UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM 10-K
x | 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, 2008 | |
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o | TRANSITION REPORT UNDER 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 0-28572. | |
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| OPTIMAL GROUP INC. (Exact name of registrant as specified in its charter) | |
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Canada |
| 98-0160833 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer |
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3500 de Maisonneuve Blvd. West, Suite 800, |
| (514) 738-8885 |
Montreal, Quebec, Canada, H3Z 3C1 |
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(Address of principal executive offices and postal code) |
| (Registrant telephone number, including area code) |
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Securities registered pursuant to Section 12(b) of the Act: | ||
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| Name of Each Exchange on Which Registered |
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Class “A” shares, no par value |
| Nasdaq Stock Market |
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Securities registered pursuant to Section 12(g) of the Act: None | ||
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act |
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act |
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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 x 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 |
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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 12 b-2 of the Exchange Act (Check one): |
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Large Accelerated filer o | Accelerated filer x | Non-accelerated filer o | Small reporting company o |
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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 x |
Aggregate market value of the voting stock of the registrant held by non-affiliates of the registrant as of June 30, 2008 (computed by reference to the last reported sale price of the Class “A” shares on the Nasdaq Global Market on such date): $52,221,629. For purposes of this calculation, only executive officers and directors are deemed to be affiliates of the registrant.
| Number of Class “A” shares outstanding at February 27, 2009: 25,742,223 |
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EXPLANATORY NOTE
This Amendment No. 1 (this “Amendment”) amends the Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2009 by Optimal Group Inc. (the “Company”) for the fiscal year ended December 31, 2008 (the “Original Report”). This Amendment amends and restates the following sections of the Original Report in response to an SEC comment letter addressed to the Company dated May 21, 2009 :
• Part II Item 9A – Controls and Procedures, to clarify disclosure that there were no material changes to the Company’s internal control over financial reporting during the year ended December 31, 2008;
• Part III Item 13 – Certain Relationship and Related Transactions, and Director Independence, to revise disclosure to describe how the Company reviews, approves or ratifies related party transactions; and
• The Company is also filing as exhibits to this Amendment the certifications required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Because no financial statements are contained in this Amendment, the Company is not including certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Except for the foregoing revisions, this Amendment does not modify or update any disclosures presented in the Original Report. Accordingly, this Amendment does not reflect events occurring after the filing of the Original Report or modify or update those disclosures contained in the Original Report which may have been affected by subsequent events. Information not affected by this Amendment is unchanged and reflects the disclosures made at the time the Original Report was filed.
PART II
ITEM 9A - CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our principal executive officer and our principal accounting officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.
Management’s Report on Internal Control Over Financial Reporting
Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal accounting officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2008.
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Management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2008 excluded Sablon Distribution, which we acquired on August 29, 2008 and Think Tank Toys which we acquired on July 1, 2008. Sablon Distribution and the assets and liabilities of Think Tank Toys are wholly-owned by us and their total assets and total net sales represented 12% of our consolidated total assets and less than 10% of our consolidated net sales, respectively, as of and for the year ended December 31, 2008. Companies are allowed to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired company under guidelines established by the Securities and Exchange Commission. No changes in our internal control over financial reporting occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
KPMG LLP (“KPMG”), an independent registered public accounting firm, has issued an attestation report on the effectiveness of internal control over financial reporting as of December 31, 2008, and their report is included herein.
ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Our Board of Directors has not adopted a formal policy pertaining to the review, approval and ratification of related party transactions; however, our independent directors will review, approve or ratify, when necessary, transactions with related parties on a case-by-case basis, and if the proposed transaction is with an independent board member, such member will recuse himself or herself from such review, approval or ratification. When deliberating such transactions, the independent directors will consider whether the terms of the transaction are fair to us.
Mr. Stephen Shaper provided us with consulting services and, as a result, in 2008 we incurred approximately $199,521 (2007 - $260,000) to Middlemarch Capital Corporation, a company under his control. Effective September 30, 2008, we no longer used his consulting services.
The consulting agreement with Mr. Stephen Shaper was an arrangement that was entered into by Terra Payments Inc. (“Terra”) prior to our acquisition of Terra in 2004. As a result, this arrangement was not subject to review and formal approval in 2008.
PART IV
ITEM 15 – EXHIBITS
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Certification required under Section 302 of the Sarbanes-Oxley Act of 2002. | |
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Certification required under Section 302 of the Sarbanes-Oxley Act of 2002. |
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SIGNATURES
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.
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| OPTIMAL GROUP INC. | ||
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Dated: June 1 , 2009 |
| By: | /s/ NEIL S. WECHSLER | |
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| Neil S. Wechsler, Co-Chairman | ||
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| and Chief Executive Officer | ||
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| (Principal Executive Officer) | ||
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| By: | /s/ GARY S. WECHSLER | |
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| Gary S. Wechsler, Chief Financial Officer | ||
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| (Principal Accounting Officer) | ||
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons of the Registrant and in the capacities and on the dates indicated:
Dated: June 1 , 2009 |
| /s/ NEIL S. WECHSLER |
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| Neil S. Wechsler, Director |
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Dated: June 1 , 2009 |
| /s/ HOLDIN L. OSTRIN |
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| Holdin L. Ostrin, Director |
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Dated: June 1 , 2009 |
| /s/ TOMMY BOMAN |
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| Tommy Boman, Director |
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Dated: June 1 , 2009 |
| /s/ JAMES S. GERTLER |
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| James S. Gertler, Director |
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Dated: June 1 , 2009 |
| /s/ JONATHAN J. GINNS |
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| Jonathan J. Ginns, Director |
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Dated: June 1 , 2009 |
| /s/ HENRY M. KARP |
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| Henry M. Karp, Director |
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Dated: June 1 , 2009 |
| /s/ THOMAS D. MURPHY |
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| Thomas D. Murphy, Director |