Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Mar. 26, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Medytox Solutions, Inc. | ' |
Entity Central Index Key | '0001374536 | ' |
Document Type | '10-K | ' |
Document Period End Date | 31-Dec-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 Public Float | ' | $0 |
Entity Common Stock, Shares Outstanding | ' | 0 |
Document Fiscal Period Focus | 'FY | ' |
Document Fiscal Year Focus | '2013 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current assets: | ' | ' |
Cash | $4,141,416 | $1,773,785 |
Accounts receivable, net | 10,986,368 | 3,269,180 |
Deferred loan costs | 0 | 77,192 |
Prepaid expenses and other current assets | 194,137 | 109,697 |
Deferred tax assets | 1,748,600 | 1,980,600 |
Assets attributable to disputed activity | 1,367,796 | 1,367,796 |
Total current assets | 18,438,317 | 8,578,250 |
Property and equipment, net | 2,156,381 | 598,741 |
Other assets: | ' | ' |
Intangible assets | 3,190,613 | 550,000 |
Goodwill | 1,425,999 | 1,050,912 |
Deposits | 96,747 | 70,368 |
Total assets | 25,308,057 | 10,848,271 |
Current liabilities: | ' | ' |
Accounts payable | 1,755,965 | 1,168,443 |
Accrued expenses | 2,855,884 | 1,026,922 |
Loans and notes payable, related parties | 0 | 242,100 |
Income tax liabilities | 6,052,740 | 1,883,900 |
Disputed net income - Trident | 397,918 | 397,918 |
Current portion of notes payable | 3,689,554 | 3,154,389 |
Current portion of capital lease obligation | 193,095 | 0 |
Liabilities attributable to disputed activity | 1,104,063 | 1,104,063 |
Total current liabilities | 16,049,219 | 8,977,735 |
Other liabilities: | ' | ' |
Notes payable, net of current portion | 42,107 | 0 |
Capital lease obligations, net of current portion | 405,718 | 0 |
Deferred tax liabilities | 41,800 | 36,100 |
Total liabilities | 16,538,844 | 9,013,835 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Common stock | 3,000 | 2,953 |
Additional paid-in-capital | 1,905,223 | 616,512 |
Deferred issuance costs | -12,500 | 0 |
Retained earnings | 6,752,485 | 1,093,866 |
Total Medytox Solutions stockholders' equity | 8,648,209 | 1,713,432 |
Noncontrolling interest | 121,004 | 121,004 |
Total stockholders' equity | 8,769,213 | 1,834,436 |
Total liabilities and stockholders' equity | 25,308,057 | 10,848,271 |
Series B Preferred Stock | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock | 1 | 1 |
Series C Preferred Stock | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock | $0 | $100 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 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 | 29,996,386 | 29,533,753 |
Common stock shares outstanding | 29,996,386 | 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 | 0 | 1,000,000 |
Preferred stock shares outstanding | 0 | 1,000,000 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Statement [Abstract] | ' | ' |
Revenues | $52,523,660 | $21,076,357 |
Operating expenses: | ' | ' |
Direct costs of revenue | 9,570,950 | 2,913,169 |
General and administrative | 13,479,879 | 6,112,016 |
Legal fees related to disputed subsidiary | 976,789 | 325,762 |
Sales and marketing expenses | 2,953,292 | 1,106,864 |
Bad debt expense | 10,634,789 | 7,021,945 |
Depreciation and amortization | 407,971 | 65,648 |
Total operating expenses | 38,023,670 | 17,545,404 |
Income from operations | 14,499,990 | 3,530,953 |
Other income (expense): | ' | ' |
Other income | 389 | 129 |
Gain on settlement of debt | 0 | 348,315 |
Gain (loss) on settlement of assets | -27,413 | 2,546 |
Loss on legal settlement | -169,800 | 0 |
Interest expense | -474,649 | -653,588 |
Total other income (expense) | -671,473 | -302,598 |
Income before income taxes | 13,828,517 | 3,228,355 |
Provision for income taxes | 5,568,600 | 481,400 |
Net income from continuing operations | 8,259,917 | 2,746,955 |
Net income (loss) from disputed activity | 0 | -397,918 |
Net income attributable to Medytox Solutions | 8,259,917 | 2,349,037 |
Preferred stock dividends | 2,601,298 | 50,000 |
Net income attributable to Medytox Solutions common shareholders | $5,658,619 | $2,299,037 |
Net income per common share - Basic and diluted | $0.19 | $0.07 |
Weighted average number of common shares outstanding during the period - Basic and diluted | 29,654,703 | 30,795,073 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from operating activities: | ' | ' |
Net income | $8,259,917 | $2,349,037 |
Adjustments to reconcile net income to net cash provided by operations: | ' | ' |
Depreciation and amortization | 407,971 | 65,648 |
Stock issued for services | 62,500 | 225 |
Stock-based compensation | 452,500 | 235,001 |
Stock-based consulting fees | 85,000 | 0 |
Increase in allowance for bad debts | 2,324,045 | 7,021,945 |
Accretion of loan costs as interest | 181,141 | 244,758 |
Accretion of beneficial conversion feature as interest | 52,280 | 0 |
Gain on disposal of equipment | 27,413 | -2,546 |
Gain on conversion of debt | 0 | -348,315 |
Disputed net income | 0 | 397,918 |
Assets attributable to disputed activity | 0 | 753,830 |
Liabilities attributable to disputed activity | 0 | -108,463 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -10,041,233 | -10,107,742 |
Prepaid expenses and other current assets | -84,440 | -108,697 |
Deferred tax assets | 232,000 | -1,256,700 |
Security deposits | -26,379 | -67,225 |
Accounts payable | 527,571 | 726,831 |
Accrued expenses | 1,827,655 | 840,242 |
Income tax liabilities | 4,168,840 | 1,332,200 |
Deferred tax liabilities | 5,700 | 36,100 |
Net cash provided by operating activities | 8,462,481 | 2,004,047 |
Cash flows used in investing activities: | ' | ' |
Purchase of property and equipment | -1,097,766 | -491,545 |
Cash received in sale of property and equipment | 750 | 25,373 |
Cash paid for acquisitions | -735,052 | -101,000 |
Cash received in acquisitions | 3,735 | 21,203 |
Net cash used in investing activities | -1,828,333 | -545,969 |
Cash flows provided by (used in) financing activities: | ' | ' |
Proceeds from the sale of common stock | 286,000 | 0 |
Deferred issuance costs | -12,500 | 0 |
Deferred loan costs | -103,949 | -121,950 |
Dividends on Series B preferred stock | -2,601,298 | -50,000 |
Payments made on repurchase agreements | 0 | -385,200 |
Proceeds from issuance of notes payable | 1,300,000 | 1,755,200 |
Payments on notes payable | -2,700,193 | -971,536 |
Payments on capital lease obligations | -139,577 | 0 |
Proceeds from issuance of related party loans | 0 | 413,093 |
Payments on related party loans | -195,000 | -321,003 |
Common stock repurchased from lender | -100,000 | -100,000 |
Net cash provided by (used in) financing activities | -4,266,517 | 218,604 |
Net increase in cash | 2,367,631 | 1,676,682 |
Cash at beginning of year | 1,773,785 | 97,103 |
Cash at end of year | 4,141,416 | 1,773,785 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 342,672 | 336,039 |
Cash paid for taxes | 1,162,060 | 0 |
Non-cash investing and financing activities: | ' | ' |
Net liabilities (assets) acquired in acquisitions, net of cash | 1,565,613 | -437,329 |
Intangible assets | -2,640,613 | -248,800 |
Notes payable issued | 1,075,000 | 565,125 |
Noncontrolling interest | 0 | 121,004 |
Property and equipment acquired with issuance of notes payable | -56,603 | -101,032 |
Notes payable issued | 56,603 | 101,032 |
Capital lease assets acquired | -322,441 | 0 |
Capital lease obligations | 322,441 | 0 |
Conversion of Series C preferred stock to common stock: | ' | ' |
Common stock | 21 | 0 |
Series C preferred stock | -100 | 0 |
Additional paid in capital | 79 | 0 |
Conversion of note payable to common stock: | ' | ' |
Notes payable | 0 | -50,317 |
Common stock | 0 | 2 |
Additional paid in capital | 0 | 50,315 |
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 |
Exchange of repurchase agreements and common stock to Series C preferred stock: | ' | ' |
Common stock cancelled | 0 | -1,658 |
Series C preferred stock | 0 | 100 |
Additional paid in capital | 0 | 1,558 |
Repurchase agreements payable | 0 | -926,675 |
Treasury stock | 0 | 926,675 |
Treasury stock retired and cancelled | ' | ' |
Common stock cancelled | 0 | -823 |
Additional paid in capital | 0 | -406,877 |
Treasury stock | 0 | 407,700 |
Common stock issued as inducement for loan: | ' | ' |
Deferred loan costs | 0 | -200,000 |
Common stock | 0 | 8 |
Additional paid in capital | $0 | $199,992 |
Consolidated_Statement_of_Stoc
Consolidated Statement of Stockholders' Equity (Deficit) (USD $) | Preferred stock Non-designated | Preferred stock Series B | Preferred stock Series C | Common Stock | Additional Paid-In Capital | Treasury Stock | Deferred issuance costs | Noncontrolling Interest | Accumulated Deficit / earnings | Total |
Beginning Balance, Amount at Dec. 31, 2011 | ' | ' | ' | $3,076 | $515,761 | ($1,334,375) | ' | $703,202 | ($1,082,285) | ($1,194,621) |
Beginning Balance, Shares at Dec. 31, 2011 | ' | ' | ' | 30,764,800 | ' | ' | ' | ' | ' | ' |
Common stock issued as inducement for loan, Amount | ' | ' | ' | 8 | 199,992 | ' | ' | ' | ' | 200,000 |
Common stock issued as inducement for loan, Shares | ' | ' | ' | 80,000 | ' | ' | ' | ' | ' | ' |
Common stock repurchased from lender and cancelled, Amount | ' | ' | ' | -4 | -99,996 | ' | ' | ' | ' | -100,000 |
Common stock repurchased from lender and cancelled, Shares | ' | ' | ' | -40,000 | ' | ' | ' | ' | ' | ' |
Common stock repurchased under repurchase agreements cancelled, Amount | ' | ' | ' | -823 | -406,877 | 407,700 | ' | ' | ' | ' |
Common stock repurchased under repurchase agreements cancelled, Shares | ' | ' | ' | -8,233,100 | ' | ' | ' | ' | ' | ' |
Repurchase agreements exchanged for Series C preferred stock and common stock cancelled, Amount | ' | ' | 100 | -1,658 | 1,558 | 926,675 | ' | ' | ' | 926,675 |
Repurchase agreements exchanged for Series C preferred stock and common stock cancelled, Shares | ' | ' | 1,000,000 | -16,580,575 | ' | ' | ' | ' | ' | ' |
Common stock issued in exchange for notes payable, Amount | ' | ' | ' | 2 | 50,315 | ' | ' | ' | ' | 50,317 |
Common stock issued in exchange for notes payable, Shares | ' | ' | ' | 20,128 | ' | ' | ' | ' | ' | ' |
Common stock issued for services, Amount | ' | ' | ' | 2 | 223 | ' | ' | ' | ' | 225 |
Common stock issued for services, Shares | ' | ' | ' | 22,500 | ' | ' | ' | ' | ' | ' |
Common stock issued to executives as compensation, Amount | ' | ' | ' | 2,350 | 232,650 | ' | ' | ' | ' | 235,000 |
Common stock issued to executives as compensation, Shares | ' | ' | ' | 23,500,000 | ' | ' | ' | ' | ' | ' |
Series B preferred stock issued to executives as compensation, Amount | ' | 1 | ' | ' | ' | ' | ' | ' | ' | 1 |
Series B preferred stock issued to executives as compensation, Shares | ' | 5,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Acquisition of subsidiaries | ' | ' | ' | ' | ' | ' | ' | 121,004 | ' | 121,004 |
Disputed activity | ' | ' | ' | ' | 122,886 | ' | ' | -703,202 | -122,886 | -703,202 |
Dividends on Series B preferred stock | ' | ' | ' | ' | ' | ' | ' | ' | -50,000 | -50,000 |
Net income for the year ended | ' | ' | ' | ' | ' | ' | ' | ' | 2,349,037 | 2,349,037 |
Ending Balance, Amount at Dec. 31, 2012 | ' | 1 | 100 | 2,953 | 616,512 | ' | ' | 121,004 | 1,093,866 | 1,834,436 |
Ending Balance, Shares at Dec. 31, 2012 | ' | 5,000 | 1,000,000 | 29,533,753 | ' | ' | ' | ' | ' | ' |
Common stock repurchased from lender and cancelled, Amount | ' | ' | ' | -4 | -99,996 | ' | ' | ' | ' | -100,000 |
Common stock repurchased from lender and cancelled, Shares | ' | ' | ' | -40,000 | ' | ' | ' | ' | ' | ' |
Common stock issued for services, Amount | ' | ' | ' | 3 | 62,497 | ' | ' | ' | ' | 62,500 |
Common stock issued for services, Shares | ' | ' | ' | 25,000 | ' | ' | ' | ' | ' | ' |
Series B preferred stock issued to executives as compensation, Shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25,000 |
Dividends on Series B preferred stock | ' | ' | ' | ' | ' | ' | ' | ' | -2,601,298 | -2,601,298 |
Common stock issued for cash, Amount | ' | ' | ' | 11 | 285,989 | ' | ' | ' | ' | 286,000 |
Common stock issued for cash, Shares | ' | ' | ' | 114,400 | ' | ' | ' | ' | ' | ' |
Common stock issued in acquisition of Medical Billing Choices, Inc., Amount | ' | ' | ' | 16 | 399,984 | ' | ' | ' | ' | 400,000 |
Common stock issued in acquisition of Medical Billing Choices, Inc., Shares | ' | ' | ' | 160,000 | ' | ' | ' | ' | ' | ' |
Warrants issued for settlement of subsidiary obligations | ' | ' | ' | ' | 85,000 | ' | ' | ' | ' | 85,000 |
Stock options issued | ' | ' | ' | ' | 452,500 | ' | ' | ' | ' | 452,500 |
Conversion of Series C preferred stock to common stock, Amount | ' | ' | -100 | 21 | 79 | ' | ' | ' | ' | ' |
Conversion of Series C preferred stock to common stock, Shares | ' | ' | -1,000,000 | 203,233 | ' | ' | ' | ' | ' | ' |
Beneficial conversion feature | ' | ' | ' | ' | 55,558 | ' | ' | ' | ' | 55,558 |
Capital contribution | ' | ' | ' | ' | 47,100 | ' | ' | ' | ' | 47,100 |
Deferred issuance costs | ' | ' | ' | ' | ' | ' | -12,500 | ' | ' | -12,500 |
Net income for the year ended | ' | ' | ' | ' | ' | ' | ' | ' | 8,259,917 | 8,259,917 |
Ending Balance, Amount at Dec. 31, 2013 | ' | $1 | ' | $3,000 | $1,905,223 | ' | ($12,500) | $121,004 | $6,752,485 | $8,769,213 |
Ending Balance, Shares at Dec. 31, 2013 | ' | 5,000 | ' | 29,996,386 | ' | ' | ' | ' | ' | ' |
1_Organization_Nature_of_Busin
1. Organization, Nature of Business and Presentation | 12 Months Ended |
Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
1. Organization, Nature of Business 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 June 22, 2011, the Company organized Medytox Medical Management Solutions Corp. ("MMMSC"), a Florida corporation, as a wholly-owned subsidiary. MMMSC was a marketing company selling laboratory testing services to medical clinics, hospitals and physicians’ offices. On October 15, 2013, MMMSC changed its name to Medytox Information Technology, Inc. (“MIT”). MIT provides information technology services and solutions to all subsidiaries and customers of the Company and operates from the corporate offices in West Palm Beach, Florida. | |
On July 26, 2011, the Company organized Medytox Institute of Laboratory Medicine, Inc. ("MILM"), a Florida corporation, as a wholly-owned subsidiary. MILM was organized to acquire and manage medical testing laboratories. MILM operates from the corporate offices in West Palm Beach, Florida. | |
On August 22, 2011, the Company acquired 100% of Medical Billing Choices, Inc. ("MBC"), a privately-owned North Carolina corporation, through a stock purchase agreement for cash and an installment note. MBC operates a medical billing service for a variety of medical providers throughout the southeastern United States from offices in Charlotte, North Carolina. Since the acquisition, MBC is the main billing company for the Company's laboratories. | |
On February 6, 2012, the Company formed Medytox Diagnostics Inc. (“MDI”), a Florida corporation, as a wholly-owned subsidiary to acquire and build clinical laboratories. MDI operates from the corporate offices in West Palm Beach, Florida. | |
On February 16, 2012, MDI acquired majority interest in Collectaway LLC, now known as PB Laboratories, LLC ("PB Labs"), a Florida limited liability company. On October 31, 2012, MDI acquired the remaining noncontrolling interest in PB Labs. As of October 31, 2012, PB Labs is a wholly-owned subsidiary of MDI. | |
On March 9, 2013, the Company formed Medytox Medical Marketing & Sales, Inc. (“MMMS”), a Florida corporation, as a wholly-owned subsidiary that provides marketing for clinical laboratories that are owned by the Company. | |
On December 7, 2012, MDI acquired a majority interest in Biohealth Medical Laboratory, Inc. (“Biohealth”), a Florida corporation. | |
On January 1, 2013, 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, MDI 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. (“EPIC”). | |
On April 4, 2013, MDI purchased 100% of the interests in International Technologies, LLC ("Tech"). In October 2013, Tech began doing business as NJ Reference Labs (“NJ Ref”). NJ Ref operates a licensed clinical lab in Waldwick, New Jersey and is an enrolled Medicare provider. | |
Nature of Operations | |
The Company operates in the medical services segment. | |
Basis of Presentation | |
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission (“SEC”). | |
Reclassifications | |
Certain items on the statement of operations for the year ended December 31, 2012 have been reclassified to conform to the current period presentation. |
2_Summary_of_Significant_Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
2. Summary of Significant Accounting Policies | ' |
Use of Estimates | |
The preparation of financial statements in conformity with generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant areas of estimate include the impairment of assets and rates for amortization, accrued liabilities, future income tax obligations and the inputs used in calculating stock-based compensation and transactions. Actual results could differ from those estimates and would impact future results of operations and cash flows. | |
Principles of Consolidation | |
The consolidated financial statements include the accounts of Medytox Solutions, Inc. and its wholly-owned subsidiaries, Medytox Information Technology, Inc., Medytox Institute of Laboratory Medicine, Inc., Medical Billing Choices, Inc., Medytox Diagnostics, Inc., PB Laboratories, LLC, Medytox Medical Marketing & Sales, Inc., Alethea Laboratories, Inc., EPIC Reference Labs, Inc., and International Technologies, LLC, and its majority-owned subsidiary, Biohealth Medical Laboratory, Inc. Due to the dispute with Trident and its selling shareholders (see Note – 4), the accounts of Trident Laboratories, Inc. have been excluded from consolidation. In addition, a disputed net income reserve of $397,918 has been established as of December 31, 2012 representing all of Trident’s net income recognized by the Company since August 22, 2011, the date of acquisition. All significant inter-company balances and transactions have been eliminated in consolidation. | |
Cash and Cash Equivalents | |
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2013 and 2012, respectively, the Company had no cash equivalents. | |
Revenue Recognition | |
Service revenues are principally generated from laboratory testing services including chemical diagnostic tests such as blood analysis and urine analysis. Net service revenues are recognized at the time the testing services are performed and are reported at their estimated net realizable amounts. | |
Net service revenues are determined utilizing gross service revenues net of contractual allowances. Even though it is the responsibility of the patient to pay for laboratory service bills, most individuals in the United States have an agreement with a third party payor such as Medicare, Medicaid or a commercial insurance provider to pay all or a portion of their healthcare expenses; the majority of services provided by Medytox are to patients covered under a third party payor contract. In certain cases, the individual has no insurance or does not provide insurance information. We estimate that 0% of self-pay billings will be collectible. The Company currently does not have any capitated agreements. In the remainder of the cases, Medytox is provided the third party billing information and seeks payment from the third party under the terms and conditions of the third party payor for health service providers like Medytox. Each of these third party payors may differ not only with regard to rates, but also with regard to terms and conditions of payment and providing coverage (reimbursement) for specific tests. Estimated revenues are established based on a series of procedures and judgments that require industry specific healthcare experience and an understanding of payor methods and trends. | |
We review our calculations on a monthly basis in order to make certain that we are properly allowing for the uncollectable portion of our gross billings and that our estimates remain sensitive to variances and changes within our payor groups. The contractual allowance calculation is made on the basis of historical allowance rates for the various specific payor groups on a monthly basis with a greater weight being given to the most recent trends; this process is adjusted based on recent changes in underlying contract provisions and shifts in the testing being performed. Bad debt expense represents our estimate of net revenues that will ultimately be uncollectable and is based upon our analysis of historical payment rates by specific payor groups on a monthly basis with primary weight being given to the most recent trends; this approach allows bad debt to more accurately adjust to short-term changes in the business environment. These two calculations are routinely analyzed by Medytox on the basis of actual allowances issued by payors and the actual payments made to determine what adjustments, if any, are needed. | |
Contractual Allowances and Doubtful Accounts Policy | |
Accounts receivable are reported at realizable value, net of allowances for contractual credits and doubtful accounts, which are estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimate and review the collectibility of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for contractual credits and doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues which may impact the collectibility of these receivables or reserve estimates. Revisions to the allowances for doubtful accounts estimates are recorded as an adjustment to bad debt expense within selling, general and administrative expenses. Receivables deemed to be uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. | |
As of December 31, 2013 and 2012, management recorded allowances for uncollectible accounts in the amount of $3,621,814 and $1,297,769, respectively. Bad debt expense was $10,634,789 and $7,021,945 for the years ended December 31, 2013 and 2012, respectively. | |
Impairment or Disposal of Long-Lived Assets | |
The Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment”. ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. The Company did not recognize any impairment losses for the years ended December 31, 2013 and 2012. | |
Fair Value of Financial Instruments | |
The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. | |
ASC 820 “Fair Value Measurements and Disclosures” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) a reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: | |
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; | |
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and | |
Level 3 - fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). | |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2013 and 2012. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. | |
The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements. | |
As of December 31, 2013 and 2012 the fair values of the Company’s financial instruments approximate their historical carrying amount. | |
Advertising | |
The costs of advertising are expensed as incurred. Advertising expense was $21,550 and $111,691 for the years ended December 31, 2013 and 2012, respectively. Advertising expenses are included in the Company’s operating expenses. | |
Stock Based Compensation | |
The Company accounts for Stock-Based Compensation under ASC 718 “Compensation – Stock Compensation”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. | |
The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Any stock options or warrants issued to non-employees are recorded in expense and additional paid-in capital in stockholders' equity over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options or warrants at the end of each period. | |
The Company issues stock to consultants for various services. The costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expense and a corresponding increase to additional paid-in-capital related to stock issued for services. | |
Income Taxes | |
Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than not to be realized. | |
The FASB has issued ASC 740 “Income Taxes”. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. | |
As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by ASC 740 and concluded that the tax position of the Company has not met the more-likely-than-not threshold as of December 31, 2013. | |
Basic and Diluted Income Per Share | |
The Company computes income 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 December 31, 2013, there were a total of 23,170,000 stock options outstanding to purchase shares of common stock, 346,400 warrants outstanding to purchase shares of common stock, a $100,000 convertible debenture convertible into 40,000 shares of the Company’s common stock, and $500,000 of convertible notes payable convertible into shares of the Company’s common stock at a 10% discount to the average market price for the thirty days prior to conversion. However, these potentially dilutive shares are considered to be anti-dilutive and are therefore not included in the calculation of income per share. | |
Segment Information | |
In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, the Company is required to report financial and descriptive information about its reportable operating segments. The Company does not consider itself to have any operating segments as of December 31, 2013 and 2012. |
3_Recent_Accounting_Pronouncem
3. Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Changes and Error Corrections [Abstract] | ' |
3. Recent Accounting Pronouncements | ' |
In February 2013, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2013-04,”Liabilities (Topic 405)”, which provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. ASU 2013-04 is effective for fiscal years beginning after December 15, 2013. We do not believe the adoption of ASU 2013-04 will have a material effect on the Company’s financial statements. | |
In February 2013, the FASB issued ASU 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” ASU 2013-02 requires disclosure of the amounts reclassified out of each component of accumulated other comprehensive income and into net earnings during the reporting period and is effective for reporting periods beginning after December 15, 2012. We do not believe the adoption of ASU 2013−02 will have a material impact on the measurement of net earnings or other comprehensive income. | |
In December 2011, the FASB issued ASU 2011-11, “Disclosures about Offsetting Assets and Liabilities” and in January 2013, the FASB issued ASU 2013-01, “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities”. ASU 2011-11, as clarified, enhances disclosures surrounding offsetting (netting) assets and liabilities. The clarified standard applies to derivatives, repurchase agreements and securities lending transactions and requires companies to disclose gross and net information about financial instruments and derivatives eligible for offset and to disclose financial instruments and derivatives subject to master netting arrangements in financial statements. The clarified standard did not have a material effect on our financial position or results of operations. | |
In October 2012, the FASB issued ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update is effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 did not have a material impact on our financial position or results of operations. | |
Management does not believe any recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the Company’s present or future financial statements. |
4_Disputed_Subsidiary
4. Disputed Subsidiary | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Disputed Subsidiary Tables | ' | ||||
4. 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 its 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. Trident’s appeal has been dismissed and the appeals of the shareholders are pending. | |||||
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. | |||||
Legal fees related to the lawsuit were $976,789 and $325,762 for the years ended December 31, 2013 and 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 established a disputed net income reserve of $397,918 as of 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 December 31, 2013 and 2012 consolidated balance sheets. A separate $389,135 of commissions payable on Trident sales is included in liabilities attributable to disputed activity as of December 31, 2013 and 2012. | |||||
Assets and liabilities of the disputed subsidiary as of December 31, 2013 and 2012 were as follows: | |||||
Total assets | $ | 1,367,796 | |||
Total liabilities | $ | 1,104,063 |
5_LongLived_Assets
5. Long-Lived Assets | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
5. Long-Lived Assets | ' | ||||||||
Property and equipment at December 31, 2013 and 2012 consisted of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Medical equipment | $ | 655,125 | $ | 269,931 | |||||
Equipment | 111,265 | 37,140 | |||||||
Equipment under capital leases | 980,948 | – | |||||||
Furniture | 206,587 | 66,606 | |||||||
Leasehold improvements | 243,983 | 47,197 | |||||||
Vehicles | 177,534 | 70,828 | |||||||
Computer equipment | 235,507 | 85,478 | |||||||
Software | 285,175 | 196,711 | |||||||
2,896,124 | 773,891 | ||||||||
Less accumulated depreciation | (739,743 | ) | (175,150 | ) | |||||
Property and equipment, net | $ | 2,156,381 | $ | 598,741 | |||||
Depreciation of property and equipment was $407,971 and $65,648 for the years ended December 31, 2013 and 2012, respectively. | |||||||||
The Company’s management has performed a valuation of the identifiable intangible assets, including medical licenses, of Alethea Laboratories, Inc. and International Technologies, LLC (see Note – 13 Business Combinations). As a result, the Company has recorded medical licenses acquired from all acquisitions in the amount of $3,190,613 and $550,000 as intangible property as of December 31, 2013 and 2012, respectively. 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 years ended December 31, 2013 and 2012. | |||||||||
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. |
6_Accrued_Expenses
6. Accrued Expenses | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
6. Accrued Expenses | ' | ||||||||
Accrued expenses at December 31, 2013 and 2012 consisted of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Commissions payable | $ | 277,731 | $ | – | |||||
Dividends payable | 360,726 | – | |||||||
Accrued payroll and related liabilities | 114,471 | 283,490 | |||||||
Accrued bonuses | 1,900,000 | 500,000 | |||||||
Accrued interest | 46,842 | 146,943 | |||||||
Other accrued expenses | 156,114 | 96,489 | |||||||
Accrued expenses | $ | 2,855,884 | $ | 1,026,922 | |||||
The accrual of bonuses was approved by the Company’s board of directors on February 6, 2014. |
7_Notes_Payable
7. Notes Payable | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
7. Notes Payable | ' | ||||||||
The Company and its subsidiaries are party to a number of loans with affiliates and unrelated parties. At December 31, 2013 and 2012, notes payable consisted of the following: | |||||||||
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. The due date of the note was extended from October 31, 2013 to February 5, 2014 by the lender. 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 Information Technology Inc. ("MIT") and Trident. | $ | 100,000 | $ | 500,000 | |||||
Loan for working capital, dated September 15, 2011, in the amount of $500,000 and bearing interest at 20%. Interest and principal were payable in 10 equal payments ending August 31, 2013. This note was subordinated to the loan from TCA and was secured by the assets of the Company, MIT and Trident. | – | 150,000 | |||||||
Acquisition note to former shareholders of Medical Billing Choices, Inc. ("MBC") in the amount of $750,000, 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. The note was extended from January 15, 2014 to September 15, 2014, and is secured by all assets of the Company and its subsidiaries (other than Trident and MBC). See "TCA Global" below. | 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 | |||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
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. | – | 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. | 150,000 | – | |||||||
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. | 150,000 | – | |||||||
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. | 98,471 | – | |||||||
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 $16,623 at December 31, 2013. | 15,845 | – | |||||||
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 $16,430 at December 31, 2013. | 16,279 | – | |||||||
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 $18,300 at December 31, 2013. | 17,676 | – | |||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
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 $1,639 at December 31, 2013. | 248,361 | – | |||||||
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 $1,639 at December 31, 2013. | 248,361 | – | |||||||
Loan from former member of International Technologies, LLC in the remaining amount of $416,667 at the date of acquisition, at 1% interest, with principal payments of $83,333 due quarterly starting June 7, 2013. | 166,668 | – | |||||||
Loan from former member of International Technologies, LLC in the remaining amount of $112,500 at the date of acquisition, at 1% interest, with principal payments of $22,500 due quarterly starting June 7, 2013. | 45,000 | – | |||||||
3,731,661 | 3,154,389 | ||||||||
Less current portion | (3,689,554 | ) | (3,154,389 | ) | |||||
Notes payable, net of current portion | $ | 42,107 | $ | – | |||||
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 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 was 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, now known as EPIC Reference Labs, Inc. ("EPIC"), 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 were 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. The note has been extended by the lender from January 15, 2014 to September 15, 2014. | |||||||||
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 December 30, 2013 and 2012 consisted of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Deferred loan costs | $ | 425,899 | $ | 321,950 | |||||
Less accumulated accretion as interest | (425,899 | ) | (244,758 | ) | |||||
Deferred loan costs, net | $ | -0- | $ | 77,192 |
8_Related_Party_Transactions
8. Related Party Transactions | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
8. 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 year ended December 31, 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 year ended December 31, 2013, the $85,000 was paid along with a one-time interest charge of $18,417. Alcimede was paid $240,000 and $240,000 for consulting fees pursuant to a consulting agreement for the years ended December 31, 2013 and 2012, respectively. The Company reimbursed Alcimede $520,334 and $71,422 for certain operating expenses and asset purchases paid by Alcimede on the Company’s behalf in the years ended December 31, 2013 and 2012, respectively. | |
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 year ended December 31, 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 years ended December 31, 2013 and 2012, the Company paid $33,070 and $116,930 to DASH, respectively, pursuant to the Asset Purchase Agreement. As of December 31, 2013, the purchase is fully paid. | |
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. The Company reimbursed Dr. Mendolia $252,841 and $48,786 for certain operating expenses and asset purchases paid by Dr. Mendolia on the Company’s behalf in the years ended December 31, 2013 and 2012, respectively. | |
At December 31, 2011, senior management had deferred compensation of $291,766. During the year ended December 31, 2012, $15,000 was paid and the remaining $276,766 was released by senior management. The $276,766 is included in gain on settlement of debt (see Note 11). |
9_Capital_Lease_Obligations
9. Capital Lease Obligations | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Capital Lease Obligations [Abstract] | ' | ||||||||
9. Capital Lease Obligations | ' | ||||||||
The Company leases various assets under capital leases expiring in 2020 as follows: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Medical equipment | $ | 980,948 | $ | – | |||||
Less accumulated depreciation | (364,726 | ) | – | ||||||
Net | $ | 616,222 | $ | – | |||||
Depreciation expense on assets under capital leases was $137,306 for the year ended December 31, 2013. | |||||||||
Aggregate future minimum rentals under capital leases are as follows: | |||||||||
December 31, | |||||||||
2014 | $ | 203,865 | |||||||
2015 | 208,612 | ||||||||
2016 | 82,058 | ||||||||
2017 | 35,575 | ||||||||
2018 | 35,575 | ||||||||
Thereafter | 68,186 | ||||||||
Total | 633,871 | ||||||||
Less interest: | 35,058 | ||||||||
Present value of minimum lease payments | 598,813 | ||||||||
Less current portion of capital lease obligations | 193,095 | ||||||||
Capital lease obligations, net of current portion | $ | 405,718 |
10_Stockholders_Equity
10. Stockholders' Equity | 12 Months Ended | ||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||||||||||||
10. 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 were 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 included voting rights of 25 votes for every share of Series C Preferred Stock and were entitled to dividends at the same time any dividend was paid or declared on any shares of the Company’s Common Stock. | |||||||||||||||||||||||||||||||
Preferred Stock | |||||||||||||||||||||||||||||||
During the year ended December 31, 2012, the Company issued 5,000 shares of Series B Preferred Stock to executives as compensation. The shares were valued at par totaling $1 and charged to operations. | |||||||||||||||||||||||||||||||
During the year ended December 31, 2012, the Series B Preferred shareholders agreed to limit their dividend for 2012 to a total of $50,000. The dividend was paid on December 6, 2012. If the dividend had not been limited, the Series B shareholders would have received $281,430. During the year ended December 31, 2013, the Series B preferred shareholders earned dividends totaling $2,601,298, of which $360,726 was due and payable at December 31, 2013. | |||||||||||||||||||||||||||||||
During the year ended December 31, 2012, the Company issued 1,000,000 shares of Series C Preferred Stock in exchange for $926,675 of repurchase agreements and cancelled 16,580,575 shares of treasury stock. Under the terms of the certificate of designation, the 1,000,000 shares of Series C preferred shares were mandatorily converted into 203,233 shares of the Company’s common stock on December 31, 2013. | |||||||||||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||||||||||
During the year ended December 31, 2011, the Company offered promissory notes in the total amount of $1,484,475 to a number of shareholders in exchange for retiring a total of 27,114,175 shares of common stock. Some of these shares had been returned and were listed as treasury stock at December 31, 2011. The promissory notes were recorded as other liabilities on the balance sheet. As the notes were paid off, the associated treasury stock was cancelled. | |||||||||||||||||||||||||||||||
During the year ended December 31, 2011, the Company paid a total of $172,600 on the promissory notes and cancelled 2,300,500 shares of the treasury stock at a value of $150,100. | |||||||||||||||||||||||||||||||
During the year ended December 31, 2012, the Company paid a total of $385,200 on the promissory notes and cancelled 8,233,100 shares of treasury stock at a value of $407,700. Also during the year ended December 31, 2012, the Company exchanged the remaining $926,675 of the promissory notes for 1,000,000 shares of Series C preferred stock and cancelled 16,580,575 shares of the treasury stock at a value of $926,675. | |||||||||||||||||||||||||||||||
During the year ended December 31, 2012, the Company issued 80,000 shares of its restricted Common Stock for corporate advisory and investment banking services in connection with an additional funding at a value of the services received of $200,000. Also during the same period, the Company repurchased and cancelled 40,000 shares of the restricted Common Stock from the lender for a total of $100,000. | |||||||||||||||||||||||||||||||
During the year ended December 31, 2012, the Company issued 20,128 shares of its restricted Common Stock in conversion of a note payable of $50,317. | |||||||||||||||||||||||||||||||
During the year ended December 31, 2012, the Company issued 22,500 shares of its restricted Common Stock for consulting services at a value of $225. | |||||||||||||||||||||||||||||||
During the year ended December 31, 2012, the Company issued 23,500,000 shares of its restricted Common Stock for compensation to executives at a value of $235,000. | |||||||||||||||||||||||||||||||
During the year ended December 31, 2013, the Company issued Units consisting of a total of 46,400 shares of its restricted Common Stock and warrants to purchase an additional 46,400 shares of restricted 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 year ended December 31, 2013, the Company issued 68,000 shares of its restricted Common Stock to two investors for $170,000 cash ($2.50 per share) in private placements. | |||||||||||||||||||||||||||||||
During the year ended December 31, 2013, the Company repurchased the remaining 40,000 shares of its Common Stock from the Lender for $100,000 and cancelled the shares. | |||||||||||||||||||||||||||||||
During the year ended December 31, 2013, the Company issued 25,000 shares of its restricted 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 year ended December 31, 2013, the Company issued an aggregate of 160,000 shares of its restricted 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 13 – 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. | |||||||||||||||||||||||||||||||
During the year ended December 31, 2013, pursuant to the terms of the certificate of designation, the Company issued 203,233 shares of its restricted Common Stock in the mandatory conversion of the 1,000,000 shares of its Series C preferred stock. | |||||||||||||||||||||||||||||||
2013 Equity Plan | |||||||||||||||||||||||||||||||
On September 25, 2013, the Company’s board of directors approved and adopted the Medytox Solutions, Inc. 2013 Incentive Compensation Plan (the “2013 Plan”). The 2013 Plan was approved by a majority of stockholders of the Company on November 22, 2013. The 2013 Plan provides for the grant of shares of common stock, options, performance shares, performance units, restricted stock, stock appreciation rights and other awards. No awards of any kind under the 2013 Plan have been granted as of December 31, 2013. | |||||||||||||||||||||||||||||||
Stock Options | |||||||||||||||||||||||||||||||
The following summarizes option activity for the years ended December 31, 2013 and 2012: | |||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
Common Stock Options Outstanding | average | ||||||||||||||||||||||||||||||
Employees and | exercise | ||||||||||||||||||||||||||||||
Directors | Non-employees | Total | price | ||||||||||||||||||||||||||||
Outstanding at December 31, 2011 | – | 400,000 | 400,000 | 4.5 | |||||||||||||||||||||||||||
Options granted | 19,300,000 | 3,020,000 | 22,320,000 | $ | 5.66 | ||||||||||||||||||||||||||
Options exercised | – | – | – | – | |||||||||||||||||||||||||||
Options cancelled or expired | (1,000,000 | ) | (400,000 | ) | (1,400,000 | ) | 3.43 | ||||||||||||||||||||||||
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 December 31, 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 December 31, 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 | ||||||||||||||||||||||||
$ | 2.5 | 7,550,000 | 3.66 | $ | 2.5 | $ | – | 7,450,000 | $ | 2.5 | $ | – | |||||||||||||||||||
$ | 5 | 6,600,000 | 3.97 | $ | 5 | – | 6,500,000 | $ | 5 | – | |||||||||||||||||||||
$ | 10 | 6,000,000 | 9.01 | $ | 10 | – | 6,000,000 | $ | 10 | – | |||||||||||||||||||||
20,150,000 | $ | 5.55 | $ | – | 19,950,000 | $ | 5.57 | $ | – | ||||||||||||||||||||||
During the year ended December 31, 2012, the Company issued 19,300,000 options to employees with a grant date fair value of $0.00 as there was no market value for the stock. 1,000,000 options were cancelled during the year ended December 31, 2012. All of the options granted were fully vested upon their grant. Stock option expense for employees was $0 for the year ended December 31, 2012. | |||||||||||||||||||||||||||||||
The Company estimated the fair value of employee stock options using the Black-Scholes Option Pricing Model. The fair value of employee stock options is expensed upon vesting of the awards. The fair value of employee stock options was estimated using the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $0.00 | ||||||||||||||||||||||||||||||
Expected term | 1 to 5 years | ||||||||||||||||||||||||||||||
Expected volatility | 29 to 30% | ||||||||||||||||||||||||||||||
Risk-free interest rate | 0.25 to 0.72% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
During the year ended December 31, 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 year ended December 31, 2013. As of December 31, 2013, there was unrecognized compensation costs of $40,000 related to these stock options. The Company expects to recognize those costs over a weighted average period of .55 years as of December 31, 2013. Future option grants will increase the amount of compensation expense to be recorded in these periods. | |||||||||||||||||||||||||||||||
During the year ended December 31, 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 year ended December 31, 2013. | |||||||||||||||||||||||||||||||
The following table summarizes information with respect to stock options outstanding and exercisable by non-employees at December 31, 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 | ||||||||||||||||||||||||
$ | 2.5 | 1,020,000 | 3.94 | $ | 2.5 | $ | – | 1,020,000 | $ | 2.5 | $ | – | |||||||||||||||||||
$ | 5 | 1,000,000 | 4 | $ | 5 | – | 1,000,000 | $ | 5 | – | |||||||||||||||||||||
$ | 10 | 1,000,000 | 9.01 | $ | 10 | – | 1,000,000 | $ | 10 | – | |||||||||||||||||||||
3,020,000 | $ | 5.81 | $ | – | 3,020,000 | $ | 5.81 | $ | – | ||||||||||||||||||||||
During the year ended December 31, 2012, the Company issued 3,020,000 options to non-employees with a grant date fair value of $0.00 as there was no market value for the stock. 400,000 options were cancelled during the year ended December 31, 2012. All of the options granted were fully vested upon their grant. Stock option expense for non-employees was $0 and $0 for the years ended December 31, 2013 and 2012. | |||||||||||||||||||||||||||||||
The Company estimated the fair value of non-employee stock options using the Black-Scholes Option Pricing Model. The fair value of non-employee stock options is expensed upon vesting of the awards. The fair value of non-employee stock options was estimated using the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $0.00 | ||||||||||||||||||||||||||||||
Expected term | 2 to 10 years | ||||||||||||||||||||||||||||||
Expected volatility | 29 - 30% | ||||||||||||||||||||||||||||||
Risk-free interest rate | 0.25 – 1.78%% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
Warrants | |||||||||||||||||||||||||||||||
The following table summarizes warrant transactions for the year ended December 31, 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 December 31, 2013 | 346,400 | $ | 3.22 | 0.94 | $ | – | |||||||||||||||||||||||||
Exercisable at December 31, 2013 | 346,400 | $ | 3.22 | 0.94 | $ | – | |||||||||||||||||||||||||
Weighted Average Grant Date Fair Value | $ | 0.25 | |||||||||||||||||||||||||||||
During the year ended December 31, 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 one year 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 | 1 year | ||||||||||||||||||||||||||||||
Expected volatility | 29.13% | ||||||||||||||||||||||||||||||
Risk free interest rate | 0.15% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
During the year ended December 31, 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 year ended December 31, 2013. |
11_Settlement_of_Debt
11. Settlement of Debt | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
11. Settlement of Debt | ' |
During the year ended December 31, 2012, two parties, our Chief Executive Officer and a former officer and director of the Company, released the Company of remaining contractual deferred compensation amounts due to them totaling $276,766 which were recorded in accrued liabilities at December 31, 2011. | |
During the year ended December 31, 2012, three parties, former vendors of Casino Players, Inc., released the Company of remaining contractual amounts due to them totaling $59,000 which were recorded in accounts payable at December 31, 2011. | |
During the year ended December 31, 2012, three parties, former employees of MMMS, released the Company of remaining contractual amounts due to them totaling $12,549 which were recorded in accounts payable at December 31, 2011. |
12_Income_Taxes
12. Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
12. Income Taxes | ' | ||||||||
Significant components of the income tax provision are summarized as follows: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Current provision: | |||||||||
Federal | $ | 5,834,600 | $ | 1,702,200 | |||||
State | 1,027,500 | 181,700 | |||||||
Deferred provision: | |||||||||
Federal | (1,168,700 | ) | (1,267,200 | ) | |||||
State | (124,800 | ) | (135,300 | ) | |||||
$ | 5,568,600 | $ | 481,400 | ||||||
A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate on income before income taxes for the years ended December 31, 2013 and 2012 is as follows: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Expected federal income tax at 34% statutory rate | 34.00% | 34.00% | |||||||
State income taxes | 4.30% | 3.60% | |||||||
Permanent differences | 2.00% | 3.50% | |||||||
Change in valuation allowance | 0.00% | -26.00% | |||||||
40.30% | 15.10% | ||||||||
The Company provides for income taxes using the liability method in accordance with FASB ASC Topic 740 “Income Taxes”. Deferred income taxes arise from the differences in the recognition of income and expenses for tax purposes. Deferred tax assets and liabilities are comprised of the following at December 31, 2013 and 2012: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Deferred income tax assets: | |||||||||
Allowance for bad debts | $ | 1,362,900 | $ | 1,980,600 | |||||
Accrued compensation | 385,700 | – | |||||||
Stock options | 170,300 | – | |||||||
Total deferred income tax assets | $ | 1,918,900 | $ | 1,980,600 | |||||
Deferred income tax liabilities: | |||||||||
Property and equipment | $ | (76,100 | ) | $ | – | ||||
Intangible amortization | (136,000 | ) | (36,100 | ) | |||||
Total deferred income tax liabilities | $ | (212,100 | ) | $ | (36,100 | ) | |||
Net deferred income taxes: | |||||||||
Current | 1,748,600 | 1,980,600 | |||||||
Non-current | (41,800 | ) | (36,100 | ) | |||||
$ | 1,706,800 | $ | 1,944,500 | ||||||
Management has reviewed the provisions regarding assessment of their valuation allowance on deferred tax assets and based on that criteria determined that it will have sufficient taxable income to realize those assets. Therefore, management has assessed the realization of the deferred tax assets and has determined that it is more likely than not that they will be realized. | |||||||||
The Company recognizes the consolidated financial statement impact of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than–not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. | |||||||||
The Company is subject to income taxes in the U.S. federal jurisdiction and the states of Florida, North Carolina, New Mexico and New Jersey. The tax regulations within each jurisdiction are subject to interpretation of related tax laws and regulations and require significant judgment to apply. As of December 31, 2013, tax years 2012, 2011, 2010, 2009, 2008, 2007, 2006 and 2005 remain open for IRS audit. The Company has received no notice of audit from the IRS for any of the open tax years. |
13_Business_Combinations
13. Business Combinations | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Business Combinations [Abstract] | ' | ||||||||
13. Business Combinations | ' | ||||||||
The Company completed two acquisitions during the year ended December 31, 2013 and two during the year ended December 31, 2012. 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 December 31, 2013 and December 31, 2012: | |||||||||
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 | |||||||
$ | 1,425,999 | $ | 1,050,912 | ||||||
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. | |||||||||
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 | 1,665,329 | ||||||||
Total identifiable net assets | 1,110,052 | ||||||||
Goodwill and unidentified intangible assets | – | ||||||||
$ | 1,110,052 | ||||||||
Intangible assets consisting of certain medical licenses were valued by management based on the fair value of obtaining such licenses. As the licenses have indefinite lives, the intangible assets are non-amortizable (See Note 5 – Long-Lived Assets). | |||||||||
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 non-interest bearing 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. | |||||||||
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 | 975,284 | ||||||||
Total identifiable net assets | 700,000 | ||||||||
Goodwill and unidentified intangible assets | – | ||||||||
$ | 700,000 | ||||||||
Intangible assets consisting of certain medical licenses were valued by management based on the fair value of obtaining such licenses. As the licenses have indefinite lives, the intangible assets are non-amortizable (See Note 5 – Long-Lived Assets). | |||||||||
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. | |||||||||
Biohelath Medical Laboratory, Inc. | |||||||||
On December 7, 2012, the Company, through its subsidiary, MDI, agreed to purchase 50.5% of Biohealth Medical Laboratory, Inc. ("Biohealth") from two unrelated parties for cash of $100,000 and an installment note in a total amount of $165,125. The note was paid in $75,000 payments due on February 7 and May 7, 2013 and was reduced by a contingent consideration adjustment of $24,913, net of the final installment of $15,125 due on August 7, 2013. | |||||||||
The following table summarizes the consideration given for Biohealth and the fair values of the assets acquired and liabilities assumed recognized at the acquisition date, as well as the fair value at the acquisition date of the noncontrolling interest in Biohealth. | |||||||||
Consideration Given: | |||||||||
Cash | $ | 100,000 | |||||||
Acquisition Note | 165,125 | ||||||||
Contingent consideration adjustment | (24,913 | ) | |||||||
Total Consideration | $ | 240,212 | |||||||
Fair value of identifiable assets acquired and liabilities assumed: | |||||||||
Cash | $ | 19,327 | |||||||
Accounts receivable | 64,206 | ||||||||
Property and equipment, net | 9,477 | ||||||||
Deposits | 3,143 | ||||||||
Accounts payable | (120,590 | ) | |||||||
Accrued expenses | (6,110 | ) | |||||||
Identifiable intangible assets | 275,000 | ||||||||
Total identifiable net assets | 244,453 | ||||||||
Noncontrolling interest in Biohealth | (121,004 | ) | |||||||
Goodwill | 116,763 | ||||||||
$ | 240,212 | ||||||||
Intangible assets consisting of certain medical licenses were valued by management based on the fair value of obtaining such licenses. As the licenses have indefinite lives, the intangible assets are non-amortizable (See Note 5 – Long-Lived Assets). | |||||||||
PB Laboratories, LLC | |||||||||
On February 16, 2012, the Company, through its subsidiary, MDI, agreed to purchase 50.5% of PB Laboratories, LLC ("PB Labs") from an unrelated party for cash of $1,000 and an installment note in a total amount of $200,000. The note was paid in $50,000 quarterly payments over 12 months. | |||||||||
On October 31, 2012, MDI agreed to purchase the remaining 49.5% of PB Labs from the noncontrolling member for an installment note in a total amount of $200,000. The note was paid in $50,000 quarterly payments over 12 months. | |||||||||
The following table summarizes the consideration given for PB Labs and the fair values of the assets acquired and liabilities assumed recognized at the acquisition dates of PB Labs. | |||||||||
Consideration Given: | |||||||||
Cash | $ | 1,000 | |||||||
Acquisition Notes | 400,000 | ||||||||
Total Consideration | $ | 401,000 | |||||||
Fair value of identifiable assets acquired and liabilities assumed: | |||||||||
Cash | $ | 1,876 | |||||||
Property and equipment, net | 17,000 | ||||||||
Identifiable intangible assets | 275,000 | ||||||||
Total identifiable net assets | 293,876 | ||||||||
Goodwill | 107,124 | ||||||||
$ | 401,000 | ||||||||
Intangible assets consisting of certain medical licenses were valued by management based on the fair value of obtaining such licenses. As the licenses have indefinite lives, the intangible assets are non-amortizable (See Note 5 – Long-Lived Assets). |
14_Commitments_and_Contingenci
14. Commitments and Contingencies | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||
14. Commitments and Contingencies | ' | ||||||
Operating Lease Commitments | |||||||
The Company leases office space and business equipment for its corporate office and subsidiaries under multiple year non-cancelable operating leases that expire through 2016. The office lease agreements have certain escalation clauses and renewal options. Additionally, the Company has lease agreements for computer equipment, office copiers and fax machines. | |||||||
The office space lease agreements include escalating rents over the lease term. The Company expenses rent on a straight-line basis over the lease term which commences on the date the Company has the right to control the property. The cumulative expense recognized on a straight-line basis in excess of the cumulative payments is included in Accrued Expenses in the accompanying Consolidated Balance Sheets. | |||||||
At December 31, 2013, future minimum lease payments under these leases are as follows: | |||||||
Year ending December 31, | |||||||
2014 | $ | 333,656 | |||||
2015 | 303,922 | ||||||
2016 | 178,461 | ||||||
2017 | 160,684 | ||||||
2018 | 116,350 | ||||||
2019 and thereafter | 30,951 | ||||||
Total minimum future lease payments | $ | 1,124,024 | |||||
Rent expense for the years ended December 31, 2013 and 2012 was $350,169 and $134,733, respectively. | |||||||
During the year ended December 31, 2013, the Company entered into master equipment lease agreements with a leasing company for a total commitment of up to approximately $1,400,000. As of December 31, 2013, no equipment has been delivered under the leases. | |||||||
Purchase Commitments | |||||||
The Company has entered into a purchase agreement for reagent supplies through December, 2020. Minimum purchase commitments as of December 31, 2013 are as follows: | |||||||
Year ending December 31, | |||||||
2014 | $ | 54,871 | |||||
2015 | 54,871 | ||||||
2016 | 54,871 | ||||||
2017 | 54,871 | ||||||
2018 | 54,871 | ||||||
2019 and thereafter | 109,742 | ||||||
Total purchase commitments | $ | 384,097 | |||||
Significant Risks and Uncertainties | |||||||
[a] Concentrations of Credit Risk - Cash - At December 31, 2013 and 2012, the Company had approximately $2,631,000 and $1,070,000, respectively, in cash balances at financial institutions which were in excess of the federally insured limits. | |||||||
[b] Concentration of Credit Risk - Accounts Receivable - Credit risk with respect to accounts receivable is generally diversified due to the large number of patients comprising the client base. The Company does have significant receivable balances with government payors and various insurance carriers. Generally, the Company does not require collateral or other security to support customer receivables. However, the Company continually monitors and evaluates its client acceptance and collection procedures to minimize potential credit risks associated with its accounts receivable and establishes an allowance for uncollectible accounts and as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is not material to the financial statements. | |||||||
A number of proposals for legislation continue to be under discussion which could substantially reduce Medicare and Medicaid (CMS) reimbursements to clinical laboratories. Depending upon the nature of regulatory action, and the content of legislation, the Company could experience a significant decrease in revenues from Medicare and Medicaid (CMS), which could have a material adverse effect on the Company. The Company is unable to predict, however, the extent to which such actions will be taken. | |||||||
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 Medytox Institute of Laboratory Medicine, Inc., its wholly-owned subsidiary ("MILM"), $2,906,844 on its breach of contract claim against Trident Laboratories, Inc. and its shareholders and awarded Seamus Lagan $750,000 individually against Christopher Hawley for defamatory postings on the internet. The jury rejected every claim made against the MILM parties. Trident's appeal has been dismissed and the appeals of the shareholders are pending. | |||||||
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. | |||||||
The Company has filed an action against Reginald Samuels and Ralph Perricelli seeking, among other things, a declaration that the convertible debentures in the aggregate amount of $500,000 that the Company issued to Mr. Samuels and Mr. Perricelli as part of the consideration for the purchase of their interests in International Technologies, LLC are null and void. Mr. Samuels and Mr. Perricelli have been served and the litigation is ongoing. | |||||||
On October 21, 2013, Mr. Samuels 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. Mr. Perricelli filed a similar action. The Company believes all these claims are without merit. | |||||||
The Company removed both cases from the Superior Court of New Jersey to the federal court in the District of New Jersey. The Company also filed to transfer both cases to the Southern District of Florida pursuant to the forum selection clause in the purchase agreement. The action filed by Mr. Perricelli has since been transferred to the Southern District of Florida. The motion to transfer the action filed by Mr. Samuels remains pending. |
15_Pro_Forma_Financial_Informa
15. Pro Forma Financial Information | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | ' | ||||||||||||||||||||
15. Pro Forma Financial Information | ' | ||||||||||||||||||||
The following unaudited pro forma data summarizes the results of operations for the year ended December 31, 2013 as if the acquisitions of International Technologies, LLC had been completed January 1, 2013. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place on January 1, 2013. | |||||||||||||||||||||
Medytox | International Technologies, | ||||||||||||||||||||
Solutions, Inc. | LLC | Pro Forma | |||||||||||||||||||
Historical | Historical | Adjustments | Ref | Combined | |||||||||||||||||
Revenues | $ | 52,523,660 | $ | 2,943 | $ | – | $ | 52,526,603 | |||||||||||||
Operating expenses | 38,023,670 | 305,183 | – | 38,328,853 | |||||||||||||||||
Income (loss) from operations | 14,499,990 | (302,240 | ) | – | 14,197,750 | ||||||||||||||||
Other income (expense) | (671,473 | ) | (1,343 | ) | – | (672,816 | ) | ||||||||||||||
Income (loss) before income taxes | 13,828,517 | (303,583 | ) | – | 13,524,934 | ||||||||||||||||
Provision (benefit) for income taxes | 5,568,600 | – | (114,200 | ) | -2 | 5,454,400 | |||||||||||||||
Net income (loss) | 8,259,917 | (303,583 | ) | 114,200 | 8,070,534 | ||||||||||||||||
Preferred stock dividends | 2,601,298 | – | – | 2,601,298 | |||||||||||||||||
Net income (loss) available for common shareholders | $ | 5,658,619 | $ | (303,583 | ) | $ | 114,200 | $ | 5,469,236 | ||||||||||||
Net income per share; | |||||||||||||||||||||
Basic and diluted | $ | 0.19 | $ | 0.18 | |||||||||||||||||
Weighted average number of shares, basic and diluted: | |||||||||||||||||||||
Basic and diluted | 29,654,703 | 29,654,703 | |||||||||||||||||||
-1 | Represents unaudited results of operations of International Technologies, LLC from January 1, 2013 to April 3, 2013. International Technologies' results of operations from April 4, 2013 to December 31, 2013 are consolidated with Medytox Solutions, Inc. | ||||||||||||||||||||
-2 | Additional income tax benefit on the loss related to International Technologies for the period January 1 to April 3, 2013. |
16_Subsequent_Events
16. Subsequent Events | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events [Abstract] | ' |
16. Subsequent Events | ' |
On February 4, 2014, $235,011 of equipment was delivered under a master lease entered into during the year ended December 31, 2013. Lease terms are for 42 months with a monthly lease payment of $6,580. The lease is accounted for as a capital lease. | |
On February 19, 2014, a committee of the Company’s board of directors approved the grant of 1,035,000 stock options under the Medytox Solutions, Inc. 2013 Incentive Compensation Plan to various employees. The options were granted on March 3, 2014 and were issued at an exercise price of $2.50, a term of 10 years, and 50% of the options vest each on the 6 month anniversary and 12 month anniversary of the grant date. | |
On March 12, 2014, an aggregate of 210,000 shares of the Company’s restricted common stock were issued to six management executives and one consultant as partial payment of bonuses which were accrued at December 31, 2013. The shares were valued at $2.50, based on the price of shares sold to investors, for a total of $525,000. | |
On March 14, 2014, an aggregate of $350,000 was paid to six management executives and one consultant as partial payment of bonuses which were accrued at December 31, 2013. | |
On March 17, 2014, the Company filed a Certificate of Designation with the State of Nevada authorizing up to 200,000 shares of Series D Convertible Preferred Stock ("Series D Preferred Stock"). With respect to dividends and liquidation rights, the Series D Preferred Stock ranks (i) on a parity with the Common Stock; (ii) senior to any class or series of preferred stock of the Company created in the future not specifically ranking by its terms senior to or on a parity with the Series D Preferred Stock; (iii) junior to any other class or series of preferred stock created in the future specifically ranking by its terms senior to the Series D Preferred Stock; and (iv) on a parity with the Series B Preferred Stock and any other class or series of preferred stock created in the future specifically ranking by its terms on a parity with the Series D Preferred Stock. | |
On March 18, 2014, MDI, pursuant to a stock purchase agreement, purchased all of the outstanding stock of Clinlab, Inc. ("Clinlab") from James A. Wilson and Daniel Stewart, previously the sole owners of Clinlab. Clinlab develops and markets laboratory information management systems. The purchase price was an aggregate of $2,250,000, $1,000,000 in cash and 200,000 shares of Series D Convertible Preferred Stock of the Company, convertible into $1,250,000 of common stock of the Company at the date of conversion. | |
On March 27, 2014, TCA Global Credit Master Fund, LP extended the maturity date of its loan to the Company until September 15, 2014. | |
On March 28, 2014, Sebastien Sainsbury was appointed to the Board of Directors of the Company. | |
Each of the holders of shares of Series B Preferred Stock, Epizon, Ltd., of which Seamus Lagan is the sole shareholder, Aella, Ltd., of which Sharon L. Hollis is the sole shareholder, Francisco Roca, III, Dr. Thomas F. Mendolia and Steven Sramowicz, entered into a purchase option agreement with the Company as of March 27, 2014. Each agreement grants the Company an option to purchase any or all shares of Series B Preferred Stock held by the holder at any time through March 27, 2016. Each holder owns 1,000 shares of Series B Preferred Stock. If all of a holder's shares are purchased by the Company pursuant to the option, the purchase price would be $5,000,000. If fewer shares are purchased from a holder, the purchase price would be adjusted proportionately. Each holder agreed not to transfer or dispose of any shares of Series B Preferred Stock during the term of the option, other than to the Company upon an exercise of the option. Any exercise of an option is completely at the Company's discretion. | |
The Company has evaluated subsequent events through the date the financial statements were issued and filed with SEC. The Company has determined that there are no other events that warrant disclosure or recognition in the financial statements. |
2_Summary_of_Significant_Accou1
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
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 June 22, 2011, the Company organized Medytox Medical Management Solutions Corp. ("MMMSC"), a Florida corporation, as a wholly-owned subsidiary. MMMSC was a marketing company selling laboratory testing services to medical clinics, hospitals and physicians’ offices. On October 15, 2013, MMMSC changed its name to Medytox Information Technology, Inc. (“MIT”). MIT provides information technology services and solutions to all subsidiaries and customers of the Company and operates from the corporate offices in West Palm Beach, Florida. | |
On July 26, 2011, the Company organized Medytox Institute of Laboratory Medicine, Inc. ("MILM"), a Florida corporation, as a wholly-owned subsidiary. MILM was organized to acquire and manage medical testing laboratories. MILM operates from the corporate offices in West Palm Beach, Florida. | |
On August 22, 2011, the Company acquired 100% of Medical Billing Choices, Inc. ("MBC"), a privately-owned North Carolina corporation, through a stock purchase agreement for cash and an installment note. MBC operates a medical billing service for a variety of medical providers throughout the southeastern United States from offices in Charlotte, North Carolina. Since the acquisition, MBC is the main billing company for the Company's laboratories. | |
On February 6, 2012, the Company formed Medytox Diagnostics Inc. (“MDI”), a Florida corporation, as a wholly-owned subsidiary to acquire and build clinical laboratories. MDI operates from the corporate offices in West Palm Beach, Florida. | |
On February 16, 2012, MDI acquired majority interest in Collectaway LLC, now known as PB Laboratories, LLC ("PB Labs"), a Florida limited liability company. On October 31, 2012, MDI acquired the remaining noncontrolling interest in PB Labs. As of October 31, 2012, PB Labs is a wholly-owned subsidiary of MDI. | |
On December 7, 2012, MDI acquired a majority interest in Biohealth Medical Laboratory, Inc. (“Biohealth”), a Florida corporation. | |
On January 1, 2013, 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, MDI 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. (“EPIC”). | |
On March 9, 2013, the Company formed Medytox Medical Marketing & Sales, Inc. (“MMMS”), a Florida corporation, as a wholly-owned subsidiary that provides marketing for clinical laboratories that are owned by the Company. | |
On April 4, 2013, MDI purchased 100% of the interests in International Technologies, LLC ("Tech"). In October 2013, Tech began doing business as NJ Reference labs (“NJ Ref”). NJ Ref operates a licensed clinical lab in Waldwick, New Jersey and is an enrolled Medicare provider. | |
Nature of Operations | ' |
The Company operates in the medical services segment. | |
Basis of Presentation | ' |
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission (“SEC”). | |
Reclassifications | ' |
Certain items on the statement of operations for the year ended December 31, 2012 have been reclassified to conform to the current period presentation. | |
Use of Estimates | ' |
The preparation of financial statements in conformity with generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant areas of estimate include the impairment of assets and rates for amortization, accrued liabilities, future income tax obligations and the inputs used in calculating stock-based compensation and transactions. Actual results could differ from those estimates and would impact future results of operations and cash flows. | |
Principles of Consolidation | ' |
The consolidated financial statements include the accounts of Medytox Solutions, Inc. and its wholly-owned subsidiaries, Medytox Information Technology, Inc., Medytox Institute of Laboratory Medicine, Inc., Medical Billing Choices, Inc., Medytox Diagnostics, Inc., PB Laboratories, LLC, Medytox Medical Marketing & Sales, Inc., Alethea Laboratories, Inc., EPIC Reference Labs, Inc., and International Technologies, LLC, and its majority-owned subsidiary, Biohealth Medical Laboratory, Inc. Due to the dispute with Trident and its selling shareholders (see Note – 4), the accounts of Trident Laboratories, Inc. have been excluded from consolidation. In addition, a disputed net income reserve of $397,918 has been established as of December 31, 2012 representing all of Trident’s net income recognized by the Company since August 22, 2011, the date of acquisition. All significant inter-company balances and transactions have been eliminated in consolidation. | |
Cash and Cash Equivalents | ' |
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2013 and 2012, respectively, the Company had no cash equivalents. | |
Revenue Recognition | ' |
Service revenues are principally generated from laboratory testing services including chemical diagnostic tests such as blood analysis and urine analysis. Net service revenues are recognized at the time the testing services are performed and are reported at their estimated net realizable amounts. | |
Net service revenues are determined utilizing gross service revenues net of contractual allowances. Even though it is the responsibility of the patient to pay for laboratory service bills, most individuals in the United States have an agreement with a third party payor such as Medicare, Medicaid or a commercial insurance provider to pay all or a portion of their healthcare expenses; the majority of services provided by Medytox are to patients covered under a third party payor contract. In certain cases, the individual has no insurance or does not provide insurance information. We estimate that 0% of self-pay billings will be collectible. The Company currently does not have any capitated agreements. In the remainder of the cases, Medytox is provided the third party billing information and seeks payment from the third party under the terms and conditions of the third party payor for health service providers like Medytox. Each of these third party payors may differ not only with regard to rates, but also with regard to terms and conditions of payment and providing coverage (reimbursement) for specific tests. Estimated revenues are established based on a series of procedures and judgments that require industry specific healthcare experience and an understanding of payor methods and trends. | |
We review our calculations on a monthly basis in order to make certain that we are properly allowing for the uncollectable portion of our gross billings and that our estimates remain sensitive to variances and changes within our payor groups. The contractual allowance calculation is made on the basis of historical allowance rates for the various specific payor groups on a monthly basis with a greater weight being given to the most recent trends; this process is adjusted based on recent changes in underlying contract provisions and shifts in the testing being performed. Bad debt expense represents our estimate of net revenues that will ultimately be uncollectable and is based upon our analysis of historical payment rates by specific payor groups on a monthly basis with primary weight being given to the most recent trends; this approach allows bad debt to more accurately adjust to short-term changes in the business environment. These two calculations are routinely analyzed by Medytox on the basis of actual allowances issued by payors and the actual payments made to determine what adjustments, if any, are needed. | |
Contractual Allowances and Doubtful Accounts Policy | ' |
Accounts receivable are reported at realizable value, net of allowances for contractual credits and doubtful accounts, which are estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimate and review the collectibility of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for contractual credits and doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues which may impact the collectibility of these receivables or reserve estimates. Revisions to the allowances for doubtful accounts estimates are recorded as an adjustment to bad debt expense within selling, general and administrative expenses. Receivables deemed to be uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. | |
As of December 31, 2013 and 2012, management recorded allowances for uncollectible accounts in the amount of $3,621,814 and $1,297,769, respectively. Bad debt expense was $10,634,789 and $7,021,945 for the years ended December 31, 2013 and 2012, respectively. | |
Impairment or Disposal of Long-Lived Assets | ' |
The Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment”. ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. The Company did not recognize any impairment losses for the years ended December 31, 2013 and 2012. | |
Fair Value of Financial Instruments | ' |
The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. | |
ASC 820 “Fair Value Measurements and Disclosures” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) a reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: | |
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; | |
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and | |
Level 3 - fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). | |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2013 and 2012. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. | |
The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements. | |
As of December 31, 2013 and 2012 the fair values of the Company’s financial instruments approximate their historical carrying amount. | |
Advertising | ' |
The costs of advertising are expensed as incurred. Advertising expense was $21,550 and $111,691 for the years ended December 31, 2013 and 2012, respectively. Advertising expenses are included in the Company’s operating expenses. | |
Stock Based Compensation | ' |
The Company accounts for Stock-Based Compensation under ASC 718 “Compensation – Stock Compensation”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. | |
The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Any stock options or warrants issued to non-employees are recorded in expense and additional paid-in capital in stockholders' equity over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options or warrants at the end of each period. | |
The Company issues stock to consultants for various services. The costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expense and a corresponding increase to additional paid-in-capital related to stock issued for services. | |
Income Taxes | ' |
Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than not to be realized. | |
The FASB has issued ASC 740 “Income Taxes”. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. | |
As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by ASC 740 and concluded that the tax position of the Company has not met the more-likely-than-not threshold as of December 31, 2013. | |
Basic and Diluted Income Per Share | ' |
The Company computes income 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 December 31, 2013, there were a total of 23,170,000 stock options outstanding to purchase shares of common stock, 346,400 warrants outstanding to purchase shares of common stock, a $100,000 convertible debenture convertible into 40,000 shares of the Company’s common stock, and $500,000 of convertible notes payable convertible into shares of the Company’s common stock at a 10% discount to the average market price for the thirty days prior to conversion. However, these potentially dilutive shares are considered to be anti-dilutive and are therefore not included in the calculation of income per share. | |
Segment Information | ' |
In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, the Company is required to report financial and descriptive information about its reportable operating segments. The Company does not consider itself to have any operating segments as of December 31, 2013 and 2012. |
4_Disputed_Subsidiary_Tables
4. Disputed Subsidiary (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Disputed Subsidiary Tables | ' | ||||
Assets and liabilities of the subsidiary | ' | ||||
Assets and liabilities of the disputed subsidiary as of December 31, 2013 and 2012 were as follows: | |||||
Total assets | $ | 1,367,796 | |||
Total liabilities | $ | 1,104,063 | |||
5_LongLived_Assets_Tables
5. Long-Lived Assets (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and equipment | ' | ||||||||
Property and equipment at December 31, 2013 and 2012 consisted of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Medical equipment | $ | 655,125 | $ | 269,931 | |||||
Equipment | 111,265 | 37,140 | |||||||
Equipment under capital leases | 980,948 | – | |||||||
Furniture | 206,587 | 66,606 | |||||||
Leasehold improvements | 243,983 | 47,197 | |||||||
Vehicles | 177,534 | 70,828 | |||||||
Computer equipment | 235,507 | 85,478 | |||||||
Software | 285,175 | 196,711 | |||||||
2,896,124 | 773,891 | ||||||||
Less accumulated depreciation | (739,743 | ) | (175,150 | ) | |||||
Property and equipment, net | $ | 2,156,381 | $ | 598,741 | |||||
6_Accrued_Expenses_Tables
6. Accrued Expenses (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued expenses | ' | ||||||||
Accrued expenses at December 31, 2013 and 2012 consisted of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Commissions payable | $ | 277,731 | $ | – | |||||
Dividends payable | 360,726 | – | |||||||
Accrued payroll and related liabilities | 114,471 | 283,490 | |||||||
Accrued bonuses | 1,900,000 | 500,000 | |||||||
Accrued interest | 46,842 | 146,943 | |||||||
Other accrued expenses | 156,114 | 96,489 | |||||||
Accrued expenses | $ | 2,855,884 | $ | 1,026,922 |
7_Notes_Payable_Tables
7. Notes Payable (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Notes Payable | ' | ||||||||
The Company and its subsidiaries are party to a number of loans with affiliates and unrelated parties. At December 31, 2013 and 2012, notes payable consisted of the following: | |||||||||
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. The due date of the note was extended from October 31, 2013 to February 5, 2014 by the lender. 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 Information Technology Inc. ("MIT") and Trident. | $ | 100,000 | $ | 500,000 | |||||
Loan for working capital, dated September 15, 2011, in the amount of $500,000 and bearing interest at 20%. Interest and principal was payable in 10 equal payments ending August 31, 2013. This note was subordinated to the loan from TCA and was secured by the assets of the Company, MIT and Trident. | – | 150,000 | |||||||
Acquisition note to former shareholders of Medical Billing Choices, Inc. ("MBC") in the amount of $750,000, 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. The note was extended from January 15, 2014 to September 15, 2014, and is secured by all assets of the Company and its subsidiaries (other than Trident and MBC). See "TCA Global" below. | 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 | |||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
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. | – | 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. | 150,000 | – | |||||||
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. | 150,000 | – | |||||||
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. | 98,471 | – | |||||||
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 $16,623 at December 31, 2013. | 15,845 | – | |||||||
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 $16,430 at December 31, 2013. | 16,279 | – | |||||||
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 $18,300 at December 31, 2013. | 17,676 | – | |||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
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 $1,639 at December 31, 2013. | 248,361 | – | |||||||
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 $1,639 at December 31, 2013. | 248,361 | – | |||||||
Loan from former member of International Technologies, LLC in the remaining amount of $416,667 at the date of acquisition, at 1% interest, with principal payments of $83,333 due quarterly starting June 7, 2013. | 166,668 | – | |||||||
Loan from former member of International Technologies, LLC in the remaining amount of $112,500 at the date of acquisition, at 1% interest, with principal payments of $22,500 due quarterly starting June 7, 2013. | 45,000 | – | |||||||
3,731,661 | 3,154,389 | ||||||||
Less current portion | (3,689,554 | ) | (3,154,389 | ) | |||||
Notes payable, net of current portion | $ | 42,107 | $ | – | |||||
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 December 30, 2013 and 2012 consisted of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Deferred loan costs | $ | 425,899 | $ | 321,950 | |||||
Less accumulated accretion as interest | (425,899 | ) | (244,758 | ) | |||||
9_Capital_Lease_Obligations_Ta
9. Capital Lease Obligations (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Capital Lease Obligations [Abstract] | ' | ||||||||
Capital leased assets | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Medical equipment | $ | 980,948 | $ | – | |||||
Less accumulated depreciation | (364,726 | ) | – | ||||||
Net | $ | 616,222 | $ | – | |||||
Aggregate future minimum rentals under capital leases | ' | ||||||||
December 31, | |||||||||
2014 | $ | 203,865 | |||||||
2015 | 208,612 | ||||||||
2016 | 82,058 | ||||||||
2017 | 35,575 | ||||||||
2018 | 35,575 | ||||||||
Thereafter | 68,186 | ||||||||
Total | 633,871 | ||||||||
Less interest: | 35,058 | ||||||||
Present value of minimum lease payments | 598,813 | ||||||||
Less current portion of capital lease obligations | 193,095 | ||||||||
Capital lease obligations, net of current portion | $ | 405,718 |
11_Stockholders_Equity_Tables
11. Stockholders' Equity (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||||||||||||
Options outstanding | ' | ||||||||||||||||||||||||||||||
The following summarizes option activity for the years ended December 31, 2013 and 2012: | |||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
Common Stock Options Outstanding | average | ||||||||||||||||||||||||||||||
Employees and | exercise | ||||||||||||||||||||||||||||||
Directors | Non-employees | Total | price | ||||||||||||||||||||||||||||
Outstanding at December 31, 2011 | – | 400,000 | 400,000 | 4.5 | |||||||||||||||||||||||||||
Options granted | 19,300,000 | 3,020,000 | 22,320,000 | $ | 5.66 | ||||||||||||||||||||||||||
Options exercised | – | – | – | – | |||||||||||||||||||||||||||
Options cancelled or expired | (1,000,000 | ) | (400,000 | ) | (1,400,000 | ) | 3.43 | ||||||||||||||||||||||||
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 December 31, 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 | ||||||||||||||||||||||||
$ | 2.5 | 7,550,000 | 3.66 | $ | 2.5 | $ | – | 7,450,000 | $ | 2.5 | $ | – | |||||||||||||||||||
$ | 5 | 6,600,000 | 3.97 | $ | 5 | – | 6,500,000 | $ | 5 | – | |||||||||||||||||||||
$ | 10 | 6,000,000 | 9.01 | $ | 10 | – | 6,000,000 | $ | 10 | – | |||||||||||||||||||||
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 December 31, 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 | ||||||||||||||||||||||||
$ | 2.5 | 1,020,000 | 3.94 | $ | 2.5 | $ | – | 1,020,000 | $ | 2.5 | $ | – | |||||||||||||||||||
$ | 5 | 1,000,000 | 4 | $ | 5 | – | 1,000,000 | $ | 5 | – | |||||||||||||||||||||
$ | 10 | 1,000,000 | 9.01 | $ | 10 | – | 1,000,000 | $ | 10 | – | |||||||||||||||||||||
3,020,000 | $ | 5.81 | $ | – | 3,020,000 | $ | 5.81 | $ | – | ||||||||||||||||||||||
Option assumptions | ' | ||||||||||||||||||||||||||||||
The Company estimated the fair value of employee stock options using the Black-Scholes Option Pricing Model. The fair value of employee stock options is expensed upon vesting of the awards. The fair value of employee stock options was estimated using the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $0.00 | ||||||||||||||||||||||||||||||
Expected term | 1 to 5 years | ||||||||||||||||||||||||||||||
Expected volatility | 29 to 30% | ||||||||||||||||||||||||||||||
Risk-free interest rate | 0.25 to 0.72% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
During the year ended December 31, 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 year ended December 31, 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 Company estimated the fair value of non-employee stock options using the Black-Scholes Option Pricing Model. The fair value of employee stock options is expensed upon vesting of the awards. The fair value of non-employee stock options was estimated using the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $0.00 | ||||||||||||||||||||||||||||||
Expected term | 2 to 10 years | ||||||||||||||||||||||||||||||
Expected volatility | 29 - 30% | ||||||||||||||||||||||||||||||
Risk-free interest rate | 0.25 – 1.78%% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
Warrant transactions | ' | ||||||||||||||||||||||||||||||
The following table summarizes warrant transactions for the year ended December 31, 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 December 31, 2013 | 346,400 | $ | 3.22 | 0.94 | $ | – | |||||||||||||||||||||||||
Exercisable at December 31, 2013 | 346,400 | $ | 3.22 | 0.94 | $ | – | |||||||||||||||||||||||||
Weighted Average Grant Date Fair Value | $ | 0.25 | |||||||||||||||||||||||||||||
Warrant assumption | ' | ||||||||||||||||||||||||||||||
During the year ended December 31, 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 one year 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 | 1 year | ||||||||||||||||||||||||||||||
Expected volatility | 29.13% | ||||||||||||||||||||||||||||||
Risk free interest rate | 0.15% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
During the year ended December 31, 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 | ||||||||||||||||||||||||||||||
12_Income_Taxes_Tables
12. Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Taxes Tables | ' | ||||||||
Iincome tax provision are summarized | ' | ||||||||
Significant components of the income tax provision are summarized as follows: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Current provision: | |||||||||
Federal | $ | 5,834,600 | $ | 1,702,200 | |||||
State | 1,027,500 | 181,700 | |||||||
Deferred provision: | |||||||||
Federal | (1,168,700 | ) | (1,267,200 | ) | |||||
State | (124,800 | ) | (135,300 | ) | |||||
$ | 5,568,600 | $ | 481,400 | ||||||
Statutory federal income tax rate to the Company's effective income tax rate on income before income taxes | ' | ||||||||
A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate on income before income taxes for the years ended December 31, 2013 and 2012 is as follows: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Expected federal income tax at 34% statutory rate | 34.00% | 34.00% | |||||||
State income taxes | 4.30% | 3.60% | |||||||
Permanent differences | 2.00% | 3.50% | |||||||
Change in valuation allowance | 0.00% | -26.00% | |||||||
40.30% | 15.10% | ||||||||
Deferred tax assets and liabilities are comprised | ' | ||||||||
The Company provides for income taxes using the liability method in accordance with FASB ASC Topic 740 “Income Taxes”. Deferred income taxes arise from the differences in the recognition of income and expenses for tax purposes. Deferred tax assets and liabilities are comprised of the following at December 31, 2013 and 2012: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Deferred income tax assets: | |||||||||
Allowance for bad debts | $ | 1,362,900 | $ | 1,980,600 | |||||
Accrued compensation | 385,700 | – | |||||||
Stock options | 170,300 | – | |||||||
Total deferred income tax assets | $ | 1,918,900 | $ | 1,980,600 | |||||
Deferred income tax liabilities: | |||||||||
Property and equipment | $ | (76,100 | ) | $ | – | ||||
Intangible amortization | (136,000 | ) | (36,100 | ) | |||||
Total deferred income tax liabilities | $ | (212,100 | ) | $ | (36,100 | ) | |||
Net deferred income taxes: | |||||||||
Current | 1,748,600 | 1,980,600 | |||||||
Non-current | (41,800 | ) | (36,100 | ) | |||||
$ | 1,706,800 | $ | 1,944,500 |
13_Business_Combinations_Table
13. Business Combinations (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Business Combinations [Abstract] | ' | ||||||||
Schedule of goodwill | ' | ||||||||
Goodwill was attributable to the following subsidiaries as of December 31, 2013 and December 31, 2012: | |||||||||
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 | |||||||
$ | 1,425,999 | $ | 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. | |||||||||
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 | 1,665,329 | ||||||||
Total identifiable net assets | 1,110,052 | ||||||||
Goodwill and unidentified intangible assets | – | ||||||||
$ | 1,110,052 | ||||||||
Intangible assets consisting of certain medical licenses were valued by management based on the fair value of obtaining such licenses. As the licenses have indefinite lives, the intangible assets are non-amortizable (See Note 5 – Long-Lived Assets). | |||||||||
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 non-interest bearing 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. | |||||||||
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 | 975,284 | ||||||||
Total identifiable net assets | 700,000 | ||||||||
Goodwill and unidentified intangible assets | – | ||||||||
$ | 700,000 | ||||||||
Intangible assets consisting of certain medical licenses were valued by management based on the fair value of obtaining such licenses. As the licenses have indefinite lives, the intangible assets are non-amortizable (See Note 5 – Long-Lived Assets). | |||||||||
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. | |||||||||
Biohelath Medical Laboratory, Inc. | |||||||||
On December 7, 2012, the Company, through its subsidiary, MDI, agreed to purchase 50.5% of Biohealth Medical Laboratory, Inc. ("Biohealth") from two unrelated parties for cash of $100,000 and an installment note in a total amount of $165,125. The note was paid in $75,000 payments due on February 7 and May 7, 2013 and was reduced by a contingent consideration adjustment of $24,913, net of the final installment of $15,125 due on August 7, 2013. | |||||||||
The following table summarizes the consideration given for Biohealth and the fair values of the assets acquired and liabilities assumed recognized at the acquisition date, as well as the fair value at the acquisition date of the noncontrolling interest in Biohealth. | |||||||||
Consideration Given: | |||||||||
Cash | $ | 100,000 | |||||||
Acquisition Note | 165,125 | ||||||||
Contingent consideration adjustment | (24,913 | ) | |||||||
Total Consideration | $ | 240,212 | |||||||
Fair value of identifiable assets acquired and liabilities assumed: | |||||||||
Cash | $ | 19,327 | |||||||
Accounts receivable | 64,206 | ||||||||
Property and equipment, net | 9,477 | ||||||||
Deposits | 3,143 | ||||||||
Accounts payable | (120,590 | ) | |||||||
Accrued expenses | (6,110 | ) | |||||||
Identifiable intangible assets | 275,000 | ||||||||
Total identifiable net assets | 244,453 | ||||||||
Noncontrolling interest in Biohealth | (121,004 | ) | |||||||
Goodwill | 116,763 | ||||||||
$ | 240,212 | ||||||||
Intangible assets consisting of certain medical licenses were valued by management based on the fair value of obtaining such licenses. As the licenses have indefinite lives, the intangible assets are non-amortizable (See Note 5 – Long-Lived Assets). | |||||||||
PB Laboratories, LLC | |||||||||
On February 16, 2012, the Company, through its subsidiary, MDI, agreed to purchase 50.5% of PB Laboratories, LLC ("PB Labs") from an unrelated party for cash of $1,000 and an installment note in a total amount of $200,000. The note was paid in $50,000 quarterly payments over 12 months. | |||||||||
On October 31, 2012, MDI agreed to purchase the remaining 49.5% of PB Labs from the noncontrolling member for an installment note in a total amount of $200,000. The note was paid in $50,000 quarterly payments over 12 months. | |||||||||
The following table summarizes the consideration given for PB Labs and the fair values of the assets acquired and liabilities assumed recognized at the acquisition dates of PB Labs. | |||||||||
Consideration Given: | |||||||||
Cash | $ | 1,000 | |||||||
Acquisition Notes | 400,000 | ||||||||
Total Consideration | $ | 401,000 | |||||||
Fair value of identifiable assets acquired and liabilities assumed: | |||||||||
Cash | $ | 1,876 | |||||||
Property and equipment, net | 17,000 | ||||||||
Identifiable intangible assets | 275,000 | ||||||||
Total identifiable net assets | 293,876 | ||||||||
Goodwill | 107,124 | ||||||||
$ | 401,000 | ||||||||
14_Commitments_and_Contingenci1
14. Commitments and Contingencies (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Commitments And Contingencies Tables | ' | ||||||
Future minimum operating lease payments | ' | ||||||
Year ending December 31, | |||||||
2014 | $ | 333,656 | |||||
2015 | 303,922 | ||||||
2016 | 178,461 | ||||||
2017 | 160,684 | ||||||
2018 | 116,350 | ||||||
2019 and thereafter | 30,951 | ||||||
Total minimum future lease payments | $ | 1,124,024 | |||||
Minimum purchase commitments | ' | ||||||
The Company has entered into a purchase agreement for reagent supplies through December, 2020. Minimum purchase commitments as of December 31, 2013 are as follows: | |||||||
Year ending December 31, | |||||||
2014 | $ | 54,871 | |||||
2015 | 54,871 | ||||||
2016 | 54,871 | ||||||
2017 | 54,871 | ||||||
2018 | 54,871 | ||||||
2019 and thereafter | 109,742 | ||||||
Total purchase commitments | $ | 384,097 |
15_Pro_Forma_Financial_Informa1
15. Pro Forma Financial Information (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | ' | ||||||||||||||||||||
Pro forma financial information | ' | ||||||||||||||||||||
summarizes the results of operations for the year ended December 31, 2013 as if the acquisitions of International Technologies, LLC had been completed January 1, 2013. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place on January 1, 2013. | |||||||||||||||||||||
Medytox | International Technologies, | ||||||||||||||||||||
Solutions, Inc. | LLC | Pro Forma | |||||||||||||||||||
Historical | Historical | Adjustments | Ref | Combined | |||||||||||||||||
Revenues | $ | 52,523,660 | $ | 2,943 | $ | – | $ | 52,526,603 | |||||||||||||
Operating expenses | 38,023,670 | 305,183 | – | 38,328,853 | |||||||||||||||||
Income (loss) from operations | 14,499,990 | (302,240 | ) | – | 14,197,750 | ||||||||||||||||
Other income (expense) | (671,473 | ) | (1,343 | ) | – | (672,816 | ) | ||||||||||||||
Income (loss) before income taxes | 13,828,517 | (303,583 | ) | – | 13,524,934 | ||||||||||||||||
Provision (benefit) for income taxes | 5,568,600 | – | (114,200 | ) | -2 | 5,454,400 | |||||||||||||||
Net income (loss) | 8,259,917 | (303,583 | ) | 114,200 | 8,070,534 | ||||||||||||||||
Preferred stock dividends | 2,601,298 | – | – | 2,601,298 | |||||||||||||||||
Net income (loss) available for common shareholders | $ | 5,658,619 | $ | (303,583 | ) | $ | 114,200 | $ | 5,469,236 | ||||||||||||
Net income per share; | |||||||||||||||||||||
Basic and diluted | $ | 0.19 | $ | 0.18 | |||||||||||||||||
Weighted average number of shares, basic and diluted: | |||||||||||||||||||||
Basic and diluted | 29,654,703 | 29,654,703 | |||||||||||||||||||
-1 | Represents unaudited results of operations of International Technologies, LLC from January 1, 2013 to April 3, 2013. International Technologies' results of operations from April 4, 2013 to December 31, 2013 are consolidated with Medytox Solutions, Inc. | ||||||||||||||||||||
-2 | Additional income tax benefit on the loss related to International Technologies for the period January 1 to April 3, 2013. |
2_Summary_of_Significant_Accou2
2. Summary of Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Allowances for uncollectible accounts | $3,621,814 | $1,297,769 |
Bad debt expense | 10,634,789 | 7,021,945 |
Advertising expense | $21,550 | $111,691 |
Stock Options | ' | ' |
Antidilutive shares excluded from EPS | 23,170,000 | ' |
Warrants | ' | ' |
Antidilutive shares excluded from EPS | 346,400 | ' |
Convertible Debentures | ' | ' |
Antidilutive shares excluded from EPS | 40,000 | ' |
4_Disputed_Subsidiary_Details
4. Disputed Subsidiary (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Assets of disupted subsidiary | $1,367,796 | $1,367,796 |
Liabilities of disputed subsidiary | 1,104,063 | 1,104,063 |
Disputed Subsidiary | ' | ' |
Assets of disupted subsidiary | 1,367,796 | 1,367,796 |
Liabilities of disputed subsidiary | $1,104,063 | $1,104,063 |
4_Disputed_Subsidiary_Details_
4. Disputed Subsidiary (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Legal fees | $976,789 | $325,762 |
Disputed net income - Trident | 397,918 | 397,918 |
Disputed Subsidiary | ' | ' |
Legal fees | 976,789 | 325,762 |
Disputed net income - Trident | ' | 397,918 |
Commissions payable | $389,135 | $389,135 |
5_LongLived_Assets_Details
5. Long-Lived Assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property and equipment, gross | $2,896,124 | $773,891 |
Accumulated depreciation | -739,743 | -175,150 |
Property and equipment, net | 2,156,381 | 598,741 |
Medical equipment | ' | ' |
Property and equipment, gross | 655,125 | 269,931 |
Equipment | ' | ' |
Property and equipment, gross | 111,265 | 37,140 |
Capital lease assets | ' | ' |
Property and equipment, gross | 980,948 | 0 |
Furniture | ' | ' |
Property and equipment, gross | 206,587 | 66,606 |
Leasehold Improvements | ' | ' |
Property and equipment, gross | 243,983 | 47,197 |
Vehicles | ' | ' |
Property and equipment, gross | 177,534 | 70,828 |
Computer Equipment | ' | ' |
Property and equipment, gross | 235,507 | 85,478 |
Software | ' | ' |
Property and equipment, gross | $285,175 | $196,711 |
5_LongLived_Assets_Details_Nar
5. Long-Lived Assets (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Property, Plant and Equipment [Abstract] | ' | ' |
Depreciation | $407,971 | $65,648 |
Medical licenses | $3,190,613 | $550,000 |
6_Accrued_Expenses_Details
6. Accrued Expenses (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accrued expenses | $2,855,884 | $1,026,922 |
Disputed Subsidiary | ' | ' |
Commissions payable | 277,731 | 0 |
Dividends payable | 360,726 | 0 |
Accrued payroll and related liabilities | 114,471 | 283,490 |
Accrued bonuses | 1,900,000 | 500,000 |
Accrued interest | 46,842 | 146,943 |
Other accrued expenses | 156,114 | 96,489 |
Accrued expenses | $2,855,884 | $1,026,922 |
7_Notes_Payable_DetailsNotes_P
7. Notes Payable (Details-Notes Payable) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes payable, total | $3,731,661 | $3,154,389 |
Less: current portion | -3,689,554 | -3,154,389 |
Notes payable, net of current portion | 42,107 | 0 |
Convertible debenture for working capital | ' | ' |
Notes payable, total | 100,000 | 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 | 0 | 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 | 150,000 | 0 |
Acquisition note 2 to Alethea | ' | ' |
Notes payable, total | 150,000 | 0 |
Loan to former shareholders Alethea | ' | ' |
Notes payable, total | 98,471 | 0 |
Commercial loan | ' | ' |
Notes payable, total | 15,845 | 0 |
Commercial loan 2 | ' | ' |
Notes payable, total | 16,279 | 0 |
Commercial loan 3 | ' | ' |
Notes payable, total | 17,676 | 0 |
Acquisition convertible note 1 | ' | ' |
Notes payable, total | 248,361 | 0 |
Acquisition convertible note 2 | ' | ' |
Notes payable, total | 248,361 | 0 |
Loan from former member Intl Technologies | ' | ' |
Notes payable, total | 166,668 | 0 |
Loan 2 from former member Intl Technologies | ' | ' |
Notes payable, total | $45,000 | $0 |
7_Notes_Payable_DetailsDeferre
7. Notes Payable (Details-Deferred loan costs) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Debt Disclosure [Abstract] | ' | ' |
Deferred loan costs | $425,899 | $321,950 |
Less: accumulated accretion as interest | -425,899 | -244,758 |
Deferred loan costs, net | $0 | $77,192 |
8_Related_Party_Transactions_D
8. Related Party Transactions (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Forhan | ' | ' |
Outstanding to related parties | ' | $57,100 |
Payments made to related parties | 10,000 | ' |
Capital contribution | 47,100 | ' |
Alcimede | ' | ' |
Outstanding to related parties | ' | 85,000 |
Payments made to related parties | 85,000 | ' |
Payments made pursuant to consulting agreement | 240,000 | 240,000 |
Payments made for certain operating expenses and asset purchases | 520,334 | 71,422 |
Interest paid | 18,417 | ' |
DASH | ' | ' |
Payments made pursuant to consulting agreement | 33,070 | 116,930 |
MBC Shareholder | ' | ' |
Outstanding to related parties | ' | 100,000 |
Mendolia | ' | ' |
Payments made for certain operating expenses and asset purchases | $252,841 | $48,786 |
9_Capital_Lease_Obligations_De
9. Capital Lease Obligations (Details-Capital leased assets) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Capital Lease Obligations [Abstract] | ' | ' |
Medical equipment | $980,948 | $0 |
Less accumulated depreciation | -364,726 | 0 |
Net | $616,222 | $0 |
9_Capital_Lease_Obligations_De1
9. Capital Lease Obligations (Details-Future miminum rentals) (USD $) | Dec. 31, 2013 |
Capital Lease Obligations [Abstract] | ' |
2014 | $203,865 |
2015 | 208,612 |
2016 | 82,058 |
2017 | 35,575 |
2018 | 35,575 |
Thereafter | 68,186 |
Total | 633,871 |
Less interest: | 35,058 |
Present value of minimum lease payments | 598,813 |
Less current portion of capital lease obligations | 193,095 |
Capital lease obligations, net of current portion | $405,718 |
9_Capital_Lease_Obligations_De2
9. Capital Lease Obligations (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Capital Lease Obligations [Abstract] | ' |
Depreciation expense | $137,306 |
10_Stockholders_Equity_Details
10. Stockholders' Equity (Details-Option Activity) (Stock Options, USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Options outstanding | ' | ' |
Options outstanding, beginning balance | 21,320,000 | 400,000 |
Options granted | 1,850,000 | 22,320,000 |
Options exercised | ' | ' |
Options cancelled or expired | ' | -1,400,000 |
Options outstanding, ending balance | 23,170,000 | 21,320,000 |
Weighted Average Exercise Price | ' | ' |
Options outstanding, beginning balance | $5.79 | $4.50 |
Options granted | $3.24 | $5.66 |
Options exercised | ' | ' |
Options cancelled or expired | ' | $3.43 |
Options outstanding, ending balance | $5.33 | $5.79 |
Employees and Directors | ' | ' |
Options outstanding | ' | ' |
Options outstanding, beginning balance | 18,300,000 | 0 |
Options granted | 1,850,000 | 19,300,000 |
Options exercised | ' | ' |
Options cancelled or expired | ' | -1,000,000 |
Options outstanding, ending balance | 20,150,000 | 18,300,000 |
Weighted Average Exercise Price | ' | ' |
Options outstanding, ending balance | $5.55 | ' |
Non-Employee | ' | ' |
Options outstanding | ' | ' |
Options outstanding, beginning balance | 3,020,000 | 400,000 |
Options granted | ' | 3,020,000 |
Options exercised | ' | ' |
Options cancelled or expired | ' | -400,000 |
Options outstanding, ending balance | 3,020,000 | 3,020,000 |
10_Stockholders_Equity_Details1
10. Stockholders' Equity (Details-Options outstanding and exercisable) (Stock Options, USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
Employees and Directors | 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 | 400,000 | 20,150,000 | 18,300,000 | 0 | 7,550,000 | 6,600,000 | 6,000,000 |
Weighted average remaining contractual life | ' | ' | ' | ' | ' | ' | '3 years 7 months 28 days | '3 years 11 months 19 days | '9 years 4 days |
Weighted average exercise price - outstanding | $5.33 | $5.79 | $4.50 | $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 | ' | ' | ' | $5.55 | ' | ' | $2.50 | $5 | $10 |
Aggregate intrinsic value - vested and exercisable | ' | ' | ' | $0 | ' | ' | $0 | $0 | $0 |
10_Stockholders_Equity_Details2
10. Stockholders' Equity (Details-Non-employee options outstanding) (Stock Options, USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 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 | 400,000 | 3,020,000 | 1,020,000 | 1,000,000 | 1,000,000 |
Weighted average remaining contractual life | ' | ' | ' | ' | '3 years 11 months 9 days | '4 years | '9 years 4 days |
Weighted average exercise price - outstanding | $5.33 | $5.79 | $4.50 | $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 |
10_Stockholders_Equity_Details3
10. Stockholders' Equity (Details-Assumptions) (Stock Options, USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Employees and Directors | ' |
Stock price | $0 |
Dividend yield | 0.00% |
Employees and Directors | Minimum | ' |
Contractual term | '1 year |
Expected volatility | 29.00% |
Risk free interest rate | 0.25% |
Employees and Directors | Maximum | ' |
Contractual term | '5 years |
Expected volatility | 30.00% |
Risk free interest rate | 0.72% |
Two Directors | ' |
Stock price | $2.50 |
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% |
10_Stockholders_Equity_Details4
10. Stockholders' Equity (Details-Warrants outstanding) (Warrant, USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Warrant | ' |
Number of warrants | ' |
Warrants outstanding - beginning balance | 0 |
Warrants granted | 346,400 |
Warrants oustanding - ending balance | 346,400 |
Warrants exercisable | 346,400 |
Weighted average exercise price | ' |
Warrants outstanding - beginning balance | $0 |
Warrants granted | $3.22 |
Warrants outstanding - ending balance | $3.22 |
Warrants exercisable | $3.22 |
Aggregate intrinsic value | ' |
Warrants outstanding - beginning balance | ' |
Warrants granted | ' |
Warrants outstanding - ending balance | ' |
Warrants exercisable | ' |
Weighted average grant date fair value | $3.22 |
10_Stockholders_Equity_Details5
10. Stockholders' Equity (Details-Warrant assumption) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Warrants issued total 46,400 | ' |
Stock price | $0.01 |
Contractual term | '1 year |
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% |
10_Stockholders_Equity_Details6
10. Stockholders' Equity (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Shares repurchased, shares | 40,000 | ' |
Shares repurchased, cost | $100,000 | $100,000 |
Shares issued in lieu of compensation, shares | 25,000 | ' |
Shares issued in lieu of compensation, value | 62,500 | 225 |
Stock issued for acquisition, value | 400,000 | ' |
Stock based compensation | 452,500 | 235,001 |
Convertible Series C Preferred Stock | ' | ' |
Stock and warrants issued | 203,233 | ' |
Preferred stock Series B | ' | ' |
Dividends earned | 2,601,298 | ' |
Dividends payable | 360,726 | ' |
Shares issued in lieu of compensation, shares | ' | 5,000 |
Nine investors | ' | ' |
Stock and warrants issued | 46,400 | ' |
Proceeds from issuance of warrants | 116,000 | ' |
Two investors | ' | ' |
Stock and warrants issued | 68,000 | ' |
Proceeds from issuance of warrants | $170,000 | ' |
12_Income_Taxes_DetailsIncome_
12. Income Taxes (Details-Income tax components) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Current provision: | ' | ' |
Federal | $5,834,600 | $1,702,200 |
State | 1,027,500 | 181,700 |
Deferred provision: | ' | ' |
Federal | -1,168,700 | -1,267,200 |
State | -124,800 | -135,300 |
Total | $5,568,600 | $481,400 |
12_Income_Taxes_DetailsEffecti
12. Income Taxes (Details-Effective income tax rate) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' |
Expected federal income tax at 34% statutory rate | 34.00% | 34.00% |
State income taxes | 4.30% | 3.60% |
Permanent differences | 2.00% | 3.50% |
Change in valuation allowance | 0.00% | -26.00% |
Income tax provision (benefit) | 40.30% | 15.10% |
12_Income_Taxes_DetailsDeferre
12. Income Taxes (Details-Deferred income taxes) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred tax assets: | ' | ' |
Allowance for bad debts | $1,362,900 | $1,980,600 |
Accrued compensation | 385,700 | 0 |
Stock options | 170,300 | 0 |
Total deferred tax assets | 1,918,900 | 1,980,600 |
Deferred tax liabilities: | ' | ' |
Property and equipment | -76,100 | 0 |
Intangible amortization | -136,000 | -36,100 |
Total deferred liabilities | -212,100 | -36,100 |
Net deferred income taxes: | ' | ' |
Current | 1,748,600 | 1,980,600 |
Non-current | -41,800 | -36,100 |
Net deferred tax | $1,706,800 | $1,944,500 |
13_Business_Combinations_Detai
13. Business Combinations (Details-Goodwill (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Goodwill | $1,425,999 | $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 |
13_Business_Combinations_Detai1
13. Business Combinations (Detail-Acquisition summary) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Consideration Given | ' | ' |
Cash | $735,052 | $101,000 |
Fair value of identifiable assets acquired and liabilities assumed: | ' | ' |
Goodwill and unidentified intangible assets | 1,425,999 | 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 | 1,665,329 | ' |
Total identifiable net assets | 1,110,052 | ' |
Goodwill and unidentified intangible assets | 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 | ' |
Identifiable intangible assets | 975,284 | ' |
Total identifiable net assets | 700,000 | ' |
Goodwill and unidentified intangible assets | 0 | ' |
Total consideration | 700,000 | ' |
Biohealth Medical Laboratory | ' | ' |
Consideration Given | ' | ' |
Cash | 100,000 | ' |
Amount due | 165,125 | ' |
Acquisition notes | -24,913 | ' |
Total consideration | 240,212 | ' |
Fair value of identifiable assets acquired and liabilities assumed: | ' | ' |
Cash | 19,327 | ' |
Property and equipment, net | 64,206 | ' |
Capital lease assets, net | 9,477 | ' |
Accounts payable and accrued expenses | 3,143 | ' |
Notes payable | -120,590 | ' |
Capital lease obligation | -6,110 | ' |
Identifiable intangible assets | 275,000 | ' |
Total identifiable net assets | 244,453 | ' |
Noncontrolling interest | -121,004 | ' |
Goodwill and unidentified intangible assets | 116,763 | 141,676 |
Total consideration | 240,212 | ' |
PB Laboratories | ' | ' |
Consideration Given | ' | ' |
Cash | 1,000 | ' |
Acquisition notes | 400,000 | ' |
Total consideration | 401,000 | ' |
Fair value of identifiable assets acquired and liabilities assumed: | ' | ' |
Cash | 1,876 | ' |
Property and equipment, net | 17,000 | ' |
Identifiable intangible assets | 275,000 | ' |
Total identifiable net assets | 293,876 | ' |
Goodwill and unidentified intangible assets | 107,124 | 107,124 |
Total consideration | $401,000 | ' |
14_Commitments_and_Contingenci2
14. Commitments and Contingencies (Details-Operating lease payments) (USD $) | Dec. 31, 2013 |
Commitments and Contingencies Disclosure [Abstract] | ' |
2014 | $333,656 |
2015 | 303,922 |
2016 | 178,461 |
2017 | 160,684 |
2018 | 116,350 |
2019 and thereafter | 30,951 |
Total | $1,124,024 |
14_Commitments_and_Contingenci3
14. Commitments and Contingencies (Details-Purchase commitments) (USD $) | Dec. 31, 2013 |
Commitments and Contingencies Disclosure [Abstract] | ' |
2014 | $54,871 |
2015 | 54,871 |
2016 | 54,871 |
2017 | 54,871 |
2018 | 54,871 |
2019 and thereafter | 109,742 |
Total purchase commitments | $384,097 |
14_Commitments_and_Contingenci4
14. Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Rent expense | $350,169 | $134,733 |
Master equipment lease commitment | 1,400,000 | ' |
Uninsured cash | $2,631,000 | $1,070,000 |
15_Pro_Forma_Financial_Informa2
15. Pro Forma Financial Information (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Revenues | $52,523,660 | $21,076,357 |
Total operating expenses | 38,023,670 | 17,545,404 |
Income (loss) from operations | 14,499,990 | 3,530,953 |
Other income (expense) | 389 | 129 |
Income (loss) before income taxes | 13,828,517 | 3,228,355 |
Provision (benefit) for income taxes | 5,568,600 | 481,400 |
Net income (loss) | 8,259,917 | 2,746,955 |
Preferred stock dividends | 2,601,298 | 50,000 |
Net income (loss) available for common shareholders | 5,658,619 | 2,299,037 |
Net income per common share - Basic and diluted | $0.19 | $0.07 |
Weighted average number of common shares outstanding during the period - Basic and diluted | 29,654,703 | 30,795,073 |
Medytox Solutions, Inc. Historical | ' | ' |
Revenues | 52,523,660 | ' |
Total operating expenses | 38,023,670 | ' |
Income (loss) from operations | 14,499,990 | ' |
Other income (expense) | -671,473 | ' |
Income (loss) before income taxes | 13,828,517 | ' |
Provision (benefit) for income taxes | 5,568,600 | ' |
Net income (loss) | 8,259,917 | ' |
Preferred stock dividends | 2,601,298 | ' |
Net income (loss) available for common shareholders | 5,658,619 | ' |
Net income per common share - Basic and diluted | $0.19 | ' |
Weighted average number of common shares outstanding during the period - Basic and diluted | 29,654,703 | ' |
International Technologies, LLC Historical | ' | ' |
Revenues | 2,943 | ' |
Total operating expenses | 305,183 | ' |
Income (loss) from operations | -302,240 | ' |
Other income (expense) | -1,343 | ' |
Income (loss) before income taxes | -303,583 | ' |
Net income (loss) | -303,583 | ' |
Net income (loss) available for common shareholders | -303,583 | ' |
Pro Forma Adjustments | ' | ' |
Provision (benefit) for income taxes | -114,200 | ' |
Net income (loss) | 114,200 | ' |
Net income (loss) available for common shareholders | 114,200 | ' |
Combined | ' | ' |
Revenues | 52,526,603 | ' |
Total operating expenses | 38,328,853 | ' |
Income (loss) from operations | 14,197,750 | ' |
Other income (expense) | -672,816 | ' |
Income (loss) before income taxes | 13,524,934 | ' |
Provision (benefit) for income taxes | 5,454,400 | ' |
Net income (loss) | 8,070,534 | ' |
Preferred stock dividends | 2,601,298 | ' |
Net income (loss) available for common shareholders | $5,469,236 | ' |
Net income per common share - Basic and diluted | $0.18 | ' |
Weighted average number of common shares outstanding during the period - Basic and diluted | 29,654,703 | ' |