on March 31, 2008. On February 27, 2009,
the Board of Directors awarded to Mr. Pearce 85,000 stock options at an
exercise price of $1.10, the closing NYSE Amex price on February 27, 2009,
which vest ratably over three years and have a contractual term of three years
from the vesting date. The vesting of these options accelerates upon change of
control. Also on February 27, 2009, the Compensation Committee
approved and, on March 5, 2009, the full Board approved an amendment to
Mr. Pearce’s employment agreement to extend his severance period from three
months of salary and benefits to six months of salary and benefits. On April 26,
2009, the Company and Mr. Pearce entered into a First Amended and Restated
Employment Agreement incorporating this revision.
Summary
Compensation Table
As of
December 31, 2009, we had two executive officers, Mr. Pearce and
Ms. Clifford. The following table sets forth 2009 and 2008 annual and
long-term compensation to our executive officers:
Name
and Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)(3)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
All
Other Compensation
($)
|
|
|
Total
($)
|
|
Michael
C. Pearce(1)
|
|
2009
|
|
$
|
180,000
|
|
|
$
|
––
|
|
|
$
|
––
|
|
|
$
|
104,526
|
|
|
$
|
22,005
|
|
|
$
|
306,531
|
|
Chief
Executive Officer, President &
Chairman
of the Board of Directors
|
|
2008
|
|
|
180,000
|
|
|
|
––
|
|
|
|
––
|
|
|
|
91,777
|
|
|
|
20,049
|
|
|
|
291,826
|
|
Tracy
S. Clifford(2)
|
|
2009
|
|
|
112,747
|
|
|
|
7,100
|
|
|
|
––
|
|
|
|
15,532
|
|
|
|
16,418
|
|
|
|
151,797
|
|
Chief
Financial Officer & Secretary
|
|
2008
|
|
|
112,747
|
|
|
|
5,000
|
|
|
|
––
|
|
|
|
13,400
|
|
|
|
14,471
|
|
|
|
145,618
|
|
———————
(1)
|
Mr. Pearce
was appointed Chief Executive Officer and President effective
November 8, 2007. His annual salary is $180,000. Included in his All
Other Compensation for 2009 and 2008 are annual health and life insurance
premiums and reimbursements of $17,205 and $15,249,
respectively, and the car allowance of $4,800 for each of the
years 2009 and 2008. On February 27, 2009 and on December 14, 2007,
he received awards of 85,000 and 275,000 stock options, respectively, for
which $104,526 and $91,777 of expense was recognized for 2009 and 2008,
respectively. See further discussion of these options below under the
caption Outstanding Equity Awards at Fiscal
Year-End.
|
(2)
|
Tracy
S. Clifford, our former Controller, was appointed Principal Accounting
Officer on February 6, 2007, Secretary on February 20, 2007, and
Chief Financial Officer on December 17, 2007. Included in
Ms. Clifford’s All Other Compensation are annual health and life
insurance premiums of $16,418 and $14,471 for the years ended
December 31, 2009 and 2008, respectively. On February 27, 2009 and on
January 18, 2008, Ms. Clifford received awards of 10,000 and 50,000 stock
options, respectively, for which $15,532 and $13,400 of expense was
recognized for 2009 and 2008, respectively. See further discussion of
these options below under the caption Outstanding Equity Awards at Fiscal
Year-End.
|
(3)
|
Bonuses
are discretionary and are not calculated or paid according to a formula or
specific time frame or schedule.
|
The
compensation arrangements with each of our executive officers are described in
the following paragraphs.
Michael C.
Pearce
Employment
Agreement
. We are subject to an employment agreement with
respect to Mr. Pearce, which was originally entered into between us and Mr.
Pearce on November 8, 2007, and was amended and restated on April 26,
2009. The agreement provides for, among other things, the
following:
|
·
|
an
annual base salary of $180,000, adjusted annually based on merit and to
account for changes in cost of
living;
|
|
·
|
the
right to participate in all of our employee benefit programs for which our
senior executive employees are generally
eligible;
|
|
·
|
automatic
vesting of all unvested stock options upon termination of his employment
without cause (as defined in the agreement), upon death or disability, or
in the event of a change in control of GTA (as defined in the
agreement);
|
|
·
|
reimbursement
for all reasonable business expenses incurred in the course of performing
his duties;
|
|
·
|
in
the event of his termination without cause, or his resignation as a result
of a material breach of GTA's obligations under the agreement, a
diminution in his duties or in connection with a change in control,
payment of 50% of his annual base salary, payable immediately in a lump
sum or over the course of six months at his election, and continued
employee benefits for six months;
and
|
|
·
|
the
nondisclosure of certain confidential information regarding our
business.
|
Awards of Equity
Compensation.
On December 14, 2007, when the 2007 Stock
Option Plan was approved, Mr. Pearce received an award of 275,000 options (which
replaced an equivalent number of stock appreciation rights) to purchase common
stock. On February 27, 2009, Mr. Pearce received an award of 85,000
options as discussed above. As of December 31, 2009, 183,334 of his
options have vested, and the remaining are scheduled to vest (i) 91,666 on
December 14, 2010 and (ii) 85,000 will vest ratably over three years
beginning on February 27, 2010 unless subject to accelerated
vesting.
Effect of Merger with Pernix
Therapeutics, Inc.
Following the proposed
merger with Pernix Therapeutic, Inc., Mr. Pearce's employment will terminate and
he will receive severance compensation equal to 50% of his annual base salary
(or $90,000), as well as continued health benefits for six
months. Mr. Pearce will serve as Chairman of the Board of the
combined company. On the closing of the merger, all of Mr. Pearce’s
unvested options will automatically vest as a result of the change of control of
GTA.
Tracy
S. Clifford
Ms.
Clifford is not subject to a written employment agreement with us.
Awards of Equity
Compensation.
On January 18, 2008, the board of directors
awarded to Ms. Clifford 50,000 stock options at an exercise price of $1.90 per
option, the closing NYSE Amex price on January 18, 2008, which vest ratably
over three years and have a contractual term of three years from the vesting
date. On February 27, 2009, the board of directors awarded to
Ms. Clifford 10,000 stock options as discussed above. The vesting of
these options accelerates upon change of control.
Effect of Merger with Pernix
Therapeutics, Inc.
On the closing of the
proposed merger with Pernix, all of Ms. Clifford's unvested options will
automatically vest as a result of the change of control of GTA. Ms.
Clifford will serve as the Chief Financial Officer of the combined company
following the consummation of the proposed merger.
Retirement
Plans
We had a
401(k) savings/retirement plan which permitted our eligible employees to defer
up to 80% of their annual compensation, subject to certain limitations imposed
by the Internal Revenue Code. The employees’ elective deferrals were
immediately vested and non-forfeitable upon contribution to the 401(k)
plan. We had previously discontinued our discretionary contribution
matching policy. Our board voted to terminate the 401(k) plan on
October 9, 2009 due to our minimal number of employees and the proposed
merger. We subsequently distributed the plan assets pursuant to
instructions from the participants and as of December 31, 2009, the plan has no
assets and has been terminated.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information concerning the outstanding equity awards
of each of the named executive officers as of December 31, 2009. The value
of unexercised in-the-money options at December 31, 2009 (the last business
day of the year) is based on a value of $1.98 per share, the prior closing price
of our common stock on the NYSE Amex on December 31, 2009.
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(1)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
Michael
C. Pearce
|
|
|
91,667
|
|
|
|
—
|
|
|
|
2.10
|
|
12/24/11
|
Chief
Executive Officer, President & Chairman of the Board of
Directors
|
|
|
91,667
|
|
|
|
—
|
|
|
|
2.10
|
|
12/24/12
|
|
|
|
––
|
|
|
|
91,666
|
|
|
|
2.10
|
|
12/24/13
|
|
|
|
––
|
|
|
|
28,334
|
|
|
|
1.10
|
|
2/27/13
|
|
|
|
—
|
|
|
|
28,333
|
|
|
|
1.10
|
|
2/27/14
|
|
|
|
––
|
|
|
|
28,333
|
|
|
|
1.10
|
|
2/27/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tracy
S. Clifford
|
|
|
16,667
|
|
|
|
|
|
|
|
1.90
|
|
1/18/12
|
Chief
Financial Officer & Secretary
|
|
|
––
|
|
|
|
16,667
|
|
|
|
1.90
|
|
1/18/13
|
|
|
|
––
|
|
|
|
16,666
|
|
|
|
1.90
|
|
1/18/14
|
|
|
|
––
|
|
|
|
3,333
|
|
|
|
1.10
|
|
2/27/13
|
|
|
|
––
|
|
|
|
3,333
|
|
|
|
1.10
|
|
2/27/14
|
|
|
|
—
|
|
|
|
3,334
|
|
|
|
1.10
|
|
2/27/15
|
———————
(1)
|
Each
of these awards of stock options vest ratably over three years and have a
contractual term of three years from the vesting date. All unvested
options will automatically vest upon a termination without cause, death or
disability, change of control of the Company or other similar fundamental
corporate transaction.
|
Compensation
of Directors
We pay our independent directors fees
for their services as directors. Independent directors during 2009 received
annual compensation of $5,000, plus a fee of $500 for attendance at each meeting
of the Board of Directors (whether in person or telephonically), and $250 for
attending each committee meeting. We reimburse directors for their reasonable
and documented out-of-pocket travel expenses.
Upon full Board of Directors approval
on January 23, 2008, 40,000 stock options from the approved 2007 plan was
awarded to each independent director, to vest at the rate of 13,333 (13,334 in
2011) per year from anniversary date for three years with the exception of those
options issued to Mr. Vlahos, and at an exercise price fixed at the closing
stock price on that date of $1.82. See discussion of the vesting schedule of
Mr. Vlahos’s options in note 6 to the table under Item 12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters below.
Upon full Board of Directors approval
on March 5, 2009, 40,000 stock options from the approved 2007 plan was
awarded to three of the four independent directors, to vest at the rate of
13,333 (13,334 in 2012) per year from anniversary date for three years, and at
an exercise price fixed at the closing stock price on that date of
$0.97.
All
of these options vest ratably over three years and have a contractual term of
three years from the vesting date. The vesting of these options accelerates upon
change of control and the Board’s options also accelerate upon the resignation
or removal of a director upon completion of his elected term. The exercise price
for these options is the closing NYSE Amex price on the respective grant date,
as specified by the Compensation Committee.
Pertaining to the stock option award
approved on March 5, 2009, one of the four independent Board members,
Mr. Vlahos, elected to receive the cash equivalent of the stock options
paid out over the three year vesting period instead of receiving stock options,
as permitted by the Compensation Committee, due to the stock ownership
restrictions and their applicability to his current stock
ownership percentage.
Directors
who are also our officers or who are not independent are not separately
compensated for their service as directors. Our non-employee directors earned
the following aggregate amounts of compensation for fiscal year
2009:
Name
and Principal Position
|
|
Fees
Earned
or
Paid
in
Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
Jan
H. Loeb, Director
|
|
$
|
8,500
|
|
|
$
|
—
|
|
|
$
|
15,881
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
$
|
24,381
|
|
Michael
C. Pearce,
Chairman,
Director,
President
and CEO
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
William
Vlahos, Director
|
|
|
7,750
|
|
|
|
|
|
|
|
10,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,440
|
|
Jay
Gottlieb, Director
|
|
|
8,750
|
|
|
|
|
|
|
|
15,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,631
|
|
Jonathan
M. Couchman, Director
|
|
|
8,750
|
|
|
|
—
|
|
|
|
15,881
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24,631
|
|
———————
At
December 31, 2009, former directors not listed in the above table namely,
Messrs. Edward L. Wax, Raymond V. Jones, Fred W. Reams, and the
heirs of Roy Chapman own 10,000 shares each of common stock issuable upon
exercise of vested options, including:
|
·
|
5,000
vested shares at $17.94 issued on February 6, 2000 and which expired
subsequent to year-end on February 5, 2010;
and
|
|
·
|
5,000
vested shares at $7.85 issued on February 6, 2001 and expiring on
February 5, 2011
|
ITEM
12.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
The
following table describes, as of February 22, 2010, the beneficial ownership of
our common stock held by (a) each of our directors, (b) each of our
executive officers, (c) all of our directors and executive officers as a
group, and (d) each person known to us to be the beneficial owner of
five percent or more of our outstanding common stock. Each person named in
the table has sole voting and investment/disposition power with respect to all
of the shares of common stock shown as beneficially owned by such person, except
as otherwise set forth in the notes to the table. Unless otherwise noted, the
address of each person in the table is c/o Golf Trust of America, Inc., 10
North Adger’s Wharf, Charleston, South Carolina 29401.
Name
of Beneficial Owner
|
|
Number
of
shares
of
Common
Stock
|
|
|
Percentage
of
Class(9)
|
|
Jonathan
M. Couchman(1)
|
|
|
366,400
|
|
|
|
4.98
|
%
|
Tracy
S. Clifford(2)
|
|
|
36,667
|
|
|
|
*
|
|
Jay
A. Gottlieb(3)
|
|
|
645,750
|
|
|
|
8.78
|
%
|
Jan
H. Loeb(4)
|
|
|
884,100
|
|
|
|
12.02
|
%
|
Merrill
Lynch, Pierce, Fenner & Smith, Inc.(5)
|
|
|
370,000
|
|
|
|
5.06
|
%
|
William
Vlahos/Odyssey Value Advisors, LLC(6)
|
|
|
1,233,182
|
|
|
|
16.79
|
%
|
Michael
C. Pearce(7)
|
|
|
211,668
|
|
|
|
2.81
|
%
|
Directors
and officers as a group (9 persons)(8)
|
|
|
3,377,767
|
|
|
|
43.80
|
%
|
———————
(1)
|
Beneficial
ownership includes options to purchase 40,000 shares of our common stock
which have vested and are exercisable as of February 22, 2010 or will
become exercisable within 60 days from that date. All of these options
were in the money as of February 22, 2010. Beneficial ownership excludes
options to purchase (i) 13,334 shares of our common stock which vest on
January 23, 2011 and (ii) 26,666 shares of our common stock which
vest ratably over the next two years beginning on March 4, 2011. The
vesting of these options accelerates upon change of
control.
|
(2)
|
Beneficial
ownership includes options to purchase 36,667 shares of our common stock,
of which all have vested and are exercisable as of February 22, 2010 or
will become exercisable within 60 days from that date. All of
these options were in the money as of February 22, 2010. Beneficial
ownership excludes options to purchase (i) 16,666 shares of our common
stock which vest on January 18, 2011 and (ii) 6,667 shares of our
common stock which vest on ratably over the next two years beginning on
February 27, 2011. The vesting of these options
accelerates upon change of control.
|
(3)
|
Includes
100,000 shares held in trust for the benefit of Mr. Gottlieb's
children. Mr. Gottlieb's business address is 27 Misty Brook Lane, New
Fairfield, CT 06812. Mr. Gottlieb reports that he has sole power to
vote or to direct the vote of 605,750 shares and sole power to dispose or
to direct the disposition of 605,750. Information about Mr. Gottlieb
is included in reliance on the Schedule 13D filed with the SEC on
February 13, 2008. Beneficial ownership includes options to purchase
40,000 shares of our common stock which have vested and are exercisable as
of February 22, 2010 or will become exercisable within 60 days from that
date. All of these options were in the money as of February 22,
2010. Beneficial ownership excludes options to purchase (i) 13,333 shares
of our common stock which vest on January 23, 2011 and (ii) 26,667 shares
of our common stock which vest ratably over the next two years beginning
on March 4, 2011. The vesting of these options accelerates upon
change of control.
|
(4)
|
Mr. Loeb's
business address is 10451 Mill Run Circle, Owings Mills, Maryland 21117.
Mr. Loeb reports that he has sole power to vote or to direct the vote
of 806,100 shares, shared power to vote or to direct the vote of 38,000
shares, sole power to dispose or to direct the disposition of 806,100
shares and shared power to dispose or to direct the disposition of 38,000
shares. Information about Mr. Loeb is included in reliance on the
Schedule 13D/A filed with the SEC on October 13, 2006.
Beneficial ownership includes options to purchase 40,000 shares of our
common stock which have vested and are exercisable as of February 22, 2010
or will become exercisable within 60 days from that date.
All
of
these options were in the money as of February 22, 2010
.
Beneficial ownership excludes options to purchase 13,334 shares of our
common stock which vest on January 23, 2011 and (ii) 26,667 shares of
our common stock which vest ratably over the next two years beginning on
March 4, 2011. The vesting of these options accelerates upon change
of control.
|
(5)
|
Merrill
Lynch, Pierce, Fenner & Smith, Inc.'s address is 4 World
Financial Center, New York, NY 10080. Information about Merrill Lynch,
Pierce, Fenner & Smith, Inc. is included in reliance on the
Schedule 13G filed with the SEC on February 13,
2006.
|
(6)
|
Includes
474,800 shares of common stock which are directly owned by
Mr. Vlahos. In addition, Mr. Vlahos is the General Partner of
Odyssey Value Advisors, LLC, and therefore beneficially owns the
731,715 shares of common stock owned directly by Odyssey Value
Advisors, LLC. Odyssey Value Advisors, LLC's address is 601
Montgomery Street, San Francisco, California 94111. Information about
Odyssey Value Advisors, LLC is included in reliance on the
Schedule 13D/A filed with the SEC on January 27, 2009.
Beneficial ownership includes options to purchase 26,667 shares of our
common stock which have vested and are exercisable as of February 22, 2010
or will become exercisable within 60 days from that date.
All
of these options were in the money as of February 22,
2010
.
Beneficial ownership excludes options to
purchase 13,333 shares of our common stock which vest on January 23,
2011. The vesting of these options accelerates upon change of
control.
|
(7)
|
Beneficial
ownership includes options to purchase 211,668 shares of our common stock
which have vested and are exercisable as of February 22, 2010 or will
become exercisable within 60 days from that date.
Of
these options, 28,334 were in the money as of February 22,
2010.
Beneficial ownership excludes options to purchase
(i) 91,666 shares of our common stock which vest on December 14, 2010
and (ii) 56,666 shares of our common stock which vest ratably over the
next two years beginning February 27, 2011. The vesting of these
options accelerates upon change of
control.
|
(8)
|
Beneficial
ownership includes options to purchase 395,002 shares of our common stock
which have vested and are exercisable as of February 22, 2010 or will
become exercisable within 60 days from that date.
Of
these options, 211,668 were in the money at February 22,
2010
.
Beneficial ownership excludes options to purchase
304,998 shares of our common stock which vest according to the following
schedule: (i) 91,666 on December 14, 2010, (ii) 16,666 on
January 18, 2011 (iii) 53,332 on January 23, 2011, (iv) 31,666
on February 27, 2011 and 2012 and (v) 40,001 on March 4, 2011
and 2012. The vesting of these options accelerates upon change of
control.
|
(9)
|
Based
on 7,317,163 common shares outstanding. In accordance with the rules of
the Securities and Exchange Commission, each person's percentage
interest is calculated by dividing such person's beneficially owned common
shares by the sum of the total number of common shares outstanding plus
the number of currently unissued common shares such person has the right
to acquire (including upon exercise of vested options and upon conversion
of preferred stock) within 60 days of February 22, 2010. Beneficial
ownership excludes options issued to former Board members to purchase
20,000 shares of our common stock which all have vested and are
exercisable.
None
of these options was in the money as of February 17,
2010
.
These options will expire, if not exercised, on
February 5, 2011.
|
Securities
Authorized for Issuance under Equity Compensation
Plans
|
The
following table presents summary information about our equity compensation
plans, including our stock option plans and any individual stock option
arrangements not arising under any plan. We submitted all of our stock option
plans for stockholders’ approval. The table presents the following data on our
plans as of the close of business on December 31, 2009:
|
·
|
the
aggregate number of shares of our common stock subject to outstanding
stock options;
|
|
·
|
the
weighted average exercise price of those outstanding stock options;
and
|
|
·
|
the
number of shares that remain available for future option
grants.
|
For
additional information regarding our stock option plans and the accounting
effects of our stock based compensation, please see Note 7 of our Notes to
Consolidated Financial Statements in Item 15 of this Annual Report.
Equity
Compensation Plan Information
Plan
Category
|
|
Number
of
securities
to
be
issued upon
exercise
of
outstanding
options,
warrants
and
rights
|
|
|
Weighted
average
exercise
price of
outstanding
options,
warrants
and
rights
|
|
|
Number
of
securities
remaining
available
for
future
issuance
under
equity
compensation
plans
(excluding
securities
reflected
in
column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity
compensation plans approved by security holders
|
|
|
740,000
|
|
|
$
|
2.30
|
|
|
|
19,968
|
|
Equity
compensation plans not approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
740,000
|
|
|
$
|
2.30
|
|
|
|
19,968
|
|
On
February 5, 2010, 20,000 options, previously issued to our former Board
members at an exercise price of $17.94 and outstanding at December 31,
2009, expired. See Item 11. "Executive Compensation" above for more
detailed discussion of the outstanding options.
ITEM
13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
As required by Rule 802 of the
rules of the NYSE Amex, the Board of Directors consists of a majority of
independent directors (as defined in NYSE Amex Rule 121(A)). Periodically,
and at least annually in connection with its annual recommendation to the Board
of Directors of a slate of nominees, the Nominating Committee of the Board of
Directors reviews the independence of current members of the Board of Directors
(and director nominees who are not current members) and reports its findings to
the full Board of Directors. The Board of Directors then considers all relevant
facts and circumstances in making an independence determination, including an
analysis from the standpoint of the director and from that of persons or
organizations with which the director has an affiliation.
The Board
of Directors has affirmatively determined that four of our five current
directors (Messrs. Loeb, Couchman, Gottlieb and Vlahos) are independent as
defined in NYSE Amex Rule 121(A). We refer to these four directors as our
independent directors. Mr. Pearce is the Chief Executive Officer and
President of the Company, and therefore is not an independent
director.
ITEM
14.
PRINCIPAL
ACCOUNTING FEES AND SERVICES
The
following table shows the fees paid or accrued by us for the audit and other
services provided by Cherry, Bekaert & Holland, L.L.P. for fiscal years 2009
and 2008.
|
|
2009
|
|
|
2008
|
|
Audit
Fees(1)
|
|
$
|
45,993
|
|
|
$
|
93,973
|
|
Audit-Related
Fees(2)
|
|
|
34,949
|
|
|
|
10,000
|
|
Tax
Fees(3)
|
|
|
19,750
|
|
|
|
40,505
|
|
All
Other Fees
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
100,692
|
|
|
$
|
144,478
|
|
———————
(1)
|
“Audit
Fees” represent fees for professional services rendered by Cherry, Bekaert
& Holland, L.L.P for fiscal years 2009 and 2008 for the audit of our
annual consolidated financial statements included in our Annual Reports on
Form 10-K for those respective fiscal years, the review of financial
statements included in our Quarterly Reports on Form 10-Q for those
respective years and any services normally provided by these firms in
connection with statutory and regulatory filings or
engagements.
|
(2)
|
“Audit-Related
Fees” represent fees for assurance and related services by Cherry, Bekaert
& Holland, L.L.P. for fiscal years 2009 and 2008 that are reasonably
related to the performance of the audit or review of our consolidated
financial statements for those respective fiscal years and are not
reported under “Audit Fees.” These fees consisted primarily of accounting
consultations relating to the preparation and filing of our definitive
proxy statement for the merger with Pernix Therapeutics,
Inc.
|
(3)
|
“Tax
Fees” represent fees for professional services rendered by Cherry, Bekaert
& Holland, L.L.P. for fiscal years 2009 and 2008 for tax compliance,
tax advice and tax planning.
|
Our Audit
Committee is required to pre-approve the audit and non-audit services performed
for us by our independent registered public accounting firm in order to assure
that the provision of such services does not impair the independence of our
independent registered public accounting firm. Prior to the beginning of our
fiscal year, our Audit Committee typically pre-approves certain general audit
and non-audit services up to specified cost levels. Any audit or non-audit
services that are not generally pre-approved in this manner require specific
pre-approval by our Audit Committee. While our Audit Committee may delegate
pre-approval authority to one or more of its members, the member or members to
whom such authority is delegated must report any pre-approval decisions to our
Audit Committee at its next scheduled meeting. Our Audit Committee does not
delegate its responsibilities to pre-approve services performed by our
independent registered public accounting firm to management.
All of
the services described in “Audit-Related Fees,” “Tax Fees” and “All Other Fees”
in the table above were approved by the Audit Committee as required by the
Securities and Exchange Commission (in Rule 2-01 of Regulation S-X,
paragraph c(7)(i)(C)).
PART
IV
ITEM
15.
EXHIBITS,
FINANCIAL STATEMENT SCHEDULES
Financial
Statements and Schedules
The
financial statements and schedules filed as part of this Annual Report on
Form 10-K are listed on page 29, which is incorporated herein by
reference.
Exhibits
The
exhibits filed as part of this annual report on Form 10-K are listed in the
Exhibit Index, which is incorporated herein by reference.
INDEX
TO FINANCIAL STATEMENTS
|
Page
|
Financial
Statements of Golf Trust of America, Inc.
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated
Balance Sheets as of December 31, 2009 and 2008
|
F-3
|
Consolidated
Statements of Operations for the Years Ended December 31, 2009 and
2008
|
F-4
|
Consolidated
Statement of Stockholders’ Equity for the Years Ended December 31,
2009 and 2008
|
F-5
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2009 and
2008
|
F-6
|
Notes
to Consolidated Financial Statements
|
F-7
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and
Stockholders
of Golf Trust of America, Inc.
Charleston,
SC
We have
audited the accompanying consolidated balance sheets of Golf Trust of America,
Inc. and Subsidiaries (the “Company”) as of December 31, 2009 and 2008, and
the related consolidated statements of operations, stockholders’ equity and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company as
of December 31, 2009 and 2008, and the consolidated results of their
operations and their cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of
America.
We were
not engaged to examine management’s assertion about the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2009
and 2008 included in the accompanying “Management’s Annual Report on Internal
Control Over Financial Reporting” and, accordingly, we do not express an opinion
thereon.
/s/
CHERRY, BEKAERT & HOLLAND, L.L.P.
Charlotte,
North Carolina
February
24, 2010
GOLF
TRUST OF AMERICA, INC.
CONSOLIDATED
BALANCE SHEETS
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
6,714,406
|
|
|
$
|
8,001,878
|
|
Receivables—net
|
|
|
—
|
|
|
|
11,209
|
|
Other
current assets
|
|
|
27,636
|
|
|
|
33,566
|
|
Note
receivable – current portion
|
|
|
133,333
|
|
|
|
—
|
|
Current
assets of discontinued operations
|
|
|
—
|
|
|
|
516,531
|
|
Total
current assets
|
|
|
6,875,375
|
|
|
|
8,563,184
|
|
Note
receivable—long-term portion
|
|
|
120,334
|
|
|
|
228,936
|
|
Property
and equipment, net
|
|
|
964,916
|
|
|
|
1,047,668
|
|
Non-current
assets of discontinued operations
|
|
|
—
|
|
|
|
3,910,357
|
|
Total
assets
|
|
$
|
7,960,625
|
|
|
$
|
13,750,145
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
85,876
|
|
|
$
|
32,940
|
|
Accrued
expenses and other liabilities
|
|
|
62,479
|
|
|
|
60,276
|
|
Current
liabilities of discontinued operations
|
|
|
—
|
|
|
|
4,696,312
|
|
Total
current liabilities
|
|
|
148,355
|
|
|
|
4,789,528
|
|
Non-current
liabilities of discontinued operations
|
|
|
—
|
|
|
|
805,433
|
|
Total
liabilities
|
|
|
148,355
|
|
|
|
5,594,961
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
9.25%
Cumulative Convertible Redeemable Preferred stock, $.01 par
value,
10,000,000
shares authorized, no shares outstanding
|
|
|
—
|
|
|
|
—
|
|
STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
|
Common
stock, $.01 par value, 90,000,000 shares authorized, 7,317,163 issued and
outstanding
|
|
|
73,172
|
|
|
|
73,172
|
|
Additional
paid-in capital
|
|
|
8,981,810
|
|
|
|
8,803,418
|
|
Accumulated
deficit
|
|
|
(1,242,712
|
)
|
|
|
(721,406
|
)
|
Total
stockholders’ equity
|
|
|
7,812,270
|
|
|
|
8,155,184
|
|
Total
liabilities and stockholders’ equity
|
|
$
|
7,960,625
|
|
|
$
|
13,750,145
|
|
See accompanying notes to our
consolidated financial statements.
GOLF
TRUST OF AMERICA, INC.
CONSOLIDATED
STATEMENT OF OPERATIONS
|
|
For
the years ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
Revenues
|
|
|
|
|
|
|
Total
revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
3,612
|
|
|
|
2,675
|
|
Impairment
loss
|
|
|
80,000
|
|
|
|
—
|
|
General
and administrative
|
|
|
1,562,052
|
|
|
|
1,641,290
|
|
Total
expenses
|
|
|
1,645,664
|
|
|
|
1,643,965
|
|
Operating
loss
|
|
|
(1,645,664
|
)
|
|
|
(1,643,965
|
)
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
—
|
|
|
|
1,641,176
|
|
Other
expenses
|
|
|
—
|
|
|
|
(6,300
|
)
|
Interest
income
|
|
|
98,656
|
|
|
|
192,416
|
|
Interest
expense
|
|
|
(2,376
|
)
|
|
|
(4,870
|
)
|
Other
income, net
|
|
|
96,280
|
|
|
|
1,822,422
|
|
Income
(loss) from continuing operations before income tax
provision
|
|
|
(1,549,384
|
)
|
|
|
178,457
|
|
Income
tax provision
|
|
|
—
|
|
|
|
—
|
|
Income
(loss) from continuing operations, net of tax
|
|
|
(1,549,384
|
)
|
|
|
178,457
|
|
|
|
|
|
|
|
|
|
|
Loss
from discontinued operations, net of tax
|
|
|
(130,336
|
)
|
|
|
(716,308
|
)
|
Gain
on sale of discontinued operations, net of tax
|
|
|
1,158,414
|
|
|
|
—
|
|
Income
(loss) from discontinued operations, net of tax
|
|
|
1,028,078
|
|
|
|
(716,308
|
)
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(521,306
|
)
|
|
$
|
(537,851
|
)
|
Basic
and diluted earnings (loss) per share
|
|
|
|
|
|
|
|
|
From
continuing operations
|
|
$
|
(.21
|
)
|
|
$
|
.02
|
|
From
discontinued operations
|
|
$
|
.14
|
|
|
$
|
(.09
|
)
|
Net
loss
|
|
$
|
(.07
|
)
|
|
$
|
(.07
|
)
|
Weighted
average number of shares—basic and diluted
|
|
|
7,317,163
|
|
|
|
7,317,163
|
|
See accompanying notes to our
consolidated financial statements.
GOLF
TRUST OF AMERICA, INC.
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008
|
|
Number
of
Shares
Issued
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders’
Equity
|
|
Balance
at December 31, 2007
|
|
|
7,317,163
|
|
|
$
|
73,172
|
|
|
$
|
8,658,171
|
|
|
$
|
(183,555
|
)
|
|
$
|
8,547,788
|
|
Stock-based
compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
145,247
|
|
|
|
—
|
|
|
|
145,247
|
|
Net
loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(537,851
|
)
|
|
|
(537,851
|
)
|
Balance
at December 31, 2008
|
|
|
7,317,163
|
|
|
|
73,172
|
|
|
|
8,803,418
|
|
|
|
(721,406
|
)
|
|
|
8,155,184
|
)
|
Stock-based
compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
178,392
|
|
|
|
—
|
|
|
|
178,392
|
|
Net
loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(521,306
|
)
|
|
|
(521,306
|
)
|
Balance
at December 31, 2009
|
|
|
7,317,163
|
|
|
$
|
73,172
|
|
|
$
|
8,981,810
|
|
|
$
|
(1,242,712
|
)
|
|
$
|
7,812,270
|
|
See accompanying notes to our
consolidated financial statements.
GOLF
TRUST OF AMERICA, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
For
the years ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
CASH
FLOWS USED IN OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(521,306
|
)
|
|
$
|
(537,851
|
)
|
Income
(loss) from discontinued operations
|
|
|
1,028,078
|
|
|
|
(716,308
|
)
|
Income
(loss) from continuing operations
|
|
|
(1,549,384
|
)
|
|
|
178,457
|
|
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
3,612
|
|
|
|
2,675
|
|
Stock
based compensation charges
|
|
|
178,392
|
|
|
|
145,247
|
|
Gain
on legal settlement
|
|
|
—
|
|
|
|
(1,463,922
|
)
|
Non-cash
interest income
|
|
|
(24,731
|
)
|
|
|
(30,689
|
)
|
Impairment
charge to fair value of land
|
|
|
80,000
|
|
|
|
—
|
|
Change
in:
|
|
|
|
|
|
|
|
|
Receivables
and other assets
|
|
|
11,209
|
|
|
|
37,025
|
|
Prepaid
expenses
|
|
|
5,930
|
|
|
|
(6,160
|
)
|
Accounts
payable and other liabilities
|
|
|
58,140
|
|
|
|
(416,088
|
)
|
Net
cash used in continuing operating activities
|
|
|
(1,236,832
|
)
|
|
|
(1,553,455
|
)
|
Net
cash provided by discontinued operating activities including gain on sale
of approximately $1,158,000 and -0-, respectively
|
|
|
14,325
|
|
|
|
81,844
|
|
CASH
FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Purchases
of equipment
|
|
|
(860
|
)
|
|
|
(16,262
|
)
|
Proceeds
from escrow/restricted cash
|
|
|
—
|
|
|
|
2,000,000
|
|
Decrease
in notes receivable
|
|
|
—
|
|
|
|
233,334
|
|
Net
cash provided by(used in) continuing investing activities
|
|
|
(860
|
)
|
|
|
2,217,072
|
|
Net
cash provided by discontinued investing activities including net proceeds
from disposal of property and equipment of $4,100,000 (less certain
deductions of $64,105) and -0-, respectively
|
|
|
4,035,895
|
|
|
|
(103,954
|
)
|
CASH
FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net
cash provided by continuing financing activities
|
|
|
—
|
|
|
|
—
|
|
Net
cash used in discontinued financing activities including principal
payments under credit agreement of $4,100,000 and -0-,
respectively
|
|
|
(4,100,000
|
)
|
|
|
(38,184
|
)
|
Net
(decrease) increase in cash and cash equivalents
|
|
|
(1,287,472
|
)
|
|
|
603,323
|
|
Cash
and cash equivalents, beginning of year
|
|
|
8,001,878
|
|
|
|
7,398,555
|
|
Cash
and cash equivalents, end of year
|
|
$
|
6,714,406
|
|
|
$
|
8,001,878
|
|
Supplemental
Disclosure of Cash Flow Information
|
|
|
|
|
|
|
|
|
Interest
paid during the period
|
|
$
|
13,625
|
|
|
$
|
301,848
|
|
Non-cash
investing and financing activities:
|
|
|
|
|
|
|
|
|
Gain
on legal settlement:
|
|
|
|
|
|
|
|
|
Note
receivable
|
|
$
|
—
|
|
|
$
|
431,581
|
|
Land
and value of timber
|
|
$
|
—
|
|
|
$
|
1,032,341
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to our
consolidated financial statements.
GOLF
TRUST OF AMERICA, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
1.
Organization, Termination of the Plan of
Liquidation and Alternative Business
Strategies
|
Organization
and Termination of Plan of Liquidation
Golf
Trust of America, Inc. (the “Company”) was incorporated in Maryland on
November 8, 1996 as a real estate investment trust (“REIT”). In
May 2001, after consideration of various strategic alternatives, the
Company approved a Plan of Liquidation (the “POL”). As a result, the Company
adopted the liquidation basis of accounting. Subsequent to adoption of the POL,
the Company sold all of its golf course properties. After consideration of
its strategic alternatives to maximize shareholder value, the Board
adopted a resolution approving the termination of the POL advisable and the
Company’s stockholders approved such proposal to terminate the POL on
November 8, 2007. Therefore, financial statements subsequent to this date
are presented under the going concern basis as an operating company rather than
under the liquidation basis of accounting.
The Board
has not limited the types of alternative growth strategies that it has
considered. Emphasis has been placed on areas of historical Company expertise,
as well as that of our management and board of directors.
See Note
9,
Income Taxes
,
regarding discussion of net operating loss carryforwards in a business
combination.
On
October 6, 2009, the Company entered into an Agreement and Plan of Merger
with Pernix Therapeutics, Inc. ("Pernix”). Under the Agreement, a wholly
owned subsidiary of GTA will merge with Pernix and GTA will issue 41,800,000
shares of GTA's common stock to Pernix’s stockholders, representing
approximately 84% of the combined company’s outstanding common stock on a fully
diluted basis.
The
closing is subject to a number of closing conditions and contingencies,
including shareholder approval by the GTA shareholders, approval of GTA's new
listing application with the NYSE AMEX along with customary closing
conditions. The Company filed a definitive proxy statement for its
stockholders to approve the merger on February 8, 2010 and a Special Meeting of
its stockholders is scheduled for March 8, 2010 to vote on this
matter.
Sale
of Stonehenge
On
January 23, 2009, the Company completed the sale of the business and the
related assets of the country clubs of Wildewood and Woodcreek Farms, or
Stonehenge, representing two private golf courses operating under one club
structure located in South Carolina. The sale was made to WCWW Committee, LLC,
pursuant to the Purchase and Sale Agreement dated September 26, 2008 (the
“Agreement”). The rights of the WCWW Committee, LLC were assigned to The Members
Club at Woodcreek and Wildewood, which completed the transaction as
purchaser.
The
purchase price received by us from the purchaser was (a) approximately
$4,100,000 in cash subject to certain credits, adjustments and prorations
pursuant to the Agreement, (b) the assumption of certain liabilities and
(c) contingent value rights. The Agreement provided for a post-closing
settlement sixty days from the closing date which has been concluded. The
Company realized a gain on this sale of approximately $1,158,000.
The
Company’s outstanding balance of $4,100,000 on its revolving credit line with
Textron Financial Corporation (“Textron”), which was scheduled to mature on
March 18, 2009, was paid in full concurrent with the closing of this sale.
This loan was collateralized by a security interest in Stonehenge. With the
retirement in full of the Textron revolving credit line, the Company has no
outstanding corporate indebtedness.
The
operations of Stonehenge are accounted for as discontinued operations as of the
signing of the purchase and sale agreement on September 26, 2008 and are
retrospective to November 8, 2007, the date the Company exited the plan of
liquidation and re-adopted going concern basis of accounting. The title to
Stonehenge was held by Golf Trust of America, L.P., a Delaware limited
partnership and the Company’s operating partnership.
At
December 31, 2009, the Company’s only remaining real estate asset is the
undeveloped land obtained in the legal settlement of a matter referred to as the
Young Complaints (Note 4).
Note
2.
Summary of Significant
Accounting Policies
|
Principles
of Consolidation
The
accompanying consolidated financial statements include the accounts of
GTA GP, Inc., GTA LP, Inc., Golf Trust of America,
LP and their wholly-owned subsidiaries, including GTA-Stonehenge, LLC. All
significant intercompany transactions and balances have been eliminated in
consolidation.
Cash
Risk Concentration
We have
cash and cash equivalents in a financial institution which is insured by the
Federal Deposit Insurance Corporation, or FDIC, for amounts up to $250,000. At
December 31, 2009 and 2008, the Company had amounts in excess of FDIC
limits.
Cash
Equivalents
The
Company considers all highly liquid debt instruments with an original maturity
of three months or less to be cash equivalents. From time to time,
the Company invests the majority of its available cash in short-term U.S.
Treasury Bills with maturities of 13-weeks and certificates of deposit with
maturities of 30-35 days. At December 31, 2008, approximately
$3,760,000 was in a 13-week Treasury Bill bearing interest at 1.118% per annum
which matured on January 2, 2009. The Company’s remaining
available cash balances are in interest bearing accounts at Wachovia
Bank N.A. from which funds are transferred to the operating bank accounts as
needed to cover operational expenses.
Property
and Equipment
Furniture and
office equipment is carried at the lower of cost or net realizable value.
Depreciation is computed on a straight-line basis over the original estimated
useful lives of the assets of three to five years.
Income
Taxes
The
Company provides for income taxes using the asset and liability method. Deferred
tax assets or liabilities at the end of each period are determined using the
enacted tax rates. Income tax expense will increase or decrease in the same
period in which a change in tax rates is enacted. The Company records a
valuation allowance against deferred tax assets when the weight of available
evidence indicates it is more likely than not that the deferred tax asset will
not be realized at its initially recorded value; however, due to the high degree
of subjectivity in these estimates , they may change based on expectations in
the future.
The
Company concluded that it had not taken any uncertain tax positions on any of
its income tax returns filed that would materially distort its consolidated
financial statements for the years ended December 31, 2009 and
2008. The Company’s method of accounting are based on estatablished
income tax principles approved in the Internal Revenue Code and are properly
calculated and reflected within its income tax returns.
Stock
based compensation
Compensation
expense is determined by reference to the fair value of an award on the date of
grant and is amortized on a straight-line basis over the vesting period. We have
elected to use the Black-Scholes-Merton (BSM) pricing model to determine the
fair value of all stock option awards.
Use
of estimates
The
preparation of the consolidated financial statements, in conformity with
accounting principles generally accepted in the United States of America,
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Fair
Value of Financial Instruments
The
carrying amounts of our financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable, and accrued liabilities,
approximate fair value because of their generally short maturities.
Long-lived
Assets
The Company reviews property and
equipment for impairment whenever events or changes in circumstances indicate
the carrying amount of an asset may not be recoverable. If property
and equipment are considered to be impaired, the impairment to be recognized
equals the amount by which the carrying value of the asset exceeds its fair
market value. During 2009, we recognized an impairment charge of
approximately $80,000 on the Company’s only remaining real estate
asset.
Discontinued
Operations
As
discussed in Note 1, the Company signed a purchase and sale agreement for the
disposition of Stonehenge on September 26, 2008; therefore, the operations
of Stonehenge were accounted for as discontinued operations as of the signing of
this agreement.
Revenue Recognition
-
Revenues from golf operations, food and beverage and merchandise sales was
recognized at the time of sale or when the service was provided. Revenues from
membership dues were billed monthly and recognized in the period earned. The
monthly dues were expected to cover the cost of providing future membership
services. Prepaid dues were recognized as income over the prepayment
period.
Membership Initiation Fees
-
Certain memberships previously sold at Stonehenge have initiation fees totaling
approximately $1,326,000 that were refundable (without interest) based on
specific conditions generally upon conclusion of a thirty-year required
membership term, as defined in the Club Membership Manual. These refundable
initiation fees may have been refundable prior to the expiration of the
thirty-year term under specific membership replacement conditions. The estimated
present value of these potential refunds was $317,000, which was recorded as an
accrued liability at December 31, 2008, and accreted over the members’
remaining average contractual term using an interest rate of approximately
10.5%. The accretion was included in interest expense.
An
initiation fee was required to be paid on all memberships at Stonehenge. The
majority of the membership fees were not refundable and were deferred and
recognized over the average expected life of an active membership. Membership
initiation fees were deferred and recognized as revenue on a straight-line basis
over the average expected life of an active membership, which based on
historical information was deemed to be an average nine years for all membership
categories.
Inventories -
The inventory
for food and beverage, golf merchandise and maintenance supplies at Stonehenge
was recorded at the lower of cost (first-in,first-out method) or
market.
Accounts Receivable -
Accounts receivable primarily represents amounts due from Stonehenge
members and is net of allowances of approximately $23,000 at December 31,
2008.
When the
Company owned Stonehenge, management reviewed accounts receivable
quarterly to determine if any receivables were uncollectible. Any receivable
considered to be uncollectible was included in the allowance for doubtful
accounts. After all attempts to collect the receivable have failed, the
receivable was written off against the allowance.
Leases -
Leases which
transfer substantially all of the benefits and risks of ownership of property
are classified as capital leases. Assets and liabilities were recorded at
amounts equal to the present value of the minimum lease payments at the
beginning of the lease term. Interest expense relating to the lease liabilities
was recorded to affect constant rates of interest over the terms of the leases.
Leases which do not transfer substantially all of the benefits and risks of
ownership of property were classified as operating leases, and the related
rentals were charged to expense as incurred.
Property and Equipment -
Property and equipment is carried at the lower of cost or net realizable
value. Depreciation is computed on a straight-line basis over the original
estimated useful lives of the assets as follows:
Golf
course improvements
|
15 years
|
Buildings
and improvements
|
30 years
|
Furniture,
fixtures and equipment
|
3–8 years
|
Earnings
per Share
Earnings
per common share are presented under two formats: basic earnings per common
share and diluted earnings per common share. Earnings per share are computed by
dividing net income (loss) (after deducting dividends on preferred stock) by the
weighted average number of common shares outstanding during the year. Diluted
earnings per common share are computed by dividing net income (loss) (after
deducting dividends on preferred stock) by the weighted average number of common
shares outstanding during the year, plus the impact of those common stock
equivalents (i.e., stock options) that are dilutive. For the years ended
December 31, 2009 and 2008, the loss per share was the same for
basic and diluted since the effect of the options would have been anti-dilutive
due to the fact that there was a loss for both of these periods.
Subsequent
Events
In May
2009, the FASB issued a new accounting standard which established general
accounting standards and disclosure for subsequent events. In
accordance with this standard, we evaluated subsequent events through February
24, 2010, the date we filed this Annual Report on Form 10-K with the Securities
and Exchange Commission (SEC).
Recent
Accounting Pronouncements
In June 2009, the FASB issued a new
accounting standard which changes the consolidation rules as they relate to
variable interest entities. Specifically, the new standard makes
significant changes to the model for determining who should consolidate a
variable interest entity, and also addresses how often this assessment should be
performed. We adopted this standard in the first quarter of 2010 and
the adoption did not have a material impact on our consolidated financial
statements.
In August 2009, the FASB issued a new
accounting standard which provides additional guidance on the measurement of
liabilities at fair value. Specifically, when a quoted price in an
active market for the identical liability is not available, the new standard
requires that the fair value of a liability be measured using one or more of the
valuation techniques that should maximize the use of relevant observable inputs
and minimize the use of unobservable inputs. In addition, an entity
is not required to include a separate input or adjustment to other inputs
relating to the existence of a restriction that prevents the transfer of a
liability. We adopted this standard in the fourth quarter of 2009 and
the adoption did not have a material impact on our consolidated financial
statements.
Note
3. Fair Value Measurement
|
Fair
value is defined as the price that would be received to sell an asset or paid to
transfer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market
participants on the measurement date. The fair value hierarchy prescribed by the
accounting literature contains three levels as follows:
Level 1—
|
Quoted
prices in active markets for identical assets or
liabilities.
|
Level 2—
|
Observable
inputs other than Level 1 prices such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable market
data for substantially the full term of the assets or
liabilities.
|
Level 3—
|
Unobservable
inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities. Level 3 assets
and liabilities include financial instruments whose value is determined
using pricing models, discounted cash flow methodologies, or similar
techniques, as well as instruments for which the determination of fair
value requires significant management judgment or
estimation.
|
In
addition, GAAP requires the Company to disclose the fair value for financial
assets on both a recurring and non-recurring basis.
The
carrying value of cash and cash equivalents, accounts receivable, other assets
and trade accounts payable approximate fair value due to the short-term nature
of these instruments. At December 31, 2008, cash equivalents consist of U.S.
Treasury bills with original maturity dates of thirteen weeks, for which
management determined fair value through quoted prices. Fair value of cash
equivalents that do not trade on a regular basis in active markets are
classified as Level 2.
The
Company has a note receivable with a balance at December 31, 2008 of
approximately $254,000 which is measured at fair value on a nonrecurring
basis.
The Company reviews property and
equipment for impairment whenever events or changes in circumstances indicate
the carrying amount of an asset may not be recoverable. During 2009,
the Company recognized an impairment charge of $80,000 on the Company’s only
remaining asset and is classified as Level 3.
Note
4.
Property and
Equipment
|
Property
and equipment consists of the following:
|
December
31,
|
|
|
2009
|
|
|
2008
|
|
Land
|
$
|
952,342
|
|
|
$
|
1,032,342
|
|
Office
furniture and equipment
|
|
18,921
|
|
|
|
18,061
|
|
|
|
971,263
|
|
|
|
1,050,403
|
|
Less
accumulated depreciation
|
|
(6,347
|
)
|
|
|
(2,735
|
)
|
|
$
|
964,916
|
|
|
$
|
1,047,668
|
|
Depreciation
expense amounted to approximately $3,600 and $2,700 for the years ended
December 31, 2009 and 2008, respectively. Other land includes the estimated
fair value of 118.67 acres of undeveloped land in Charleston County, South
Carolina (which the Company obtained title to on March 5, 2008 in the final
settlement of certain litigation which involved one of our former Board members
and was known as the Young Complaints). The Company recorded an
impairment charge of $80,000 at December 31, 2009 based on the current appraised
value of the land.
Note
receivable
The note receivable of approximately
$254,000 and $229,000 at December 31, 2009 and 2008, respectively, represents
the estimated net present value of a note receivable from Mr. Larry D.
Young and the other plaintiffs in the Young litigation received as a result of a
settlement agreement executed on February 1, 2008. The promissory note is
in the principal amount of approximately $3,877,000, which outstanding balance
will be considered satisfied in full upon timely remittance of the $500,000
which is due in installments of $100,000 due May 31, 2008, and three annual
payments of $133,333 commencing on January 1, 2009. The Company
agreed to extend the due date for $66,333 of the January 1, 2010 installment to
May 1, 2010. In the event the balance of the note is not paid in full
by January 1, 2011, the note provides for an additional installment of
approximately $3,377,000 in principal, plus interest. The balance of the note
accretes over the term of this note using an interest rate of approximately 10%.
The accretion is recorded to interest income.
Note
6. Discontinued Operations
As
previously disclosed in Note 1, the Company signed a purchase and sale agreement
for the disposition of Stonehenge on September 26, 2008 which closed on
January 23, 2009; therefore, the operations of Stonehenge are accounted for
as discontinued operations effective as of the signing of this agreement. The
carrying values of the major classes of assets and liabilities of discontinued
operations, included under the “Current and non-current assets of discontinued
operations” and “Current and non-current liabilities of discontinued
operations,” captions in the consolidated condensed balance sheet as of December
31, 2008 are disclosed in the following table. There were no material
changes to these balances between December 31, 2008 and the closing date of the
sale on January 23, 2009.
|
|
December 31,
2008
|
|
Cash and cash equivalents
|
|
$
|
25,876
|
|
Accounts
receivable
|
|
|
333,972
|
|
Prepaid
expenses
|
|
|
30,978
|
|
Inventory
|
|
|
125,705
|
|
Current
assets of discontinued operations
|
|
|
516,531
|
|
|
|
|
|
|
Property
and equipment
|
|
|
4,581,308
|
|
Accumulated
depreciation
|
|
|
(670,951
|
)
|
Non-current
assets of discontinued operations
|
|
|
3,910,357
|
|
|
|
|
|
|
Total
assets of discontinued operations
|
|
$
|
4,426,888
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
139,406
|
|
Accrued
expenses and other liabilities
|
|
|
96,506
|
|
Long-term
debt – current portion
|
|
|
4,141,534
|
|
Member
initiation fees and other deferred revenue – current
portion
|
|
|
318,866
|
|
Current
liabilities of discontinued operations
|
|
|
4,696,312
|
|
|
|
|
|
|
Long-term
debt, net of current portion
|
|
|
72,391
|
|
Member
initiation fees and other deferred revenue, net of current
portion
|
|
|
733,042
|
|
Non-current
liabilities of discontinued operations
|
|
|
805,433
|
|
|
|
|
|
|
Total
liabilities of discontinued operations
|
|
$
|
5,501,745
|
|
———————
Notes
to the Table of Discontinued Operations Above:
Long-term
debt — current portion
GTA-Stonehenge, LLC,
or GTA-SH, has a $4,200,000 revolving credit line with Textron Financial
Corporation (“Textron”), with an outstanding balance of $4,100,000 at
December 31, 2008 which was scheduled to mature on March 18, 2009 and
is included in the “Long-term debt — current portion” in the table above. This
loan was collateralized by a security interest in Stonehenge. This revolving
credit line was paid in full concurrent with the closing of the sale of
Stonehenge on January 23, 2009.
Also
included in “Long-term debt — current portion” are various other loan and
capital lease obligations that the Company entered into that have payment terms
ranging from approximately $200 to $2,000 per month and interest rates of 6.5%
to 9.0%.
Summary
results of discontinued operations for the period January 1, 2009 to January 22,
2009 and for the year ended December 31, 2008.
|
|
Period
January 1,
2009
to
January
22,
2009
|
|
|
Year
Ended
December
31, 2008
|
|
Revenues
from discontinued operations
|
|
$
|
148,829
|
|
|
$
|
4,064,669
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from discontinued operations, net of tax
|
|
$
|
(130,336
|
)
|
|
$
|
(716,308
|
)
|
|
|
|
|
|
|
|
|
|
Gain
on sale of discontinued operations, net of tax
|
|
$
|
1,158,414
|
|
|
$
|
—
|
|
Note
7.
Stock Options and Awards
|
The
compensation committee of the board of directors determines compensation,
including stock options and awards. Options are generally awarded with the
exercise price equal to the closing NYSE AMEX price on the respective grant
date, as specified by the Compensation Committee, and become exercisable in
three to five years.
The
Company’s 2007 Stock Option Plan, which is stockholder approved, permits the
grant of share options and shares to its employees for up to 700,000 shares of
common stock. The Company believes that such awards better align the interests
of its employees with those of its stockholders. These option awards generally
vest ratably over three years and have three to five year contractual terms from
the vesting date. Any options issued to employees who are
subsequently terminated do not expire early as a result of termination but
expire pursuant to their contractual terms at issuance. Certain option and share
awards provide for accelerated vesting if there is a change in control (as
defined in the Stock Option Plan) or by resolution of the board of
directors.
Pursuant
to the respective option plans, except the 1997 Non-Employee Director’s Plan and
the 2007 Stock Option Plan , any options issued to employees who are
subsequently terminated expire ninety days following his/her termination if not
exercised. The options issued under the 1997 Non-Employee Director’s Plan are
exercisable until their original expiration date. As of December 31,
2009, there are 40,000 options outstanding under the 1997 Non-Employee
Director’s Plan.
Name
of Stock Option/Award Plans
|
|
Shares
Issued
|
|
|
Shares
Available
To
Issue
|
|
1997
Stock Incentive Plan
|
|
|
500,000
|
|
|
|
—
|
|
1997
Non-employee Director’s Plan
|
|
|
100,000
|
|
|
|
—
|
|
New
1997 Plan
|
|
|
582,032
|
|
|
|
17,968
|
|
1998
Plan
|
|
|
498,000
|
|
|
|
2,000
|
|
2007
Stock Option Plan
|
|
|
700,000
|
|
|
|
—
|
|
Stock
Option Plan Transactions
A summary of option activity under our
stock option plans for the years ended December 31, 2009 and 2008 is as
follows:
|
|
Number of
options
|
|
|
Weighted
average exercise
price
($)
|
|
|
Weighted
average
remaining
contractual
term
(years)
|
|
|
Aggregate
intrinsic Value
($)
|
|
Options
outstanding at December 31, 2007
|
|
|
625,000
|
|
|
$
|
12.83
|
|
|
|
|
|
|
|
Plus:
options granted
|
|
|
210,000
|
|
|
|
1.84
|
|
|
|
|
|
|
|
Less:
options exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
Less:
options canceled or expired
|
|
|
270,000
|
|
|
|
22.61
|
|
|
|
|
|
|
|
Options
outstanding at December 31, 2008
|
|
|
565,000
|
|
|
|
4.08
|
|
|
|
|
|
|
|
Plus:
options granted
|
|
|
215,000
|
|
|
|
1.03
|
|
|
|
|
|
|
|
Less:
options exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
Less:
options canceled or expired
|
|
|
(40,000
|
)
|
|
|
20.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
outstanding at December 31, 2009
|
|
|
740,000
|
|
|
|
2.30
|
|
|
|
3.2
|
|
|
$
|
204,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
exercisable at December 31, 2009
|
|
|
293,337
|
|
|
$
|
3.51
|
|
|
|
2.3
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the year ended December 31,
2009, 215,000 options were issued, 161,670 options vested, no options were
exercised and 40,000 options expired. During the year ended December
31, 2008, 210,000 options were issued, 91,667 options vested, no options were
exercised and 20,000 options expired. The vesting of these options
accelerates upon change of control (as defined in the Stock Option Plan) or by
resolution of the board of directors. The Board’s options also
accelerate upon the resignation or removal of a director upon completion of his
elected term.
The following table further discloses
by grant date the stock option grants that the Company made during the years
ended December 31, 2009 and 2008.
Grant
Date
|
|
Number of
stock
options granted
|
|
|
Exercise
Price
|
|
|
Fair
Value of Common Stock on Date of Grant
|
|
|
Intrinsic
Value of Stock Options at Grant Date
|
|
1/18/08
|
|
|
50,000
|
|
|
$
|
1.90
|
|
|
$
|
1.90
|
|
|
$
|
—
|
|
1/23/08
|
|
|
160,000
|
|
|
|
1.82
|
|
|
|
1.82
|
|
|
|
—
|
|
2/27/09
|
|
|
95,000
|
|
|
|
1.10
|
|
|
|
1.10
|
|
|
|
—
|
|
3/4/09
|
|
|
120,000
|
|
|
|
0.97
|
|
|
|
0.97
|
|
|
|
—
|
|
|
|
|
425,000
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
With
respect to the options awarded to the independent Board members on March 4,
2009, one board member received the cash equivalent of the stock options paid
out over the three year vesting period instead of receiving stock options, as
permitted by the Compensation Committee, due to the stock ownership restrictions
and their applicability to his current stock
ownership percentage. The cash equivalent of the
estimated grant-date fair value of these options of approximately $19,000 is
recorded as a board fee expense and is included in accrued liabilities as of
December 31, 2009.
The fair
value of each option award is estimated on the date of grant using a
Black-Scholes-Merton option valuation model that uses the assumptions noted in
the following table. Expected volatility is based on the historical volatility
of the price of the Company’s stock. Within the valuation model, the Company
currently estimates that all of these options will be
exercised. The expected term of options is derived from the
output of the option valuation model and represents the period of time that
options are expected to be outstanding. The risk-free rate for periods within
the contractual life of the option is based on the U.S. Treasury bill rate in
effect at the time of grant. The fair values of the options were estimated using
the Black-Scholes-Merton option-pricing model based on the following
assumptions:
|
|
For
the years ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
Risk
free interest rate
|
|
|
1.62
|
%
|
|
|
2.69
|
%
|
Expected
average life
|
|
3.5 years
|
|
|
4 years
|
|
Expected
volatility
|
|
|
67
|
%
|
|
|
54
|
%
|
Expected
dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Forfeiture
rate
|
|
|
0
|
%
|
|
|
0
|
%
|
Stock-based
compensation expense included in the consolidated statement of operations is
approximately $178,000 and $145,000 for the years ended December 31, 2009 and
2008, respectively. As of December 31, 2009, there is approximately
$225,000 of total unrecognized stock-based compensation cost related to options
granted under the Company’s plans that will be recognized over a weighted
average period of 1.4 years.
|
|
Options
Outstanding
|
|
|
|
Options
Exercisable
|
|
Range of Exercise Price
|
|
Shares
|
|
Avg
Remaining
Contractual
Life
(years)
|
|
Average
Exercise
Price
|
|
Shares
|
|
Price
|
|
$0.97
|
|
|
120,000
|
|
|
4.2
|
|
$0.97
|
|
|
—
|
|
$
—
|
|
$1.10
|
|
|
95,000
|
|
|
4.2
|
|
1.10
|
|
|
—
|
|
—
|
|
$1.82
|
|
|
160,000
|
|
|
3.1
|
|
1.82
|
|
|
53,334
|
|
1.82
|
|
$1.90
|
|
|
50,000
|
|
|
3.1
|
|
1.90
|
|
|
16,667
|
|
1.90
|
|
$2.10
|
|
|
275,000
|
|
|
3.0
|
|
2.10
|
|
|
183,333
|
|
2.10
|
|
$7.85
|
|
|
20,000
|
|
|
1.1
|
|
7.85
|
|
|
20,000
|
|
7.85
|
|
$16–$19
|
|
|
20,000
|
|
|
0.1
|
|
17.94
|
|
|
20,000
|
|
17.34
|
|
|
|
|
740,000
|
|
|
|
|
|
|
|
293,334
|
|
|
|
Note
8. Income Taxes
The
Company initially qualified as a real estate investment trust, commonly called a
REIT. The Company no longer qualified as a REIT as of 2002. Under the tax code,
once REIT status is lost, it generally may not be regained for the following
four years. Accordingly, the Company will be subject to federal income tax on
any net taxable income it earns (or net taxable gain it realizes).
During
2009 and 2008, the Company’s operations resulted in a net operating loss for
income tax purposes. Therefore, no income tax will be due on its 2009 and 2008
operating revenues or its proceeds from 2009 property sales. There
were no property sales in 2008. Deferred income tax assets (liabilities) as of
December 31, 2009 and 2008 are as follows:
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
Differences
in the carrying value of property and equipment
|
|
$
|
28,000
|
|
|
$
|
(262,000
|
)
|
Federal
and state net operating loss carryforwards
|
|
|
31,050,000
|
|
|
|
30,971,000
|
|
Capital
loss carryover
|
|
|
—
|
|
|
|
16,624,000
|
|
Other
liabilities
|
|
|
14,000
|
|
|
|
338,000
|
|
Other
|
|
|
—
|
|
|
|
8,000
|
|
Sub-total
|
|
|
31,092,000
|
|
|
|
47,679,000
|
|
Valuation
Allowance
|
|
|
(31,092,000
|
)
|
|
|
(47,679,000
|
)
|
Total
net deferred tax assets
|
|
$
|
—
|
|
|
$
|
—
|
|
Included
in deferred tax assets above for the years ended December 31, 2009 and 2008
are federal net operating losses of $85,303,000 and $85,032,000, respectively.
These net operating losses expire at various dates beginning with the 2022 tax
year and ending with the 2029 tax year.
Included
in deferred tax assets above for the years ended December 31, 2009 and 2008
are state net operating losses of $72,506,000 and $72,325,000, respectively.
These net operating losses expire at various dates beginning with the 2022 tax
year and ending with the 2029 tax year.
Also
included in deferred tax assets above for 2008 is a capital loss carryover of
$44,568,000, which expired at December 31, 2009.
The
provision for federal and state income taxes from continuing operations for
the years ended December 31, 2009 and 2008 is made up of the following
components:
|
|
2009
|
|
|
2008
|
|
Current
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
The
change in valuation allowance for the year ended December 31, 2009 is
comprised of an increase of $37,000 from operations, and a decrease of
$16,624,000 from the expiration of capital loss carryforwards, resulting in a
net decrease of $16,587,000. The change in valuation allowance from
operations for the year ended December 31, 2008 was $124,000.
Utilization
of the deferred tax asset of $31,092,000 is dependent on future taxable income.
Based on the Company’s historical operating results and its current estimates of
future operating income, we do not anticipate generating future profits from
which to benefit from the calculated deferred tax asset; accordingly, a
valuation allowance for the entire amount has been recorded.
The
effective income tax rate from continuing operations is different
from the federal statutory rate for the years ended December 31, 2009 and
2008 for the following reasons:
|
|
2009
|
|
|
2008
|
|
Expected
taxes at statutory rates
|
|
|
(34.0
|
)%
|
|
|
34.0
|
%
|
State
income tax benefit, net of federal income tax rate
|
|
|
92.3
|
%
|
|
|
6.1
|
%
|
Expiration
of capital loss carryforwards
|
|
|
978.0
|
%
|
|
|
—
|
|
Incentive
stock options expense
|
|
|
3.9
|
%
|
|
|
27.6
|
%
|
Nondeductible
meals and entertainment expenses
|
|
|
0.1
|
%
|
|
|
1.5
|
%
|
Nondeductible
expenses of pending merger……………………...
|
|
|
8.7
|
%
|
|
|
—
|
|
Other………………………………………………………………
|
|
|
(3.6
|
)%
|
|
|
—
|
|
Change
in Valuation allowance
|
|
|
(1,045.4
|
)%
|
|
|
(69.2
|
)%
|
Total
|
|
|
—
|
|
|
|
—
|
|
The
statutory rate reconciling percentages for 2009 are initiated primarily as
a result of the nominal amount of pretax income to which the reconciling items
are being compared. The primary reconciling item for 2009 is the permanent
difference related to the expiration of the deferred tax asset for capital loss
carryforwards.
During
the year ended December 31, 2008, the Company recognized approximately
$1,641,000 in other income. This other income was primarily due to the
recognition of a gain from the settlement of certain litigation formerly known
as the Young Complaints. In connection with the settlement, the Company recorded
at their estimated fair value (i) a note receivable of approximately $432,000
(see Note 5) and undeveloped land of $1,032,000 (see Note 4). Further, the
Company recognized approximately $177,000 in income from the resolution of the
property tax lawsuit related to the Resort.
Note
10. Commitments and Contingencies
|
Operating
Leases
The
Company leases its corporate office space under an operating lease which expired
on September 30, 2009 at a monthly lease amount of approximately $2,500
(currently under a month-to-month arrangement with the same lease terms) and
certain equipment under an operating lease at a monthly lease amount of
approximately $435 which expire on January 14, 2010 (and will be retained
on a month-to-month basis until March 31, 2010). All other operating leases held
at December 31, 2008 were related to the discontinued operations at
Stonehenge and were assumed by the buyer upon the closing of the sale on
January 23, 2009. The operating lease expense (excluding discontinue
operations) for the years ended December 31, 2009 and 2008 was approximately
$35,000 and $40,000, respectively.
SIGNATURES
AND POWERS OF ATTORNEY
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
GOLF TRUST OF AMERICA,
INC.
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|
|
|
|
|
February
24, 2010
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By:
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/s/ MICHAEL C. PEARCE
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|
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|
Michael
C. Pearce
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|
|
|
President
and Chief Executive Officer
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|
|
|
|
|
|
|
|
|
February
24, 2010
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By:
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/s/
TRACY
S. CLIFFORD
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Tracy S. Clifford
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|
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Chief
Financial Officer
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|
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Each of
the undersigned officers and directors of Golf Trust of America, Inc. does
hereby constitute and appoint Michael C. Pearce and Tracy S. Clifford, and each
of them individually, his true and lawful attorneys-in-fact and agents, each
with full power of substitution and re-substitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments to
this report, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby, ratifying and confirming all that each of said
attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons in the capacities and on the dates
indicated:
Signature
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|
Title
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|
Date
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|
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|
|
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/s/
M
ichael
C.
P
earce
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|
President,
Chief Executive Officer and
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|
February
24, 2010
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Michael
C. Pearce
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Chairman
of the Board of Directors
(principal
executive officer)
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/s/
T
racy
S.
C
lifford
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Chief
Financial Officer and Secretary
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|
February
24, 2010
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Tracy
S. Clifford
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|
(principal
financial officer)
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|
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/s/
J
onathan
M.
C
ouchman
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|
Director
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February
24, 2010
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Jonathan
M. Couchman
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|
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|
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/s/
J
ay
A.
G
ottlieb
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Director
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|
February
24, 2010
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Jay
A. Gottlieb
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/s/
J
an
H.
L
oeb
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Director
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February
24, 2010
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Jan
H. Loeb
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/s/
W
illiam
V
lahos
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Director
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|
February
24, 2010
|
William
Vlahos
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|
|
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Pursuant
to Item 601(a)(2) of Regulation S-K, this exhibit index immediately
precedes the exhibits.
The
following exhibits are part of this Annual Report on Form 10-K for fiscal
year 2009 (and are numbered in accordance with Item 601 of
Regulation S-K). Items marked with an asterisk (*) are filed with this
Annual Report.
No.
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|
Description
|
2.1
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|
Plan
of Liquidation and Dissolution of Golf Trust of America, Inc., as
approved by stockholders on May 22, 2001 which was terminated by
stockholders on November 8, 2007 (previously filed as
Exhibit 2.1 to our company’s Current Report on Form 8-K, filed
May 30, 2001, and incorporated herein by
reference).
|
2.2
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|
Agreement
and Plan of Merger By and Among Golf Trust of America, Inc., GTA
Acquisition, LLC and Pernix Therapeutics, Inc. dated as of October 6, 2009
(incorporated by reference from Exhibit No. 10.6 to this Annual Report on
Form 10-K).
|
3.1
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|
Articles
of Incorporation of Golf Trust of America, Inc., as currently in effect
(previously filed as Exhibit 3.1 to our company’s Current Report on
Form 8-K dated as of November 6, 2007 and incorporated herein by
reference).
|
3.2
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|
Sixth
Amended and Restated Bylaws of Golf Trust of America, Inc., as
adopted on November 8, 2007 and as currently in effect (previously
filed as Exhibit 3.1 to our company’s Current Report on
Form 8-K, filed November 9, 2007 and incorporated herein by
reference).
|
4.1
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|
Form of
Share Certificate for Golf Trust of America, Inc. Common Stock
(previously filed as Exhibit 4.3 to our company’s Current Report on
Form 8-K, filed August 30, 1999, and incorporated herein by
reference).
|
4.2
|
|
Form of
Share Certificate for Golf Trust of America, Inc. Series A
Preferred Stock (previously filed as Exhibit 3.2 to our company’s
Current Report on Form 8-K, filed April 13, 1999, and
incorporated herein by reference).
|
4.3
|
|
Shareholder
Rights Agreement, by and between Golf Trust of America, Inc. and
ChaseMellon Shareholder Services, L.L.C., as rights agent, dated
August 24, 1999 (previously filed as Exhibit 4.1 to our
company’s Current Report on Form 8-K, filed August 30, 1999, and
incorporated herein by reference).
|
4.4
|
|
Resolutions
of the Board of Directors dated March 9, 2009 regarding the
inadvertent acquisition of common shares by Odyssey Value Advisors, LLC
and waiver of provisions of the Shareholder Rights
Agreement.
|
10.1+
|
|
First
Amended and Restated Employment Agreement between Golf Trust of
America, Inc. and Michael Pearce, dated as of April 26, 2009
(previously filed as Exhibit 10.1.2 to our company’s Quarterly Report
on Form 10-Q, filed on May 14, 2009, and incorporated herein by
reference).
|
10.2.1
|
|
Amended
and Restated Loan Agreement, dated as of August 4, 2005, by and among
GTA—Stonehenge, LLC, as Borrower, Golf Trust of America, L.P.,
as Guarantor, and Textron Financial Corporation as the Lender (previously
filed as Exhibit 10.22.3 to our company’s Current Report on
Form 8-K, filed August 9, 2005, and incorporated herein by
reference).
|
10.2.2
|
|
Notice
of Future Advances, Note Mortgage, Security Agreement, and Fixture Filing,
dated as of August 4, 2005, from Golf Trust of America, L.P. in
favor of Textron Financial Corporation (previously filed as
Exhibit 10.22.4 to our company’s Current Report on Form 8-K,
filed August 9, 2005, and incorporated herein by
reference).
|
10.3
|
|
Golf
Trust of America, Inc. 2007 Stock Option Plan (previously filed as
Appendix A to our company’s definitive proxy statement dated and
filed on November 16, 2007, and incorporated herein by
reference).
|
10.4.1
|
|
Settlement
Agreement by and among Larry D. Young, Danny L. Young, Kyle N. Young, The
Young Family Irrevocable Trust and The Legends Group, Ltd.
(collectively, the “Legends Plaintiffs”), and Golf Trust of
America, Inc., W. Bradley Blair, II, and Scott D. Peters
(collectively, the “GTA Defendants”) (previously filed as
Exhibit 10.1 to our company’s Current Report on Form 8-K filed
February 4, 2008 and incorporated herein by
reference).
|
10.4.2
|
|
Confession
of Judgment by and among Larry D. Young, Danny L. Young, Kyle N. Young,
The Young Family Irrevocable Trust and The Legends Group, Ltd.
(collectively, the “Legends Plaintiffs”), and Golf Trust of
America, Inc., W. Bradley Blair, II, and Scott D. Peters
(collectively, the “GTA Defendants”) (previously filed as
Exhibit 10.2 to our company’s Current Report on Form 8-K filed
February 4, 2008 and incorporated herein by
reference).
|
10.4.3
|
|
Promissory
Note pursuant to the Settlement Agreement in the case captioned
Larry D. Young, et al.,
Plaintiffs, v. BDO Seidman, LLP, et al., Defendants
(previously filed as Exhibit 10.3 to our company’s Current Report on
Form 8-K filed February 4, 2008 and incorporated herein by
reference).
|
10.5.1
|
|
Purchase
and Sale Agreement by and among Golf Trust of America, L.P. and WCWW
Committee, LLC dated as of September 26, 2008 (previously filed as
Exhibit 10.1 to our company’s Current Report on Form 8-K filed
October 1, 2008 and incorporated herein by
reference).
|
10.5.2
|
|
Consent
of J. Richard Marlow, MAI, SGA (previously filed as Exhibit 25.1 to
our company’s 2007 Annual Report on Form 10-K filed March 31,
2008 and incorporated herein by reference).
|
10.6
|
|
Agreement
and Plan of Merger By and Among Golf Trust of America, Inc., GTA
Acquisition, LLC and Pernix Therapeutics, Inc. dated as of October 6,
2009 (previously filed as Exhibit 10.1 to our Current Report on Form 8-K
filed on October 7, 2009, and incorporated herein by
reference).
|
14.1
|
|
Code
of Business Conduct and Ethics, adopted by the Board of Directors of Golf
Trust of America, Inc. on November 6, 2007 (previously filed as
Exhibit 14.1 to our company’s Current Report on Form 8-K, filed
November 9, 2007, and incorporated herein by
reference).
|
|
|
Consent
of Cherry, Bekaert & Holland, L.L.P.
|
|
|
Powers
of Attorney (included under the caption “Signatures and Powers of
Attorney”)
|
|
|
Certification
of Michael C. Pearce pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
Certification
of Tracy S. Clifford pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
Certifications
under Section 906 of the Sarbanes-Oxley Act of
2002.
|
———————
†
|
Portions
of this exhibit have been omitted pursuant to a request for confidential
treatment.
|
+
|
Denotes
a management contract or compensatory
plan.
|