Cybercare's offices empty out amid tardy filings
South Florida Business Journal - August 15, 2003
by John T. Fakler
Cybercare, once a South Florida Internet darling with a stock price of $40 a share, is no longer doing business at its Boynton Beach headquarters.
A public filing by Cybercare (Pink Sheets: CYBR) in April said the company wouldn't file its annual report on time. But little has been heard since from the company, which hasn't reported any of its finances with the SEC since then.
Two stock quote Web sites indicated Cybercare was trading at 0.2 cents earlier this week.
Calls to Cybercare's corporate office and an investor relations contact in Boynton Beach could not be completed because the lines were busy.
An address on Quantum Lakes Drive in Boynton Beach, listed by the state of Florida and Pinksheets.com as the firm's headquarters, was vacated at the end of July, according to Quantum Lakes Realty, the management company leasing space at the complex.
Suite 400 of the Woolbright Corporate Center II on Congress Road, Cybercare's last known address, according to Nasdaq, is now occupied by the Muscular Dystrophy Association.
"They've been gone about a year-and-a-half," said a worker at the Congress Road location. "They didn't leave a forwarding address. I haven't heard much about them since."
Louja Management, leasing agent for the Woolbright Corporate Center, said it does not have Cybercare on its roster of companies currently doing business there.
In an April 30 public filing, Cybercare said it was having financial difficulties and that its accountants refused to turn over any work papers until they got paid.
As of Wednesday, Cybercare had not made any filings, including its belated annual report, with the SEC.
In May 2000, the company faced a flurry of suits filed by class action lawyers who questioned the accuracy of information Cybercare provided to shareholders and the public. The company said it would defend itself "vigorously" and expected to be fully vindicated.
IBM won a case against Cybercare last year. The final judgment for more than $500,000 followed a withdrawal of the defendant's counsel and a no-show by Cybercare CEO Joe Forte, who was compelled to appear for discovery and depositions by IBM.
"[Cybercare] filed a confession of judgment," said Ronald Marlowe with Stephens Lynn in Fort Lauderdale, who represented plaintiff IBM. "They basically said, 'we give up.'"
But Marlowe said he isn't optimistic about collecting.
His only contact information for Cybercare is that of the attorney in Miami who withdrew and another attorney in Miami Beach who once represented Cybercare.
No one is answering phones there, either, he said.
While a class action was settled in 2002, another suit - with Cybercare as the plaintiff - remained open as of Monday.
Mark Felstein, a Boca Raton attorney representing Cybercare against 400 John Doe brokers, did not return calls by deadline.
That case remains active, with several summonses issued last month.
Several years ago, Cybercare announced it did not need FDA approval for a medical monitoring product, but the item in question didn't pertain to an advanced version of the product, which was drawing investor interest and needed FDA approval.
The SEC made some inquiries regarding the matter, but stopped short of a formal investigation.
In June 2000, the company announced it had received clearance from the FDA to sell the advanced versions of its telemedicine equipment. But at the time of that announcement, Cybercare shares were trading at $7.25, compared with a 52-week high of $40.
In August 2002, Cybercare's accounts receivable lender denied the company additional funding.
The company also said it fired the president of its pharmacy operations and that key pharmacy employees had resigned.
Amid company protests, Nasdaq delisted Cybercare in November after the company failed to meet the financial criteria for continued listing.
In April, continued losses and a lack of sufficient working capital were attributed as the reason behind the failure and closing of Cybercare's Physical Therapy and Rehabilitation unit, comprised of 42 clinics statewide.
Cybercare planned to continue to engage in sales efforts in the technology division, the company said in the April filing. The intention was "to concentrate on collecting its accounts receivable and on selling certain assets."
Cybercare, creator of the Electronic HouseCall System that monitors patient care via the Internet, was in discussions with unnamed suitors regarding a possible sale of one or more of its operating units, the filing said, but Cybercare said its continued operation was "uncertain."
Jonathan Awner, chairman of the corporate practice group of Akerman Senterfitt in Miami, said many firms going into bankruptcy or ceasing operations continue to file publicly, while others say, "What's the point? The creditors will own the company anyway."
Awner said all companies with at least 500 shareholders and $10 million in assets must file with the SEC electronically. Paper hardships are a rarity, but do happen, he said. Companies must prove they don't have access to a computer to make the filing, and that's unlikely with an Internet company, he said.
A 10K is a filing required on an annual basis, said Leo Hinkley, president and director of the National Investor Relations Institute's South Florida office in Fort Lauderdale.
"There is a grace period," he said. "They [Cybercare] are well beyond that. That's why, in part, they were moved [to Over the Counter]."
Hinkley said Nasdaq, which oversees OTC stocks, has different requirements with regard to the size of the company and whether or not it has to file.
"If they [Cybercare] were running into financial issues, their [filing] requirement could change," Hinkley said. "I would expect they would have to do some kind of filing."
Hinkley said small, public firms like Cybercare have taken the brunt of the bear market, recession and new Sarbanes-Oxley legislation, which is expensive to implement.
Meeting the requirements of Sarbanes and Reg FD (Regulation Fair Disclosure) are putting some financial burden on the smaller cap companies, he said, noting that the new legislation has cost corporations about
$1.25 billion so far - not even a year since legislation went into effect.
The federal government has asked that companies put changes in place in a manner that is cost-effective, he said.
"The SEC is supposed to do a follow-up and seek enforcement measures," Awner said about late filers. But resources are tapped, he said, and the agency is better off going after bigger fish like WorldCom, where they can get "more bang for the buck."
That worries IBM attorney Marlowe, who intends to get his client its just reward.
"There's a final judgment [against Cybercare], he said. "That doesn't mean the collections are over."
E-mail Senior Reporter John T. Fakler at jfakler@bizjournals.com. |
