Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 14-May-14 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'CATASYS, INC. | ' |
Document Type | '10-Q | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Common Stock, Shares Outstanding | ' | 20,693,046 |
Amendment Flag | 'false | ' |
Entity Central Index Key | '0001136174 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Document Period End Date | 31-Mar-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (Current Period Unaudited) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | ||
Current assets | ' | ' | ||
Cash and cash equivalents | $723,000 | $1,136,000 | ||
Receivables, net of allowance for doubtful accounts of $13 and $0, respectively | 293,000 | 173,000 | ||
Receivables from related party | ' | 115,000 | ||
Prepaids and other current assets | 230,000 | 275,000 | ||
Total current assets | 1,246,000 | 1,699,000 | ||
Long-term assets | ' | ' | ||
Property and equipment, net of accumulated depreciation of $2,014 and $2,001, respectively | 380,000 | 366,000 | ||
Intangible assets, net of accumulated amortization of $406 and $401, respectively | 113,000 | 118,000 | ||
Deposits and other assets | 353,000 | 440,000 | ||
Total Assets | 2,092,000 | 2,623,000 | ||
Current liabilities | ' | ' | ||
Accounts payable | 1,072,000 | 1,148,000 | ||
Accrued compensation and benefits | 1,205,000 | 1,181,000 | ||
Deferred revenue | 684,000 | 534,000 | ||
Other accrued liabilities | 1,204,000 | 1,270,000 | ||
Total current liabilities | 4,165,000 | 4,133,000 | ||
Long-term liabilities | ' | ' | ||
Deferred rent and other long-term liabilities | 238,000 | 160,000 | ||
Capital leases | 24,000 | 26,000 | ||
Warrant liabilities | 13,556,000 | 16,347,000 | ||
Total Liabilities | 17,983,000 | 20,666,000 | ||
Stockholders' deficit | ' | ' | ||
Common stock, $0.0001 par value; 500,000,000 shares authorized at March 31, 2014 and December 31, 2013, respectively; 20,559,712 and 18,835,571 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | 2,000 | [1] | 2,000 | [1] |
Additional paid-in-capital | 209,182,000 | 209,169,000 | ||
Accumulated deficit | -225,075,000 | -227,214,000 | ||
Total Stockholders' deficit | -15,891,000 | -18,043,000 | ||
Total Liabilities and Stockholders' deficit | $2,092,000 | $2,623,000 | ||
[1] | The financial statements have been retroactively restated to reflect the 10-for-1 reverse stock split that occurred on May 6, 2013. |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Allowance For Doubtful Accounts (in Dollars) | $13 | $0 |
Property and equipment, accumulated depreciation (in Dollars) | 2,014 | 2,001 |
Intangible assets, accumulated amortization (in Dollars) | $406 | $401 |
Preferred stock par value (in Dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in Dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock,shares issued | 20,559,712 | 18,835,571 |
Common stock, shares outstanding | 20,559,712 | 18,835,571 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | |||
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Revenues | ' | ' | ||
Healthcare services revenues | $199 | $99 | ||
License and management services revenues | 19 | 36 | ||
Total revenues | 218 | 135 | ||
Operating expenses | ' | ' | ||
Cost of healthcare services | 333 | 204 | ||
General and administrative | 1,505 | 1,629 | ||
Depreciation and amortization | 28 | 47 | ||
Total operating expenses | 1,866 | 1,880 | ||
Loss from operations | -1,648 | -1,745 | ||
Interest expense | -1,312 | ' | ||
Change in fair value of warrant liability | 5,101 | 4,360 | ||
Income from operations before provision for income taxes | 2,141 | 2,615 | ||
Provision for income taxes | 2 | 2 | ||
Net Income | $2,139 | $2,613 | ||
Basic and diluted net income per share:* | ' | ' | ||
Basic net income per share* (in Dollars per share) | $0.11 | [1] | $0.22 | [1] |
Basic weighted number of shares outstanding* (in Shares) | 19,449 | 12,057 | ||
Diluted net income per share* (in Dollars per share) | $0.08 | $0.16 | ||
Diluted weighted number of shares outstanding* (in Shares) | 28,166 | 16,562 | ||
[1] | The financial statements have been retroactively restated to reflect the 10-for-1 reverse stock split that occurred on May 6, 2013. |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statement of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Operating activities: | ' | ' |
Net income | $2,139,000 | $2,613,000 |
Adjustments to reconcile net income to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 28,000 | 47,000 |
Issuance costs included in interest expense | 1,311,000 | ' |
Provision for doubtful accounts | 13,000 | ' |
Share-based compensation expense | 13,000 | 68,000 |
Fair value adjustment on warrant liability | -5,101,000 | -4,360,000 |
Deferred rent | 78,000 | ' |
Changes in current assets and liabilities: | ' | ' |
Receivables | -133,000 | -39,000 |
Prepaids and other current assets | 41,000 | 47,000 |
Deferred revenue | 150,000 | 38,000 |
Accounts payable and other accrued liabilities | -3,000 | 21,000 |
Net cash used in operating activities | -1,464,000 | -1,565,000 |
Investing activities: | ' | ' |
Deposits and other assets | 87,000 | ' |
Purchase of property, plant, or equipment | -30,000 | ' |
Net cash provided by investing activities | 57,000 | ' |
Financing activities: | ' | ' |
Proceeds from the issuance of common stock and warrants | 1,000,000 | ' |
Proceeds from the exercise of warrants | ' | 23,000 |
Capital lease obligations | -6,000 | -3,000 |
Net cash provided by financing activities | 994,000 | 20,000 |
Net decrease in cash and cash equivalents | -413,000 | -1,545,000 |
Cash and cash equivalents at beginning of period | 1,136,000 | 3,153,000 |
Cash and cash equivalents at end of period | 723,000 | 1,608,000 |
Supplemental disclosure of cash paid | ' | ' |
Income taxes | 11,000 | 5,000 |
Exercise Of Warrants [Member] | ' | ' |
Supplemental disclosure of non-cash activity | ' | ' |
Common stock issued for exercise of warrants | ' | $129,000 |
Note_1_Basis_of_Consolidation_
Note 1 - Basis of Consolidation, Presentation and Going Concern | 3 Months Ended |
Mar. 31, 2014 | |
Disclosure Text Block [Abstract] | ' |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | ' |
Note 1. Basis of Consolidation, Presentation and Going Concern | |
The accompanying unaudited interim condensed consolidated financial statements for Catasys, Inc. and our subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and instructions to Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with U.S. GAAP. In our opinion, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of the results that may be expected for the entire fiscal year. The accompanying financial information should be read in conjunction with the financial statements and the notes thereto in our most recent Annual Report on Form 10-K for the year-ended December 31, 2013, from which the December 31, 2013 balance sheet has been derived. | |
Our financial statements have been prepared on the basis that we will continue as a going concern. At March 31, 2014, cash and cash equivalents amounted to $723,000 and we had a working capital deficit of approximately $2.9 million. In January 2014, we closed on a financing of approximately $1.0 million. We have incurred significant operating losses and negative cash flows from operations since our inception. During the three months ended March 31, 2014, our cash used in operating activities amounted to $1.5 million. We anticipate that we could continue to incur negative cash flows and net losses for the next twelve months. The financial statements do not include any adjustments relating to the recoverability of the carrying amount of the recorded assets or the amount of liabilities that might result from the outcome of this uncertainty. As of March 31, 2014, these conditions raised substantial doubt as to our ability to continue as a going concern. | |
Our ability to fund our ongoing operations and continue as a going concern is dependent on signing and generating fees from existing and new contracts for our Catasys managed care programs and the success of management’s plans to increase revenue and continue to control expenses. We are operating our programs in Kansas, Louisiana, Massachusetts, Oklahoma, West Virginia, Kentucky, and Wisconsin. The Wisconsin program, which represents our first managed care Medicaid health plan customer, commenced enrollment in the first quarter of 2014. In 2013, we signed an agreement with a national health plan to provide services to their members in New Jersey, which we expect to commence enrollment by the end of the third quarter of 2014. We have generated fees from the launched programs and expect to increase enrollment and fees throughout 2014. However, there can be no assurance that we will generate such fees. In addition, we continue to seek ways to streamline our operating expenses. | |
Based on the provisions of our management services agreement (“MSA”) between us and our managed professional medical corporation, we have determined that our managed professional medical corporation constitutes a variable interest entity, and that we are the primary beneficiary as defined in Financial Accounting Standards Board (“FASB”) Interpretation No. 46R “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51” (“FIN 46R”). Accordingly, we are required to consolidate the revenue and expenses of our managed professional medical corporation. See Management Services Agreement heading under Note 2, Summary of Significant Accounting Policies, for more discussion. | |
All intercompany transactions and balances have been eliminated in consolidation. |
Note_2_Summary_of_Significant_
Note 2 - Summary of Significant Accounting Policies | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Significant Accounting Policies [Text Block] | ' | ||||||||||||||||
Note 2. Summary of Significant Accounting Policies | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
Healthcare Services | |||||||||||||||||
Our Catasys contracts are generally designed to provide cash fees to us on a monthly basis based on enrolled members. To the extent our contracts may include a minimum performance guarantee, we reserve a portion of the monthly fees that may be at risk until the performance measurement period is completed. To the extent we receive case rates that are not subject to the performance guarantees we recognize the case rate ratably over twelve months. | |||||||||||||||||
License and Management Services | |||||||||||||||||
Our license and management services revenues are primarily derived from our managed treatment center, which we include in our consolidated financial statements, and which are derived from charging fees directly to patients for treatment and are recorded when services are provided. Revenues for other services are recognized when services are rendered. | |||||||||||||||||
Cost of Services | |||||||||||||||||
Healthcare Services | |||||||||||||||||
Cost of healthcare services consists primarily of salaries related to our care coaches, healthcare provider claims payments, and fees charged by our third party administrators for processing these claims. Healthcare services cost of services is recognized in the period in which an eligible member receives services. We contract with doctors and licensed behavioral healthcare professionals, on a fee-for-services basis. We determine that a member has received services when we receive a claim or in the absence of a claim, by utilizing member data recorded in the OnTrakTM database within the contracted timeframe, with all required billing elements correctly completed by the service provider. | |||||||||||||||||
License and Management Services | |||||||||||||||||
Cost of license and management services primarily represents direct costs associated with providing care to patients that are incurred in connection with our managed treatment center. Costs are recognized in the periods in which medical treatment is provided. Such costs include, but are not limited to, direct labor costs, medical supplies and medications. | |||||||||||||||||
Cash Equivalents and Concentration of Credit Risk | |||||||||||||||||
We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Financial instruments that potentially subject us to a concentration of credit risk consist of cash and cash equivalents, and accounts receivable. Cash is deposited with what we believe are highly credited, quality financial institutions. The deposited cash may exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. At March 31, 2104, cash and cash equivalents exceeding federal insured limits totaled $523,710. | |||||||||||||||||
For the three months ended March 31, 2014, three customers accounted for approximately 68% of revenues and two customers accounted for approximately 81% of accounts receivable. | |||||||||||||||||
Basic and Diluted Income (Loss) per Share | |||||||||||||||||
Basic income (loss) per share is computed by dividing the net income (loss) to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common and dilutive common equivalent shares outstanding during the period. | |||||||||||||||||
Common equivalent shares, consisting of 8,717,165 and 4,505,385 incremental common shares for the three months ended March 31, 2014 and March 31, 2013, respectively, issuable upon the exercise of stock options and warrants have been included in the diluted earnings per share calculation. | |||||||||||||||||
Three Months Ended | |||||||||||||||||
31-Mar | |||||||||||||||||
(in thousands, except per share amounts) | 2014 | 2013 | |||||||||||||||
Numerator | |||||||||||||||||
Net income | $ | 2,139 | $ | 2,613 | |||||||||||||
Denominator | |||||||||||||||||
Weighted-average common shares outstanding | 19,449 | 12,057 | |||||||||||||||
Shares used in calculation - basic | 19,449 | 12,057 | |||||||||||||||
Stock options and warrants | 8,717 | 4,505 | |||||||||||||||
Shares used in calculation - diluted | 28,166 | 16,562 | |||||||||||||||
Net income per share | |||||||||||||||||
Basic | $ | 0.11 | $ | 0.22 | |||||||||||||
Diluted | $ | 0.08 | $ | 0.16 | |||||||||||||
Share-Based Compensation | |||||||||||||||||
Our 2010 Stock Incentive Plan, as amended (the “Plan”), provides for the issuance of up to 1,825,000 shares of our common stock. Incentive stock options (ISOs) under Section 422A of the Internal Revenue Code and non-qualified options (NSOs) are authorized under the Plan. We have granted stock options to executive officers, employees, members of our board of directors, and certain outside consultants. The terms and conditions upon which options become exercisable vary among grants, but option rights expire no later than ten years from the date of grant and employee and board of director awards generally vest over three to five years. At March 31, 2014, we had 482,177 vested and unvested shares outstanding and 1,285,586 shares available for future awards. | |||||||||||||||||
Share-based compensation expense attributable to continuing operations amounted to $13,000 and $68,000 for the three months ended March 31, 2014, compared with the same period in 2013. | |||||||||||||||||
Stock Options – Employees and Directors | |||||||||||||||||
We measure and recognize compensation expense for all share-based payment awards made to employees and directors based on estimated fair values on the date of grant. We estimate the fair value of share-based payment awards using the Black Scholes option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the condensed consolidated statements of operations subsequent to January 1, 2006. We account for share-based awards to employees and directors using the intrinsic value method under previous FASB rules, allowable prior to January 1, 2006. Under the intrinsic value method, no share-based compensation expense had been recognized in our consolidated statements of operations for awards to employees and directors because the exercise price of our stock options equaled the fair market value of the underlying stock at the date of grant. | |||||||||||||||||
Share-based compensation expense recognized for employees and directors for the three months ended March 31, 2014 and 2013, was $12,000 and $47,000, respectively. | |||||||||||||||||
Share-based compensation expense recognized in our condensed consolidated statements of operations for the three months ended March 31, 2014 and 2013, includes compensation expense for share-based payment awards granted prior to, but not yet vested, as of January 1, 2006, based on the grant date fair value estimated in accordance with the pro-forma provisions of Statement of Financial Accounting Standards (“SFAS”) 123, and for the share-based payment awards granted subsequent to January 1, 2006 based on the grant date fair value estimated in accordance with the provisions of the Accounting Standards Codification (“ASC”) 718. For share-based awards issued to employees and directors, share-based compensation is attributed to expense using the straight-line single option method. Share-based compensation expense recognized in our condensed consolidated statements of operations for the three months ended March 31, 2014 and 2013, is based on awards ultimately expected to vest, reduced for estimated forfeitures. Accounting rules for stock options require forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. | |||||||||||||||||
During the three months ended March 31, 2014 and 2013, there were no options granted to employees. Employee and director stock option activity for the three ended March 31, 2014 are as follows: | |||||||||||||||||
Weighted Avg. | |||||||||||||||||
Shares | Exercise Price | ||||||||||||||||
Balance December 31, 2013 | 461,000 | $ | 19.69 | ||||||||||||||
Granted | - | $ | - | ||||||||||||||
Canceled | - | $ | - | ||||||||||||||
Balance March 31, 2014 | 461,000 | $ | 19.69 | ||||||||||||||
The expected volatility assumptions have been based on the historical and expected volatility of our stock, measured over a period generally commensurate with the expected term. The weighted average expected option term for the three months ended March 31, 2014 and 2013, reflects the application of the simplified method prescribed in SEC Staff Accounting Bulletin (“SAB”) No. 107 (and as amended by SAB 110), which defines the life as the average of the contractual term of the options and the weighted average vesting period for all option tranches. | |||||||||||||||||
As of March 31, 2014, there was $33,000 of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of approximately 0.81 years. | |||||||||||||||||
Stock Options and Warrants – Non-employees | |||||||||||||||||
We account for the issuance of options and warrants for services from non-employees by estimating the fair value of warrants issued using the Black-Scholes pricing model. This model’s calculations include the option or warrant exercise price, the market price of shares on grant date, the weighted average risk-free interest rate, the expected life of the option or warrant, and the expected volatility of our stock and the expected dividends. | |||||||||||||||||
For options and warrants issued as compensation to non-employees for services that are fully vested and non-forfeitable at the time of issuance, the estimated value is recorded in equity and expensed when the services are performed and benefit is received. For unvested shares, the change in fair value during the period is recognized in expense using the graded vesting method. | |||||||||||||||||
There were no options issued to non-employees for the three months ended March 31, 2014 or 2013. Share-based compensation expense relating to stock options and warrants recognized for non-employees was $1,000 and $20,000 for the three months ended March 31, 2014 and 2013, respectively. | |||||||||||||||||
Non-employee stock option activity for the three months ended March 31, 2014, are as follows: | |||||||||||||||||
Weighted Avg. | |||||||||||||||||
Shares | Exercise Price | ||||||||||||||||
Balance December 31, 2013 | 21,000 | $ | 28.4 | ||||||||||||||
Canceled | - | $ | - | ||||||||||||||
Balance March 31, 2014 | 21,000 | $ | 28.4 | ||||||||||||||
Common Stock | |||||||||||||||||
In January 2014, we entered into securities purchase agreements (the “January Agreements”) with several investors, including Crede CG III, Ltd. (“Crede”), an affiliate of Terren S. Peizer, Chairman and Chief Executive Officer of the Company, relating to the sale and issuance of an aggregate of 1,724,141 shares of common stock and warrants (the “January Warrants”) to purchase an aggregate of 1,724,141 shares of common stock at an exercise price of $0.58 per share for aggregate gross proceeds of approximately $1.0 million (the “January Offering”). The January Agreements provide that in the event that we effectuate a reverse stock split of our common stock within 24 months of the closing date of the January Offering (the “Reverse Split”) and the volume weighted average price (“VWAP”) of the common stock during the 20 trading days following the effective date of the Reverse Split (the “VWAP Period”) declines from the closing price on the trading date immediately prior to the effective date of the Reverse Split, that we shall issue additional shares of common stock (the “Adjustment Shares”). | |||||||||||||||||
There were no shares of common stock issued in exchange for various services or settlement of claims during the three months ended March 31, 2014 or 2013. The costs associated with shares issued for services are being amortized to share-based compensation expense on a straight-line basis over the related service periods. For the three months ended March 31, 2014 and 2013, share-based compensation expense relating to all common stock issued for consulting services was $0 and $1,000, respectively. | |||||||||||||||||
Income Taxes | |||||||||||||||||
We have recorded a full valuation allowance against our otherwise recognizable deferred tax assets as of March 31, 2014. As such, we have not recorded a provision for income tax for the period ended March 31, 2014. We utilize the liability method of accounting for income taxes as set forth in ASC 740, Income Taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances we consider projected future taxable income and the availability of tax planning strategies. After evaluating all positive and negative historical and perspective evidences, management has determined it is more likely than not that our deferred tax assets will not be realized. | |||||||||||||||||
We assess our income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, we have recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Based on management's assessment of the facts, circumstances and information available, management has determined that all of the tax benefits for the period ended March 31, 2014 should be realized. | |||||||||||||||||
Fair Value Measurements | |||||||||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure fair value. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I) and the lowest priority to unobservable inputs (Level III). The three levels of the fair value hierarchy are described below: | |||||||||||||||||
Level Input: | Input Definition: | ||||||||||||||||
Level I | Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. | ||||||||||||||||
Level II | Inputs, other than quoted prices included in Level I, that are observable for the asset or liability through corroboration with market data at the measurement date. | ||||||||||||||||
Level III | Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. | ||||||||||||||||
The following table summarizes fair value measurements by level at March 31, 2014 for assets and liabilities measured at fair value: | |||||||||||||||||
2013 | |||||||||||||||||
(Dollars in thousands) | Level I | Level II | Level III | Total | |||||||||||||
Certificates of deposit | $ | 87 | $ | - | $ | - | $ | 87 | |||||||||
Total assets | $ | 87 | $ | - | $ | - | $ | 87 | |||||||||
Warrant liabilities | $ | - | $ | - | $ | 13,556 | $ | 13,556 | |||||||||
Total liabilities | $ | - | $ | - | $ | 13,556 | $ | 13,556 | |||||||||
Financial instruments classified as Level III in the fair value hierarchy as of March 31, 2014, represent our liabilities measured at market value on a recurring basis which include warrant liabilities resulting from recent debt and equity financings. In accordance with current accounting rules, the warrant liabilities are being marked-to-market each quarter-end until they are completely settled. The warrants are valued using the Black-Scholes option-pricing model, using both observable and unobservable inputs and assumptions consistent with those used in our estimate of fair value of employee stock options. See Warrant Liabilities below. | |||||||||||||||||
The following table summarizes our fair value measurements using significant Level III inputs, and changes therein, for the three months ended March 31, 2014: | |||||||||||||||||
Level III | |||||||||||||||||
Warrant | |||||||||||||||||
(Dollars in thousands) | Liabilities | ||||||||||||||||
Balance as of December 31, 2013 | $ | 16,347 | |||||||||||||||
Issuance of warrants | 2,310 | ||||||||||||||||
Change in fair value | (5,101 | ) | |||||||||||||||
Balance as of March 31, 2014 | $ | 13,556 | |||||||||||||||
Intangible Assets | |||||||||||||||||
As of March 31, 2014, the gross and net carrying amounts of intangible assets that are subject to amortization are as follows: | |||||||||||||||||
Gross | Amortization | ||||||||||||||||
(In thousands) | Carrying | Accumulated | Net | Period | |||||||||||||
Amount | Amortization | Balance | (in years) | ||||||||||||||
Intellectual property | $ | 519 | $ | (406 | ) | $ | 113 | 7 | |||||||||
During the three months ended March 31, 2014, we did not acquire any new intangible assets and at March 31, 2014, all of our intangible assets consisted of intellectual property, which is not subject to renewal or extension. We had no intangible impairment for the three months ended March 31, 2014 or 2013. | |||||||||||||||||
Additionally, it is important to note that our overall business model, business operations and future prospects of our business have not changed materially since we performed the reviews and analysis noted above, with the exception of the timing, and annualized amounts of expected revenue. | |||||||||||||||||
Estimated remaining amortization expense for intangible assets for the current year and each of the next five years ending December 31 is as follows: | |||||||||||||||||
(In thousands) | |||||||||||||||||
Year | Amount | ||||||||||||||||
2014 (9 months) | $ | 12 | |||||||||||||||
2015 | $ | 16 | |||||||||||||||
2016 | $ | 16 | |||||||||||||||
2017 | $ | 16 | |||||||||||||||
2018 | $ | 16 | |||||||||||||||
Property and Equipment | |||||||||||||||||
Property and equipment are stated at cost, less accumulated depreciation. Additions and improvements to property and equipment are capitalized at cost. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which range from two to seven years for furniture and equipment. Leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or the related lease term, which is typically five to seven years. | |||||||||||||||||
Variable Interest Entities | |||||||||||||||||
Generally, an entity is defined as a Variable Interest Entity (“VIE”) under current accounting rules if it has (a) equity that is insufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (b) equity investors that cannot make significant decisions about the entity’s operations, or that do not absorb the expected losses or receive the expected returns of the entity. When determining whether an entity that is a business qualifies as a VIE, we also consider whether (i) we participated significantly in the design of the entity, (ii) we provided more than half of the total financial support to the entity, and (iii) substantially all of the activities of the VIE either involve us or are conducted on our behalf. A VIE is consolidated by its primary beneficiary, which is the party that absorbs or receives a majority of the entity’s expected losses or expected residual returns. | |||||||||||||||||
As discussed under the heading Management Services Agreement below, we have an MSA with a managed medical corporation. Under this MSA, the equity owner of the affiliated medical group has only a nominal equity investment at risk, and we absorb or receive a majority of the entity’s expected losses or expected residual returns. We participate significantly in the design of this MSA. We also agree to provide working capital loans to allow for the medical group to pay for its obligations. Substantially all of the activities of this managed medical corporation either involve us or are conducted for our benefit, as evidenced by the fact that under the MSA, we agree to provide and perform all non-medical management and administrative services for the medical group. Payment of our management fee is subordinate to payments of the obligations of the medical group, and repayment of the working capital loans is not guaranteed by the equity owner of the affiliated medical group or other third party. Creditors of the managed medical corporation do not have recourse to our general credit. | |||||||||||||||||
Based on the design and provisions of this MSA and the working capital loans provided to the medical group, we have determined that the managed medical corporation is a VIE, and that we are the primary beneficiary as defined in the current accounting rules. Accordingly, we are required to consolidate the revenues and expenses of the managed medical corporation. | |||||||||||||||||
Management Services Agreement | |||||||||||||||||
We have an executed MSA with a medical professional corporation and related treatment center. Under the MSA, we license to the treatment center the right to use our proprietary treatment programs and related trademarks and provide all required day-to-day business management services, including, but not limited to: | |||||||||||||||||
● | general administrative support services; | ||||||||||||||||
● | information systems; | ||||||||||||||||
● | recordkeeping; | ||||||||||||||||
● | scheduling; | ||||||||||||||||
● | billing and collection; | ||||||||||||||||
● | marketing and local business development; and | ||||||||||||||||
● | obtaining and maintaining all federal, state and local licenses, certifications and regulatory permits. | ||||||||||||||||
The treatment center retains the sole right and obligation to provide medical services to its patients and to make other medically related decisions, such as the choice of medical professionals to hire or medical equipment to acquire and the ordering of drugs. | |||||||||||||||||
In addition, we provide office space to the treatment center on a non-exclusive basis, and we are responsible for all costs associated with rent and utilities. The treatment center pays us a monthly fee equal to the aggregate amount of (a) our costs of providing management services (including reasonable overhead allocable to the delivery of our services and including salaries, rent, equipment, and tenant improvements incurred for the benefit of the medical group, provided that any capitalized costs will be amortized over a five-year period), (b) 10%-15% of the foregoing costs, and (c) any performance bonus amount, as determined by the treatment center at its sole discretion. The treatment center’s payment of our fee is subordinate to payment of the treatment center's obligations, including physician fees and medical group employee compensation. | |||||||||||||||||
We have also agreed to provide a credit facility to the treatment center to be available as a working capital loan, with interest at the Prime Rate plus 2%. Funds are advanced pursuant to the terms of the MSA described above. The notes are due on demand or upon termination of the MSA. At March 31, 2014, there was one outstanding credit facility under which $13.3 million was outstanding. Our maximum exposure to loss could exceed this amount, and cannot be quantified as it is contingent upon the amount of losses incurred by the treatment center that we are required to fund under the credit facility. | |||||||||||||||||
Under the MSA, the equity owner of the affiliated treatment center has only a nominal equity investment at risk, and we absorb or receive a majority of the entity’s expected losses or expected residual returns. We also agree to provide working capital loans to allow for the treatment center to pay for its obligations. Substantially all of the activities of the managed medical corporation either involves us or are conducted for our benefit, as evidenced by the facts that (i) the operations of the managed medical corporation is conducted primarily using our licensed protocols and (ii) under the MSA, we agree to provide and perform all non-medical management and administrative services for the treatment center. Payment of our management fee is subordinate to payments of the obligations of the treatment center, and repayment of the working capital loans is not guaranteed by the equity owner of the affiliated treatment center or other third party. Creditors of the managed medical corporation do not have recourse to our general credit. Based on these facts, we have determined that the managed medical corporation is a VIE and that we are the primary beneficiary as defined in current accounting rules. Accordingly, we are required to consolidate the assets, liabilities, revenues and expenses of the managed treatment center. | |||||||||||||||||
The amounts and classification of assets and liabilities of the VIE included in our consolidated balance sheets as of March 31, 2014 and December 31, 2013, are as follows: | |||||||||||||||||
(audited) | |||||||||||||||||
March 31, | December 31, | ||||||||||||||||
(in thousands) | 2014 | 2013 | |||||||||||||||
Cash and cash equivalents | $ | 8 | $ | 24 | |||||||||||||
Receivables, net | 12 | 24 | |||||||||||||||
Total assets | $ | 20 | $ | 48 | |||||||||||||
Accounts payable | 13 | 25 | |||||||||||||||
Note payable to Catasys, Inc. | 13,316 | 13,119 | |||||||||||||||
Total liabilities | $ | 13,329 | $ | 13,144 | |||||||||||||
Warrant Liabilities | |||||||||||||||||
In January 2014, we entered into the January Agreements with several investors relating to the sale and issuance of an aggregate of 1,724,141 shares of common stock and warrants to purchase an aggregate of 1,724,141 shares of common stock at an exercise price of $0.58 per share for aggregate gross proceeds of approximately $1.0 million. The January Agreements provide that in the event that we effectuate a Reverse Split and the VWAP period declines from the closing price on the trading date immediately prior to the effective date of the Reverse Split, that we shall issue the Adjustment Shares. | |||||||||||||||||
The January Warrants expire in January 2019, and contain anti-dilution provisions. As a result, if we, in the future, issue or grant any rights to purchase any of our common stock, or other securities convertible into our common stock, for a per share price less than the exercise price of the January Warrants, the exercise price of the January Warrants will be reduced to such lower price, subject to customary exceptions. In the event that Adjustment Shares are issued, the number of shares that may be purchased under the January Warrants shall be increased by an amount equal to the Adjustment Shares. In addition, the exercise price is subject to adjustment in the event that the VWAP during the VWAP period is less than the exercise price prior to the VWAP Period. | |||||||||||||||||
We have issued warrants to purchase common stock in July 2010, October 2010, November 2010, December 2011, February 2012, April 2012, May 2012, September 2012, December 2012, April 2013, October 2013, January 2014, and when we amended and restated the Highbridge senior secured note in July 2008. The warrants are being accounted for as liabilities in accordance with FASB accounting rules, due to provisions in some warrants that protect the holders from declines in our stock price and a requirement to deliver registered shares upon exercise of the warrants, which is considered outside our control. The warrants are marked-to-market each reporting period, using the Black-Scholes pricing model, until they are completely settled or expire. | |||||||||||||||||
For the three months ended March 31, 2014 and 2013, we recognized a gain of $5.1 million and $4.4 million, respectively, related to the revaluation of our warrant liabilities. | |||||||||||||||||
Recently Issued or Newly Adopted Accounting Standards | |||||||||||||||||
In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, (“ASU 2013-02”). ASU 2013-02 amends ASC 220, Comprehensive Income (“ASC 220”), and requires entities to present the changes in the components of accumulated other comprehensive income for the current period. Entities are required to present separately the amount of the change that is due to reclassifications, and the amount that is due to current period other comprehensive income. These changes are permitted to be shown either before or net-of-tax and can be displayed either on the face of the financial statements or in the footnotes. ASU 2013-02 was effective for our interim and annual periods beginning January 1, 2013. The adoption of ASU 2013-02 did not have a material effect on our consolidated financial position or results of operations. | |||||||||||||||||
In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, (“ASU 2013-11”), which eliminates diversity in practice for the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward is available to reduce the taxable income or tax payable that would result from disallowance of a tax position. ASU 2013-11 affects only the presentation of such amounts in an entity’s balance sheet and is effective for fiscal years beginning after December 15, 2013 and interim periods within those years. The adoption of ASU 2013-11 did not have a material effect on our consolidated financial position or results of operations. |
Note_3_Segment_Information
Note 3 - Segment Information | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Segment Reporting Disclosure [Text Block] | ' | ||||||||
Note 3. Segment Information | |||||||||
We manage and report our operations through two business segments: healthcare services and license and management services. We evaluate segment performance based on total assets, revenue and income or loss before provision for income taxes. Our assets are included within each discrete reporting segment. In the event that any services are provided to one reporting segment by the other, the transactions are valued at the market price. No such services were provided during the three months ended March 31, 2014 and 2013. Summary financial information for our two reportable segments are as follows: | |||||||||
Three Months Ended | |||||||||
(in thousands) | March 31, | ||||||||
2014 | 2013 | ||||||||
Healthcare services | |||||||||
Revenues | $ | 199 | $ | 99 | |||||
Income before provision for income taxes | 2,362 | 2,862 | |||||||
Assets * | 1,968 | 2,291 | |||||||
License and management services | |||||||||
Revenues | $ | 19 | $ | 36 | |||||
Loss before provision for income taxes | (221 | ) | (247 | ) | |||||
Assets * | 124 | 1,042 | |||||||
Consolidated continuing operations | |||||||||
Revenues | $ | 218 | $ | 135 | |||||
Income before provision for income taxes | 2,141 | 2,615 | |||||||
Assets * | 2,092 | 3,333 | |||||||
* Assets are reported as of March 31. | |||||||||
Healthcare Services | |||||||||
Catasys’ integrated substance dependence solutions combine innovative medical and psychosocial treatments with elements of traditional disease management, case management and ongoing member support to help organizations treat and manage substance dependent populations to impact both the medical and behavioral health costs associated with substance dependence and the related co-morbidities. | |||||||||
We are currently marketing our integrated substance dependence solutions to managed care health plans on a case rate, monthly fee, or fee-for-service basis, which involves educating third party payors on the disproportionately high cost of their substance dependent population and demonstrating the potential for improved clinical outcomes and reduced cost associated with using our Catasys programs. We are operating our programs in Kansas, Massachusetts, Louisiana, Oklahoma, Kentucky, West Virginia, and Wisconsin. In 2013, we signed an agreement with national health plans to provide services to their members in New Jersey, and expect to commence enrollment by the end of the third quarter of 2014. | |||||||||
The following table summarizes the operating results for Healthcare Services for the three months ended March 31, 2014 and 2013: | |||||||||
Three Months Ended | |||||||||
(in thousands) | March 31, | ||||||||
2014 | 2013 | ||||||||
Revenues | $ | 199 | $ | 99 | |||||
Operating Expenses | |||||||||
Cost of healthcare services | $ | 265 | $ | 144 | |||||
General and administrative expenses | |||||||||
Salaries and benefits | 873 | 1,013 | |||||||
Other expenses | 464 | 435 | |||||||
Depreciation and amortization | 24 | 5 | |||||||
Total operating expenses | $ | 1,626 | $ | 1,597 | |||||
Loss from operations | $ | (1,427 | ) | $ | (1,498 | ) | |||
Interest expense | (1,312 | ) | - | ||||||
Change in fair value of warrant liabilities | 5,101 | 4,360 | |||||||
Income before provision for income taxes | $ | 2,362 | $ | 2,862 | |||||
License and Management Services | |||||||||
Our license and management services segment primarily represents our managed treatment office, which offers a range of addiction treatment and mental health services. | |||||||||
The following table summarizes the operating results for License and Management Services for the three months ended March 31, 2014 and 2013: | |||||||||
(In thousands) | Three Months Ended | ||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Revenues | $ | 19 | $ | 36 | |||||
Operating expenses | |||||||||
Cost of license and management services | $ | 68 | $ | 60 | |||||
General and administrative expenses | |||||||||
Salaries and benefits | 96 | 125 | |||||||
Other expenses | 72 | 57 | |||||||
Depreciation and amortization | 4 | 41 | |||||||
Total operating expenses | $ | 240 | $ | 283 | |||||
Loss from operations | $ | (221 | ) | $ | (247 | ) | |||
Interest and other income | - | - | |||||||
Interest expense | - | - | |||||||
Loss before provision for income taxes | $ | (221 | ) | $ | (247 | ) | |||
Note_4_Related_Party_Disclosur
Note 4 - Related Party Disclosure | 3 Months Ended |
Mar. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions Disclosure [Text Block] | ' |
Note 4. Related Party Disclosure | |
In December 2010, we entered into a three-year sublease agreement with Xoftek, Inc., an affiliate of our Chairman and Chief Executive Officer, to sublease approximately one-third of our office space for a three-year term for a monthly rent of approximately $11,000 per month. The related party receivable as of March 31, 2014 and December 31, 2013 was $0 and $115,000, respectively. This is net of an offset of $115,000 and $186,000 payable to our Chairman and Chief Executive Officer against this receivable at March 31, 2104 and December 31, 2013, respectively. We have offset approximately $382,000 in payables due to our Chairman and Chief Executive Officer as of March 31, 2014. | |
Crede, an affiliate of our Chairman and Chief Executive Officer, participated in our January 2014 Offering. Crede received approximately 1,585,345 shares of our common stock and warrants to purchase an aggregate 1,585,345 shares of common stock at a price of $0.58 per share, for gross proceeds of approximately $919,500. |
Note_5_Restatement_of_Financia
Note 5 - Restatement of Financial Statements | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Changes and Error Corrections [Abstract] | ' |
Accounting Changes and Error Corrections [Text Block] | ' |
Note 5. Restatement of Financial Statements | |
The financial statements have been retroactively restated to reflect the 10-for-1 reverse stock split that occurred on May 6, 2013. |
Note_6_Subsequent_Events
Note 6 - Subsequent Events | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events [Text Block] | ' |
Note 6. Subsequent Events | |
Beginning April 1, 2014, we agreed with the professional medical corporation to close the practice covered by the MSA. | |
We and our Chief Executive Officer were party to a litigation in which the plaintiffs asserted causes of action for conversion, a request for an order to set aside fraudulent conveyance and breach of contract. The litigation and subsequent appeals were resolved in our favor. The plaintiff filed a petition for review with the California Supreme Court, which was denied in April 2014. The litigation is now ended with a complete victory by the defendants. |
Accounting_Policies_by_Policy_
Accounting Policies, by Policy (Policies) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Revenue Recognition, Policy [Policy Text Block] | ' | ||||||||||||||||
Revenue Recognition | |||||||||||||||||
Healthcare Services | |||||||||||||||||
Our Catasys contracts are generally designed to provide cash fees to us on a monthly basis based on enrolled members. To the extent our contracts may include a minimum performance guarantee, we reserve a portion of the monthly fees that may be at risk until the performance measurement period is completed. To the extent we receive case rates that are not subject to the performance guarantees we recognize the case rate ratably over twelve months. | |||||||||||||||||
License and Management Services | |||||||||||||||||
Our license and management services revenues are primarily derived from our managed treatment center, which we include in our consolidated financial statements, and which are derived from charging fees directly to patients for treatment and are recorded when services are provided. Revenues for other services are recognized when services are rendered. | |||||||||||||||||
Cost of Sales, Policy [Policy Text Block] | ' | ||||||||||||||||
Cost of Services | |||||||||||||||||
Healthcare Services | |||||||||||||||||
Cost of healthcare services consists primarily of salaries related to our care coaches, healthcare provider claims payments, and fees charged by our third party administrators for processing these claims. Healthcare services cost of services is recognized in the period in which an eligible member receives services. We contract with doctors and licensed behavioral healthcare professionals, on a fee-for-services basis. We determine that a member has received services when we receive a claim or in the absence of a claim, by utilizing member data recorded in the OnTrakTM database within the contracted timeframe, with all required billing elements correctly completed by the service provider. | |||||||||||||||||
License and Management Services | |||||||||||||||||
Cost of license and management services primarily represents direct costs associated with providing care to patients that are incurred in connection with our managed treatment center. Costs are recognized in the periods in which medical treatment is provided. Such costs include, but are not limited to, direct labor costs, medical supplies and medications. | |||||||||||||||||
Cash and Cash Equivalents, Policy [Policy Text Block] | ' | ||||||||||||||||
Cash Equivalents and Concentration of Credit Risk | |||||||||||||||||
We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Financial instruments that potentially subject us to a concentration of credit risk consist of cash and cash equivalents, and accounts receivable. Cash is deposited with what we believe are highly credited, quality financial institutions. The deposited cash may exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. At March 31, 2104, cash and cash equivalents exceeding federal insured limits totaled $523,710. | |||||||||||||||||
For the three months ended March 31, 2014, three customers accounted for approximately 68% of revenues and two customers accounted for approximately 81% of accounts receivable. | |||||||||||||||||
Earnings Per Share, Policy [Policy Text Block] | ' | ||||||||||||||||
Basic and Diluted Income (Loss) per Share | |||||||||||||||||
Basic income (loss) per share is computed by dividing the net income (loss) to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common and dilutive common equivalent shares outstanding during the period. | |||||||||||||||||
Common equivalent shares, consisting of 8,717,165 and 4,505,385 incremental common shares for the three months ended March 31, 2014 and March 31, 2013, respectively, issuable upon the exercise of stock options and warrants have been included in the diluted earnings per share calculation. | |||||||||||||||||
Three Months Ended | |||||||||||||||||
31-Mar | |||||||||||||||||
(in thousands, except per share amounts) | 2014 | 2013 | |||||||||||||||
Numerator | |||||||||||||||||
Net income | $ | 2,139 | $ | 2,613 | |||||||||||||
Denominator | |||||||||||||||||
Weighted-average common shares outstanding | 19,449 | 12,057 | |||||||||||||||
Shares used in calculation - basic | 19,449 | 12,057 | |||||||||||||||
Stock options and warrants | 8,717 | 4,505 | |||||||||||||||
Shares used in calculation - diluted | 28,166 | 16,562 | |||||||||||||||
Net income per share | |||||||||||||||||
Basic | $ | 0.11 | $ | 0.22 | |||||||||||||
Diluted | $ | 0.08 | $ | 0.16 | |||||||||||||
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | ' | ||||||||||||||||
Share-Based Compensation | |||||||||||||||||
Our 2010 Stock Incentive Plan, as amended (the “Plan”), provides for the issuance of up to 1,825,000 shares of our common stock. Incentive stock options (ISOs) under Section 422A of the Internal Revenue Code and non-qualified options (NSOs) are authorized under the Plan. We have granted stock options to executive officers, employees, members of our board of directors, and certain outside consultants. The terms and conditions upon which options become exercisable vary among grants, but option rights expire no later than ten years from the date of grant and employee and board of director awards generally vest over three to five years. At March 31, 2014, we had 482,177 vested and unvested shares outstanding and 1,285,586 shares available for future awards. | |||||||||||||||||
Share-based compensation expense attributable to continuing operations amounted to $13,000 and $68,000 for the three months ended March 31, 2014, compared with the same period in 2013. | |||||||||||||||||
Stock Options – Employees and Directors | |||||||||||||||||
We measure and recognize compensation expense for all share-based payment awards made to employees and directors based on estimated fair values on the date of grant. We estimate the fair value of share-based payment awards using the Black Scholes option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the condensed consolidated statements of operations subsequent to January 1, 2006. We account for share-based awards to employees and directors using the intrinsic value method under previous FASB rules, allowable prior to January 1, 2006. Under the intrinsic value method, no share-based compensation expense had been recognized in our consolidated statements of operations for awards to employees and directors because the exercise price of our stock options equaled the fair market value of the underlying stock at the date of grant. | |||||||||||||||||
Share-based compensation expense recognized for employees and directors for the three months ended March 31, 2014 and 2013, was $12,000 and $47,000, respectively. | |||||||||||||||||
Share-based compensation expense recognized in our condensed consolidated statements of operations for the three months ended March 31, 2014 and 2013, includes compensation expense for share-based payment awards granted prior to, but not yet vested, as of January 1, 2006, based on the grant date fair value estimated in accordance with the pro-forma provisions of Statement of Financial Accounting Standards (“SFAS”) 123, and for the share-based payment awards granted subsequent to January 1, 2006 based on the grant date fair value estimated in accordance with the provisions of the Accounting Standards Codification (“ASC”) 718. For share-based awards issued to employees and directors, share-based compensation is attributed to expense using the straight-line single option method. Share-based compensation expense recognized in our condensed consolidated statements of operations for the three months ended March 31, 2014 and 2013, is based on awards ultimately expected to vest, reduced for estimated forfeitures. Accounting rules for stock options require forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. | |||||||||||||||||
During the three months ended March 31, 2014 and 2013, there were no options granted to employees. Employee and director stock option activity for the three ended March 31, 2014 are as follows: | |||||||||||||||||
Weighted Avg. | |||||||||||||||||
Shares | Exercise Price | ||||||||||||||||
Balance December 31, 2013 | 461,000 | $ | 19.69 | ||||||||||||||
Granted | - | $ | - | ||||||||||||||
Canceled | - | $ | - | ||||||||||||||
Balance March 31, 2014 | 461,000 | $ | 19.69 | ||||||||||||||
The expected volatility assumptions have been based on the historical and expected volatility of our stock, measured over a period generally commensurate with the expected term. The weighted average expected option term for the three months ended March 31, 2014 and 2013, reflects the application of the simplified method prescribed in SEC Staff Accounting Bulletin (“SAB”) No. 107 (and as amended by SAB 110), which defines the life as the average of the contractual term of the options and the weighted average vesting period for all option tranches. | |||||||||||||||||
As of March 31, 2014, there was $33,000 of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of approximately 0.81 years. | |||||||||||||||||
Stock Options and Warrants – Non-employees | |||||||||||||||||
We account for the issuance of options and warrants for services from non-employees by estimating the fair value of warrants issued using the Black-Scholes pricing model. This model’s calculations include the option or warrant exercise price, the market price of shares on grant date, the weighted average risk-free interest rate, the expected life of the option or warrant, and the expected volatility of our stock and the expected dividends. | |||||||||||||||||
For options and warrants issued as compensation to non-employees for services that are fully vested and non-forfeitable at the time of issuance, the estimated value is recorded in equity and expensed when the services are performed and benefit is received. For unvested shares, the change in fair value during the period is recognized in expense using the graded vesting method. | |||||||||||||||||
There were no options issued to non-employees for the three months ended March 31, 2014 or 2013. Share-based compensation expense relating to stock options and warrants recognized for non-employees was $1,000 and $20,000 for the three months ended March 31, 2014 and 2013, respectively. | |||||||||||||||||
Non-employee stock option activity for the three months ended March 31, 2014, are as follows: | |||||||||||||||||
Weighted Avg. | |||||||||||||||||
Shares | Exercise Price | ||||||||||||||||
Balance December 31, 2013 | 21,000 | $ | 28.4 | ||||||||||||||
Canceled | - | $ | - | ||||||||||||||
Balance March 31, 2014 | 21,000 | $ | 28.4 | ||||||||||||||
Common Stock | |||||||||||||||||
In January 2014, we entered into securities purchase agreements (the “January Agreements”) with several investors, including Crede CG III, Ltd. (“Crede”), an affiliate of Terren S. Peizer, Chairman and Chief Executive Officer of the Company, relating to the sale and issuance of an aggregate of 1,724,141 shares of common stock and warrants (the “January Warrants”) to purchase an aggregate of 1,724,141 shares of common stock at an exercise price of $0.58 per share for aggregate gross proceeds of approximately $1.0 million (the “January Offering”). The January Agreements provide that in the event that we effectuate a reverse stock split of our common stock within 24 months of the closing date of the January Offering (the “Reverse Split”) and the volume weighted average price (“VWAP”) of the common stock during the 20 trading days following the effective date of the Reverse Split (the “VWAP Period”) declines from the closing price on the trading date immediately prior to the effective date of the Reverse Split, that we shall issue additional shares of common stock (the “Adjustment Shares”). | |||||||||||||||||
There were no shares of common stock issued in exchange for various services or settlement of claims during the three months ended March 31, 2014 or 2013. The costs associated with shares issued for services are being amortized to share-based compensation expense on a straight-line basis over the related service periods. For the three months ended March 31, 2014 and 2013, share-based compensation expense relating to all common stock issued for consulting services was $0 and $1,000, respectively. | |||||||||||||||||
Income Tax, Policy [Policy Text Block] | ' | ||||||||||||||||
Income Taxes | |||||||||||||||||
We have recorded a full valuation allowance against our otherwise recognizable deferred tax assets as of March 31, 2014. As such, we have not recorded a provision for income tax for the period ended March 31, 2014. We utilize the liability method of accounting for income taxes as set forth in ASC 740, Income Taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances we consider projected future taxable income and the availability of tax planning strategies. After evaluating all positive and negative historical and perspective evidences, management has determined it is more likely than not that our deferred tax assets will not be realized. | |||||||||||||||||
We assess our income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, we have recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Based on management's assessment of the facts, circumstances and information available, management has determined that all of the tax benefits for the period ended March 31, 2014 should be realized. | |||||||||||||||||
Fair Value of Financial Instruments, Policy [Policy Text Block] | ' | ||||||||||||||||
Fair Value Measurements | |||||||||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure fair value. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I) and the lowest priority to unobservable inputs (Level III). The three levels of the fair value hierarchy are described below: | |||||||||||||||||
Level Input: | Input Definition: | ||||||||||||||||
Level I | Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. | ||||||||||||||||
Level II | Inputs, other than quoted prices included in Level I, that are observable for the asset or liability through corroboration with market data at the measurement date. | ||||||||||||||||
Level III | Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. | ||||||||||||||||
The following table summarizes fair value measurements by level at March 31, 2014 for assets and liabilities measured at fair value: | |||||||||||||||||
2013 | |||||||||||||||||
(Dollars in thousands) | Level I | Level II | Level III | Total | |||||||||||||
Certificates of deposit | $ | 87 | $ | - | $ | - | $ | 87 | |||||||||
Total assets | $ | 87 | $ | - | $ | - | $ | 87 | |||||||||
Warrant liabilities | $ | - | $ | - | $ | 13,556 | $ | 13,556 | |||||||||
Total liabilities | $ | - | $ | - | $ | 13,556 | $ | 13,556 | |||||||||
Financial instruments classified as Level III in the fair value hierarchy as of March 31, 2014, represent our liabilities measured at market value on a recurring basis which include warrant liabilities resulting from recent debt and equity financings. In accordance with current accounting rules, the warrant liabilities are being marked-to-market each quarter-end until they are completely settled. The warrants are valued using the Black-Scholes option-pricing model, using both observable and unobservable inputs and assumptions consistent with those used in our estimate of fair value of employee stock options. See Warrant Liabilities below. | |||||||||||||||||
The following table summarizes our fair value measurements using significant Level III inputs, and changes therein, for the three months ended March 31, 2014: | |||||||||||||||||
Level III | |||||||||||||||||
Warrant | |||||||||||||||||
(Dollars in thousands) | Liabilities | ||||||||||||||||
Balance as of December 31, 2013 | $ | 16,347 | |||||||||||||||
Issuance of warrants | 2,310 | ||||||||||||||||
Change in fair value | (5,101 | ) | |||||||||||||||
Balance as of March 31, 2014 | $ | 13,556 | |||||||||||||||
Goodwill and Intangible Assets, Policy [Policy Text Block] | ' | ||||||||||||||||
Intangible Assets | |||||||||||||||||
As of March 31, 2014, the gross and net carrying amounts of intangible assets that are subject to amortization are as follows: | |||||||||||||||||
Gross | Amortization | ||||||||||||||||
(In thousands) | Carrying | Accumulated | Net | Period | |||||||||||||
Amount | Amortization | Balance | (in years) | ||||||||||||||
Intellectual property | $ | 519 | $ | (406 | ) | $ | 113 | 7 | |||||||||
During the three months ended March 31, 2014, we did not acquire any new intangible assets and at March 31, 2014, all of our intangible assets consisted of intellectual property, which is not subject to renewal or extension. We had no intangible impairment for the three months ended March 31, 2014 or 2013. | |||||||||||||||||
Additionally, it is important to note that our overall business model, business operations and future prospects of our business have not changed materially since we performed the reviews and analysis noted above, with the exception of the timing, and annualized amounts of expected revenue. | |||||||||||||||||
Estimated remaining amortization expense for intangible assets for the current year and each of the next five years ending December 31 is as follows: | |||||||||||||||||
(In thousands) | |||||||||||||||||
Year | Amount | ||||||||||||||||
2014 (9 months) | $ | 12 | |||||||||||||||
2015 | $ | 16 | |||||||||||||||
2016 | $ | 16 | |||||||||||||||
2017 | $ | 16 | |||||||||||||||
2018 | $ | 16 | |||||||||||||||
Property, Plant and Equipment, Policy [Policy Text Block] | ' | ||||||||||||||||
Property and Equipment | |||||||||||||||||
Property and equipment are stated at cost, less accumulated depreciation. Additions and improvements to property and equipment are capitalized at cost. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which range from two to seven years for furniture and equipment. Leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or the related lease term, which is typically five to seven years. | |||||||||||||||||
Consolidation, Variable Interest Entity, Policy [Policy Text Block] | ' | ||||||||||||||||
Variable Interest Entities | |||||||||||||||||
Generally, an entity is defined as a Variable Interest Entity (“VIE”) under current accounting rules if it has (a) equity that is insufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (b) equity investors that cannot make significant decisions about the entity’s operations, or that do not absorb the expected losses or receive the expected returns of the entity. When determining whether an entity that is a business qualifies as a VIE, we also consider whether (i) we participated significantly in the design of the entity, (ii) we provided more than half of the total financial support to the entity, and (iii) substantially all of the activities of the VIE either involve us or are conducted on our behalf. A VIE is consolidated by its primary beneficiary, which is the party that absorbs or receives a majority of the entity’s expected losses or expected residual returns. | |||||||||||||||||
As discussed under the heading Management Services Agreement below, we have an MSA with a managed medical corporation. Under this MSA, the equity owner of the affiliated medical group has only a nominal equity investment at risk, and we absorb or receive a majority of the entity’s expected losses or expected residual returns. We participate significantly in the design of this MSA. We also agree to provide working capital loans to allow for the medical group to pay for its obligations. Substantially all of the activities of this managed medical corporation either involve us or are conducted for our benefit, as evidenced by the fact that under the MSA, we agree to provide and perform all non-medical management and administrative services for the medical group. Payment of our management fee is subordinate to payments of the obligations of the medical group, and repayment of the working capital loans is not guaranteed by the equity owner of the affiliated medical group or other third party. Creditors of the managed medical corporation do not have recourse to our general credit. | |||||||||||||||||
Based on the design and provisions of this MSA and the working capital loans provided to the medical group, we have determined that the managed medical corporation is a VIE, and that we are the primary beneficiary as defined in the current accounting rules. Accordingly, we are required to consolidate the revenues and expenses of the managed medical corporation. | |||||||||||||||||
Revenue Recognition, Sales of Services [Policy Text Block] | ' | ||||||||||||||||
Management Services Agreement | |||||||||||||||||
We have an executed MSA with a medical professional corporation and related treatment center. Under the MSA, we license to the treatment center the right to use our proprietary treatment programs and related trademarks and provide all required day-to-day business management services, including, but not limited to: | |||||||||||||||||
● | general administrative support services; | ||||||||||||||||
● | information systems; | ||||||||||||||||
● | recordkeeping; | ||||||||||||||||
● | scheduling; | ||||||||||||||||
● | billing and collection; | ||||||||||||||||
● | marketing and local business development; and | ||||||||||||||||
● | obtaining and maintaining all federal, state and local licenses, certifications and regulatory permits. | ||||||||||||||||
The treatment center retains the sole right and obligation to provide medical services to its patients and to make other medically related decisions, such as the choice of medical professionals to hire or medical equipment to acquire and the ordering of drugs. | |||||||||||||||||
In addition, we provide office space to the treatment center on a non-exclusive basis, and we are responsible for all costs associated with rent and utilities. The treatment center pays us a monthly fee equal to the aggregate amount of (a) our costs of providing management services (including reasonable overhead allocable to the delivery of our services and including salaries, rent, equipment, and tenant improvements incurred for the benefit of the medical group, provided that any capitalized costs will be amortized over a five-year period), (b) 10%-15% of the foregoing costs, and (c) any performance bonus amount, as determined by the treatment center at its sole discretion. The treatment center’s payment of our fee is subordinate to payment of the treatment center's obligations, including physician fees and medical group employee compensation. | |||||||||||||||||
We have also agreed to provide a credit facility to the treatment center to be available as a working capital loan, with interest at the Prime Rate plus 2%. Funds are advanced pursuant to the terms of the MSA described above. The notes are due on demand or upon termination of the MSA. At March 31, 2014, there was one outstanding credit facility under which $13.3 million was outstanding. Our maximum exposure to loss could exceed this amount, and cannot be quantified as it is contingent upon the amount of losses incurred by the treatment center that we are required to fund under the credit facility. | |||||||||||||||||
Under the MSA, the equity owner of the affiliated treatment center has only a nominal equity investment at risk, and we absorb or receive a majority of the entity’s expected losses or expected residual returns. We also agree to provide working capital loans to allow for the treatment center to pay for its obligations. Substantially all of the activities of the managed medical corporation either involves us or are conducted for our benefit, as evidenced by the facts that (i) the operations of the managed medical corporation is conducted primarily using our licensed protocols and (ii) under the MSA, we agree to provide and perform all non-medical management and administrative services for the treatment center. Payment of our management fee is subordinate to payments of the obligations of the treatment center, and repayment of the working capital loans is not guaranteed by the equity owner of the affiliated treatment center or other third party. Creditors of the managed medical corporation do not have recourse to our general credit. Based on these facts, we have determined that the managed medical corporation is a VIE and that we are the primary beneficiary as defined in current accounting rules. Accordingly, we are required to consolidate the assets, liabilities, revenues and expenses of the managed treatment center. | |||||||||||||||||
The amounts and classification of assets and liabilities of the VIE included in our consolidated balance sheets as of March 31, 2014 and December 31, 2013, are as follows: | |||||||||||||||||
(audited) | |||||||||||||||||
March 31, | December 31, | ||||||||||||||||
(in thousands) | 2014 | 2013 | |||||||||||||||
Cash and cash equivalents | $ | 8 | $ | 24 | |||||||||||||
Receivables, net | 12 | 24 | |||||||||||||||
Total assets | $ | 20 | $ | 48 | |||||||||||||
Accounts payable | 13 | 25 | |||||||||||||||
Note payable to Catasys, Inc. | 13,316 | 13,119 | |||||||||||||||
Total liabilities | $ | 13,329 | $ | 13,144 | |||||||||||||
Derivatives, Policy [Policy Text Block] | ' | ||||||||||||||||
Warrant Liabilities | |||||||||||||||||
In January 2014, we entered into the January Agreements with several investors relating to the sale and issuance of an aggregate of 1,724,141 shares of common stock and warrants to purchase an aggregate of 1,724,141 shares of common stock at an exercise price of $0.58 per share for aggregate gross proceeds of approximately $1.0 million. The January Agreements provide that in the event that we effectuate a Reverse Split and the VWAP period declines from the closing price on the trading date immediately prior to the effective date of the Reverse Split, that we shall issue the Adjustment Shares. | |||||||||||||||||
The January Warrants expire in January 2019, and contain anti-dilution provisions. As a result, if we, in the future, issue or grant any rights to purchase any of our common stock, or other securities convertible into our common stock, for a per share price less than the exercise price of the January Warrants, the exercise price of the January Warrants will be reduced to such lower price, subject to customary exceptions. In the event that Adjustment Shares are issued, the number of shares that may be purchased under the January Warrants shall be increased by an amount equal to the Adjustment Shares. In addition, the exercise price is subject to adjustment in the event that the VWAP during the VWAP period is less than the exercise price prior to the VWAP Period. | |||||||||||||||||
We have issued warrants to purchase common stock in July 2010, October 2010, November 2010, December 2011, February 2012, April 2012, May 2012, September 2012, December 2012, April 2013, October 2013, January 2014, and when we amended and restated the Highbridge senior secured note in July 2008. The warrants are being accounted for as liabilities in accordance with FASB accounting rules, due to provisions in some warrants that protect the holders from declines in our stock price and a requirement to deliver registered shares upon exercise of the warrants, which is considered outside our control. The warrants are marked-to-market each reporting period, using the Black-Scholes pricing model, until they are completely settled or expire. | |||||||||||||||||
For the three months ended March 31, 2014 and 2013, we recognized a gain of $5.1 million and $4.4 million, respectively, related to the revaluation of our warrant liabilities. | |||||||||||||||||
New Accounting Pronouncements, Policy [Policy Text Block] | ' | ||||||||||||||||
Recently Issued or Newly Adopted Accounting Standards | |||||||||||||||||
In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, (“ASU 2013-02”). ASU 2013-02 amends ASC 220, Comprehensive Income (“ASC 220”), and requires entities to present the changes in the components of accumulated other comprehensive income for the current period. Entities are required to present separately the amount of the change that is due to reclassifications, and the amount that is due to current period other comprehensive income. These changes are permitted to be shown either before or net-of-tax and can be displayed either on the face of the financial statements or in the footnotes. ASU 2013-02 was effective for our interim and annual periods beginning January 1, 2013. The adoption of ASU 2013-02 did not have a material effect on our consolidated financial position or results of operations. | |||||||||||||||||
In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, (“ASU 2013-11”), which eliminates diversity in practice for the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward is available to reduce the taxable income or tax payable that would result from disallowance of a tax position. ASU 2013-11 affects only the presentation of such amounts in an entity’s balance sheet and is effective for fiscal years beginning after December 15, 2013 and interim periods within those years. The adoption of ASU 2013-11 did not have a material effect on our consolidated financial position or results of operations. |
Note_2_Summary_of_Significant_1
Note 2 - Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Note 2 - Summary of Significant Accounting Policies (Tables) [Line Items] | ' | ||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | ' | ||||||||||||||||
Three Months Ended | |||||||||||||||||
31-Mar | |||||||||||||||||
(in thousands, except per share amounts) | 2014 | 2013 | |||||||||||||||
Numerator | |||||||||||||||||
Net income | $ | 2,139 | $ | 2,613 | |||||||||||||
Denominator | |||||||||||||||||
Weighted-average common shares outstanding | 19,449 | 12,057 | |||||||||||||||
Shares used in calculation - basic | 19,449 | 12,057 | |||||||||||||||
Stock options and warrants | 8,717 | 4,505 | |||||||||||||||
Shares used in calculation - diluted | 28,166 | 16,562 | |||||||||||||||
Net income per share | |||||||||||||||||
Basic | $ | 0.11 | $ | 0.22 | |||||||||||||
Diluted | $ | 0.08 | $ | 0.16 | |||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | ' | ||||||||||||||||
Weighted Avg. | |||||||||||||||||
Shares | Exercise Price | ||||||||||||||||
Balance December 31, 2013 | 21,000 | $ | 28.4 | ||||||||||||||
Canceled | - | $ | - | ||||||||||||||
Balance March 31, 2014 | 21,000 | $ | 28.4 | ||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | ' | ||||||||||||||||
2013 | |||||||||||||||||
(Dollars in thousands) | Level I | Level II | Level III | Total | |||||||||||||
Certificates of deposit | $ | 87 | $ | - | $ | - | $ | 87 | |||||||||
Total assets | $ | 87 | $ | - | $ | - | $ | 87 | |||||||||
Warrant liabilities | $ | - | $ | - | $ | 13,556 | $ | 13,556 | |||||||||
Total liabilities | $ | - | $ | - | $ | 13,556 | $ | 13,556 | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | ' | ||||||||||||||||
Level III | |||||||||||||||||
Warrant | |||||||||||||||||
(Dollars in thousands) | Liabilities | ||||||||||||||||
Balance as of December 31, 2013 | $ | 16,347 | |||||||||||||||
Issuance of warrants | 2,310 | ||||||||||||||||
Change in fair value | (5,101 | ) | |||||||||||||||
Balance as of March 31, 2014 | $ | 13,556 | |||||||||||||||
Schedule of Finite-Lived Intangible Assets [Table Text Block] | ' | ||||||||||||||||
Gross | Amortization | ||||||||||||||||
(In thousands) | Carrying | Accumulated | Net | Period | |||||||||||||
Amount | Amortization | Balance | (in years) | ||||||||||||||
Intellectual property | $ | 519 | $ | (406 | ) | $ | 113 | 7 | |||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | ' | ||||||||||||||||
(In thousands) | |||||||||||||||||
Year | Amount | ||||||||||||||||
2014 (9 months) | $ | 12 | |||||||||||||||
2015 | $ | 16 | |||||||||||||||
2016 | $ | 16 | |||||||||||||||
2017 | $ | 16 | |||||||||||||||
2018 | $ | 16 | |||||||||||||||
Schedule of Variable Interest Entities [Table Text Block] | ' | ||||||||||||||||
(audited) | |||||||||||||||||
March 31, | December 31, | ||||||||||||||||
(in thousands) | 2014 | 2013 | |||||||||||||||
Cash and cash equivalents | $ | 8 | $ | 24 | |||||||||||||
Receivables, net | 12 | 24 | |||||||||||||||
Total assets | $ | 20 | $ | 48 | |||||||||||||
Accounts payable | 13 | 25 | |||||||||||||||
Note payable to Catasys, Inc. | 13,316 | 13,119 | |||||||||||||||
Total liabilities | $ | 13,329 | $ | 13,144 | |||||||||||||
Employees and Directors [Member] | ' | ||||||||||||||||
Note 2 - Summary of Significant Accounting Policies (Tables) [Line Items] | ' | ||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | ' | ||||||||||||||||
Weighted Avg. | |||||||||||||||||
Shares | Exercise Price | ||||||||||||||||
Balance December 31, 2013 | 461,000 | $ | 19.69 | ||||||||||||||
Granted | - | $ | - | ||||||||||||||
Canceled | - | $ | - | ||||||||||||||
Balance March 31, 2014 | 461,000 | $ | 19.69 |
Note_3_Segment_Information_Tab
Note 3 - Segment Information (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Note 3 - Segment Information (Tables) [Line Items] | ' | ||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] | ' | ||||||||
Three Months Ended | |||||||||
(in thousands) | March 31, | ||||||||
2014 | 2013 | ||||||||
Healthcare services | |||||||||
Revenues | $ | 199 | $ | 99 | |||||
Income before provision for income taxes | 2,362 | 2,862 | |||||||
Assets * | 1,968 | 2,291 | |||||||
License and management services | |||||||||
Revenues | $ | 19 | $ | 36 | |||||
Loss before provision for income taxes | (221 | ) | (247 | ) | |||||
Assets * | 124 | 1,042 | |||||||
Consolidated continuing operations | |||||||||
Revenues | $ | 218 | $ | 135 | |||||
Income before provision for income taxes | 2,141 | 2,615 | |||||||
Assets * | 2,092 | 3,333 | |||||||
Healthcare Services [Member] | ' | ||||||||
Note 3 - Segment Information (Tables) [Line Items] | ' | ||||||||
Condensed Income Statement [Table Text Block] | ' | ||||||||
Three Months Ended | |||||||||
(in thousands) | March 31, | ||||||||
2014 | 2013 | ||||||||
Revenues | $ | 199 | $ | 99 | |||||
Operating Expenses | |||||||||
Cost of healthcare services | $ | 265 | $ | 144 | |||||
General and administrative expenses | |||||||||
Salaries and benefits | 873 | 1,013 | |||||||
Other expenses | 464 | 435 | |||||||
Depreciation and amortization | 24 | 5 | |||||||
Total operating expenses | $ | 1,626 | $ | 1,597 | |||||
Loss from operations | $ | (1,427 | ) | $ | (1,498 | ) | |||
Interest expense | (1,312 | ) | - | ||||||
Change in fair value of warrant liabilities | 5,101 | 4,360 | |||||||
Income before provision for income taxes | $ | 2,362 | $ | 2,862 | |||||
License and Management Services [Member] | ' | ||||||||
Note 3 - Segment Information (Tables) [Line Items] | ' | ||||||||
Schedule of Segment Reporting Information, by Segment [Table Text Block] | ' | ||||||||
(In thousands) | Three Months Ended | ||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Revenues | $ | 19 | $ | 36 | |||||
Operating expenses | |||||||||
Cost of license and management services | $ | 68 | $ | 60 | |||||
General and administrative expenses | |||||||||
Salaries and benefits | 96 | 125 | |||||||
Other expenses | 72 | 57 | |||||||
Depreciation and amortization | 4 | 41 | |||||||
Total operating expenses | $ | 240 | $ | 283 | |||||
Loss from operations | $ | (221 | ) | $ | (247 | ) | |||
Interest and other income | - | - | |||||||
Interest expense | - | - | |||||||
Loss before provision for income taxes | $ | (221 | ) | $ | (247 | ) |
Note_1_Basis_of_Consolidation_1
Note 1 - Basis of Consolidation, Presentation and Going Concern (Details) (USD $) | 1 Months Ended | 3 Months Ended | |||
Jan. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | |
Disclosure Text Block [Abstract] | ' | ' | ' | ' | ' |
Cash and Cash Equivalents, at Carrying Value | ' | $723,000 | $1,608,000 | $1,136,000 | $3,153,000 |
Working Capital Deficit | ' | 2,900,000 | ' | ' | ' |
Proceeds from Issuance or Sale of Equity | 1,000,000 | 1,000,000 | ' | ' | ' |
Net Cash Provided by (Used in) Operating Activities | ' | ($1,464,000) | ($1,565,000) | ' | ' |
Note_2_Summary_of_Significant_2
Note 2 - Summary of Significant Accounting Policies (Details) (USD $) | 1 Months Ended | 3 Months Ended | |
Jan. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | |
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items] | ' | ' | ' |
Cash and Cash Equivalents Uninsured Amount | ' | $523,710 | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares) | ' | 8,717,165 | 4,505,385 |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares) | ' | 1,825,000 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number (in Shares) | ' | 482,177 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares) | ' | 1,285,586 | ' |
Allocated Share-based Compensation Expense | ' | 13,000 | 68,000 |
Share-based Compensation | ' | 13,000 | 68,000 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | ' | 33,000 | ' |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | ' | '295 days | ' |
Stock Issued During Period, Shares, New Issues (in Shares) | 1,724,141 | ' | ' |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares) | 1,724,141 | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Share) | $0.58 | ' | ' |
Proceeds from Issuance or Sale of Equity | 1,000,000 | 1,000,000 | ' |
Stock Issued During Period, Shares, Issued for Services (in Shares) | ' | 0 | 0 |
Impairment of Intangible Assets, Finite-lived | ' | 0 | 0 |
Debt Instrument, Basis Spread on Variable Rate | ' | 2.00% | ' |
Line of Credit Facility, Amount Outstanding | ' | 13,300,000 | ' |
Increase (Decrease) in Derivative Liabilities | ' | -5,101,000 | -4,360,000 |
Employees and Directors [Member] | ' | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items] | ' | ' | ' |
Share-based Compensation | ' | 12,000 | 47,000 |
Nonemployees [Member] | ' | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items] | ' | ' | ' |
Share-based Compensation | ' | 1,000 | 20,000 |
Consulting Services [Member] | ' | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items] | ' | ' | ' |
Share-based Compensation | ' | $0 | $1,000 |
Furniture and Equipment [Member] | Minimum [Member] | ' | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items] | ' | ' | ' |
Property, Plant and Equipment, Useful Life | ' | '2 years | ' |
Furniture and Equipment [Member] | Maximum [Member] | ' | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items] | ' | ' | ' |
Property, Plant and Equipment, Useful Life | ' | '7 years | ' |
Leasehold Improvements [Member] | Minimum [Member] | ' | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items] | ' | ' | ' |
Property, Plant and Equipment, Useful Life | ' | '5 years | ' |
Leasehold Improvements [Member] | Maximum [Member] | ' | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items] | ' | ' | ' |
Property, Plant and Equipment, Useful Life | ' | '7 years | ' |
Revenue [Member] | ' | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items] | ' | ' | ' |
Concentration Risk, Percentage | ' | 68.00% | ' |
Account Receivable [Member] | ' | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items] | ' | ' | ' |
Concentration Risk, Percentage | ' | 81.00% | ' |
Minimum [Member] | ' | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items] | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | ' | '3 years | ' |
Percentage of Costs | ' | 10.00% | ' |
Maximum [Member] | ' | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items] | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | ' | '5 years | ' |
Percentage of Costs | ' | 15.00% | ' |
Note_2_Summary_of_Significant_3
Note 2 - Summary of Significant Accounting Policies (Details) - Common Equivalent Shares, Consisting Incremental Common Shares (USD $) | 3 Months Ended | |||
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Numerator | ' | ' | ||
Net income (in Dollars) | $2,139 | $2,613 | ||
Denominator | ' | ' | ||
Weighted-average common shares outstanding | 19,449 | 12,057 | ||
Stock options and warrants | 8,717 | 4,505 | ||
Shares used in calculation - basic | 19,449 | 12,057 | ||
Stock options and warrants | 8,717 | 4,505 | ||
Shares used in calculation - diluted | 28,166 | 16,562 | ||
Net income per share | ' | ' | ||
Basic (in Dollars per share) | $0.11 | [1] | $0.22 | [1] |
Diluted (in Dollars per share) | $0.08 | $0.16 | ||
[1] | The financial statements have been retroactively restated to reflect the 10-for-1 reverse stock split that occurred on May 6, 2013. |
Note_2_Summary_of_Significant_4
Note 2 - Summary of Significant Accounting Policies (Details) - Employee and Director Stock Option Activity (Employees and Directors [Member], USD $) | 3 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | |
Employees and Directors [Member] | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) - Employee and Director Stock Option Activity [Line Items] | ' | ' |
Shares | 461,000 | 461,000 |
Weighted Average Exercise Price | $19.69 | $19.69 |
Granted | 0 | ' |
Granted | $0 | ' |
Canceled | 0 | ' |
Canceled | $0 | ' |
Note_2_Summary_of_Significant_5
Note 2 - Summary of Significant Accounting Policies (Details) - Non-Employee Stock Option Activity (Nonemployees [Member], USD $) | 3 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | |
Nonemployees [Member] | ' | ' |
Note 2 - Summary of Significant Accounting Policies (Details) - Non-Employee Stock Option Activity [Line Items] | ' | ' |
Balance | 21,000 | 21,000 |
Balance | $28.40 | $28.40 |
Canceled | 0 | ' |
Canceled | $0 | ' |
Note_2_Summary_of_Significant_6
Note 2 - Summary of Significant Accounting Policies (Details) - Summary of Fair Value Measuremnet for Assets and Liabilities (USD $) | Mar. 31, 2013 |
In Thousands, unless otherwise specified | |
Note 2 - Summary of Significant Accounting Policies (Details) - Summary of Fair Value Measuremnet for Assets and Liabilities [Line Items] | ' |
Certificates of deposit | $87 |
Total assets | 87 |
Warrant liabilities | 13,556 |
Total liabilities | 13,556 |
Fair Value, Inputs, Level 1 [Member] | ' |
Note 2 - Summary of Significant Accounting Policies (Details) - Summary of Fair Value Measuremnet for Assets and Liabilities [Line Items] | ' |
Certificates of deposit | 87 |
Total assets | 87 |
Fair Value, Inputs, Level 3 [Member] | ' |
Note 2 - Summary of Significant Accounting Policies (Details) - Summary of Fair Value Measuremnet for Assets and Liabilities [Line Items] | ' |
Warrant liabilities | 13,556 |
Total liabilities | $13,556 |
Note_2_Summary_of_Significant_7
Note 2 - Summary of Significant Accounting Policies (Details) - Fair Value Measurements Using Significant Level III Inputs (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Fair Value Measurements Using Significant Level III Inputs [Abstract] | ' | ' |
Balance | $13,556 | $16,347 |
Issuance of warrants | 2,310 | ' |
Change in fair value | ($5,101) | ' |
Note_2_Summary_of_Significant_8
Note 2 - Summary of Significant Accounting Policies (Details) - Gross and Net Carrying Amounts of Intangible Assets Subject to Amortization (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Gross and Net Carrying Amounts of Intangible Assets Subject to Amortization [Abstract] | ' | ' |
Intellectual property | $519 | ' |
Intellectual property | -406 | -401 |
Intellectual property | $113 | $118 |
Intellectual property | '7 years | ' |
Note_2_Summary_of_Significant_9
Note 2 - Summary of Significant Accounting Policies (Details) - Estimated Remaining Amortization Expense for Intangible Assets (USD $) | Mar. 31, 2014 |
In Thousands, unless otherwise specified | |
Estimated Remaining Amortization Expense for Intangible Assets [Abstract] | ' |
2014 (9 months) | $12 |
2015 | 16 |
2016 | 16 |
2017 | 16 |
2018 | $16 |
Recovered_Sheet1
Note 2 - Summary of Significant Accounting Policies (Details) - Amounts and Classification of Assets and Liabilities of the VIE (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Variable Interest Entity [Line Items] | ' | ' |
VIE Assets | $20 | $48 |
VIE Liabilities | 13,329 | 13,144 |
Accounts Payable [Member] | ' | ' |
Variable Interest Entity [Line Items] | ' | ' |
VIE Liabilities | 13 | 25 |
Note Payable [Member] | ' | ' |
Variable Interest Entity [Line Items] | ' | ' |
VIE Liabilities | 13,316 | 13,119 |
Cash [Member] | ' | ' |
Variable Interest Entity [Line Items] | ' | ' |
VIE Assets | 8 | 24 |
Receivables Net [Member] | ' | ' |
Variable Interest Entity [Line Items] | ' | ' |
VIE Assets | $12 | $24 |
Note_3_Segment_Information_Det
Note 3 - Segment Information (Details) | 3 Months Ended |
Mar. 31, 2014 | |
Segment Reporting [Abstract] | ' |
Number of Operating Segments | 2 |
Number of Reportable Segments | 2 |
Note_3_Segment_Information_Det1
Note 3 - Segment Information (Details) - Segment Reporting Information, by Segment (USD $) | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | ||
Segment Reporting Information [Line Items] | ' | ' | ' | ||
Revenues | $199 | $99 | ' | ||
Assets | 2,092 | ' | 2,623 | ||
Revenues | 218 | 135 | ' | ||
Revenues | 19 | 36 | ' | ||
Healthcare Services [Member] | ' | ' | ' | ||
Segment Reporting Information [Line Items] | ' | ' | ' | ||
Revenues | 199 | 99 | ' | ||
Income/(loss) before provision for income taxes | 2,362 | 2,862 | ' | ||
Assets | 1,968 | [1] | 2,291 | [1] | ' |
License and Management Services [Member] | ' | ' | ' | ||
Segment Reporting Information [Line Items] | ' | ' | ' | ||
Income/(loss) before provision for income taxes | -221 | -247 | ' | ||
Assets | 124 | [1] | 1,042 | [1] | ' |
Revenues | 19 | 36 | ' | ||
Consolidated Continuing Operations [Member] | ' | ' | ' | ||
Segment Reporting Information [Line Items] | ' | ' | ' | ||
Income/(loss) before provision for income taxes | 2,141 | 2,615 | ' | ||
Assets | 2,092 | [1] | 3,333 | [1] | ' |
Revenues | $218 | $135 | ' | ||
[1] | Assets are reported as of March 31. |
Note_3_Segment_Information_Det2
Note 3 - Segment Information (Details) - Operating Results for Healthcare Services (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Condensed Income Statements, Captions [Line Items] | ' | ' |
Revenues | $199 | $99 |
Operating Expenses | ' | ' |
Cost of healthcare services | 333 | 204 |
General and administrative expenses | ' | ' |
Depreciation and amortization | 28 | 47 |
Loss from operations | -1,648 | -1,745 |
Interest expense | 1,312 | ' |
Change in fair value of warrant liabilities | -5,101 | -4,360 |
Healthcare Services [Member] | ' | ' |
Condensed Income Statements, Captions [Line Items] | ' | ' |
Revenues | 199 | 99 |
Operating Expenses | ' | ' |
Cost of healthcare services | 265 | 144 |
General and administrative expenses | ' | ' |
Salaries and benefits | 873 | 1,013 |
Other expenses | 464 | 435 |
Depreciation and amortization | 24 | 5 |
Total operating expenses | 1,626 | 1,597 |
Loss from operations | -1,427 | -1,498 |
Interest expense | -1,312 | ' |
Change in fair value of warrant liabilities | 5,101 | 4,360 |
Income before provision for income taxes | $2,362 | $2,862 |
Note_3_Segment_Information_Det3
Note 3 - Segment Information (Details) - Operating Results for License and Management Services (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Segment Reporting Information [Line Items] | ' | ' |
Revenues | $19 | $36 |
Operating expenses | ' | ' |
Cost of license and management services | 333 | 204 |
General and administrative expenses | ' | ' |
Depreciation and amortization | 28 | 47 |
Loss from operations | -1,648 | -1,745 |
Loss before provision for income taxes | 2,141 | 2,615 |
License and Management Services [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenues | 19 | 36 |
Operating expenses | ' | ' |
Cost of license and management services | 68 | 60 |
General and administrative expenses | ' | ' |
Salaries and benefits | 96 | 125 |
Other expenses | 72 | 57 |
Depreciation and amortization | 4 | 41 |
Total operating expenses | 240 | 283 |
Loss from operations | -221 | -247 |
Loss before provision for income taxes | ($221) | ($247) |
Note_4_Related_Party_Disclosur1
Note 4 - Related Party Disclosure (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | 36 Months Ended | 39 Months Ended | |
Jan. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2010 | Jan. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | |
January 2014 [Member] | Per Month [Member] | Payments Received On Related Party Receivables [Member] | |||||
Note 4 - Related Party Disclosure (Details) [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Operating Lease Term | ' | ' | ' | '3 years | ' | ' | ' |
Operating Leases, Rent Expense | ' | ' | ' | ' | ' | $11,000 | ' |
Accounts Receivable, Related Parties | ' | 0 | 115,000 | ' | ' | ' | ' |
Increase (Decrease) in Due to Related Parties | ' | 115,000 | 186,000 | ' | ' | ' | ' |
Related Party Transaction, Amounts of Transaction | ' | ' | ' | ' | ' | ' | 382,000 |
Stock Issued During Period, Shares, New Issues (in Shares) | 1,724,141 | ' | ' | ' | 1,585,345 | ' | ' |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares) | 1,724,141 | ' | ' | ' | 1,585,345 | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item) | $0.58 | ' | ' | ' | $0.58 | ' | ' |
Proceeds from Issuance or Sale of Equity | $1,000,000 | $1,000,000 | ' | ' | $919,500 | ' | ' |
Note_5_Restatement_of_Financia1
Note 5 - Restatement of Financial Statements (Details) | 0 Months Ended |
6-May-13 | |
Accounting Changes and Error Corrections [Abstract] | ' |
Stockholders' Equity, Reverse Stock Split | '10-for-1 |