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Replies to post #36477 on Imaging Diagnostic Systems (fka IMDS)
09/18/13 4:18 PM
09/18/13 7:01 PM
The SEC’s complaint alleges from October 2008 to December 2009, Imaging repeatedly disclosed in filings and letters to shareholders that it expected to file, by specific deadlines identified in these public statements, a Premarket Approval (“PMA”) application with the FDA to obtain permission to market and sell the CTLM®. Each time, Imaging failed to meet its projected deadline. The complaint alleges that Grable and Schwartz knew there was no basis for the projections because Imaging did not have enough cancer cases to finish its clinical trials and could not pay for the clinical sites.
In addition, according to the complaint, beginning in the quarter ended March 31, 2010, Imaging stopped remitting payroll to the IRS for its employees. The complaint alleges that Imaging’s failure to pay payroll taxes constituted a known commitment, event, or uncertainty of the type that should have been disclosed in the Management’s Discussion and Analysis of Imaging’s periodic filings, which were signed by Grable and Schwartz. However, Imaging did not publicly disclose that it failed to remit payroll taxes until over 16 months later, when on May 18, 2011 it filed a Form 10-Q. Even then, Imaging failed to disclose the risks associated with its failure to pay payroll taxes and in fact failed to provide any disclosure of the risks until it filed an Amended Form 10-K on November 29, 2011.
Finally, the complaint alleges that Grable and Schwartz failed to file beneficial ownership reports in 2009, 2010, and 2011 despite having received stock and options.
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