x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2014 | |
or | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transaction period from _____________ to _____________ |
Commission file number 333-62216 |
HEALTH DISCOVERY CORPORATION (Exact name of registrant as specified in its charter) |
Georgia (State or other jurisdiction of incorporation or organization) | 74-3002154 (IRS Employer Identification No.) |
4243 Dunwoody Club Drive Suite 202 Atlanta, Georgia 30350 | ||||
(Address of principal executive offices) | ||||
(678) 336-5300 | ||||
(Registrant’s telephone number, including area code) | ||||
(Former name, former address and former fiscal year, if changed since the last report) |
Large Accelerated Filer o | Non-Accelerated Filer o | |||
(do not check if a smaller reporting company) | ||||
Accelerated Filer o | Smaller Reporting Company x |
Class: | Outstanding as of May 15, 2014 |
Common Stock, no par value | 252,557,310 |
Series A Preferred Stock | 0 |
Series B Preferred Stock | 8,827,500 |
Series C Preferred Stock | 4,333,334 |
ii |
TABLE OF CONTENTS | ||||
PART I -- FINANCIAL INFORMATION | 2 | |||
2 | ||||
2 | ||||
3 | ||||
4 | ||||
5 | ||||
Managements’s Discussion and Analysis of Financial Condition and Results of Operations | 10 | |||
15 | ||||
Controls and Procedures | 15 | |||
16 | ||||
16 | ||||
Item 1A. | Risk Factors | 16 | ||
16 | ||||
16 | ||||
16 | ||||
16 | ||||
16 | ||||
17 |
iii |
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 38,737 | $ | 71,991 | ||||
Accounts Receivable | 61 | 80 | ||||||
Investment in Available For Sale Securities (Note G) | 624,600 | 724,000 | ||||||
Total Current Assets | 663,398 | 796,071 | ||||||
Equipment, Less Accumulated Depreciation of $56,656 and $55,133 | 4,229 | 5,752 | ||||||
Other Assets | ||||||||
Patents, Less Accumulated Amortization of $2,584,970 and $2,519,290 | 1,400,824 | 1,466,504 | ||||||
Total Assets | $ | 2,068,451 | $ | 2,268,327 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities | ||||||||
Accounts Payable - Trade | $ | 337,715 | $ | 326,267 | ||||
Accrued Liabilities | 5,000 | 2,500 | ||||||
Dividends Payable - S/T | 326,137 | 308,724 | ||||||
Deferred Revenue | 779,588 | 1,024,988 | ||||||
Total Current Liabilities | 1,448,440 | 1,662,479 | ||||||
Long Term Liabilities | ||||||||
Deferred Revenue | 180,781 | 191,628 | ||||||
Total Liabilities | 1,629,221 | 1,854,107 | ||||||
Stockholders’ Equity | ||||||||
Series B Preferred Stock, Convertible, | ||||||||
20,625,000 Shares Authorized, 8,827,500 Issued and Outstanding | 677,902 | 677,902 | ||||||
Series C Preferred Stock, Convertible, 16,500,000 Shares Authorized, | ||||||||
4,333,334 Issued and Outstanding March 31, 2014 | 260,000 | 160,000 | ||||||
2,000,000 Issued and Outstanding December 31, 2013 | ||||||||
Common Stock, No Par Value, 300,000,000 Shares Authorized | ||||||||
252,557,310 Shares Issued and Outstanding March 31, 2014 | ||||||||
252,557,310 Shares Issued and Outstanding December 31, 2013 | 26,370,194 | 26,368,892 | ||||||
Accumulated Deficit | (26,868,866 | ) | (26,792,574 | ) | ||||
Total Stockholders’ Equity | 439,230 | 414,220 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 2,068,451 | $ | 2,268,327 | ||||
See accompanying notes to financial statements. |
2 |
2014 | 2013 | |||||||
Revenues: | ||||||||
Licensing & Development | $ | 261,359 | $ | 284,139 | ||||
Operating Expenses: | ||||||||
Amortization | 65,680 | 65,680 | ||||||
Professional and Consulting Fees | 91,917 | 279,083 | ||||||
Legal Fees | 16,681 | 39,155 | ||||||
Research & Development Fees | 23,438 | 35,151 | ||||||
Compensation | 78,530 | 166,025 | ||||||
Other General and Administrative Expenses | 43,685 | 114,333 | ||||||
Total Operating Expenses | 319,931 | 699,427 | ||||||
Loss From Operations | (58,572 | ) | (415,288 | ) | ||||
Other (Expense) Income | ||||||||
Unrealized (Loss) Gain on Available for Sale Securities(Note G) | (70,800 | ) | 459,650 | |||||
Realized Gain on Available for Sale Securities(Note G) | 53,080 | 270,450 | ||||||
Total Other (Expense) Income | (17,720 | ) | 730,100 | |||||
Net (Loss) Income | $ | (76,292 | ) | $ | 314,812 | |||
Preferred Stock Dividends | 17,413 | 34,205 | ||||||
(Loss) Income Attributable to Common Shareholders | $ | (93,705 | ) | $ | 280,607 |
Weighted Average Outstanding Shares | ||||||||
Basic | 252,557,310 | 233,773,144 | ||||||
Diluted | 252,557,310 | 251,141,406 | ||||||
(Loss) Income Per Share (basic and diluted) | $ | (0.000 | ) | $ | 0.001 |
3 |
2014 | 2013 | |||||||
Cash Flows From Operating Activities | ||||||||
Net (Loss) Income | $ | (76,292 | ) | $ | 314,812 | |||
Adjustments to Reconcile Net (Loss) Income to Net Cash | ||||||||
Used for Operating Activities: | ||||||||
Stock-based Compensation | 3,837 | 17,931 | ||||||
Services Exchanged for Options | 14,878 | 10,158 | ||||||
Realized Gain on Investments in Available for Sale Securities Measured in Accordance with the Fair Value Option (Note G) | (53,080 | ) | (270,450 | ) | ||||
Unrealized Loss (Gain) on Investments in Available for Sale Securities Measured in Accordance with the Fair Value Option (Note G) | 70,800 | (459,650 | ) | |||||
Depreciation and Amortization | 67,203 | 67,832 | ||||||
Decrease (Increase) in Accounts Receivable | 19 | (108 | ) | |||||
Decrease in Deferred Revenue | (256,247 | ) | (256,247 | ) | ||||
Increase (Decrease) in Accounts Payable – Trade | 11,448 | (41,482 | ) | |||||
Increase (Decrease) in Accrued Liabilities | 2,500 | (50,500 | ) | |||||
Net Cash Used for Operating Activities | (214,934 | ) | (667,704 | ) | ||||
Cash Flows From Investing Activity: | ||||||||
Proceeds from Sale of Available for Sale Securities (Note G) | 81,680 | 581,475 | ||||||
Net Cash Provided by Investing Activity | 81,680 | 581,475 | ||||||
Cash Flows From Financing Activity: | ||||||||
Proceeds from Series C Preferred Stock Issuance | 100,000 | - | ||||||
Net Cash Provided by Financing Activity | 100,000 | - | ||||||
Net Decrease in Cash | (33,254 | ) | (86,229 | ) | ||||
Cash, at Beginning of Period | 71,991 | 171,424 | ||||||
Cash, at End of Period | $ | 38,737 | $ | 85,195 | ||||
See accompanying notes to financial statements. |
4 |
For the three-month period ending March 31, 2014, both the basic and diluted per share loss are computed by dividing net loss by the weighted average number of common shares outstanding for the period. The calculation of diluted per share amounts would have created an anti-dilutive result due to the net loss for the period.
5 |
Three months ended March 31, 2013 | ||||
Basic: | ||||
Net income attributable to common shareholders | $ | 280,607 | ||
Basic weighted average common shares outstanding | 233,773,144 | |||
Basic earnings per common share | $ | 0.001 | ||
Diluted: | ||||
Net income attributable to common shareholders | $ | 314,812 | ||
Basic weighted average common shares outstanding | 233,773,144 | |||
Effect of dilutive securities: | ||||
Conversion of options and warrants | 28,087 | |||
Conversion of preferred shares to common shares | 17,340,175 | |||
Diluted weighted average common shares outstanding | 251,141,406 | |||
Diluted earnings per common share | $ | 0.001 |
In addition, for the three month period ended March 31, 2014, 4,750,000 outstanding stock options and warrants were not included in the computation of diluted earnings per share as doing so would have an antidilutive effect.
6 |
Exercise Prices | Number Outstanding | Weighted- Average Remaining Contractual Life (years) | Number Exercisable | Weighted Average Remaining Contractual Life (years) of Exercisable Warrants and Options | ||||||
$0.027 | 3,000,000 | 9.25 | - | - | ||||||
$0.036 | 7,750,000 | 9.50 | 2,000,000 | 9.50 | ||||||
$0.040 | 1,000,000 | 3.75 | 1,000,000 | 3.75 | ||||||
$0.050 | 1,000,000 | 3.75 | 1,000,000 | 3.75 | ||||||
$0.080 | 750,000 | .25 | 750,000 | .25 | ||||||
Total | 13,500,000 | 4,750,000 |
7 |
8 |
9 |
10 |
11 |
12 |
13 |
Total | 1 Year Or Less | More Than 1 Year | ||||||||||
Accrued Liabilities | $ | 5,000 | $ | 5,000 | - | |||||||
Total | $ | 5,000 | $ | 5,000 | - |
14 |
15 |
3.1 | Articles of Incorporation. Registrant incorporates by reference Exhibit 3.1 to Form 8-K filed July 18, 2007. |
3.1(a) | Articles of Amendment to Articles of Incorporation. Registrant incorporates by reference Exhibit 99.1 to Form 8-K filed October 10, 2007. |
3.1(b) | Articles of Amendment to Articles of Incorporation. Registrant incorporates by reference Exhibit 3.1(b) to Form 10-K filed March 31, 2009. |
3.1(c) | Amended and Restated Articles of Amendment to Articles of Incorporation. Registrant incorporates by reference Exhibit 3.1 to Form 10-Q filed November 16, 2009. |
3.2 | By-Laws. Registrant incorporates by reference Exhibit 3.2 to Form 8-K filed July 18, 2007. |
4.1 | Copy of Specimen Certificate for shares of Common Stock. Registrant incorporates by reference Exhibit 4.1 to Registration Statement on Form SB-2, filed June 4, 2001. |
10.27 | License Agreement, dated January 6, 2012, between Health Discovery Corporation and NeoGenomics Laboratories, Inc. Registrant incorporates by reference Exhibit 10.27 to Form 8-K filed on January 12, 2012. |
31.1 | Rule 13a-14(a)/15(d)-14(a) Certifications of Chief Executive Officer and Principal Financial Offier. Filed herewith. |
32.1 | Section 1350 Certifications of Chief Executive Officer and Principal Financial Officer. Filed herewith. |
16 |
Health Discovery Corporation | |||
Registrant |
Date: May 15, 2014 | By: | /s/ Kevin Kowbel | |
Printed Name: Kevin Kowbel | |||
Title: Interim Chief Executive Officer, Principal Financial Officer, and Principal Accounting Officer |
17 |