Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Apr. 10, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | Praxsyn Corp | ||
Entity Central Index Key | 1346973 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | Yes | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $12,448,211 | ||
Entity Common Stock, Shares Outstanding | 577,107,157 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||
Cash and cash equivalents | $1,222,084 | $37,494 |
Accounts receivable, net of allowance | 10,134,743 | 3,564,770 |
Inventories | 201,639 | 13,441 |
Other current assets | 15,981 | 20,230 |
Total current assets | 11,574,447 | 3,635,935 |
Property and equipment, at cost | 79,543 | 27,782 |
Accounts receivable, long-term | 4,139,543 | 983,440 |
Debt issuance cost, net | 24,361 | |
Other assets | 7,549 | 5,879 |
Deferred tax asset | 902,941 | 248,455 |
Total assets | 16,704,023 | 4,925,852 |
Current liabilities: | ||
Accounts payable | 482,648 | 191,002 |
Other accrued liabilities | 1,088,299 | 187,502 |
Accrued interest | 1,573,467 | 1,011,414 |
Accrued marketing | 5,896,197 | 1,411,493 |
Notes payable to related parties | 199,067 | 406,664 |
Notes payable, current portion | 3,676,492 | 5,639,594 |
Settlement liabilities | 70,000 | 248,000 |
Liabilities of discontinued operations | 961,831 | |
Deferred tax liabilities | 897,433 | 459,411 |
Total current liabilities | 14,845,434 | 9,555,080 |
Notes payable, non-current | 226,755 | |
Total liabilities | 15,072,189 | 9,555,080 |
Commitments and contingencies (Note 10) | ||
Shareholders' equity (deficit): | ||
Common stock, no par value: 1,400,000,000 shares authorized, 451,889,263 and no shares issued and outstanding at December 31, 2014 and 2013, respectively | ||
Additional paid-in capital | 54,239,832 | 35,624,371 |
Accumulated deficit | -52,407,998 | -40,053,599 |
Treasury stock at cost, 389,623 shares at December 31, 2014 and 2013, respectively | -200,000 | -200,000 |
Total shareholders' equity (deficit) | 1,631,834 | -4,629,228 |
Total liabilities and shareholders' equity (deficit) | 16,704,023 | 4,925,852 |
Series D Preferred Stock [Member] | ||
Shareholders' equity (deficit): | ||
Preferred stock, no par value, 10,000,000 shares authorized: | ||
Series B Preferred Stock [Member] | ||
Shareholders' equity (deficit): | ||
Preferred stock, no par value, 10,000,000 shares authorized: | ||
Series C Preferred Stock [Member] | ||
Shareholders' equity (deficit): | ||
Preferred stock, no par value, 10,000,000 shares authorized: | ||
Series A Preferred Stock [Member] | ||
Shareholders' equity (deficit): | ||
Preferred stock, no par value, 10,000,000 shares authorized: |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Preferred stock, par value | ||
Preferred stock, shares authorized | 10,000,000 | |
Common stock, par value | ||
Common stock, shares authorized | 1,400,000,000 | 1,400,000,000 |
Common stock, shares issued | 451,889,263 | |
Common stock, shares outstanding | 451,889,263 | |
Treasury stock, Shares | 389,623 | 389,623 |
Series D Preferred Stock [Member] | ||
Preferred stock, par value | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 332,336 | 174,184 |
Preferred stock, shares outstanding | 332,336 | 174,184 |
Preferred stock, liquidation preference | $13,293,440 | $6,967,360 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 63,838 | |
Preferred stock, shares outstanding | 63,838 | |
Preferred stock, liquidation preference | 1,915,140 | 0 |
Series C Preferred Stock [Member] | ||
Preferred stock, par value | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 20 | |
Preferred stock, shares outstanding | 20 | |
Preferred stock, liquidation preference | 2,000 | 0 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Preferred stock, liquidation preference | $0 | $0 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | ||
Net revenues | $66,598,896 | $6,988,536 |
Cost of net revenues | 3,586,164 | 694,180 |
Gross profit | 63,012,732 | 6,294,356 |
Operating expenses: | ||
Selling and marketing - stock based | 11,391,301 | |
Selling and marketing - non stock-based | 22,369,757 | 1,790,841 |
Total selling and marketing | 33,761,058 | 1,790,841 |
General and administrative - stock based | 102,277 | |
General and administrative - non stock based | 3,083,351 | 1,304,002 |
Total general and administrative | 3,185,628 | 1,304,002 |
Total operating expenses | 36,946,686 | 3,094,843 |
Operating income | 26,066,046 | 3,199,513 |
Other income (expense): | ||
Interest expense | -31,732,511 | -2,390,931 |
Warrant modification expense | -7,111,444 | |
Gain on extinguishment of debt | 225,193 | |
Other, net | -15,747 | -38,359 |
Other income (expense), net | -38,634,509 | -2,429,290 |
Income (loss) before income taxes | -12,568,463 | 770,223 |
Provision (benefit) for income taxes | -214,064 | 540,162 |
Net income (loss) | ($12,354,399) | $230,061 |
Income (loss) per common share - basic | ($0.05) | $0 |
Income (loss) per common share - diluted | ($0.05) | $0 |
Weighted average number of common shares used in basic calculations | 268,948,521 | |
Weighted average number of common shares used in diluted calculations | 268,948,521 | 175,729,583 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (Deficit) (USD $) | Series D Preferred Stock [Member] | Series B Preferred Stock [Member] | Series C Preferred Stock [Member] | Series A Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Related Party Receivable [Member] | Treasury Stock [Member] | Total |
Balance at Dec. 31, 2012 | $35,459,066 | ($40,283,660) | ($108,243) | ($4,932,837) | ||||||
Balance, shares at Dec. 31, 2012 | 172,510 | |||||||||
Stock issued to settle debt | 273,548 | 273,548 | ||||||||
Stock issued to settle debt, shares | 2,489 | |||||||||
Stock exchanged for note payable | -200,000 | -200,000 | ||||||||
Stock exchanged for note payable, shares | ||||||||||
Stock exchanged for related party receivable | -108,243 | 108,243 | ||||||||
Stock exchanged for related party receivable, shares | -815 | |||||||||
Stock issued for services Total | ||||||||||
Net income (loss) | 230,061 | 230,061 | ||||||||
Balance at Dec. 31, 2013 | 35,624,371 | -40,053,599 | -200,000 | -4,629,228 | ||||||
Balance, shares at Dec. 31, 2013 | 174,184 | |||||||||
Stock issued to settle debt | 2,064,757 | 2,064,757 | ||||||||
Stock issued to settle debt, shares | 2,599 | 53,036,707 | ||||||||
Shares retained in merger and net liabilities assumed | -2,185,778 | -2,185,778 | ||||||||
Shares retained in merger and net liabilities assumed, shares | 72,415 | 1,245 | 287,582,556 | |||||||
Repurchase and cancellation of stock | -506,000 | -506,000 | ||||||||
Repurchase and cancellation of stock, shares | -7,549 | |||||||||
Stock issued for services for TPS | 10,391,301 | 10,391,301 | ||||||||
Stock issued for services for TPS, shares | 166,664 | |||||||||
Stock issued for services for other | 1,100,000 | 1,100,000 | ||||||||
Stock issued for services for other, shares | 8,279 | |||||||||
Stock issued for services Total | 11,491,301 | 11,491,301 | ||||||||
Stock issued for services total, shares | 174,943 | |||||||||
Stock issued to cancel warrants | 7,111,444 | 7,111,444 | ||||||||
Stock issued to cancel warrants, shares | 155,823 | |||||||||
Beneficial conversion feature | 637,460 | 637,460 | ||||||||
Series D Preferred stock conversions | ||||||||||
Series D Preferred stock conversions, shares | -1,000 | 1,000,000 | ||||||||
Series B Preferred stock conversions | ||||||||||
Series B Preferred stock conversions, shares | -8,577 | 85,770,000 | ||||||||
Series C Preferred stock conversions | ||||||||||
Series C Preferred stock conversions, shares | -1,225 | 24,500,000 | ||||||||
Stock options expense | 2,277 | 2,277 | ||||||||
Cancellation of TPS Series D shares | ||||||||||
Cancellation of TPS Series D shares, shares | -166,664 | |||||||||
Net income (loss) | -12,354,399 | -12,354,399 | ||||||||
Balance at Dec. 31, 2014 | $54,239,832 | ($52,407,998) | ($200,000) | $1,631,834 | ||||||
Balance, shares at Dec. 31, 2014 | 332,336 | 63,838 | 20 | 451,889,263 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | ||
Net income (loss) | ($12,354,399) | $230,061 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Warrant modification expense | 7,111,444 | |
Gain on extinguishment of debt | -225,193 | |
Loss on exchange and conversion of notes payable | 247,096 | |
Loss from derivative accounting included in other expense | 17,347 | |
Stock issued for services rendered | 11,491,301 | |
Loss on accounts receivables sold to factor treated as interest expense | 29,598,765 | 873,201 |
Depreciation and amortization | 15,942 | 9,110 |
Loss on disposal of property and equipment | 5,184 | |
Amortization of debt discount | 733,220 | 154,176 |
Amortization of debt issuance costs | 24,361 | 73,799 |
Stock option expense | 2,277 | |
Deferred tax provision (benefit) | -214,064 | 540,162 |
Changes in operating assets and liabilities: | ||
Accounts receivable | -65,388,360 | -6,171,378 |
Inventories | -188,198 | 2,597 |
Other current assets | 2,580 | 59,880 |
Accounts payable | -59,166 | 1,448,959 |
Accrued liabilities | 319,584 | 239,374 |
Accrued interest | 1,075,298 | 570,464 |
Accrued marketing | 4,484,704 | |
Settlement liabilities | -170,000 | -8,000 |
Net cash used in operating activities | -23,717,373 | -1,732,099 |
Cash flows from investing activities: | ||
Capital expenditures | -67,703 | -4,000 |
Cash acquired in connection with reverse merger | 485,012 | |
Net cash provided by (used in) investing activities | 417,309 | -4,000 |
Cash flows from financing activities: | ||
Proceeds from sale of accounts receivable to factor | 26,063,518 | 1,358,759 |
Repurchase and cancellation of stock | -506,000 | |
Repayment of notes payable | -812,867 | -14,881 |
Borrowings from related parties | 246,767 | 104,164 |
Repayments to related parties | -506,764 | |
Net cash provided by financing activities | 24,484,654 | 1,448,042 |
Increase (decrease) in cash and cash equivalents | 1,184,590 | -288,057 |
Cash and cash equivalents at beginning of year | 37,494 | 325,551 |
Cash and cash equivalents at end of year | 1,222,084 | 37,494 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 220,035 | 478,157 |
Cash paid for income taxes | 1,600 | |
Supplemental disclosure of non-cash investing and financing activities: | ||
Common stock issued in exchange for cancellation of note payable | 2,064,757 | 321,667 |
Conversion of accrued interest into note payable | 20,833 | 67,839 |
Creation of obligations through settlements | 500,000 | 200,000 |
Stock exchanged for related party receivable | 108,243 | |
Net liabilities assumed from reverse merger | $2,185,778 |
Business
Business | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
Business | 1. Business | ||||||||
Business | |||||||||
Praxsyn Corporation (the “Company” or “Praxsyn”) is a health care company dedicated to providing medical practitioners with medications and services for their patients. Through our retail pharmacy facility in Irvine, California, we currently formulate healthcare practitioner-prescribed medications to serve patients who experience chronic pain. Our focus with these products is on non-narcotic and non-habit forming medications using therapeutic and preventative agents for pain management. In addition, we prepare innovative products that address erectile dysfunction and metabolic issues, and other ancillary products. Our products are either picked up directly at our pharmacy facility or shipped to patients covered under the California workers’ compensation system, as well as preferred provider (“PPO”) contracts. Billings are made to, and collections received from, the insurance companies which cover the patients. | |||||||||
Merger | |||||||||
On December 31, 2013, we entered into a First Amended Securities Exchange Agreement (“SEA”) with Mesa Pharmacy, Inc. (“Mesa”), a wholly-owned subsidiary of Pharmacy Development Corporation (“PDC”), to acquire all of Mesa. On March 20, 2014, we replaced the SEA by entering into an Agreement and Plan of Merger (the “APM”) with PDC whereby we agreed to acquire all the issued and outstanding shares of PDC in exchange for 500,000 shares of our Series D Preferred Stock. Each share of Series D preferred stock is convertible into 1,000 shares of our common stock. On January 23, 2014, we entered into an agreement with our primary marketing consultant, Trestles Pain Management Specialists, LLC (“TPS”), whereby we agreed to issue 166,664 (or approximately one-third of the 500,000 shares) of our Series D Preferred Stock issued in connection with the APM. The TPS shares were committed in exchange for future marketing services with our Company on a performance basis. At September 30, 2014, 166,664 shares had been earned by, and deemed issued to, TPS with no shares remaining to be earned and issued. Additionally, in accordance with the APM, certain of our convertible promissory notes were exchanged for new convertible promissory notes, convertible into shares of Series D Preferred Stock at the rate of one (1) share of Series D Preferred Stock for each One Hundred Dollars ($100) of unpaid principal and interest. The APM closed on March 31, 2014 (the “Acquisition Date”). Effective December 31, 2014, TPS determined that they would cancel their Series D shares so they would no longer be outstanding. | |||||||||
For accounting purposes, this transaction was treated as a reverse-acquisition in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, since control of our Company passed to the PDC shareholders. We determined for accounting and reporting purposes that PDC is the acquirer because of the significant holdings and influence of its control group (which includes Mesa) before and after the acquisition. Immediately subsequent to this transaction, the PDC control group owned approximately 40% of our issued and outstanding common stock on a diluted basis. In addition, the Series D preferred shares are the only preferred shares with voting rights. With these voting rights, the PDC control group controlled approximately 63% of our voting power on a diluted basis after the acquisition. Additionally, the PDC control group, pre-acquisition, was significantly larger than Praxsyn in terms of assets and operations. Finally, the future operations of the PDC control group will be our Company’s primary operations and more indicative of the operations of the consolidated entity on a going forward basis. | |||||||||
Accordingly, the consolidated assets and liabilities of PDC are reported at historical costs and the historical consolidated results of operations of PDC will be reflected in our filings subsequent to the acquisition as a change in reporting entity. The assets and liabilities of Praxsyn are reported at their carrying value, which approximated their fair value, on the Acquisition Date and no goodwill was recorded. Praxsyn’s results of operations are included from the Acquisition Date. The following is a schedule of Praxsyn’s assets and liabilities at the Acquisition Date: | |||||||||
Assets: | |||||||||
Cash | $ | 485,012 | |||||||
Fixed assets | 5,184 | ||||||||
Total assets | 490,196 | ||||||||
Liabilities: | |||||||||
Accounts payable | 362,582 | ||||||||
Accrued expenses | 588,401 | ||||||||
Accrued interest | 96,362 | ||||||||
Convertible debentures | 666,798 | ||||||||
Liabilities of discontinued operations | 961,831 | ||||||||
Total liabilities | 2,675,974 | ||||||||
Net liabilities assumed | $ | (2,185,778 | ) | ||||||
The following is our pro-forma revenue and earnings information for 2014 and 2013 assuming both our Company and PDC had been combined as of January 1, 2013. Amounts have been rounded to the nearest thousand and are unaudited: | |||||||||
2014 | 2013 | ||||||||
Sales, net | $ | 66,599,000 | $ | 6,989,000 | |||||
Net loss from continuing operations | $ | (21,122,000 | ) | $ | (6,323,000 | ) | |||
Net loss | $ | (21,125,000 | ) | $ | (6,359,000 | ) | |||
Net loss per share – basic and diluted | $ | (0.08 | ) | $ | (0.06 | ) |
Basis_of_Presentation_and_Sign
Basis of Presentation and Significant Accounting Policies | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accounting Policies [Abstract] | |||||||||
Basis of Presentation and Significant Accounting Policies | 2. Basis of Presentation and Significant Accounting Policies | ||||||||
Basis of Presentation | |||||||||
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America. | |||||||||
Principles of Consolidation | |||||||||
The accompanying consolidated financial statements include the accounts of PDC, including Mesa and NexGen, for the years ended December 31, 2014 and 2013, and Praxsyn as of the acquisition date of March 31, 2014. All significant intercompany transactions have been eliminated in consolidation. Management makes estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes. Actual results could differ from those estimates. | |||||||||
Going Concern | |||||||||
The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. Since inception, management has funded operations primarily through proceeds received in connection with factoring of accounts receivable on a nonrecourse basis from two primary factors, issuances of notes payable, and through sales of common stock. Also, our 2014 business was concentrated within the workers compensation market for which the collection of payments on receivables may be delayed for a significant period depending on various factors. Additionally during 2014, we were dependent upon a few third party marketing services, one of them being a related party, and we derived almost 100% of our revenues from customers referred by the marketing services. During the years ended 2014 and 2013, we incurred a net loss of $12,354,399, and generated net income of $230,061, respectively. $11,491,301 of the net loss during the 2014 period consisted of stock-based expenses. | |||||||||
There are two additional influences to the losses we have reported in 2014. First, our revenue recognition, as discussed in Note 2, is based on our estimate of the net realizable value of each of our customer billings. We invoiced most of our customers, those which are insurance companies for workers compensation cases, in accordance with the fees permitted according to the State of California fee schedule. This is our gross billing. Given the nature of our industry and the reimbursement environment in which we operate, our estimate of the net realizable value of our billings is often less than the gross billing we are allowed to charge. We have recorded our revenue based on historical collection trends. Second, we have had to finance our operations by selling our accounts receivable (recorded at net realizable value) to a number of factors. The cost of factoring, which we record as interest expense, can be quite high – anywhere from 70% to 75% of the gross accounts receivable billing. | |||||||||
These two influences have had a material impact on our operating results, but also offer a major opportunity for profit growth as we move forward. We have recently formed a subsidiary named NexGen Med Solutions, LLC (“NexGen”), which we expect will allow us to expand our accounts receivables collection effort. We believe this will allow us to improve our collections, increase the net realizable value of our gross billing revenues, and reduce our dependency on factoring. In addition we continue to seek more conventional financing which will allow us to further move away from factoring and reduce our interest expense. Finally, we continue to seek new markets for our transdermal creams which will diversify our business, increase profitability and improve shareholder value. While there is no certainty that we will be able to achieve these goals, Management is hopeful we will be successful. | |||||||||
In addition, while Management believes our new PPO business will greatly improve our operating performance, we understand that we will need additional accounts receivable factoring, or debt/equity financing to be able to fully implement our business plan. Given the indicators described above, there is substantial doubt about our ability to continue as a going concern. | |||||||||
We are attempting to find additional financing sources to build our operations to profitable levels, however, there is no assurance we will be successful. The successful outcome of future activities cannot be determined at this time, and there are no assurances that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results. | |||||||||
The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. | |||||||||
Use of Estimates | |||||||||
Financial statements prepared in accordance with accounting principles generally accepted in the United States require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates made by management are revenue recognition along with the related allowance for doubtful accounts and contractual receivables, the allocation of accounts receivable between current and long-term, the value of stock-based compensation awards, the amount of potential legal settlements and contingencies, the fair market value of assets and liabilities of Praxsyn and the realization of deferred tax assets. Actual results could differ from those estimates. Management performs a periodic retrospective review of estimates and modifies assumptions as deemed appropriate. | |||||||||
Revenue Recognition | |||||||||
We sell our products directly through our pharmacy and record the associated revenues using the net method, as required under ASC 954-605-25, Health Care Entities – Revenue Recognition. Our prescription revenue is recorded at established billing rates less estimated contractual adjustments with each respective insurance carrier. Net revenues represent the amount each respective insurance company and the California Workers Compensation Fund are expected to pay us. We recognize revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the sales price is fixed or determinable, and collection is probable. Our pharmacy revenues are recognized when both the compounding prescriptions and customer shipment services are performed. | |||||||||
Net revenues consisted of the following for the years ended December 31, 2014 and 2013: | |||||||||
2014 | 2013 | ||||||||
Gross revenues | $ | 156,853,777 | $ | 15,551,345 | |||||
Less: estimated contractual and other adjustments | (90,254,881 | ) | (8,562,809 | ) | |||||
Net revenues | $ | 66,598,896 | $ | 6,988,536 | |||||
Shipping and Handling | |||||||||
Shipping and handling costs incurred are included in general and administrative expenses. The amount of revenue received for shipping and handling is less than 0.5% of revenues for all periods presented. | |||||||||
Cash Equivalents | |||||||||
We consider all highly liquid, income bearing investments purchased with original maturities of three months or less to be cash equivalents. | |||||||||
Accounts Receivable | |||||||||
Accounts receivable represent amounts due from insurance companies, through various networks, for products delivered to patients. We record an allowance for doubtful accounts and contractual reimbursements based on analyses of historical collections over the expected period until such cases are closed or settled. Management also assess specific identifiable accounts considered at risk or uncollectible. As discussed above, we have factored a significant amount of our accounts receivable. The difference between the estimated net realizable value of accounts receivable, which we have recorded as net revenues, and the factored amounts has been recorded in the consolidated statements of operations as interest expense. | |||||||||
Due to the nature of the industry and the reimbursement environment in which we operate, certain estimates are required in order to record net revenues and accounts receivable at their net realizable values. Inherent in these estimates is the risk that they may have to be revised or updated as additional information becomes available. It is possible that management’s estimates could change, which could have an impact on operations and cash flows. Specifically, the complexity of many billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payers may result in adjustments to amounts originally recorded. | |||||||||
Inventories | |||||||||
Inventories are stated at the lower of cost (first-in, first-out method) or market. Our inventories consist of pharmaceutical ingredients used within our compounding products. Our inventories for all periods presented are predominantly raw materials. | |||||||||
Property and Equipment | |||||||||
Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives. Leasehold improvements are amortized on a straight-line basis over the lesser of the useful lives or the remaining term of the lease. For tax purposes, accelerated tax methods are used. We expense all purchases of equipment with individual costs of under $1,000. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. | |||||||||
Debt Issuance Costs | |||||||||
We capitalize direct costs related to the issuance of debt, including finder’s fees, underwriting and legal costs. The debt issuance costs are recorded as an asset and amortized as interest expense over the term of the related debt using the straight-line method, which approximates the effective interest method. Upon the extinguishment of the related debt, any unamortized debt issuance costs are expensed as interest expense. | |||||||||
Impairment of Long-Lived Assets | |||||||||
We review our long-lived assets in accordance with ASC 360-10-35, Impairment or Disposal of Long-Lived Assets. Under that directive, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Such group is tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. | |||||||||
Convertible Debt and Warrants Issued with Convertible Debt | |||||||||
Convertible debt is accounted for under the guidelines established by ASC 470, Debt with Conversion and Other Options and ASC 740, Beneficial Conversion Features. We record a beneficial conversion feature (“BCF”) when convertible debt is issued with conversion features at fixed or adjustable rates that are below market value when issued. If, however, the conversion feature is dependent upon a condition being met or the occurrence of a specific event, the BCF will be recorded when the related contingency is met or occurs. The BCF for the convertible instrument is recorded as a reduction, or discount, to the carrying amount of the convertible instrument equal to the fair value of the conversion feature. The discount is then amortized to interest over the life of the underlying debt using the effective interest method. | |||||||||
We calculate the fair value of warrants issued with the convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing employee options for purposes of ASC 718, Compensation – Stock Compensation, except that the contractual life of the warrant is used. Under these guidelines, we allocate the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value is recorded as a debt discount or premium and is amortized over the expected term of the convertible debt to interest expense. For a conversion price change of a convertible debt issue, the additional intrinsic value of the debt conversion feature, calculated as the number of additional shares issuable due to a conversion price change multiplied by the previous conversion price, is recorded as additional debt discount and amortized over the remaining life of the debt. | |||||||||
For modifications of convertible debt, we record the modification that changes the fair value of an embedded conversion feature, including a BCF, as a debt discount which we amortize to interest expense over the remaining life of the debt. If modification is considered substantial (i.e. greater than 10% of the carrying value of the debt), an extinguishment of debt is deemed to have occurred, resulting in the recognition of an extinguishment gain or loss. | |||||||||
Fair Value of Financial Instruments | |||||||||
We utilize ASC 820-10, Fair Value Measurement and Disclosure, for valuing financial assets and liabilities measured on a recurring basis. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of our Company. Unobservable inputs are inputs that reflect our Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value: | |||||||||
Level 1. Observable inputs such as quoted prices in active markets; | |||||||||
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | |||||||||
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | |||||||||
As of December 31, 2014 and December 31, 2013, we did not have any level 2 or 3 assets or liabilities. | |||||||||
Stock Based Compensation | |||||||||
We account for our share-based compensation in accordance with ASC 718-20, Stock-based Compensation. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite vesting period. | |||||||||
We have issued warrants exercisable into our common stock and preferred stock as compensation to debt holders. The fair value of each warrant is estimated on the date of grant using the Black-Scholes pricing model. Assumptions are determined at the time of grant. No warrants were granted during the years ended December 31, 2014 and 2013. | |||||||||
The assumptions used in the Black Scholes models referred to above are based upon the following data: (1) The expected life of the warrant is estimated by considering the contractual term of the warrant. (2) The expected stock price volatility of the underlying shares over the expected term of the warrant is based upon historical share price data. (3) The risk free interest rate is based on published U.S. Treasury Department interest rates for the expected terms of the underlying warrants. (4) Expected dividends are based on historical dividend data and expected future dividend activity. (5) The expected forfeiture rate is based on historical forfeiture activity and assumptions regarding future forfeitures based on the composition of current grantees. | |||||||||
Income Taxes | |||||||||
We account for income taxes in accordance with ASC 740-10, Income Taxes. We recognize deferred tax assets and liabilities to reflect the estimated future tax effects, calculated at currently effective tax rates, of future deductible or taxable amounts attributable to events that have been recognized on a cumulative basis in the consolidated financial statements. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. | |||||||||
ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. We classify interest and penalties as a component of interest and other expenses. To date, there have been no interest or penalties assessed or paid. | |||||||||
We measure and record uncertain tax positions by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. | |||||||||
Net Income (Loss) Per Share | |||||||||
Basic earnings per share is calculated by dividing income available to common stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share is computed using the weighted average number of common and dilutive common share equivalents outstanding during the period. | |||||||||
Concentrations, Uncertainties and Other Risks | |||||||||
Cash and cash equivalents - Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000 per institution that pays Federal Deposit Insurance Corporation (FDIC) insurance premiums. We have never experienced any losses related to these balances. | |||||||||
Revenues and accounts receivable - Financial instruments that potentially subject us to credit risk principally consist of receivables. Amounts owed to us by insurance companies account for a substantial portion of the receivables. This risk is limited due to the number of insurance companies comprising our customer base and their geographic dispersion. The risk is further limited by our ability to factor our receivables. For the years ended December 31, 2014 and 2013, no single customer represented more than 10% of revenues or accounts receivable, net. | |||||||||
The majority of our accounts receivable arise from product sales and are primarily due from insurance companies. We monitor the financial performance and creditworthiness of our customers so that we can properly assess and respond to changes in their credit profile. Conditions in the normal course of business, including inherent variability of timing of cash receipts, have resulted in, and may continue to result in, an increase in the average length of time that it takes to collect accounts receivable outstanding. For accounts receivable that are held and not factored, we do not expect to have write-offs or adjustments to accounts receivable which could have a material adverse effect on our consolidated financial position, results of operations or cash flows as the portion which is deemed uncollectible is already taken into account when the revenue is recognized. | |||||||||
During the years ended December 31, 2014 and 2013, revenues generated from sales of compounding pharmaceutical products primarily to worker’s compensation patients located throughout Southern California represented nearly 100% of total revenues. At times the collection on these receivables can take in excess of one year, during which we may attend legal hearings, file liens to securitize claims, negotiate before worker’s compensation administrative judges, resolve liens with stipulations and orders for defendants to pay, and transmit demands to settle liens filed with the adjuster or defense attorneys. | |||||||||
During the years ended December 31, 2014 and 2013, we retained two principal consultants, one of which was TPS, to market our products to licensed healthcare practitioners who treat patients covered under a variety of workers’ compensation insurance programs. For each period presented, nearly 100% of our net revenue resulted from the consultants’ marketing efforts and fees for the two consultants represented nearly all of our selling and marketing expense. In addition, on March 31, 2014, we added a representative of TPS to our Board of Directors. Subsequent to December 31, 2014, our consulting agreement with TPS expired and we replaced them with another marketing consultant. See Note 15 for further information. As a result, the TPS representative resigned from our Board effective February 23, 2015. For the years ended December 31, 2014 and 2013, the consultants earned the following: | |||||||||
Year Ended: | |||||||||
31-Dec-14 | $ | 33,745,106 | Includes stock-based compensation of $11,391,301 | ||||||
31-Dec-13 | $ | 1,790,761 | Includes no stock-based compensation | ||||||
The amounts payable to the consultants at December 31, 2014 and 2013 were $5,896,197 and $1,411,493, respectively. | |||||||||
The pharmaceutical industry is highly competitive and regulated, and our future revenue growth and profitability is dependent on our timely product development, ability to retain proprietary formulas, and continued compliance. The compounding, processing, formulation, packaging, labeling, testing, storing, distributing, advertising and sale of our products are subject to regulation by one or more U.S. and California agencies, including the Board of Pharmacy, the Food and Drug Administration, the Federal Trade Commission, and the Drug Enforcement Administration as well as several other state and local agencies in localities in which our products are sold. In addition, we compound and market certain of our products in accordance with standards set by organizations, such as the United States Pharmacopeial Convention, Inc. We believe our policies, operations and products comply in all material respects with existing regulations. Healthcare reform and a reduction in the coverage and reimbursement levels by insurance companies and government agencies and/or a change in the regulations or compliance with related agencies and/or a disruption in our ability to maintain our competitiveness may have a material impact on our consolidated financial position, results of operations, and cash flows. | |||||||||
Vendors - As of December 31, 2014 and 2013, two suppliers made up substantially 100% of our direct materials. Management believes the loss of either supplier to this organization would have a material impact on our consolidated financial position, results of operations, and cash flows. If our Company’s relationship with one of our vendors was disrupted, we could have temporary difficulty filling prescriptions for worker’s compensation related drugs until a replacement wholesaler agreement was executed, which would negatively impact our business. | |||||||||
For the years ended December 31, 2014 and 2013, purchases made for pharmaceutical compounding materials obtained from these vendors were $2,492,749, and $273,135, respectively. The amounts payable at December 31, 2014 and 2013 for such costs were $12,158 and $58,594, respectively. | |||||||||
Recent Accounting Pronouncements | |||||||||
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers,” which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new standard requires a company to recognize revenue upon transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. ASU 2014-09 defines a five-step approach for recognizing revenue which may require a company to use more judgment and make more estimates than under the current guidance. This ASU will be effective for us starting in the first quarter of 2018. The new standard allows for two methods of adoption: (a) full retrospective adoption, meaning the standard is applied to all periods presented, or (b) modified retrospective adoption, meaning the cumulative effect of applying the new standard is recognized as an adjustment to the fiscal 2018 opening retained earnings balance. We are in the process of determining the adoption method as well as the effects the adoption will have on our consolidated financial statements. | |||||||||
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, “Presentation of Financial Statements—Going Concern”, which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted. Management is still in the process of assessing the impact of ASU 2014-15 on the Company’s consolidated financial statements. | |||||||||
There are no other recently issued accounting pronouncements or standards updates that we have yet to adopt that are expected to have a material effect on our consolidated financial position, results of operations, or cash flows. |
Accounts_Receivable
Accounts Receivable | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accounts Receivable | |||||||||
Accounts Receivable | 3. Accounts Receivable | ||||||||
Accounts receivable consist of the following at: | |||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Accounts receivable | $ | 36,364,280 | $ | 10,814,161 | |||||
Allowance for doubtful accounts and | (22,089,994 | ) | (6,265,951 | ) | |||||
contractual write-offs | |||||||||
Subtotal | 14,274,286 | 4,548,210 | |||||||
Less: long-term portion | (4,139,543 | ) | (983,440 | ) | |||||
Current portion | $ | 10,134,743 | $ | 3,564,770 | |||||
We have computed the long-term portion of our accounts receivable using amounts and timing historical collection information. | |||||||||
We have sold a significant portion of our accounts receivable, in groups of receivables, to various factors on a non-recourse basis. Prior to funding, the factor performs due diligence testing on a sampling of accounts receivable to determine that the accounts meet their criteria for purchase. After funding, if it is determined that an account receivable does not meet their purchase criteria, we will exchange it for a different account and pursue collection of the account returned. If we do not have a different account to exchange with the factor, we would have to return the proceeds from an account that they are putting back to us. However, as long as we continue to generate new accounts receivable, we are not at risk of having to return any factoring proceeds. | |||||||||
Under the factoring agreements, we receive initial net proceeds ranging from 20% to 25% of the gross accounts receivable sold in each group. The agreements also allow for our receipt of additional proceeds once the factors’ collections have reached a certain collection benchmark for each group of receivables sold. In addition, for certain groups of receivables, we may also receive additional proceeds upon the passage of eighteen months. Although we expect we may ultimately receive additional proceeds from our factors, we will not record any additional receipts until such funds have actually been received. The difference between the recorded amount of the accounts receivable and the amount received has been treated as interest expense. | |||||||||
We have granted one factor a first security interest in all accounts receivable that have not been sold to another factor. In addition, we provided the same factor with a first right of refusal to purchase future receivables. | |||||||||
During the years ended December 31, 2014 and 2013, our factoring activity has been as follows: | |||||||||
2014 | 2013 | ||||||||
Gross billing receivables sold | $ | 128,637,988 | $ | 4,852,088 | |||||
Adjustment to net revenues (for estimated contractual and other adjustments) | (72,879,912 | ) | (2,620,128 | ) | |||||
Interest expense for factored accounts receivable | (29,694,558 | ) | (873,201 | ) | |||||
Proceeds received from factors | $ | 26,063,518 | $ | 1,358,759 |
Property_and_Equipment_Net
Property and Equipment, Net | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Property and Equipment, Net | 4. Property and Equipment, Net | ||||||||
Property and equipment consist of the following at: | |||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Machinery and equipment | $ | 27,229 | $ | 22,629 | |||||
Computer equipment | 31,473 | 13,406 | |||||||
Furniture and fixtures | 3,997 | 3,997 | |||||||
Leasehold improvements | 69,784 | 24,749 | |||||||
132,483 | 64,781 | ||||||||
Less: accumulated depreciation | (52,940 | ) | (36,999 | ) | |||||
$ | 79,543 | $ | 27,782 | ||||||
Depreciation expense for 2014 and 2013 amounted to $15,942 and $9,110, respectively. |
Notes_Payable_and_Accrued_Inte
Notes Payable and Accrued Interest | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||
Notes Payable and Accrued Interest | 5. Notes Payable and Accrued Interest | ||||||||||||||||
Notes payable and accrued interest consisted of the following at: | |||||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||
Principal | Accrued Interest | Principal | Accrued Interest | ||||||||||||||
Non-related parties: | |||||||||||||||||
2007 – 2009 convertible notes | $ | 315,000 | $ | 124,334 | $ | 497,000 | $ | 78,083 | |||||||||
Profit sharing notes | 175,000 | 527,012 | 675,000 | 383,163 | |||||||||||||
Secured bridge notes | 449,275 | 86,945 | 449,275 | 72,901 | |||||||||||||
2012 convertible promissory notes | 2,288,250 | 706,384 | 3,299,875 | 410,174 | |||||||||||||
Promissory notes | 350,722 | 3,507 | 817,366 | 5,793 | |||||||||||||
Convertible debentures | 325,000 | 114,110 | — | — | |||||||||||||
Less: unamortized discount | — | — | (98,922 | ) | — | ||||||||||||
Subtotal – non-related parties | 3,903,247 | 1,562,292 | 5,639,594 | 950,114 | |||||||||||||
Related parties: | |||||||||||||||||
2007 – 2009 convertible notes | — | — | 152,500 | 43,300 | |||||||||||||
2012 Convertible promissory notes | — | — | 150,000 | 18,000 | |||||||||||||
Promissory notes | 146,667 | 7,414 | — | — | |||||||||||||
Convertible note | 52,400 | 3,761 | — | — | |||||||||||||
Notes payable to Officer | — | — | 104,164 | — | |||||||||||||
Subtotal – related parties | 199,067 | 11,175 | 406,664 | 61,300 | |||||||||||||
Total | 4,102,314 | 1,573,467 | 6,046,258 | 1,011,414 | |||||||||||||
Current portion | (3,875,559 | ) | (1,573,467 | ) | (6,046,258 | ) | (1,011,414 | ) | |||||||||
Long-term portion | $ | 226,755 | $ | — | $ | — | $ | — | |||||||||
2007 – 2009 Convertible Notes | |||||||||||||||||
The 2007 – 2009 Convertible Notes were initially issued in 2007 to 2009 to a series of individuals, including a related party who is a relative of the founder of the PDC control group. These notes are unsecured. The non-related party notes in this category bear interest rates ranging from 18% to 33% per annum. | |||||||||||||||||
On March 31, 2014, we entered into a Note Conversion Agreement with a shareholder and holder of one of the 2007 – 2009 Convertible Notes with a principal amount of $100,000. Under the conversion agreement, the principal was converted into 1,505 shares of Series D Preferred Stock and we issued a new Unsecured Promissory Note for the remaining balance of accrued and unpaid interest totaling $20,833 which has been repaid as of December 31, 2014. See Promissory Notes section below. As a result of this transaction, we recorded a loss on extinguishment of debt of $100,000 during 2014. | |||||||||||||||||
On September 19, 2014, we repaid principal and interest on notes in this category with face value totaling $95,000. In connection with this transaction, we recorded a gain on extinguishment of debt of $182. | |||||||||||||||||
On September 30, 2014, we entered into a Settlement Agreement and Mutual Release with the related party note holder referred to above. Under the agreement, we settled notes in this category with face value totaling $152,500 along with a 2012 Convertible Promissory note (see below) with a face value of $150,000. Under the settlement agreement, we paid the note holder $302,500 in full settlement of the notes, including accrued interest, and recorded a gain on extinguishment of debt in the amount of $99,704 and eliminated $143,517 in derivative liability (related to the 2012 Convertible Promissory note), which was recorded as a gain upon extinguishment. | |||||||||||||||||
All notes in this category, which were originally written on PDC, contained a provision allowing for conversion into common stock only if PDC became a public entity. This conversion provision allowed for the conversion of all unpaid principal and accrued interest at the rate of the average closing price of the common stock for the 10 days prior to conversion. Upon finalization of the merger on March 31, 2014 as discussed in Note 1, the remaining notes in this category were rewritten with the following changes (i) the conversion feature was modified to allow for conversion into one (1) share of Series D Preferred Stock for each One Hundred Dollars ($100) of unpaid principal and interest and (ii) the maturity date of the notes was changed to allow for future payment of principal and accrued interest when our company’s resources would allow. The modification of the conversion feature created a beneficial conversion feature (“BCF”) of $322,785 and, in accordance with the requirements of ASC 470-50, we have recorded that amount as a loss on extinguishment of debt during 2014. | |||||||||||||||||
Because these notes were previously past-due and now have no fixed maturity date, we have reflected them as current liabilities at each balance sheet date in the accompanying consolidated financial statements. | |||||||||||||||||
Profit Sharing Notes | |||||||||||||||||
The Profit Sharing Notes were initially issued in 2010 with a term of four (4) years. In lieu of interest, the notes called for monthly payments ranging from 0.1% to 5% of the cash receipts from prescription sales. These notes are collateralized by all receivables generated by sales of prescriptions. | |||||||||||||||||
On March 10, 2014, as amended on May 1, 2014, we finalized a settlement agreement with All American T.V., Inc./John Casorio (“AATV”), a shareholder and a holder of one of the 2010 Profit Sharing Notes under which we, among other things, agreed to repay the note and accrued interest for a total payment of $600,000. Based on the finalized settlement agreement, we reclassified this note to Settlement Liabilities in 2014 (see Note 6). In connection with the settlement agreement, we recorded a gain on extinguishment of debt during 2014 in the amount of $180,973. | |||||||||||||||||
At both December 31, 2014 and 2013, these Profit Sharing Notes are past-due and are reflected as current liabilities at each balance sheet date. There have been no demands for repayment or claims of default. | |||||||||||||||||
Secured Bridge Notes | |||||||||||||||||
These Secured Bridge Notes were initially issued in 2010 and 2011 and were to be repaid at the time of a major funding from a specified funding source. Certain of the notes accrue interest at one-time flat-rates ranging from 15% to 22.5% and others at an annual rate of 15% per annum. The notes are collateralized by all receivables generated by sales of prescriptions. At both December 31, 2014 and 2013, these 2010 and 2011 Secured Bridge Notes are reflected as current liabilities at each balance sheet date since funding from the funding source was never obtained. | |||||||||||||||||
2012 Convertible Promissory Notes | |||||||||||||||||
These Convertible Promissory Notes were issued during the second half of 2012, and have a term of four (4) years. One of these notes was issued to a related party, a relative of the founder of the PDC control group. All of these notes bear interest at 18% per annum. Each note including, accrued interest, may be converted at the option of the note holder at any time on or after the second anniversary of the note into an amount of our common shares calculated by dividing the amount to be converted by 95% of the average daily volume weighted average price of our common stock during the five days immediately prior to the date of conversion. | |||||||||||||||||
On March 31, 2014, we entered into a Note Conversion Agreement with the holder of a 2012 Convertible Promissory Note in the principal amount of $124,750, whereby the 2012 Convertible Promissory Note and accrued and unpaid interest of $20,584 was exchanged for 1,094 shares of our Series D Preferred Stock. No gain or loss was recorded in connection with this transaction. | |||||||||||||||||
On September 30, 2014, we entered into a Settlement Agreement and Mutual Release with the related party holder of a 2012 Convertible Promissory Note. See 2007 – 2009 Convertible Notes section above. | |||||||||||||||||
On October 10, 2014, we entered into Settlement Agreement and Mutual Release agreements with three of these noteholders holding notes with face values totaling $886,875. Under the agreements, we agreed to the following in full satisfaction of amounts owed them under their notes, inclusive of accrued interest: (1) the issuance of 30,074,105 shares of our restricted common stock and (2) the issuance of a Promissory Note (see section below) with a principal balance of $65,756. The new note bears interest at 12% per annum and is payable over twelve months with monthly payments of $5,842, which includes interest. We valued the shares issued in connection with these transactions at their market price as of October 10, 2014, their date of issuance, and recorded a gain of $30,959 in connection therewith. | |||||||||||||||||
During the second half of 2014, the notes in this category became convertible. Based on the requirements of ASC 815, we determined that as each note reached its convertibility date, a derivative liability was triggered, the amounts of which we calculated using the Black-Scholes valuation method with the following range of assumptions: | |||||||||||||||||
Stock price per share | $0.04000 to $0.06200 | ||||||||||||||||
Exercise price per share | $0.03770 to $0.05759 | ||||||||||||||||
Time to maturity in years | 1.75 to 2.00 | ||||||||||||||||
Annual risk-free interest rate | 0.47% to 0.58% | ||||||||||||||||
Annualized volatility | 250% to 283% | ||||||||||||||||
Effective December 31, 2014, the remaining notes in this category were amended to include a minimum conversion price of $2.00 per share, thereby eliminating the derivative liability accounting requirement. During 2014, in connection with these amended notes and their convertibility, we recorded a net expense of $458,192 with the offset to additional paid-in capital for debt settled during the period. The net expense consisted of the following: | |||||||||||||||||
(Income) | |||||||||||||||||
Expense | |||||||||||||||||
Interest expense (debt discount amortization) | $ | 634,299 | |||||||||||||||
(Gain) loss on extinguishment of debt | (193,454 | ) | |||||||||||||||
Other expense | 17,347 | ||||||||||||||||
$ | 458,192 | ||||||||||||||||
At both December 31, 2014 and 2013, we reflected these 2012 convertible promissory notes as current liabilities, either in accordance with their terms or because we were in default of the interest payments required under the notes. | |||||||||||||||||
Subsequent to December 31, 2014, we made a full and final settlement for a note with principal value of $110,500 note, inclusive of accrued interest, for $110,500. | |||||||||||||||||
Promissory Notes | |||||||||||||||||
The Promissory Notes consist of the following at: | |||||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||
Non-related parties: | |||||||||||||||||
Note dated November 18, 2013 | $ | — | $ | 772,366 | |||||||||||||
Notes dated October 10, 2014 | 350,722 | — | |||||||||||||||
Note dated January 1, 2014 | — | 45,000 | |||||||||||||||
Subtotal | 350,722 | 817,366 | |||||||||||||||
Related parties: | |||||||||||||||||
Note dated February 20, 2014 | 96,667 | — | |||||||||||||||
Note dated March 11, 2014 | 50,000 | — | |||||||||||||||
Subtotal | 146,667 | — | |||||||||||||||
$ | 497,389 | $ | 817,366 | ||||||||||||||
On November 18, 2013, we issued a Secured Promissory Note with a principal amount of $772,366. This note, which was issued in exchange for previous notes payable and accrued interest, had a term of five (5) years, bore interest at 18% per annum, and required monthly payments of $19,613. The note was secured by certain of our accounts receivable. On October 10, 2014 we entered into a Settlement Agreement and Mutual Release with the noteholder under which we made the following payments in full satisfaction of amounts owed under the notes, inclusive of accrued interest: (1) a cash payment of $150,000, (2) the issuance of 10,807,000 shares of our restricted common stock, and (3) the issuance of a note payable with a principal balance of $300,000 ($290,151 as of December 31, 2014). The new note bears interest at 12% per annum and is payable over four years with monthly payments of $7,900, which includes interest. In addition, the collateral remains the same. We valued the shares issued in connection with these transactions at their market price as of October 10, 2014, their date of issuance, and recorded a loss of $23 in connection therewith. The aggregate amount of principal payments due under this note for each of the future years ending December 31, 2015, 2016, 2017, and 2018 are $63,395, $71,435, $80,495, and $74,825, respectively. | |||||||||||||||||
As described in the 2012 Convertible Promissory Notes section above, we issued a Promissory Note with a principal balance of $65,756 ($60,571 as of December 31, 2014). | |||||||||||||||||
At December 31, 2013, we were in default of the monthly payment requirement and reflected this note as a current liability at that balance sheet date. As of December 31, 2014, we are in compliance of the provisions of the new note and have reflected its long-term portion as such at that balance sheet date. | |||||||||||||||||
Effective December 31, 2013, we issued an Unsecured Promissory Note for $45,000. This note had a term of six months, had no stated interest rate, and was repayable in monthly payments of $7,500. As of December 31, 2014, this note had been repaid. | |||||||||||||||||
On February 20, 2014 we issued an Unsecured Promissory Note for $96,667 to a company whose Managing Member is a shareholder. This note, which had a stated interest rate of 0.5% per month (6% per annum), was repayable in thirty (30) days. We issued a similar Unsecured Promissory Note for $50,000 to the same company on March 11, 2014. The second note contained the same interest rate as the first and was also payable in thirty (30) days. The notes are past due as of December 31, 2014. Subsequent to December 31, 2014, we made a full and final settlement of the $50,000 note, inclusive of accrued interest, for $50,000. | |||||||||||||||||
With the exception of the one note described above, we reflected these Promissory Notes as current liabilities as of December 31, 2014 and 2013 either in accordance with their terms or because we were in default of our payment obligations. | |||||||||||||||||
Convertible Debentures | |||||||||||||||||
The Convertible Debentures were assumed March 31, 2014 as a result of the Merger discussed in Note 1. The convertible debentures, which bear interest at 8% per annum, were due in August 2013 and are therefore past due. They are convertible into shares of our common stock at the rate of $0.50 per share. There was no activity with respect to these convertible debentures during 2014. | |||||||||||||||||
Convertible Note (Related Party) | |||||||||||||||||
On March 5, 2014, we issued a convertible note in the amount of $42,500 to a shareholder. The convertible note, which has a stated interest rate of 6% per annum, was to be repaid in April 2014 and is therefore past due. The note is convertible at the option of the note holder into 260 shares of Series B Preferred Stock. As of December 31, 2014, the total principal amount outstanding for this note was $52,400. | |||||||||||||||||
Notes Payable to Officers | |||||||||||||||||
These unsecured notes resulted from advances made in 2013 and 2014, primarily by our Pharmacist in Charge. All amounts, which were due with no stated interest, have been repaid by December 31, 2014. |
Settlement_Liabilities
Settlement Liabilities | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Settlement Liabilities | |||||||||
Settlement Liabilities | 6. Settlement Liabilities | ||||||||
Settlement liabilities consist of the following at: | |||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Myhill | $ | 70,000 | $ | 200,000 | |||||
Primary Care | — | 48,000 | |||||||
Subtotal | $ | 70,000 | $ | 248,000 | |||||
Myhill | |||||||||
On August 28, 2012, we received a claim from Roger Saxton, Loren Myhill, Lucas Myhill, Beryl Myhill, and Ann Marie Kaumo (collectively the “Myhill Litigants”) seeking $358,433 for delayed public entry and illiquidity stemming from an investment made by the Myhill Litigants. On January 6, 2014, we entered into a Settlement and Mutual General Release Agreement with the Myhill Litigants under which they agreed to release all claims against us and relinquish all shares of PDC they owned in exchange for $200,000, $20,000 of which was payable on execution of the settlement agreement and the remainder payable at $10,000 per month over the following 18 months. In connection with this transaction, the $200,000 has been recorded as Treasury Stock. | |||||||||
The settlement agreement requires Counsel for the Plaintiffs to hold the PDC stock certificates during pendency of the payout period. During such period, Plaintiffs shall have no right to vote such shares, transfer such shares, or encumber such shares, and will not be entitled to receive cash dividends or stock dividends or any distributions based on ownership of such shares. The Plaintiffs shall return each of their stock certificates to the Company with a full executed stock power sufficient to transfer such shares. In the event of any transaction by the Company, including merger or buyout, that results in Plaintiffs’ shares of PDC to be converted to shares of another entity, such obligations and restrictions stated herein shall apply to such new or different shares. | |||||||||
Primary Care | |||||||||
In December 2009, we entered into an agreement with Primary Care Management Services (“Primary Care”) under which Primary Care would provide services consisting of billing to and collection from various insurance carriers for our products. Primary Care was to be compensated by a rate equaling two percent of the amounts billed on our behalf. In April 2012, we entered into a settlement agreement with Primary Care, who by that time had billed in excess of $10 million which it had been unable to collect. Under the settlement agreement, we agreed to pay Primary Care $92,000, $20,000 of which was payable immediately and the remainder payable at $2,000 per month over the following 36 months. | |||||||||
On May 15, 2014 we entered into a new settlement agreement with Primary Care under which we paid them $40,000 in full satisfaction of all remaining amounts owed them. In connection with this new settlement agreement, we recorded a gain on extinguishment of debt in the amount of $8,000 during 2014. | |||||||||
Forte Capital | |||||||||
This obligation was assumed March 31, 2014 in the amount of $289,398 as a result of the Merger discussed in Note 1. The obligation arose from a March 2014 agreement with Forte Capital Partners, LLC under which we agreed to repay amounts outstanding under a 14% convertible debenture with a total of 14,351,322 shares of our common stock, issuable in six monthly installments of 2,391,887 shares beginning in March 2014. 2,391,887 shares were issued prior to the merger discussed in Note 1 and 11,959,435 were issued post-merger. As of December 31, 2014, we have issued all shares required under the agreement with Forte Capital and no further amounts are owed. | |||||||||
AATV | |||||||||
As discussed in Note 5, on May 1, 2014, we finalized a settlement agreement with AATV. Under the finalized agreement, we agreed to pay AATV $1,100,000 for the following: | |||||||||
● | $600,000 for the full repayment of principal and accrued interest on a Profit Sharing Note, $100,000 of which was paid in March 2014 (see Note 5). | ||||||||
● | $500,000 for the repurchase of 7,504 Series D Preferred shares, representing the amount of AATV’s original investment (see Note 8). | ||||||||
As of December 31, 2014, we had paid all amounts owed under our obligation to AATV. |
Liabilities_of_Discontinued_Op
Liabilities of Discontinued Operations | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Liabilities Of Discontinued Operations | |||||
Liabilities of Discontinued Operations | 7. Liabilities of Discontinued Operations | ||||
Liabilities of discontinued operations totaling $961,831 represent the liabilities of our interest in our subsidiary Pet Airways, Inc. and consist of the following as of December 31, 2014: | |||||
Accrued airline leases | $ | 360,679 | |||
Other accrued liabilities | 376,924 | ||||
Amounts owed to credit card merchants | 102,315 | ||||
Unearned revenue | 121,913 | ||||
Total | $ | 961,831 | |||
On March 26, 2014, prior to the reverse acquisition by us on March 31, 2014, former management issued 60,000,000 common shares to a company controlled by two former officers of our Company in exchange for the former officers’ agreement to purchase our interest in Pet Airways and to forgive their unpaid wages. The former officers’ agreement to purchase our interest in Pet Airways was meant to relieve us of these debts. As of December 31, 2014, the former officers had not fulfilled their obligation to purchase our interest in Pet Airways, and other matters between the parties are in dispute. | |||||
We have endeavored to resolve our disputes with the former officers, including their fulfillment of their obligation to purchase the interest in Pet Airways, but to date have been unsuccessful. During the fourth quarter of 2014, we agreed to participate in non-binding mediation for the matters in dispute. If we are unable to come to a satisfactory resolution through this process, we will likely pursue litigation. | |||||
Because of the foregoing factors, we have continued to recognize these liabilities in the accompanying consolidated balance sheets. |
Capital_Stock
Capital Stock | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Stockholders' Equity Note [Abstract] | |||||
Capital Stock | 8. Capital Stock | ||||
Common Stock | |||||
We are authorized to issue 1,400,000,000 shares of no par value common stock. The holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders and are not entitled to cumulate their votes in the election of directors. The holders of common stock are entitled to any dividends that may be declared by the Board of Directors out of funds legally available therefore subject to the prior rights of holders of any outstanding shares of preferred stock and any contractual restrictions against the payment of dividends on common stock. In the event of liquidation or dissolution of our Company, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive or other subscription rights and no right to convert their common stock into any other securities. | |||||
During 2014, we issued a total of 53,036,707 common shares to settle debt. Certain of these shares were issued under agreements made by previous management prior to the merger discussed in Note 1. 11,959,435 shares were issued to a Forte Capital as discussed in Note 6 and 196,167 shares were issued to a vendor for pre-merger services provided. The remaining shares were issued in connection with agreements to settle debt as discussed in Note 5. | |||||
Preferred Stock | |||||
We are authorized to issue 10,000,000 shares of no par value preferred stock and as of December 31, 2014 have designated four (4) series of preferred stock whose rights are described below. | |||||
Series D Preferred Stock - on December 30, 2013, we filed a Certificate of Designations with the State of Illinois under which we designated 500,000 shares of Preferred Stock as Series D Preferred Stock (the “Series D Preferred”). The following describes certain information with respect to the Series D Preferred Stock: | |||||
Ranking – The Series D Preferred ranks, with respect to rights upon liquidation, dissolution or winding-up of the affairs of our Company (collectively “Liquidation”), (i) senior to the Common Stock, (ii) equal to the Series B Preferred Stock, (iii) senior to any and all other classes or series of our Preferred Stock whether authorized now, or at any time in the future, unless any such subordination to any other class or series of Preferred Stock, is expressly agreed to, pursuant to an affirmative vote or written consent of holders of at least sixty-seven percent (67%) of the Series D Preferred issued and outstanding at the time of any such vote or written consent, and (iv) junior to any and all existing and future indebtedness of the Company. | |||||
Right of Conversion – Any holder of Series D Preferred shall have the right to convert any or all of the their Series D Preferred into a number of fully paid and non-assessable shares of common stock at the rate of 1,000 common shares for each share of Series D Preferred. No conversion will be allowed which would cause the common share beneficial ownership of the holder and its affiliates to exceed 4.9% of our issued and outstanding common shares after such conversion unless such provision is waived by the holder with 61 days’ notice. | |||||
Dividends – Series D Preferred shall not be entitled to dividends. | |||||
Liquidation – In the event of any Liquidation, holders of Series D Preferred shall be entitled to $40 per share. If upon any Liquidation, our remaining assets are insufficient to pay the Series D Preferred holders the full $40 per share to which they are entitled, then the remaining assets shall be distributed on a pro rata basis to all holders of the Series D Preferred and any other class of our capital stock that ranks equal to the Series D Preferred. | |||||
The repurchased and cancelled shares consist mainly of 7,504 shares repurchased in connection with the AATV settlement agreement. See Notes 5 and 6. | |||||
The shares issued for services consist of 166,664 shares issued to TPS as described in Note 1 and 8,279 shares issued to other service providers. All of these share issuances were valued at the market price of the common equivalent shares as of the date earned. In connection with their issuance, we made the following charges to expense for the year ended December 31, 2014: | |||||
Selling and marketing | $ | 11,391,301 | |||
General and administrative | 100,000 | ||||
$ | 11,491,301 | ||||
Although the TPS shares were validly issued in accordance with our agreement with them, as the end of 2014 approached, they determined that they did not want to incur the potential tax liability that would be associated with the fair market value of shares issued. Effective December 31, 2014, TPS returned the shares to us for cancellation and we did not adjust the expense previously recorded. | |||||
On March 17, 2014, all of the outstanding warrants of the PDC control group were exchanged for PDC Series D Preferred Shares. The Company converted all common and preferred warrants, whether expired or not, into without consideration for the strike price upon the terms and provisions set forth in the warrant agreements. The conversion resulted in an issuance of 155,823 Series D Preferred shares. This conversion was treated as a modification of the exercise price of the warrants. Accordingly, the warrants were revalued on the conversion date using the Black-Scholes option pricing model, resulting in a loss of $7,111,444 being recorded during the year ended December 31, 2014. Subsequent to the March 17, 2014 conversion, no warrants for the PDC control group remained outstanding. | |||||
As discussed in Note 5, on March 31, 2014, we settled certain notes payable and issued a total of 2,599 Series D Preferred shares in connection therewith. 1,505 and 1,094 shares were issued in connection with the settlements of a 2007-2009 Convertible Note and a 2012 Convertible Promissory Note, respectively. | |||||
Series B Preferred Stock - on March 15, 2013, we filed a Certificate of Designations with the State of Illinois under which we designated 80,000 shares of our Preferred Stock as Series B Preferred Stock (the “Series B Preferred”). The following describes certain information with respect to the Series B Preferred Stock: | |||||
Ranking – The Series B Preferred has the same ranking as the Series D Preferred described above. | |||||
Right of Conversion – Any holder of Series B Preferred shall have the right to convert each of their Series B Preferred shares into a number of fully paid and non-assessable shares of common stock calculated as follows: 0.001% of the number of shares of the our Common Stock that would be issued and outstanding after the hypothetical conversion and issuance of all of the outstanding shares of any and all classes of convertible stock and/or any and all other convertible debt instruments, options and/or warrants outstanding at the time of conversion (the “Series B Conversion Ratio”). In no event shall the Series B Conversion Ratio be less than 4,300 shares of common stock for each Series B Preferred share and more than 10,000 shares of Common Stock for each Series B Preferred share. No conversion will be allowed which would cause the common share beneficial ownership of the holder and its affiliates to exceed 4.9% of our issued and outstanding common shares after such conversion unless such provision is waived by the holder with 61 days’ notice. | |||||
Dividends – Series B Preferred shall not be entitled to dividends. | |||||
Liquidation – In the event of any liquidation, dissolution or winding-up of the affairs of our Company (collectively, a “Liquidation”), holders of Series B Preferred shall be entitled to $30 per share. If upon any Liquidation, our remaining assets are insufficient to pay the Series B Preferred holders the full $30 per share to which they are entitled, then the remaining assets shall be distributed on a pro rata basis to all holders of the Series B Preferred and any other class of our capital stock that ranks equal to or higher than the Series B Preferred. | |||||
Series C Preferred Stock - on May 15, 2013, we filed a Certificate of Designations with the State of Illinois under which we designated 50,000 shares of our Preferred Stock as Series C Preferred Stock (the “Series C Preferred”). The following describes certain information with respect to the Series C Preferred Stock: | |||||
Ranking – The Series C Preferred ranks, with respect to rights upon Liquidation, (i) senior to the Common Stock, The Series A Preferred Stock and any and all other classes or series of our Preferred Stock whether authorized now, or at any time in the future, unless any such subordination to any other class or series of Preferred Stock, is expressly agreed to, pursuant to an affirmative vote or written consent of holders of at least sixty-seven percent (67%) of the Series C Preferred issued and outstanding at the time of any such vote or written consent, (ii) junior to the Series D Preferred and Series B Preferred, and (iii) junior to any and all existing and future indebtedness of the Company. | |||||
Right of Conversion – Any holder of Series C Preferred shall have the right to convert each of their Series C Preferred shares into a number of fully paid and non-assessable shares of common stock calculated as follows: the face value of Series C preferred shares (calculated at $100 per share) divided by ninety percent (90%) of the lowest closing price for our common stock, as quoted on any exchange or market upon which the common stock is traded over the sixty (60) calendar days preceding the date of conversion (the “Series C Conversion Rate”). In no event shall the Series C Conversion Rate be less 10,000 shares of common stock for each Series C Preferred share and more than 20,000 shares of Common Stock for each Series C Preferred share. No conversion will be allowed which would cause the common share beneficial ownership of the holder and its affiliates to exceed 4.9% of our issued and outstanding common shares after such conversion unless such provision is waived by the holder with 61 days’ notice. | |||||
Dividends – Series C Preferred shall not be entitled to dividends. | |||||
Liquidation – In the event of any Liquidation, holders of Series C Preferred shall be entitled to $100 per share after payments have been made to holders of the Series D Preferred and Series B Preferred. If upon any Liquidation, our remaining assets are insufficient to pay the Series C Preferred holders the full $100 per share to which they are entitled, then the remaining assets shall be distributed on a pro rata basis to all holders of the Series C Preferred and any other class of our capital stock that ranks equal to or higher than the Series C Preferred. | |||||
Series A Preferred Stock - on May 27, 2011, we filed a Certificate of Designations with the State of Illinois under which we designated 500 shares of our Preferred Stock as Series A Preferred Stock (the “Series A Preferred”). The following describes certain information with respect to the Series A Preferred Stock: | |||||
Ranking – The Series A Preferred ranks, with respect to rights upon Liquidation, (i) senior to the Common Stock, (ii) junior to the Series D Preferred, Series B Preferred, and Series C Preferred and (iii) junior to any and all existing and future indebtedness of the Company. | |||||
Right of Conversion – The Series A Preferred is not convertible into any of our capital stock. | |||||
Dividends – Series A Preferred shall be entitled to dividends at the rate of 10% per annum which are payable upon redemption of the Series A Preferred. So long as any shares of Series A Preferred are outstanding, no dividends or other distributions may be paid or declared to any securities which are junior to the Series A Preferred other than dividends or other distributions payable on the common stock solely in the form of additional shares of common stock. After payment of dividends at the annual rate set forth above, any additional dividends declared shall be distributed ratably among all holders of the Series A Preferred and common stock in proportion to the number of shares of common stock that would be held by each such holder of Series A Preferred as if the Series A Preferred were converted into common stock by taking the Series A Liquidation Value (as defined below) divided by the market price of one share of common stock on the date of distribution. | |||||
Liquidation – In the event of any Liquidation, any payments to holders of Series A Preferred shall be made only after Liquidation payments have been made to holders of the Series D Preferred, the Series C Preferred and Series B Preferred. After such payments have been made, our remaining assets shall be paid to holders of the Series A Preferred up to the amount of $10,000 per Series A Preferred share plus any accrued but unpaid dividends (the “Series A Liquidation Value”). Any remaining assets shall be distributed on a pro rata basis to both the Series A Preferred shareholders and the common shareholders as if the Series A Preferred were converted into common stock. | |||||
Redemption – The Company may redeem any or all of the Series A Preferred at any time at a redemption price per share equal to the Series A Liquidation Value. | |||||
Warrants | |||||
On December 31, 2014, we had outstanding warrants to purchase 43,424,989 of our common shares. The warrants, the majority of which were issued under a June 3, 2011 securities purchase agreement, expire at various dates through June 3, 2016 and are exercisable at various per share prices ranging from $0.01 to $1.02. | |||||
Stock Incentive Plans | |||||
Under our 2010 Stock Incentive Plan (the “2010 Plan”), options to purchase 4,000,000 shares of our common stock had been approved and reserved for grants to employees, officers, directors and outside advisors at fair market value on the date of grant. At December 31, 2014, we had 367,000 option shares outstanding at an average exercise price of $0.16 per share and 3,633,000 option shares available for grant. | |||||
Under our 2012 Stock Incentive Plan (the “2012 Plan”), we had 10,000,000 common shares and shares underlying stock options approved and reserved for the issuance to employees, officers, directors and outside advisors. At December 31, 2014, the Company had issued 6,170,950 common shares under the 2012 Plan and have 3,829,050 common shares available for issuance. | |||||
Both the 2010 Plan and the 2012 Plan expire after 10 years. |
Other_Related_Party_Informatio
Other Related Party Information | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Related Party Transactions [Abstract] | ||||||
Other Related Party Information | 9. Other Related Party Information | |||||
Following is a summary of total cash compensation, including base salary, bonus and other cash compensation for employees related to Edward Kurtz, our CEO, for the years ended December 31, 2014 and 2013: | ||||||
Twelve months ended December 31, 2014 | $ | 772,332 | ||||
Twelve months ended December 31, 2013 | $ | 445,540 | ||||
A relative of our former Pharmacist in Charge was a consultant to the Company providing management consulting and other business advisory services. During the years ended December 31, 2014 and 2013, the consultant’s fees totaled $39,000 and $78,000, respectively. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies |
Leases | |
Our facilities, consisting of approximately 7,343 square feet of space, are located in Irvine, California under a rental agreement that expires on September 30, 2016. The rental agreement includes operating expenses such as common area maintenance, property taxes and insurance. Total rent expense, which is reflected in general and administrative expenses in the accompanying consolidated statements of operations, was $83,805 and $53,444 during the years ended December 31, 2014 and 2013, respectively. Future minimum lease payments under operating leases are as follows: $104,191 for the year ended December 31, 2015 and $80,278 for the year ended December 31, 2016. | |
In connection with certain prior operations which have been discontinued, we have recorded liabilities totaling $360,679 related to abandoned leases in the accompanying consolidated balance sheets under Liabilities of Discontinued Operations. See Note 7. | |
Other Commitments and Contingencies | |
There are various other pending legal commitments and contingencies involving our Company, principally first right of refusal conflicts, material breach of contract, and committed shares with consultants that were never issued. While it is not feasible to predict the outcome of such commitments, threats, and potential liabilities, in our opinion, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such obligations is not expected to be material to our financial position, results of operations or cash flows either individually or in the aggregate. In the opinion of our legal counsel, we have filed cross complaints which should mitigate some or our potential liability. | |
HIPAA – The Health Insurance Portability and Accountability Act (“HIPAA”) was enacted on August 21, 1996, to assure health insurance portability, reduce healthcare fraud and abuse, guarantee security and privacy of health information, and enforce standards for health information. Organizations are required to be in compliance with HIPAA provisions by April 2005. Effective August 2009, the Health Information Technology for Economic and Clinical Health Act (“HITECH Act”) was introduced imposing notification requirements in the event of certain security breaches relating to protected health information. Organizations are subject to significant fines and penalties if found not to be compliant with the provisions outlined in the regulations. The Company continues to be in compliance with HIPAA as of December 31, 2014. | |
Our decision to obtain insurance coverage is dependent on market conditions, including cost and availability, existing at the time such decisions are made. We have evaluated our risks and has determined that the cost of obtaining product liability insurance outweighs the likely benefits of the coverage that is available and, as such, has no insurance for certain product liabilities effective May 1, 2006. | |
We believe that there are no compliance issues associated with applicable pharmaceutical laws and regulations that would have a material adverse effect on us. |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2014 | |
Litigation | |
Litigation | 11. Litigation |
We are involved in various lawsuits and claims regarding shareholder derivative actions, third-party billing agency actions, negligent misrepresentation, and breach of contract, that arise from time to time in the ordinary course of our business. | |
Nokley Group LLC | |
In February 2014, we were served with a complaint from Nokley Group LLC (“Nokley”) for breach of contract under a Fee and First Right of Refusal Agreement dated May 25, 2012 between our company and Nokley. In the complaint, which was filed in Nevada, Nokley stated, among other things, that we sold certain of our accounts receivable to factoring organizations without offering Nokley first right of refusal which they allege was required under the agreement. While we estimate we would have cross-complaints against Nokley that would significantly mitigate any potential damages, we first filed a motion to dismiss based on improper venue. On July 31, 2014, our Company and Nokley agreed to dismiss the action without prejudice, and to have each party to bear its own attorney fees and costs. | |
The Company estimates that the potential range of exposure for this matter, if refiled in a proper venue, is $17,000 to $30,000. As of December 31, 2014, we have accrued the minimum amount of potential exposure under our estimation that a loss would be probable. | |
MedCapGroup LLC | |
In May 2014, we were served with a complaint from MedCapGroup LLC (“MedCap”) for breach of contract, breach of covenant of good faith and fair dealing, intentional misrepresentation, fraud in the inducement, and deceptive trade practices under a November 2012 Healthcare Accounts Receivable Purchase Agreement between our company and MedCap. MedCap alleged in its complaint that because we sell our accounts receivable based on dates of service, and not by patient, that only the original purchaser of a patient’s claims controls all payments and settlement negotiations with the insurer. As a result, MedCap alleged that we had misrepresented the collectability of certain accounts receivable they had purchased from us and that they had therefore been damaged. While we estimate we have significant defenses against MedCap’s complaint, we first filed a motion to dismiss based on improper venue. On July 30, 2014, our motion to dismiss was granted. | |
In November 2014, MedCap filed a complaint in the US District Court of Nevada similar to that discussed above. In December 2014, we counterclaimed against MedCap for intentional and negligent interference of contract based on their agency relationship with David Brown, the broker/collector retained by MedCap to collect on the accounts receivable they purchased. In addition, third party complaint along with our answer to bring Mr. Brown into this litigation. At of this date, we cannot reasonably estimate a potential range of loss with respect to this matter, however we believe we have significant defenses to this complaint, intend to defend it vigorously, and believe that there no loss that is probable. | |
Andrew Warner | |
On September 16, 2014, a former officer of the Company, Andrew Warner, filed a lawsuit against us in the Superior Court of California, Santa Clara (Case No. 114CV270653). In the lawsuit, Mr. Warner is alleging that we breached an oral contract for management services performed by Mr. Warner, by not paying him certain monies for those services. In the complaint, he is asking for damages of approximately $300,000. We believe that this action is without merit, and will defend it vigorously and believe that no loss is probable. | |
Trestles Pain Specialists | |
On March 11, 2015, we filed a lawsuit in the Superior Court of California, Orange County (Case No. 30-2015-00776389) against Trestles Pain Specialists, LLC (“TPS”), John Garbino and David Fish. We first allege that TPS breached the terms of the consulting services agreement due to lack of performance by TPS of the agreed upon services. Second, we allege that we were fraudulently induced into entering into the consulting services agreement due to the misrepresentation made by Mr. Garbino that Mr. Fish, who has some unsettling issues that were of concern to us, was not an owner of TPS. Had we known that Mr. Fish did have a stake in TPS, we would not have entered into the consulting services agreement. We allege in the complaint that TPS, Mr. Garbino, and Mr. Fish owe us damages to us in excess of $1,500,000. In addition we are seeking rescission of the consulting services agreement so that all monies paid would be refunded to us. On April 6, 2015, TPS filed a lawsuit in the Superior Court of California, Orange County (Case No. 30-2015-00781113) against us, in which they assert several claims including but not limited to breach of contract, breach of oral contract and various other claims. We believe such allegations are without merit, and we will vigorously proceed with our causes of action and defenses, in this litigation. | |
Judgments and Orders | |
In prior years, a number of judgments and orders were obtained against Pet Airways, Inc. as detailed below. In connection with the 2014 Merger discussed above, two former officers of our Company agreed to purchase our interest in Pet Airways which was meant to relieve us of the Pet Airways debts. As such, we believe that any obligations of Pet Airways rests with the two former officers of our Company and not with us. Notwithstanding the foregoing, we have included certain amounts in our balance sheets in the accompanying consolidated financial statements in the category Liabilities of Discontinued Operations in connection with these matters. | |
Sky Way Enterprises | |
In April 2012, a judgment was entered against Pet Airways in Circuit Court in and for Palm Beach County, Florida by Sky Way Enterprises, Inc. in the sum of $187,827 for services rendered, damages, including costs, statutory interest and attorneys’ fees. We have recorded a liability of $198,500 within Liabilities of discontinued operations at December 31, 2014 in connection with this matter. | |
Suburban Air Freight | |
On March 4, 2013, a judgment was entered against Pet Airways in District Court of Douglas County, Nebraska by Suburban Air Freight in the sum of $87,491 for services rendered, including statutory interest and attorneys’ fees. In August 2014, Suburban moved to enforce the judgment against Praxsyn in Orange County, California and in November 2014, the Orange County court vacated Suburban’s motion to enforce judgment as it did not arise in any transaction with Praxsyn. We have recorded a liability of $90,532 within Liabilities of discontinued operations at December 31, 2014 in connection with this matter. | |
Alyce Tognotti | |
On March 6, 2013, an order was issued by the labor commissioner of the State of California for Pet Airways, Inc., to pay a former employee Alyce Tognotti wages and penalties in the sum of $17,611 for services rendered, including penalties, statutory interest and liquidated damages. We have recorded a liability of $18,771 within Liabilities of discontinued operations at December 31, 2014 in connection with this matter. | |
AFCO Cargo | |
On May 31, 2013, a motion for final judgment was filed against our subsidiary, Pet Airways, Inc., in Circuit Court in and for Broward County, Florida by AFCO Cargo BWI, LLC in the sum of $31,120 for services rendered, including statutory interest and attorneys’ fees. We have recorded a liability of $32,331 within Liabilities of discontinued operations at December 31, 2014 in connection with this matter. | |
We record accruals for such contingencies when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. As of December 31, 2014 and 2013, we accrue for liabilities associated with certain litigation matters if they are both probable and can be reasonably estimated. We have accrued for these matters and will continue to monitor each related legal issue and adjust accruals for new information and further developments in accordance with ASC 450-20-25, Contingencies. For these and other litigation and regulatory matters currently disclosed for which a loss is probable or reasonably possible, we are unable to determine an estimate of the possible loss or range of loss beyond the amounts already accrued. These matters can be affected by various factors, including whether damages sought in the proceedings are unsubstantiated or indeterminate; scientific and legal discovery has not commenced or is not complete; proceedings are in early stages; matters present legal uncertainties; there are significant facts in dispute; or there are numerous parties involved. | |
In our opinion, based on our examination of these matters, our experience to date and discussions with counsel, the ultimate outcome of legal proceedings, net of liabilities accrued in our consolidated balance sheet, is not expected to have a material adverse effect on our consolidated financial position. However, the resolution in any reporting period of one or more of these matters, either alone or in the aggregate, may have a material adverse effect on our consolidated results of operations and cash flows for that period. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Income Taxes | 12. Income Taxes | ||||||||
The following table presents the current and deferred tax provision for federal and state income taxes for the years ended December 31: | |||||||||
2014 | 2013 | ||||||||
Current tax provision: | |||||||||
Federal | $ | — | $ | — | |||||
State | 2,400 | 1,600 | |||||||
Total | 2,400 | 1,600 | |||||||
Deferred tax provision (benefit): | |||||||||
Federal | (178,142 | ) | 426,654 | ||||||
State | (38,322 | ) | 111,908 | ||||||
Total | (216,464 | ) | 538,562 | ||||||
Total provision (benefit) for income taxes | $ | (214,064 | ) | $ | 540,162 | ||||
Reconciliations of the U.S. federal statutory rate to the actual tax rate are as follows for the years ended December 31: | |||||||||
2014 | 2013 | ||||||||
U.S. federal statuatory rate | 34 | % | 34 | % | |||||
Effects of: | |||||||||
State taxes, net of federal benefit | 5.8 | % | 8.8 | % | |||||
Nondeductible expenses | (41.5 | )% | 27.3 | % | |||||
Effective tax provision (benefit) rate | (1.7 | )% | 70.1 | % | |||||
The components of our deferred tax assets (liabilities) for federal and state income taxes consisted of the following as of December 31: | |||||||||
2014 | 2013 | ||||||||
Current deferred income tax assets (liabilities) | |||||||||
Accounts receivable | $ | (967,839 | ) | $ | (1,957,119 | ) | |||
Reserves and accruals | 70,406 | 1,497,708 | |||||||
Total current deferred tax asset (liability) | (897,433 | ) | (459,411 | ) | |||||
Non-current deferred tax asset (liability) | |||||||||
Accounts receivable | (500,000 | ) | |||||||
Net operating losses | 1,402,941 | 248,455 | |||||||
Total non-current deferred tax asset | 902,941 | 248,455 | |||||||
Valuation allowance | — | — | |||||||
Deferred income tax assets (liabilities) | $ | 5,508 | $ | (210,956 | ) | ||||
The Company has net operating loss (“NOL”) carry forwards of approximately $3,275,000 and $562,000 at December 31, 2014 and 2013, respectively. The NOL carry forwards, if not utilized, will begin to expire in 2031. | |||||||||
As a result of the Merger, the Company converted from reporting income under the cash basis to the accrual basis for income tax purposes. The provision for income taxes includes the historical operations of PDC and Mesa Pharmacy, Inc. as well as Praxsyn Corporation from March 31, 2014, the effective date of the Merger. | |||||||||
The Company has identified the United States Federal tax returns as its “major” tax jurisdiction. The United States Federal return years 2010 through 2014 are still subject to tax examination by the United States Internal Revenue Service; however, we do not currently have any ongoing tax examinations. The Company is subject to examination by the California Franchise Tax Board for the years ended 2010 through 2014 and currently does not have any ongoing tax examinations. |
Income_Loss_Per_Share
Income (Loss) Per Share | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Income (Loss) Per Share | 13. Income (Loss) Per Share | ||||||||
Basic and diluted income (loss) per share amounts were calculated by dividing net income (loss) by the weighted average number of common shares outstanding. The numerators and denominators used to calculate basic and diluted income (loss) per share are as follows for the years ended December 31, 2014 and 2013: | |||||||||
2014 | 2013 | ||||||||
Numerator for income (loss) per share: | |||||||||
Net income (loss) attributable to common shareholders for basic income (loss) per share | $ | (12,354,399 | ) | $ | 230,061 | ||||
Net income (loss) attributable to common shareholders for diluted income (loss) per share | $ | (12,354,399 | ) | $ | 230,061 | ||||
Denominator for income (loss) per share: | |||||||||
Denominator - basic income (loss) per share – weighted average shares | 268,948,521 | — | |||||||
Preferred stock: | |||||||||
Series D | — | 175,729,583 | |||||||
Denominator - diluted income (loss) per share | 268,948,521 | 175,729,583 | |||||||
The following weighted-average shares of dilutive common share equivalents are not included in the computation of diluted income (loss) per share, because their conversion prices exceeded the average market price or their inclusion would be anti-dilutive: | |||||||||
2014 | 2013 | ||||||||
2007-2009 convertible notes | 3,519,534 | — | |||||||
2012 convertible notes | 18,627,747 | — | |||||||
Convertible debentures | 487,500 | — | |||||||
Convertible note – related party | 2,144,110 | — | |||||||
Preferred stock: | |||||||||
Series D | 408,111,049 | — | |||||||
Series B | 520,348,767 | — | |||||||
Series C | 7,297,260 | — | |||||||
Options | 367,000 | — | |||||||
Warrants | 43,424,989 | — | |||||||
1,004,327,956 | — | ||||||||
As previously disclosed, 166,664 Series D Preferred shares were canceled effective December 31, 2014. In addition, effective December 31, 2014, a holder of Series B Preferred stock agreed not to convert 16,000 of his Series B Preferred shares (the “Locked-Up Shares”) until April 1, 2016. If all dilutive securities had been exercised at December 31, 2014, excluding the Locked-Up Shares, the total number of common shares outstanding would be approximately 1.359 billion which is below the 1.4 billion authorized. |
Gain_Loss_on_Extinguishment_of
Gain (Loss) on Extinguishment of Debt | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Debt Disclosure [Abstract] | |||||
Gain (Loss) on Extinguishment of Debt | 14. Gain (Loss) on Extinguishment of Debt | ||||
Gain (loss) on extinguishment of debt for 2014 results from transactions in the following. There was no gain or loss on extinguishment recorded during 2013. | |||||
31-Dec-14 | |||||
Accounts payable | $ | (8,788 | ) | ||
Convertible notes – 2007-2009 and 2012 | 45,031 | ||||
Profit sharing notes payable | 180,973 | ||||
Promissory notes | (23 | ) | |||
Settlement liabilities | 8,000 | ||||
$ | 225,193 |
Subsequent_Events
Subsequent Events | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Subsequent Events [Abstract] | |||||||||
Subsequent Events | 15. Subsequent Events | ||||||||
Conversion of Preferred Stock | |||||||||
Subsequent to December 31, 2014, shareholders converted preferred stock into common stock as follows: | |||||||||
Preferred | Common | ||||||||
Shares | Shares | ||||||||
Series D Preferred | 106,256 | 106,256,000 | |||||||
Series B Preferred | 1,850 | 18,500,000 | |||||||
Conversion of 2012 Convertible Promissory Notes | |||||||||
Subsequent to December 31, 2014, a note holder converted $18,000 of his note ($13,000 in principal and $5,000 in accrued interest) into 461,894 shares of our common stock in accordance with the provisions of his note. | |||||||||
Agreements with Consultants for Marketing Services | |||||||||
Subsequent to December 31, 2014, our consulting agreement with TPS expired and we replaced them with another marketing consultant, Products for Doctors (“P4D”), on substantially the same terms as the TPS agreement. As a result, the TPS representative resigned from our Board effective February 23, 2015. The P4D and TPS agreements were mainly concentrated in the workers compensation market. Additionally, subsequent to December 31, 2014, we entered into a consulting agreement with NHS Pharma Inc. (“NHS”) under which NHS is to provide marketing services in the PPO market, a new market for us beginning in 2015. | |||||||||
Accounts Receivable Factoring | |||||||||
Subsequent to December 31, 2014, we factored gross billing accounts receivable of $15,735,235 and received proceeds of $3,147,047. |
Basis_of_Presentation_and_Sign1
Basis of Presentation and Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accounting Policies [Abstract] | |||||||||
Basis of Presentation | Basis of Presentation | ||||||||
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America. | |||||||||
Principles of Consolidation | Principles of Consolidation | ||||||||
The accompanying consolidated financial statements include the accounts of PDC, including Mesa and NexGen, for the years ended December 31, 2014 and 2013, and Praxsyn as of the acquisition date of March 31, 2014. All significant intercompany transactions have been eliminated in consolidation. Management makes estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes. Actual results could differ from those estimates. | |||||||||
Going Concern | Going Concern | ||||||||
The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. Since inception, management has funded operations primarily through proceeds received in connection with factoring of accounts receivable on a nonrecourse basis from two primary factors, issuances of notes payable, and through sales of common stock. Also, our 2014 business was concentrated within the workers compensation market for which the collection of payments on receivables may be delayed for a significant period depending on various factors. Additionally during 2014, we were dependent upon a few third party marketing services, one of them being a related party, and we derived almost 100% of our revenues from customers referred by the marketing services. During the years ended 2014 and 2013, we incurred a net loss of $12,354,399, and generated net income of $230,061, respectively. $11,491,301 of the net loss during the 2014 period consisted of stock-based expenses. | |||||||||
There are two additional influences to the losses we have reported in 2014. First, our revenue recognition, as discussed in Note 2, is based on our estimate of the net realizable value of each of our customer billings. We invoiced most of our customers, those which are insurance companies for workers compensation cases, in accordance with the fees permitted according to the State of California fee schedule. This is our gross billing. Given the nature of our industry and the reimbursement environment in which we operate, our estimate of the net realizable value of our billings is often less than the gross billing we are allowed to charge. We have recorded our revenue based on historical collection trends. Second, we have had to finance our operations by selling our accounts receivable (recorded at net realizable value) to a number of factors. The cost of factoring, which we record as interest expense, can be quite high – anywhere from 70% to 75% of the gross accounts receivable billing. | |||||||||
These two influences have had a material impact on our operating results, but also offer a major opportunity for profit growth as we move forward. We have recently formed a subsidiary named NexGen Med Solutions, LLC (“NexGen”), which we expect will allow us to expand our accounts receivables collection effort. We believe this will allow us to improve our collections, increase the net realizable value of our gross billing revenues, and reduce our dependency on factoring. In addition we continue to seek more conventional financing which will allow us to further move away from factoring and reduce our interest expense. Finally, we continue to seek new markets for our transdermal creams which will diversify our business, increase profitability and improve shareholder value. While there is no certainty that we will be able to achieve these goals, Management is hopeful we will be successful. | |||||||||
In addition, while Management believes our new PPO business will greatly improve our operating performance, we understand that we will need additional accounts receivable factoring, or debt/equity financing to be able to fully implement our business plan. Given the indicators described above, there is substantial doubt about our ability to continue as a going concern. | |||||||||
We are attempting to find additional financing sources to build our operations to profitable levels, however, there is no assurance we will be successful. The successful outcome of future activities cannot be determined at this time, and there are no assurances that, if achieved, we will have sufficient funds to execute our intended business plan or generate positive operating results. | |||||||||
The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. | |||||||||
Use of Estimates | Use of Estimates | ||||||||
Financial statements prepared in accordance with accounting principles generally accepted in the United States require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates made by management are revenue recognition along with the related allowance for doubtful accounts and contractual receivables, the allocation of accounts receivable between current and long-term, the value of stock-based compensation awards, the amount of potential legal settlements and contingencies, the fair market value of assets and liabilities of Praxsyn and the realization of deferred tax assets. Actual results could differ from those estimates. Management performs a periodic retrospective review of estimates and modifies assumptions as deemed appropriate. | |||||||||
Revenue Recognition | Revenue Recognition | ||||||||
We sell our products directly through our pharmacy and record the associated revenues using the net method, as required under ASC 954-605-25, Health Care Entities – Revenue Recognition. Our prescription revenue is recorded at established billing rates less estimated contractual adjustments with each respective insurance carrier. Net revenues represent the amount each respective insurance company and the California Workers Compensation Fund are expected to pay us. We recognize revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the sales price is fixed or determinable, and collection is probable. Our pharmacy revenues are recognized when both the compounding prescriptions and customer shipment services are performed. | |||||||||
Net revenues consisted of the following for the years ended December 31, 2014 and 2013: | |||||||||
2014 | 2013 | ||||||||
Gross revenues | $ | 156,853,777 | $ | 15,551,345 | |||||
Less: estimated contractual and other adjustments | (90,254,881 | ) | (8,562,809 | ) | |||||
Net revenues | $ | 66,598,896 | $ | 6,988,536 | |||||
Shipping and Handling | Shipping and Handling | ||||||||
Shipping and handling costs incurred are included in general and administrative expenses. The amount of revenue received for shipping and handling is less than 0.5% of revenues for all periods presented. | |||||||||
Cash Equivalents | Cash Equivalents | ||||||||
We consider all highly liquid, income bearing investments purchased with original maturities of three months or less to be cash equivalents. | |||||||||
Accounts Receivable | Accounts Receivable | ||||||||
Accounts receivable represent amounts due from insurance companies, through various networks, for products delivered to patients. We record an allowance for doubtful accounts and contractual reimbursements based on analyses of historical collections over the expected period until such cases are closed or settled. Management also assess specific identifiable accounts considered at risk or uncollectible. As discussed above, we have factored a significant amount of our accounts receivable. The difference between the estimated net realizable value of accounts receivable, which we have recorded as net revenues, and the factored amounts has been recorded in the consolidated statements of operations as interest expense. | |||||||||
Due to the nature of the industry and the reimbursement environment in which we operate, certain estimates are required in order to record net revenues and accounts receivable at their net realizable values. Inherent in these estimates is the risk that they may have to be revised or updated as additional information becomes available. It is possible that management’s estimates could change, which could have an impact on operations and cash flows. Specifically, the complexity of many billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payers may result in adjustments to amounts originally recorded. | |||||||||
Inventories | Inventories | ||||||||
Inventories are stated at the lower of cost (first-in, first-out method) or market. Our inventories consist of pharmaceutical ingredients used within our compounding products. Our inventories for all periods presented are predominantly raw materials. | |||||||||
Property and Equipment | Property and Equipment | ||||||||
Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives. Leasehold improvements are amortized on a straight-line basis over the lesser of the useful lives or the remaining term of the lease. For tax purposes, accelerated tax methods are used. We expense all purchases of equipment with individual costs of under $1,000. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. | |||||||||
Debt Issuance Costs | Debt Issuance Costs | ||||||||
We capitalize direct costs related to the issuance of debt, including finder’s fees, underwriting and legal costs. The debt issuance costs are recorded as an asset and amortized as interest expense over the term of the related debt using the straight-line method, which approximates the effective interest method. Upon the extinguishment of the related debt, any unamortized debt issuance costs are expensed as interest expense. | |||||||||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets | ||||||||
We review our long-lived assets in accordance with ASC 360-10-35, Impairment or Disposal of Long-Lived Assets. Under that directive, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Such group is tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. | |||||||||
Convertible Debt and Warrants Issued with Convertible Debt | Convertible Debt and Warrants Issued with Convertible Debt | ||||||||
Convertible debt is accounted for under the guidelines established by ASC 470, Debt with Conversion and Other Options and ASC 740, Beneficial Conversion Features. We record a beneficial conversion feature (“BCF”) when convertible debt is issued with conversion features at fixed or adjustable rates that are below market value when issued. If, however, the conversion feature is dependent upon a condition being met or the occurrence of a specific event, the BCF will be recorded when the related contingency is met or occurs. The BCF for the convertible instrument is recorded as a reduction, or discount, to the carrying amount of the convertible instrument equal to the fair value of the conversion feature. The discount is then amortized to interest over the life of the underlying debt using the effective interest method. | |||||||||
We calculate the fair value of warrants issued with the convertible instruments using the Black-Scholes valuation method, using the same assumptions used for valuing employee options for purposes of ASC 718, Compensation – Stock Compensation, except that the contractual life of the warrant is used. Under these guidelines, we allocate the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value is recorded as a debt discount or premium and is amortized over the expected term of the convertible debt to interest expense. For a conversion price change of a convertible debt issue, the additional intrinsic value of the debt conversion feature, calculated as the number of additional shares issuable due to a conversion price change multiplied by the previous conversion price, is recorded as additional debt discount and amortized over the remaining life of the debt. | |||||||||
For modifications of convertible debt, we record the modification that changes the fair value of an embedded conversion feature, including a BCF, as a debt discount which we amortize to interest expense over the remaining life of the debt. If modification is considered substantial (i.e. greater than 10% of the carrying value of the debt), an extinguishment of debt is deemed to have occurred, resulting in the recognition of an extinguishment gain or loss. | |||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||||||
We utilize ASC 820-10, Fair Value Measurement and Disclosure, for valuing financial assets and liabilities measured on a recurring basis. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of our Company. Unobservable inputs are inputs that reflect our Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value: | |||||||||
Level 1. Observable inputs such as quoted prices in active markets; | |||||||||
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | |||||||||
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | |||||||||
As of December 31, 2014 and December 31, 2013, we did not have any level 2 or 3 assets or liabilities. | |||||||||
Stock Based Compensation | Stock Based Compensation | ||||||||
We account for our share-based compensation in accordance with ASC 718-20, Stock-based Compensation. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite vesting period. | |||||||||
We have issued warrants exercisable into our common stock and preferred stock as compensation to debt holders. The fair value of each warrant is estimated on the date of grant using the Black-Scholes pricing model. Assumptions are determined at the time of grant. No warrants were granted during the years ended December 31, 2014 and 2013. | |||||||||
The assumptions used in the Black Scholes models referred to above are based upon the following data: (1) The expected life of the warrant is estimated by considering the contractual term of the warrant. (2) The expected stock price volatility of the underlying shares over the expected term of the warrant is based upon historical share price data. (3) The risk free interest rate is based on published U.S. Treasury Department interest rates for the expected terms of the underlying warrants. (4) Expected dividends are based on historical dividend data and expected future dividend activity. (5) The expected forfeiture rate is based on historical forfeiture activity and assumptions regarding future forfeitures based on the composition of current grantees. | |||||||||
Income Taxes | Income Taxes | ||||||||
We account for income taxes in accordance with ASC 740-10, Income Taxes. We recognize deferred tax assets and liabilities to reflect the estimated future tax effects, calculated at currently effective tax rates, of future deductible or taxable amounts attributable to events that have been recognized on a cumulative basis in the consolidated financial statements. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. | |||||||||
ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. We classify interest and penalties as a component of interest and other expenses. To date, there have been no interest or penalties assessed or paid. | |||||||||
We measure and record uncertain tax positions by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. | |||||||||
Net Income (Loss) Per Share | Net Income (Loss) Per Share | ||||||||
Basic earnings per share is calculated by dividing income available to common stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share is computed using the weighted average number of common and dilutive common share equivalents outstanding during the period. | |||||||||
Concentrations, Uncertainties and Other Risks | Concentrations, Uncertainties and Other Risks | ||||||||
Cash and cash equivalents - Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000 per institution that pays Federal Deposit Insurance Corporation (FDIC) insurance premiums. We have never experienced any losses related to these balances. | |||||||||
Revenues and accounts receivable - Financial instruments that potentially subject us to credit risk principally consist of receivables. Amounts owed to us by insurance companies account for a substantial portion of the receivables. This risk is limited due to the number of insurance companies comprising our customer base and their geographic dispersion. The risk is further limited by our ability to factor our receivables. For the years ended December 31, 2014 and 2013, no single customer represented more than 10% of revenues or accounts receivable, net. | |||||||||
The majority of our accounts receivable arise from product sales and are primarily due from insurance companies. We monitor the financial performance and creditworthiness of our customers so that we can properly assess and respond to changes in their credit profile. Conditions in the normal course of business, including inherent variability of timing of cash receipts, have resulted in, and may continue to result in, an increase in the average length of time that it takes to collect accounts receivable outstanding. For accounts receivable that are held and not factored, we do not expect to have write-offs or adjustments to accounts receivable which could have a material adverse effect on our consolidated financial position, results of operations or cash flows as the portion which is deemed uncollectible is already taken into account when the revenue is recognized. | |||||||||
During the years ended December 31, 2014 and 2013, revenues generated from sales of compounding pharmaceutical products primarily to worker’s compensation patients located throughout Southern California represented nearly 100% of total revenues. At times the collection on these receivables can take in excess of one year, during which we may attend legal hearings, file liens to securitize claims, negotiate before worker’s compensation administrative judges, resolve liens with stipulations and orders for defendants to pay, and transmit demands to settle liens filed with the adjuster or defense attorneys. | |||||||||
During the years ended December 31, 2014 and 2013, we retained two principal consultants, one of which was TPS, to market our products to licensed healthcare practitioners who treat patients covered under a variety of workers’ compensation insurance programs. For each period presented, nearly 100% of our net revenue resulted from the consultants’ marketing efforts and fees for the two consultants represented nearly all of our selling and marketing expense. In addition, on March 31, 2014, we added a representative of TPS to our Board of Directors. Subsequent to December 31, 2014, our consulting agreement with TPS expired and we replaced them with another marketing consultant. See Note 15 for further information. As a result, the TPS representative resigned from our Board effective February 23, 2015. For the years ended December 31, 2014 and 2013, the consultants earned the following: | |||||||||
Year Ended: | |||||||||
31-Dec-14 | $ | 33,745,106 | Includes stock-based compensation of $11,391,301 | ||||||
31-Dec-13 | $ | 1,790,761 | Includes no stock-based compensation | ||||||
The amounts payable to the consultants at December 31, 2014 and 2013 were $5,896,197 and $1,411,493, respectively. | |||||||||
The pharmaceutical industry is highly competitive and regulated, and our future revenue growth and profitability is dependent on our timely product development, ability to retain proprietary formulas, and continued compliance. The compounding, processing, formulation, packaging, labeling, testing, storing, distributing, advertising and sale of our products are subject to regulation by one or more U.S. and California agencies, including the Board of Pharmacy, the Food and Drug Administration, the Federal Trade Commission, and the Drug Enforcement Administration as well as several other state and local agencies in localities in which our products are sold. In addition, we compound and market certain of our products in accordance with standards set by organizations, such as the United States Pharmacopeial Convention, Inc. We believe our policies, operations and products comply in all material respects with existing regulations. Healthcare reform and a reduction in the coverage and reimbursement levels by insurance companies and government agencies and/or a change in the regulations or compliance with related agencies and/or a disruption in our ability to maintain our competitiveness may have a material impact on our consolidated financial position, results of operations, and cash flows. | |||||||||
Vendors - As of December 31, 2014 and 2013, two suppliers made up substantially 100% of our direct materials. Management believes the loss of either supplier to this organization would have a material impact on our consolidated financial position, results of operations, and cash flows. If our Company’s relationship with one of our vendors was disrupted, we could have temporary difficulty filling prescriptions for worker’s compensation related drugs until a replacement wholesaler agreement was executed, which would negatively impact our business. | |||||||||
For the years ended December 31, 2014 and 2013, purchases made for pharmaceutical compounding materials obtained from these vendors were $2,492,749, and $273,135, respectively. The amounts payable at December 31, 2014 and 2013 for such costs were $12,158 and $58,594, respectively. | |||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers,” which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new standard requires a company to recognize revenue upon transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. ASU 2014-09 defines a five-step approach for recognizing revenue which may require a company to use more judgment and make more estimates than under the current guidance. This ASU will be effective for us starting in the first quarter of 2018. The new standard allows for two methods of adoption: (a) full retrospective adoption, meaning the standard is applied to all periods presented, or (b) modified retrospective adoption, meaning the cumulative effect of applying the new standard is recognized as an adjustment to the fiscal 2018 opening retained earnings balance. We are in the process of determining the adoption method as well as the effects the adoption will have on our consolidated financial statements. | |||||||||
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, “Presentation of Financial Statements—Going Concern”, which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted. Management is still in the process of assessing the impact of ASU 2014-15 on the Company’s consolidated financial statements. | |||||||||
There are no other recently issued accounting pronouncements or standards updates that we have yet to adopt that are expected to have a material effect on our consolidated financial position, results of operations, or cash flows. |
Business_Tables
Business (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Business Tables | |||||||||
Schedule of Assets and Liabilities | The assets and liabilities of Praxsyn are reported at their carrying value, which approximated their fair value, on the Acquisition Date and no goodwill was recorded. Praxsyn’s results of operations are included from the Acquisition Date. The following is a schedule of Praxsyn’s assets and liabilities at the Acquisition Date: | ||||||||
Assets: | |||||||||
Cash | $ | 485,012 | |||||||
Fixed assets | 5,184 | ||||||||
Total assets | 490,196 | ||||||||
Liabilities: | |||||||||
Accounts payable | 362,582 | ||||||||
Accrued expenses | 588,401 | ||||||||
Accrued interest | 96,362 | ||||||||
Convertible debentures | 666,798 | ||||||||
Liabilities of discontinued operations | 961,831 | ||||||||
Total liabilities | 2,675,974 | ||||||||
Net liabilities assumed | $ | (2,185,778 | ) | ||||||
Summary of Pro Forma Combined | The following is our pro-forma revenue and earnings information for 2014 and 2013 assuming both our Company and PDC had been combined as of January 1, 2013. Amounts have been rounded to the nearest thousand and are unaudited: | ||||||||
2014 | 2013 | ||||||||
Sales, net | $ | 66,599,000 | $ | 6,989,000 | |||||
Net loss from continuing operations | $ | (21,122,000 | ) | $ | (6,323,000 | ) | |||
Net loss | $ | (21,125,000 | ) | $ | (6,359,000 | ) | |||
Net loss per share – basic and diluted | $ | (0.08 | ) | $ | (0.06 | ) |
Basis_of_Presentation_and_Sign2
Basis of Presentation and Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Basis Of Presentation And Significant Accounting Policies Tables | |||||||||
Schedule Of Net Revenues | Net revenues consisted of the following for the years ended December 31, 2014 and 2013: | ||||||||
2014 | 2013 | ||||||||
Gross revenues | $ | 156,853,777 | $ | 15,551,345 | |||||
Less: estimated contractual and other adjustments | (90,254,881 | ) | (8,562,809 | ) | |||||
Net revenues | $ | 66,598,896 | $ | 6,988,536 | |||||
Schedule of Consultants Earned | As a result, the TPS representative resigned from our Board effective February 23, 2015. For the years ended December 31, 2014 and 2013, the consultants earned the following: | ||||||||
Year Ended: | |||||||||
31-Dec-14 | $ | 33,745,106 | Includes stock-based compensation of $11,391,301 | ||||||
31-Dec-13 | $ | 1,790,761 | Includes no stock-based compensation |
Accounts_Receivable_Tables
Accounts Receivable (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accounts Receivable Tables | |||||||||
Summary of Accounts Receivable | Accounts receivable consist of the following at: | ||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Accounts receivable | $ | 36,364,280 | $ | 10,814,161 | |||||
Allowance for doubtful accounts and | (22,089,994 | ) | (6,265,951 | ) | |||||
contractual write-offs | |||||||||
Subtotal | 14,274,286 | 4,548,210 | |||||||
Less: long-term portion | (4,139,543 | ) | (983,440 | ) | |||||
Current portion | $ | 10,134,743 | $ | 3,564,770 | |||||
Schedule of Factoring Activity on Accounts Receivable | During the years ended December 31, 2014 and 2013, our factoring activity has been as follows: | ||||||||
2014 | 2013 | ||||||||
Gross billing receivables sold | $ | 128,637,988 | $ | 4,852,088 | |||||
Adjustment to net revenues (for estimated contractual and other adjustments) | (72,879,912 | ) | (2,620,128 | ) | |||||
Interest expense for factored accounts receivable | (29,694,558 | ) | (873,201 | ) | |||||
Proceeds received from factors | $ | 26,063,518 | $ | 1,358,759 |
Property_and_Equipment_Net_Tab
Property and Equipment, Net (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Schedule of Property and Equipment | Property and equipment consist of the following at: | ||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Machinery and equipment | $ | 27,229 | $ | 22,629 | |||||
Computer equipment | 31,473 | 13,406 | |||||||
Furniture and fixtures | 3,997 | 3,997 | |||||||
Leasehold improvements | 69,784 | 24,749 | |||||||
132,483 | 64,781 | ||||||||
Less: accumulated depreciation | (52,940 | ) | (36,999 | ) | |||||
$ | 79,543 | $ | 27,782 |
Notes_Payable_and_Accrued_Inte1
Notes Payable and Accrued Interest (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||
Outstanding Notes Payable | Notes payable and accrued interest consisted of the following at: | ||||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||
Principal | Accrued Interest | Principal | Accrued Interest | ||||||||||||||
Non-related parties: | |||||||||||||||||
2007 – 2009 convertible notes | $ | 315,000 | $ | 124,334 | $ | 497,000 | $ | 78,083 | |||||||||
Profit sharing notes | 175,000 | 527,012 | 675,000 | 383,163 | |||||||||||||
Secured bridge notes | 449,275 | 86,945 | 449,275 | 72,901 | |||||||||||||
2012 convertible promissory notes | 2,288,250 | 706,384 | 3,299,875 | 410,174 | |||||||||||||
Promissory notes | 350,722 | 3,507 | 817,366 | 5,793 | |||||||||||||
Convertible debentures | 325,000 | 114,110 | — | — | |||||||||||||
Less: unamortized discount | — | — | (98,922 | ) | — | ||||||||||||
Subtotal – non-related parties | 3,903,247 | 1,562,292 | 5,639,594 | 950,114 | |||||||||||||
Related parties: | |||||||||||||||||
2007 – 2009 convertible notes | — | — | 152,500 | 43,300 | |||||||||||||
2012 Convertible promissory notes | — | — | 150,000 | 18,000 | |||||||||||||
Promissory notes | 146,667 | 7,414 | — | — | |||||||||||||
Convertible note | 52,400 | 3,761 | — | — | |||||||||||||
Notes payable to Officer | — | — | 104,164 | — | |||||||||||||
Subtotal – related parties | 199,067 | 11,175 | 406,664 | 61,300 | |||||||||||||
Total | 4,102,314 | 1,573,467 | 6,046,258 | 1,011,414 | |||||||||||||
Current portion | (3,875,559 | ) | (1,573,467 | ) | (6,046,258 | ) | (1,011,414 | ) | |||||||||
Long-term portion | $ | 226,755 | $ | — | $ | — | $ | — | |||||||||
Schedule of Derivative Liability Calculated Using Black-Scholes Valuation | During the second half of 2014, the notes in this category became convertible. Based on the requirements of ASC 815, we determined that as each note reached its convertibility date, a derivative liability was triggered, the amounts of which we calculated using the Black-Scholes valuation method with the following range of assumptions: | ||||||||||||||||
Stock price per share | $0.04000 to $0.06200 | ||||||||||||||||
Exercise price per share | $0.03770 to $0.05759 | ||||||||||||||||
Time to maturity in years | 1.75 to 2.00 | ||||||||||||||||
Annual risk-free interest rate | 0.47% to 0.58% | ||||||||||||||||
Annualized volatility | 250% to 283% | ||||||||||||||||
Summary of Net Expenses | The net expense consisted of the following: | ||||||||||||||||
(Income) | |||||||||||||||||
Expense | |||||||||||||||||
Interest expense (debt discount amortization) | $ | 634,299 | |||||||||||||||
(Gain) loss on extinguishment of debt | (193,454 | ) | |||||||||||||||
Other expense | 17,347 | ||||||||||||||||
$ | 458,192 | ||||||||||||||||
Schedule of Interest Payments in Promissory Notes | The Promissory Notes consist of the following at: | ||||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||
Non-related parties: | |||||||||||||||||
Note dated November 18, 2013 | $ | — | $ | 772,366 | |||||||||||||
Notes dated October 10, 2014 | 350,722 | — | |||||||||||||||
Note dated January 1, 2014 | — | 45,000 | |||||||||||||||
Subtotal | 350,722 | 817,366 | |||||||||||||||
Related parties: | |||||||||||||||||
Note dated February 20, 2014 | 96,667 | — | |||||||||||||||
Note dated March 11, 2014 | 50,000 | — | |||||||||||||||
Subtotal | 146,667 | — | |||||||||||||||
$ | 497,389 | $ | 817,366 |
Settlement_Liabilities_Tables
Settlement Liabilities (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Banking and Thrift [Abstract] | |||||||||
Schedule of Settlement Liabilities | Settlement liabilities consist of the following at: | ||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Myhill | $ | 70,000 | $ | 200,000 | |||||
Primary Care | — | 48,000 | |||||||
Subtotal | $ | 70,000 | $ | 248,000 |
Liabilities_of_Discontinued_Op1
Liabilities of Discontinued Operations (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Liabilities Of Discontinued Operations | |||||
Schedule of Liabilities of Discontinued Operations | Liabilities of discontinued operations totaling $961,831 represent the liabilities of our interest in our subsidiary Pet Airways, Inc. and consist of the following as of December 31, 2014: | ||||
Accrued airline leases | $ | 360,679 | |||
Other accrued liabilities | 376,924 | ||||
Amounts owed to credit card merchants | 102,315 | ||||
Unearned revenue | 121,913 | ||||
Total | $ | 961,831 |
Capital_Stock_Tables
Capital Stock (Tables) (Warrant [Member]) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Warrant [Member] | |||||
Schedule of Selling and Administrative Expense | All of these share issuances were valued at the market price of the common equivalent shares as of the date earned. In connection with their issuance, we made the following charges to expense for the year ended December 31, 2014: | ||||
Selling and marketing | $ | 11,391,301 | |||
General and administrative | 100,000 | ||||
$ | 11,491,301 |
Other_Related_Party_Informatio1
Other Related Party Information (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Related Party Transactions [Abstract] | ||||||
Schedule of Compensation Related Party | Following is a summary of total cash compensation, including base salary, bonus and other cash compensation for employees related to Edward Kurtz, our CEO, for the years ended December 31, 2014 and 2013: | |||||
Twelve months ended December 31, 2014 | $ | 772,332 | ||||
Twelve months ended December 31, 2013 | $ | 445,540 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Schedule of Current and Deferred Tax Provision for Federal and State Income Taxes | The following table presents the current and deferred tax provision for federal and state income taxes for the years ended December 31: | ||||||||
2014 | 2013 | ||||||||
Current tax provision: | |||||||||
Federal | $ | — | $ | — | |||||
State | 2,400 | 1,600 | |||||||
Total | 2,400 | 1,600 | |||||||
Deferred tax provision (benefit): | |||||||||
Federal | (178,142 | ) | 426,654 | ||||||
State | (38,322 | ) | 111,908 | ||||||
Total | (216,464 | ) | 538,562 | ||||||
Total provision (benefit) for income taxes | $ | (214,064 | ) | $ | 540,162 | ||||
Schedule of Reconciliation of Income Tax (Provision) | Reconciliations of the U.S. federal statutory rate to the actual tax rate are as follows for the years ended December 31: | ||||||||
2014 | 2013 | ||||||||
U.S. federal statuatory rate | 34 | % | 34 | % | |||||
Effects of: | |||||||||
State taxes, net of federal benefit | 5.8 | % | 8.8 | % | |||||
Nondeductible expenses | (41.5 | )% | 27.3 | % | |||||
Effective tax provision (benefit) rate | (1.7 | )% | 70.1 | % | |||||
Schedule of Deferred Tax Assets | The components of our deferred tax assets (liabilities) for federal and state income taxes consisted of the following as of December 31: | ||||||||
2014 | 2013 | ||||||||
Current deferred income tax assets (liabilities) | |||||||||
Accounts receivable | $ | (967,839 | ) | $ | (1,957,119 | ) | |||
Reserves and accruals | 70,406 | 1,497,708 | |||||||
Total current deferred tax asset (liability) | (897,433 | ) | (459,411 | ) | |||||
Non-current deferred tax asset (liability) | |||||||||
Accounts receivable | (500,000 | ) | |||||||
Net operating losses | 1,402,941 | 248,455 | |||||||
Total non-current deferred tax asset | 902,941 | 248,455 | |||||||
Valuation allowance | — | — | |||||||
Deferred income tax assets (liabilities) | $ | 5,508 | $ | (210,956 | ) |
Income_Loss_Per_Share_Tables
Income (Loss) Per Share (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Schedule of Numerator and Denominator Basic and Diluted Income (Loss) Per Share | Basic and diluted income (loss) per share amounts were calculated by dividing net income (loss) by the weighted average number of common shares outstanding. The numerators and denominators used to calculate basic and diluted income (loss) per share are as follows for the years ended December 31, 2014 and 2013: | ||||||||
2014 | 2013 | ||||||||
Numerator for income (loss) per share: | |||||||||
Net income (loss) attributable to common shareholders for basic income (loss) per share | $ | (12,354,399 | ) | $ | 230,061 | ||||
Net income (loss) attributable to common shareholders for diluted income (loss) per share | $ | (12,354,399 | ) | $ | 230,061 | ||||
Denominator for income (loss) per share: | |||||||||
Denominator - basic income (loss) per share – weighted average shares | 268,948,521 | — | |||||||
Preferred stock: | |||||||||
Series D | — | 175,729,583 | |||||||
Denominator - diluted income (loss) per share | 268,948,521 | 175,729,583 | |||||||
Schedule of Common Share Equivalants | The following weighted-average shares of dilutive common share equivalents are not included in the computation of diluted income (loss) per share, because their conversion prices exceeded the average market price or their inclusion would be anti-dilutive: | ||||||||
2014 | 2013 | ||||||||
2007-2009 convertible notes | 3,519,534 | — | |||||||
2012 convertible notes | 18,627,747 | — | |||||||
Convertible debentures | 487,500 | — | |||||||
Convertible note – related party | 2,144,110 | — | |||||||
Preferred stock: | |||||||||
Series D | 408,111,049 | — | |||||||
Series B | 520,348,767 | — | |||||||
Series C | 7,297,260 | — | |||||||
Options | 367,000 | — | |||||||
Warrants | 43,424,989 | — | |||||||
1,004,327,956 | — |
Gain_Loss_on_Extinguishment_of1
Gain (Loss) on Extinguishment of Debt (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Debt Disclosure [Abstract] | |||||
Schedule of Gain Loss on Extinguishment of Debt | Gain (loss) on extinguishment of debt for 2014 results from transactions in the following. There was no gain or loss on extinguishment recorded during 2013. | ||||
31-Dec-14 | |||||
Accounts payable | $ | (8,788 | ) | ||
Convertible notes – 2007-2009 and 2012 | 45,031 | ||||
Profit sharing notes payable | 180,973 | ||||
Promissory notes | (23 | ) | |||
Settlement liabilities | 8,000 | ||||
$ | 225,193 |
Subsequent_Events_Tables
Subsequent Events (Tables) (Pharmacy Development Corporation [Member]) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Pharmacy Development Corporation [Member] | |||||||||
Schedule of Conversion of Preferred Stock | Subsequent to December 31, 2014, shareholders converted preferred stock into common stock as follows: | ||||||||
Preferred | Common | ||||||||
Shares | Shares | ||||||||
Series D Preferred | 106,256 | 106,256,000 | |||||||
Series B Preferred | 1,850 | 18,500,000 |
Business_Details_Narrative
Business (Details Narrative) | 0 Months Ended | 12 Months Ended | 0 Months Ended | ||
Sep. 30, 2014 | Jan. 23, 2014 | Dec. 31, 2014 | Mar. 20, 2014 | Dec. 31, 2013 | |
Issued and Outstanding stock own percentage | 40.00% | ||||
Voting rights acquisition percentage | 63.00% | ||||
Trestles Pain Management Specialists LLC [Member] | |||||
Stock issued for services primary market consultant, shares | 166,664 | ||||
Stock earned by and deemed during period shares | 166,664 | ||||
Promissory notes converted into stock | Convertible promissory notes were exchanged for new convertible promissory note, convertible into shares of Series D Preferred Stock at the rate of one (1) share of Series D Preferred Stock for each One Hundred Dollars ($100.00) | ||||
Series D Preferred Stock [Member] | |||||
Preferred stock, shares issued | 332,336 | 174,184 | |||
Series D Preferred stock converted into Common stock | 155,823 | ||||
Series D Preferred Stock [Member] | |||||
Series D Preferred stock converted into Common stock | -1,000 | ||||
Stock issued for services primary market consultant, shares | 174,943 | ||||
Securities Exchange Agreement [Member] | Pharmacy Development Corporation [Member] | Series D Preferred Stock [Member] | |||||
Series D Preferred stock converted into Common stock | 1,000 | ||||
Securities Exchange Agreement [Member] | Pharmacy Development Corporation [Member] | Series D Preferred Stock [Member] | |||||
Preferred stock, shares issued | 500,000 |
Business_Schedule_of_Assets_an
Business - Schedule of Assets and Liabilities (Details) (USD $) | Dec. 31, 2014 |
Business - Schedule Of Assets And Liabilities Details | |
Cash | $485,012 |
Fixed Assets | 5,184 |
Total assets | 490,196 |
Accounts payable | 362,582 |
Accrued expenses | 588,401 |
Accrued interest | 96,362 |
Convertible debentures | 666,798 |
Liabilities of discontinued operations | 961,831 |
Total liabilities | 2,675,974 |
Net liabilities assumed | ($2,185,778) |
Business_Summary_of_Pro_Forma_
Business - Summary of Pro Forma Revenue and Earnings Information (Details) (Pro Forma [Member], USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Pro Forma [Member] | ||
Sales, net | $66,599,000 | $6,989,000 |
Net loss from continuing operations | -21,122,000 | -6,323,000 |
Net loss | ($21,125,000) | ($6,359,000) |
Net loss per share - basic and diluted | ($0.08) | ($0.06) |
Basis_of_Presentation_and_Sign3
Basis of Presentation and Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue percentage | 100.00% | |
Net loss | ($12,354,399) | $230,061 |
Stock-based expenses | 11,391,301 | |
Percentage of revenue on shipping and handling | 0.50% | |
Equipment expense | 1,000 | |
Percentage on extinguishment of debt | 10.00% | |
Stock based compensation, warrants grant value | 0 | 0 |
FDIC insured amount | 250,000 | |
Maximum percentage of revenue represented for single customer | 10.00% | 10.00% |
Percentage of revenue generated from sales | 100.00% | 100.00% |
Two suppliers made up substantially our direct materials, percentage | 100.00% | 100.00% |
Amounts payable | 5,896,197 | 1,411,493 |
Vendors [Member] | ||
Amounts payable | 12,158 | 58,594 |
Cost of compounding supplies & materials | 2,492,749 | 273,135 |
Trestles Pain Management Specialists LLC [Member] | ||
Percentage of revenue generated from sales | 100.00% | 100.00% |
Selling And Marketing [Member] | ||
Stock-based expenses | $11,491,301 |
Basis_of_Presentation_and_Sign4
Basis of Presentation and Significant Accounting Policies - Schedule of Net Revenues (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Basis Of Presentation And Significant Accounting Policies - Schedule Of Net Revenues Details | ||
Gross revenues | $156,853,777 | $15,551,345 |
Less: estimated contractual and other adjustments | -90,254,881 | -8,562,809 |
Net revenues | $66,598,896 | $6,988,536 |
Basis_of_Presentation_and_Sign5
Basis of Presentation and Significant Accounting Policies - Schedule of Consultants Earned (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Stock-based compensation | $11,391,301 | |
Total selling and marketing | 33,761,058 | 1,790,841 |
Consultants [Member] | ||
Stock-based compensation | 11,391,301 | |
Total selling and marketing | $33,745,106 | $1,790,761 |
Accounts_Receivable_Details_Na
Accounts Receivable (Details Narrative) | 12 Months Ended |
Dec. 31, 2014 | |
Minimum [Member] | |
Percentage on proceeds of accounts receivable | 0.2 |
Maximum [Member] | |
Percentage on proceeds of accounts receivable | 0.25 |
Accounts_Receivable_Summary_of
Accounts Receivable - Summary of Accounts Receivable (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Accounts Receivable - Summary Of Accounts Receivable Details | ||
Accounts receivable | $36,364,280 | $10,814,161 |
Allowance for doubtful accounts and contractual write-offs | -22,089,994 | -6,265,951 |
Subtotal | 14,274,286 | 4,548,210 |
Less: long-term portion | -4,139,543 | -983,440 |
Current portion | $10,134,743 | $3,564,770 |
Accounts_Receivable_Summary_of1
Accounts Receivable - Summary of Factoring Activity on Accounts Receivable (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Accounts Receivable - Summary Of Factoring Activity On Accounts Receivable Details | ||
Gross billing receivables sold | $128,637,988 | $4,852,088 |
Adjustment to net revenues (for estimated contractual and other adjustments) | -72,879,912 | -260,128 |
Interest expense for factored accounts receivable | -29,694,558 | -873,201 |
Proceeds received from factors | $26,063,518 | $1,358,759 |
Property_and_Equipment_Net_Det
Property and Equipment, Net (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $15,942 | $9,110 |
Property_and_Equipment_Net_Sch
Property and Equipment, Net - Schedule of Property and Equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Property, Plant and Equipment [Abstract] | ||
Machinery and equipment | $27,229 | $22,629 |
Computer equipment | 31,473 | 13,406 |
Furniture and fixtures | 3,997 | 3,997 |
Leasehold improvements | 69,784 | 24,749 |
Property and equipment, gross | 132,483 | 64,781 |
Less : accumulated depreciation | -52,940 | -36,999 |
Property and equipment, net | $79,543 | $27,782 |
Notes_Payable_and_Accrued_Inte2
Notes Payable and Accrued Interest (Details Narrative) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | |||||||
Sep. 19, 2014 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 10, 2014 | Jan. 06, 2012 | Mar. 31, 2014 | Mar. 10, 2014 | Feb. 20, 2014 | Nov. 18, 2013 | Mar. 04, 2014 | Sep. 30, 2014 | Mar. 06, 2014 | |
Note principal amount | $600,000 | $110,500 | $600,000 | ||||||||||
Loss on extinguishment of debt | 182 | 225,193 | |||||||||||
Long term debt principal payment due December 31.2015 | 63,395 | ||||||||||||
Long term debt principal payment due December 31.2016 | 71,135 | ||||||||||||
Long term debt principal payment due December 31.2017 | 80,495 | ||||||||||||
Beneficial conversion feature recognized to interest expense | 322,785 | ||||||||||||
Face value of note | 95,000 | ||||||||||||
Derivative liability | |||||||||||||
Repayment of debt and accrued interest | 100,000 | ||||||||||||
Accrued and unpaid intrest | 1,573,467 | 1,011,414 | |||||||||||
Debt monthly Payment | 7,500 | ||||||||||||
Debt conversation price per share | $2 | ||||||||||||
Net expenses | 458,192 | ||||||||||||
Accrued interest | 110,500 | ||||||||||||
Secured Bridge Notes, Principle | 45,000 | ||||||||||||
Payment for note payable | 812,867 | 14,881 | |||||||||||
Related Party Notes, Principle | 146,667 | ||||||||||||
Settlement of note | 50,000 | ||||||||||||
Settlement Agreement [Member] | |||||||||||||
Unsecured Promissory Notes | 302,500 | ||||||||||||
Derivative liability | 143,517 | ||||||||||||
Settlement Agreement and Mutual Release Agreements [Member] | |||||||||||||
Note principal amount | 290,151 | 65,756 | |||||||||||
Loss on extinguishment of debt | 30,959 | ||||||||||||
Face value of note | 886,875 | ||||||||||||
Issuance of restricted common stock, shares | 30,074,105 | ||||||||||||
Debt monthly Payment | 5,842 | ||||||||||||
Settlement Agreement and Mutual Release Agreements One [Member] | |||||||||||||
Note principal amount | 300,000 | ||||||||||||
Loss on extinguishment of debt | 23 | ||||||||||||
Notes interest rate | 12.00% | ||||||||||||
Issuance of restricted common stock, shares | 10,807,000 | ||||||||||||
Debt monthly Payment | 7,900 | ||||||||||||
Pharmacy Development Corporation [Member] | |||||||||||||
Loss on extinguishment of debt | 7,111,444 | ||||||||||||
Promissory notes converted into stock | Convertible promissory notes were exchanged for new convertible promissory note, convertible into shares of Series D Preferred Stock at the rate of one (1) share of Series D Preferred Stock for each One Hundred Dollars ($100.00) | ||||||||||||
Settlement Agreement [Member] | |||||||||||||
Loss on extinguishment of debt | 8,000 | 99,704 | |||||||||||
2007 - 2009 Convertible Notes [Member] | |||||||||||||
Notes, Interest Rate, Minimum | 18.00% | ||||||||||||
Notes, Interest Rate, Maximum | 33.00% | ||||||||||||
Note principal amount | 100,000 | 100,000 | |||||||||||
2007 - 2009 Convertible Notes [Member] | Related Party Convertible Promissory [Member] | |||||||||||||
Loss on extinguishment of debt | 100,000 | ||||||||||||
Repayment of debt and accrued interest | 20,833 | ||||||||||||
2007 - 2009 Convertible Notes [Member] | Note Conversion Agreement [Member] | |||||||||||||
Debentures converted into common stock | 1,505 | ||||||||||||
Convertible Notes, shares value | 100,000 | ||||||||||||
Unsecured Promissory Notes Issued To Shareholder [Member] | |||||||||||||
Face value of note | 152,500 | ||||||||||||
2012 Convertible Promissory Notes [Member] | |||||||||||||
Note principal amount | 65,756 | ||||||||||||
Face value of note | 150,000 | ||||||||||||
Notes interest rate | 18.00% | ||||||||||||
Profit-Sharing Notes' term | 4 years | ||||||||||||
Percentage on conversion of promissory note | 95.00% | ||||||||||||
2012 Convertible Promissory Notes [Member] | Note Conversion Agreement [Member] | |||||||||||||
Note principal amount | 124,750 | 124,750 | |||||||||||
Debentures converted into common stock | 1,094 | ||||||||||||
Accrued and unpaid intrest | 20,584 | 20,584 | |||||||||||
2010 Profit Sharing Notes [Member] | |||||||||||||
Notes, Interest Rate, Minimum | 0.10% | ||||||||||||
Notes, Interest Rate, Maximum | 5.00% | ||||||||||||
Loss on extinguishment of debt | 180,973 | ||||||||||||
Repayment of debt and accrued interest | 600,000 | ||||||||||||
Profit-Sharing Notes' term | 4 years | ||||||||||||
Secured Bridge Notes [Member] | |||||||||||||
Notes, Interest Rate, Minimum | 15.00% | ||||||||||||
Notes, Interest Rate, Maximum | 22.50% | ||||||||||||
Unsecured Promissory Notes [Member] | |||||||||||||
Notes, Interest Rate, Minimum | 0.50% | ||||||||||||
Notes, Interest Rate, Maximum | 6.00% | ||||||||||||
Notes interest rate | 18.00% | ||||||||||||
Profit-Sharing Notes' term | 5 years | ||||||||||||
Secured Bridge Notes, Principle | 772,366 | ||||||||||||
Repayment of Unsecured Promissory Notes per month | 19,613 | ||||||||||||
2012 Convertible Promissory Notes One [Member] | |||||||||||||
Note principal amount | 60,571 | ||||||||||||
Related Party Unsecured Promissory Notes [Member] | |||||||||||||
Unsecured Promissory Notes | 50,000 | ||||||||||||
Accrued interest | 50,000 | ||||||||||||
Related Party Notes, Principle | 96,667 | ||||||||||||
Convertible Note (Related Party) [Member] | |||||||||||||
Related Party Notes, Principle | 52,400 | ||||||||||||
Convertible Note (Related Party) [Member] | Shareholder [Member] | |||||||||||||
Notes interest rate | 6.00% | ||||||||||||
Related Party Notes, Principle | $42,500 | ||||||||||||
Convertible Note (Related Party) [Member] | Shareholder [Member] | Series D Preferred Stock [Member] | |||||||||||||
Debentures converted into common stock | 260 |
Notes_Payable_and_Accrued_Inte3
Notes Payable and Accrued Interest - Outstanding Notes Payable (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Debt, Gross | $4,102,314 | $6,046,258 |
Less: unamortized discount | ||
Current Portion, Principle | -3,875,559 | -6,046,258 |
Long-term Portion, Principle | 226,755 | |
Accrued Interest | 1,573,467 | 1,011,414 |
Accrued Interest, Current Portion | -1,573,467 | -1,011,414 |
Accrued Interest, Long-term Portion | ||
Non-Related Parties [Member] | ||
Debt, Gross | 3,903,247 | 5,639,594 |
Less: unamortized discount | -98,922 | |
Accrued Interest | 1,562,292 | 950,114 |
Less: unamortized discount | ||
Non-Related Parties [Member] | 2007 - 2009 Convertible Notes [Member] | ||
Debt, Gross | 315,000 | 497,000 |
Accrued Interest | 124,334 | 78,083 |
Non-Related Parties [Member] | Profit Sharing Notes [Member] | ||
Debt, Gross | 175,000 | |
Accrued Interest | 527,012 | |
Non-Related Parties [Member] | Secured Bridge Notes [Member] | ||
Debt, Gross | 449,275 | 449,275 |
Accrued Interest | 86,945 | 72,901 |
Non-Related Parties [Member] | 2012 Convertible Promissory Notes [Member] | ||
Debt, Gross | 2,288,250 | 3,299,875 |
Accrued Interest | 706,384 | 410,174 |
Non-Related Parties [Member] | Promissory Notes [Member] | ||
Debt, Gross | 350,722 | |
Accrued Interest | 3,507 | |
Non-Related Parties [Member] | Convertible Debentures [Member] | ||
Debt, Gross | 325,000 | |
Accrued Interest | 114,110 | |
Less: unamortized discount | ||
Non-Related Parties [Member] | 2010 Profit Sharing Notes [Member] | ||
Debt, Gross | 675,000 | |
Accrued Interest | 383,163 | |
Non-Related Parties [Member] | Unsecured Promissory Notes [Member] | ||
Debt, Gross | 817,366 | |
Accrued Interest | 5,793 | |
Related Parties [Member] | ||
Debt, Gross | 199,067 | 406,664 |
Accrued Interest | 11,175 | 61,300 |
Related Parties [Member] | 2007 - 2009 Convertible Notes [Member] | ||
Debt, Gross | 152,500 | |
Accrued Interest | 43,300 | |
Related Parties [Member] | 2012 Convertible Promissory Notes [Member] | ||
Debt, Gross | 150,000 | |
Accrued Interest | 18,000 | |
Related Parties [Member] | Promissory Notes [Member] | ||
Debt, Gross | 146,667 | |
Accrued Interest | 7,414 | |
Related Parties [Member] | Convertible Notes [Member] | ||
Debt, Gross | 52,400 | |
Accrued Interest | 3,761 | |
Related Parties [Member] | Note Payable Due To Officer [Member] | ||
Debt, Gross | 104,164 | |
Accrued Interest | ||
Related Parties [Member] | Unsecured Promissory Notes [Member] | ||
Debt, Gross | ||
Accrued Interest |
Notes_Payable_and_Accrued_Inte4
Notes Payable and Accrued Interest - Schedule of Derivative Liability Calculated Using Black-Scholes Valuation (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Minimum [Member] | |
Stock price per share | $0.04 |
Exercise price per share | $0.04 |
Time to maturity in years | 1 year 9 months |
Annual risk-free interest rate | 0.47% |
Annualized volatility | 250.00% |
Maximum [Member] | |
Stock price per share | $0.06 |
Exercise price per share | $0.06 |
Time to maturity in years | 2 years |
Annual risk-free interest rate | 0.58% |
Annualized volatility | 283.00% |
Notes_Payable_and_Accrued_Inte5
Notes Payable and Accrued Interest - Summary of Net Expenses (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Notes Payable And Accrued Interest - Summary Of Net Expenses Details | |
Interest expense (debt discount amortization) | $634,299 |
(Gain) loss on extinguishment of debt | -193,454 |
Other expense | 17,347 |
Net Expenses | $458,192 |
Notes_Payable_and_Accrued_Inte6
Notes Payable and Accrued Interest - Schedule of Interest Payments in Promissory Notes (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Promissory Notes, Non-related parties | $350,722 | $817,366 |
Promissory Notes, Related parties | 146,667 | |
Promissory Notes, Related and Non related parties | 497,389 | 817,366 |
November 18, 2013 [Member] | ||
Promissory Notes, Non-related parties | 772,366 | |
October 10, 2014 [Member] | ||
Promissory Notes, Non-related parties | 350,722 | |
January 1, 2014 [Member] | ||
Promissory Notes, Non-related parties | 45,000 | |
February 20, 2014 [Member] | ||
Promissory Notes, Related parties | 96,667 | |
March 11, 2014 [Member] | ||
Promissory Notes, Related parties | $50,000 |
Settlement_Liabilities_Details
Settlement Liabilities (Details Narrative) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | |||||
Sep. 19, 2014 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 06, 2014 | Jan. 06, 2012 | Apr. 30, 2012 | Jan. 06, 2014 | Aug. 28, 2012 | 15-May-14 | 2-May-14 | |
Value of treasury stock | $200,000 | $200,000 | |||||||||
Gain loss on extinguishment of debt | 182 | 225,193 | |||||||||
Merger value | 289,398 | ||||||||||
Percentage of amount outstanding under convertible note | 14.00% | ||||||||||
Convertible debenture converted into stock | 2,391,887 | ||||||||||
Shares issued prior merger | 2,391,887 | ||||||||||
Shares issued post merger | 11,959,435 | ||||||||||
Convertible note principal payment | 600,000 | 110,500 | |||||||||
Interest accrued | 100,000 | ||||||||||
Series D Preferred Stock [Member] | |||||||||||
Repurchase of stock | 7,504 | ||||||||||
Value of stock repurchased | 500,000 | ||||||||||
Settlement Agreement [Member] | |||||||||||
Settlement amount in exchange | 92,000 | ||||||||||
Payments for legal setttlements | 20,000 | 20,000 | |||||||||
Payments for settement in months | 2,000 | ||||||||||
Settlements in periods | 36 months | ||||||||||
Value of treasury stock | 200,000 | 200,000 | |||||||||
Billed in excess unable to collect the amount | 10,000,000 | ||||||||||
Gain loss on extinguishment of debt | 8,000 | 99,704 | |||||||||
Convertible debenture converted into stock | 14,351,322 | ||||||||||
Myhill Litigants [Member] | |||||||||||
Settlement amount | 358,433 | ||||||||||
Settlement amount in exchange | 200,000 | ||||||||||
Payments for settement in months | 10,000 | ||||||||||
Settlements in periods | 18 months | ||||||||||
Primary care [Member] | |||||||||||
Settlement amount | 40,000 | ||||||||||
AATV [Member] | |||||||||||
Settlement amount | $1,100,000 |
Settlement_Liabilities_Summary
Settlement Liabilities - Summary of Settlement Liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Settlement Liabilities amount | $70,000 | $248,000 |
Myhill [Member] | ||
Settlement Liabilities amount | 70,000 | 200,000 |
Primary care [Member] | ||
Settlement Liabilities amount | $48,000 |
Liabilities_of_Discontinued_Op2
Liabilities of Discontinued Operations (Details Narrative) (USD $) | 0 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2014 | |
Liabilities discontinued operations | $961,831 | |
Common stock shares issued | 60,000,000 | |
Pet Airways, Inc. [Member] | ||
Liabilities discontinued operations | $961,831 |
Liabilities_of_Discontinued_Op3
Liabilities of Discontinued Operations - Schedule of Liabilities of Discontinued Operations (Details) (USD $) | Dec. 31, 2014 |
Liabilities Of Discontinued Operations | |
Accrued airline leases | $360,679 |
Other accrued liabilities | 376,924 |
Amounts owed to credit card merchants | 102,314 |
Unearned revenue | 121,913 |
Total | $961,831 |
Capital_Stock_Details_Narrativ
Capital Stock (Details Narrative) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | |||||
Sep. 19, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 30, 2013 | Mar. 31, 2014 | Mar. 15, 2013 | 15-May-13 | Feb. 09, 2012 | |
Common stock, shares authorized | 1,400,000,000 | 1,400,000,000 | ||||||
Stock issued to settle debt, shares | 53,036,707 | |||||||
Issuance of common stock for vendor to pre merger service provided, shares | 196,167 | |||||||
Preferred stock, shares authorized | 10,000,000 | |||||||
Preferred stock, par value | ||||||||
Issuance of common stock shares for other serives | 8,279 | |||||||
Gain loss on extinguishment of debt | $182 | $225,193 | ||||||
Option outstanding | 367,000 | |||||||
Option available for issuance | 3,633,000 | |||||||
Option exercise price per share | $0.16 | |||||||
Stock Incentive Plan [Member] | ||||||||
Shares approved and reserved for the issuance of stock options | 4,000,000 | |||||||
Option outstanding | 367,000 | |||||||
Option available for issuance | 3,633,000 | |||||||
2012 Stock Incentive Plan [Member] | ||||||||
Shares approved and reserved for the issuance of stock options | 10,000,000 | |||||||
Option available for issuance | 3,829,050 | |||||||
Option issued | 6,170,950 | |||||||
2010 Stock Incentive Plan And 2012 Stock Incentive Plan [Member] | ||||||||
Stock plan expiration term | 10 years | |||||||
Warrant [Member] | ||||||||
Warrants outstanding | 43,424,989 | |||||||
Warrants expiration date | 3-Jun-16 | |||||||
Series A Preferred Stock [Member] | ||||||||
Issuance of common stock for merger, shares | ||||||||
Stock issued for services, shares | ||||||||
Shares of common stock repurchased | ||||||||
Conversion of stock | ||||||||
Liquidation remaining assets insufficient to pay per share | $10,000 | |||||||
Percentage of preferred stock dividends | 10.00% | |||||||
Minimum [Member] | Warrant [Member] | ||||||||
Warrants exercise price per share | $0.01 | |||||||
Maximum [Member] | Warrant [Member] | ||||||||
Warrants exercise price per share | $1.02 | |||||||
2007 - 2009 Convertible Notes [Member] | ||||||||
Conversion of stock | 1,505 | |||||||
2012 Convertible Notes [Member] | ||||||||
Conversion of stock | 1,094 | |||||||
Pharmacy Development Corporation [Member] | ||||||||
Gain loss on extinguishment of debt | $7,111,444 | |||||||
Series D Preferred Stock [Member] | ||||||||
Stock issued to settle debt, shares | 1,000 | |||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||||||
Preferred stock, par value | ||||||||
Preferred stock shares designated | 500,000 | |||||||
Percentage of issued and outstanding for written consent | 67.00% | |||||||
Percentage of Common Stock beneficially owned | 4.90% | |||||||
Preferred stock liquidation per share | $40 | |||||||
Conversion of stock | 155,823 | |||||||
Series D Preferred Stock [Member] | Note Conversion Agreement [Member] | ||||||||
Stock issued to settle debt, shares | 2,599 | |||||||
Series B Preferred Stock [Member] | ||||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||||||
Preferred stock, par value | ||||||||
Designated preferred stock | 80,000 | |||||||
Percentage of common stock shares issued and outstanding after hypothetical conversion | 0.01% | |||||||
Preferred stock conversion | In no event shall the Series B Conversion Ratio be less than 4,300 shares of common stock for each Series B Preferred share and more than 10,000 shares of Common Stock | |||||||
Conversion ratio of common stock, minimum | 4,300 | |||||||
Conversion ratio of common stock, maximum | 10,000 | |||||||
Percentage affiliates to exceed issued and outstanding | 4.90% | |||||||
Liqudation of preferred stock price per share | $30 | |||||||
Liquidation remaining assets insufficient to pay per share | $30 | |||||||
Series C Preferred Stock [Member] | ||||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||||||
Preferred stock, par value | ||||||||
Percentage of issued and outstanding for written consent | 67.00% | |||||||
Designated preferred stock | 50,000 | |||||||
Percentage of common stock shares issued and outstanding after hypothetical conversion | 90.00% | |||||||
Liqudation of preferred stock price per share | $100 | |||||||
Liquidation remaining assets insufficient to pay per share | $100 | |||||||
Percentage of affliates to exceed | 4.90% | |||||||
Series C Preferred Stock [Member] | Minimum [Member] | ||||||||
Conversion of common stock, shares | 10,000 | |||||||
Series C Preferred Stock [Member] | Maximum [Member] | ||||||||
Conversion of common stock, shares | 20,000 | |||||||
Forte Capital Partners LLC [Member] | ||||||||
Issuance of common stock for merger, shares | 11,959,435 | |||||||
AATV [Member] | Settlement Agreement [Member] | ||||||||
Shares of common stock repurchased | 7,504 | |||||||
Trestles Pain Management Specialists LLC [Member] | ||||||||
Stock issued for services, shares | 166,664 |
Capital_Stock_Schedule_of_Sell
Capital Stock - Schedule of Selling and Administrative Expense (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Selling and marketing | $33,761,058 | $1,790,841 |
General and administrative | 3,185,628 | 1,304,002 |
Series D Preferred Stock [Member] | ||
Selling and marketing | 11,391,301 | |
General and administrative | 100,000 | |
Selling and general administrative expenses | $11,491,301 |
Other_Related_Party_Informatio2
Other Related Party Information (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ||
Consultant fees | $39,000 | $78,000 |
Other_Related_Party_Informatio3
Other Related Party Information - Schedule of Compensation Related Party (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ||
Employee compensation | $772,332 | $445,540 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
ha | ||
Commitments and Contingencies Disclosure [Abstract] | ||
Area of lease | 7,343 | |
Lease agreement expiration date | 30-Sep-16 | |
Operating lease rent expense | $83,805 | $53,444 |
Liabilities of discontinued operations | 360,729 | |
Future minimum lease payments for the period December 31, 2015 | 104,191 | |
Future minimum lease payments for the period December 31, 2016 | $80,278 |
Litigation_Details_Narrative
Litigation (Details Narrative) (USD $) | 12 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | ||
Dec. 31, 2014 | Apr. 30, 2012 | Mar. 04, 2013 | Mar. 06, 2013 | 31-May-13 | Dec. 31, 2013 | |
Payment for damages | $300,000 | |||||
Sky Way Enterprises [Member] | ||||||
Litigation Damage cost | 187,827 | |||||
Litigation liability | 198,500 | |||||
Suburban Air Freight [Member] | ||||||
Litigation settlement interest | 87,491 | |||||
Litigation liability | 90,532 | |||||
Alyce Tognotti [Member] | ||||||
Litigation Damage cost | 17,611 | |||||
Litigation liability | 18,771 | |||||
AFCO Cargo [Member] | ||||||
Litigation settlement interest | 31,120 | |||||
Litigation liability | 32,331 | |||||
March 11, 2015 [Member] | ||||||
Payment for damages | 1,500,000 | |||||
Minimum [Member] | ||||||
Legal fees and costs | 17,000 | |||||
Maximum [Member] | ||||||
Legal fees and costs | $30,000 |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forwards | $3,275,000 | $562,000 |
Net operating loss carry forwards expiry date | 2031 |
Income_Taxes_Schedule_of_Curre
Income Taxes - Schedule of Current and Deferred Tax Provision for Federal and State Income Taxes (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes - Schedule Of Current And Deferred Tax Provision For Federal And State Income Taxes Details | ||
Federal | ||
State | 2,400 | 1,600 |
Total current taxes | 2,400 | 1,600 |
Federal | -178,142 | 426,654 |
State | -38,322 | 111,908 |
Total | -216,464 | 538,562 |
Total provision (benefit) for income taxes | ($214,064) | $540,162 |
Income_Taxes_Schedule_of_Recon
Income Taxes - Schedule of Reconciliation of Income Tax (Provision) (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal statuatory rate | 34.00% | 34.00% |
State taxes, net of Federal benefit | 5.80% | 8.80% |
Nondeductible expenses | -41.50% | 27.30% |
Effective tax provision (benefit) rate | -1.70% | 70.10% |
Income_Taxes_Schedule_of_Defer
Income Taxes - Schedule of Deferred Tax Assets (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Income Taxes - Schedule Of Deferred Tax Assets Details | ||
Accounts receivable | ($967,839) | ($1,957,119) |
Reserves and accruals | 70,406 | 1,497,708 |
Total current deferred tax asset (liability) | -897,433 | -459,411 |
Accounts receivable | -500,000 | |
Net operating losses | 1,402,941 | 248,455 |
Total non-current deferred tax asset | 902,941 | 248,455 |
Valuation allowance | ||
Deferred income tax assets (liabilities) | $5,508 | ($210,956) |
Income_Loss_Per_Share_Details_
Income (Loss) Per Share (Details Narrative) | 12 Months Ended |
Dec. 31, 2014 | |
Number of lock up shares of common stock authorized | 1,359,000,000 |
Number of lock up shares of common stock outstanding | 1,400,000,000 |
Series B Preferred Stock [Member] | |
Number of stock shares not converted | 16,000 |
Series D Preferred Stock [Member] | |
Number of shares canceled during period | 166,664 |
Income_Loss_Per_Share_Schedule
Income (Loss) Per Share - Schedule of Numerator and Denominator Basic and Diluted Income (Loss) Per Share (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Earnings Per Share [Abstract] | ||
Net income (loss) attributable to common shareholders for basic income (loss) per share | ($12,354,399) | $230,061 |
Net income (loss) attributable to common shareholders for diluted income (loss) per share | ($12,354,399) | $230,061 |
Denominator - basic income (loss) per share - weighted average shares | 268,948,521 | |
Preferred StockiD | 175,729,583 | |
Denominator - diluted income (loss) per share | 268,948,521 | 175,729,583 |
Income_Loss_Per_Share_Schedule1
Income (Loss) Per Share - Schedule of Common Share Equivalents (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Common share equivalents | 1,004,327,956 | |
Series B Preferred Stock [Member] | ||
Common share equivalents | 520,348,767 | |
Series C Preferred Stock [Member] | ||
Common share equivalents | 7,297,260 | |
Series D Preferred Stock [Member] | ||
Common share equivalents | ||
Series D Preferred Stock [Member] | ||
Common share equivalents | 408,111,049 | |
2007 - 2009 Convertible Notes [Member] | ||
Common share equivalents | 3,519,534 | |
2012 Convertible Notes [Member] | ||
Common share equivalents | 18,627,747 | |
Convertible Debentures [Member] | ||
Common share equivalents | 487,500 | |
Convertible Note Related Party [Member] | ||
Common share equivalents | 2,144,110 | |
Options [Member] | ||
Common share equivalents | 367,000 | |
Warrant [Member] | ||
Common share equivalents | 43,424,989 |
Gain_Loss_on_Extinguishment_of2
Gain (Loss) on Extinguishment of Debt - Schedule of Gain Loss on Extinguishment of Debt (Details) (USD $) | 0 Months Ended | 12 Months Ended | |
Sep. 19, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Debt Disclosure [Abstract] | |||
Accounts payable | ($8,788) | ||
Convertible notes - 2007-2009 and 2012 | 45,031 | ||
Profit sharing notes payable | 180,973 | ||
Promissory notes | -23 | ||
Settlement liabilities | 8,000 | ||
Gain (Loss) on Extinguishment of Debt | $182 | $225,193 |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Sep. 19, 2014 | Dec. 31, 2013 | |
Debt principal amount | $95,000 | ||
Accrued interest | 110,500 | ||
Factored gross billing accounts receivable | 14,274,286 | 4,548,210 | |
Subsequent Event [Member] | Factoring [Member] | |||
Factored gross billing accounts receivable | 15,735,235 | ||
Received proceeds | 3,147,047 | ||
Conversion of 2012 Convertible Promissory Notes [Member] | Subsequent Event [Member] | |||
Conversion of debt amount | 18,000 | ||
Debt principal amount | 13,000 | ||
Accrued interest | $5,000 | ||
Number of common stock converted | 461,894 |
Subsequent_Events_Schedule_of_
Subsequent Events - Schedule of Conversion of Preferred Stock (Details) (Subsequent Event [Member]) | 12 Months Ended | 3 Months Ended |
Dec. 31, 2014 | Mar. 31, 2014 | |
Preferred Stock [Member] | ||
Series D Preferred | 106,256 | |
Series B Preferred | 1,850 | |
Common Stock [Member] | ||
Series D Preferred | 106,256,000 | |
Series B Preferred | 18,500,000 |