Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 31, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Medytox Solutions, Inc. | ' |
Entity Central Index Key | '0001374536 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 29,793,153 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
Condensed_Balance_Sheets
Condensed Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Current assets: | ' | ' |
Cash | $2,538,047 | $1,773,785 |
Accounts receivable, net | 7,121,967 | 3,269,180 |
Deferred loan costs | 25,799 | 77,192 |
Prepaid expenses and other current assets | 134,775 | 109,697 |
Deferred tax assets | 1,193,100 | 1,980,600 |
Assets attributable to disputed activity | 1,367,796 | 1,367,796 |
Total current assets | 12,381,484 | 8,578,250 |
Property and equipment, net | 1,832,752 | 598,741 |
Other assets: | ' | ' |
Intangible assets | 550,000 | 550,000 |
Goodwill | 4,066,612 | 1,050,912 |
Deposits | 201,581 | 70,368 |
Total assets | 19,032,429 | 10,848,271 |
Current liabilities: | ' | ' |
Accounts payable | 1,933,030 | 1,168,443 |
Accrued expenses | 2,526,052 | 1,026,922 |
Loans and notes payable, related parties | 0 | 242,100 |
Income tax liabilities | 2,673,100 | 1,883,900 |
Disputed net income - Trident | 397,918 | 397,918 |
Current portion of notes payable | 4,091,078 | 3,154,389 |
Current portion of capital lease obligation | 176,842 | 0 |
Liabilities attributable to disputed activity | 1,104,063 | 1,104,063 |
Total current liabilities | 12,902,083 | 8,977,735 |
Other liabilities: | ' | ' |
Notes payable, net of current portion | 44,118 | 0 |
Capital lease obligations, net of current portion | 273,232 | 0 |
Deferred tax liabilities | 115,300 | 36,100 |
Total liabilities | 13,334,733 | 9,013,835 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Common stock | 2,973 | 2,953 |
Additional paid-in-capital | 1,735,150 | 616,512 |
Retained earnings | 3,838,468 | 1,093,866 |
Total Medytox Solutions stockholders' equity | 5,576,692 | 1,713,432 |
Noncontrolling interest | 121,004 | 121,004 |
Total stockholders' equity | 5,697,696 | 1,834,436 |
Total liabilities and stockholders' equity | 19,032,429 | 10,848,271 |
Series B Preferred Stock | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, 100,000,000 shares authorized: | 1 | 1 |
Series C Preferred Stock | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, 100,000,000 shares authorized: | $100 | $100 |
Condensed_Balance_Sheets_Paren
Condensed Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Preferred stock shares authorized | 100,000,000 | 100,000,000 |
Common stock par value | $0.00 | $0.00 |
Common stock shares authorized | 500,000,000 | 500,000,000 |
Common stock shares issued | 29,725,153 | 29,533,753 |
Common stock shares outstanding | 29,725,153 | 29,533,753 |
Series B Preferred Stock | ' | ' |
Preferred stock shares authorized | 5,000 | 5,000 |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares issued | 5,000 | 5,000 |
Preferred stock shares outstanding | 5,000 | 5,000 |
Series C Preferred Stock | ' | ' |
Preferred stock shares authorized | 1,000,000 | 1,000,000 |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares issued | 1,000,000 | 1,000,000 |
Preferred stock shares outstanding | 1,000,000 | 1,000,000 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Income Statement [Abstract] | ' | ' | ' | ' |
Revenues | $16,729,526 | $8,367,445 | $33,355,862 | $11,958,786 |
Operating expenses: | ' | ' | ' | ' |
Direct costs of revenue | 3,291,530 | 1,190,121 | 6,987,777 | 2,263,896 |
General and administrative | 4,529,506 | 1,237,516 | 9,171,359 | 4,236,997 |
Legal fees related to disputed subsidiary | 267,286 | 34,900 | 857,587 | 200,496 |
Sales and marketing expenses | 691,159 | 540,460 | 1,923,843 | 930,095 |
Bad debt expense | 3,717,376 | 2,982,392 | 7,794,361 | 3,532,512 |
Depreciation | 118,998 | 16,266 | 323,031 | 73,592 |
Total operating expenses | 12,615,855 | 6,001,655 | 27,057,958 | 11,237,588 |
Income from operations | 4,113,671 | 2,365,790 | 6,297,904 | 721,198 |
Other income (expense): | ' | ' | ' | ' |
Other income | 64 | -1,415 | 273 | 19,788 |
Gain on settlement of debt | 0 | 0 | 0 | 59,000 |
Gain on settlement of assets | 400 | 0 | 750 | 0 |
Loss on legal settlement | -100,000 | 0 | -169,800 | 0 |
Interest expense | -68,785 | -121,451 | -332,387 | -279,451 |
Total other income (expense) | -168,321 | -122,866 | -501,164 | -200,663 |
Income before income taxes | 3,945,350 | 2,242,924 | 5,796,740 | 520,535 |
Provision for income taxes | 1,141,000 | 825,000 | 1,655,900 | 177,000 |
Net income | 2,804,350 | 1,417,924 | 4,140,840 | 343,535 |
Net income attributable to noncontrolling interest | 0 | 737,357 | 0 | 178,900 |
Net income from continuing operations | 2,804,350 | 680,567 | 4,140,840 | 164,635 |
Net income (loss) from disputed activity | 0 | -274,806 | 0 | -411,919 |
Net income (loss) attributable to Medytox Solutions | 2,804,350 | 405,761 | 4,140,840 | -247,284 |
Preferred stock dividends | 913,132 | 0 | 1,396,238 | 0 |
Net income (loss) attributable to Medytox Solutions common shareholders | $1,891,218 | $405,761 | $2,744,602 | ($247,284) |
Net income (loss) per share - Basic and diluted | $0.06 | $0.01 | $0.09 | ($0.01) |
Weighted average number of shares outstanding during the period - Basic and diluted | 29,692,110 | 29,614,800 | 29,610,287 | 30,068,404 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Cash flows from (used in) operating activities: | ' | ' |
Net income (loss) | $4,140,840 | ($247,284) |
Adjustments to reconcile net income (loss) to net cash provided by operations: | ' | ' |
Noncontrolling interests | 0 | 94,125 |
Depreciation and amortization | 323,031 | 94,426 |
Stock issued for services | 62,500 | 0 |
Stock-based compensation | 452,500 | 0 |
Stock-based consulting fees | 85,000 | 0 |
Increase in allowance for bad debts | 1,364,681 | 3,532,512 |
Accretion of loan costs as interest | 155,342 | 33,334 |
Accretion of beneficial conversion feature as interest | 34,532 | 0 |
Gain on disposal of equipment | -750 | 0 |
Gain on conversion of debt | 0 | 59,000 |
Disputed net income | 0 | 411,919 |
Liabilities attributable to disputed activity | 0 | 389,135 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -5,217,468 | -4,951,958 |
Prepaid expenses and other current assets | -25,078 | -1,224 |
Deferred tax assets | 787,500 | 723,900 |
Security deposits | -131,213 | 0 |
Accounts payable | 704,636 | 635,423 |
Accrued expenses | 1,497,823 | -24,950 |
Income tax liabilities | 789,200 | 0 |
Deferred tax liabilities | 79,200 | 0 |
Net cash provided by operating activities | 5,102,276 | 748,358 |
Cash flows used in investing activities: | ' | ' |
Purchase of property and equipment | -862,645 | -254,123 |
Cash received in sale of property and equipment | 750 | 0 |
Cash paid for acquisitions | -735,052 | -86,650 |
Cash received in acquisitions | 3,736 | 0 |
Net cash used in investing activities | -1,593,212 | -340,773 |
Cash flows provided by (used in) financing activities: | ' | ' |
Proceeds from the sale of common stock | 116,000 | 0 |
Deferred loan costs | -103,949 | 0 |
Dividends on Series B preferred stock | -1,396,238 | 0 |
Payments made on repurchase agreements | 0 | -33,082 |
Proceeds from issuance of notes payable | 1,300,000 | 1,301,203 |
Payments on notes payable | -2,278,910 | -913,071 |
Payments on capital lease obligations | -86,705 | 0 |
Proceeds from issuance of related party loans | 0 | 275,040 |
Payments on related party loans | -195,000 | -114,558 |
Common stock repurchased from lender | -100,000 | -85,000 |
Net cash provided by (used in) financing activities | -2,744,802 | 430,532 |
Net increase in cash | 764,262 | 838,117 |
Cash at beginning of period | 1,773,785 | 97,103 |
Cash at end of period | 2,538,047 | 935,220 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 257,963 | 134,486 |
Cash paid for taxes | 0 | 0 |
Non-cash investing and financing activities: | ' | ' |
Net liabilities (assets) acquired in acquisitions, net of cash | 1,565,613 | -184,000 |
Goodwill | -2,640,613 | 0 |
Notes payable issued | 1,075,000 | 184,000 |
Property and equipment acquired with issuance of notes payable | -56,603 | -53,032 |
Notes payable issued | 56,603 | 53,032 |
Capital lease assets acquired | -120,830 | 0 |
Capital lease obligations | 120,830 | 0 |
Related party loans forgiven: | ' | ' |
Loans and notes payable, related parties | -47,100 | 0 |
Additional paid in capital | 47,100 | 0 |
Beneficial conversion feature of convertible notes payable: | ' | ' |
Notes payable | -55,558 | 0 |
Additional paid in capital | 55,558 | 0 |
Adjustment to purchase price for Biohealth Medical Laboratory, Inc.: | ' | ' |
Goodwill | 24,913 | 0 |
Notes payable issued | -24,677 | 0 |
Accrued expenses | -236 | 0 |
Adjustment to purchase price for Medical Billing Choices, Inc.: | ' | ' |
Goodwill | -400,000 | 0 |
Common stock | 16 | 0 |
Additional paid in capital | 399,984 | 0 |
Common stock issued as inducement for loan: | ' | ' |
Deferred loan costs | 0 | -175,000 |
Common stock | 0 | 7 |
Additional paid in capital | $0 | $174,993 |
1_Organization_and_Presentatio
1. Organization and Presentation | 9 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
1. Organization and Presentation | ' |
Organization | |
Medytox Solutions, Inc. (the “Company”), was incorporated in Nevada on July 20, 2005 as Casino Players, Inc. In the first half of 2011, Company management decided to reorganize the operations of the Company as a holding company to acquire and manage a number of companies in the medical services sector. | |
On January 1, 2013, the Company's wholly-owned subsidiary, Medytox Diagnostics, Inc. (“MDI”), purchased 100% of the stock of Alethea Laboratories, Inc. ("Alethea"). Althea operates a licensed clinical lab in Las Cruces, New Mexico and is an enrolled Medicare provider. | |
On January 29, 2013, the Company formed Advantage Reference Labs, Inc. (“Advantage”), a Florida corporation, as a wholly-owned subsidiary that will provide reference, confirmation and clinical testing services. On October 14, 2013, Advantage changed its name to EPIC Reference Labs, Inc. | |
On April 4, 2013, the Company's wholly-owned subsidiary, MDI, purchased 100% of the interests in International Technologies, LLC ("Tech"). Tech operates a licensed clinical lab in Waldwick, New Jersey and is an enrolled Medicare provider. | |
Basis of Presentation | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows for the interim periods reported in this Form 10-Q. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year. | |
These unaudited financial statements should be read in conjunction with the 2012 annual financial statements included in the Annual Report on Form 10-K and Amendment No. 1 to the Annual Report on Form 10-K/A, filed with the U.S. Securities and Exchange Commission (“SEC”) on April 16, 2013 and September 3, 2013, respectively. | |
Reclassifications | |
Certain items on the statements of operations for the three and nine months ended September 30, 2012 and statement of cash flows for the nine months ended September 30, 2012 have been reclassified to conform to current period presentation. |
2_Disputed_Subsidiary
2. Disputed Subsidiary | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||
2. Disputed Subsidiary | ' | ||||
On July 2, 2013, a jury awarded our wholly-owned subsidiary, Medytox Institute of Laboratory Medicine, Inc. ("MILM"), $2,906,844 on its breach of contract claim against Trident Laboratories, Inc. ("Trident"), and Trident's shareholders, Michele Steegstra, Christopher Hawley, Donette Hawley, Michael Falestta and Skyler Lukas ("Shareholders"), and awarded Seamus Lagan $750,000 individually against Christopher Hawley for Mr. Hawley's defamatory postings on the internet. The jury rejected every claim made against the MILM parties. | |||||
The case arose from the August 22, 2011 agreement among MILM and Trident and its Shareholders pursuant to which MILM was to acquire 81% of Trident. On January 17, 2012, Trident notified MILM that it was rescinding the agreement. As a result, MILM filed suit against Trident and its Shareholders in Florida Circuit Court in Broward County. The jury found that Trident and its Shareholders breached the agreement and failed to perform their obligations thereunder. | |||||
Trident and the Shareholders filed motions for judgment notwithstanding the verdict, for a new trial, to dismiss the case, and for remittitur. On September 4, 2013, the judge denied all these motions and entered a partial final judgment in the amounts granted by the jury. MILM’s claims for specific performance remain to be decided by the Court. Trident and the Shareholders have filed a notice of appeal. One of the Shareholders, Donnette Hawley, filed a petition for bankruptcy on October 22, 2013. | |||||
Legal fees related to the lawsuit were $267,286 and $857,587 for the three and nine months ended September 30, 2013 and $34,900 and $200,496 for the three and nine months ended September 30, 2012, respectively. | |||||
The Company has not received any financial statements of Trident since August 31, 2012. These consolidated financial statements were prepared without the missing activity. Management believes that the missing activity is immaterial to the consolidated financial statements as a whole. The Company has established a disputed net income reserve of $397,918 as of September 30, 2013 and December 31, 2012, representing all of Trident's net income recognized by the Company since August 22, 2011, the date of acquisition. The assets and liabilities of Trident have been condensed and presented as assets, or liabilities, attributable to disputed activity in the September 30, 2013 and December 31, 2012 consolidated balance sheets. A separate $389,135 of commissions payable on Trident sales is included in liabilities attributable to disputed activity as of September 30, 2013 and December 31, 2012. | |||||
Assets and liabilities of the disputed subsidiary as of September 30, 2013 and December 31, 2012 were as follows: | |||||
Total assets | $ | 1,367,796 | |||
Total liabilities | $ | 1,104,063 | |||
3_LongLived_Assets
3. Long-Lived Assets | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
3. Long-Lived Assets | ' | ||||||||
Property and equipment at September 30, 2013 and December 31, 2012 consisted of the following: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Medical equipment | $ | 588,089 | $ | 269,931 | |||||
Equipment | 111,718 | 37,140 | |||||||
Capital lease assets | 779,337 | – | |||||||
Furniture | 193,477 | 66,606 | |||||||
Leasehold improvements | 157,496 | 47,197 | |||||||
Vehicles | 174,957 | 70,828 | |||||||
Computer equipment | 268,728 | 85,478 | |||||||
Software | 284,551 | 196,711 | |||||||
2,558,353 | 773,891 | ||||||||
Less accumulated depreciation | (725,601 | ) | (175,150 | ) | |||||
Property and equipment, net | $ | 1,832,752 | $ | 598,741 | |||||
Depreciation of property and equipment was $323,031 and $73,592 for the nine months ended September 30, 2013 and 2012, respectively. | |||||||||
The Company has recorded medical licenses acquired from acquisitions in the amount of $550,000 as intangible property as of September 30, 2013 and December 31, 2012. The medical licenses include licenses for Medicare and Medicaid, COLA Laboratory Accreditation, Clinical Laboratory Improvement Amendments (CLIA), and State of Florida (AHCA) Clinical Laboratory Licenses and have indefinite lives. As such, there was no amortization of intangible assets for the nine months ended September 30, 2013 and 2012. | |||||||||
Management is in the process of valuing any identifiable intangible assets, including medical licenses, of Alethea Laboratories, Inc. and International Technologies, LLC. See Note 7 – Business Combinations. | |||||||||
Management periodically reviews the valuation of long-lived assets for potential impairments. Management has not recognized an impairment of these assets to date, and does not anticipate any negative impact from known current business developments. |
4_Notes_Payable
4. Notes Payable | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
4. Notes Payable | ' | ||||||||
The Company and its subsidiaries are party to a number of loans with affiliates and unrelated parties. At September 30, 2013 and December 31, 2012, notes payable consisted of the following: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Convertible debenture for working capital, dated September 15, 2011, in the amount of $500,000 and bearing interest at 20%. Interest only payments are payable monthly. The note is convertible at $2.50 per share until October 31, 2013 when the note is due. This note is subordinated to the loan from TCA Global Credit Master Fund, L.P. ("TCA") and is secured by the assets of the Company, Medytox Medical Management Solutions Corp. ("MMMS") and Trident. | $ | 250,000 | $ | 500,000 | |||||
Loan for working capital, dated September 15, 2011, in the amount of $500,000 and bearing interest at 20%. Interest and principal are payable in 10 equal payments ending August 31, 2013. This note is subordinated to the loan from TCA and is secured by the assets of the Company, MMMS and Trident. | – | 150,000 | |||||||
Acquisition note to former shareholders of Medical Billing Choices, Inc. ("MBC") in the amount of $750,000, payable from percentage of collections, with interest at 6%, payable by August 22, 2013. | – | 449,512 | |||||||
Loan from TCA. Principal of $2,475,000 and $1,725,000, respectively, payable by January 15, 2014. Secured by all assets of the Company and its subsidiaries (other than Trident and MBC). | 2,475,000 | 1,725,000 | |||||||
Acquisition note to former member of PB Laboratories, LLC for 50.5% ownership, in the amount of $200,000 at 6% interest, with payments of $50,000 quarterly starting May 17, 2012 | – | 50,000 | |||||||
Acquisition note to former member of PB Laboratories, LLC for 49.5% ownership, in the amount of $200,000 at 0% interest, with payments of $50,000 quarterly starting January 31, 2013 | 15,000 | 150,000 | |||||||
Acquisition note to former shareholder of Biohealth Medical Laboratory, Inc. for 50.5% ownership, in the amount of $165,125 at 0% interest, with payments of $75,000 due quarterly starting February 7, 2013 and a final payment of $15,125 due on August 7, 2013. In May 2013, a final settlement was reached with the former shareholder and the remaining balance of $24,677 as of May 31, 2013 was discharged. | – | 99,677 | |||||||
Short-term note from affiliate, non-interest bearing and is due on demand. | – | 30,200 | |||||||
Acquisition note No.1 to former shareholder of Alethea Laboratories, Inc. in the amount of $287,500 at 0% interest, with payments of $50,000 due quarterly starting April 1, 2013. | 187,500 | – | |||||||
Acquisition note No. 2 to former shareholder of Alethea Laboratories, Inc. in the amount of $287,500 at 0% interest, with payments of $50,000 due quarterly starting April 1, 2013. | 187,500 | – | |||||||
Loan from former shareholders of Alethea Laboratories, Inc. in the amount of $344,650 at 4% interest, with principal payments of $24,618 due monthly starting March 15, 2013. | 172,325 | – | |||||||
Commercial loan with a finance company, dated December 20, 2012, in the original amount of $18,249 and bearing interest at 12.59%. Principal and interest payments in the amount of $364 are payable for 72 months ending on January 3, 2019. This note is secured by a lien on a vehicle with a carrying value of $17,662 at September 30, 2013. | 16,654 | – | |||||||
Commercial loan with a finance company, dated November 15, 2012, in the original amount of $18,008 and bearing interest at 15.07%. Principal and interest payments in the amount of $384 are payable for 72 months ending on November 30, 2018. This note is secured by a lien on a vehicle with a carrying value of $17,457 at September 30, 2013. | 16,376 | – | |||||||
Commercial loan with a finance company, dated November 28, 2012, in the original amount of $20,345 and bearing interest at 8.99%. Principal and interest payments in the amount of $368 are payable for 72 months ending on January 12, 2019. This note is secured by a lien on a vehicle with a carrying value of $19,444 at September 30, 2013. | 18,366 | – | |||||||
Acquisition convertible note No. 1 to former member of International Technologies, LLC in the amount of $250,000 at 5% interest, due January 17, 2014. The note is convertible into the Company's common stock at a ten percent (10%) discount to the average market price for the thirty days prior to conversion. The note is discounted for its unamortized beneficial conversion feature of $10,513 at September 30, 2013. | 239,487 | – | |||||||
Acquisition convertible note No. 2 to former member of International Technologies, LLC in the amount of $250,000 at 5% interest, due January 17, 2014. The note is convertible into the Company's common stock at a ten percent (10%) discount to the average market price for the thirty days prior to conversion. The note is discounted for its unamortized beneficial conversion feature of $10,513 at September 30, 2013. | 239,487 | – | |||||||
Loan from former member of International Technologies, LLC in the remaining amount of $416,667 at the date of acquistion, at 1% interest, with principal payments of $83,333 due quarterly starting June 7, 2013. | 250,001 | – | |||||||
Loan from former member of International Technologies, LLC in the remaining amount of $112,500 at the date of acquistion, at 1% interest, with principal payments of $22,500 due quarterly starting June 7, 2013. | 67,500 | – | |||||||
4,135,196 | 3,154,389 | ||||||||
Less current portion | (4,091,078 | ) | (3,154,389 | ) | |||||
Notes payable, net of current portion | $ | 44,118 | $ | – | |||||
TCA Global | |||||||||
On May 14, 2012, the Company borrowed $550,000 from TCA Global Credit Master Fund, LP (the "Lender") pursuant to the terms of the Senior Secured Revolving Credit Facility Agreement, dated as of April 30, 2012 (the "Credit Agreement"), among Medytox, MMMS, MDI, PB Laboratories, LLC (“PB Labs”) and the Lender. The funds were used for general corporate purposes. Under the Credit Agreement, Medytox may borrow up to an amount equal to the lesser of 80% of its Eligible Accounts (as defined in the Credit Agreement) and the revolving loan commitment, which initially was $550,000. | |||||||||
Medytox could request that the revolving loan commitment be raised by various specified amounts at specified times, up to an initial maximum of $4,000,000. In each case, whether to agree to any such increase in the revolving loan commitment was in the Lender's sole discretion. | |||||||||
On August 9, 2012, the Company borrowed an additional $525,000 in a second round of funding. These additional funds were also used for general corporate purposes. In this second round of funding, certain changes were made to the terms of the Credit Agreement: | |||||||||
· | the revolving loan commitment was increased from $550,000 to $1,100,000 and was subject to further increase, up to a maximum of $4,000,000, in the Lender's sole discretion; | ||||||||
· | the maturity date of the loan was extended to February 8, 2013 from the original maturity date of November 30, 2012 (subject to the Lender's continuing ability to call the loan upon 60 days written notice); and | ||||||||
· | a prepayment penalty was added of 5% if substantially all of the loan is prepaid between 91 and 180 days prior to the maturity date, or 2.50% if substantially all of the loan is prepaid within 90 days of the maturity date. | ||||||||
On December 4, 2012, the Company borrowed an additional $650,000 in a third round of funding. These additional funds were used for general corporate purposes. In this third round of funding, certain additional changes were made to the terms of the Credit Agreement: | |||||||||
· | the revolving loan commitment was increased from $1,100,000 to $1,725,000 and is subject to further increase, up to a maximum of $15,000,000, in the Lender's sole discretion; | ||||||||
· | the maturity date of the loan was extended to September 3, 2013 from the previous maturity date of February 8, 2013 (subject to the Lender's continuing ability to call the loan upon 60 days written notice); and | ||||||||
· | a covenant was added to require that any subsidiary that is formed, acquired or otherwise becomes a subsidiary must guarantee the loan and pledge substantially all of its assets as security for the loan. | ||||||||
On March 4, 2013, Medytox borrowed an additional $800,000 from the Lender pursuant to the terms of Amendment No. 3 to Senior Secured Revolving Credit Facility Agreement, dated as of February 28, 2013 ("Amendment No. 3"). These additional funds were used in accordance with management's discretion. In connection with Amendment No. 3, Advantage Reference Labs, Inc., a newly-formed wholly-owned subsidiary of Medytox ("Advantage"), entered into a Guaranty Agreement to guaranty the TCA loan and a Security Agreement to pledge substantially all its assets to secure its guaranty. | |||||||||
In connection with Amendment No. 3, Medytox executed an Amended and Restated Revolving Promissory Note, due September 4, 2013, in the amount of $2,525,000. | |||||||||
On July 15, 2013, Medytox borrowed an additional $500,000 from the Lender pursuant to the terms of Amendment No. 4 to Senior Secured Revolving Credit Facility Agreement, dated as of June 30, 2013 ("Amendment No. 4"). These additional funds shall be used in accordance with management's discretion. In connection with Amendment No. 4, each of International Technologies, LLC "International") and Alethea Laboratories, Inc. ("Alethea"), wholly-owned subsidiaries of Medytox, entered into a Guaranty Agreement to guaranty the TCA loan and a Security Agreement to pledge substantially all of its assets to secure its guaranty. The maturity date of the loan was extended to January 15, 2014 from the previous maturity date of September 3, 2013 (subject to the Lender’s continuing ability to call the loan upon 60 days written notice). | |||||||||
In connection with Amendment No. 4, Medytox executed an Amended and Restated Revolving Promissory Note, due January 15, 2014, in the amount of $3,025,000. Except as amended through Amendment No. 4, the terms of the Credit Agreement remain in full force and effect. On August 12, 2013, the Company made a payment of $550,000 on the note. | |||||||||
Deferred Loan Costs | |||||||||
The Company has incurred certain loan costs as inducement for loans and has recorded them as deferred loan costs. The loan costs are amortized as interest expense on a straight-line basis over the life of the loan. Deferred loan costs at September 30, 2013 and December 31, 2012 consisted of the following: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Deferred loan costs | $ | 425,899 | $ | 321,950 | |||||
Less accumulated accretion as interest | (400,100 | ) | (244,758 | ) | |||||
Deferred loan costs, net | $ | 25,799 | $ | 77,192 | |||||
5_Related_Party_Transactions
5. Related Party Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
5. Related Party Transactions | ' |
William Forhan, the Chief Executive Officer, and a director and shareholder of the Company, had advanced loans to the Company for the payment of certain operating expenses. The loans were non-interest bearing and were due on demand. The amount outstanding to Mr. Forhan was $57,100 at December 31, 2012. During the nine months ended September 30, 2013, $10,000 was paid and the remaining $47,100 was released by Mr. Forhan. The $47,100 is recorded as a capital contribution as additional paid in capital. | |
Alcimede, LLC, of which a shareholder of the Company is the managing member, had advanced loans to the Company for the payment of certain operating expenses. The loans were non-interest bearing and were due on demand. The amount outstanding to Alcimede was $85,000 at December 31, 2012. During the nine months ended September 30, 2013, the $85,000 was paid along with a one-time interest charge of $18,417. | |
A selling shareholder of MBC had advanced loans to the Company for the payment of certain operating expenses. The loans were non-interest bearing and were due on demand. The amount outstanding to the selling shareholder was $100,000 at December 31, 2012 and was paid during the nine months ended September 30, 2013. | |
On September 10, 2012, the Company entered into an Asset Purchase Agreement with DASH Software, LLC (“DASH”) for the purchase of certain software utilized by the Company in its operations for $150,000. Sharon Hollis, a Vice President and shareholder of the Company, is the managing member of DASH. During the nine months ended September 30, 2013 and the year ended December 31, 2012, the Company paid $33,070 and $116,930 to DASH, respectively, pursuant to the Asset Purchase Agreement. | |
In connection with the Company's acquisition of MBC, Dr. Thomas Mendolia, the Chief Executive Officer of the Company's Laboratories and a shareholder, entered into an agreement with the selling shareholders of MBC to receive 20% of the purchase price of MBC as it was paid by the Company and 0.88% of the gross collections that MBC collected for the Company. Pursuant to this agreement, Dr. Mendolia received $29,625 for the year ended December 31, 2011, $90,152 during the year ended December 31, 2012 and $103,583 during the six months ended June 30, 2013 for a total of $223,360. Pursuant to the completion of the acquisition of MBC on July 22, 2013, the Company and Dr. Mendolia agreed that the $223,360 would be paid back to MBC and payment was received in July 2013. |
6_Stockholders_Equity
6. Stockholders' Equity | 9 Months Ended | ||||||||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||||||||||||
6. Stockholders' Equity | ' | ||||||||||||||||||||||||||||||
Authorized Capital | |||||||||||||||||||||||||||||||
The Company has 500,000,000 authorized shares of Common Stock at $0.0001 par value and 100,000,000 authorized shares of Preferred Stock at a par value of $0.0001. | |||||||||||||||||||||||||||||||
On October 1, 2012, the Company filed a certificate of designation with the Secretary of State of Nevada to designate 5,000 shares of Series B Non-convertible Preferred Stock, at $0.0001 par value per share. The Series B shares do not include any voting rights and allow for monthly dividends in an amount equal to the sum of 1) 10% of the amount of gross sales in excess of $1 million collected in the ordinary course of business, not to exceed $150,000, and 2) 15% of the amount of gross sales in excess of $2.5 million collected in the ordinary course of business. | |||||||||||||||||||||||||||||||
On October 7, 2012, the Company filed a certificate of designation with the Secretary of State of Nevada to designate 1,000,000 shares of Series C Convertible Preferred Stock, at $0.0001 par value per share. The Series C shares are convertible into shares of Common Stock by the quotient of 1 divided by the product of 0.80 multiplied by the market price of the Company’s Common Stock at the date of conversion. The Series C shares also include voting rights of 25 votes for every share of Series C Preferred Stock and shall be entitled to dividends at the same time any dividend is paid or declared on any shares of the Company’s Common Stock. | |||||||||||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company issued Units to purchase 46,400 shares of its common stock and warrants to purchase an additional 46,400 shares of common stock at an exercise price of $2.50 to nine investors for $116,000 cash ($2.50 per unit) in private placements. | |||||||||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company repurchased 40,000 shares of its common stock from the Lender for $100,000 and cancelled the shares. | |||||||||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company issued 25,000 shares of its common stock to an employee in lieu of cash compensation. The shares were valued at $2.50 per share, based on the price of shares sold to investors, for a total of $62,500. | |||||||||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company issued an aggregate of 160,000 shares of its common stock to the former shareholders of its subsidiary, Medical Billing Choices, Inc. (“MBC”) in accordance with an amendment to the Agreement dated August 22, 2011, pursuant to which the Company had acquired MBC. See Note 7 – Business Combinations. The shares were valued at $2.50 per share, based on the price of shares sold to investors, for a total of $400,000. | |||||||||||||||||||||||||||||||
Stock Options | |||||||||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company’s Board of Directors granted stock options to purchase a total of 1,850,000 shares of the Company’s restricted Common Stock to two directors of the Company and an employee. | |||||||||||||||||||||||||||||||
The following summarizes options outstanding at December 31, 2012 and option activity for the nine months ended September 30, 2013: | |||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
Common Stock Options Outstanding | average | ||||||||||||||||||||||||||||||
Employees and | exercise | ||||||||||||||||||||||||||||||
Directors | Non-employees | Total | price | ||||||||||||||||||||||||||||
Outstanding at December 31, 2012 | 18,300,000 | 3,020,000 | 21,320,000 | 5.79 | |||||||||||||||||||||||||||
Options granted | 1,850,000 | – | 1,850,000 | 3.24 | |||||||||||||||||||||||||||
Options exercised | – | – | – | – | |||||||||||||||||||||||||||
Options cancelled or expired | – | – | – | – | |||||||||||||||||||||||||||
Balance at September 30, 2013 | 20,150,000 | 3,020,000 | 23,170,000 | $ | 5.33 | ||||||||||||||||||||||||||
The following table summarizes information with respect to stock options outstanding and exercisable by employees and directors at September 30, 2013: | |||||||||||||||||||||||||||||||
Options outstanding | Options vested and exercisable | ||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
average | Weighted | Weighted | |||||||||||||||||||||||||||||
remaining | average | Aggregate | average | Aggregate | |||||||||||||||||||||||||||
Number | contractual | exercise | intrinsic | Number | exercise | intrinsic | |||||||||||||||||||||||||
Exercise price | outstanding | life (years) | price | value | vested | price | value | ||||||||||||||||||||||||
$2.50 | 7,550,000 | 3.91 | $2.50 | $ | – | 7,450,000 | $2.50 | $ | – | ||||||||||||||||||||||
$5.00 | 6,600,000 | 4.23 | $5.00 | – | 6,500,000 | $5.00 | – | ||||||||||||||||||||||||
$10.00 | 6,000,000 | 9.26 | $10.00 | – | 6,000,000 | $10.00 | – | ||||||||||||||||||||||||
20,150,000 | $5.55 | $ | – | 19,950,000 | $5.57 | $ | – | ||||||||||||||||||||||||
The following table summarizes information with respect to stock options outstanding and exercisable by non-employees at September 30, 2013: | |||||||||||||||||||||||||||||||
Options outstanding | Options vested and exercisable | ||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
average | Weighted | Weighted | |||||||||||||||||||||||||||||
remaining | average | Aggregate | average | Aggregate | |||||||||||||||||||||||||||
Number | contractual | exercise | intrinsic | Number | exercise | intrinsic | |||||||||||||||||||||||||
Exercise price | outstanding | life (years) | price | value | vested | price | value | ||||||||||||||||||||||||
$2.50 | 1,020,000 | 4.2 | $2.50 | $ | – | 1,020,000 | $2.50 | $ | – | ||||||||||||||||||||||
$5.00 | 1,000,000 | 4.25 | $5.00 | – | 1,000,000 | $5.00 | – | ||||||||||||||||||||||||
$10.00 | 1,000,000 | 9.26 | $10.00 | – | 1,000,000 | $10.00 | – | ||||||||||||||||||||||||
3,020,000 | $5.81 | $ | – | 3,020,000 | $5.81 | $ | – | ||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company issued options to purchase a total of 600,000 shares of the Company’s common stock to two directors. These options have contractual lives of four years and were valued at an average grant date fair value of $0.20 per option, or $120,000, using the Black-Scholes Option Pricing Model with the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $2.50 | ||||||||||||||||||||||||||||||
Contractual term | 4 years | ||||||||||||||||||||||||||||||
Expected volatility | 26.48% | ||||||||||||||||||||||||||||||
Risk free interest rate | 0.54% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
The stock price was based on the price of shares sold to investors and volatility was based on comparable volatility of other companies since the Company had no significant historical volatility. Vested amount of the options of $80,000 was expensed as stock-based compensation for the nine months ended September 30, 2013. As of September 30, 2013, there was unrecognized compensation costs of $40,000 related to stock options. The Company expects to recognize those costs over a weighted average period of .80 years as of September 30, 2013. Future option grants will increase the amount of compensation expense to be recorded in these periods. | |||||||||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company issued options to purchase a total of 1,250,000 shares of the Company’s common stock to an employee. These options have contractual lives of three to five years and were valued at an average grant date fair value of $0.30 per option, or $372,500, using the Black-Scholes Option Pricing Model with the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $2.50 | ||||||||||||||||||||||||||||||
Contractual term | 3 to 5 years | ||||||||||||||||||||||||||||||
Expected volatility | 29.50% | ||||||||||||||||||||||||||||||
Risk free interest rate | 0.32% to 0.47% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
The stock price was based on the price of shares sold to investors and volatility was based on comparable volatility of other companies since the Company had no significant historical volatility. All of the options were fully vested upon their grant and the fair value of the options of $372,500 was expensed as stock-based compensation for the nine months ended September 30, 2013. | |||||||||||||||||||||||||||||||
Warrants | |||||||||||||||||||||||||||||||
The following table summarizes warrant transactions for the nine months ended September 30, 2013: | |||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
Weighted | average | ||||||||||||||||||||||||||||||
average | remaining | Aggregate | |||||||||||||||||||||||||||||
Number | exercise | contractual | intrinsic | ||||||||||||||||||||||||||||
of warrants | price | term (years) | value | ||||||||||||||||||||||||||||
Outstanding at December 31, 2012 | – | $ | – | $ | – | ||||||||||||||||||||||||||
Granted in 2013 | 346,400 | $ | 3.22 | ||||||||||||||||||||||||||||
Outstanding at September 30, 2013 | 346,400 | $ | 3.22 | 1.16 | $ | – | |||||||||||||||||||||||||
Exercisable at September 30, 2013 | 346,400 | $ | 3.22 | 1.16 | $ | – | |||||||||||||||||||||||||
Weighted Average Grant Date Fair Value | $ | 0.25 | |||||||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company issued warrants to purchase a total of 46,400 shares of the Company’s common stock in conjunction with sales of Units. These warrants have contractual lives of ten months and were valued at a grant date fair value of $-0- per warrant using the Black-Scholes Option Pricing Model with the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $0.01 | ||||||||||||||||||||||||||||||
Contractual term | 10 months | ||||||||||||||||||||||||||||||
Expected volatility | 29.13% | ||||||||||||||||||||||||||||||
Risk free interest rate | 0.15% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company issued warrants to purchase a total of 300,000 shares of the Company’s common stock to two individuals in connection with obligations entered into by the Company’s subsidiaries. These warrants have contractual lives of two years and were valued at an average grant date fair value of $0.283 per warrant, or $85,000, using the Black-Scholes Option Pricing Model with the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $2.50 | ||||||||||||||||||||||||||||||
Contractual term | 2 years | ||||||||||||||||||||||||||||||
Expected volatility | 29.13% | ||||||||||||||||||||||||||||||
Risk free interest rate | 0.27% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
The stock price was based on the price of shares sold to investors and volatility was based on comparable volatility of other companies since the Company had no significant historical volatility. The $85,000 was expensed as stock-based consulting fees for the nine months ended September 30, 2013. | |||||||||||||||||||||||||||||||
Basic and Diluted Income (Loss) Per Share | |||||||||||||||||||||||||||||||
The Company computes income (loss) per share in accordance with ASC 260, "Earnings per Share", which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of September 30, 2013, there were a total of 23,170,000 stock options to purchase shares of common stock outstanding, warrants outstanding to purchase 346,400 shares of common stock, $750,000 of convertible debentures convertible into an estimated 206,838 shares of the Company’s common stock, and 1,000,000 shares of convertible Series C preferred stock outstanding. However, these potentially dilutive shares are considered to be anti-dilutive and are therefore not included in the calculation of income (loss) per share. |
7_Business_Combinations
7. Business Combinations | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Business Combinations [Abstract] | ' | ||||||||
7. Business Combinations | ' | ||||||||
The Company completed two acquisitions during the nine months ended September 30, 2013 and two each during the years ended December 31, 2012 and 2011. The Company accounted for the assets, liabilities and ownership interests in accordance with the provisions of FASB ASC 805 “Business Combinations“. As such, the recorded assets and liabilities acquired have been recorded at fair value and any difference in the net asset values and the consideration given has been recorded as a gain on acquisition or as goodwill. | |||||||||
Goodwill was attributable to the following subsidiaries as of September 30, 2013 and December 31, 2012: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Medical Billing Choices, Inc. | $ | 1,202,112 | $ | 802,112 | |||||
PB Laboratories, LLC | 107,124 | 107,124 | |||||||
Biohealth Medical Laboratory, Inc. | 116,763 | 141,676 | |||||||
Alethea Laboratories, Inc. | 975,284 | – | |||||||
International Technologies, LLC | 1,665,329 | – | |||||||
$ | 4,066,612 | $ | 1,050,912 | ||||||
The goodwill attributed to Alethea Laboratories, Inc. and International Technologies, LLC is subject to adjustment by management as described below. | |||||||||
International Technologies, LLC | |||||||||
On April 4, 2013, the Company, through its subsidiary, Medytox Diagnostics, Inc. (“MDI”), agreed to purchase 100% of the membership interests of International Technologies, LLC ("Intl Tech") from two unrelated parties for cash of $127,000 and two convertible debentures in a total amount of $500,000. The debentures bear interest at 5%, are due on January 17, 2014 and are convertible at any time after 90 days from the date of issuance at a conversion price of a 10% discount to the average market price of the Company’s common stock for the 30 days prior to the conversion. | |||||||||
The following table summarizes the consideration given for Intl Tech and the fair values of the assets acquired and liabilities assumed recognized at the acquisition date. Management is in the process of valuing any identifiable intangible assets. Until the valuation is complete and values are assigned to intangible assets, if any, the entire amount of the excess of the consideration given over the net assets acquired is allocated to goodwill. | |||||||||
Consideration Given: | |||||||||
Cash | $ | 127,000 | |||||||
Amount due from International Technologies, LLC | 483,052 | ||||||||
Acquisition notes | 500,000 | ||||||||
Total Consideration | $ | 1,110,052 | |||||||
Fair value of identifiable assets acquired and liabilities assumed: | |||||||||
Cash | $ | 1,703 | |||||||
Property and equipment, net | 31,649 | ||||||||
Accounts payable and accrued expenses | (59,462 | ) | |||||||
Notes payable | (529,167 | ) | |||||||
Identified intangible assets | – | ||||||||
Total identifiable net assets | (555,277 | ) | |||||||
Goodwill and unidentified intangible assets | 1,665,329 | ||||||||
$ | 1,110,052 | ||||||||
Alethea Laboratories, Inc. | |||||||||
On January 1, 2013, the Company, through its subsidiary, MDI, agreed to purchase 100% of Alethea Laboratories, Inc. ("Alethea") from two unrelated parties for cash of $125,000 and two installment notes in a total amount of $575,000. The notes are being paid in $50,000 quarterly installments beginning on April 1, 2013. | |||||||||
The following table summarizes the consideration given for Alethea and the fair values of the assets acquired and liabilities assumed recognized at the acquisition date. Management is in the process of valuing any identifiable intangible assets. Until the valuation is complete and values are assigned to intangible assets, if any, the entire amount of the excess of the consideration given over the net assets acquired is allocated to goodwill. | |||||||||
Consideration Given: | |||||||||
Cash | $ | 125,000 | |||||||
Acquisition notes | 575,000 | ||||||||
Total Consideration | $ | 700,000 | |||||||
Fair value of identifiable assets acquired and liabilities assumed: | |||||||||
Cash | $ | 2,032 | |||||||
Property and equipment, net | 92,498 | ||||||||
Capital lease assets, net | 392,817 | ||||||||
Accounts payable | (2,032 | ) | |||||||
Note payable | (344,650 | ) | |||||||
Capital lease obligation | (415,949 | ) | |||||||
Identified intangible assets | – | ||||||||
Total identifiable net assets | (275,284 | ) | |||||||
Goodwill and unidentified intangible assets | 975,284 | ||||||||
$ | 700,000 | ||||||||
Medical Billing Choices, Inc. | |||||||||
On July 12, 2013, the Company and the two selling shareholders amended the Agreement, dated August 22, 2011, pursuant to which the Company had acquired Medical Billing Choices, Inc. (“MBC”). The Company paid the balance due of $378,057 under its promissory note and issued an aggregate of 160,000 shares of its restricted common stock to the two selling shareholders. In addition, the loan made by one selling shareholder in the amount of $100,000 was discharged. The amendment to the Agreement resulted in an increase of $400,000 to the purchase price of MBC, as well as the resulting goodwill in connection with the acquisition. |
8_Commitments_and_Contingencie
8. Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
8. Commitments and Contingencies | ' |
Legal Matters | |
During the course of business, litigation commonly occurs. From time to time the Company may be a party to litigation matters involving claims against the Company. The Company operates in a highly regulated industry and employs personnel which may inherently lend itself to legal matters. Management is aware that litigation has associated costs and that results of adverse litigation verdicts could have a material effect on the Company’s financial position or results of operations. Management, in consultation with legal counsel, has addressed known assertions and predicted unasserted claims below. | |
On July 2, 2013, a jury awarded our wholly-owned subsidiary, MILM, $2,906,844 on its breach of contract claim against Trident and Trident's shareholders, Michele Steegstra, Christopher Hawley, Donette Hawley, Michael Falestta and Skyler Lukas ("Shareholders"), and awarded Seamus Lagan $750,000 individually against Christopher Hawley for Mr. Hawley's defamatory postings on the internet. The jury rejected every claim made against the MILM parties. | |
The case arose from the August 22, 2011 agreement among MILM and Trident and its Shareholders pursuant to which MILM was to acquire 81% of Trident. On January 17, 2012, Trident notified MILM that it was rescinding the agreement. As a result, MILM filed suit against Trident and its Shareholders in Florida Circuit Court in Broward County. The jury found that Trident and its Shareholders breached the agreement and failed to perform their obligations thereunder. | |
Trident and the Shareholders filed motions for judgment notwithstanding the verdict, for a new trial, to dismiss the case, and for remittitur. On September 4, 2013, the judge denied all these motions and entered a partial final judgment in the amounts granted by the jury. MILM’s claims for specific performance remain to be decided by the Court. Trident and the Shareholders have filed a notice of appeal. One of the Shareholders, Donnette Hawley, filed a petition for bankruptcy on October 22, 2013. | |
Legal fees related to the lawsuit were $267,286 and $857,587 for the three and nine months ended September 30, 2013 and $34,900 and $200,496 for the three and nine months ended September 30, 2012, respectively. |
9_Subsequent_Events
9. Subsequent Events | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
9. Subsequent Events | ' |
On October 9, 2013, the Company issued 68,000 shares of its common stock to two investors for $170,000 cash ($2.50 per share) in private placements. | |
On October 21, 2013, Reginald Samuels, a former member and employee of International Technologies, LLC, filed a complaint in the Superior Court of New Jersey (Bergen County) against the Company and Medytox Diagnostics, Inc. alleging breach of contract under his employment agreement and the agreement under which International Technologies, LLC was acquired; unjust enrichment; fraud; intentional and negligent misrepresentation; and breach of an implied duty of good faith and fair dealing and seeking an accounting. The Company believes these claims are without merit. | |
The Company has evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. The Company has determined that there are no other events that warrant disclosure or recognition in the consolidated financial statements. |
1_Organization_and_Presentatio1
1. Organization and Presentation (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Organization | ' |
Organization | |
Medytox Solutions, Inc. (the “Company”), was incorporated in Nevada on July 20, 2005 as Casino Players, Inc. In the first half of 2011, Company management decided to reorganize the operations of the Company as a holding company to acquire and manage a number of companies in the medical services sector. | |
On January 1, 2013, the Company's wholly-owned subsidiary, Medytox Diagnostics, Inc. (“MDI”), purchased 100% of the stock of Alethea Laboratories, Inc. ("Alethea"). Althea operates a licensed clinical lab in Las Cruces, New Mexico and is an enrolled Medicare provider. | |
On January 29, 2013, the Company formed Advantage Reference Labs, Inc. (“Advantage”), a Florida corporation, as a wholly-owned subsidiary that will provide reference, confirmation and clinical testing services. On October 14, 2013, Advantage changed its name to EPIC Reference Labs, Inc. | |
On April 4, 2013, the Company's wholly-owned subsidiary, MDI, purchased 100% of the interests in International Technologies, LLC ("Tech"). Tech operates a licensed clinical lab in Waldwick, New Jersey and is an enrolled Medicare provider. | |
Basis of Presentation | ' |
Basis of Presentation | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows for the interim periods reported in this Form 10-Q. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year. | |
These unaudited financial statements should be read in conjunction with the 2012 annual financial statements included in the Annual Report on Form 10-K and Amendment No. 1 to the Annual Report on Form 10-K/A, filed with the U.S. Securities and Exchange Commission (“SEC”) on April 16, 2013 and September 3, 2013, respectively. | |
Reclassifications | ' |
Reclassifications | |
Certain items on the statements of operations for the three and nine months ended September 30, 2012 and statement of cash flows for the nine months ended September 30, 2012 have been reclassified to conform to current period presentation. |
2_Disputed_Subsidiary_Tables
2. Disputed Subsidiary (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||
Assets and liabilities of the subsidiary | ' | ||||
Total assets | $ | 1,367,796 | |||
Total liabilities | $ | 1,104,063 |
3_LongLived_Assets_Tables
3. Long-Lived Assets (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and equipment | ' | ||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Medical equipment | $ | 588,089 | $ | 269,931 | |||||
Equipment | 111,718 | 37,140 | |||||||
Capital lease assets | 779,337 | – | |||||||
Furniture | 193,477 | 66,606 | |||||||
Leasehold improvements | 157,496 | 47,197 | |||||||
Vehicles | 174,957 | 70,828 | |||||||
Computer equipment | 268,728 | 85,478 | |||||||
Software | 284,551 | 196,711 | |||||||
2,558,353 | 773,891 | ||||||||
Less accumulated depreciation | (725,601 | ) | (175,150 | ) | |||||
Property and equipment, net | $ | 1,832,752 | $ | 598,741 |
4_Notes_Payable_Tables
4. Notes Payable (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Notes Payable | ' | ||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Convertible debenture for working capital, dated September 15, 2011, in the amount of $500,000 and bearing interest at 20%. Interest only payments are payable monthly. The note is convertible at $2.50 per share until October 31, 2013 when the note is due. This note is subordinated to the loan from TCA Global Credit Master Fund, L.P. ("TCA") and is secured by the assets of the Company, Medytox Medical Management Solutions Corp. ("MMMS") and Trident. | $ | 250,000 | $ | 500,000 | |||||
Loan for working capital, dated September 15, 2011, in the amount of $500,000 and bearing interest at 20%. Interest and principal are payable in 10 equal payments ending August 31, 2013. This note is subordinated to the loan from TCA and is secured by the assets of the Company, MMMS and Trident. | – | 150,000 | |||||||
Acquisition note to former shareholders of Medical Billing Choices, Inc. ("MBC") in the amount of $750,000, payable from percentage of collections, with interest at 6%, payable by August 22, 2013. | – | 449,512 | |||||||
Loan from TCA. Principal of $2,475,000 and $1,725,000, respectively, payable by January 15, 2014. Secured by all assets of the Company and its subsidiaries (other than Trident and MBC). | 2,475,000 | 1,725,000 | |||||||
Acquisition note to former member of PB Laboratories, LLC for 50.5% ownership, in the amount of $200,000 at 6% interest, with payments of $50,000 quarterly starting May 17, 2012 | – | 50,000 | |||||||
Acquisition note to former member of PB Laboratories, LLC for 49.5% ownership, in the amount of $200,000 at 0% interest, with payments of $50,000 quarterly starting January 31, 2013 | 15,000 | 150,000 | |||||||
Acquisition note to former shareholder of Biohealth Medical Laboratory, Inc. for 50.5% ownership, in the amount of $165,125 at 0% interest, with payments of $75,000 due quarterly starting February 7, 2013 and a final payment of $15,125 due on August 7, 2013. In May 2013, a final settlement was reached with the former shareholder and the remaining balance of $24,677 as of May 31, 2013 was discharged. | – | 99,677 | |||||||
Short-term note from affiliate, non-interest bearing and is due on demand. | – | 30,200 | |||||||
Acquisition note No.1 to former shareholder of Alethea Laboratories, Inc. in the amount of $287,500 at 0% interest, with payments of $50,000 due quarterly starting April 1, 2013. | 187,500 | – | |||||||
Acquisition note No. 2 to former shareholder of Alethea Laboratories, Inc. in the amount of $287,500 at 0% interest, with payments of $50,000 due quarterly starting April 1, 2013. | 187,500 | – | |||||||
Loan from former shareholders of Alethea Laboratories, Inc. in the amount of $344,650 at 4% interest, with principal payments of $24,618 due monthly starting March 15, 2013. | 172,325 | – | |||||||
Commercial loan with a finance company, dated December 20, 2012, in the original amount of $18,249 and bearing interest at 12.59%. Principal and interest payments in the amount of $364 are payable for 72 months ending on January 3, 2019. This note is secured by a lien on a vehicle with a carrying value of $17,662 at September 30, 2013. | 16,654 | – | |||||||
Commercial loan with a finance company, dated November 15, 2012, in the original amount of $18,008 and bearing interest at 15.07%. Principal and interest payments in the amount of $384 are payable for 72 months ending on November 30, 2018. This note is secured by a lien on a vehicle with a carrying value of $17,457 at September 30, 2013. | 16,376 | – | |||||||
Commercial loan with a finance company, dated November 28, 2012, in the original amount of $20,345 and bearing interest at 8.99%. Principal and interest payments in the amount of $368 are payable for 72 months ending on January 12, 2019. This note is secured by a lien on a vehicle with a carrying value of $19,444 at September 30, 2013. | 18,366 | – | |||||||
Acquisition convertible note No. 1 to former member of International Technologies, LLC in the amount of $250,000 at 5% interest, due January 17, 2014. The note is convertible into the Company's common stock at a ten percent (10%) discount to the average market price for the thirty days prior to conversion. The note is discounted for its unamortized beneficial conversion feature of $10,513 at September 30, 2013. | 239,487 | – | |||||||
Acquisition convertible note No. 2 to former member of International Technologies, LLC in the amount of $250,000 at 5% interest, due January 17, 2014. The note is convertible into the Company's common stock at a ten percent (10%) discount to the average market price for the thirty days prior to conversion. The note is discounted for its unamortized beneficial conversion feature of $10,513 at September 30, 2013. | 239,487 | – | |||||||
Loan from former member of International Technologies, LLC in the remaining amount of $416,667 at the date of acquistion, at 1% interest, with principal payments of $83,333 due quarterly starting June 7, 2013. | 250,001 | – | |||||||
Loan from former member of International Technologies, LLC in the remaining amount of $112,500 at the date of acquistion, at 1% interest, with principal payments of $22,500 due quarterly starting June 7, 2013. | 67,500 | – | |||||||
4,135,196 | 3,154,389 | ||||||||
Less current portion | (4,091,078 | ) | (3,154,389 | ) | |||||
Notes payable, net of current portion | $ | 44,118 | $ | – | |||||
Deferred loan costs | ' | ||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Deferred loan costs | $ | 425,899 | $ | 321,950 | |||||
Less accumulated accretion as interest | (400,100 | ) | (244,758 | ) | |||||
Deferred loan costs, net | $ | 25,799 | $ | 77,192 |
6_Stockholders_Equity_Tables
6. Stockholders' Equity (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||||||||||||
Options outstanding | ' | ||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
Common Stock Options Outstanding | average | ||||||||||||||||||||||||||||||
Employees and | exercise | ||||||||||||||||||||||||||||||
Directors | Non-employees | Total | price | ||||||||||||||||||||||||||||
Outstanding at December 31, 2012 | 18,300,000 | 3,020,000 | 21,320,000 | 5.79 | |||||||||||||||||||||||||||
Options granted | 1,850,000 | – | 1,850,000 | 3.24 | |||||||||||||||||||||||||||
Options exercised | – | – | – | – | |||||||||||||||||||||||||||
Options cancelled or expired | – | – | – | – | |||||||||||||||||||||||||||
Balance at September 30, 2013 | 20,150,000 | 3,020,000 | 23,170,000 | $ | 5.33 | ||||||||||||||||||||||||||
Schedule of stock option activity | ' | ||||||||||||||||||||||||||||||
The following table summarizes information with respect to stock options outstanding and exercisable by employees and directors at September 30, 2013: | |||||||||||||||||||||||||||||||
Options outstanding | Options vested and exercisable | ||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
average | Weighted | Weighted | |||||||||||||||||||||||||||||
remaining | average | Aggregate | average | Aggregate | |||||||||||||||||||||||||||
Number | contractual | exercise | intrinsic | Number | exercise | intrinsic | |||||||||||||||||||||||||
Exercise price | outstanding | life (years) | price | value | vested | price | value | ||||||||||||||||||||||||
$2.50 | 7,550,000 | 3.91 | $2.50 | $ | – | 7,450,000 | $2.50 | $ | – | ||||||||||||||||||||||
$5.00 | 6,600,000 | 4.23 | $5.00 | – | 6,500,000 | $5.00 | – | ||||||||||||||||||||||||
$10.00 | 6,000,000 | 9.26 | $10.00 | – | 6,000,000 | $10.00 | – | ||||||||||||||||||||||||
20,150,000 | $5.55 | $ | – | 19,950,000 | $5.57 | $ | – | ||||||||||||||||||||||||
The following table summarizes information with respect to stock options outstanding and exercisable by non-employees at September 30, 2013: | |||||||||||||||||||||||||||||||
Options outstanding | Options vested and exercisable | ||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
average | Weighted | Weighted | |||||||||||||||||||||||||||||
remaining | average | Aggregate | average | Aggregate | |||||||||||||||||||||||||||
Number | contractual | exercise | intrinsic | Number | exercise | intrinsic | |||||||||||||||||||||||||
Exercise price | outstanding | life (years) | price | value | vested | price | value | ||||||||||||||||||||||||
$2.50 | 1,020,000 | 4.2 | $2.50 | $ | – | 1,020,000 | $2.50 | $ | – | ||||||||||||||||||||||
$5.00 | 1,000,000 | 4.25 | $5.00 | – | 1,000,000 | $5.00 | – | ||||||||||||||||||||||||
$10.00 | 1,000,000 | 9.26 | $10.00 | – | 1,000,000 | $10.00 | – | ||||||||||||||||||||||||
3,020,000 | $5.81 | $ | – | 3,020,000 | $5.81 | $ | – | ||||||||||||||||||||||||
Option assumptions | ' | ||||||||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company issued options to purchase a total of 600,000 shares of the Company’s common stock to two directors. These options have contractual lives of four years and were valued at an average grant date fair value of $0.20 per option, or $120,000, using the Black-Scholes Option Pricing Model with the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $2.50 | ||||||||||||||||||||||||||||||
Contractual term | 4 years | ||||||||||||||||||||||||||||||
Expected volatility | 26.48% | ||||||||||||||||||||||||||||||
Risk free interest rate | 0.54% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company issued options to purchase a total of 1,250,000 shares of the Company’s common stock to an employee. These options have contractual lives of three to five years and were valued at an average grant date fair value of $0.30 per option, or $372,500, using the Black-Scholes Option Pricing Model with the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $2.50 | ||||||||||||||||||||||||||||||
Contractual term | 3 to 5 years | ||||||||||||||||||||||||||||||
Expected volatility | 29.50% | ||||||||||||||||||||||||||||||
Risk free interest rate | 0.32% to 0.47% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
Warrant transactions | ' | ||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
Weighted | average | ||||||||||||||||||||||||||||||
average | remaining | Aggregate | |||||||||||||||||||||||||||||
Number | exercise | contractual | intrinsic | ||||||||||||||||||||||||||||
of warrants | price | term (years) | value | ||||||||||||||||||||||||||||
Outstanding at December 31, 2012 | – | $ | – | $ | – | ||||||||||||||||||||||||||
Granted in 2013 | 346,400 | $ | 3.22 | ||||||||||||||||||||||||||||
Outstanding at September 30, 2013 | 346,400 | $ | 3.22 | 1.16 | $ | – | |||||||||||||||||||||||||
Exercisable at September 30, 2013 | 346,400 | $ | 3.22 | 1.16 | $ | – | |||||||||||||||||||||||||
Weighted Average Grant Date Fair Value | $ | 0.25 | |||||||||||||||||||||||||||||
Warrant assumption | ' | ||||||||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company issued warrants to purchase a total of 46,400 shares of the Company’s common stock in conjunction with sales of Units. These warrants have contractual lives of ten months and were valued at a grant date fair value of $-0- per warrant using the Black-Scholes Option Pricing Model with the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $0.01 | ||||||||||||||||||||||||||||||
Contractual term | 10 months | ||||||||||||||||||||||||||||||
Expected volatility | 29.13% | ||||||||||||||||||||||||||||||
Risk free interest rate | 0.15% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
During the nine months ended September 30, 2013, the Company issued warrants to purchase a total of 300,000 shares of the Company’s common stock to two individuals in connection with obligations entered into by the Company’s subsidiaries. These warrants have contractual lives of two years and were valued at an average grant date fair value of $0.283 per warrant, or $85,000, using the Black-Scholes Option Pricing Model with the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $2.50 | ||||||||||||||||||||||||||||||
Contractual term | 2 years | ||||||||||||||||||||||||||||||
Expected volatility | 29.13% | ||||||||||||||||||||||||||||||
Risk free interest rate | 0.27% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
7_Business_Combinations_Tables
7. Business Combinations (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Business Combinations [Abstract] | ' | ||||||||
Schedule of goodwill | ' | ||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Medical Billing Choices, Inc. | $ | 1,202,112 | $ | 802,112 | |||||
PB Laboratories, LLC | 107,124 | 107,124 | |||||||
Biohealth Medical Laboratory, Inc. | 116,763 | 141,676 | |||||||
Alethea Laboratories, Inc. | 975,284 | – | |||||||
International Technologies, LLC | 1,665,329 | – | |||||||
$ | 4,066,612 | $ | 1,050,912 | ||||||
Consideration given | ' | ||||||||
The following table summarizes the consideration given for Intl Tech and the fair values of the assets acquired and liabilities assumed recognized at the acquisition date. Management is in the process of valuing any identifiable intangible assets. Until the valuation is complete and values are assigned to intangible assets, if any, the entire amount of the excess of the consideration given over the net assets acquired is allocated to goodwill. | |||||||||
Consideration Given: | |||||||||
Cash | $ | 127,000 | |||||||
Amount due from International Technologies, LLC | 483,052 | ||||||||
Acquisition notes | 500,000 | ||||||||
Total Consideration | $ | 1,110,052 | |||||||
Fair value of identifiable assets acquired and liabilities assumed: | |||||||||
Cash | $ | 1,703 | |||||||
Property and equipment, net | 31,649 | ||||||||
Accounts payable and accrued expenses | (59,462 | ) | |||||||
Notes payable | (529,167 | ) | |||||||
Identified intangible assets | – | ||||||||
Total identifiable net assets | (555,277 | ) | |||||||
Goodwill and unidentified intangible assets | 1,665,329 | ||||||||
$ | 1,110,052 | ||||||||
The following table summarizes the consideration given for Alethea and the fair values of the assets acquired and liabilities assumed recognized at the acquisition date. Management is in the process of valuing any identifiable intangible assets. Until the valuation is complete and values are assigned to intangible assets, if any, the entire amount of the excess of the consideration given over the net assets acquired is allocated to goodwill. | |||||||||
Consideration Given: | |||||||||
Cash | $ | 125,000 | |||||||
Acquisition notes | 575,000 | ||||||||
Total Consideration | $ | 700,000 | |||||||
Fair value of identifiable assets acquired and liabilities assumed: | |||||||||
Cash | $ | 2,032 | |||||||
Property and equipment, net | 92,498 | ||||||||
Capital lease assets, net | 392,817 | ||||||||
Accounts payable | (2,032 | ) | |||||||
Note payable | (344,650 | ) | |||||||
Capital lease obligation | (415,949 | ) | |||||||
Identified intangible assets | – | ||||||||
Total identifiable net assets | (275,284 | ) | |||||||
Goodwill and unidentified intangible assets | 975,284 | ||||||||
$ | 700,000 | ||||||||
2_Disputed_Subsidiary_Narrativ
2. Disputed Subsidiary (Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Legal fees | $267,286 | $34,900 | $857,587 | $200,496 | ' |
Assets of disupted subsidiary | 1,367,796 | ' | 1,367,796 | ' | 1,367,796 |
Liabilities of disputed subsidiary | 1,104,063 | ' | 1,104,063 | ' | 1,104,063 |
Disputed Subsidiary | ' | ' | ' | ' | ' |
Legal fees | 267,286 | 34,900 | 857,587 | 200,496 | ' |
Assets of disupted subsidiary | 1,367,796 | ' | 1,367,796 | ' | 1,367,796 |
Liabilities of disputed subsidiary | $1,104,063 | ' | $1,104,063 | ' | $1,104,063 |
3_LongLived_Assets_Detail
3. Long-Lived Assets (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Property and equipment, gross | $2,558,353 | $773,891 |
Accumulated depreciation | -725,601 | -175,150 |
Property and equipment, net | 1,832,752 | 598,741 |
Medical equipment | ' | ' |
Property and equipment, gross | 588,089 | 269,931 |
Equipment | ' | ' |
Property and equipment, gross | 111,718 | 37,140 |
Capital lease assets | ' | ' |
Property and equipment, gross | 779,337 | 0 |
Furniture | ' | ' |
Property and equipment, gross | 193,477 | 66,606 |
Leasehold Improvements | ' | ' |
Property and equipment, gross | 157,496 | 47,197 |
Vehicles | ' | ' |
Property and equipment, gross | 174,957 | 70,828 |
Computer Equipment | ' | ' |
Property and equipment, gross | 268,728 | 85,478 |
Software | ' | ' |
Property and equipment, gross | $284,551 | $196,711 |
3_LongLived_Assets_Narrative
3. Long-Lived Assets (Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Property, Plant and Equipment [Abstract] | ' | ' | ' | ' | ' |
Depreciation | $118,998 | $16,266 | $323,031 | $73,592 | ' |
Medical licenses | $550,000 | ' | $550,000 | ' | $550,000 |
4_Notes_Payable_Detail
4. Notes Payable (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Notes payable, total | $4,135,196 | $3,154,389 |
Less: current portion | 4,091,078 | 3,154,389 |
Notes payable, net of current portion | 44,118 | 0 |
Convertible debenture for working capital | ' | ' |
Notes payable, total | 250,000 | 500,000 |
Loan for working capital | ' | ' |
Notes payable, total | 0 | 150,000 |
Acquisition note to MBC shareholders | ' | ' |
Notes payable, total | 0 | 449,512 |
Loan from TCA | ' | ' |
Notes payable, total | 2,475,000 | 1,725,000 |
Acquisition note to former member of PB | ' | ' |
Notes payable, total | 0 | 50,000 |
Acquisition note to fomer member of PB | ' | ' |
Notes payable, total | 15,000 | 150,000 |
Acquisition note to fomer member of Biohealth | ' | ' |
Notes payable, total | 0 | 99,677 |
Short-term note | ' | ' |
Notes payable, total | 0 | 30,200 |
Acquisition note 1 to Alethea | ' | ' |
Notes payable, total | 187,500 | 0 |
Acquisition note 2 to Alethea | ' | ' |
Notes payable, total | 187,500 | 0 |
Loan to former shareholders Alethea | ' | ' |
Notes payable, total | 172,325 | 0 |
Commercial loan | ' | ' |
Notes payable, total | 16,654 | 0 |
Commercial loan 2 | ' | ' |
Notes payable, total | 16,376 | 0 |
Commercial loan 3 | ' | ' |
Notes payable, total | 18,366 | 0 |
Acquisition convertible note 1 | ' | ' |
Notes payable, total | 239,487 | 0 |
Acquisition convertible note 2 | ' | ' |
Notes payable, total | 239,487 | 0 |
Loan from former member Intl Technologies | ' | ' |
Notes payable, total | 250,001 | 0 |
Loan 2 from former member Intl Technologies | ' | ' |
Notes payable, total | $67,500 | $0 |
4_Deferred_Loan_Costs_Detail
4. Deferred Loan Costs (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Debt Disclosure [Abstract] | ' | ' |
Deferred loan costs | $425,899 | $321,950 |
Less: accumulated accretion as interest | -400,100 | -244,758 |
Deferred loan costs, net | $25,799 | $77,192 |
5_Related_Party_Transactions_N
5. Related Party Transactions (Narrative) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Forhan | ' | ' |
Notes to related parties | $0 | $57,100 |
Payments made to related parties | 10,000 | ' |
Capital contribution | 47,100 | ' |
Alcimede | ' | ' |
Notes to related parties | 0 | 85,000 |
Payments made to related parties | 85,000 | ' |
Interest paid | 18,417 | ' |
MBC Shareholder | ' | ' |
Notes to related parties | 0 | 100,000 |
Payments made to related parties | 100,000 | ' |
DASH | ' | ' |
Payments made pursuant to asset purchase agreement | 33,070 | 116,930 |
Mendolia | ' | ' |
Payments made for acquisition | $90,152 | $103,583 |
6_Options_Outstanding_Details
6. Options Outstanding (Details) (Stock Options, USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Options outstanding | ' |
Options outstanding, beginning balance | 21,320,000 |
Options granted | 1,850,000 |
Options exercised | 0 |
Options cancelled or expired | 0 |
Options outstanding, ending balance | 23,170,000 |
Weighted Average Exercise Price | ' |
Options outstanding, beginning balance | $5.79 |
Options granted | $3.24 |
Options exercised | ' |
Options cancelled or expired | ' |
Options outstanding, ending balance | $5.33 |
Employees and Directors | ' |
Options outstanding | ' |
Options outstanding, beginning balance | 18,300,000 |
Options granted | 1,850,000 |
Options exercised | 0 |
Options cancelled or expired | 0 |
Options outstanding, ending balance | 20,150,000 |
Weighted Average Exercise Price | ' |
Options outstanding, ending balance | $5.55 |
Non-Employee | ' |
Options outstanding | ' |
Options outstanding, beginning balance | 3,020,000 |
Options granted | 0 |
Options exercised | 0 |
Options cancelled or expired | 0 |
Options outstanding, ending balance | 3,020,000 |
6_Options_Exercisable_Employee
6. Options Exercisable - Employees and Directors (Details) (Stock Options, USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Employees and Directors | Employees and Directors | Exercise price $2.50 | Exercise price $5.00 | Exercise price $10.00 | |||
Employees and Directors | Employees and Directors | Employees and Directors | |||||
Options Outstanding - Employees and Directors | ' | ' | ' | ' | ' | ' | ' |
Options outstanding | 23,170,000 | 21,320,000 | 20,150,000 | 18,300,000 | 7,550,000 | 6,600,000 | 6,000,000 |
Weighted average remaining contractual life | ' | ' | ' | ' | '3 years 10 months 28 days | '4 years 2 months 23 days | '9 years 3 months 4 days |
Weighted average exercise price - outstanding | $5.33 | $5.79 | $5.55 | ' | $2.50 | $5 | $10 |
Aggregate intrinsic value - outstanding | ' | ' | $0 | ' | $0 | $0 | $0 |
Options Vested and Exercisable - Employees and Directors | ' | ' | ' | ' | ' | ' | ' |
Options vested | ' | ' | 19,950,000 | ' | 7,450,000 | 6,500,000 | 6,000,000 |
Weighted average exercise price - vested and exercisable | ' | ' | $5.57 | ' | $2.50 | $5 | $10 |
Aggregate intrinsic value - vested and exercisable | ' | ' | $0 | ' | $0 | $0 | $0 |
6_Options_Exercisable_NonEmplo
6. Options Exercisable - Non-Employees (Details) (Stock Options, USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Non-Employee | Exercise price $2.50 | Exercise price $5.00 | Exercise price $10.00 | |||
Non-Employee | Non-Employee | Non-Employee | ||||
Options Outstanding - Non-Employees | ' | ' | ' | ' | ' | ' |
Options outstanding | 23,170,000 | 21,320,000 | 3,020,000 | 1,020,000 | 1,000,000 | 1,000,000 |
Weighted average remaining contractual life | ' | ' | ' | '4 years 2 months 12 days | '4 years 3 months | '9 years 3 months 4 days |
Weighted average exercise price - outstanding | $5.33 | $5.79 | $5.81 | $2.50 | $5 | $10 |
Aggregate intrinsic value - outstanding | ' | ' | $0 | $0 | $0 | $0 |
Options Vested and Exercisable - Non-Employees | ' | ' | ' | ' | ' | ' |
Options vested | ' | ' | 3,020,000 | 1,020,000 | 1,000,000 | 1,000,000 |
Weighted average exercise price - vested and exercisable | ' | ' | $5.81 | $2.50 | $5 | $10 |
Aggregate intrinsic value - vested and exercisable | ' | ' | $0 | $0 | $0 | $0 |
6_Options_Assumptions_Details
6. Options Assumptions (Details) (Stock Options, USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Two Directors | ' |
Stock price | $2.50 |
Contractual term | '4 years |
Expected volatility | 26.48% |
Risk free interest rate | 0.54% |
Dividend yield | 0.00% |
Employee | ' |
Stock price | $2.50 |
Expected volatility | 29.50% |
Dividend yield | 0.00% |
Employee | Minimum | ' |
Contractual term | '3 years |
Risk free interest rate | 0.32% |
Employee | Maximum | ' |
Contractual term | '5 years |
Risk free interest rate | 0.47% |
6_Warrants_Outstanding_Details
6. Warrants Outstanding (Details) (Warrant, USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Warrant | ' |
Number of warrants | ' |
Warrants outstanding - beginning balance | 0 |
Warrants granted | 346,400 |
Warrants exercisable | 346,400 |
Warrants oustanding - ending balance | 346,000 |
Weighted average exercise price | ' |
Warrants outstanding - beginning balance | ' |
Warrants granted | $3.22 |
Warrants exercisable | $3.22 |
Warrants outstanding - ending balance | $3.22 |
Weighted average remaining contracted term | ' |
Warrants exercisable | '1 year 1 month 28 days |
Warrants outstanding - ending balance | '1 year 1 month 28 days |
Aggregate intrinsic value | ' |
Warrants granted | ' |
Warrants exercisable | ' |
Weighted average grant date fair value | $0.25 |
6_Warrant_Assumptions_Details
6. Warrant Assumptions (Details) (USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Warrants issued total 46,400 | ' |
Stock price | $0.01 |
Contractual term | '10 months |
Expected volatility | 29.13% |
Risk free interest rate | 0.15% |
Dividend yield | 0.00% |
Warrants issued total 300,000 | ' |
Stock price | $2.50 |
Contractual term | '2 years |
Expected volatility | 29.13% |
Risk free interest rate | 0.27% |
Dividend yield | 0.00% |
6_Stockholders_Equity_Narrativ
6. Stockholders' Equity (Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Stock and warrants issued | 46,400 | ' |
Proceeds from issuance of warrants | $116,000 | ' |
Shares repurchased, shares | 40,000 | ' |
Shares repurchased, cost | 100,000 | 85,000 |
Shares issued in lieu of compensation, shares | 25,000 | ' |
Shares issued in lieu of compensation, value | 62,500 | 0 |
Stock issued for acquisition, shares | 160,000 | ' |
Stock issued for acquisition, value | 400,000 | ' |
Unrecognized compensation costs | 40,000 | ' |
Stock based compensation | 452,500 | 0 |
Convertible Debentures | ' | ' |
Antidilutive shares not included in calculation of income (loss) per share | 750,000 | ' |
Convertible Series C Preferred Stock | ' | ' |
Antidilutive shares not included in calculation of income (loss) per share | 1,000,000 | ' |
Warrants issued total 300,000 | ' | ' |
Stock based compensation | $85,000 | ' |
Warrant | ' | ' |
Antidilutive shares not included in calculation of income (loss) per share | 346,400 | ' |
Stock Options | ' | ' |
Antidilutive shares not included in calculation of income (loss) per share | 23,170,000 | ' |
7_Business_Combinations_Detail
7. Business Combinations (Detail 1) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Goodwill | $4,066,612 | $1,050,912 |
Medical Billing Choices | ' | ' |
Goodwill | 1,202,112 | 802,112 |
PB Laboratories | ' | ' |
Goodwill | 107,124 | 107,124 |
Biohealth Medical Laboratory | ' | ' |
Goodwill | 116,763 | 141,676 |
Alethea Laboratories | ' | ' |
Goodwill | 975,284 | 0 |
International Technologies | ' | ' |
Goodwill | $1,665,329 | $0 |
7_Business_Combinations_Consid
7. Business Combinations Consideration Given (Details) (USD $) | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Consideration Given | ' | ' | ' |
Cash | $735,052 | $86,650 | ' |
Fair value of identifiable assets acquired and liabilities assumed: | ' | ' | ' |
Goodwill and unidentified intangible assets | 4,066,612 | ' | 1,050,912 |
International Technologies | ' | ' | ' |
Consideration Given | ' | ' | ' |
Cash | 127,000 | ' | ' |
Amount due | 483,052 | ' | ' |
Acquisition notes | 500,000 | ' | ' |
Total consideration | 1,110,052 | ' | ' |
Fair value of identifiable assets acquired and liabilities assumed: | ' | ' | ' |
Cash | 1,703 | ' | ' |
Property and equipment, net | 31,649 | ' | ' |
Accounts payable and accrued expenses | -59,462 | ' | ' |
Notes payable | -529,167 | ' | ' |
Identifiable intangible assets | 0 | ' | ' |
Total identifiable net assets | -555,277 | ' | ' |
Goodwill and unidentified intangible assets | 1,665,329 | ' | 0 |
Total consideration | 1,110,052 | ' | ' |
Alethea Laboratories | ' | ' | ' |
Consideration Given | ' | ' | ' |
Cash | 125,000 | ' | ' |
Acquisition notes | 575,000 | ' | ' |
Total consideration | 700,000 | ' | ' |
Fair value of identifiable assets acquired and liabilities assumed: | ' | ' | ' |
Cash | 2,032 | ' | ' |
Property and equipment, net | 92,498 | ' | ' |
Capital lease assets, net | 392,817 | ' | ' |
Accounts payable and accrued expenses | -2,032 | ' | ' |
Notes payable | -344,650 | ' | ' |
Capital lease obligation | -415,949 | ' | ' |
Total identifiable net assets | -275,284 | ' | ' |
Goodwill and unidentified intangible assets | 975,284 | ' | 0 |
Total consideration | $700,000 | ' | ' |
8_Commitments_and_Contingencie1
8. Commitments and Contingencies (Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | ' | ' | ' | ' |
Legal fees | $267,286 | $34,900 | $857,587 | $200,496 |