Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 13-May-14 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Medytox Solutions, Inc. | ' |
Entity Central Index Key | '0001374536 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 30,206,386 |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2014 | ' |
Condensed_Balance_Sheets
Condensed Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Current assets: | ' | ' |
Cash | $2,739,213 | $4,141,416 |
Accounts receivable, net | 15,922,652 | 10,986,368 |
Prepaid expenses and other current assets | 256,640 | 194,137 |
Deferred tax assets | 3,080,000 | 1,748,600 |
Assets attributable to disputed activity | 0 | 1,367,796 |
Total current assets | 21,998,505 | 18,438,317 |
Property and equipment, net | 2,627,211 | 2,156,381 |
Other assets: | ' | ' |
Intangible assets | 3,190,613 | 3,190,613 |
Goodwill | 3,699,502 | 1,425,999 |
Deposits | 123,267 | 96,747 |
Total assets | 31,639,098 | 25,308,057 |
Current liabilities: | ' | ' |
Accounts payable | 1,840,081 | 1,755,965 |
Accrued expenses | 2,307,412 | 2,855,884 |
Income tax liabilities | 9,386,338 | 6,052,740 |
Disputed net income - Trident | 0 | 397,918 |
Current portion of notes payable | 3,305,453 | 3,689,554 |
Current portion of capital lease obligation | 264,847 | 193,095 |
Liabilities attributable to disputed activity | 0 | 1,104,063 |
Total current liabilities | 17,104,131 | 16,049,219 |
Other liabilities: | ' | ' |
Notes payable, net of current portion | 0 | 42,107 |
Capital lease obligations, net of current portion | 525,984 | 405,718 |
Deferred tax liabilities | 74,800 | 41,800 |
Total liabilities | 17,704,915 | 16,538,844 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Common stock | 3,021 | 3,000 |
Additional paid-in-capital | 3,680,182 | 1,905,223 |
Deferred issuance costs | -12,500 | -12,500 |
Retained earnings | 10,142,455 | 6,752,485 |
Total Medytox Solutions stockholders' equity | 13,813,179 | 8,648,209 |
Noncontrolling interest | 121,004 | 121,004 |
Total stockholders' equity | 13,934,183 | 8,769,213 |
Total liabilities and stockholders' equity | 31,639,098 | 25,308,057 |
Series B Preferred Stock | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, 100,000,000 shares authorized: | 1 | 1 |
Series C Preferred Stock | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, 100,000,000 shares authorized: | 0 | 0 |
Series D preferred stock | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, 100,000,000 shares authorized: | $20 | $0 |
Condensed_Balance_Sheets_Paren
Condensed Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
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 | 30,206,386 | 29,996,386 |
Common stock shares outstanding | 30,206,386 | 29,996,386 |
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 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Series D preferred stock | ' | ' |
Preferred stock shares authorized | 200,000 | 200,000 |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares issued | 200,000 | 0 |
Preferred stock shares outstanding | 200,000 | 0 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Income Statement [Abstract] | ' | ' |
Revenues | $21,062,572 | $8,023,759 |
Operating expenses: | ' | ' |
Direct costs of revenue | 3,277,841 | 1,672,631 |
General and administrative | 3,719,958 | 2,190,182 |
Legal fees related to disputed subsidiary | 58,672 | 126,013 |
Sales and marketing expenses | 789,302 | 483,735 |
Bad debt expense | 6,187,033 | 2,219,193 |
Depreciation and amortization | 165,688 | 74,549 |
Total operating expenses | 14,198,494 | 6,766,303 |
Income from operations | 6,864,078 | 1,257,456 |
Other income (expense): | ' | ' |
Other income | 121 | 151 |
Gain on settlement of debt | 0 | 47,100 |
Gain on settlement of assets | 0 | 250 |
Gain on disposition of subsidiary | 134,185 | ' |
Loss on legal settlement | 0 | -69,800 |
Interest expense | -96,751 | -187,844 |
Total other income (expense) | 37,555 | -210,143 |
Income before income taxes | 6,901,633 | 1,047,313 |
Provision for income taxes | 2,598,100 | 394,100 |
Net income attributable to Medytox Solutions | 4,303,533 | 653,213 |
Preferred stock dividends | 913,563 | 238,741 |
Net income (loss) attributable to Medytox Solutions common shareholders | $3,389,970 | $414,472 |
Net income per common share: Basic | $0.11 | $0.01 |
Net income per common share: Diluted | $0.11 | $0.01 |
Weighted average number of shares outstanding during the period - Basic | 30,043,053 | 29,563,504 |
Weighted average number of shares outstanding during the period - Diluted | 30,337,497 | 29,966,737 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Cash flows from operating activities: | ' | ' |
Net income | $4,303,533 | $653,213 |
Adjustments to reconcile net income to net cash provided by operations: | ' | ' |
Depreciation and amortization | 165,688 | 74,549 |
Stock issued for services | 0 | 62,500 |
Stock-based consulting fees | 0 | 85,000 |
Bad debts | 6,187,033 | 2,219,193 |
Accretion of loan costs as interest | 0 | 65,817 |
Accretion of beneficial conversion feature as interest | 3,278 | 0 |
Gain on disposition of subsidiary | -134,185 | ' |
Gain on disposal of equipment | 0 | -250 |
Gain on settlement of debt | 0 | -47,100 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -11,069,300 | -2,438,391 |
Prepaid expenses and other current assets | -62,261 | 103,442 |
Deferred tax assets | -1,331,400 | -313,800 |
Security deposits | -25,820 | 0 |
Accounts payable | 78,767 | -76,466 |
Accrued expenses | -115,891 | 69,910 |
Income tax liabilities | 3,333,598 | 691,800 |
Deferred tax liabilities | 33,000 | 16,100 |
Net cash provided by operating activities | 1,366,040 | 1,165,517 |
Cash flows used in investing activities: | ' | ' |
Purchase of property and equipment | -387,407 | -132,195 |
Cash received in sale of property and equipment | 0 | 250 |
Cash advanced to related party | 0 | -80,111 |
Cash advances to third parties | 0 | -655,052 |
Cash paid for acquisitions | -1,000,000 | -100,000 |
Cash received in acquisitions | 19,306 | 0 |
Net cash used in investing activities | -1,368,101 | -967,108 |
Cash flows provided by (used in) financing activities: | ' | ' |
Proceeds from the sale of common stock | 0 | 116,000 |
Deferred issuance costs | 0 | -52,350 |
Dividends on Series B preferred stock | -913,563 | -238,741 |
Proceeds from issuance of notes payable | 0 | 800,000 |
Payments on notes payable | -429,486 | -568,692 |
Payments on capital lease obligations | -57,093 | -29,801 |
Payments on related party loans | 0 | -95,000 |
Common stock repurchased from lender | 0 | -75,000 |
Net cash used in financing activities | -1,400,142 | -143,584 |
Net increase in cash | -1,402,203 | 54,825 |
Cash at beginning of period | 4,141,416 | 1,773,785 |
Cash at end of period | 2,739,213 | 1,828,610 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 85,951 | 87,709 |
Cash paid for taxes | 600,000 | 0 |
Non-cash investing and financing activities: | ' | ' |
Net liabilities (assets) acquired in acquisitions, net of cash | 969,486 | 375,284 |
Goodwill | -2,273,503 | -975,284 |
Contingent acquisition liability | 54,017 | 0 |
Notes payable issued | 0 | 600,000 |
Series D preferred stock | 20 | 0 |
Additional paid in capital | 1,249,980 | 0 |
Property and equipment acquired with issuance of notes payable | 0 | -18,249 |
Notes payable issued | 0 | 18,249 |
Common stock issued as payment of accrued bonuses: | ' | ' |
Accrued bonuses | -525,000 | 0 |
Common stock | 21 | 0 |
Additional paid in capital | 524,979 | 0 |
Capital lease assets acquired | -249,111 | 0 |
Capital lease obligations | $249,111 | $0 |
1_Organization_and_Presentatio
1. Organization and Presentation | 3 Months Ended |
Mar. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
1. Organization and Presentation | ' |
Organization | |
Medytox Solutions, Inc. (the “Company”) was incorporated in Nevada on July 19, 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 March 18, 2014, the Company's wholly-owned subsidiary, Medytox Information Technology, Inc. (“MIT”), purchased 100% of the stock of Clinlab, Inc. ("Clinlab"). Clinlab develops and markets laboratory information management systems. | |
Basis of Presentation | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows for the interim periods reported in this Form 10-Q. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year. | |
These unaudited financial statements should be read in conjunction with the 2013 audited annual financial statements included in the Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 31, 2014. | |
Reclassifications | |
Certain items on the statement of operations and the statement of cash flows for the three months ended March 31, 2013 have been reclassified to conform to current period presentation. |
2_Disputed_Subsidiary
2. Disputed Subsidiary | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||
2. Disputed Subsidiary | ' | ||||||||
On July 2, 2013, a jury awarded our wholly-owned subsidiary, Medytox Institute of Laboratory Medicine, Inc. ("MILM"), $2,906,844 on its breach of contract claim against Trident Laboratories, Inc. ("Trident"), and Trident's shareholders, Michele Steegstra, Christopher Hawley, Donette Hawley, Michael Falestta and Skyler Lukas ("Shareholders"), and awarded Seamus Lagan $750,000 individually against Christopher Hawley for Mr. Hawley's defamatory postings on the internet. The jury rejected every claim made against the MILM parties. | |||||||||
The case arose from the August 22, 2011 agreement among MILM and Trident and its Shareholders pursuant to which MILM was to acquire 81% of Trident. On January 17, 2012, Trident notified MILM that it was rescinding the agreement. As a result, MILM filed suit against Trident and its Shareholders in Florida Circuit Court in Broward County. The jury found that Trident and its Shareholders breached the agreement and failed to perform their obligations thereunder. | |||||||||
Legal fees related to the lawsuit were $58,672 and $126,013 for the three months ended March 31, 2014 and 2013, respectively, and $976,789 for the year ended December 31, 2013. | |||||||||
The Company has not received any financial statements of Trident since August 31, 2012. The consolidated financial statements of the Company were prepared without the financial information relating to Trident. Management believes that the financial information relating to Trident is immaterial to the consolidated financial statements as a whole. The Company had established a disputed net income reserve of $397,918 as of December 31, 2013, 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 had been condensed and presented as assets, or liabilities, attributable to disputed activity in the December 31, 2013 consolidated balance sheet. A separate $389,135 of commissions payable on Trident sales was included in liabilities attributable to disputed activity as of December 31, 2013. Effective March 31, 2014, the Company’s management believes that the net assets of Trident are not recoverable and, as such, the Company has accounted for the disputed assets and liabilities as if they have been disposed, resulting in a gain on the disposition of $134,185. | |||||||||
Assets and liabilities of the disputed subsidiary as of March 31, 2014 and December 31, 2013 were as follows: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Total assets | $ | -0- | $ | 1,367,796 | |||||
Total liabilities | $ | -0- | $ | 1,104,063 |
3_LongLived_Assets
3. Long-Lived Assets | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
3. Long-Lived Assets | ' | ||||||||
Property and equipment at March 31, 2014 and December 31, 2013 consisted of the following: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Medical equipment | $ | 723,128 | $ | 655,125 | |||||
Equipment | 145,945 | 111,265 | |||||||
Equipment under capital leases (See Note 6 - Capital Lease Obligations) | 1,230,060 | 980,948 | |||||||
Furniture | 213,104 | 206,587 | |||||||
Leasehold improvements | 400,045 | 243,983 | |||||||
Vehicles | 177,534 | 177,534 | |||||||
Computer equipment | 324,414 | 235,507 | |||||||
Software | 318,412 | 285,175 | |||||||
3,532,642 | 2,896,124 | ||||||||
Less accumulated depreciation | (905,431 | ) | (739,743 | ) | |||||
Property and equipment, net | $ | 2,627,211 | $ | 2,156,381 | |||||
Depreciation of property and equipment was $165,688 and $74,549 for the three months ended March 31, 2014 and 2013, respectively. | |||||||||
The Company has recorded medical licenses acquired from acquisitions in the amount of $3,190,613 as intangible property as of March 31, 2014 and December 31, 2013. 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 three months ended March 31, 2014 and 2013. | |||||||||
Management is in the process of valuing any identifiable tangible and intangible assets of Clinlab, Inc. See Note 9 – Business Combinations. | |||||||||
Management periodically reviews the valuation of long-lived assets for potential impairments. Management has not recognized an impairment of these assets to date, and does not anticipate any negative impact from known current business developments. |
4_Notes_Payable
4. Notes Payable | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
4. Notes Payable | ' | ||||||||
The Company and its subsidiaries are party to a number of loans with affiliates and unrelated parties. At March 31, 2014 and December 31, 2013, notes payable consisted of the following: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Convertible debenture for working capital, dated September 15, 2011, in the amount of $500,000 and bearing interest at 20%. The note was 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. The note was paid in full on February 5, 2014. | $ | – | $ | 100,000 | |||||
Loan from TCA. Principal of $2,475,000 and $2,475,000, 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 | 2,475,000 | |||||||
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. | 100,000 | 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. | 100,000 | 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. | 24,618 | 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 was secured by a lien on a vehicle with a carrying value of $16,623 at December 31, 2013. The note was paid in full on March 26, 2014. | – | 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 was secured by a lien on a vehicle with a carrying value of $16,430 at December 31, 2013. The note was paid in full on March 26, 2014. | – | 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 was secured by a lien on a vehicle with a carrying value of $18,300 at December 31, 2013. The note was paid in full on March 26, 2014. | – | 17,676 | |||||||
Acquisition convertible note No. 1 to former member of International Technologies, LLC in the amount of $250,000 at 5% interest and was due January 17, 2014. The note was 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 $-0- and $1,639 at March 31, 2014 and December 31, 2013, respectively. See "Acquisition Convertible Notes" below. | 250,000 | 248,361 | |||||||
Acquisition convertible note No. 2 to former member of International Technologies, LLC in the amount of $250,000 at 5% interest and was due January 17, 2014. The note was 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 $-0- and $1,639 at March 31, 2014 and December 31, 2013, respectively. See "Acquisition Convertible Notes" below. | 250,000 | 248,361 | |||||||
Loan from former member of International Technologies, LLC in the remaining amount of $416,667 at the date of acquistion, at 1% interest, with principal payments of $83,333 due quarterly starting June 7, 2013. | 83,335 | 166,668 | |||||||
Loan from former member of International Technologies, LLC in the remaining amount of $112,500 at the date of acquistion, at 1% interest, with principal payments of $22,500 due quarterly starting June 7, 2013. | 22,500 | 45,000 | |||||||
3,305,453 | 3,731,661 | ||||||||
Less current portion | (3,305,453 | ) | (3,689,554 | ) | |||||
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, Medytox Medical Marketing & Sales, Inc. (“MMM&S”), Medytox Diagnostics, Inc. (“MDI”), PB Laboratories, LLC (“PB Labs”) and the Lender. The funds were used for general corporate purposes. Under the Credit Agreement, Medytox may borrow up to an amount equal to the lesser of 80% of its Eligible Accounts (as defined in the Credit Agreement) and the revolving loan commitment, which initially was $550,000. | |||||||||
Medytox could request that the revolving loan commitment be raised by various specified amounts at specified times, up to an initial maximum of $4,000,000. In each case, whether to agree to any such increase in the revolving loan commitment was in the Lender's sole discretion. | |||||||||
On August 9, 2012, the Company borrowed an additional $525,000 in a second round of funding. These additional funds were also used for general corporate purposes. In this second round of funding, certain changes were made to the terms of the Credit Agreement: | |||||||||
· | the revolving loan commitment was increased from $550,000 to $1,100,000 and was subject to further increase, up to a maximum of $4,000,000, in the Lender's sole discretion; | ||||||||
· | the maturity date of the loan was extended to February 8, 2013 from the original maturity date of November 30, 2012 (subject to the Lender's continuing ability to call the loan upon 60 days written notice); and | ||||||||
· | a prepayment penalty was added of 5% if substantially all of the loan is prepaid between 91 and 180 days prior to the maturity date, or 2.50% if substantially all of the loan is prepaid within 90 days of the maturity date. | ||||||||
On December 4, 2012, the Company borrowed an additional $650,000 in a third round of funding. These additional funds were used for general corporate purposes. In this third round of funding, certain additional changes were made to the terms of the Credit Agreement: | |||||||||
· | the revolving loan commitment was increased from $1,100,000 to $1,725,000 and is subject to further increase, up to a maximum of $15,000,000, in the Lender's sole discretion; | ||||||||
· | the maturity date of the loan was extended to September 3, 2013 from the previous maturity date of February 8, 2013 (subject to the Lender's continuing ability to call the loan upon 60 days written notice); and | ||||||||
· | a covenant was added to require that any subsidiary that is formed, acquired or otherwise becomes a subsidiary must guarantee the loan and pledge substantially all of its assets as security for the loan. | ||||||||
On March 4, 2013, Medytox borrowed an additional $800,000 from the Lender pursuant to the terms of Amendment No. 3 to Senior Secured Revolving Credit Facility Agreement, dated as of February 28, 2013 ("Amendment No. 3"). These additional funds were used in accordance with management's discretion. In connection with Amendment No. 3, Advantage Reference Labs, Inc., a newly-formed wholly-owned subsidiary of Medytox ("Advantage"), entered into a Guaranty Agreement to guaranty the TCA loan and a Security Agreement to pledge substantially all its assets to secure its guaranty. | |||||||||
In connection with Amendment No. 3, Medytox executed an Amended and Restated Revolving Promissory Note, due September 4, 2013, in the amount of $2,525,000. | |||||||||
On July 15, 2013, Medytox borrowed an additional $500,000 from the Lender pursuant to the terms of Amendment No. 4 to Senior Secured Revolving Credit Facility Agreement, dated as of June 30, 2013 ("Amendment No. 4"). These additional funds 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). | |||||||||
TCA Global (Continued) | |||||||||
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. | |||||||||
Acquisition Convertible Notes | |||||||||
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. | |||||||||
5_Related_Party_Transactions
5. Related Party Transactions | 3 Months Ended |
Mar. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
5. Related Party Transactions | ' |
William Forhan, the Chief Executive Officer, and a director and shareholder of the Company, had advanced loans to the Company for the payment of certain operating expenses. The loans were non-interest bearing and were due on demand. The amount outstanding to Mr. Forhan was $57,100 at December 31, 2012. During the three months ended March 31, 2013, $10,000 was paid and the remaining $47,100 was released by Mr. Forhan. The $47,100 was recorded as a capital contribution as additional paid in capital as of March 31, 2013. | |
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 three months ended March 31, 2013, the $85,000 was paid along with a one-time interest charge of $18,417. | |
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 three months ended March 31, 2013, the Company paid $33,070 to DASH pursuant to the Asset Purchase Agreement. | |
6_Capital_Lease_Obligations
6. Capital Lease Obligations | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
6. Capital Lease Obligations | ' | ||||||||
The Company leases various assets under capital leases expiring in 2020 as follows: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Medical equipment | $ | 1,230,060 | $ | 980,948 | |||||
Less accumulated depreciation | (419,706 | ) | (364,726 | ) | |||||
Net | $ | 810,354 | $ | 616,222 | |||||
Depreciation expense on assets under capital leases was $54,980 and $31,012 for the three months ended March 31, 2014 and 2013, respectively. | |||||||||
Aggregate future minimum rentals under capital leases are as follows: | |||||||||
December 31, | |||||||||
2014 | $ | 232,836 | |||||||
2015 | 310,448 | ||||||||
2016 | 170,512 | ||||||||
2017 | 92,128 | ||||||||
2018 | 35,575 | ||||||||
Thereafter | 68,186 | ||||||||
Total | 909,685 | ||||||||
Less interest: | 118,854 | ||||||||
Present value of minimum lease payments | 790,831 | ||||||||
Less current portion of capital lease obligations | 264,847 | ||||||||
Capital lease obligations, net of current portion | $ | 525,984 | |||||||
7_Stockholders_Equity
7. Stockholders' Equity | 3 Months Ended | ||||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||||||||||||
7. 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 par value of $0.0001 per share. | |||||||||||||||||||||||||||||||
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 March 27, 2014, each of the holders of shares of Series B Preferred Stock entered into a purchase option agreement with the Company. 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 at a purchase price of $5,000 per share. 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. | |||||||||||||||||||||||||||||||
On October 7, 2012, the Company filed a certificate of designation with the Secretary of State of Nevada to designate 1,000,000 shares of Series C Convertible Preferred Stock, at $0.0001 par value per share. The Series C shares are convertible into shares of Common Stock by the quotient of 1 divided by the product of 0.80 multiplied by the market price of the Company’s Common Stock at the date of conversion. The Series C shares also include voting rights of 25 votes for every share of Series C Preferred Stock and shall be entitled to dividends at the same time any dividend is paid or declared on any shares of the Company’s Common Stock. | |||||||||||||||||||||||||||||||
On March 17, 2014, the Company filed a Certificate of Designation with the Secretary of State of Nevada authorizing up to 200,000 shares of Series D Convertible Preferred Stock at a $0.0001 par value per share ("Series D Preferred Stock"). The Series D shares are convertible into shares of Common Stock by the quotient of 5 divided by the product of 0.80 multiplied by the market price of the Company’s Common Stock at the date of conversion. After the earlier of the date the trading volume of the Common Stock exceeds an aggregate of 3,000,000 shares in any 30 day period or the date the Company sells shares of Common Stock in a firm commitment underwritten public offering with aggregate gross proceeds of at least $30,000,000, each share of Series D Preferred Stock shall be convertible into the number of shares of Common Stock equal to the quotient of (I) 5 divided by (ii) the market price of the Common Stock. All shares of Series D Preferred Stock outstanding on the second anniversary of the original issuance date shall be automatically converted into shares of Common Stock. The Series D shares also include voting rights of 1 vote for every share of Series D Preferred Stock and shall be entitled to dividends at the same time any dividend is paid or declared on any shares of the Company’s Common Stock. | |||||||||||||||||||||||||||||||
Preferred Stock | |||||||||||||||||||||||||||||||
During the three months ended March 31, 2014 and 2013, the Series B preferred shareholders earned dividends totaling $913,563 and $238,741, respectively, of which $481,215 was due and payable at March 31, 2014. | |||||||||||||||||||||||||||||||
On March 18, 2014, 200,000 shares of Series D Preferred Stock of the Company were issued to the previous owners of Clinlab pursuant to a stock purchase agreement whereby the Company purchased all of the outstanding stock of Clinlab (See Note 9 – Business Combinations). | |||||||||||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||||||||||
During the three months ended March 31, 2014, the Company issued an aggregate of 210,000 shares of the Company’s restricted common stock 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. | |||||||||||||||||||||||||||||||
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. | |||||||||||||||||||||||||||||||
The following summarizes 2013 Plan activity for the three months ended March 31, 2014: | |||||||||||||||||||||||||||||||
Shares approved for issuance at plan inception | 5,000,000 | ||||||||||||||||||||||||||||||
Options granted in 2014 | (1,035,000 | ) | |||||||||||||||||||||||||||||
Options cancelled in 2014 | 10,000 | ||||||||||||||||||||||||||||||
Restricted shares issued in 2014 | (210,000 | ) | |||||||||||||||||||||||||||||
Balance at March 31, 2014 | 3,765,000 | ||||||||||||||||||||||||||||||
Stock Options | |||||||||||||||||||||||||||||||
On March 3, 2014, the Company’s board of directors granted stock options to purchase a total of 1,035,000 shares of the Company’s Common Stock under the 2013 Plan to various employees. The options 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. | |||||||||||||||||||||||||||||||
The following summarizes options outstanding at December 31, 2013 and option activity for the three months ended March 31, 2014: | |||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
Common Stock Options Outstanding | average | ||||||||||||||||||||||||||||||
Employees and | exercise | ||||||||||||||||||||||||||||||
Directors | Non-employees | Total | price | ||||||||||||||||||||||||||||
Balance at December 31, 2013 | 20,150,000 | 3,020,000 | 23,170,000 | $ | 5.33 | ||||||||||||||||||||||||||
Options granted | 1,035,000 | – | 1,035,000 | 2.5 | |||||||||||||||||||||||||||
Options exercised | – | – | – | ||||||||||||||||||||||||||||
Options cancelled or expired | (210,000 | ) | – | (210,000 | ) | 2.5 | |||||||||||||||||||||||||
Balance at March 31, 2014 | 20,975,000 | 3,020,000 | 23,995,000 | $ | 5.14 | ||||||||||||||||||||||||||
The following table summarizes information with respect to stock options outstanding and exercisable by employees and directors at March 31, 2014: | |||||||||||||||||||||||||||||||
Options outstanding | Options vested and exercisable | ||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
average | Weighted | Weighted | |||||||||||||||||||||||||||||
remaining | average | Aggregate | average | Aggregate | |||||||||||||||||||||||||||
Number | contractual | exercise | intrinsic | Number | exercise | intrinsic | |||||||||||||||||||||||||
Exercise price | outstanding | life (years) | price | value | vested | price | value | ||||||||||||||||||||||||
$2.50 | 8,375,000 | 4.29 | $2.50 | $ | – | 7,250,000 | $2.50 | $ | – | ||||||||||||||||||||||
$5.00 | 6,600,000 | 3.73 | $5.00 | – | 6,500,000 | $5.00 | – | ||||||||||||||||||||||||
$10.00 | 6,000,000 | 8.76 | $10.00 | – | 6,000,000 | $10.00 | – | ||||||||||||||||||||||||
20,975,000 | $5.43 | $ | – | 19,750,000 | $5.60 | $ | – | ||||||||||||||||||||||||
The following table summarizes information with respect to stock options outstanding and exercisable by non-employees at March 31, 2014: | |||||||||||||||||||||||||||||||
Options outstanding | Options vested and exercisable | ||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
average | Weighted | Weighted | |||||||||||||||||||||||||||||
remaining | average | Aggregate | average | Aggregate | |||||||||||||||||||||||||||
Number | contractual | exercise | intrinsic | Number | exercise | intrinsic | |||||||||||||||||||||||||
Exercise price | outstanding | life (years) | price | value | vested | price | value | ||||||||||||||||||||||||
$2.50 | 1,020,000 | 3.7 | $2.50 | $ | – | 1,020,000 | $2.50 | $ | – | ||||||||||||||||||||||
$5.00 | 1,000,000 | 3.76 | $5.00 | – | 1,000,000 | $5.00 | – | ||||||||||||||||||||||||
$10.00 | 1,000,000 | 8.76 | $10.00 | – | 1,000,000 | $10.00 | – | ||||||||||||||||||||||||
3,020,000 | $5.81 | $ | – | 3,020,000 | $5.81 | $ | – | ||||||||||||||||||||||||
During the three months ended March 31, 2014, the Company issued options to purchase a total of 1,035,000 shares of the Company’s common stock to various employees. These options have contractual lives of ten years and were valued at an average grant date fair value of $0.70 per option, or $724,500, using the Black-Scholes Option Pricing Model with the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $2.50 | ||||||||||||||||||||||||||||||
Expected term | 5.375 years | ||||||||||||||||||||||||||||||
Expected volatility | 27.72% | ||||||||||||||||||||||||||||||
Risk free interest rate | 1.46% | ||||||||||||||||||||||||||||||
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. As none of the options were vested as of March 31, 2014, no stock-based compensation was recorded for the three months ended March 31, 2014. | |||||||||||||||||||||||||||||||
As of March 31, 2014, there was unrecognized compensation costs of $757,500 related to stock options. The Company expects to recognize those costs over a weighted average period of .57 years as of March 31, 2014. Future option grants will increase the amount of compensation expense to be recorded in these periods. | |||||||||||||||||||||||||||||||
Warrants | |||||||||||||||||||||||||||||||
The following table summarizes warrant transactions for the three months ended March 31, 2014: | |||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
Weighted | average | ||||||||||||||||||||||||||||||
average | remaining | Aggregate | |||||||||||||||||||||||||||||
Number | exercise | contractual | intrinsic | ||||||||||||||||||||||||||||
of warrants | price | term (years) | value | ||||||||||||||||||||||||||||
Granted in 2013 | 346,400 | $ | 3.22 | ||||||||||||||||||||||||||||
Outstanding at December 31, 2013 and March 31, 2014 | 346,400 | $ | 3.22 | 0.82 | $ | – | |||||||||||||||||||||||||
Exercisable at December 31, 2013 and March 31, 2014 | 346,400 | $ | 3.22 | 0.82 | $ | – | |||||||||||||||||||||||||
Weighted Average Grant Date Fair Value | $ | 0.25 | |||||||||||||||||||||||||||||
During the three months ended March 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 twenty-three months and were valued at a grant date fair value of $-0- per warrant using the Black-Scholes Option Pricing Model with the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $0.01 | ||||||||||||||||||||||||||||||
Contractual term | 23 months | ||||||||||||||||||||||||||||||
Expected volatility | 29.13% | ||||||||||||||||||||||||||||||
Risk free interest rate | 0.15% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
During the three months ended March 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 three months ended March 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 potential dilutive equivalent 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, convertible preferred stock, or warrants. | |||||||||||||||||||||||||||||||
Basic and Diluted EPS were calculated as follows: | |||||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||||
Basic: | |||||||||||||||||||||||||||||||
Numerator - net income available to common stockholders | $ | 3,389,970 | $ | 414,472 | |||||||||||||||||||||||||||
Denominator - weighted-average shares outstanding | 30,043,053 | 29,563,504 | |||||||||||||||||||||||||||||
Net income per share - Basic | $ | 0.11 | $ | 0.01 | |||||||||||||||||||||||||||
Diluted: | |||||||||||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||||||||||
Net income available to common stockholders | $ | 3,389,970 | $ | 414,472 | |||||||||||||||||||||||||||
Interest expense on convertible debt, net of taxes | 3,700 | 15,000 | |||||||||||||||||||||||||||||
$ | 3,393,670 | $ | 429,472 | ||||||||||||||||||||||||||||
Denominator: | |||||||||||||||||||||||||||||||
Weighted-average shares outstanding | 30,043,053 | 29,563,504 | |||||||||||||||||||||||||||||
Weighted-average equivalent shares from convertible debt | 222,222 | 200,000 | |||||||||||||||||||||||||||||
Weighted-average equivalent shares from Series C convertible preferred stock | – | 203,233 | |||||||||||||||||||||||||||||
Weighted-average equivalent shares from Series D convertible preferred stock | 72,222 | – | |||||||||||||||||||||||||||||
30,337,497 | 29,966,737 | ||||||||||||||||||||||||||||||
Net income per share - Diluted | $ | 0.11 | $ | 0.01 | |||||||||||||||||||||||||||
Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of March 31, 2014 and 2013, the following potential common stock equivalents were excluded from the calculation of Diluted EPS as their effect was anti-dilutive: | |||||||||||||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||||
Stock options outstanding | 23,995,000 | 21,320,000 | |||||||||||||||||||||||||||||
Warrants outstanding | 346,400 | 346,400 | |||||||||||||||||||||||||||||
24,341,400 | 21,666,400 | ||||||||||||||||||||||||||||||
8_Income_Taxes
8. Income Taxes | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
8. Income Taxes | ' | ||||||||
Significant components of the income tax provision are summarized as follows: | |||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Current provision: | |||||||||
Federal | $ | 3,327,000 | $ | 625,100 | |||||
State | 569,500 | 66,700 | |||||||
Deferred provision: | |||||||||
Federal | (1,173,200 | ) | (269,000 | ) | |||||
State | (125,200 | ) | (28,700 | ) | |||||
$ | 2,598,100 | $ | 394,100 | ||||||
A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate on income before income taxes for the three months ended March 31, 2014 and 2013 is as follows: | |||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Expected federal income tax at 34% statutory rate | 34.00% | 34.00% | |||||||
State income taxes | 4.20% | 3.60% | |||||||
Permanent differences | -0.60% | 0.00% | |||||||
Change in valuation allowance | 0.00% | 0.00% | |||||||
37.60% | 37.60% | ||||||||
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 March 31, 2014 and December 31, 2013: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Deferred income tax assets: | |||||||||
Allowance for bad debts | $ | 2,694,300 | $ | 1,362,900 | |||||
Accrued compensation | 385,700 | 385,700 | |||||||
Stock options | 170,300 | 170,300 | |||||||
Total deferred income tax assets | $ | 3,250,300 | $ | 1,918,900 | |||||
Deferred income tax liabilities: | |||||||||
Property and equipment | $ | (80,100 | ) | $ | (76,100 | ) | |||
Intangible amortization | (165,000 | ) | (136,000 | ) | |||||
Total deferred income tax liabilities | $ | (245,100 | ) | $ | (212,100 | ) | |||
Net deferred income taxes: | |||||||||
Current | 3,080,000 | 1,748,600 | |||||||
Non-current | (74,800 | ) | (41,800 | ) | |||||
$ | 3,005,200 | $ | 1,706,800 | ||||||
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. | |||||||||
9_Business_Combinations
9. Business Combinations | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Business Combinations [Abstract] | ' | ||||||||
9. Business Combinations | ' | ||||||||
The Company completed one acquisition during the three months ended March 31, 2014 and two during the year ended December 31, 2013. 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 March 31, 2014 and December 31, 2013: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Medical Billing Choices, Inc. | $ | 1,202,112 | $ | 1,202,112 | |||||
PB Laboratories, LLC | 107,124 | 107,124 | |||||||
Biohealth Medical Laboratory, Inc. | 116,763 | 116,763 | |||||||
Clinlab, Inc. | 2,273,503 | – | |||||||
$ | 3,699,502 | $ | 1,425,999 | ||||||
The goodwill attributed to Clinlab, Inc. is subject to adjustment by management as described below. | |||||||||
Clinlab, Inc. | |||||||||
On March 18, 2014, the Company, through its subsidiary, MIT, purchased all of the outstanding stock of Clinlab from two unrelated parties. The purchase price was an aggregate of $2,250,000, $1,000,000 in cash and 200,000 shares of Series D Preferred Stock of the Company, currently convertible into $1,250,000 of common stock of the Company at the date of conversion. | |||||||||
The following table summarizes the consideration given for Clinlab and the fair values of the assets acquired and liabilities assumed recognized at the acquisition date. Management is in the process of valuing any identifiable tangible and intangible assets. Until the valuation is complete and values are assigned to tangible or intangible assets, if any, the entire amount of the excess of the consideration given over the net assets acquired is allocated to goodwill. | |||||||||
Consideration Given: | |||||||||
Cash | $ | 1,000,000 | |||||||
Series D Preferred stock | 1,250,000 | ||||||||
Contingent acquisition liability | 54,017 | ||||||||
Total Consideration | $ | 2,304,017 | |||||||
Fair value of identifiable assets acquired and liabilities assumed: | |||||||||
Cash | $ | 19,306 | |||||||
Accounts receivable | 54,017 | ||||||||
Prepaid expenses | 242 | ||||||||
Security deposit | 700 | ||||||||
Accounts payable and accrued expenses | (43,751 | ) | |||||||
Identified intangible assets | – | ||||||||
Total identifiable net assets | 30,514 | ||||||||
Goodwill and unidentified intangible assets | 2,273,503 | ||||||||
$ | 2,304,017 |
10_Commitments_and_Contingenci
10. Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
10. Commitments and Contingencies | ' |
Legal Matters | |
During the course of business, litigation commonly occurs. From time to time the Company may be a party to litigation matters involving claims against the Company. The Company operates in a highly regulated industry and employs personnel which may inherently lend itself to legal matters. Management is aware that litigation has associated costs and that results of adverse litigation verdicts could have a material effect on the Company's financial position or results of operations. Management, in consultation with legal counsel, has addressed known assertions and predicted unasserted claims below. | |
On July 2, 2013, a jury awarded Medytox Institute of Laboratory Medicine, Inc., our 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. All appeals have been dismissed. | |
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. |
11_Subsequent_Events
11. Subsequent Events | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events [Abstract] | ' |
11. Subsequent Events | ' |
The Company has evaluated subsequent events through the date the financial statements were issued and filed with the SEC. The Company has determined that there are no events that warrant disclosure or recognition in the consolidated financial statements. | |
1_Organization_and_Presentatio1
1. Organization and Presentation (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Organization | ' |
Organization | |
Medytox Solutions, Inc. (the “Company”) was incorporated in Nevada on July 19, 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 March 18, 2014, the Company's wholly-owned subsidiary, Medytox Information Technology, Inc. (“MIT”), purchased 100% of the stock of Clinlab, Inc. ("Clinlab"). Clinlab develops and markets laboratory information management systems. | |
Basis of Presentation | ' |
Basis of Presentation | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows for the interim periods reported in this Form 10-Q. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year. | |
These unaudited financial statements should be read in conjunction with the 2013 audited annual financial statements included in the Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 31, 2014. | |
Reclassifications | ' |
Reclassifications | |
Certain items on the statement of operations and the statement of cash flows for the three months ended March 31, 2013 have been reclassified to conform to current period presentation. |
2_Disputed_Subsidiary_Tables
2. Disputed Subsidiary (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||
Assets and liabilities of the subsidiary | ' | ||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Total assets | $ | -0- | $ | 1,367,796 | |||||
Total liabilities | $ | -0- | $ | 1,104,063 |
3_LongLived_Assets_Tables
3. Long-Lived Assets (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and equipment | ' | ||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Medical equipment | $ | 723,128 | $ | 655,125 | |||||
Equipment | 145,945 | 111,265 | |||||||
Equipment under capital leases (See Note 6 - Capital Lease Obligations) | 1,230,060 | 980,948 | |||||||
Furniture | 213,104 | 206,587 | |||||||
Leasehold improvements | 400,045 | 243,983 | |||||||
Vehicles | 177,534 | 177,534 | |||||||
Computer equipment | 324,414 | 235,507 | |||||||
Software | 318,412 | 285,175 | |||||||
3,532,642 | 2,896,124 | ||||||||
Less accumulated depreciation | (905,431 | ) | (739,743 | ) | |||||
Property and equipment, net | $ | 2,627,211 | $ | 2,156,381 |
4_Notes_Payable_Tables
4. Notes Payable (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Notes Payable | ' | ||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Convertible debenture for working capital, dated September 15, 2011, in the amount of $500,000 and bearing interest at 20%. The note was 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. The note was paid in full on February 5, 2014. | $ | – | $ | 100,000 | |||||
Loan from TCA. Principal of $2,475,000 and $2,475,000, 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 | 2,475,000 | |||||||
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. | 100,000 | 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. | 100,000 | 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. | 24,618 | 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 was secured by a lien on a vehicle with a carrying value of $16,623 at December 31, 2013. The note was paid in full on March 26, 2014. | – | 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 was secured by a lien on a vehicle with a carrying value of $16,430 at December 31, 2013. The note was paid in full on March 26, 2014. | – | 16,279 | |||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
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 was secured by a lien on a vehicle with a carrying value of $18,300 at December 31, 2013. The note was paid in full on March 26, 2014. | – | 17,676 | |||||||
Acquisition convertible note No. 1 to former member of International Technologies, LLC in the amount of $250,000 at 5% interest and was due January 17, 2014. The note was 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 $-0- and $1,639 at March 31, 2014 and December 31, 2013, respectively. See "Acquisition Convertible Notes" below. | 250,000 | 248,361 | |||||||
Acquisition convertible note No. 2 to former member of International Technologies, LLC in the amount of $250,000 at 5% interest and was due January 17, 2014. The note was 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 $-0- and $1,639 at March 31, 2014 and December 31, 2013, respectively. See "Acquisition Convertible Notes" below. | 250,000 | 248,361 | |||||||
Loan from former member of International Technologies, LLC in the remaining amount of $416,667 at the date of acquistion, at 1% interest, with principal payments of $83,333 due quarterly starting June 7, 2013. | 83,335 | 166,668 | |||||||
Loan from former member of International Technologies, LLC in the remaining amount of $112,500 at the date of acquistion, at 1% interest, with principal payments of $22,500 due quarterly starting June 7, 2013. | 22,500 | 45,000 | |||||||
3,305,453 | 3,731,661 | ||||||||
Less current portion | (3,305,453 | ) | (3,689,554 | ) | |||||
Notes payable, net of current portion | $ | – | $ | 42,107 |
6_Capital_Lease_Obligations_Ta
6. Capital Lease Obligations (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Capital Lease | ' | ||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Medical equipment | $ | 1,230,060 | $ | 980,948 | |||||
Less accumulated depreciation | (419,706 | ) | (364,726 | ) | |||||
Net | $ | 810,354 | $ | 616,222 | |||||
Aggregate future minimum rentals under capital leases | ' | ||||||||
December 31, | |||||||||
2014 | $ | 232,836 | |||||||
2015 | 310,448 | ||||||||
2016 | 170,512 | ||||||||
2017 | 92,128 | ||||||||
2018 | 35,575 | ||||||||
Thereafter | 68,186 | ||||||||
Total | 909,685 | ||||||||
Less interest: | 118,854 | ||||||||
Present value of minimum lease payments | 790,831 | ||||||||
Less current portion of capital lease obligations | 264,847 | ||||||||
Capital lease obligations, net of current portion | $ | 525,984 |
7_Stockholders_Equity_Tables
7. Stockholders' Equity (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||||||||||||
Options outstanding | ' | ||||||||||||||||||||||||||||||
The following table summarizes information with respect to stock options outstanding and exercisable by employees and directors at March 31, 2014: | |||||||||||||||||||||||||||||||
Options outstanding | Options vested and exercisable | ||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
average | Weighted | Weighted | |||||||||||||||||||||||||||||
remaining | average | Aggregate | average | Aggregate | |||||||||||||||||||||||||||
Number | contractual | exercise | intrinsic | Number | exercise | intrinsic | |||||||||||||||||||||||||
Exercise price | outstanding | life (years) | price | value | vested | price | value | ||||||||||||||||||||||||
$2.50 | 8,375,000 | 4.29 | $2.50 | $ | – | 7,250,000 | $2.50 | $ | – | ||||||||||||||||||||||
$5.00 | 6,600,000 | 3.73 | $5.00 | – | 6,500,000 | $5.00 | – | ||||||||||||||||||||||||
$10.00 | 6,000,000 | 8.76 | $10.00 | – | 6,000,000 | $10.00 | – | ||||||||||||||||||||||||
20,975,000 | $5.43 | $ | – | 19,750,000 | $5.60 | $ | – | ||||||||||||||||||||||||
The following table summarizes information with respect to stock options outstanding and exercisable by non-employees at March 31, 2014: | |||||||||||||||||||||||||||||||
Options outstanding | Options vested and exercisable | ||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
average | Weighted | Weighted | |||||||||||||||||||||||||||||
remaining | average | Aggregate | average | Aggregate | |||||||||||||||||||||||||||
Number | contractual | exercise | intrinsic | Number | exercise | intrinsic | |||||||||||||||||||||||||
Exercise price | outstanding | life (years) | price | value | vested | price | value | ||||||||||||||||||||||||
$2.50 | 1,020,000 | 3.7 | $2.50 | $ | – | 1,020,000 | $2.50 | $ | – | ||||||||||||||||||||||
$5.00 | 1,000,000 | 3.76 | $5.00 | – | 1,000,000 | $5.00 | – | ||||||||||||||||||||||||
$10.00 | 1,000,000 | 8.76 | $10.00 | – | 1,000,000 | $10.00 | – | ||||||||||||||||||||||||
3,020,000 | $5.81 | $ | – | 3,020,000 | $5.81 | $ | – | ||||||||||||||||||||||||
Schedule of stock option activity | ' | ||||||||||||||||||||||||||||||
Shares approved for issuance at plan inception | 5,000,000 | ||||||||||||||||||||||||||||||
Options granted in 2014 | (1,035,000 | ) | |||||||||||||||||||||||||||||
Options cancelled in 2014 | 10,000 | ||||||||||||||||||||||||||||||
Restricted shares issued in 2014 | (210,000 | ) | |||||||||||||||||||||||||||||
Balance at March 31, 2014 | 3,765,000 | ||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
Common Stock Options Outstanding | average | ||||||||||||||||||||||||||||||
Employees and | exercise | ||||||||||||||||||||||||||||||
Directors | Non-employees | Total | price | ||||||||||||||||||||||||||||
Balance at December 31, 2013 | 20,150,000 | 3,020,000 | 23,170,000 | $ | 5.33 | ||||||||||||||||||||||||||
Options granted | 1,035,000 | – | 1,035,000 | 2.5 | |||||||||||||||||||||||||||
Options exercised | – | – | – | ||||||||||||||||||||||||||||
Options cancelled or expired | (210,000 | ) | – | (210,000 | ) | 2.5 | |||||||||||||||||||||||||
Balance at March 31, 2014 | 20,975,000 | 3,020,000 | 23,995,000 | $ | 5.14 | ||||||||||||||||||||||||||
Option assumptions | ' | ||||||||||||||||||||||||||||||
Stock price | $2.50 | ||||||||||||||||||||||||||||||
Expected term | 5.375 years | ||||||||||||||||||||||||||||||
Expected volatility | 27.72% | ||||||||||||||||||||||||||||||
Risk free interest rate | 1.46% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
Warrant transactions | ' | ||||||||||||||||||||||||||||||
Weighted | |||||||||||||||||||||||||||||||
Weighted | average | ||||||||||||||||||||||||||||||
average | remaining | Aggregate | |||||||||||||||||||||||||||||
Number | exercise | contractual | intrinsic | ||||||||||||||||||||||||||||
of warrants | price | term (years) | value | ||||||||||||||||||||||||||||
Granted in 2013 | 346,400 | $ | 3.22 | ||||||||||||||||||||||||||||
Outstanding at December 31, 2013 and March 31, 2014 | 346,400 | $ | 3.22 | 0.82 | $ | – | |||||||||||||||||||||||||
Exercisable at December 31, 2013 and March 31, 2014 | 346,400 | $ | 3.22 | 0.82 | $ | – | |||||||||||||||||||||||||
Weighted Average Grant Date Fair Value | $ | 0.25 | |||||||||||||||||||||||||||||
Warrant assumption | ' | ||||||||||||||||||||||||||||||
During the three months ended March 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 twenty-three months and were valued at a grant date fair value of $-0- per warrant using the Black-Scholes Option Pricing Model with the following assumptions: | |||||||||||||||||||||||||||||||
Stock price | $0.01 | ||||||||||||||||||||||||||||||
Contractual term | 23 months | ||||||||||||||||||||||||||||||
Expected volatility | 29.13% | ||||||||||||||||||||||||||||||
Risk free interest rate | 0.15% | ||||||||||||||||||||||||||||||
Dividend yield | 0 | ||||||||||||||||||||||||||||||
During the three months ended March 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 | ||||||||||||||||||||||||||||||
Basic and Diluted Income Per Share | ' | ||||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||||
Basic: | |||||||||||||||||||||||||||||||
Numerator - net income available to common stockholders | $ | 3,389,970 | $ | 414,472 | |||||||||||||||||||||||||||
Denominator - weighted-average shares outstanding | 30,043,053 | 29,563,504 | |||||||||||||||||||||||||||||
Net income per share - Basic | $ | 0.11 | $ | 0.01 | |||||||||||||||||||||||||||
Diluted: | |||||||||||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||||||||||
Net income available to common stockholders | $ | 3,389,970 | $ | 414,472 | |||||||||||||||||||||||||||
Interest expense on convertible debt, net of taxes | 3,700 | 15,000 | |||||||||||||||||||||||||||||
$ | 3,393,670 | $ | 429,472 | ||||||||||||||||||||||||||||
Denominator: | |||||||||||||||||||||||||||||||
Weighted-average shares outstanding | 30,043,053 | 29,563,504 | |||||||||||||||||||||||||||||
Weighted-average equivalent shares from convertible debt | 222,222 | 200,000 | |||||||||||||||||||||||||||||
Weighted-average equivalent shares from Series C convertible preferred stock | – | 203,233 | |||||||||||||||||||||||||||||
Weighted-average equivalent shares from Series D convertible preferred stock | 72,222 | – | |||||||||||||||||||||||||||||
30,337,497 | 29,966,737 | ||||||||||||||||||||||||||||||
Net income per share - Diluted | $ | 0.11 | $ | 0.01 | |||||||||||||||||||||||||||
Antidilutive securities | ' | ||||||||||||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||||
Stock options outstanding | 23,995,000 | 21,320,000 | |||||||||||||||||||||||||||||
Warrants outstanding | 346,400 | 346,400 | |||||||||||||||||||||||||||||
24,341,400 | 21,666,400 |
8_Income_Taxes_Tables
8. Income Taxes (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Income tax provision | ' | ||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Current provision: | |||||||||
Federal | $ | 3,327,000 | $ | 625,100 | |||||
State | 569,500 | 66,700 | |||||||
Deferred provision: | |||||||||
Federal | (1,173,200 | ) | (269,000 | ) | |||||
State | (125,200 | ) | (28,700 | ) | |||||
$ | 2,598,100 | $ | 394,100 | ||||||
Reconciliation of the statutory federal income tax rate | ' | ||||||||
March 31, | March 31, | ||||||||
2014 | 2013 | ||||||||
Expected federal income tax at 34% statutory rate | 34.00% | 34.00% | |||||||
State income taxes | 4.20% | 3.60% | |||||||
Permanent differences | -0.60% | 0.00% | |||||||
Change in valuation allowance | 0.00% | 0.00% | |||||||
37.60% | 37.60% | ||||||||
Deferred Tax Liability | ' | ||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Deferred income tax assets: | |||||||||
Allowance for bad debts | $ | 2,694,300 | $ | 1,362,900 | |||||
Accrued compensation | 385,700 | 385,700 | |||||||
Stock options | 170,300 | 170,300 | |||||||
Total deferred income tax assets | $ | 3,250,300 | $ | 1,918,900 | |||||
Deferred income tax liabilities: | |||||||||
Property and equipment | $ | (80,100 | ) | $ | (76,100 | ) | |||
Intangible amortization | (165,000 | ) | (136,000 | ) | |||||
Total deferred income tax liabilities | $ | (245,100 | ) | $ | (212,100 | ) | |||
Net deferred income taxes: | |||||||||
Current | 3,080,000 | 1,748,600 | |||||||
Non-current | (74,800 | ) | (41,800 | ) | |||||
$ | 3,005,200 | $ | 1,706,800 |
9_Business_Combinations_Tables
9. Business Combinations (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Business Combinations [Abstract] | ' | ||||||||
Schedule of goodwill | ' | ||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Medical Billing Choices, Inc. | $ | 1,202,112 | $ | 1,202,112 | |||||
PB Laboratories, LLC | 107,124 | 107,124 | |||||||
Biohealth Medical Laboratory, Inc. | 116,763 | 116,763 | |||||||
Clinlab, Inc. | 2,273,503 | – | |||||||
$ | 3,699,502 | $ | 1,425,999 | ||||||
Consideration given | ' | ||||||||
Consideration Given: | |||||||||
Cash | $ | 1,000,000 | |||||||
Series D Preferred stock | 1,250,000 | ||||||||
Contingent acquisition liability | 54,017 | ||||||||
Total Consideration | $ | 2,304,017 | |||||||
Fair value of identifiable assets acquired and liabilities assumed: | |||||||||
Cash | $ | 19,306 | |||||||
Accounts receivable | 54,017 | ||||||||
Prepaid expenses | 242 | ||||||||
Security deposit | 700 | ||||||||
Accounts payable and accrued expenses | (43,751 | ) | |||||||
Identified intangible assets | – | ||||||||
Total identifiable net assets | 30,514 | ||||||||
Goodwill and unidentified intangible assets | 2,273,503 | ||||||||
$ | 2,304,017 |
2_Disputed_Subsidiary_Details_
2. Disputed Subsidiary (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Legal fees | $58,672 | $126,013 | $976,789 |
Assets of disupted subsidiary | 0 | ' | 1,367,796 |
Liabilities of disputed subsidiary | 0 | ' | 1,104,063 |
Disputed Subsidiary | ' | ' | ' |
Legal fees | 58,672 | 126,013 | ' |
Assets of disupted subsidiary | 0 | ' | 1,367,796 |
Liabilities of disputed subsidiary | $0 | ' | $1,104,063 |
3_LongLived_Assets_Details
3. Long-Lived Assets (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Property and equipment, gross | $3,532,642 | $2,896,124 |
Accumulated depreciation | -905,431 | -739,743 |
Property and equipment, net | 2,627,211 | 2,156,381 |
Medical equipment | ' | ' |
Property and equipment, gross | 723,128 | 655,125 |
Equipment | ' | ' |
Property and equipment, gross | 145,945 | 111,265 |
Capital lease assets | ' | ' |
Property and equipment, gross | 1,230,060 | 980,948 |
Furniture | ' | ' |
Property and equipment, gross | 213,104 | 206,587 |
Leasehold Improvements | ' | ' |
Property and equipment, gross | 400,045 | 243,983 |
Vehicles | ' | ' |
Property and equipment, gross | 177,534 | 177,534 |
Computer Equipment | ' | ' |
Property and equipment, gross | 324,414 | 235,507 |
Software | ' | ' |
Property and equipment, gross | $318,412 | $285,175 |
3_LongLived_Assets_Details_Nar
3. Long-Lived Assets (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Property, Plant and Equipment [Abstract] | ' | ' | ' |
Depreciation | $165,688 | $74,549 | ' |
Medical licenses acquired in acquisition | $3,190,613 | ' | $3,190,613 |
4_Notes_Payable_DetailsNotes_P
4. Notes Payable (Details-Notes Payable) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Notes payable, total | $3,305,453 | $3,731,661 | ' |
Less: current portion | -3,305,453 | -3,689,554 | ' |
Notes payable, net of current portion | 0 | 42,107 | ' |
Convertible debenture for working capital | ' | ' | ' |
Notes payable, total | 0 | 100,000 | ' |
Loan from TCA | ' | ' | ' |
Notes payable, total | 2,475,000 | 2,475,000 | ' |
Acquisition note No. 1 | ' | ' | ' |
Notes payable, total | 100,000 | 150,000 | ' |
Acquisition note No. 2 | ' | ' | ' |
Notes payable, total | 100,000 | 150,000 | ' |
Acquisition note to former member of PB | ' | ' | ' |
Notes payable, total | 4,618 | 98,471 | ' |
Commercial loan dated 12/20/2012 | ' | ' | ' |
Notes payable, total | 0 | 15,845 | ' |
Commercial loan dated 11/15/2012 | ' | ' | ' |
Notes payable, total | 0 | 16,279 | ' |
Commercial loan dated 11/28/2012 | ' | ' | ' |
Notes payable, total | 0 | 17,676 | ' |
Acquisition convertible note No. 1 | ' | ' | ' |
Notes payable, total | 250,000 | 248,361 | ' |
Acquisition convertible note No. 2 | ' | ' | ' |
Notes payable, total | 250,000 | 248,361 | ' |
Loan from former member of Intl Tech LLC | ' | ' | ' |
Notes payable, total | 83,335 | 166,668 | 45,000 |
Loan No. 2 | ' | ' | ' |
Notes payable, total | $22,500 | ' | ' |
6_Capital_Lease_Obligations_De
6. Capital Lease Obligations (Details-Capital leased assets) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Capital Lease Obligations [Abstract] | ' | ' |
Medical equipment | $1,230,060 | $980,948 |
Less accumulated depreciation | -419,706 | -364,726 |
Net | $810,354 | $616,222 |
6_Capital_Lease_Obligations_De1
6. Capital Lease Obligations (Details-Future payments) (USD $) | Mar. 31, 2014 |
December 31, | ' |
2014 | $232,836 |
2015 | 310,448 |
2016 | 170,512 |
2017 | 92,128 |
2018 | 35,575 |
Thereafter | 68,186 |
Total | 909,685 |
Less interest: | 118,854 |
Present value of minimum lease payments | 790,831 |
Less current portion of capital lease obligations | 264,847 |
Capital lease obligations, net of current portion | $525,984 |
7_Stockholders_Equity_DetailsO
7. Stockholders' Equity (Details-Option activity) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
2013 Equity Plan | ' |
Options outstanding | ' |
Options outstanding, beginning balance | 5,000,000 |
Options granted | -1,035,000 |
Options cancelled or expired | 10,000 |
Restricted shares issued | -210,000 |
Options outstanding, ending balance | 3,765,000 |
Stock Options | ' |
Options outstanding | ' |
Options outstanding, beginning balance | 23,170,000 |
Options granted | 1,035,000 |
Options exercised | 0 |
Options cancelled or expired | -210,000 |
Options outstanding, ending balance | 23,995,000 |
Weighted Average Exercise Price | ' |
Options outstanding, beginning balance | 5.33 |
Options granted | 2.5 |
Options cancelled or expired | 2.5 |
Options outstanding, ending balance | 5.14 |
Stock Options | Employees and Directors | ' |
Options outstanding | ' |
Options outstanding, beginning balance | 20,150,000 |
Options granted | 1,035,000 |
Options exercised | 0 |
Options cancelled or expired | -210,000 |
Options outstanding, ending balance | 20,975,000 |
Weighted Average Exercise Price | ' |
Options outstanding, ending balance | 5.43 |
Stock Options | Non-Employee | ' |
Options outstanding | ' |
Options outstanding, beginning balance | 3,020,000 |
Options granted | 0 |
Options exercised | 0 |
Options cancelled or expired | 0 |
Options outstanding, ending balance | 3,020,000 |
7_Stockholders_Equity_DetailsO1
7. Stockholders Equity (Details-Option to employees and directors) (Stock Options, USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 |
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 | 23,995,000 | 23,170,000 | 20,975,000 | 20,150,000 | 8,375,000 | 6,600,000 | 6,000,000 |
Weighted average remaining contractual life | ' | ' | ' | ' | '4 years 3 months 14 days | '3 years 9 months | '8 years 9 months |
Weighted average exercise price - outstanding | $5.14 | $5.33 | $5.43 | ' | $2.50 | $5 | $10 |
Aggregate intrinsic value - outstanding | ' | ' | $0 | ' | $0 | $0 | $0 |
Options Vested and Exercisable - Employees and Directors | ' | ' | ' | ' | ' | ' | ' |
Options vested | ' | ' | 19,750,000 | ' | 7,250,000 | 6,500,000 | 6,000,000 |
Weighted average exercise price - vested and exercisable | ' | ' | $5.60 | ' | $2.50 | $5 | $10 |
Aggregate intrinsic value - vested and exercisable | ' | ' | $0 | ' | $0 | $0 | $0 |
7_Options_Exercisable_Detail_N
7. Options Exercisable (Detail - Non-Employees) (Stock Options, USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 |
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 | 23,995,000 | 23,170,000 | 3,020,000 | 1,020,000 | 1,000,000 | 1,000,000 |
Weighted average remaining contractual life | ' | ' | ' | '3 years 8 months 12 days | '3 years 9 months | '8 years 9 months |
Weighted average exercise price - outstanding | $5.14 | $5.33 | $5.81 | $2.50 | $5 | $10 |
Aggregate intrinsic value - outstanding | ' | ' | $0 | $0 | $0 | $0 |
Options Vested and Exercisable - Non-Employees | ' | ' | ' | ' | ' | ' |
Options vested | ' | ' | 3,020,000 | 1,020,000 | 1,000,000 | 1,000,000 |
Weighted average exercise price - vested and exercisable | ' | ' | $5.81 | $2.50 | $5 | $10 |
Aggregate intrinsic value - vested and exercisable | ' | ' | $0 | $0 | $0 | $0 |
7_Stockholders_Equity_DetailsA
7. Stockholders Equity (Details-Assumptions0 (Stock Options, Employee, USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Stock Options | Employee | ' |
Stock price | $2.50 |
Contractual term | '5 years 9 months |
Expected volatility | 27.72% |
Risk free interest rate | 1.46% |
Dividend yield | 0.00% |
7_Stockholders_Equity_DetailsW
7. Stockholders Equity (Details-Warrants) (Warrant, USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Warrant | ' |
Number of warrants | ' |
Warrants outstanding - beginning balance | 346,400 |
Warrants exercisable | 346,400 |
Warrants oustanding - ending balance | 346,400 |
Weighted average exercise price | ' |
Warrants outstanding - beginning balance | $3.22 |
Warrants exercisable | $3.22 |
Warrants outstanding - ending balance | $3.22 |
Weighted average remaining contracted term | ' |
Warrants exercisable | '9 months 25 days |
Warrants outstanding - ending balance | '9 months 25 days |
Aggregate intrinsic value | ' |
Warrants outstanding | $0 |
Warrants exercisable | $0 |
7_Stockholders_Equity_DetailsW1
7. Stockholders Equity (Details-Warrant assumptions) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Warrants issued total 46,400 | ' |
Stock price | $0.01 |
Contractual term | '23 months |
Expected volatility | 29.13% |
Risk free interest rate | 0.15% |
Dividend yield | 0.00% |
Warrants issued total 300,000 | ' |
Stock price | $2.50 |
Contractual term | '2 years |
Expected volatility | 29.13% |
Risk free interest rate | 0.27% |
Dividend yield | 0.00% |
7_Stockholders_Equity_Earnings
7. Stockholders Equity Earnings (Details-EPS) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Basic: | ' | ' |
Net income (loss) attributable to Medytox Solutions common shareholders | $3,389,970 | $414,472 |
Weighted average number of shares outstanding during the period - Basic | 30,043,053 | 29,563,504 |
Basic net loss per share attributable to common stockholders | $0.11 | $0.01 |
Diluted: | ' | ' |
Net income (loss) attributable to Medytox Solutions common shareholders | 3,389,970 | 414,472 |
Interest expense on convertible debt, net of taxes | 3,700 | 15,000 |
Total | $3,393,670 | $429,472 |
Weighted average number of shares outstanding during the period - Basic | 30,043,053 | 29,563,504 |
Weighted-average equivalent shares from convertible debt | 222,222 | 200,000 |
Weighted-average equivalent shares from Series C convertible preferred stock | ' | 203,233 |
Weighted-average equivalent shares from Series D convertible preferred stock | 72,222 | ' |
Diluted Shares Outstanding | 30,337,497 | 29,966,737 |
Net income per share - Diluted | $0.11 | $0.01 |
7_Stockholders_Equity_DetailsA1
7. Stockholders Equity (Details-Antidiluted shares) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Stockholders Equity Details-Antidiluted Shares | ' | ' |
Stock options outstanding | 23,995,000 | 21,320,000 |
Warrants outstanding | 346,400 | 346,400 |
Antidilutive | 24,341,400 | 21,666,400 |
8_Income_Taxes_DetailsIncome_t
8. Income Taxes (Details-Income tax components) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Current provision: | ' | ' |
Federal | $3,327,000 | $625,100 |
State | 569,500 | 66,700 |
Deferred provision: | ' | ' |
Federal | -1,173,200 | -269,000 |
State | -125,200 | -28,700 |
Total | $2,598,100 | $394,100 |
8_Income_Taxes_DetailsEffectiv
8. Income Taxes (Details-Effective income tax rate) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' |
Expected federal income tax at 34% statutory rate | 34.00% | 34.00% |
State income taxes | 4.20% | 3.60% |
Permanent differences | -0.60% | 0.00% |
Change in valuation allowance | 0.00% | 0.00% |
Income tax provision (benefit) | 37.60% | 37.60% |
8_Income_Taxes_DetailsDeferred
8. Income Taxes (Details-Deferred income taxes) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets: | ' | ' |
Allowance for bad debts | $2,694,300 | $1,362,900 |
Accrued compensation | 385,700 | 385,700 |
Stock options | 170,300 | 170,300 |
Total deferred tax assets | 3,250,300 | 1,918,900 |
Deferred tax liabilities: | ' | ' |
Property and equipment | -80,100 | -76,100 |
Intangible amortization | -165,000 | -136,000 |
Total deferred liabilities | -245,100 | -212,100 |
Net deferred income taxes: | ' | ' |
Current | 3,080,000 | 1,748,600 |
Non-current | -74,800 | -41,800 |
Net deferred tax | $3,005,200 | $1,706,800 |
9_Business_Combinations_Detail
9. Business Combinations (Detail-Goodwill) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Goodwill | $3,699,502 | $1,425,999 |
Medical Billing Choices | ' | ' |
Goodwill | 1,202,112 | 1,202,112 |
PB Laboratories | ' | ' |
Goodwill | 107,124 | 107,124 |
Biohealth Medical Laboratory | ' | ' |
Goodwill | 116,763 | 116,763 |
Clinlab, Inc. | ' | ' |
Goodwill | $2,273,503 | ' |
9_Business_Combinations_Consid
9. Business Combinations Consideration Given (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Consideration Given | ' | ' | ' |
Cash | $1,000,000 | $100,000 | ' |
Fair value of identifiable assets acquired and liabilities assumed: | ' | ' | ' |
Goodwill and unidentified intangible assets | 3,699,502 | ' | 1,425,999 |
Clinlab, Inc. | ' | ' | ' |
Consideration Given | ' | ' | ' |
Cash | 1,000,000 | ' | ' |
Series D Preferred stock | 1,250,000 | ' | ' |
Contingent acquisition liability | 54,017 | ' | ' |
Total consideration | 2,304,017 | ' | ' |
Fair value of identifiable assets acquired and liabilities assumed: | ' | ' | ' |
Cash | 19,306 | ' | ' |
Accounts receivable | 54,017 | ' | ' |
Prepaid expenses | 242 | ' | ' |
Security deposit | 700 | ' | ' |
Accounts payable and accrued expenses | -43,751 | ' | ' |
Identifiable intangible assets | 0 | ' | ' |
Total identifiable net assets | 30,514 | ' | ' |
Goodwill and unidentified intangible assets | 2,273,503 | ' | ' |
Total consideration | $2,304,017 | ' | ' |