Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 28, 2014 | Jun. 28, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'CareView Communications Inc | ' | ' |
Entity Central Index Key | '0001377149 | ' | ' |
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 shares held by non-affiliates | ' | ' | 87,070,037 |
Entity Public Float | ' | ' | $47,888,250 |
Entity Common Stock, Shares Outstanding | ' | 138,753,397 | ' |
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 and cash equivalents | $4,125,180 | $5,413,848 |
Accounts receivable, net of allowance of $0 and $80,235, respectively | 305,033 | 367,742 |
Other current assets | 165,531 | 194,592 |
Total current assets | 4,595,744 | 5,976,182 |
Property and equipment, net of accumulated depreciation of $4,255,233 and $2,726,234, respectively | 6,364,609 | 7,861,537 |
Other Assets: | ' | ' |
Intangible assets, net of accumulated amortization of $43,921 and $19,839, respectively | 252,989 | 208,974 |
Other assets | 1,224,554 | 2,019,856 |
[AssetsNoncurrent] | 1,477,543 | 2,228,830 |
Total assets | 12,437,896 | 16,066,549 |
Current Liabilities: | ' | ' |
Accounts payable | 414,888 | 166,373 |
Revolving line of credit | 982,255 | ' |
Notes payable, net of debt discount of $0 and $32,988, respectively | 442,519 | 410,586 |
Mandatorily redeemable equity in joint venture, net of debt discount of $0 and $32,988, respectively | 442,519 | 410,586 |
Accrued interest | 127,327 | 59,872 |
Other current liabilities | 538,142 | 802,528 |
Total current liabilities | 2,947,650 | 1,849,945 |
Long-term Liabilities | ' | ' |
Senior secured convertible notes, net of debt discount of $16,248,228 and $17,791,104, respectively | 17,941,662 | 12,439,154 |
Fair value of warrant liability | 370,865 | ' |
Lease liability, net of current portion | 8,607 | 25,824 |
Total long-term liabilities | 18,321,134 | 12,464,978 |
Total liabilities | 21,268,784 | 14,314,923 |
Commitments and Contingencies | ' | ' |
Stockholders' Equity (Deficit): | ' | ' |
Preferred stock - par value $0.001; 20,000,000 shares authorized; no shares issued and outstanding | ' | ' |
Common stock - par value $0.001; 300,000,000 shares authorized; 138,753,397 and 132,526,042 issued and outstanding, respectively | 138,753 | 132,526 |
Additional paid in capital | 71,202,451 | 67,224,170 |
Accumulated deficit | -79,793,823 | -65,275,518 |
Total CareView Communications Inc. stockholders' equity (deficit) | -8,452,619 | 2,081,178 |
Noncontrolling interest | -378,269 | -329,552 |
Total stockholders' equity (deficit) | -8,830,888 | 1,751,626 |
Total liabilities and stockholders' equity (deficit) | $12,437,896 | $16,066,549 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Allowance for Doubtful Accounts | ' | $80,235 |
Accumulated depreciation of property and equipment | 4,255,233 | 2,726,234 |
Accumulated amortization of intellectual property, patents, and trademarks | 43,921 | 19,839 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 138,753,397 | 132,526,042 |
Common stock, shares outstanding | 138,753,397 | 132,526,042 |
Mandatorily Redeemable Equity in Joint Venture | ' | ' |
Debt discount | 0 | 32,988 |
Notes Payable | ' | ' |
Debt discount | 0 | 32,988 |
Senior Secured Convertible Notes | ' | ' |
Debt discount | $16,248,228 | $17,791,104 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Percentage owned by Rockwell of each Project LLC formed for the Project Hospitals | ' | ' |
Revenues, net | $2,068,771 | $1,629,971 |
Operating expenses: | ' | ' |
Network operations | 2,477,430 | 2,905,703 |
General and administration | 2,734,658 | 4,807,758 |
Sales and marketing | 999,449 | 1,927,205 |
Research and development | 860,371 | 951,132 |
Depreciation and amortization | 1,611,546 | 2,112,609 |
Total operating expense | 8,683,454 | 12,704,407 |
Operating loss | -6,614,683 | -11,074,436 |
Other income and (expense): | ' | ' |
Interest expense | -7,969,527 | -7,670,396 |
Interest income | 2,632 | 5,250 |
Other income | 14,556 | 134,070 |
Total other income (expense) | -7,952,339 | -7,531,076 |
Loss before taxes | -14,567,022 | -18,605,512 |
Provision for income taxes | ' | ' |
Net loss | -14,567,022 | -18,605,512 |
Net loss attributable to noncontrolling interest | -48,717 | -102,542 |
Net loss attributable to CareView Communications, Inc. | ($14,518,305) | ($18,502,970) |
Net loss per share attributable to CareView Communications, Inc. basic and diluted | ($0.11) | ($0.14) |
Weighted average number of common shares outstanding, basic and diluted | 137,217 | 132,122,958 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Noncontrolling Interest | Total |
Beginning balance at Dec. 31, 2011 | $131,455 | $62,788,134 | ($46,772,548) | ($227,010) | $15,920,031 |
Beginning balance, shares at Dec. 31, 2011 | 131,455,407 | ' | ' | ' | ' |
Shares issued for exercise of warrants | 1,071 | 261,380 | ' | ' | 262,451 |
Shares issued for exercise of warrants, shares | 1,070,635 | ' | ' | ' | ' |
Options granted as compensation | ' | 812,045 | ' | ' | 812,045 |
Warrants issued for services | ' | 320,812 | ' | ' | 320,812 |
Warrants issued for financing costs (revalued) | ' | ' | ' | ' | ' |
Beneficial conversion features for senior secured convertible notes | ' | 3,041,799 | ' | ' | 3,041,799 |
Net loss | ' | ' | -18,502,970 | -102,542 | -18,605,512 |
Ending balance at Dec. 31, 2012 | 132,526 | 67,224,170 | -65,275,518 | -329,552 | 1,751,626 |
Ending balance, shares at Dec. 31, 2012 | 132,526,042 | ' | ' | ' | ' |
Shares issued in private placement, net of costs | 6,220 | 2,696,909 | ' | ' | 2,703,129 |
Shares issued in private placement, net of costs, shares | 6,220,000 | ' | ' | ' | ' |
Warrants issued in private placement | ' | 25,000 | ' | ' | 25,000 |
Liability associated with warrants issued in private placement | ' | -672,909 | ' | ' | -672,909 |
Shares issued for exercise of warrants | 7 | -7 | ' | ' | ' |
Shares issued for exercise of warrants, shares | 7,355 | ' | ' | ' | ' |
Options granted as compensation | ' | 390,443 | ' | ' | 390,443 |
Warrants issued for services | ' | 49,091 | ' | ' | 49,091 |
Warrants issued for financing costs (revalued) | ' | 64,286 | ' | ' | 64,286 |
Beneficial conversion features for senior secured convertible notes | ' | 1,425,468 | ' | ' | 1,425,468 |
Net loss | ' | ' | -14,518,305 | -48,717 | -14,567,022 |
Ending balance at Dec. 31, 2013 | $138,753 | $71,202,451 | ($79,793,823) | ($378,269) | ($8,830,888) |
Ending balance, shares at Dec. 31, 2013 | 138,753,397 | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_STO1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Statement of Stockholders' Equity [Abstract] | ' |
Private placement costs | $375,771 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITES | ' | ' |
Net loss | ($14,567,022) | ($18,605,512) |
Adjustments to reconcile net loss to net cash flows used in operating activities: | ' | ' |
Depreciation | 1,587,464 | 1,546,599 |
Provision for doubtful accounts | ' | 64,251 |
Amortization of intangible assets | 24,082 | 566,010 |
Amortization of debt discount | 3,034,320 | 3,375,706 |
Amortization of prepaid consulting costs | 76,536 | 457,975 |
Amortization of installation costs | 349,939 | 599,950 |
Amortization of deferred distribution/service costs | ' | 55,334 |
Amortization of deferred debt issuance costs | 569,388 | 526,530 |
Interest incurred and paid in kind | 3,959,632 | 3,449,440 |
Stock based compensation related to options granted | 390,443 | 812,045 |
Stock based costs related to warrants issued | 49,091 | 320,812 |
Change in value of warrant liability | -302,044 | ' |
Gain on disposal of assets | -2,374 | -124,944 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 62,709 | -245,142 |
Other current assets | 29,061 | 162,308 |
Other assets | 151,906 | 178,503 |
Accounts payable | 248,515 | -850,603 |
Accrued expenses and other current liabilities | -196,931 | 362,419 |
Other liabilities | -17,217 | 25,824 |
Net cash flows used in operating activities | -4,552,502 | -7,322,495 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' |
Purchase of property and equipment | -105,986 | -538,399 |
Payment for deferred installation costs | -288,181 | -387,923 |
Patent and trademark costs | -63,823 | -62,171 |
Proceeds from insurance claims | 17,824 | ' |
Purchase of computer software and website costs | -4,274 | -22,220 |
Net cash flows used in investing activities | -444,440 | -1,010,713 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Proceeds from sale of common stock, net of issuance costs | 2,703,129 | ' |
Proceeds from notes payable and line of credit | 982,255 | 5,000,000 |
Proceeds from sale of warrants | 25,000 | ' |
Proceeds from exercise of options and warrants | ' | 262,451 |
Repayment of notes payable | -2,110 | -42,252 |
Net cash flows provided by financing activities | 3,708,274 | 5,220,199 |
Decrease in cash | -1,288,668 | -3,113,009 |
Cash and cash equivalents, beginning of period | 5,413,848 | 8,526,857 |
Cash and cash equivablents, end of period | 4,125,180 | 5,413,848 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ' | ' |
Cash paid for interest | 169,663 | 81,942 |
Cash paid for income taxes | ' | ' |
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES: | ' | ' |
Beneficial conversion features for senior secured convertible notes | 1,425,468 | 3,041,799 |
Liability associated with warrants issued in private placement | -672,909 | ' |
Warrants issued for financing costs | $64,286 | ' |
THE_COMPANY
THE COMPANY | 12 Months Ended |
Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
THE COMPANY | ' |
NOTE 1 – THE COMPANY | |
CareView Communications, Inc., a Nevada corporation (“CareView-NV” or the “Company”), was originally formed in California on July 8, 1997 under the name Purpose, Inc., changing our name to Ecogate, Inc. in April 1999, and CareView Communications, Inc. in October 2007. We began our current operation in 2003 as a healthcare information technology company with a patented patient monitoring and entertainment system. CareView developed a suite of products and hardware to help connect patients, families and health care providers through one easy-to-install and simple-to-use data and patient monitoring system (the “CareView System®”). The CareView System runs on each hospital’s coaxial cable television network that provides television signals to patients’ rooms; consequently, CareView’s network does not need to run on or through the hospital’s specific IT infrastructure, thereby requiring minimal Internet technology involvement on the part of the hospital. The Company’s proprietary, high-speed data network system may be deployed throughout a healthcare facility and will provide the facility with recurring revenue and infrastructure for future applications. Real-time bedside and point-of-care video monitoring and recording improve efficiency while limiting liability, and entertainment packages and patient education enhance the patient’s quality of stay. | |
On November 16, 2009, the Company entered into a joint venture relationship with Rockwell Holdings I, LLC, a Wisconsin limited liability company (“Rockwell”), wherein two Wisconsin limited liability companies were formed, CareView-Hillcrest, LLC (“CareView-Hillcrest”) and CareView-Saline, LLC (“CareView-Saline”) (together known as the “Project LLCs”). Under the terms of a Master Investment Agreement, the Company and Rockwell each own 50% of the Project LLCs with Rockwell providing the financing and the Company providing the technology and expertise to fully implement the CareView System in Hillcrest Medical Center in Tulsa, Oklahoma and Saline Memorial Hospital in Benton, Arkansas. Pursuant to the terms of the Operating Agreements of each of the Project LLCs, the Company is the managing member. See NOTE 13 for further details. | |
Throughout these Notes to Consolidated Financial Statements, the terms “we,” “us,” “our,” “CareView,” or the “Company” refers to CareView-NV, and unless otherwise specified, includes our wholly owned subsidiaries, CareView Communications, Inc., a Texas corporation (“CareView-TX”) and CareView Operations, LLC, a Nevada limited liability company (“CareView Operations”) (collectively known as the “Company’s Subsidiaries”) and our Project LLCs, CareView-Hillcrest and CareView-Saline, determined to be variable interest entities (“VIEs”) in which the Company exercises control and is deemed the Primary Beneficiary (collectively known as the “Company’s LLCs”). The Company’s business consists of a single segment of products and services all of which are sold and provided within the United States. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Summary Of Significant Accounting Policies | ' | ||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||||||
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The accompanying consolidated financial statements include the accounts of the Company, our wholly owned subsidiaries and our LLCs for which we control the operating activities. All material intercompany balances and transactions have been eliminated in consolidation. | |||||||||||||||||
We report noncontrolling interests in our VIEs as a component of stockholders’ equity in the Consolidated Balance Sheets and the loss attributable to noncontrolling interests as an adjustment to net loss to arrive at net loss attributable to the Company in the Consolidated Statements of Operations. | |||||||||||||||||
Variable Interest Entities | |||||||||||||||||
We use a qualitative analysis to determine if we are the primary beneficiary of a VIE. We consider whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics, among others: (a) the power to direct the activities of a variable interest entity that most significantly impacts the entity’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits from the entity, that could potentially be significant to the variable interest entity. | |||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
Beginning January 1, 2013, insurance coverage reverted to $250,000 per depositor at each financial institution and certain of our non-interest bearing cash balances exceeded federally insured limits. Cash is maintained at reputable financial institutions; however, balances in certain accounts exceeded federally insured limits during 2013. During 2012, resulting from a temporary federal program in effect from December 31, 2010 through December 31, 2012, there was no limit to the amount of insurance for eligible accounts. | |||||||||||||||||
Trade Accounts Receivable | |||||||||||||||||
Trade accounts receivable are customer obligations due under normal trade terms. We provide an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Trade accounts receivable past due more than 90 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluations, results of collection efforts, and specific circumstances of the customer. Recoveries of accounts previously written off are recorded as reductions of bad debt expense when received. | |||||||||||||||||
The following table provides a summary of changes in the allowance for doubtful accounts for the years ended December 31, 2013 and 2012: | |||||||||||||||||
Allowance for Doubtful Accounts | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Beginning balance | $ | 80,235 | $ | 15,984 | |||||||||||||
Additions | — | 85,096 | |||||||||||||||
Reductions | (80,235 | ) | (20,845 | ) | |||||||||||||
Ending balance | $ | — | $ | 80,235 | |||||||||||||
Property and Equipment | |||||||||||||||||
Property and equipment is stated at cost, net of accumulated depreciation. Maintenance costs, which do not significantly extend the useful lives of the respective assets, and repair costs are charged to operating expense as incurred. We include Network Equipment in fixed assets upon receipt, and begin depreciating the Network Equipment when such equipment passes our incoming inspection and is available for use. We attribute no salvage value to the Network Equipment and depreciation is computed using the straight-line method based on the estimated useful life of seven years. Also using the straight-line method, depreciation of office and test equipment, warehouse equipment and furniture is based on the estimated useful lives of the assets, generally three years for office and test equipment, and five years for warehouse equipment and furniture. | |||||||||||||||||
Allowance for System Removal | |||||||||||||||||
We would remove the CareView System customer premises due to a number of factors; including, but not limited to, collection/revenue performance issues and contract expiration/non-renewal. We regularly evaluate the installed CareView Systems. An allowance is set up based on the estimated cost to de-install. As of December 31, 2013 and 2012, an allowance of approximately $56,000 and $28,000, respectively, was recorded. | |||||||||||||||||
Impairment of Long-Lived Assets | |||||||||||||||||
Carrying values of property and equipment and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable. Such events or circumstances include, but are not limited to: | |||||||||||||||||
• | Significant declines in an asset’s market price; | ||||||||||||||||
• | Significant deterioration in an asset’s physical condition; | ||||||||||||||||
• | Significant changes in the nature or extent of an asset’s use or operation; | ||||||||||||||||
• | Significant adverse changes in the business climate that could impact an asset’s value, including adverse actions or assessments by regulators; | ||||||||||||||||
• | Accumulation of costs significantly in excess of original expectations related to the acquisition or construction of an asset; | ||||||||||||||||
• | Current-period operating or cash flow losses combined with a history of such losses or a forecast that demonstrates continuing losses associated with an asset’s use; and | ||||||||||||||||
• | Expectations that it is more likely than not that an asset will be sold or otherwise disposed of significantly before the end of our previously estimated useful life. | ||||||||||||||||
If impairment indicators are present, we determine whether an impairment loss should be recognized by testing the applicable asset or asset group’s carrying value for recoverability. This test requires long-lived assets to be grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, the determination of which requires judgment. We estimate the undiscounted future cash flows expected to be generated from the use and eventual disposal of the assets and compare that estimate to the respective carrying values in order to determine if such carrying values are recoverable. This assessment requires the exercise of judgment in assessing the future use of and projected value to be derived from the eventual disposal of the assets to be held and used. Assessments also consider changes in asset utilization, including the temporary idling of capacity and the expected timing for placing this capacity back into production. If the carrying value of the assets is not recoverable, then a loss is recorded for the difference between the assets’ fair value and respective carrying value. The fair value of the assets is determined using an “income approach” based upon a forecast of all the expected discounted future net cash flows associated with the subject assets. Some of the more significant estimates and assumptions include: market size and growth, market share, projected selling prices, manufacturing cost and discount rate. Our estimates are based upon our historical experience, our commercial relationships, market conditions and available external information about future trends. We believe our current assumptions and estimates are reasonable and appropriate; however, unanticipated events and changes in market conditions could affect such estimates resulting in the need for an impairment charge in future periods. During the years ended December 31, 2013 and 2012, no impairment was recognized. | |||||||||||||||||
Research and Development | |||||||||||||||||
Research and development costs are expensed as incurred. Costs regarding the development of software to be sold, leased or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. We did not capitalize any such costs during 2013 or 2012. | |||||||||||||||||
Intellectual Property | |||||||||||||||||
We capitalize certain costs of developing software upon the establishment of technological feasibility and prior to the availability of the product for general release to customers for our CareView System in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Capitalized costs are reported at the lower of unamortized cost or net realizable value and are amortized over the estimated useful life of the CareView System not to exceed five years. Additionally, we test our intangible assets for impairment whenever circumstances indicate that their carrying value may not be recoverable. No impairment was recorded for the years ended December 31, 2013 and 2012. | |||||||||||||||||
Intellectual property is comprised of purchased and internally developed software costs totaling $2,752,933, all of which was capitalized prior to 2008 and was fully amortized at December 31, 2012. During the years ended December 31, 2013 and 2012 we capitalized no additional intellectual property costs. | |||||||||||||||||
Patents and Trademarks | |||||||||||||||||
We have capitalized certain costs related to registering trademarks and patent pending technology. In accordance with GAAP, we amortize our intangible assets with a finite life on a straight-line basis, over 10 years for trademarks and 20 years for patents. We begin amortization of these costs on the date patents or trademarks are awarded. | |||||||||||||||||
Derivative Financial Instruments | |||||||||||||||||
Derivatives are recorded on the balance sheet at fair value and changes in fair value are recorded in earnings at each reporting date in accordance with GAAP. See NOTE 4 for further details regarding derivative activity during the years ended December 31, 2013 and 2012. | |||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||
Our financial instruments consist primarily of receivables, accounts payable, accrued expenses and short and long-term debt. The carrying amount of receivables, accounts payable and accrued expenses approximates our fair value because of the short-term maturity of such instruments and they are considered Level 1 assets under the fair value hierarchy. We have elected not to carry our debt instruments at fair value. The carrying amount of our debt approximates fair value. Interest rates that are currently available to us for issuance of short and long-term debt with similar terms and remaining maturities are used to estimate the fair value of the our short and long-term debt and would be considered Level 3 inputs under the fair value hierarchy. | |||||||||||||||||
We have categorized our assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy in accordance with GAAP. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). | |||||||||||||||||
Assets and liabilities recorded in the consolidated balance sheets at fair value are categorized based on a hierarchy of inputs, as follows: | |||||||||||||||||
Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||
Level 2 — Quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. | |||||||||||||||||
Level 3 — Unobservable inputs for the asset or liability. | |||||||||||||||||
The Company’s financial assets and liabilities recorded at fair value on a recurring basis include the fair value of warrant liability discussed in NOTE 4. The fair value of this warrant liability is included in long-term liabilities and the change in fair value of this warrant is included in general and administration expenses on the accompanying consolidated financial statements. | |||||||||||||||||
The following table provides the financial assets and liabilities reported at fair value and measured on a recurring basis as of December 31, 2013: | |||||||||||||||||
Description | Assets/ (Liabilities) Measured at Fair Value | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
Fair value of warrant liability | $ | (370,865 | ) | $ | — | $ | — | $ | (370,865 | ) | |||||||
The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the year ended December 31, 2013: | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs | |||||||||||||||||
(Level 3) | |||||||||||||||||
Balance at January 1, 2013 | $ | — | |||||||||||||||
Issuances of derivative liabilities | (672,909 | ) | |||||||||||||||
Change in fair value of warrant liability | 302,044 | ||||||||||||||||
Transfers in and/out of Level 3 | — | ||||||||||||||||
Ending balance | $ | (370,865 | ) | ||||||||||||||
The above table of Level 3 liabilities begins with the prior period balance and adjusts the balance for changes that occurred during the current period. The ending balance of the Level 3 securities presented above represent our best estimates and may not be substantiated by comparisons to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. | |||||||||||||||||
Income Taxes | |||||||||||||||||
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized when the rate change is enacted. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. In accordance with GAAP, we recognize the effect of uncertain income tax positions only if the positions are more likely than not of being sustained in an audit, based on the technical merits of the position. Recognized uncertain income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which those changes in judgment occur. We recognize both interest and penalties related to uncertain tax positions as part of the income tax provision. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
Revenue is recognized when persuasive evidence of a sales arrangement exists, when the selling price is fixed or determinable, when installation and official acceptance by the facility occurs, and when collection is probable. Because we consolidate our financial statements, 100% of the revenue generated by the Project LLCs is included in our results with all intra-company accounts and transactions eliminated in consolidation. | |||||||||||||||||
We offer CareView’s services through a subscription-based contract with each facility for a standard term of three to five years. We begin to bill monthly subscription fees to the facility upon official acceptance of the CareView System by the facility. The contract requires the facility to pay us the subscription fee monthly. During the term of the contract, we provide continuous monitoring of the CareView System and are required to maintain and service all CareView System equipment. If the customer requires additional products or services, the contract is amended with new pricing or revenue sharing terms and conditions. | |||||||||||||||||
Earnings Per Share | |||||||||||||||||
We calculate earnings per share (“EPS”) in accordance with GAAP, which requires the computation and disclosure of two EPS amounts, basic and diluted. Basic EPS is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of common shares outstanding plus all potentially dilutive common shares outstanding during the period under the treasury stock method. Such potential dilutive common shares consist of stock options, warrants and convertible debt. Potential common shares totaling 75,550,210 and 67,354,894 at December 31, 2013 and 2012, respectively, have been excluded from the diluted earnings per share calculation as they are anti-dilutive due to our reported net loss. | |||||||||||||||||
Stock Based Compensation | |||||||||||||||||
We recognize compensation expense for all share-based payments granted and amended based on the grant date fair value estimated in accordance with GAAP. Compensation expense is generally recognized on a straight-line basis over the employee’s requisite service period based on the award’s estimated lives for fixed awards with ratable vesting provisions. | |||||||||||||||||
Debt Discount Costs | |||||||||||||||||
Costs incurred with parties who are providing long-term financing, with warrants issued with the underlying debt, are reflected as a debt discount based on the relative fair value of the debt and warrants. These discounts are generally amortized over the life of the related debt, using the effective interest rate method. | |||||||||||||||||
Deferred Debt Issuance Costs | |||||||||||||||||
Costs incurred through the issuance of warrants to parties who are providing long-term financing availability, which includes revolving credit lines, are reflected as deferred debt issuance based on the fair value of the warrants issued. These costs are generally amortized over the life of the financing instrument using the effective interest rate method. | |||||||||||||||||
Installation Costs | |||||||||||||||||
We defer all costs associated with the installation of the CareView System into a particular hospital until the CareView System is fully operational and accepted by the hospital. Upon acceptance, the associated costs are expensed ratably over the life of the hospital contract. These costs are included in network operations on the accompanying consolidated statements of operations. | |||||||||||||||||
Shipping and Handling Costs | |||||||||||||||||
We expense all shipping and handling costs as incurred. These costs are included in network operations on the accompanying consolidated financial statements. | |||||||||||||||||
Advertising Costs | |||||||||||||||||
We consider advertising costs as costs associated with the promotion of our products through the various media outlets. We expense all advertising costs as incurred. | |||||||||||||||||
Concentration of Credit Risks and Customer Data | |||||||||||||||||
We derive all of our revenues from hospitals. For the year ended December 31, 2013, 68 hospitals accounted for all of our revenue. During 2013 IASIS Healthcare Corporation and Health Management Associates, Inc. (“HMA”) accounted for 53% and 30% of our net revenues respectively. For the year ended December 31, 2012, 55 hospitals accounted for the all of our net revenue. During that period, HMA accounted for 80% of our revenue. HMA is a hospital management group consisting of 45 individually billed hospitals of which no hospital individually accounted for more than 7% of our revenue. | |||||||||||||||||
Use of Estimates | |||||||||||||||||
Our financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates, including those related to contingencies, on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. | |||||||||||||||||
Recently Issued Accounting Pronouncements | |||||||||||||||||
In July 2013, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance related to the presentation of unrecognized tax benefits. The update requires that the entity present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward in the statement of financial position. The guidance does not apply to the extent that a net operating loss carryforward or tax credit carryforward at the reporting date is not available under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position. The guidance is effective for annual reporting periods beginning after December 15, 2013, and interim reporting periods thereafter. We expect to present deferred tax assets net of unrecognized tax benefits, as appropriate, in the consolidated balance sheets. We do not anticipate that this guidance will have a material impact on our financial position or results of operations. | |||||||||||||||||
In February 2013, the FASB issued authoritative guidance which adds new disclosure requirements for items reclassified out of Accumulated Other Comprehensive Income (Loss) (“AOCI”). The update requires that an entity present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of AOCI based on its source and the income statement line items affected by the reclassification. The guidance was effective for the quarter ended March 30, 2013. The adoption of this guidance did not have an impact on our financial position or results from operations. | |||||||||||||||||
In July 2012, the FASB guidance giving entities an option to first assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that the indefinite-lived intangible asset impaired. If based on its qualitative assessment an entity concludes that it is more likely than not that the fair value of an indefinite lived intangible asset is less than its carrying amount, quantitative impairment testing is required. However, if an entity concludes otherwise, quantitative impairment testing is not required. The guidance was effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of this guidance did not have a material impact on our financial position or results of operations. | |||||||||||||||||
Reclassifications | |||||||||||||||||
Certain 2012 amounts have been reclassified to conform to current year presentation. | |||||||||||||||||
LIQUIDITY_AND_MANAGEMENTS_PLAN
LIQUIDITY AND MANAGEMENT'S PLAN | 12 Months Ended |
Dec. 31, 2013 | |
Liquidity And Managements Plan | ' |
LIQUIDITY AND MANAGEMENT'S PLAN | ' |
NOTE 3 – LIQUIDITY AND MANAGEMENTS PLAN | |
Our cash position at December 31, 2013 was approximately $4.125 million. We are required to maintain a minimum cash balance $4 million pursuant to existing loan documents. Falling below that balance triggers a default with HealthCor Partners Fund, LP and HealthCor Hybrid Offshore Master Fund, LP (see NOTE 11 in the accompanying consolidated financial statements for further details) and Comerica Bank and Bridge Bank (see NOTE 12 in the accompanying consolidated financial statements for further details). In view of these facts, our continued successful operation is dependent upon us achieving positive cash flow through operations while maintaining adequate liquidity; however, we may be required to obtain additional financing. In order to support current and future operations, on January 16, 2014, we closed a $5 million funding (see NOTE 17 for further details). Upon receipt of this $5 million funding, the minimum cash balance reference above was increased to $5 million pursuant to existing loan documents. We expect that the proceeds from this funding, as well as our existing and projected cash flow from billable contracts, will enable us to continue to operate for the next twelve month period. We believe that our sales and marketing plan to attract new business and our ongoing deployment and installation of units under existing hospital agreements, will meet our near-term cash needs and will help us achieve future operating profitability. | |
As more fully described in NOTE 12, we have an additional financial resource with the Comerica Bank and Bridge Bank revolving credit line for $20 million (“Revolving Line”). At present, we have sufficient inventory to install and service a select number of large customers, but eventually we will need to address additional capital needs through the Revolving Line under which we can borrow up to $20 million by using eligible signed customer contracts as collateral; however, no eligible contracts were available for additional borrowings on the Revolving Line at December 31, 2013 and at the time of this filing. The Revolving Line expires in June 2014 unless extended by mutual agreement. | |
We believe that we will achieve operating profitability; however, due to conditions and influences out of our control, including the current state of the national economy, we cannot guarantee that profitability will be achieved or that it will be achieved in the stated time frame, nor is there any assurance that such an operating level can ever be achieved. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Stockholders' Equity (Deficit): | ' | ||||||||||||||||
STOCKHOLDERS' EQUITY | ' | ||||||||||||||||
NOTE 4 – STOCKHOLDERS’ EQUITY | |||||||||||||||||
Preferred Stock | |||||||||||||||||
At December 31, 2013 and 2012, we had 20,000,000 shares of Preferred Stock, par value $0.001 authorized and none outstanding, which can be designated by our Board of Directors. | |||||||||||||||||
Common Stock | |||||||||||||||||
At December 31, 2013 and 2012, we had 300,000,000 shares of Common Stock, $0.001 par value authorized, with 138,753,397 and 132,526,042 shares of Common Stock issued and outstanding, respectively. | |||||||||||||||||
Common Stock Issuances During 2013 | |||||||||||||||||
Private Placement | |||||||||||||||||
On March 27, 2013, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with multiple investors relating to the issuance and sale of our Common Stock in a private offering. On April 1, 2013, the closing date of the Purchase Agreement, we sold (i) an aggregate of 6,220,000 shares of our Common Stock for $0.495 per share and (ii) Common Stock Purchase Warrants for the purchase of an aggregate of 2,500,000 shares for $0.01 per share (the “Private Placement Warrants”) for aggregate gross proceeds of approximately $3.1 million. The five-year Private Placement Warrants vested immediately upon issuance, have an exercise price of $0.60 per share and contain provisions for a cashless exercise. | |||||||||||||||||
Pursuant to terms in the Purchase Agreement, the 6,220,000 shares of Common Stock purchased and the 2,500,000 shares available for purchase under the Private Placement Warrants, were registered pursuant to a Form S-1 Registration Statement under the Securities Act of 1933 as filed with the Securities Exchange Commission (“SEC”) on May 4, 2013 (“Form S-1”). On May 9, 2013, the Form S-1 was deemed effective by the SEC. | |||||||||||||||||
As discussed below, the Private Placement Warrants are classified as liabilities and recorded at their fair value ($672,909) at the date of issuance. The total proceeds received from the Private Placement were allocated between the Common Stock issued and the Private Placement Warrants based on the residual method. Accordingly, $672,909 was allocated to warrant liability and $2,728,129 was allocated to common stock and additional paid in capital on the accompanying consolidated financial statements. | |||||||||||||||||
Cashless Warrant Exercise | |||||||||||||||||
In August 2013, an individual exercised a Warrant to purchase an aggregate of 179,638 shares of our Common Stock. In order to exercise the Warrant pursuant to the cashless provisions contained therein, the individual surrendered his right to receive 172,283 shares, resulting in an issuance of 7,355 shares of Common Stock. | |||||||||||||||||
Common Stock Issuances During 2012 | |||||||||||||||||
In January 2012, unaffiliated entities exercised Warrants to purchase an aggregate of 39,683 shares of our Common Stock at an aggregate exercise price of $20,635. | |||||||||||||||||
In January and February 2012, unaffiliated entities exercised Warrants to purchase an aggregate of 850,000 shares of our Common Stock. In order to exercise the Warrants pursuant to the cashless provision contained therein, the entities surrendered their right to receive 258,714 shares, resulting in an issuance of 591,286 shares of Common Stock. | |||||||||||||||||
In September 2012, a member of our Board of Directors at the time, exercised a Warrant to purchase an aggregate of 439,666 shares of our Common Stock at an aggregate exercise price of $241,816. | |||||||||||||||||
Warrants to Purchase Common Stock of the Company | |||||||||||||||||
We use the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) to determine the fair value of warrants to purchase shares of our Common Stock (“Warrant(s)”) (except Warrants issued to HealthCor Partners Fund, LP and HealthCor Hybrid Offshore Master Fund, LP (the “HealthCor Warrants”) and the Private Placement Warrants). The Black-Scholes Model is an acceptable model in accordance with the GAAP. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average term of the Warrant. The fair value of the HealthCor Warrants and the Private Placement Warrants were computed using the Binomial Lattice model, incorporating transaction details such as the price of our Common Stock, contractual terms, maturity and risk free rates, as well as assumptions about future financings, volatility, and holder behavior. Due to the down round provisions associated with the exercise price of the HealthCor Warrants and the Private Placement Warrants, we determined that the Binomial Lattice model was the most appropriate model for valuing these instruments. | |||||||||||||||||
The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the Warrants and is calculated by using the average daily historical stock prices through the day preceding the grant date. | |||||||||||||||||
Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award. Our estimated volatility is an average of the historical volatility of our stock prices (and that of peer entities whose stock prices were publicly available). Our calculation of estimated volatility is based on historical stock prices over a period equal to the expected life of the awards. Where appropriate we used the historical volatility of peer entities due to the lack of sufficient historical data of our stock price during 2007-2009. | |||||||||||||||||
The assumptions used in the Black-Scholes Model during the years ended December 31, 2013 and 2012 are set forth in the table below. | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Risk-free interest rate | NA | 0.19%-1.03 | % | ||||||||||||||
Volatility | NA | 41.63-97.77 | % | ||||||||||||||
Expected life | NA | 5-Jan | |||||||||||||||
Dividend yield | NA | 0 | % | ||||||||||||||
A summary of our Warrants activity and related information follows: | |||||||||||||||||
Number of Shares Under Warrant | Range of Warrant Price Per Share | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||||||
Balance at December 31, 2011 | 34,846,421 | $ | 0.52-$1.25 | $ | 0.95 | 5.7 | |||||||||||
Granted | 569,638 | $ | 0.77-$1.65 | $ | 1.2 | 3.7 | |||||||||||
Exercised | (1,329,349 | ) | $ | 0.52-$0.55 | $ | 0.53 | — | ||||||||||
Expired | — | ||||||||||||||||
Cancelled | (10,000 | ) | $ | 0.55 | $ | 0.55 | — | ||||||||||
Balance at December 31, 2012 | 34,076,710 | $ | 0.52-$1.65 | $ | 0.97 | 4.7 | |||||||||||
Granted | 2,500,000 | $ | 0.6 | $ | 0.6 | 4.3 | |||||||||||
Exercised | (179,638 | ) | $ | 0.52 | $ | 0.52 | — | ||||||||||
Expired | (1,931,250 | ) | $ | 0.52 | $ | 0.52 | — | ||||||||||
Cancelled | — | ||||||||||||||||
Balance at December 31, 2013 | 34,465,822 | $ | 0.52-$1.65 | $ | 0.96 | 4 | |||||||||||
Vested and Exercisable at December 31, 2013 | 34,465,822 | $ | 0.52-$1.65 | $ | 0.96 | 4 | |||||||||||
As of December 31, 2013, unamortized costs associated with capitalized Warrants, excluding the HealthCor Warrants and Private Placement Warrants, totaled approximately $285,000. | |||||||||||||||||
Warrant Activity During 2013 | |||||||||||||||||
As discussed hereinabove, during the year ended December 31, 2013, we issued Private Placement Warrants for the purchase of 2,500,000 shares of our Common Stock. The Private Placement Warrants contain provisions that protect the holders from a decline in the issue price of our Common Stock or “down round” provisions. In accordance with GAAP, our management concluded these instruments are to be accounted for as liabilities instead of equity due to the down round protection feature available on the exercise price of the Warrants. We recognized these Warrants as liabilities at their fair value and will re-measure them at fair value on each reporting date with the change reported as non-cash costs in general and administration expense. GAAP provides requirements for disclosure of liabilities that are measured at fair value on a recurring basis in periods subsequent to the initial recognition. Fair values for Warrants are determined using the Binomial Lattice Model valuation technique. The Binomial Lattice Model valuation model provides for dynamic assumptions regarding volatility and risk-free interest rates within the total period to maturity. Accordingly, within the contractual term, we provided multiple date intervals over which multiple volatilities and risk free interest rates were used. These intervals allow the Binomial Lattice Model valuation to project outcomes along specific paths which consider volatilities and risk free rates that would be more likely in an early exercise scenario. As of April 1, 2013, the date of issuance of the Private Placement Warrants, we recorded the Warrant Liability of $672,909 in the consolidated financial statements. At December 31, 2013, the Private Placement Warrants were re-valued with a fair value of $370,865 and the difference of $302,044 is included in general and administration expenses in the accompanying consolidated financial statements. We also amortized certain previously capitalized Warrant costs in the accompanying consolidated financial statements as follows: (i) 76,535 as non-cash costs included in general and administration expense and (ii) $569,387 as interest expense. | |||||||||||||||||
On January 15, 2013, we entered into a Second Amendment to the Revolving Line (“Second Amendment”) in which Comerica Bank and Bridge Bank (the “Banks”) agreed to amend the defining term for “Eligible Accounts” and add the defining term for “Verification of Accounts” (see NOTE 12 for further details). In conjunction with the Second Amendment, the Warrants issued to the Banks were amended to reduce the exercise price from $1.40 to $1.10 per share (subject to adjustment for capital events) and to extend the expiration date from August 8, 2018 to January 15, 2020. All other provisions of the Agreement and the Warrants remained unchanged. This amendment was considered a modification and the additional costs were capitalized. The Warrants were revalued in January 2013 resulting in increases in fair value of $64,286, and are amortized (over the remaining life of the Revolver Line) to interest expense in the accompanying condensed consolidated financial statements using the effective interest method. | |||||||||||||||||
During the year ended December 31, 2013, we recorded a $23,764 charge to general and administration expense in the accompanying consolidated financial statements, related to a 12-month advisory services agreement (the “AS Agreement”) entered into on May 7, 2012, wherein consideration was paid through the issuance of a five-year Warrant to purchase 240,000 shares of our Common Stock (see NOTE 15 for further details). The underlying shares vested at the rate of 20,000 shares on the monthly anniversary date of the AS Agreement. The AS Agreement terminated on May 7, 2013. At grant date the Warrant had a fair value of $265,200 at an exercise price of $1.65 per share. Because the Warrant was issued to a non-employee and contained specific vesting requirements, the fair value of the Warrant is re-valued at each reporting period and any change in the fair value of the unvested portion of the Warrant is recorded as a charge or credit to income. Upon full vesting in May 2013, the fair value of these Warrants totaled $124,720. | |||||||||||||||||
In June 2013, Rockwell Holdings I, LLC extended the due dates on certain indebtedness of the Company. In conjunction with these extensions, we agreed to extend the expiration date of accompanying Warrants to Rockwell from November 16, 2014 to November 16, 2015 (see NOTE 13 for further details). All other provisions of the Warrants remained unchanged. The Warrants were amended and revalued in August 2013 resulting in a $25,327 increase in fair value, which has been included in general and administration expense in the accompanying consolidated financial statements. | |||||||||||||||||
Warrant Activity During 2012 | |||||||||||||||||
During the year ended December 31, 2012, the Company issued the following: | |||||||||||||||||
Number of Shares Under Warrant | Exercise Price | Exercise Term in Years | Fair Value | ||||||||||||||
Services (see Note 15) | 340,000 | $ | 0.77-$1.65 | 5 | $ | 345,600 | |||||||||||
Services (see below) | 229,638 | $ | 0.52-$1.52 | 5-Jan | 139,456 | ||||||||||||
569,638 | $ | 485,056 | |||||||||||||||
During the year ended December 31, 2012, we issued Warrants to certain unrelated parties for services, recording them in the accompanying consolidated financial statements as follow: | |||||||||||||||||
· | In April 2012, we granted an entity a five-year Warrant to purchase 50,000 shares of our Common Stock (with a fair value of $48,200) at an exercise price of $1.52 per share; all of which was charged to expense and recorded as non-cash cost in general and administration. | ||||||||||||||||
· | In November 2012, an employee terminated by us in March 2012, (the “Former Employee”) and the Company entered into a Release Agreement (the Former Employee was listed as an inventor on numerous patent applications for inventions he helped develop while an employee as of the date of termination) pursuant to which we issued the Former Employee a one (1) year Warrant containing a cashless exercise provision for the purchase of 179,638 shares at a purchase price of $0.52 in exchange for the Former Employee’s release of all claims and the assignment of the patent applications to the Company. The Warrant vested immediately upon issuance with a fair value of $91,256, all of which was charged to expense and recorded as non-cash cost in general and administration. | ||||||||||||||||
We also amortized certain previously capitalized Warrant costs in the accompanying consolidated financial statements as follows: (i) $55,334 as distribution/service costs in network operations, (ii) $447,388 as non-cash costs in general and administration, and (iii) $526,530 as interest expense. | |||||||||||||||||
Stock Options | |||||||||||||||||
Effective December 3, 2007, we established the CareView Communications, Inc. 2007 Stock Incentive Plan (“2007 Plan”) pursuant to which 8,000,000 shares of Common Stock were reserved for issuance upon the exercise of options (“2007 Plan Option(s)”). The 2007 Plan was designed to serve as an incentive for retaining our qualified and competent key employees, officers and directors, and certain consultants and advisors. The 2007 Plan Options vest over three years and have an exercise period of ten years from the date of issuance. At December 31, 2013, 2007 Plan Options to purchase 8,000,000 shares of our Common Stock have been issued with 5,300,920 remaining outstanding. | |||||||||||||||||
On September 30, 2009, we established the CareView Communications, Inc. 2009 Stock Incentive Plan (the “2009 Plan”) pursuant to which 10,000,000 shares of Common Stock was reserved for issuance upon the exercise of options (“2009 Plan Option(s)”). The 2009 Plan was designed to serve as an incentive for retaining our qualified and competent key employees, officers and directors. The 2009 Plan Options vest over three years and have an exercise period of ten years from the date of issuance. As of December 31, 2013, 2009 Plan Options to purchase 9,255,556 shares of our Common Stock have been issued with 8,446,556 remaining outstanding. | |||||||||||||||||
The valuation methodology used to determine the fair value of the options issued during the year was the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average expected term of the options. | |||||||||||||||||
The assumptions used in the Black-Scholes Model during the years ended December 31, 2013 and 2012 are set forth in the table below. | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Risk-free interest rate | 0.61-0.67 | % | 0.34 | % | |||||||||||||
Volatility | 101.81%-102.81 | % | 101.9 | % | |||||||||||||
Expected life | 3 | 3 | |||||||||||||||
Dividend yield | 0 | % | 0 | % | |||||||||||||
The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the expected term of the stock option and is calculated by using the average daily historical stock prices through the day preceding the grant date. | |||||||||||||||||
Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award. Our estimated volatility is an average of the historical volatility of peer entities whose stock prices were publicly available. Our calculation of estimated volatility is based on historical stock prices of these peer entities over a period equal to the expected life of the awards. Where appropriate we used the historical volatility of peer entities due to the lack of sufficient historical data of our stock price during 2007-2009. | |||||||||||||||||
A summary of our stock option activity under the 2007 and 2009 Plans and related information follows: | |||||||||||||||||
Number of Shares Under Option | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||||||||||
Balance at December 31, 2011 | 8,750,115 | $ | 0.66 | 7.2 | $ | 8,047,942 | |||||||||||
Granted | 760,000 | $ | 0.79 | ||||||||||||||
Exercised | — | ||||||||||||||||
Expired | (215,470 | ) | $ | 0.62 | |||||||||||||
Cancelled | (200,668 | ) | $ | 1.4 | |||||||||||||
Balance at December 31, 2012 | 9,093,977 | $ | 0.66 | 6.6 | $ | 2,376,961 | |||||||||||
Granted | 4,061,000 | $ | 0.51 | ||||||||||||||
Exercised | — | ||||||||||||||||
Expired | (86,665 | ) | $ | 1.38 | |||||||||||||
Cancelled | (320,836 | ) | $ | 1.09 | |||||||||||||
Balance at December 31, 2013 | 12,747,476 | $ | 0.59 | 6.9 | $ | — | |||||||||||
Vested and Exercisable at December 31, 2013 | 8,128,972 | $ | 0.6 | 5.1 | $ | — | |||||||||||
The weighted-average grant date fair value of options granted during the years ended December 31, 2013 and 2012 was $0.31 and $0.49, respectively. | |||||||||||||||||
Share-based compensation expense for stock options charged to our operating results for the years ended December 31, 2013 and 2012 ($390,443 and $812,045, respectively) is based on awards vested Forfeitures are to be estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from the estimates. We have not included an estimate for forfeitures due to our limited history and we revise based on actual forfeitures each period. | |||||||||||||||||
At December 31, 2013, total unrecognized estimated compensation expense related to non-vested stock options granted prior to that date was approximately $1,782,000, which is expected to be recognized over a weighted-average period of 2.6 years. No tax benefit was realized due to a continued pattern of operating losses. | |||||||||||||||||
Options Issued During 2013 | |||||||||||||||||
· | In September 2013, we granted 2009 Plan Options to purchase 25,000 shares with an exercise price of $0.50 per share to employees, | ||||||||||||||||
· | In November 2013, we granted 2009 Plan Options to purchase 3,641,000 shares with an exercise price of $0.51 per share to employees, and | ||||||||||||||||
· | In December 2013, we granted 2009 Plan Options to purchase 395,000 shares with an exercise price of $0.50 per share to employees. | ||||||||||||||||
Options Issued During 2012 | |||||||||||||||||
In December 2012, we granted 2009 Plan Options to purchase 760,000 shares with an exercise price of $0.79 per share to employees. | |||||||||||||||||
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
INCOME TAXES | ' | ||||||||
NOTE 5 – INCOME TAXES | |||||||||
At December 31, 2013, we had approximately $47,700,000 of federal net operating tax loss carry-forward which begins to expire in 2028. We had approximately $8,700,000 of state net operating losses as of December 31, 2013. | |||||||||
The differences between the actual income tax benefit and the amount computed by applying the statutory federal tax rate (35%) to the loss before taxes are as follows: | |||||||||
Years Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Expected income tax benefit at statutory rate | $ | (5,098,458 | ) | $ | (6,510,535 | ) | |||
Debt discount/debt issuance costs amortization | 1,549,525 | 1,792,637 | |||||||
Other permanent differences | 39,670 | 34,736 | |||||||
State income tax benefit, net of tax effect at state statutory rate | 3,740 | 2,590 | |||||||
Deferred pool true-ups/corrections related to: | |||||||||
warrants | 1,222,954 | — | |||||||
amortization | 702,183 | — | |||||||
net operating losses | (470,016 | ) | — | ||||||
Other | (16,689 | ) | (110,517 | ) | |||||
Change in valuation account | 2,067,091 | 4,791,089 | |||||||
Income tax expense (benefit) | $ | — | $ | — | |||||
The components of the deferred tax assets are as follows: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Deferred Tax Assets: | |||||||||
Tax benefit of net operating loss carry-forward | $ | 16,692,594 | $ | 13,731,810 | |||||
Accrued interest | 1,815,656 | 1,125,256 | |||||||
Stock based compensation | 1,032,009 | 1,983,218 | |||||||
Amortization | 689,759 | 968,441 | |||||||
Depreciation | 300,237 | 116,953 | |||||||
Accrued expenses | 61,780 | — | |||||||
Research and development credit carry-forward | 29,084 | 29,084 | |||||||
Donations | 10,541 | 7,724 | |||||||
Financing fees | — | 358,000 | |||||||
Officer compensation | — | 216,000 | |||||||
Bad debt allowance | — | 28,083 | |||||||
Total deferred tax assets | 20,631,660 | 18,564,569 | |||||||
Valuation allowance for deferred tax assets | (20,631,660 | ) | (18,564,569 | ) | |||||
Deferred tax assets, net of valuation allowance | $ | — | $ | — | |||||
In 2013 and 2012, the deferred tax valuation allowance increased by $2,067,091 and $4,791,089, respectively. The realization of the tax benefits is subject to the sufficiency of taxable income in future years. The combined deferred tax assets represent the amounts expected to be realized before expiration. | |||||||||
We periodically assess the likelihood that we will be able to recover our deferred tax assets. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible profits. | |||||||||
As of December 31, 2013 and 2012, we established valuation allowances equal to the full amount of the net deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods. | |||||||||
For the years ended December 31, 2013 and 2012, no amounts have been recognized for uncertain tax positions and no amounts have been assessed or recognized related to interest or penalties related to uncertain tax positions. We have determined that it is not reasonably likely for the amounts of unrecognized tax benefits to significantly increase or decrease within the next twelve months. We are currently subject to the general three year statute of limitation for federal tax. Under this general rule, the earliest period subject to potential audit is 2010. For years in which the company may utilize its net operating losses, the IRS the ability to examine the tax year that generated those losses and propose adjustments up to the amount of losses utilized. | |||||||||
OTHER_CURRENT_ASSETS
OTHER CURRENT ASSETS | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Other Current Assets | ' | ||||||||
OTHER CURRENT ASSETS | ' | ||||||||
NOTE 6 – OTHER CURRENT ASSETS | |||||||||
Other current assets consist of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Prepaid expenses | $ | 91,923 | $ | 130,825 | |||||
Sales tax refund | 72,399 | — | |||||||
Other current assets | 1,209 | 2,676 | |||||||
Legal retainer | — | 61,091 | |||||||
TOTAL OTHER CURRENT ASSETS | $ | 165,531 | $ | 194,592 |
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property And Equipment | ' | ||||||||
PROPERTY AND EQUIPMENT | ' | ||||||||
NOTE 7 – PROPERTY AND EQUIPMENT | |||||||||
Property and equipment consist of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Network equipment | $ | 10,205,367 | $ | 10,170,480 | |||||
Office equipment | 140,764 | 119,830 | |||||||
Vehicles | 112,332 | 136,082 | |||||||
Furniture | 75,673 | 75,673 | |||||||
Test equipment | 73,719 | 73,719 | |||||||
Warehouse equipment | 6,866 | 6,866 | |||||||
Leasehold improvements | 5,121 | 5,121 | |||||||
10,619,842 | 10,587,771 | ||||||||
Less: accumulated depreciation | (4,255,233 | ) | (2,726,234 | ) | |||||
TOTAL PROPERTY AND EQUIPMENT | $ | 6,364,609 | $ | 7,861,537 | |||||
Depreciation expense for the years ended December 31, 2013 and 2012 was $1,587,464 and $1,546,599, respectively. | |||||||||
At December 31, 2013, some portion of our network equipment is in excess of current requirements based on the recent level of installations. We have developed a program to deploy assets over the near term and believe no impairment exists at December 31, 2013. No estimate can be made of a range of amounts of loss that are reasonably possible should we not be successful. |
OTHER_ASSETS
OTHER ASSETS | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Other Assets: | ' | ||||||||||||
OTHER ASSETS | ' | ||||||||||||
NOTE 8 – OTHER ASSETS | |||||||||||||
Intangible assets consist of the following: | |||||||||||||
31-Dec-13 | |||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
Patents and trademarks | $ | 246,416 | $ | 14,487 | $ | 231,929 | |||||||
Other intangible assets | 50,494 | 29,434 | 21,060 | ||||||||||
TOTAL INTANGIBLE ASSETS | $ | 296,910 | $ | 43,921 | $ | 252,989 | |||||||
31-Dec-12 | |||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
Patents and trademarks | $ | 182,593 | $ | 6,525 | $ | 176,068 | |||||||
Other intangible assets | 46,220 | 13,314 | 32,906 | ||||||||||
TOTAL INTANGIBLE ASSETS | $ | 228,813 | $ | 19,839 | $ | 208,974 | |||||||
Other assets consist of the following: | |||||||||||||
31-Dec-13 | |||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
Deferred installation costs | $ | 1,087,295 | $ | 559,537 | $ | 527,758 | |||||||
Deferred debt issuance costs | 1,600,000 | 1,315,308 | 284,692 | ||||||||||
Prepaid license fee | 249,999 | 38,250 | 211,749 | ||||||||||
Deferred closing costs | 580,241 | 463,510 | 116,731 | ||||||||||
Security deposit | 83,624 | — | 83,624 | ||||||||||
Prepaid consulting | 1,131,300 | 1,131,300 | — | ||||||||||
TOTAL OTHER ASSETS | $ | 4,732,459 | $ | 3,507,905 | $ | 1,224,554 | |||||||
31-Dec-12 | |||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
Deferred installation costs | $ | 799,114 | $ | 209,598 | $ | 589,516 | |||||||
Deferred debt issuance costs | 1,535,714 | 745,920 | 789,794 | ||||||||||
Prepaid license fee | 516,050 | 247,413 | 268,637 | ||||||||||
Deferred closing costs | 233,606 | 21,857 | 211,749 | ||||||||||
Security deposit | 83,624 | — | 83,624 | ||||||||||
Prepaid consulting | 1,131,300 | 1,054,764 | 76,536 | ||||||||||
TOTAL OTHER ASSETS | $ | 4,299,408 | $ | 2,279,552 | $ | 2,019,856 |
OTHER_CURRENT_LIABILITIES
OTHER CURRENT LIABILITIES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Other Current Liabilities | ' | ||||||||
OTHER CURRENT LIABILITIES | ' | ||||||||
NOTE 9 – OTHER CURRENT LIABILITIES | |||||||||
Other current liabilities consist of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Accrued taxes | $ | 173,938 | $ | 257,549 | |||||
Accrued paid time off | 148,729 | 103,038 | |||||||
Other accrued liabilities | 215,475 | 441,941 | |||||||
TOTAL OTHER CURRENT LIABILITIES | $ | 538,142 | $ | 802,528 |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | |||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||
Commitments And Contingencies | ' | |||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | ' | |||||||||||||||||||||
NOTE 10– COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||||
Operating Lease | ||||||||||||||||||||||
On September 8, 2009, we entered into a Commercial Lease Agreement (the “Lease”) for 10,578 square feet of office and warehouse space expiring on June 30, 2015. The Lease contains renewal provisions under which we may renew the Lease for an additional three year period under the same terms and conditions. The base lease rate is $14,219 per month. Rent expense for the years ended December 31, 2013 and 2012 was $218,476 and $251,789, respectively. | ||||||||||||||||||||||
As of December 31, 2013, future minimum rental payments are as follows: | ||||||||||||||||||||||
Years Ending December 31, | ||||||||||||||||||||||
2014 | $ | 170,628 | ||||||||||||||||||||
2015 | 85,314 | |||||||||||||||||||||
Thereafter | — | |||||||||||||||||||||
Total | $ | 255,942 | ||||||||||||||||||||
Debt Maturity | ||||||||||||||||||||||
As of December 31, 2013, future debt payments due are as follows: | ||||||||||||||||||||||
Years Ending December 31, | Total | Senior Secured Convertible Notes(1) | Revolving Line | Notes Payable | Mandatorily Redeemable Equity in Joint Venture | |||||||||||||||||
2014 | $ | 1,867,293 | $ | — | $ | 982,255 | $ | 442,519 | $ | 442,519 | ||||||||||||
2015 | — | — | — | — | — | |||||||||||||||||
2016 | — | — | — | — | — | |||||||||||||||||
2017 | — | — | — | — | — | |||||||||||||||||
2018 | — | — | — | — | — | |||||||||||||||||
Thereafter | 34,189,890 | 34,189,890 | — | — | — | |||||||||||||||||
Total | $ | 36,057,183 | $ | 34,189,890 | $ | 982,255 | $ | 442,519 | $ | 442,519 | ||||||||||||
(1) Senior Secured Convertible Notes are included on the accompanying consolidated financial statements as $17,941,662, which represents this amount less debt discount of $16,248,228. |
AGREEMENT_WITH_HEALTHCOR
AGREEMENT WITH HEALTHCOR | 12 Months Ended |
Dec. 31, 2013 | |
AgreementWithHealthcorAbstract | ' |
AGREEMENT WITH HEALTHCOR | ' |
NOTE 11 – AGREEMENT WITH HEALTHCOR | |
On April 21, 2011, we entered into a Note and Warrant Purchase Agreement (the “Purchase Agreement”) with HealthCor Partners Fund, LP and HealthCor Hybrid Offshore Master Fund, LP (the “Investors”). Pursuant to the Purchase Agreement, we sold Senior Secured Convertible Notes to the Investors in the principal amount of $9,316,000 and $10,684,000, respectively (collectively the “2011 HealthCor Notes”). The 2011 HealthCor Notes have a maturity date of April 20, 2021. We also issued Warrants to the Investors for the purchase of an aggregate of up to 5,488,456 and 6,294,403 shares, respectively, of our Common Stock at an exercise price of $1.40 per share (collectively the “HealthCor Warrants”). | |
So long as no event of default has occurred, the outstanding principal balances of the 2011 HealthCor Notes accrue interest from April 21, 2011 through April 20, 2016 (the “First Five Year Note Period”) at the rate of 12.5% per annum, compounding quarterly and shall be added to the outstanding principal balances of the 2011 HealthCor Notes on the last day of each calendar quarter. Interest accruing from April 21, 2016 through April 20, 2021 (the “Second Five Year Note Period”) at a rate of 10% per annum, compounding quarterly may be paid quarterly in arrears in cash or, at our option, such interest may be added to the outstanding principal balances of the 2011 HealthCor Notes on the last day of each calendar. | |
From the date any event of default occurs, the interest rate, then applicable, shall be increased by five percent (5%) per annum. The Investors have the right, upon an event of default, to declare due and payable any unpaid principal amount of the 2011 HealthCor Notes then outstanding, plus previously accrued but unpaid interest and charges, together with the interest then scheduled to accrue (calculated at the default rate described in the immediately preceding sentence) through the end of the First Five Year Note Period or the Second Five Year Note Period, as applicable. | |
At any time after April 21, 2011, the Investors are entitled to convert any portion of the outstanding and unpaid accrued interest on and principal balances of the 2011 HealthCor Notes into fully paid and non-assessable shares of our Common Stock at a conversion rate of $1.25 per share, subject to adjustment in accordance with anti-dilution provisions set forth in the 2011 HealthCor Notes. As of December 31, 2013, the underlying shares of our Common Stock related to the 2011 HealthCor Notes totaled approximately 22 million. | |
On January 31, 2012, we entered into the Second Amendment to Note and Warrant Purchase Agreement with the Investors (the “Second Amendment”) amending the Purchase Agreement, and sold Senior Secured Convertible Notes to the Investors in the principal amounts of $2,329,000 and $2,671,000, respectively (collectively the “2012 HealthCor Notes”). As provided by the Second Amendment, the 2012 HealthCor Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five Year Note Period” and other terms to take into account the timing of the issuance of the 2012 HealthCor Notes. The 2012 HealthCor Notes have a maturity date of January 31, 2022. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. At any time after January 31, 2012, the Investors are entitled to convert any portion of the outstanding and unpaid accrued interest on and principal balances of the 2012 HealthCor Notes into fully paid and non-assessable shares of our Common Stock at a conversion rate of $1.25 per share, subject to adjustment in accordance with anti-dilution provisions set forth in the 2012 HealthCor Notes. As of December 31, 2013, the underlying shares of our Common Stock related to the 2012 HealthCor Notes totaled approximately 5 million. | |
On August 20, 2013, we entered into a Third Amendment to Note and Warrant Purchase Agreement with the Investors (“Third Amendment”) to redefine the Company’s minimum cash balance requirements. Previously the Company was required to maintain a minimum cash balance of $5,000,000 and should the Company drop below that balance, it triggered a default. The Third Amendment allows for a reduced minimum cash period, as defined in the Purchase Agreement, which allows the Company to drop below $5,000,000, but not below $4,000,000. All other terms and conditions of the Purchase Agreement, including all amendments thereto, remain the same. Upon entering the reduced minimum cash period (which occurred on October 7, 2013), we had 120 days to return our minimum cash balance to the original $5,000,000. On January 16, 2014, we increased our cash balance to in excess of the original $5,000,000 minimum allowable balance. | |
Accounting Treatment | |
When issuing debt or equity securities convertible into common stock at a discount to the fair value of the common stock at the date the debt or equity financing is committed, a company is required to record a beneficial conversion feature (“BCF”) charge. We had two separate issuances of equity securities convertible into common stock that qualify under this accounting treatment, (i) the 2011 HealthCor Notes and (ii) the 2012 HealthCor Notes. Because the conversion feature of the 2011 HealthCor Notes were originally classified as a liability when issued and reclassified to equity on December 31, 2011, only the accrued interest capitalized as payment in kind (“PIK”) since reclassification qualifies under this accounting treatment. The full amount of the 2012 HealthCor Notes and all accrued PIK interest also qualifies for this accounting treatment. During 2013, we recorded a BCF of $1,425,468 related to the PIK. During 2012, we recorded a BCF of $3,041,799 based on the difference between the contractual conversion rate and the current fair value of our shares of Common Stock at the original issuance date. The transaction was recorded as a charge to debt discount and the credit to additional paid in capital, with the debt discount, using the effective interest method, amortized to interest expense over the expected term of the notes (through April 2021 for the 2011 HealthCor Notes and through January 2022 for the 2012 HealthCor Notes). We recorded an aggregate of $642,619 and $476,341 in interest expense for the years ended December 31, 2013 and 2012, respectively, related to this discount. The carrying value of the debt with HealthCor at December 31, 2013 approximates fair value as the interest rates used are those currently available to us and would be considered level 3 inputs under the fair value hierarchy. | |
LOAN_AND_SECURITY_AGREEMENT_WI
LOAN AND SECURITY AGREEMENT WITH COMERICA BANK AND BRIDGE BANK | 12 Months Ended |
Dec. 31, 2013 | |
Loan And Security Agreement With Comerica Bank And Bridge Bank | ' |
LOAN AND SECURITY AGREEMENT WITH COMERICA BANK AND BRIDGE BANK | ' |
NOTE 12 – LOAN AND SECURITY AGREEMENT WITH COMERICA BANK AND BRIDGE BANK | |
On August 31, 2011, we entered into and closed a Loan and Security Agreement (the “Revolving Line Agreement”) with Comerica Bank (“Comerica”) and Bridge Bank, National Association (“Bridge Bank”) (collectively the “Banks”) providing for a $20 million revolving line of credit (expiring in June 2014 unless extended by mutual agreement.). The Revolving Line will provide us with capital, among other things, to purchase equipment and perform installations pursuant to newly signed contracts that we may execute in the future with certain healthcare providers. The borrowings under the Revolving Line Agreement bears interest on the outstanding daily balance of the advances at the rate of 3.75% plus the Prime Referenced Rate, which is a rate equal to Comerica’s prime rate but no less than the sum of 30-day LIBOR rate plus 2.5% per annum. Interest shall be paid monthly in arrears on any outstanding principal amount. The interest rate was calculated to be 7% per annum at both December 31, 2013 and 2012. | |
After the payment of a $200,000 nonrefundable facility fee to be shared equally by the Banks, the Revolving Line Agreement requires us to pay (i) a quarterly unused facility fee equal to one quarter of one percent (0.25%) per annum of the difference between the amount of the Revolving Line and the average outstanding principal balance of the Revolving Line during the applicable quarter and (ii) all reasonable expenses incurred by the Banks in connection with the Revolving Line Agreement, including reasonable attorneys’ fees and expenses. | |
The Revolving Line Agreement requires us to maintain our primary operating accounts with Comerica and Bridge Bank on a 50:50 basis, with no less than 80% of our investment accounts with the Banks or their affiliates, unless our cash falls below $5 million, in which case we must maintain all our cash with the Banks. The Revolving Line Agreement requires us to maintain a fixed charge coverage ratio of at least 5.01 to 1.00 and contains certain customary affirmative covenants that include, among others, payment of taxes and other obligations, maintenance of insurance and reporting requirements, as well as customary negative covenants that limit, among other things, our ability to make dispositions and acquisitions, be acquired, incur debt or pay dividends. | |
The Revolving Line Agreement contains customary events of default including, among other things, non-payment, inaccurate representations and warranties, violation of covenants, events that constitute a material adverse effect and cross-defaults to other indebtedness. Upon an occurrence of an event of default, we are required to pay interest on the outstanding principal balance of five percent (5%) above the otherwise applicable interest rate, and the Banks may accelerate the maturity date. | |
Pursuant to and in connection with the Revolving Line Agreement, we granted the Banks a security interest in all of our assets, including our intellectual property pursuant to an Intellectual Property Security Agreement, and pledged our ownership interests in our subsidiaries and certain joint ventures. We were also required to enter into a Subordination Agreement with our existing convertible note holders, HealthCor Partners Fund, L.P. and HealthCor Hybrid Offshore Master Fund, L.P. | |
As of December 31, 2013, we have borrowed $982,255, against the $20 million Revolving Line Agreement. At December 31, 2013, approximately $19.0 million was available to us by using eligible customer contracts as collateral; however, no eligible contracts were available for additional borrowings on the Revolving Line Agreement as of December 31, 2013. | |
First Amendment | |
On January 31, 2012, we entered into a First Amendment to the Revolving Line Agreement (the “First Amendment”) changing the definition of “HealthCor Debt”, a component of “Permitted Indebtedness,” to permit the issuance of the additional Senior Convertible Notes to HealthCor (see NOTE 11 for more details). | |
Second Amendment | |
On January 15, 2013, we entered into a Second Amendment of the Revolving Line Agreement with the Banks (the “Second Amendment”) in which the Banks agreed to amend the defining term for “Eligible Accounts” and add the defining term for “Verification of Accounts.” Pursuant to the Second Amendment, we also amended the previously issued Warrants to the Banks to reduce the exercise price from $1.40 to $1.10 per share (subject to adjustment for capital events) and to extend the expiration date from August 8, 2018 to January 15, 2020. All other provisions of the Revolving Line Agreement and the Warrants remained unchanged. | |
Third Amendment | |
On August 20, 2013, we entered into a Third Amendment to Revolving Line Agreement with the Banks (the “Third Amendment”) to amend and/or restate certain provisions. Previously we were required to maintain a minimum cash balance of $5,000,000 and should we drop below that balance, immediate default would be triggered. The Third Amendment provides for a reduced minimum cash period, as defined in the agreement, which allows us to drop below $5,000,000, but not below $4,000,000. In conjunction with the Third Amendment, we also entered into an Affirmation of Subordination with the Banks. Upon entering the reduced minimum cash period (which occurred on October 7, 2013), we had 120 days to return our minimum cash balance to the original $5,000,000 or risk default on the Revolving Line. On January 16, 2014, we increased our cash balance to in excess of the original $5,000,000 minimum allowable balance. | |
Accounting Treatment | |
Pursuant to the Revolving Line Agreement, as amended, we issued Warrants to the Banks to purchase an aggregate of 1,428,572 shares of our Common Stock. The Warrants have an exercise price of $1.10 per share and expire on January 15, 2020. The fair value of the Warrants at issuance was $1,535,714, with an additional $64,286 added pursuant to the Second Amendment, all of which has been recorded as deferred financing costs. The deferred financing costs are amortized to interest expense over the term of the Revolving Line Agreement. The Warrants have not been exercised at December 31, 2013. During the years ended December 31, 2013 and 2012, $569,388 and $526,530, respectively, was amortized to interest expense in the accompanying consolidated financial statements. |
JOINT_VENTURE_AGREEMENT
JOINT VENTURE AGREEMENT | 12 Months Ended |
Dec. 31, 2013 | |
Joint Venture Agreement | ' |
JOINT VENTURE AGREEMENT | ' |
NOTE 13 – JOINT VENTURE AGREEMENT | |
On November 16, 2009, we entered into a Master Investment Agreement (the “Rockwell Agreement”) with Rockwell Holdings I, LLC, a Wisconsin limited liability (“Rockwell”). Under the terms of the Rockwell Agreement, we used funds from Rockwell to fully implement the CareView System™ in Hillcrest Medical Center in Tulsa, Oklahoma (“Hillcrest”) and Saline Memorial Hospital in Benton, Arkansas (“Saline”) (the “Project Hospital(s)”). CareView-Hillcrest, LLC and CareView-Saline, LLC were created as the operating entities for the Project Hospitals under the Rockwell Agreement (the “Project LLC(s) “). | |
Rockwell and the Company own 50% of each Project LLC. We contributed our intellectual property rights and hospital contract with each Project Hospital and Rockwell contributed cash to be used for the purchase of equipment for the Project LLCs. Rockwell provided $1,151,205 as the initial funding, $575,603 was provided under promissory notes (the “Project Notes”) and $575,602 was provided under an investment interest (“Rockwell’s Preferential Return”). We classified Rockwell’s Preferential Return as a liability since it represents an unconditional obligation by us and is recorded in mandatorily redeemable equity in joint venture on the accompanying consolidated financial statements. The Project Notes and Rockwell’s Preferential Returns both earn interest at the rate of ten percent (10%) and are secured by a security interest in all of the equipment in the Project Hospitals, intellectual property rights, and the Project Hospital Contract. | |
In accordance with GAAP, we determined the Project LLCs are VIEs based on the fact that the total equity investment at risk was not sufficient to finance the entities activities without additional financial support. We consolidate the Project LLCs as we have the power to direct the activities and an obligation to absorb losses of the VIEs. We have no contractual liability to Rockwell with respect to the repayment obligations of the Project LLCs. | |
As additional consideration to Rockwell for providing the funding, we granted Rockwell warrants to purchase 1,151,206 shares of our Common Stock on the date of the Rockwell Agreement, and using the Black-Scholes Model valued the Warrants at $1,124,728 (the “Project Warrant”). The Project Warrant is classified as equity and is included in additional paid-in-capital on the accompanying consolidated financial statements. We allocated the proceeds to the Project Warrant, the Project Notes and Preferential Returns based on the relative fair value. The originally recorded debt discount of $636,752 was amortized over the expected life of the debt and is fully amortized at December 31, 2013. Amortization is recorded as interest expense on the accompanying consolidated financial statements. Amortization expense totaled $65,976 and $199,963 for the years ended December 31, 2013 and 2012, respectively. | |
Hillcrest notified us of its desire to terminate its hospital agreement effective January 27, 2012. This termination resulted in the loss of monthly revenue totaling approximately $20,000, which revenue was used to make payments on our indebtedness to Rockwell. We incurred de-installation costs of approximately $3,000 for removing our equipment from the hospital premises. | |
As of December 31, 2013, the Project LLCs’ indebtedness to Rockwell totaled approximately $1,007,000, including principal and interest. On March 18, 2014, the Project Notes and Rockwell’s Preferential Returns, previously due on June 30, 2014 (the “June 2014 extensions”), were extended to June 30, 2015. In conjunction with the June 2014 extensions, the expiration date of the Project Warrant was also extended from November 16, 2014 to November 16, 2015. All other provisions of the Warrants remained unchanged. The Warrants were amended and revalued in August 2013 resulting in a $25,327 increase in fair value, which has been recorded as non-cash costs included in general and administration expense in the accompanying consolidated financial statements. CareView, as 50% owner of the LLCs, is currently negotiating with Rockwell to settle the debt of the LLCs through the issuance of shares of CareView’s Common Stock. Although CareView anticipates that this settlement will be forthcoming in the near future, CareView and the LLCs can give no assurances that a settlement will be negotiated, or if negotiated and settled, that it will be through the issuance of CareView’s Common Stock. |
VARIABLE_INTEREST_ENTITIES
VARIABLE INTEREST ENTITIES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Variable Interest Entities | ' | ||||||||
VARIABLE INTEREST ENTITIES | ' | ||||||||
NOTE 14 – VARIABLE INTEREST ENTITIES | |||||||||
The Company consolidates VIEs of which it is the primary beneficiary. The liabilities recognized as a result of consolidating these VIEs do not necessarily represent additional claims on our general assets; rather, they represent claims against the specific assets of the consolidated VIEs. Conversely, assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against our general assets. | |||||||||
The total consolidated VIE assets and liabilities reflected on our consolidated balance sheets at December 31, 2013 and 2012 are as follows: | |||||||||
2013 | 2012 | ||||||||
Assets | |||||||||
Cash | $ | 958 | $ | 956 | |||||
Receivables | 4,861 | 5,221 | |||||||
Total current assets | 5,819 | 6,177 | |||||||
Property, net | 99,348 | 189,003 | |||||||
Total assets | $ | 105,167 | $ | 195,180 | |||||
Liabilities | |||||||||
Accounts payable | $ | 114,089 | $ | 103,217 | |||||
Notes payable, net of debt discount of $0 and $32,988, respectively | 442,519 | 410,586 | |||||||
Mandatorily redeemable interest, net of debt discount of $0 and $32,988, respectively | 442,519 | 410,586 | |||||||
Accrued interest | 121,597 | 59,872 | |||||||
Other current liabilities | 37,731 | 53,371 | |||||||
Total liabilities | $ | 1,158,455 | $ | 1,037,632 | |||||
The financial performance of the consolidated VIEs reflected on our consolidated statements of operations for the years ended December 31, 2013 and 2012 is as follows: | |||||||||
Year Ended December 31, 2013 | Year Ended December 31, 2012 | ||||||||
Revenue | $ | 29,154 | $ | 68,655 | |||||
Network operations expense | 16,844 | 22,992 | |||||||
General and administrative expense | (21,165 | ) | 31,081 | ||||||
Depreciation | 53,248 | 58,705 | |||||||
Total operating costs | 48,927 | 112,778 | |||||||
Operating income (loss) | (19,773 | ) | (44,123 | ) | |||||
Other income (expense) | (77,661 | ) | (160,961 | ) | |||||
Loss before taxes | (97,434 | ) | (205,084 | ) | |||||
Provision for taxes | — | — | |||||||
Net loss | (97,434 | ) | (205,084 | ) | |||||
Net loss attributable to noncontrolling interest | (48,717 | ) | (102,542 | ) | |||||
Net loss attributable to CareView Communications, Inc. | $ | (48,717 | ) | $ | (102,542 | ) |
SERVICE_AGREEMENTS
SERVICE AGREEMENTS | 12 Months Ended |
Dec. 31, 2013 | |
Service Agreements | ' |
SERVICE AGREEMENTS | ' |
NOTE 15 – SERVICE AGREEMENTS | |
Sales Consulting Agreement | |
On March 1, 2012, and as amended on May 31, 2012, we entered into a two-year Sales Consulting Agreement (“Consulting Agreement”) with an unrelated entity and an unrelated individual (collectively, the “Sales Consultant”) wherein a Distribution Agreement dated January 9, 2010 between the Sales Consultant and the Company was terminated and future services to be provided by the Consultant relative to designated hospitals would be provided pursuant to the Consulting Agreement. We agreed to pay the Sales Consultant a monthly consultant fee equal to the greater of (i) $10,000 or (ii) the sum of $250 per month per designated hospital. Warrants for an aggregate of 100,000 shares were to be issued to the Sales Consultant as follows: (i) one Warrant for 50,000 shares to be issued May 31, 2012 with an exercise price $1.55 per share and (ii) one Warrant for 50,000 shares to be issued upon the first anniversary date of the Sales Consulting Agreement with an exercise price set at the closing price of the Company’s Common Stock on the date of issuance. Shares underlying the Warrants vest immediately upon issuance of each Warrant. On May 31, 2012 we issued a five-year Warrant to purchase 50,000 shares of the Company’s Common Stock (with a fair value of $52,300). On December 4, 2012, the Company and the Sales Consultant agreed to terminate the Consulting Agreement and we issued a five-year Warrant to purchase 50,000 shares of the Company’s Common Stock (with a fair value of $28,100) with an exercise price of $0.77 per share. For the year ended December 31, 2012, $80,400 was charged to expense and recorded as non-cash cost in the accompanying financial statements. No Warrants have been exercised as of December 31, 2013. | |
Advisory Services Agreement | |
On May 7, 2012, we entered into an Advisory Services Agreement (the “Agreement”) with an unrelated entity (the “Advisor”) under which the Advisor provided services related to micro-cap market research and investor relations. The Agreement was for a term of 12 months and was terminated on May 7, 2013. Compensation for the Advisor included a retainer of $5,000 per month. In addition, we issued a five-year Warrant for the purchase of 240,000 shares of our Common Stock at an exercise price of $1.65 per share. Vesting of the underlying shares occurred at the rate of 20,000 shares on the monthly anniversary date of the Agreement and all shares became fully vested on May 7, 2013. At grant date the Warrant had a fair value of $265,200 at an exercise price of $1.65 per share. Because the Warrant was issued to a non-employee and had specific vesting requirements, the fair value of the Warrant was re-valued at each reporting period and any change in the fair value of the unvested portion of the Warrant is recorded as a charge or credit. Through December 31, 2012, $100,956 was charged to expense and recorded as non-cash cost in the accompanying financial statements. No Warrants have been exercised as of December 31, 2013. |
SUBSCRIPTION_AND_INVESTORS_RIG
SUBSCRIPTION AND INVESTORS RIGHTS AGREEMENT | 12 Months Ended |
Dec. 31, 2013 | |
Subscription And Investors Rights Agreement | ' |
SUBSCRIPTION AND INVESTORS RIGHTS AGREEMENT | ' |
NOTE 16 – SUBSCRIPTION AND INVESTOR RIGHTS AGREEMENT | |
In August 2010, in an effort to resolve all past, current and future claims due pursuant to a Subscription and Investor Rights Agreement (the “Subscription Agreement”) with T2 Consulting, LLC (“T2”), and its principals, Tommy G. Thompson (“Thompson”), Gerald L. Murphy (“Murphy”), and Dennis Langley (“Langley”), (collectively, the “Parties”) we entered into a Revocation and Substitution Agreement with the Parties (the “Agreement”). In exchange for the revocation of the Subscription Agreement, we agreed to issue a five-year Warrant to purchase 1,000,000 shares of our Common Stock with an exercise price of $1.00 per share to each of Thompson, Murphy, and Langley. As additional consideration for the revocation of the Subscription Agreement, we executed an Agreement Regarding Gross Income Interest (the “GII Agreement”) with each of Thompson, Murphy and Langley. The GII Agreements do not have a termination date; however, each provides that we have the right to acquire the Gross Income Interest (“GII”) of Thompson, Murphy and Langley from September 1, 2013 until December 31, 2015. On October 31, 2013, we acquired the GII of Thompson, Murphy and Langley for an aggregate purchase price of $28,124 and the GII Agreements terminated. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
NOTE 17 – SUBSEQUENT EVENTS | |
On January 2, 2014, we issued an Option to David White (elected to the Board of Directors on January 1, 2014) for the purchase of 500,000 shares of our Common Stock. The ten-year Option has an exercise price of $0.40 per share and the underlying shares vest annually over a three-year period. | |
On January 2, 2014, we issued an Option to Jason Thompson (elected to the Board of Directors on January 1, 2014) for the purchase of 150,000 shares of our Common Stock. The ten-year Option has an exercise price of $0.40 per share and the underlying shares vest annually over a three-year period. | |
On January 16, 2014, we entered into a Fourth Amendment to the Note and Warrant Purchase Agreement with HealthCor Partners Fund, LP and HealthCor Hybrid Offshore Master Fund, LP (the “Investors”) and agreed to sell and issue to the Investors (i) additional notes in the initial aggregate principal amount of $5,000,000, with a conversion price per share equal to $0.40 (subject to adjustment as described therein) and (ii) additional warrants to purchase an aggregate of up to 4,000,000 shares of our Common Stock at an exercise price per share equal to $0.40 (subject to adjustment as described therein). |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Summary Of Significant Accounting Policies Policies | ' | ||||||||||||||||
Principles of Consolidation | ' | ||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The accompanying consolidated financial statements include the accounts of the Company, our wholly owned subsidiaries and our LLCs for which we control the operating activities. All material intercompany balances and transactions have been eliminated in consolidation. | |||||||||||||||||
We report noncontrolling interests in our VIEs as a component of stockholders’ equity in the Consolidated Balance Sheets and the loss attributable to noncontrolling interests as an adjustment to net loss to arrive at net loss attributable to the Company in the Consolidated Statements of Operations. | |||||||||||||||||
Variable Interest Entities | ' | ||||||||||||||||
Variable Interest Entities | |||||||||||||||||
We use a qualitative analysis to determine if we are the primary beneficiary of a VIE. We consider whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics, among others: (a) the power to direct the activities of a variable interest entity that most significantly impacts the entity’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits from the entity, that could potentially be significant to the variable interest entity. | |||||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
Beginning January 1, 2013, insurance coverage reverted to $250,000 per depositor at each financial institution and certain of our non-interest bearing cash balances exceeded federally insured limits. Cash is maintained at reputable financial institutions; however, balances in certain accounts exceeded federally insured limits during 2013. During 2012, resulting from a temporary federal program in effect from December 31, 2010 through December 31, 2012, there was no limit to the amount of insurance for eligible accounts. | |||||||||||||||||
Trade Accounts Receivable | ' | ||||||||||||||||
Trade Accounts Receivable | |||||||||||||||||
Trade accounts receivable are customer obligations due under normal trade terms. We provide an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Trade accounts receivable past due more than 90 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluations, results of collection efforts, and specific circumstances of the customer. Recoveries of accounts previously written off are recorded as reductions of bad debt expense when received. | |||||||||||||||||
The following table provides a summary of changes in the allowance for doubtful accounts for the years ended December 31, 2013 and 2012: | |||||||||||||||||
Allowance for Doubtful Accounts | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Beginning balance | $ | 80,235 | $ | 15,984 | |||||||||||||
Additions | — | 85,096 | |||||||||||||||
Reductions | (80,235 | ) | (20,845 | ) | |||||||||||||
Ending balance | $ | — | $ | 80,235 | |||||||||||||
Property and Equipment | ' | ||||||||||||||||
Property and Equipment | |||||||||||||||||
Property and equipment is stated at cost, net of accumulated depreciation. Maintenance costs, which do not significantly extend the useful lives of the respective assets, and repair costs are charged to operating expense as incurred. We include Network Equipment in fixed assets upon receipt, and begin depreciating the Network Equipment when such equipment passes our incoming inspection and is available for use. We attribute no salvage value to the Network Equipment and depreciation is computed using the straight-line method based on the estimated useful life of seven years. Also using the straight-line method, depreciation of office and test equipment, warehouse equipment and furniture is based on the estimated useful lives of the assets, generally three years for office and test equipment, and five years for warehouse equipment and furniture. | |||||||||||||||||
Allowance for System Removal | ' | ||||||||||||||||
Allowance for System Removal | |||||||||||||||||
We would remove the CareView System customer premises due to a number of factors; including, but not limited to, collection/revenue performance issues and contract expiration/non-renewal. We regularly evaluate the installed CareView Systems. An allowance is set up based on the estimated cost to de-install. As of December 31, 2013 and 2012, an allowance of approximately $56,000 and $28,000, respectively, was recorded. | |||||||||||||||||
Impairment of Long-Lived Assets | ' | ||||||||||||||||
Impairment of Long-Lived Assets | |||||||||||||||||
Carrying values of property and equipment and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable. Such events or circumstances include, but are not limited to: | |||||||||||||||||
• | Significant declines in an asset’s market price; | ||||||||||||||||
• | Significant deterioration in an asset’s physical condition; | ||||||||||||||||
• | Significant changes in the nature or extent of an asset’s use or operation; | ||||||||||||||||
• | Significant adverse changes in the business climate that could impact an asset’s value, including adverse actions or assessments by regulators; | ||||||||||||||||
• | Accumulation of costs significantly in excess of original expectations related to the acquisition or construction of an asset; | ||||||||||||||||
• | Current-period operating or cash flow losses combined with a history of such losses or a forecast that demonstrates continuing losses associated with an asset’s use; and | ||||||||||||||||
• | Expectations that it is more likely than not that an asset will be sold or otherwise disposed of significantly before the end of our previously estimated useful life. | ||||||||||||||||
If impairment indicators are present, we determine whether an impairment loss should be recognized by testing the applicable asset or asset group’s carrying value for recoverability. This test requires long-lived assets to be grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, the determination of which requires judgment. We estimate the undiscounted future cash flows expected to be generated from the use and eventual disposal of the assets and compare that estimate to the respective carrying values in order to determine if such carrying values are recoverable. This assessment requires the exercise of judgment in assessing the future use of and projected value to be derived from the eventual disposal of the assets to be held and used. Assessments also consider changes in asset utilization, including the temporary idling of capacity and the expected timing for placing this capacity back into production. If the carrying value of the assets is not recoverable, then a loss is recorded for the difference between the assets’ fair value and respective carrying value. The fair value of the assets is determined using an “income approach” based upon a forecast of all the expected discounted future net cash flows associated with the subject assets. Some of the more significant estimates and assumptions include: market size and growth, market share, projected selling prices, manufacturing cost and discount rate. Our estimates are based upon our historical experience, our commercial relationships, market conditions and available external information about future trends. We believe our current assumptions and estimates are reasonable and appropriate; however, unanticipated events and changes in market conditions could affect such estimates resulting in the need for an impairment charge in future periods. During the years ended December 31, 2013 and 2012, no impairment was recognized. | |||||||||||||||||
Research and Development | ' | ||||||||||||||||
Research and Development | |||||||||||||||||
Research and development costs are expensed as incurred. Costs regarding the development of software to be sold, leased or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. We did not capitalize any such costs during 2013 or 2012. | |||||||||||||||||
Intellectual Property, Patents and Trademarks | ' | ||||||||||||||||
Intellectual Property | |||||||||||||||||
We capitalize certain costs of developing software upon the establishment of technological feasibility and prior to the availability of the product for general release to customers for our CareView System in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Capitalized costs are reported at the lower of unamortized cost or net realizable value and are amortized over the estimated useful life of the CareView System not to exceed five years. Additionally, we test our intangible assets for impairment whenever circumstances indicate that their carrying value may not be recoverable. No impairment was recorded for the years ended December 31, 2013 and 2012. | |||||||||||||||||
Intellectual property is comprised of purchased and internally developed software costs totaling $2,752,933, all of which was capitalized prior to 2008 and was fully amortized at December 31, 2012. During the years ended December 31, 2013 and 2012 we capitalized no additional intellectual property costs. | |||||||||||||||||
Patents and Trademarks | |||||||||||||||||
We have capitalized certain costs related to registering trademarks and patent pending technology. In accordance with GAAP, we amortize our intangible assets with a finite life on a straight-line basis, over 10 years for trademarks and 20 years for patents. We begin amortization of these costs on the date patents or trademarks are awarded. | |||||||||||||||||
Derivative Financial Instruments | ' | ||||||||||||||||
Derivative Financial Instruments | |||||||||||||||||
Derivatives are recorded on the balance sheet at fair value and changes in fair value are recorded in earnings at each reporting date in accordance with GAAP. See NOTE 4 for further details regarding derivative activity during the years ended December 31, 2013 and 2012. | |||||||||||||||||
Fair Value of Financial Instruments | ' | ||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||
Our financial instruments consist primarily of receivables, accounts payable, accrued expenses and short and long-term debt. The carrying amount of receivables, accounts payable and accrued expenses approximates our fair value because of the short-term maturity of such instruments and they are considered Level 1 assets under the fair value hierarchy. We have elected not to carry our debt instruments at fair value. The carrying amount of our debt approximates fair value. Interest rates that are currently available to us for issuance of short and long-term debt with similar terms and remaining maturities are used to estimate the fair value of the our short and long-term debt and would be considered Level 3 inputs under the fair value hierarchy. | |||||||||||||||||
We have categorized our assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy in accordance with GAAP. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). | |||||||||||||||||
Assets and liabilities recorded in the consolidated balance sheets at fair value are categorized based on a hierarchy of inputs, as follows: | |||||||||||||||||
Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||
Level 2 — Quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. | |||||||||||||||||
Level 3 — Unobservable inputs for the asset or liability. | |||||||||||||||||
The Company’s financial assets and liabilities recorded at fair value on a recurring basis include the fair value of warrant liability discussed in NOTE 4. The fair value of this warrant liability is included in long-term liabilities and the change in fair value of this warrant is included in general and administration expenses on the accompanying consolidated financial statements. | |||||||||||||||||
The following table provides the financial assets and liabilities reported at fair value and measured on a recurring basis as of December 31, 2013: | |||||||||||||||||
Description | Assets/ (Liabilities) Measured at Fair Value | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
Fair value of warrant liability | $ | (370,865 | ) | $ | — | $ | — | $ | (370,865 | ) | |||||||
The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the year ended December 31, 2013: | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs | |||||||||||||||||
(Level 3) | |||||||||||||||||
Balance at January 1, 2013 | $ | — | |||||||||||||||
Issuances of derivative liabilities | (672,909 | ) | |||||||||||||||
Change in fair value of warrant liability | 302,044 | ||||||||||||||||
Transfers in and/out of Level 3 | — | ||||||||||||||||
Ending balance | $ | (370,865 | ) | ||||||||||||||
The above table of Level 3 liabilities begins with the prior period balance and adjusts the balance for changes that occurred during the current period. The ending balance of the Level 3 securities presented above represent our best estimates and may not be substantiated by comparisons to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. | |||||||||||||||||
Income Taxes | ' | ||||||||||||||||
Income Taxes | |||||||||||||||||
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized when the rate change is enacted. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. In accordance with GAAP, we recognize the effect of uncertain income tax positions only if the positions are more likely than not of being sustained in an audit, based on the technical merits of the position. Recognized uncertain income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which those changes in judgment occur. We recognize both interest and penalties related to uncertain tax positions as part of the income tax provision. | |||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||
Revenue Recognition | |||||||||||||||||
Revenue is recognized when persuasive evidence of a sales arrangement exists, when the selling price is fixed or determinable, when installation and official acceptance by the facility occurs, and when collection is probable. Because we consolidate our financial statements, 100% of the revenue generated by the Project LLCs is included in our results with all intra-company accounts and transactions eliminated in consolidation. | |||||||||||||||||
We offer CareView’s services through a subscription-based contract with each facility for a standard term of three to five years. We begin to bill monthly subscription fees to the facility upon official acceptance of the CareView System by the facility. The contract requires the facility to pay us the subscription fee monthly. During the term of the contract, we provide continuous monitoring of the CareView System and are required to maintain and service all CareView System equipment. If the customer requires additional products or services, the contract is amended with new pricing or revenue sharing terms and conditions. | |||||||||||||||||
Earnings Per Share | ' | ||||||||||||||||
Earnings Per Share | |||||||||||||||||
We calculate earnings per share (“EPS”) in accordance with GAAP, which requires the computation and disclosure of two EPS amounts, basic and diluted. Basic EPS is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of common shares outstanding plus all potentially dilutive common shares outstanding during the period under the treasury stock method. Such potential dilutive common shares consist of stock options, warrants and convertible debt. Potential common shares totaling 75,550,210 and 67,354,894 at December 31, 2013 and 2012, respectively, have been excluded from the diluted earnings per share calculation as they are anti-dilutive due to our reported net loss. | |||||||||||||||||
Stock Based Compensation | ' | ||||||||||||||||
Stock Based Compensation | |||||||||||||||||
We recognize compensation expense for all share-based payments granted and amended based on the grant date fair value estimated in accordance with GAAP. Compensation expense is generally recognized on a straight-line basis over the employee’s requisite service period based on the award’s estimated lives for fixed awards with ratable vesting provisions. | |||||||||||||||||
Debt Discount Costs and Deferred Debt Issuance Costs | ' | ||||||||||||||||
Debt Discount Costs | |||||||||||||||||
Costs incurred with parties who are providing long-term financing, with warrants issued with the underlying debt, are reflected as a debt discount based on the relative fair value of the debt and warrants. These discounts are generally amortized over the life of the related debt, using the effective interest rate method. | |||||||||||||||||
Deferred Debt Issuance Costs | |||||||||||||||||
Costs incurred through the issuance of warrants to parties who are providing long-term financing availability, which includes revolving credit lines, are reflected as deferred debt issuance based on the fair value of the warrants issued. These costs are generally amortized over the life of the financing instrument using the effective interest rate method. | |||||||||||||||||
Installation Costs | ' | ||||||||||||||||
Installation Costs | |||||||||||||||||
We defer all costs associated with the installation of the CareView System into a particular hospital until the CareView System is fully operational and accepted by the hospital. Upon acceptance, the associated costs are expensed ratably over the life of the hospital contract. These costs are included in network operations on the accompanying consolidated statements of operations. | |||||||||||||||||
Shipping and Handling Costs | ' | ||||||||||||||||
Shipping and Handling Costs | |||||||||||||||||
We expense all shipping and handling costs as incurred. These costs are included in network operations on the accompanying consolidated financial statements. | |||||||||||||||||
Advertising Costs | ' | ||||||||||||||||
Advertising Costs | |||||||||||||||||
We consider advertising costs as costs associated with the promotion of our products through the various media outlets. We expense all advertising costs as incurred. | |||||||||||||||||
Concentration of Credit Risks and Customer Data | ' | ||||||||||||||||
Concentration of Credit Risks and Customer Data | |||||||||||||||||
We derive all of our revenues from hospitals. For the year ended December 31, 2013, 68 hospitals accounted for all of our revenue. During 2013 IASIS Healthcare Corporation and Health Management Associates, Inc. (“HMA”) accounted for 53% and 30% of our net revenues respectively. For the year ended December 31, 2012, 55 hospitals accounted for the all of our net revenue. During that period, HMA accounted for 80% of our revenue. HMA is a hospital management group consisting of 45 individually billed hospitals of which no hospital individually accounted for more than 7% of our revenue. | |||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
Our financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates, including those related to contingencies, on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. | |||||||||||||||||
Recently Issued Accounting Pronouncements | ' | ||||||||||||||||
Recently Issued Accounting Pronouncements | |||||||||||||||||
In July 2013, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance related to the presentation of unrecognized tax benefits. The update requires that the entity present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward in the statement of financial position. The guidance does not apply to the extent that a net operating loss carryforward or tax credit carryforward at the reporting date is not available under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position. The guidance is effective for annual reporting periods beginning after December 15, 2013, and interim reporting periods thereafter. We expect to present deferred tax assets net of unrecognized tax benefits, as appropriate, in the consolidated balance sheets. We do not anticipate that this guidance will have a material impact on our financial position or results of operations. | |||||||||||||||||
In February 2013, the FASB issued authoritative guidance which adds new disclosure requirements for items reclassified out of Accumulated Other Comprehensive Income (Loss) (“AOCI”). The update requires that an entity present either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of AOCI based on its source and the income statement line items affected by the reclassification. The guidance was effective for the quarter ended March 30, 2013. The adoption of this guidance did not have an impact on our financial position or results from operations. | |||||||||||||||||
In July 2012, the FASB guidance giving entities an option to first assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that the indefinite-lived intangible asset impaired. If based on its qualitative assessment an entity concludes that it is more likely than not that the fair value of an indefinite lived intangible asset is less than its carrying amount, quantitative impairment testing is required. However, if an entity concludes otherwise, quantitative impairment testing is not required. The guidance was effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of this guidance did not have a material impact on our financial position or results of operations. | |||||||||||||||||
Reclassifications | ' | ||||||||||||||||
Reclassifications | |||||||||||||||||
Certain 2012 amounts have been reclassified to conform to current year presentation. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Summary Of Significant Accounting Policies Tables | ' | ||||||||||||||||
Schedule of changes in allowance for doubtful accounts | ' | ||||||||||||||||
The following table provides a summary of changes in the allowance for doubtful accounts for the years ended December 31, 2013 and 2012: | |||||||||||||||||
Allowance for Doubtful Accounts | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Beginning balance | $ | 80,235 | $ | 15,984 | |||||||||||||
Additions | — | 85,096 | |||||||||||||||
Reductions | (80,235 | ) | (20,845 | ) | |||||||||||||
Ending balance | $ | — | $ | 80,235 | |||||||||||||
Schedule of financial assets and liabilities reported at fair value and measured on a recurring basis | ' | ||||||||||||||||
The following table provides the financial assets and liabilities reported at fair value and measured on a recurring basis as of December 31, 2013: | |||||||||||||||||
Description | Assets/ (Liabilities) Measured at Fair Value | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
Fair value of warrant liability | $ | (370,865 | ) | $ | — | $ | — | $ | (370,865 | ) | |||||||
Schedule of summary of changes in fair value associated with the Level 3 liabilities | ' | ||||||||||||||||
The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the year ended December 31, 2013: | |||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs | |||||||||||||||||
(Level 3) | |||||||||||||||||
Balance at January 1, 2013 | $ | — | |||||||||||||||
Issuances of derivative liabilities | (672,909 | ) | |||||||||||||||
Change in fair value of warrant liability | 302,044 | ||||||||||||||||
Transfers in and/out of Level 3 | — | ||||||||||||||||
Ending balance | $ | (370,865 | ) | ||||||||||||||
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Stockholders Equity Tables | ' | ||||||||||||||||
Schedule of assumptions used in the Black-Scholes Model - Warrants and Options | ' | ||||||||||||||||
The assumptions used in the Black-Scholes Model during the years ended December 31, 2013 and 2012 are set forth in the table below. | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Risk-free interest rate | NA | 0.19%-1.03 | % | ||||||||||||||
Volatility | NA | 41.63-97.77 | % | ||||||||||||||
Expected life | NA | 5-Jan | |||||||||||||||
Dividend yield | NA | 0 | % | ||||||||||||||
The assumptions used in the Black-Scholes Model during the years ended December 31, 2013 and 2012 are set forth in the table below. | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Risk-free interest rate | 0.61-0.67 | % | 0.34 | % | |||||||||||||
Volatility | 101.81%-102.81 | % | 101.9 | % | |||||||||||||
Expected life | 3 | 3 | |||||||||||||||
Dividend yield | 0 | % | 0 | % | |||||||||||||
Schedule of warrant activity | ' | ||||||||||||||||
A summary of our Warrants activity and related information follows: | |||||||||||||||||
Number of Shares Under Warrant | Range of Warrant Price Per Share | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||||||
Balance at December 31, 2011 | 34,846,421 | $ | 0.52-$1.25 | $ | 0.95 | 5.7 | |||||||||||
Granted | 569,638 | $ | 0.77-$1.65 | $ | 1.2 | 3.7 | |||||||||||
Exercised | (1,329,349 | ) | $ | 0.52-$0.55 | $ | 0.53 | — | ||||||||||
Expired | — | ||||||||||||||||
Cancelled | (10,000 | ) | $ | 0.55 | $ | 0.55 | — | ||||||||||
Balance at December 31, 2012 | 34,076,710 | $ | 0.52-$1.65 | $ | 0.97 | 4.7 | |||||||||||
Granted | 2,500,000 | $ | 0.6 | $ | 0.6 | 4.3 | |||||||||||
Exercised | (179,638 | ) | $ | 0.52 | $ | 0.52 | — | ||||||||||
Expired | (1,931,250 | ) | $ | 0.52 | $ | 0.52 | — | ||||||||||
Cancelled | — | ||||||||||||||||
Balance at December 31, 2013 | 34,465,822 | $ | 0.52-$1.65 | $ | 0.96 | 4 | |||||||||||
Vested and Exercisable at December 31, 2013 | 34,465,822 | $ | 0.52-$1.65 | $ | 0.96 | 4 | |||||||||||
During the year ended December 31, 2012, the Company issued the following: | |||||||||||||||||
Number of Shares Under Warrant | Exercise Price | Exercise Term in Years | Fair Value | ||||||||||||||
Services (see Note 15) | 340,000 | $ | 0.77-$1.65 | 5 | $ | 345,600 | |||||||||||
Services (see below) | 229,638 | $ | 0.52-$1.52 | 5-Jan | 139,456 | ||||||||||||
569,638 | $ | 485,056 | |||||||||||||||
Schedule of stock option activity | ' | ||||||||||||||||
A summary of our stock option activity under the 2007 and 2009 Plans and related information follows: | |||||||||||||||||
Number of Shares Under Option | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||||||||||
Balance at December 31, 2011 | 8,750,115 | $ | 0.66 | 7.2 | $ | 8,047,942 | |||||||||||
Granted | 760,000 | $ | 0.79 | ||||||||||||||
Exercised | — | ||||||||||||||||
Expired | (215,470 | ) | $ | 0.62 | |||||||||||||
Cancelled | (200,668 | ) | $ | 1.4 | |||||||||||||
Balance at December 31, 2012 | 9,093,977 | $ | 0.66 | 6.6 | $ | 2,376,961 | |||||||||||
Granted | 4,061,000 | $ | 0.51 | ||||||||||||||
Exercised | — | ||||||||||||||||
Expired | (86,665 | ) | $ | 1.38 | |||||||||||||
Cancelled | (320,836 | ) | $ | 1.09 | |||||||||||||
Balance at December 31, 2013 | 12,747,476 | $ | 0.59 | 6.9 | $ | — | |||||||||||
Vested and Exercisable at December 31, 2013 | 8,128,972 | $ | 0.6 | 5.1 | $ | — | |||||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Taxes Tables | ' | ||||||||
Schedule of income tax reconciliation | ' | ||||||||
The differences between the actual income tax benefit and the amount computed by applying the statutory federal tax rate (35%) to the loss before taxes are as follows: | |||||||||
Years Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Expected income tax benefit at statutory rate | $ | (5,098,458 | ) | $ | (6,510,535 | ) | |||
Debt discount/debt issuance costs amortization | 1,549,525 | 1,792,637 | |||||||
Other permanent differences | 39,670 | 34,736 | |||||||
State income tax benefit, net of tax effect at state statutory rate | 3,740 | 2,590 | |||||||
Deferred pool true-ups/corrections related to: | |||||||||
warrants | 1,222,954 | — | |||||||
amortization | 702,183 | — | |||||||
net operating losses | (470,016 | ) | — | ||||||
Other | (16,689 | ) | (110,517 | ) | |||||
Change in valuation account | 2,067,091 | 4,791,089 | |||||||
Income tax expense (benefit) | $ | — | $ | — | |||||
Schedule of components of deferred tax assets | ' | ||||||||
The components of the deferred tax assets are as follows: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Deferred Tax Assets: | |||||||||
Tax benefit of net operating loss carry-forward | $ | 16,692,594 | $ | 13,731,810 | |||||
Accrued interest | 1,815,656 | 1,125,256 | |||||||
Stock based compensation | 1,032,009 | 1,983,218 | |||||||
Amortization | 689,759 | 968,441 | |||||||
Depreciation | 300,237 | 116,953 | |||||||
Accrued expenses | 61,780 | — | |||||||
Research and development credit carry-forward | 29,084 | 29,084 | |||||||
Donations | 10,541 | 7,724 | |||||||
Financing fees | — | 358,000 | |||||||
Officer compensation | — | 216,000 | |||||||
Bad debt allowance | — | 28,083 | |||||||
Total deferred tax assets | 20,631,660 | 18,564,569 | |||||||
Valuation allowance for deferred tax assets | (20,631,660 | ) | (18,564,569 | ) | |||||
Deferred tax assets, net of valuation allowance | $ | — | $ | — |
OTHER_CURRENT_ASSETS_Tables
OTHER CURRENT ASSETS (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Other Current Assets Tables | ' | ||||||||
Schedule of other current assets | ' | ||||||||
Other current assets consist of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Prepaid expenses | $ | 91,923 | $ | 130,825 | |||||
Sales tax refund | 72,399 | — | |||||||
Other current assets | 1,209 | 2,676 | |||||||
Legal retainer | — | 61,091 | |||||||
TOTAL OTHER CURRENT ASSETS | $ | 165,531 | $ | 194,592 | |||||
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property And Equipment Tables | ' | ||||||||
Schedule of property and equipment | ' | ||||||||
Property and equipment consist of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Network equipment | $ | 10,205,367 | $ | 10,170,480 | |||||
Office equipment | 140,764 | 119,830 | |||||||
Vehicles | 112,332 | 136,082 | |||||||
Furniture | 75,673 | 75,673 | |||||||
Test equipment | 73,719 | 73,719 | |||||||
Warehouse equipment | 6,866 | 6,866 | |||||||
Leasehold improvements | 5,121 | 5,121 | |||||||
10,619,842 | 10,587,771 | ||||||||
Less: accumulated depreciation | (4,255,233 | ) | (2,726,234 | ) | |||||
TOTAL PROPERTY AND EQUIPMENT | $ | 6,364,609 | $ | 7,861,537 | |||||
OTHER_ASSETS_Tables
OTHER ASSETS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Other Assets Tables | ' | ||||||||||||
Schedule of intangible assets | ' | ||||||||||||
Intangible assets consist of the following: | |||||||||||||
31-Dec-13 | |||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
Patents and trademarks | $ | 246,416 | $ | 14,487 | $ | 231,929 | |||||||
Other intangible assets | 50,494 | 29,434 | 21,060 | ||||||||||
TOTAL INTANGIBLE ASSETS | $ | 296,910 | $ | 43,921 | $ | 252,989 | |||||||
31-Dec-12 | |||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
Patents and trademarks | $ | 182,593 | $ | 6,525 | $ | 176,068 | |||||||
Other intangible assets | 46,220 | 13,314 | 32,906 | ||||||||||
TOTAL INTANGIBLE ASSETS | $ | 228,813 | $ | 19,839 | $ | 208,974 | |||||||
Schedule of other assets | ' | ||||||||||||
Other assets consist of the following: | |||||||||||||
31-Dec-13 | |||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
Deferred installation costs | $ | 1,087,295 | $ | 559,537 | $ | 527,758 | |||||||
Deferred debt issuance costs | 1,600,000 | 1,315,308 | 284,692 | ||||||||||
Prepaid license fee | 249,999 | 38,250 | 211,749 | ||||||||||
Deferred closing costs | 580,241 | 463,510 | 116,731 | ||||||||||
Security deposit | 83,624 | — | 83,624 | ||||||||||
Prepaid consulting | 1,131,300 | 1,131,300 | — | ||||||||||
TOTAL OTHER ASSETS | $ | 4,732,459 | $ | 3,507,905 | $ | 1,224,554 | |||||||
31-Dec-12 | |||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
Deferred installation costs | $ | 799,114 | $ | 209,598 | $ | 589,516 | |||||||
Deferred debt issuance costs | 1,535,714 | 745,920 | 789,794 | ||||||||||
Prepaid license fee | 516,050 | 247,413 | 268,637 | ||||||||||
Deferred closing costs | 233,606 | 21,857 | 211,749 | ||||||||||
Security deposit | 83,624 | — | 83,624 | ||||||||||
Prepaid consulting | 1,131,300 | 1,054,764 | 76,536 | ||||||||||
TOTAL OTHER ASSETS | $ | 4,299,408 | $ | 2,279,552 | $ | 2,019,856 | |||||||
OTHER_CURRENT_LIABILITIES_Tabl
OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Other Current Liabilities Tables | ' | ||||||||
Schedule of other current liabilities | ' | ||||||||
Other current liabilities consist of the following: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Accrued taxes | $ | 173,938 | $ | 257,549 | |||||
Accrued paid time off | 148,729 | 103,038 | |||||||
Other accrued liabilities | 215,475 | 441,941 | |||||||
TOTAL OTHER CURRENT LIABILITIES | $ | 538,142 | $ | 802,528 | |||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | |||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||
Commitments And Contingencies Tables | ' | |||||||||||||||||||||
Schedule of future minimum rental payments | ' | |||||||||||||||||||||
As of December 31, 2013, future minimum rental payments are as follows: | ||||||||||||||||||||||
Years Ending December 31, | ||||||||||||||||||||||
2014 | $ | 170,628 | ||||||||||||||||||||
2015 | 85,314 | |||||||||||||||||||||
Thereafter | — | |||||||||||||||||||||
Total | $ | 255,942 | ||||||||||||||||||||
Schedule of future debt payments | ' | |||||||||||||||||||||
As of December 31, 2013, future debt payments due are as follows: | ||||||||||||||||||||||
Years Ending December 31, | Total | Senior Secured Convertible Notes(1) | Revolving Line | Notes Payable | Mandatorily Redeemable Equity in Joint Venture | |||||||||||||||||
2014 | $ | 1,867,293 | $ | — | $ | 982,255 | $ | 442,519 | $ | 442,519 | ||||||||||||
2015 | — | — | — | — | — | |||||||||||||||||
2016 | — | — | — | — | — | |||||||||||||||||
2017 | — | — | — | — | — | |||||||||||||||||
2018 | — | — | — | — | — | |||||||||||||||||
Thereafter | 34,189,890 | 34,189,890 | — | — | — | |||||||||||||||||
Total | $ | 36,057,183 | $ | 34,189,890 | $ | 982,255 | $ | 442,519 | $ | 442,519 | ||||||||||||
(1) Senior Secured Convertible Notes are included on the accompanying consolidated financial statements as $17,941,662, which represents this amount less debt discount of $16,248,228. |
VARIABLE_INTEREST_ENTITIES_Tab
VARIABLE INTEREST ENTITIES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Variable Interest Entities Tables | ' | ||||||||
Schedule of VIE assets and liabilities and results of operations | ' | ||||||||
The total consolidated VIE assets and liabilities reflected on our consolidated balance sheets at December 31, 2013 and 2012 are as follows: | |||||||||
2013 | 2012 | ||||||||
Assets | |||||||||
Cash | $ | 958 | $ | 956 | |||||
Receivables | 4,861 | 5,221 | |||||||
Total current assets | 5,819 | 6,177 | |||||||
Property, net | 99,348 | 189,003 | |||||||
Total assets | $ | 105,167 | $ | 195,180 | |||||
Liabilities | |||||||||
Accounts payable | $ | 114,089 | $ | 103,217 | |||||
Notes payable, net of debt discount of $0 and $32,988, respectively | 442,519 | 410,586 | |||||||
Mandatorily redeemable interest, net of debt discount of $0 and $32,988, respectively | 442,519 | 410,586 | |||||||
Accrued interest | 121,597 | 59,872 | |||||||
Other current liabilities | 37,731 | 53,371 | |||||||
Total liabilities | $ | 1,158,455 | $ | 1,037,632 | |||||
The financial performance of the consolidated VIEs reflected on our consolidated statements of operations for the years ended December 31, 2013 and 2012 is as follows: | |||||||||
Year Ended December 31, 2013 | Year Ended December 31, 2012 | ||||||||
Revenue | $ | 29,154 | $ | 68,655 | |||||
Network operations expense | 16,844 | 22,992 | |||||||
General and administrative expense | (21,165 | ) | 31,081 | ||||||
Depreciation | 53,248 | 58,705 | |||||||
Total operating costs | 48,927 | 112,778 | |||||||
Operating income (loss) | (19,773 | ) | (44,123 | ) | |||||
Other income (expense) | (77,661 | ) | (160,961 | ) | |||||
Loss before taxes | (97,434 | ) | (205,084 | ) | |||||
Provision for taxes | — | — | |||||||
Net loss | (97,434 | ) | (205,084 | ) | |||||
Net loss attributable to noncontrolling interest | (48,717 | ) | (102,542 | ) | |||||
Net loss attributable to CareView Communications, Inc. | $ | (48,717 | ) | $ | (102,542 | ) |
THE_COMPANY_Details_Narrative
THE COMPANY (Details Narrative) | Nov. 16, 2009 |
Company Details Narrative | ' |
Percentage owned by company of each joint venture | 50.00% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Allowance for system removal | $56,000 | $28,000 |
Intangible assets, Net | 252,989 | 208,974 |
Anti-dilutive common share equivalents excluded from EPS calculation | 75,550,210 | 67,354,894 |
Threshold for individualized reporting, percentage of total revenue | ' | 7.00% |
Concentration | Revenue | ' | ' |
Number of Hospital clients | ' | 55 |
Concentration percentage | ' | 100.00% |
IASIS Healthcare | Concentration | Revenue | ' | ' |
Concentration percentage | 53.00% | ' |
HMA Group | ' | ' |
Number of Hospital clients | 45 | ' |
HMA Group | Concentration | Revenue | ' | ' |
Concentration percentage | 30.00% | 80.00% |
Purchased and Internally Developed Software Costs | ' | ' |
Intangible assets, Net | $2,752,933 | ' |
Patents | ' | ' |
Amortization period for intangible assets | '10 years | ' |
Trademarks | ' | ' |
Amortization period for intangible assets | '20 years | ' |
Network Equipment | ' | ' |
Estimated useful life of property and equipment | '7 years | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Summary of Changes in Allowance for Doubtful Accounts | ' | ' |
Allowance for Doubtful Accounts | $80,235 | $15,984 |
Additions | ' | 85,096 |
Reductions | -80,235 | -20,845 |
Allowance for Doubtful Accounts | ' | $80,235 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) (USD $) | Dec. 31, 2013 | Apr. 02, 2013 | Dec. 31, 2012 |
Fair value of warrant liability | ($370,865) | ($672,909) | ' |
Recurring Measurement | Fair Value | ' | ' | ' |
Fair value of warrant liability | -370,865 | ' | ' |
Recurring Measurement | Quoted Prices in Active Markets for Identical Assets (Level 1) | ' | ' | ' |
Fair value of warrant liability | ' | ' | ' |
Recurring Measurement | Significant Other Observable Inputs (Level 2) | ' | ' | ' |
Fair value of warrant liability | ' | ' | ' |
Recurring Measurement | Significant Other Unobservable Inputs (Level 3) | ' | ' | ' |
Fair value of warrant liability | ($370,865) | ' | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Change in Fair Value of Level 3 Liabilities | ' | ' |
Balance, beginning | ' | ' |
Issuances of derivative liabilities | -672,909 | ' |
Change in fair value of warrant liability | 302,044 | ' |
Transfers in and/out of Level 3 | ' | ' |
Balance, ending | ($370,865) | ' |
LIQUIDITY_AND_MANAGEMENTS_PLAN1
LIQUIDITY AND MANAGEMENTS PLAN (Details Narrative) (USD $) | Jan. 16, 2014 | Dec. 31, 2013 | Aug. 19, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Cash and cash equivalents | ' | $4,125,180 | ' | $5,413,848 | $8,526,857 |
Minimum cash balance required under existing loan documents | 5,000,000 | 4,000,000 | 5,000,000 | ' | ' |
Revolving line of credit maximum borrowing capacity | ' | 20,000,000 | ' | ' | ' |
Line of credit current borrowing capacity | ' | 19,000,000 | ' | ' | ' |
HealthCor | ' | ' | ' | ' | ' |
Senior convertible debt | $5,000,000 | ' | ' | ' | ' |
STOCKHOLDERS_EQUITY_Details_Na
STOCKHOLDERS' EQUITY (Details Narrative) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 2 Months Ended | 12 Months Ended | 1 Months Ended | 0 Months Ended | ||||
Apr. 02, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 02, 2013 | Aug. 31, 2013 | Jan. 31, 2012 | Feb. 29, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2012 | Apr. 02, 2013 | |
Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | Common Stock and Additional Paid-In Capital | ||||
Director | ||||||||||||
Preferred Stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, par value | ' | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares authorized | ' | 20,000,000 | 20,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, par value | ' | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares authorized | ' | 300,000,000 | 300,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares issued | ' | 138,753,397 | 132,526,042 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares outstanding | ' | 138,753,397 | 132,526,042 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Private Placement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued in private placement, shares | 6,220,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Price per share purchased | $0.50 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants outstanding | 2,500,000 | ' | ' | ' | ' | ' | ' | 34,465,822 | 34,076,710 | 34,846,421 | ' | ' |
Price per warrant issued | 0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant exercise price | 0.6 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant term | '5 years | ' | ' | ' | ' | ' | ' | '4 years | '4 years 8 months 12 days | '5 years 8 months 12 days | ' | ' |
Fair value of warrant liability | $672,909 | $370,865 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash received for private placement | 3,100,000 | ' | ' | 672,909 | ' | ' | ' | ' | ' | ' | ' | 2,728,129 |
Warrants exercised | ' | ' | ' | ' | 179,638 | ' | 850,000 | -179,638 | -1,329,349 | ' | ' | ' |
Noncash exercise of warrants, shares forfeited for exercise | ' | ' | ' | ' | 172,283 | ' | 258,714 | ' | ' | ' | ' | ' |
Shares issued for exercise of warrants, shares | ' | ' | ' | ' | 7,355 | 39,683 | 591,286 | ' | ' | ' | 439,666 | ' |
Shares issued for exercise of warrants | ' | ' | $262,451 | ' | ' | $20,635 | ' | ' | ' | ' | $241,816 | ' |
STOCKHOLDERS_EQUITY_Details_Na1
STOCKHOLDERS' EQUITY (Details Narrative 1) (USD $) | Apr. 02, 2013 | Aug. 31, 2011 | Apr. 02, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 16, 2013 | 7-May-12 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Aug. 31, 2013 | Jan. 16, 2013 |
Comerica Bank and Bridge Bank | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants Revalued | Warrants Revalued | Warrants Revalued | ||
Comerica Bank and Bridge Bank | Advisory Services Agreement | Advisory Services Agreement | Advisory Services Agreement | Comerica Bank and Bridge Bank | Comerica Bank and Bridge Bank | ||||||||
Warrants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unamortized warrant costs, excluding HealthCor warrants | ' | ' | ' | ' | $285,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of warrants at re-value | ' | ' | ' | ' | 370,865 | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value adjustment recorded as non-cash costs | ' | ' | ' | ' | 76,535 | ' | ' | ' | ' | ' | ' | ' | ' |
Expensed as non-cash costs in general and administration | ' | ' | ' | ' | 302,044 | 447,388 | ' | ' | ' | ' | ' | ' | ' |
Expensed as Interest Expense | ' | ' | ' | ' | 569,387 | 526,530 | ' | ' | ' | ' | ' | ' | ' |
Warrant exercise price | 0.6 | ' | ' | ' | ' | ' | 1.4 | ' | ' | ' | ' | ' | 1.1 |
Change in fair value of warrants, amortized to interest expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25,327 | 64,286 |
Noncash service costs related to warrants | ' | ' | ' | ' | ' | ' | ' | ' | 23,764 | 100,956 | ' | ' | ' |
Warrants issued for services, shares | ' | ' | 50,000 | ' | ' | ' | ' | 240,000 | ' | ' | ' | ' | ' |
Warrants issued for services | ' | ' | 48,200 | ' | ' | ' | ' | 265,200 | ' | ' | ' | ' | ' |
Exercise price of warrants granted | ' | 1.1 | 1.52 | ' | 0.6 | ' | ' | 1.65 | ' | ' | ' | ' | ' |
Term of warrants granted | ' | ' | ' | ' | '4 years 3 months 18 days | '3 years 8 months 12 days | ' | '12 months | ' | ' | ' | ' | ' |
Vesting terms of warrants granted | ' | ' | ' | ' | ' | ' | ' | 'vesting of the underlying shares occurs at the rate of 20,000 shares on the monthly anniversary date of the AS Agreement as long as the AS Agreement has not been terminated | ' | ' | ' | ' | ' |
Fair value of warrants | ' | ' | ' | ' | ' | ' | ' | ' | 124,720 | ' | ' | ' | ' |
Fair value of warrants granted | ' | ' | ' | 91,256 | ' | ' | ' | 265,200 | ' | ' | 485,056 | ' | ' |
Expensed as distribution/service costs in network operations | ' | ' | ' | ' | ' | $55,334 | ' | ' | ' | ' | ' | ' | ' |
STOCKHOLDERS_EQUITY_Details_Na2
STOCKHOLDERS' EQUITY (Details Narrative 2) (USD $) | 12 Months Ended | 1 Months Ended | 12 Months Ended | 73 Months Ended | 51 Months Ended | ||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Nov. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 03, 2007 | Dec. 31, 2013 | Sep. 30, 2009 | |
Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | 2007 Option Plan | 2007 Option Plan | 2009 Option Plan | 2009 Option Plan | |||
Stock Options | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares reserved for option under the plan | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,000,000 | ' | 10,000,000 |
Options granted | ' | ' | 395,000 | 3,641,000 | 25,000 | 760,000 | 4,061,000 | 760,000 | ' | 8,000,000 | ' | 9,255,556 | ' |
Options outstanding | ' | ' | 12,747,476 | ' | ' | 9,093,977 | 12,747,476 | 9,093,977 | 8,750,115 | 5,300,920 | ' | 8,446,556 | ' |
Weighted average grant date fair value of options | ' | ' | ' | ' | ' | ' | $0.31 | $0.49 | ' | ' | ' | ' | ' |
Share-based compensation expense | $390,443 | $812,045 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrecognized estimated compensation expense | $1,782,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period for recognization of unrecognized compensation expense | '2 years 7 months 6 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price of options granted | ' | ' | $0.50 | $0.51 | $0.50 | $0.79 | $0.51 | $0.79 | ' | ' | ' | ' | ' |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Stock Options | ' | ' |
Black-Scholes Model: | ' | ' |
Risk-free interest rate | ' | 0.34% |
Volatility | ' | 101.90% |
Expected life | '3 years | '3 years |
Dividend yield | 0.00% | 0.00% |
Lower Range | Stock Options | ' | ' |
Black-Scholes Model: | ' | ' |
Risk-free interest rate | 0.61% | ' |
Volatility | 101.81% | ' |
Upper Range | Stock Options | ' | ' |
Black-Scholes Model: | ' | ' |
Risk-free interest rate | 0.67% | ' |
Volatility | 102.81% | ' |
Warrants | ' | ' |
Black-Scholes Model: | ' | ' |
Dividend yield | ' | 0.00% |
Warrants | Lower Range | ' | ' |
Black-Scholes Model: | ' | ' |
Risk-free interest rate | ' | 0.19% |
Volatility | ' | 41.63% |
Expected life | ' | '1 year |
Warrants | Upper Range | ' | ' |
Black-Scholes Model: | ' | ' |
Risk-free interest rate | ' | 1.03% |
Volatility | ' | 97.77% |
Expected life | ' | '5 years |
STOCKHOLDERS_EQUITY_Details_1
STOCKHOLDERS' EQUITY (Details 1) (USD $) | Apr. 02, 2013 | Apr. 02, 2012 | Aug. 31, 2013 | Mar. 31, 2012 | Feb. 29, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 |
Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants Revalued | Warrants for Services Tranche 1 | Warrants for Services Tranche 1 | Warrants for Services Tranche 1 | Warrants for Services Tranche 2 | Warrants for Services Tranche 2 | Warrants for Services Tranche 2 | ||
Lower Range | Lower Range | Upper Range | Upper Range | Lower Range | Upper Range | Lower Range | Upper Range | |||||||||||
Number of shares under warrant | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants outstanding, beginning | 2,500,000 | ' | ' | ' | 34,846,421 | 34,076,710 | 34,846,421 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants granted | ' | ' | ' | ' | ' | 2,500,000 | 569,638 | ' | ' | ' | ' | 569,638 | 340,000 | ' | ' | 229,638 | ' | ' |
Warrants exercised | ' | ' | 179,638 | ' | 850,000 | -179,638 | -1,329,349 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants expired | ' | ' | ' | ' | ' | -1,931,250 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants cancelled | ' | ' | ' | ' | ' | ' | -10,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants outstanding, ending | 2,500,000 | ' | ' | ' | ' | 34,465,822 | 34,076,710 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vested and Exercisable | ' | ' | ' | ' | ' | 34,465,822 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Exercise Price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant exercise price, beginning | 0.6 | ' | ' | ' | ' | ' | ' | 0.52 | 0.52 | 1.25 | 1.65 | ' | ' | ' | ' | ' | ' | ' |
Warrants granted | ' | 1.52 | ' | ' | ' | 0.6 | ' | 0.77 | ' | 1.65 | ' | ' | ' | 0.77 | 1.65 | ' | 0.52 | 1.52 |
Warrants exercised | ' | ' | ' | ' | ' | 0.52 | ' | 0.52 | ' | 0.55 | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants expired | ' | ' | ' | ' | ' | 0.52 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants cancelled | ' | ' | ' | ' | ' | ' | 0.55 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant exercise price, ending | 0.6 | ' | ' | ' | ' | ' | ' | 0.52 | 0.52 | 1.65 | 1.65 | ' | ' | ' | ' | ' | ' | ' |
Vested and Exercisable | ' | ' | ' | ' | ' | ' | ' | ' | 0.52 | ' | 1.65 | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Remaining Contractual Life | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Wararnt term, beginning | '5 years | ' | ' | ' | '5 years 8 months 12 days | '4 years 8 months 12 days | '5 years 8 months 12 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants granted | ' | ' | ' | ' | ' | '4 years 3 months 18 days | '3 years 8 months 12 days | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | '1 year | '5 years |
Warrant term, ending | '5 years | ' | ' | ' | ' | '4 years | '4 years 8 months 12 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vested and Exercisable | ' | ' | ' | ' | ' | '4 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of warrants granted | ' | ' | ' | $91,256 | ' | ' | ' | ' | ' | ' | ' | $485,056 | $345,600 | ' | ' | $139,456 | ' | ' |
STOCKHOLDERS_EQUITY_Details_2
STOCKHOLDERS' EQUITY (Details 2) (Stock Options, USD $) | 1 Months Ended | 12 Months Ended | ||||
Dec. 31, 2013 | Nov. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |
Stock Options | ' | ' | ' | ' | ' | ' |
Number Options | ' | ' | ' | ' | ' | ' |
Stock Options Outstanding, Beginning | ' | ' | ' | ' | 9,093,977 | 8,750,115 |
Granted | 395,000 | 3,641,000 | 25,000 | 760,000 | 4,061,000 | 760,000 |
Expired | ' | ' | ' | ' | -86,665 | -215,470 |
Cancelled | ' | ' | ' | ' | -320,836 | -200,668 |
Stock Options Outstanding, Ending | 12,747,476 | ' | ' | 9,093,977 | 12,747,476 | 9,093,977 |
Stock Options, vested and exercisable | 8,128,972 | ' | ' | ' | 8,128,972 | ' |
Weighted Average Exercise Price | ' | ' | ' | ' | ' | ' |
Stock Options Outstanding, Beginning | ' | ' | ' | ' | $0.66 | $0.66 |
Granted | $0.50 | $0.51 | $0.50 | $0.79 | $0.51 | $0.79 |
Expired | ' | ' | ' | ' | $1.38 | $0.62 |
Cancelled | ' | ' | ' | ' | $1.09 | $1.40 |
Stock Options Outstanding, Ending | $0.59 | ' | ' | $0.66 | $0.59 | $0.66 |
Stock Options, vested and exercisable | $0.60 | ' | ' | ' | $0.60 | ' |
Weighted Average Remaining Contractual Life | ' | ' | ' | ' | ' | ' |
Stock Options Outstanding, Beginning | ' | ' | ' | ' | '6 years 7 months 6 days | '7 years 2 months 12 days |
Stock Options Outstanding, Ending | '6 years 10 months 24 days | ' | ' | '6 years 7 months 6 days | '6 years 10 months 24 days | '6 years 7 months 6 days |
Stock Options, vested and exercisable | ' | ' | ' | ' | '5 years 1 month 6 days | ' |
Aggregate Intrinsic Value | ' | ' | ' | ' | ' | ' |
Stock Options Outstanding, Beginning | ' | ' | ' | ' | $2,376,961 | $8,047,942 |
Stock Options Outstanding, Ending | ' | ' | ' | 2,376,961 | ' | 2,376,961 |
Stock Options Outstanding, Vested and exercisable | ' | ' | ' | ' | ' | ' |
INCOME_TAXES_Details_Narrative
INCOME TAXES (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Statutory federal tax rate | 35.00% |
Federal | ' |
Net operating tax loss-carryforward | 47,700,000 |
State | ' |
Net operating tax loss-carryforward | 8,700,000 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income tax reconciliation | ' | ' |
Expected income tax benefit at statutory rate | ($5,098,458) | ($6,510,535) |
Debt discount/debt issuance costs amortization | 1,549,525 | 1,792,637 |
Other permanent differences | 39,670 | 34,736 |
State income taxes, net of tax effect, at state statutory rate | 3,740 | 2,590 |
Deferred pool true-ups/corrections related to: | ' | ' |
Warrants | 1,222,954 | ' |
amortization | 702,183 | ' |
net operating loss | -470,016 | ' |
Other | -16,689 | -110,517 |
Change in valuation account | 2,067,091 | 4,791,089 |
Income tax expense (benefit) | ' | ' |
INCOME_TAXES_Details_1
INCOME TAXES (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred Tax Assets: | ' | ' |
Tax benefit of net operating loss carry-forward | $16,692,594 | $13,731,810 |
Accrued interest | 1,815,656 | 1,125,256 |
Stock based compensation | 1,032,009 | 1,983,218 |
Amortization | 689,759 | 968,441 |
Depreciation | 300,237 | 116,953 |
Accrued Expenses | 61,780 | ' |
Research and development credit carry-forward | 29,084 | 29,084 |
Donations | 10,541 | 7,724 |
Financing fees | ' | 358,000 |
Officer compensation | ' | 216,000 |
Bad debt allowance | ' | 28,083 |
Total deferred tax assets | 20,631,660 | 18,564,569 |
Valuation allowance for deferred tax assets | -20,631,660 | -18,564,569 |
Deferred tax assets, net of valuation allowance | ' | ' |
OTHER_CURRENT_ASSETS_Details
OTHER CURRENT ASSETS (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Other Current Assets Details | ' | ' |
Prepaid expenses | $91,923 | $130,825 |
Sales tax refund | 72,399 | ' |
Other current assets | 1,209 | 2,676 |
Legal retainer | ' | 61,091 |
TOTAL OTHER CURRENT ASSETS | $165,531 | $194,592 |
PROPERTY_AND_EQUIPMENT_Details
PROPERTY AND EQUIPMENT (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Property And Equipment Details Narrative | ' | ' |
Depreciation expense | $1,587,464 | $1,546,599 |
PROPERTY_AND_EQUIPMENT_Details1
PROPERTY AND EQUIPMENT (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property and equipment, gross | $10,619,842 | $10,587,771 |
Less: accumulated depreciation | -4,255,233 | -2,726,234 |
Property and equipment, net | 6,364,609 | 7,861,537 |
Network Equipment | ' | ' |
Property and equipment, gross | 10,205,367 | 10,170,480 |
Office Equipment | ' | ' |
Property and equipment, gross | 140,764 | 119,830 |
Vehicles | ' | ' |
Property and equipment, gross | 112,332 | 136,082 |
Furniture | ' | ' |
Property and equipment, gross | 75,673 | 75,673 |
Test Equipment | ' | ' |
Property and equipment, gross | 73,719 | 73,719 |
Warehouse Equipment | ' | ' |
Property and equipment, gross | 6,866 | 6,866 |
Leasehold Improvements | ' | ' |
Property and equipment, gross | $5,121 | $5,121 |
OTHER_ASSETS_Details
OTHER ASSETS (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Cost | $296,910 | $228,813 |
Accumulated Amortization | 43,921 | 19,839 |
Intangible assets, Net | 252,989 | 208,974 |
Patents and trademarks | ' | ' |
Cost | 246,416 | 182,593 |
Accumulated Amortization | 14,487 | 6,525 |
Intangible assets, Net | 231,929 | 176,068 |
Other intangible assets | ' | ' |
Cost | 50,494 | 46,220 |
Accumulated Amortization | 29,434 | 13,314 |
Intangible assets, Net | $21,060 | $32,906 |
OTHER_ASSETS_Details_1
OTHER ASSETS (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Cost | $4,732,459 | $4,299,408 |
Accumulated Amortization | 3,507,905 | 2,279,552 |
Other assets | 1,224,554 | 2,019,856 |
Deferred installation costs | ' | ' |
Cost | 1,087,295 | 799,114 |
Accumulated Amortization | 559,537 | 209,598 |
Other assets | 527,758 | 589,516 |
Deferred debt issuance costs | ' | ' |
Cost | 1,600,000 | 1,535,714 |
Accumulated Amortization | 1,315,308 | 745,920 |
Other assets | 284,692 | 789,794 |
Prepaid license fee | ' | ' |
Cost | 249,999 | 516,050 |
Accumulated Amortization | 38,250 | 247,413 |
Other assets | 211,749 | 268,637 |
Deferred closing costs | ' | ' |
Cost | 580,241 | 233,606 |
Accumulated Amortization | 463,510 | 21,857 |
Other assets | 116,731 | 211,749 |
Security deposit | ' | ' |
Cost | 83,624 | 83,624 |
Accumulated Amortization | ' | ' |
Other assets | 83,624 | 83,624 |
Prepaid Consulting | ' | ' |
Cost | 1,131,300 | 1,131,300 |
Accumulated Amortization | 1,131,300 | 1,054,764 |
Other assets | ' | $76,536 |
OTHER_CURRENT_LIABILITIES_Deta
OTHER CURRENT LIABILITIES (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
OTHER CURRENT LIABILITIES: | ' | ' |
Accrued taxes | $173,938 | $257,549 |
Accrued paid time off | 148,729 | 103,038 |
Other accrued liabilities | 215,475 | 441,941 |
Other current liabilities | $538,142 | $802,528 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Monthly base lease rate | $14,219 | ' |
Rent expense | 218,476 | 251,789 |
Senior secured convertible notes | 17,941,662 | 12,439,154 |
Senior Secured Convertible Notes | ' | ' |
Debt discount | $16,248,228 | $17,791,104 |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Dec. 31, 2013 |
Future minimum rental payments for the years endind December 31, | ' |
2014 | $170,628 |
2015 | 85,314 |
Thereafter | ' |
Total | $255,942 |
COMMITMENTS_AND_CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 1) (USD $) | Dec. 31, 2013 | |
Future debt payments for the year ending December 31, | ' | |
2014 | $1,867,293 | |
2015 | ' | |
2016 | ' | |
2017 | ' | |
2018 | ' | |
Thereafter | 34,189,890 | |
Total | 36,057,183 | |
Mandatorily Redeemable Equity in Joint Venture | ' | |
Future debt payments for the year ending December 31, | ' | |
2014 | 442,519 | |
2015 | ' | |
2016 | ' | |
2017 | ' | |
2018 | ' | |
Total | 442,519 | |
Revolving Line | ' | |
Future debt payments for the year ending December 31, | ' | |
2014 | 982,255 | |
2015 | ' | |
2016 | ' | |
2017 | ' | |
2018 | ' | |
Thereafter | ' | |
Total | 982,255 | |
Senior Secured Convertible Notes | ' | |
Future debt payments for the year ending December 31, | ' | |
2014 | ' | [1] |
2015 | ' | [1] |
2016 | ' | [1] |
2017 | ' | [1] |
2018 | ' | [1] |
Thereafter | 34,189,890 | [1] |
Total | 34,189,890 | [1] |
Notes Payable | ' | |
Future debt payments for the year ending December 31, | ' | |
2014 | 442,519 | |
2015 | ' | |
2016 | ' | |
2017 | ' | |
2018 | ' | |
Total | $442,519 | |
[1] | Senior Secured Convertible Notes are included on the accompanying consolidated financial statements as $17,941,662, which represents this amount less debt discount of $16,248,228. |
AGREEMENT_WITH_HEALTHCOR_Detai
AGREEMENT WITH HEALTHCOR (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | 60 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Jan. 16, 2014 | Aug. 19, 2013 | Jan. 31, 2012 | Apr. 21, 2011 | Jan. 31, 2012 | Apr. 21, 2011 | Jan. 16, 2014 | Apr. 21, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Apr. 20, 2021 | Apr. 20, 2016 | Dec. 31, 2013 | |
HealthCor Partners Fund | HealthCor Partners Fund | HealthCor Hybrid Offshore Master Fund | HealthCor Hybrid Offshore Master Fund | HealthCor | HealthCor | HealthCor | HealthCor | HealthCor | HealthCor | HealthCor | HealthCor | |||||
Senior Secured Convertible Notes | Senior Secured Convertible Notes | Senior Secured Convertible Notes | Senior Convertible Notes - 2012 Issuance | |||||||||||||
Senior secured convertible notes | $17,941,662 | $12,439,154 | ' | ' | $2,329,000 | $9,316,000 | $2,671,000 | $10,684,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Maturity Date | ' | ' | ' | ' | 31-Jan-22 | 20-Apr-21 | 31-Jan-22 | 20-Apr-21 | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants issued for financing costs, warrants | ' | ' | ' | ' | ' | 5,488,456 | ' | 6,294,403 | 4,000,000 | ' | ' | ' | ' | ' | ' | ' |
Exercise price of warrants granted | ' | ' | ' | ' | ' | 1.4 | ' | 1.4 | 0.4 | ' | ' | ' | ' | ' | ' | ' |
Interest rate, provided no default | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% | 12.50% | ' |
Increase in interest rate (per annum) should default occur | ' | ' | ' | ' | ' | ' | 5.00% | ' | ' | 5.00% | ' | ' | ' | ' | ' | ' |
Debt conversion rate | ' | ' | ' | ' | ' | ' | $1.25 | ' | $0.40 | $1.25 | ' | ' | ' | ' | ' | ' |
Number of shares the note may be converted into | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 22,000,000 | ' | ' | 5,000,000 |
Minimum cash balance required under existing loan documents | 4,000,000 | ' | 5,000,000 | 5,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Beneficial conversion features for senior secured convertible notes | 1,425,468 | 3,041,799 | ' | ' | ' | ' | ' | ' | ' | ' | 1,425,468 | 3,041,799 | ' | ' | ' | ' |
Interest Expense | $7,969,527 | $7,670,396 | ' | ' | ' | ' | ' | ' | ' | ' | $642,619 | $476,341 | ' | ' | ' | ' |
LOAN_AND_SECURITY_AGREEMENT_WI1
LOAN AND SECURITY AGREEMENT WITH COMERICA BANK AND BRIDGE BANK (Details Narrative) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | |||||||
Aug. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 16, 2014 | Aug. 19, 2013 | Apr. 02, 2013 | Apr. 02, 2012 | Dec. 31, 2013 | Aug. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 16, 2013 | Jan. 16, 2013 | |
Warrants | Warrants | Comerica Bank and Bridge Bank | Comerica Bank and Bridge Bank | Comerica Bank and Bridge Bank | Comerica Bank and Bridge Bank | Comerica Bank and Bridge Bank | |||||||
Warrants | Warrants | Warrants | Warrants Revalued | ||||||||||
Revolving line of credit maximum borrowing capacity | ' | $20,000,000 | ' | ' | ' | ' | ' | ' | $20,000,000 | ' | ' | ' | ' |
Variable Rate basis | 'LIBOR | ' | ' | ' | ' | ' | ' | ' | 'Prime Referenced Rate | ' | ' | ' | ' |
Spread on Variable Rate | 2.50% | ' | ' | ' | ' | ' | ' | ' | 3.75% | ' | ' | ' | ' |
Interest rate on revolving line of credit | ' | 7.00% | 7.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit facility fee | ' | ' | ' | ' | ' | ' | ' | ' | 200,000 | ' | ' | ' | ' |
Line of credit facility fee description | ' | ' | ' | ' | ' | ' | ' | ' | 'requires the Company to pay (i) a quarterly unused facility fee equoal to one quarter of one percent (0.25%) per annum of the difference between the amount of the Revolving Line and the average outstanding principal balance of the Revolving Line during the applicable quarter and (ii) all reasonable expenses incurred by the Banks in connection with the Agreement, including reasonable attorneys' fees and expenses. | ' | ' | ' | ' |
Annual unused facility fee | ' | ' | ' | ' | ' | ' | ' | ' | 0.25% | ' | ' | ' | ' |
Minimum percentage of investment accounts that must be maintained with the banks or their affiliates | ' | ' | ' | ' | ' | ' | ' | ' | 80.00% | ' | ' | ' | ' |
Minimum cash balance required under existing loan documents | ' | 4,000,000 | ' | 5,000,000 | 5,000,000 | ' | ' | ' | 5,000,000 | ' | ' | ' | ' |
Fixed charge coverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | 5.01 | ' | ' | ' | ' |
Borrowings from the line of credit | ' | 982,255 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit current borrowing capacity | ' | 19,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant exercise price | ' | ' | ' | ' | ' | 0.6 | ' | ' | ' | ' | ' | 1.4 | 1.1 |
Warrants issued for financing costs | ' | 64,286 | ' | ' | ' | ' | ' | ' | 1,535,714 | ' | ' | ' | ' |
Warrants issued for financing costs, warrants | ' | ' | ' | ' | ' | ' | ' | ' | 1,428,572 | ' | ' | ' | ' |
Exercise price of warrants granted | ' | ' | ' | ' | ' | ' | 1.52 | 0.6 | 1.1 | ' | ' | ' | ' |
Interest expense | ' | $7,969,527 | $7,670,396 | ' | ' | ' | ' | ' | ' | $569,388 | $526,530 | ' | ' |
JOINT_VENTURE_AGREEMENT_Detail
JOINT VENTURE AGREEMENT (Details Narrative) (USD $) | 0 Months Ended | 12 Months Ended | |
Nov. 16, 2009 | Dec. 31, 2013 | Dec. 31, 2012 | |
Percentage owned by company of each joint venture | 50.00% | ' | ' |
Interest rate on project notes and preferential returns, per investment agreement | 10.00% | ' | ' |
Amortization of debt discount | ' | $3,034,320 | $3,375,706 |
Warrants | ' | ' | ' |
Fair value adjustment recorded as non-cash costs | ' | 76,535 | ' |
Joint Venture - Rockwell | ' | ' | ' |
Funding by Rockwell into the Joint Venture, cash | 1,151,205 | ' | ' |
Promissory notes issued to Rockwell | 575,603 | 1,007,000 | ' |
Investment Interest issued to Rockwell as Preferential Return | 575,602 | ' | ' |
Discount on debt recorded | 636,752 | ' | ' |
Amortization of debt discount | ' | 65,976 | 199,963 |
Monthly revenue lost due to Hillcrest termination | ' | ' | 20,000 |
De-installation costs incurred | ' | ' | 3,000 |
Fair value adjustment recorded as non-cash costs | ' | ' | 25,327 |
Joint Venture - Rockwell | Warrants | ' | ' | ' |
Warrants issued for financing costs, warrants | 1,151,206 | ' | ' |
Fair value of warrants issued to Rockwell for providing funding | $1,124,728 | ' | ' |
VARIABLE_INTEREST_ENTITIES_Det
VARIABLE INTEREST ENTITIES (Details Narrative) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Mandatorily Redeemable Equity in Joint Venture | ' | ' |
Debt discount | $0 | $32,988 |
Senior Secured Convertible Notes | ' | ' |
Debt discount | 16,248,228 | 17,791,104 |
Variable Interest Entity | Mandatorily Redeemable Equity in Joint Venture | ' | ' |
Debt discount | 0 | 32,988 |
Variable Interest Entity | Senior Secured Convertible Notes | ' | ' |
Debt discount | $0 | $32,988 |
VARIABLE_INTEREST_ENTITIES_Det1
VARIABLE INTEREST ENTITIES (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Assets | ' | ' |
Receivables | $305,033 | $367,742 |
Total current assets | 4,595,744 | 5,976,182 |
Property, net | 6,364,609 | 7,861,537 |
Total assets | 12,437,896 | 16,066,549 |
Liabilities | ' | ' |
Accounts payable | 414,888 | 166,373 |
Notes payable, net of debt discount of $0 and $32,988, respectively | 442,519 | 410,586 |
Mandatorily redeemable equity in joint venture, net of debt discount of $0 and $32,988, respectively | 442,519 | 410,586 |
Accrued interest | 127,327 | 59,872 |
Other current liabilities | 538,142 | 802,528 |
Total liabilities | 21,268,784 | 14,314,923 |
Variable Interest Entity | ' | ' |
Assets | ' | ' |
Cash | 958 | 956 |
Receivables | 4,861 | 5,221 |
Total current assets | 5,819 | 6,177 |
Property, net | 99,348 | 189,003 |
Total assets | 105,167 | 195,180 |
Liabilities | ' | ' |
Accounts payable | 114,089 | 103,217 |
Notes payable, net of debt discount of $0 and $32,988, respectively | 442,519 | 410,586 |
Mandatorily redeemable equity in joint venture, net of debt discount of $0 and $32,988, respectively | 442,519 | 410,586 |
Accrued interest | 121,597 | 59,872 |
Other current liabilities | 37,731 | 53,371 |
Total liabilities | $1,158,455 | $1,037,632 |
VARIABLE_INTEREST_ENTITIES_Det2
VARIABLE INTEREST ENTITIES (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Revenue | $2,068,771 | $1,629,971 |
Network operations expense | 2,477,430 | 2,905,703 |
General and administrative expense | 2,734,658 | 4,807,758 |
Depreciation | 1,611,546 | 2,112,609 |
Total operating expense | 8,683,454 | 12,704,407 |
Operating loss | -6,614,683 | -11,074,436 |
Loss before taxes | -14,567,022 | -18,605,512 |
Provision for taxes | ' | ' |
Net loss attributable to noncontrolling interest | -48,717 | -102,542 |
Net loss attributable to CareView Communications, Inc. | -14,518,305 | -18,502,970 |
Variable Interest Entity | ' | ' |
Revenue | 29,154 | 68,655 |
Network operations expense | 16,844 | 22,992 |
General and administrative expense | -21,165 | 31,081 |
Depreciation | 53,248 | 58,705 |
Total operating expense | 48,927 | 112,778 |
Operating loss | -19,773 | -44,123 |
Other income (expense) | -77,661 | -160,961 |
Loss before taxes | -97,434 | -205,084 |
Provision for taxes | ' | ' |
Net loss | -97,434 | -205,084 |
Net loss attributable to noncontrolling interest | -48,717 | -102,542 |
Net loss attributable to CareView Communications, Inc. | ($48,717) | ($102,542) |
SERVICE_AGREEMENTS_Details_Nar
SERVICE AGREEMENTS (Details Narrative) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||
Apr. 02, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 04, 2012 | 31-May-12 | 31-May-12 | Dec. 31, 2012 | 7-May-12 | 7-May-12 | Dec. 31, 2013 | Dec. 31, 2012 | |
Warrants | Warrants | Warrants | Warrants | Sales Consulting Agreement | Sales Consulting Agreement | Sales Consulting Agreement | Sales Consulting Agreement | Advisory Services Agreement | Advisory Services Agreement | Advisory Services Agreement | Advisory Services Agreement | |
Warrants | Warrants | Warrants | ||||||||||
Consulting agreement description | ' | ' | ' | ' | ' | ' | 'greater of (i) $10,000 or (ii) the sum of $250 per month per designated hospital | ' | ' | ' | ' | ' |
Monthly consultant fee, option one | ' | ' | ' | ' | ' | ' | $10,000 | ' | ' | ' | ' | ' |
Monthly consultant fee per month per hospital, option two | ' | ' | ' | ' | ' | ' | 250 | ' | ' | ' | ' | ' |
Maximum number of shares consultant is entitled to receive under Warrants | ' | ' | ' | ' | ' | ' | 100,000 | ' | ' | ' | ' | ' |
Warrants issued for services, shares | 50,000 | ' | ' | ' | ' | 50,000 | ' | ' | ' | 240,000 | ' | ' |
Term of warrants granted | ' | ' | '4 years 3 months 18 days | '3 years 8 months 12 days | ' | '5 years | ' | ' | ' | '12 months | ' | ' |
Fair value of warrants granted | ' | 91,256 | ' | ' | 28,100 | 52,300 | ' | ' | ' | 265,200 | ' | ' |
Warrants issued for termination of agreement, shares | ' | ' | ' | ' | 50,000 | ' | ' | ' | ' | ' | ' | ' |
Exercise price of warrants granted | 1.52 | ' | 0.6 | ' | 0.77 | 1.55 | ' | ' | ' | 1.65 | ' | ' |
Consulting Expense | ' | ' | ' | ' | ' | ' | ' | 80,400 | ' | ' | ' | ' |
Monthly retainer amount | ' | ' | ' | ' | ' | ' | ' | ' | 5,000 | ' | ' | ' |
Vesting terms of warrants granted | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'vesting of the underlying shares occurs at the rate of 20,000 shares on the monthly anniversary date of the AS Agreement as long as the AS Agreement has not been terminated | ' | ' |
Noncash service costs related to warrants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $23,764 | $100,956 |
SUBSCRIPTION_AND_INVESTOR_RIGH
SUBSCRIPTION AND INVESTOR RIGHTS AGREEMENT (Details Narrative) (USD $) | 0 Months Ended | |
Oct. 31, 2013 | Aug. 20, 2010 | |
Subscription and Investor Rights Agreement | ||
Warrants issued for contract modifications, warrants | ' | 1,000,000 |
Exercise price of warrants granted | ' | 1 |
Term of warrants granted | ' | '5 years |
Acquisition of GII | $28,124 | ' |
SUBSEQUENT_EVENTS_Details_Narr
SUBSEQUENT EVENTS (Details Narrative) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | ||||||
Jan. 16, 2014 | Apr. 21, 2011 | Dec. 31, 2013 | Nov. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 02, 2014 | Jan. 02, 2014 | |
HealthCor | HealthCor | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | |
David White, Director | Jason Thompson, Director | |||||||||
Options granted | ' | ' | 395,000 | 3,641,000 | 25,000 | 760,000 | 4,061,000 | 760,000 | 500,000 | 150,000 |
Option term | ' | ' | ' | ' | ' | ' | ' | ' | '10 years | '10 years |
Exercise price of options granted | ' | ' | $0.50 | $0.51 | $0.50 | $0.79 | $0.51 | $0.79 | $0.40 | $0.40 |
Vesting period | ' | ' | ' | ' | ' | ' | ' | ' | 'Annually over a three-year period | 'Annually over a three-year period |
Senior convertible debt | $5,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt conversion rate | $0.40 | $1.25 | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants issued for financing costs, warrants | 4,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price of warrants granted | 0.4 | ' | ' | ' | ' | ' | ' | ' | ' | ' |