Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 8-May-14 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'CareView Communications Inc | ' |
Entity Central Index Key | '0001377149 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity a Well-known Seasoned Issuer | 'No | ' |
Entity a Voluntary Filer | 'No | ' |
Entity's Reporting Status Current | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 138,753,397 |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2014 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Current Assets: | ' | ' |
Cash | $7,480,473 | $4,125,180 |
Accounts receivable | 556,058 | 305,033 |
Other current assets | 276,792 | 165,531 |
Total current assets | 8,313,323 | 4,595,744 |
Property and equipment, net of accumulated depreciation of $4,648,102 and $4,255,233, respectively | 6,030,193 | 6,364,609 |
Other Assets: | ' | ' |
Intangible assets, net of accumulated amortization of $50,384 and $43,921, respectively | 251,214 | 252,989 |
Other assets | 955,589 | 1,224,554 |
Total other assets | 1,206,803 | 1,477,543 |
Total assets | 15,550,319 | 12,437,896 |
Current Liabilities: | ' | ' |
Accounts payable | 75,495 | 414,888 |
Revolving line of credit | 982,255 | 982,255 |
Notes payable | ' | 442,519 |
Mandatorily redeemable equity in joint venture | ' | 442,519 |
Accrued interest | 145,121 | 127,327 |
Other current liabilities | 591,949 | 538,142 |
Total current liabilities | 1,794,820 | 2,947,650 |
Long-term Liabilities | ' | ' |
Senior secured convertible notes, net of debt discount of $17,643,861 and $16,248,228, respectively | 22,742,935 | 17,941,662 |
Fair value of warrant liability | 1,004,007 | 370,865 |
Notes payable | 441,594 | ' |
Mandatorily redeemable equity in joint ventures | 441,594 | ' |
Lease liability, net of current portion | 4,304 | 8,607 |
Total long-term liabilities | 24,634,434 | 18,321,134 |
Total liabilities | 26,429,254 | 21,268,784 |
Commitments and Contingencies | ' | ' |
Stockholders' 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 issued and outstanding | 138,753 | 138,753 |
Additional paid in capital | 73,571,322 | 71,202,451 |
Accumulated deficit | -84,194,901 | -79,793,823 |
Total CareView Communications Inc. stockholders' deficit | -10,484,826 | -8,452,619 |
Noncontrolling interest | -394,109 | -378,269 |
Total stockholders' deficit | -10,878,935 | -8,830,888 |
Total liabilities and stockholders' deficit | $15,550,319 | $12,437,896 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Accumulated depreciation of property and equipment | $4,648,102 | $4,255,233 |
Accumulated amortization of intellectual property, patents, and trademarks | 50,384 | 43,921 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | ' | ' |
Preferred stock, shares outstanding | ' | ' |
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 | 138,753,397 |
Common stock, shares outstanding | 138,753,397 | 138,753,397 |
Senior Secured Convertible Notes [Member] | ' | ' |
Debt discount | $17,643,861 | $16,248,228 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Income Statement [Abstract] | ' | ' |
Revenues, net | $619,409 | $360,830 |
Operating expenses: | ' | ' |
Network operations | 601,222 | 734,353 |
General and administration | 801,977 | 894,588 |
Sales and marketing | 208,458 | 275,141 |
Research and development | 168,661 | 240,716 |
Depreciation and amortization | 399,332 | 376,084 |
Total operating expense | 2,179,650 | 2,520,882 |
Operating loss | -1,560,241 | -2,160,052 |
Other income and (expense): | ' | ' |
Interest expense | -2,225,828 | -1,984,176 |
Change in fair value of warrant liability | -633,142 | ' |
Interest income | 999 | 536 |
Other income | 1,294 | 1,052 |
Total other income (expense) | -2,856,677 | -1,982,588 |
Loss before taxes | -4,416,918 | -4,142,640 |
Provision for income taxes | ' | ' |
Net loss | -4,416,918 | -4,142,640 |
Net loss attributable to noncontrolling interest | -15,840 | -25,779 |
Net loss attributable to CareView Communications, Inc. | ($4,401,078) | ($4,116,861) |
Net loss per share attributable to CareView Communications, Inc. basic and diluted | ($0.03) | ($0.03) |
Weighted average number of common shares outstanding, basic and diluted | 138,753,397 | 132,526,042 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (Unaudited) (USD $) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance at Dec. 31, 2013 | $138,753 | $71,202,451 | ($79,793,823) | ($378,269) | ($8,830,888) |
Beginning balance, shares at Dec. 31, 2013 | 138,753,397 | ' | ' | ' | ' |
Stock options granted as compensation | ' | 196,444 | ' | ' | 196,444 |
Warrants issued in connection with the senior secured convertible notes | ' | 1,146,732 | ' | ' | 1,146,732 |
Beneficial conversion features for senior secured convertible notes | ' | 1,025,695 | ' | ' | 1,025,695 |
Net loss | ' | ' | -4,401,078 | -15,840 | -4,416,918 |
Ending balance at Mar. 31, 2014 | $138,753 | $73,571,322 | ($84,194,901) | ($394,109) | ($10,878,935) |
Ending balance, shares at Mar. 31, 2014 | 138,753,397 | ' | ' | ' | ' |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITES | ' | ' |
Net loss | ($4,416,918) | ($4,142,640) |
Adjustments to reconcile net loss to net cash flows used in operating activities: | ' | ' |
Depreciation | 392,869 | 371,700 |
Amortization of intangible assets | 6,463 | 4,384 |
Amortization of debt discount | 776,794 | 812,609 |
Amortization of prepaid consulting costs | ' | 62,049 |
Amortization of installation costs | 99,897 | 100,510 |
Amortization of deferred debt issuance costs | 142,347 | 133,538 |
Interest incurred and paid in kind | 1,196,906 | 944,695 |
Stock based compensation related to options granted | 196,444 | 98,151 |
Stock based costs related to warrants issued | ' | 17,400 |
Change in value of warrant liability | 633,142 | ' |
Gain on disposal of assets | ' | 2,405 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -251,025 | 218,605 |
Other current assets | -111,261 | -57,743 |
Other assets | 58,988 | 3,857 |
Accounts payable | -339,393 | 422,920 |
Accrued expenses and other current liabilities | 71,601 | 153,612 |
Other liabilities | -4,303 | -4,304 |
Net cash flows used in operating activities | -1,547,449 | -858,252 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' |
Purchase of property and equipment | -58,453 | -811 |
Payment for deferred installation costs | -32,267 | -159,303 |
Patent and trademark costs | -4,688 | -13,280 |
Net cash flows used in investing activities | -95,408 | -173,394 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Proceeds from notes and loans payable | 5,000,000 | 560,110 |
Repayment of notes and loans payable | -1,850 | ' |
Proceeds from sale of common stock, net of issuance costs | ' | 2,610,534 |
Net cash flows provided by financing activities | 4,998,150 | 3,170,644 |
Increase in cash | 3,355,293 | 2,138,998 |
Cash and cash equivalents, beginning of period | 4,125,180 | 5,413,848 |
Cash and cash equivablents, end of period | 7,480,473 | 7,552,846 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ' | ' |
Cash paid for interest | 33,335 | 40,043 |
Cash paid for income taxes | ' | ' |
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES: | ' | ' |
Beneficial conversion features for senior secured convertible notes | 1,025,695 | 340,090 |
Warrants issued in connection with the senior secured convertible notes | $1,146,732 | ' |
BASIS_OF_PRESENTATION_AND_RECE
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | 3 Months Ended | |||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||||||
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | ' | |||||||||||||||||
NOTE 1 – BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | ||||||||||||||||||
Interim Financial Statements | ||||||||||||||||||
The accompanying unaudited interim condensed consolidated financial statements of CareView Communications, Inc. (“CareView”, the “Company”, “we”, “us” or “our”) have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such financial statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The balance sheet at December 31, 2013 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Results of operations for interim periods are not necessarily indicative of results for the full year. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the SEC on March 28, 2014. | ||||||||||||||||||
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. 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 condensed 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 as detailed below. The fair value of this warrant liability is included in long-term liabilities on the accompanying condensed consolidated financial statements. | ||||||||||||||||||
The following table provides the financial assets and liabilities reported at fair value and measured on a recurring basis: | ||||||||||||||||||
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 | $ | (1,004,007 | ) | $ | — | $ | — | $ | (1,004,007 | ) | ||||||||
The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the three months ended: | ||||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs | ||||||||||||||||||
(Level 3) | ||||||||||||||||||
Balance at January 1, 2014 | $ | (370,865 | ) | |||||||||||||||
Issuances of derivative liabilities | — | |||||||||||||||||
Change in fair value of warrant liability | (633,142 | ) | ||||||||||||||||
Transfers in and/out of Level 3 | — | |||||||||||||||||
Ending balance at March 31, 2014 | $ | (1,004,007 | ) | |||||||||||||||
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. | ||||||||||||||||||
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 three months ended March 31, 2014, and the year ended December 31, 2013, no impairment was recognized. | ||||||||||||||||||
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 92,844,471 and 68,052,294 at March 31, 2014 and 2013, respectively, have been excluded from the diluted earnings per share calculation as they are anti-dilutive due to our reported net loss. | ||||||||||||||||||
Recently Issued and Newly Adopted Accounting Pronouncements | ||||||||||||||||||
There have been no material changes to our significant accounting policies as summarized in NOTE 2 of our Annual Report on Form 10-K for the year ended December 31, 2013. We do not expect that the adoption of any recent accounting pronouncements will have a material impact on our accompanying condensed consolidated financial statements. | ||||||||||||||||||
Reclassifications | ||||||||||||||||||
Certain 2013 amounts have been reclassified to conform to current year presentation. |
LIQUIDITY_AND_MANAGEMENTS_PLAN
LIQUIDITY AND MANAGEMENT'S PLAN | 3 Months Ended |
Mar. 31, 2014 | |
Liquidity And Managements Plan | ' |
LIQUIDITY AND MANAGEMENT'S PLAN | ' |
NOTE 2 – LIQUIDITY AND MANAGEMENT’S PLAN | |
Our cash position at March 31, 2014 was approximately $7.5 million. We are required to maintain a minimum cash balance $5 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 for further details) and Comerica Bank and Bridge Bank (see NOTE 12 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. We expect that the cash on hand, 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 a $20 million revolving credit line with Comerica Bank and Bridge Bank (the “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 requirements through the use of this Revolving Line by using eligible customer contracts as collateral. Although the unused portion of the line is approximately $19 million, the borrowing capacity is further limited by the level of eligible contracts, which results in a borrowing availability of approximately $59,000 at March 31, 2014 and $277,000 at the filing date. This 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 | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Stockholders' Deficit: | ' | ||||||||||||||||
STOCKHOLDERS' EQUITY | ' | ||||||||||||||||
NOTE 3 – STOCKHOLDERS’ EQUITY | |||||||||||||||||
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 those Warrants issued that contain down round provisions (defined hereinafter as the “Private Placement Warrants”). The Black-Scholes Model is an acceptable model in accordance with 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 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. 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 prior to 2007. | |||||||||||||||||
Warrant Activity during the Three Months Ended March 31, 2014 | |||||||||||||||||
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 and agreed to sell and issue (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 for standard anti-dilution provisions) 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 for standard anti-dilution provisions). The fair value of the convertible debt was determined to be $5,000,000. This resulted in a relative fair value of $1,146,732 for the warrants on the date of grant. At March 31, 2014,$1,12,688 remained as debt discount and $24,044 was amortized to interest expense on the accompanying condensed consolidated financial statements. | |||||||||||||||||
On April 1, 2013, the closing date of a Securities Purchase Agreement (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, contain provisions for a cashless exercise and had an exercise price of $0.60 per share. 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. As a result of the transaction discussed in the previous paragraph and the “down round” provision, the exercise price of the Private Placement Warrants was reduced to $0.40. In accordance with GAAP, we 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 Private Placement Warrants. We recognized these Private Placement Warrants as liabilities at their fair value and will re-measure them at fair value on each reporting date with the change reported in other income and 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 value for the Private Placement Warrants is 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 December 31, 2013, we recorded a Warrant Liability of $370,865 in our consolidated financial statements. At March 31, 2014, the Private Placement Warrants were re-valued with a relative fair value determination of $1,004,007 and the difference of $633,142 was included as change in fair value of warrant liability in other income and expense in the accompanying condensed consolidated financial statements. | |||||||||||||||||
We also amortized $142,347 of previously capitalized Warrant costs as interest expense in the accompanying condensed consolidated financial statements. | |||||||||||||||||
Warrant Activity during the Three Months Ended March 31, 2013 | |||||||||||||||||
During the three months ended March 31, 2013, we did not issue any Warrants; however, we amortized certain previously capitalized Warrant costs in the accompanying condensed consolidated financial statements as follows: (i) $79,449 as non-cash costs in general and administration and (ii) $133,537 as interest expense. | |||||||||||||||||
On January 15, 2013, the Company and Comerica Bank and Bridge Bank, NA (collectively the “Banks”) entered into a Second Amendment of the Agreement in which the Banks agreed to amend the defining term for “Eligible Accounts” and add the defining term for “Verification of Accounts.” In conjunction with this amendment, amendments to the Warrants issued to the Banks were also made. This amendment affected the exercise price which was reduced from $1.40 to $1.10 per share (subject to adjustment for capital events) and the expiration date which was extended from August 8, 2018 to January 15, 2020. All other provisions of the Agreement and the Warrants remained unchanged. The Warrants were revalued as of January 15, 2013 resulting in an increase in fair value of $11,429 which is amortized to interest expense using the effective interest method. | |||||||||||||||||
Options to Purchase Common Stock of the Company | |||||||||||||||||
During the three months ended March 31, 2014, we granted options to purchase 650,000 shares of our Common Stock (’‘Option(s)’’) to certain members of our board of directors. No Options were granted during the three months ended March 31, 2013. During those same three month periods, resulting from the resignation or termination of employees, 15,001 and 16,667 Options, respectively, were cancelled. During the three months ended March 31, 2014 and 2013, 31,666 and 1,667 Options, respectively, expired. | |||||||||||||||||
A summary of our stock option activity and related information follows: | |||||||||||||||||
Number of Shares Under Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||||||||||
Balance at December 31, 2013 | 12,747,476 | $ | 0.59 | 7.1 | $ | — | |||||||||||
Granted | 650,000 | $ | 0.4 | 9.8 | |||||||||||||
Exercised | — | ||||||||||||||||
Expired | (31,666 | ) | $ | 1.38 | |||||||||||||
Cancelled | (15,001 | ) | $ | 0.85 | |||||||||||||
Balance at March 31, 2014 | 13,350,809 | $ | 0.58 | 6.8 | $ | 1,902,879 | |||||||||||
Vested and Exercisable at March 31, 2014 | 8,143,972 | $ | 0.61 | 5 | $ | 1,121,329 | |||||||||||
The valuation methodology used to determine the fair value of the Options issued was the Black-Scholes Model. | |||||||||||||||||
The assumptions used in the Black-Scholes Model are set forth in the table below. | |||||||||||||||||
Three Months Ended | Year Ended December 31, 2013 | ||||||||||||||||
31-Mar-14 | |||||||||||||||||
Risk-free interest rate | 1.72 | % | 0.61-0.67% | ||||||||||||||
Volatility | 73.27 | % | 101.81-102.81% | ||||||||||||||
Expected life in years | 6 | 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 our stock prices. Our calculation of estimated volatility is based on historical stock prices over a period equal to the expected life of the awards. | |||||||||||||||||
Share-based compensation expense for stock options charged to our operating results for the three months ended March 31, 2014 and 2013 ($196,444 and $98,151, 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 March 31, 2014, total unrecognized estimated compensation expense related to non-vested stock options granted prior to that date was approximately $1,600,000, which is expected to be recognized over a weighted-average period of 2.4 years. No tax benefit was realized due to a continued pattern of operating losses. |
OTHER_CURRENT_ASSETS
OTHER CURRENT ASSETS | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
OTHER CURRENT ASSETS | ' | ||||||||
NOTE 4 – OTHER CURRENT ASSETS | |||||||||
Other current assets consist of the following: | |||||||||
March 31, | 31-Dec-13 | ||||||||
2014 | |||||||||
Prepaid expenses | $ | 203,399 | $ | 91,923 | |||||
Sales tax refund | 72,399 | 72,399 | |||||||
Other current assets | 994 | 1,209 | |||||||
TOTAL OTHER CURRENT ASSETS | $ | 276,792 | $ | 165,531 | |||||
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
PROPERTY AND EQUIPMENT | ' | ||||||||
NOTE 5 – PROPERTY AND EQUIPMENT | |||||||||
Property and equipment consist of the following: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Network equipment | $ | 10,256,354 | $ | 10,205,367 | |||||
Office equipment | 148,230 | 140,764 | |||||||
Vehicles | 112,332 | 112,332 | |||||||
Furniture | 75,673 | 75,673 | |||||||
Test equipment | 73,719 | 73,719 | |||||||
Warehouse equipment | 6,866 | 6,866 | |||||||
Leasehold improvements | 5,121 | 5,121 | |||||||
10,678,295 | 10,619,842 | ||||||||
Less: accumulated depreciation | (4,648,102 | ) | (4,255,233 | ) | |||||
TOTAL PROPERTY AND EQUIPMENT | $ | 6,030,193 | $ | 6,364,609 | |||||
Depreciation expense for the three months ended March 31, 2014 and 2013 was $392,869 and $371,700, respectively. | |||||||||
At March 31, 2014, 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 March 31, 2014. 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 | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Other Assets: | ' | ||||||||||||
OTHER ASSETS | ' | ||||||||||||
NOTE 6 – OTHER ASSETS | |||||||||||||
Intangible assets consist of the following: | |||||||||||||
31-Mar-14 | |||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
Patents and trademarks | $ | 251,104 | $ | 16,802 | $ | 234,302 | |||||||
Other intangible assets | 50,494 | 33,582 | 16,912 | ||||||||||
TOTAL INTANGIBLE ASSETS | $ | 301,598 | $ | 50,384 | $ | 251,214 | |||||||
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 | |||||||
Other assets consist of the following: | |||||||||||||
31-Mar-14 | |||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
Deferred installation costs | $ | 1,119,562 | $ | 659,434 | $ | 460,128 | |||||||
Deferred debt issuance costs | 1,600,000 | 1,457,654 | 142,346 | ||||||||||
Prepaid license fee | 249,999 | 42,349 | 207,650 | ||||||||||
Deferred closing costs | 583,967 | 522,126 | 61,841 | ||||||||||
Security deposit | 83,624 | — | 83,624 | ||||||||||
TOTAL OTHER ASSETS | $ | 3,637,152 | $ | 2,681,563 | $ | 955,589 | |||||||
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 | ||||||||||
TOTAL OTHER ASSETS | $ | 3,601,159 | $ | 2,376,605 | $ | 1,224,554 | |||||||
OTHER_CURRENT_LIABILITIES
OTHER CURRENT LIABILITIES | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
OTHER CURRENT LIABILITIES | ' | ||||||||
NOTE 7 – OTHER CURRENT LIABILITIES | |||||||||
Other current liabilities consist of the following: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Other accrued liabilities | $277,086 | $364,204 | |||||||
Accrued taxes | 195,919 | 173,938 | |||||||
Accrued insurance | 118,944 | — | |||||||
TOTAL OTHER CURRENT LIABILITIES | $ | 591,949 | $ | 538,142 | |||||
INCOME_TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | ' |
INCOME TAXES | ' |
NOTE 8 – INCOME TAXES | |
Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We do not expect to pay any significant federal or state income tax for 2014 as a result of the losses recorded during the three months ended March 31, 2014 and the additional losses expected for the remainder of 2014 and net operating loss carry forwards from prior years. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized. As of March 31, 2014, we maintained a full valuation allowance for all deferred tax assets. Based on these requirements, no provision or benefit for income taxes has been recorded. There were no recorded unrecognized tax benefits at the end of the reporting period. |
JOINT_VENTURE_AGREEMENT
JOINT VENTURE AGREEMENT | 3 Months Ended |
Mar. 31, 2014 | |
Equity Method Investments and Joint Ventures [Abstract] | ' |
JOINT VENTURE AGREEMENT | ' |
NOTE 9 – 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 condensed consolidated balance sheet. 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 an aggregate of up to 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 was fully amortized at March 31, 2014. Amortization is recorded as interest expense on the accompanying condensed consolidated financial statements. Amortization expense totaled $0 and $44,906 for the three month ended March 31, 2014 and 2013, 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 March 31, 2014 the Project LLCs’ indebtedness to Rockwell totaled approximately $1,023,000, 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 condensed 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 | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Variable Interest Entities | ' | ||||||||
VARIABLE INTEREST ENTITIES | ' | ||||||||
NOTE 10 – 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 March 31, 2014 and December 31, 2013 are as follows: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Assets | |||||||||
Cash | $ | 374 | $ | 958 | |||||
Receivables | 4,731 | 4,861 | |||||||
Total current assets | 5,105 | 5,819 | |||||||
Property, net | 84,509 | 99,348 | |||||||
Total assets | $ | 89,614 | $ | 105,167 | |||||
Liabilities | |||||||||
Accounts payable | $ | 116,106 | $ | 114,089 | |||||
Notes payable | 441,594 | 442,519 | |||||||
Mandatorily redeemable interest | 441,594 | 442,519 | |||||||
Accrued interest | 139,488 | 121,597 | |||||||
Other current liabilities | 37,807 | 37,731 | |||||||
Total liabilities | $ | 1,176,589 | $ | 1,158,455 | |||||
The financial performance of the consolidated VIEs reflected on our condensed consolidated statements of operations for the three months ended March 31, 2014 and 2013 is as follows: | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Revenue | $ | 7,162 | $ | 7,285 | |||||
Network operations expense | 4,173 | 4,231 | |||||||
General and administrative expense (cost recovery) | 47 | (9,136 | ) | ||||||
Depreciation | 12,596 | 14,505 | |||||||
Total operating costs | 16,816 | 9,600 | |||||||
Operating loss | (9,654 | ) | (2,315 | ) | |||||
Other expense | (22,026 | ) | (49,243 | ) | |||||
Loss before taxes | (31,680 | ) | (51,558 | ) | |||||
Provision for taxes | — | — | |||||||
Net loss | (31,680 | ) | (51,558 | ) | |||||
Net loss attributable to noncontrolling interest | (15,840 | ) | (25,779 | ) | |||||
Net loss attributable to CareView Communications, Inc. | $ | (15,840 | ) | $ | (25,779 | ) |
AGREEMENT_WITH_HEALTHCOR
AGREEMENT WITH HEALTHCOR | 3 Months Ended |
Mar. 31, 2014 | |
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. Additionally we issued Warrants to the Investors for the purchase of an aggregate of up to 11,782,859 shares of our Common Stock at an exercise price of $1.40 per share (collectively the “2011 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 March 31, 2014, the underlying shares of our Common Stock related to the 2011 HealthCor Notes totaled approximately 23 million. | |
On January 31, 2012, we entered into the Second Amendment to Purchase Agreement with the Investors (the “Second Amendment”) and sold Senior Secured Convertible Notes to the Investors in the principal amounts of $2,329,000 and $2,671,000 (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 March 31, 2014, 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 the 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. | |
On January 16, 2014, we entered into a Fourth Amendment to the Purchase Agreement with the Investors (the “Fourth Amendment”) and sold Senior Secured Convertible Notes to the Investors in the principal amounts of $2,329,000 and $2,671,000 (collectively the ’’2014 HealthCor Notes’’). As provided by the Fourth Amendment, the 2014 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 2014 HealthCor Notes. The 2014 HealthCor Notes have a maturity date of January 15, 2024. 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 16, 2014, the Investors are entitled to convert any portion of the outstanding and unpaid accrued interest on and principal balances of the 2014 HealthCor Notes into fully paid and non-assessable shares of our Common Stock at a conversion rate of $0.40 per share, subject to adjustment in accordance with anti-dilution provisions set forth in the 2014 HealthCor Notes. Additionally we issued Warrants to the Investors for the purchase of an aggregate of up to 4,000,000 shares of our Common Stock at an exercise price of $0.40 per share (collectively the “2014 HealthCor Warrants”). As of March 31, 2014, the underlying shares of our Common Stock related to the 2014 HealthCor Notes totaled approximately 12.8 million. | |
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 three separate issuances of equity securities convertible into common stock that qualify under this accounting treatment, (i) the 2011 HealthCor Notes, (ii) the 2012 HealthCor Notes and (iii) the 2014 HealthCor Notes. Because 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 and 2014 HealthCor Notes and all accrued PIK interest also qualifies for this accounting treatment. At March 31, 2014 and 2013, we recorded a BCF of $235,309 and $149,430, respectively, related to the PIK in interest expense in other income and expense in the accompanying condensed consolidated financial statements. | |
LOAN_AND_SECURITY_AGREEMENT_WI
LOAN AND SECURITY AGREEMENT WITH COMERICA BANK AND BRIDGE BANK | 3 Months Ended |
Mar. 31, 2014 | |
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”) 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 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 March 31, 2014 and 2013. | |
After the payment of a $200,000 nonrefundable facility fee to be shared equally by the Banks, the Revolving Line 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, including reasonable attorneys’ fees and expenses. | |
The Revolving Line 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 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 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, 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 March 31, 2014, we had borrowed $982,255 against the $20 million Revolving Line. Although the unused portion of the line is approximately $19 million, the borrowing capacity is further limited by the level of eligible contracts, which results in a borrowing availability of approximately $59,000 at March 31, 2014 and $208,000 at the filing date. | |
On January 31, 2012, we entered into a First Amendment to the Revolving Line (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 further details). | |
On January 15, 2013, we entered into a Second Amendment of the Revolving Line 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 and the Warrants remained unchanged. | |
On August 20, 2013, we entered into a Third Amendment to Revolving Line 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, 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. The Warrants have not been exercised at March 31, 2014. During the three months ended March 31, 2014 and 2013, $142,347 and $133,538, respectively, was amortized to interest expense in the accompanying condensed consolidated financial statements. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
NOTE 13 – SUBSEQUENT EVENTS | |
Effective April 1, 2014, Steven B. Epstein and Dr. James R. Higgins were elected to the Company’s Board of Directors. Upon their election, the Company issued Mr. Epstein and Dr. Higgins a Non-qualified Stock Option for the purchase of 500,000 and 150,000 shares, respectively, of the Company’s Common Stock. The ten-year Options vest annually over a three-year period and have an exercise price of $0.68 per share. |
BASIS_OF_PRESENTATION_AND_RECE1
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Tables) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||||||
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: | ||||||||||||||||||
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 | $ | (1,004,007 | ) | $ | — | $ | — | $ | (1,004,007 | ) | ||||||||
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 three months ended: | ||||||||||||||||||
Fair Value Measurements Using Significant Unobservable Inputs | ||||||||||||||||||
(Level 3) | ||||||||||||||||||
Balance at January 1, 2014 | $ | (370,865 | ) | |||||||||||||||
Issuances of derivative liabilities | — | |||||||||||||||||
Change in fair value of warrant liability | (633,142 | ) | ||||||||||||||||
Transfers in and/out of Level 3 | — | |||||||||||||||||
Ending balance at March 31, 2014 | $ | (1,004,007 | ) |
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Stockholders' Deficit: | ' | ||||||||||||||||
Schedule of stock option activity | ' | ||||||||||||||||
A summary of our stock option activity and related information follows: | |||||||||||||||||
Number of Shares Under Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||||||||||
Balance at December 31, 2013 | 12,747,476 | $ | 0.59 | 7.1 | $ | — | |||||||||||
Granted | 650,000 | $ | 0.4 | 9.8 | |||||||||||||
Exercised | — | ||||||||||||||||
Expired | (31,666 | ) | $ | 1.38 | |||||||||||||
Cancelled | (15,001 | ) | $ | 0.85 | |||||||||||||
Balance at March 31, 2014 | 13,350,809 | $ | 0.58 | 6.8 | $ | 1,902,879 | |||||||||||
Vested and Exercisable at March 31, 2014 | 8,143,972 | $ | 0.61 | 5 | $ | 1,121,329 | |||||||||||
Schedule of assumptions used in the Black-Scholes Model - Options | ' | ||||||||||||||||
The assumptions used in the Black-Scholes Model are set forth in the table below. | |||||||||||||||||
Three Months Ended | Year Ended December 31, 2013 | ||||||||||||||||
31-Mar-14 | |||||||||||||||||
Risk-free interest rate | 1.72 | % | 0.61-0.67% | ||||||||||||||
Volatility | 73.27 | % | 101.81-102.81% | ||||||||||||||
Expected life in years | 6 | 3 | |||||||||||||||
Dividend yield | 0 | % | 0 | % |
OTHER_CURRENT_ASSETS_Tables
OTHER CURRENT ASSETS (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
Schedule of other current assets | ' | ||||||||
Other current assets consist of the following: | |||||||||
March 31, | 31-Dec-13 | ||||||||
2014 | |||||||||
Prepaid expenses | $ | 203,399 | $ | 91,923 | |||||
Sales tax refund | 72,399 | 72,399 | |||||||
Other current assets | 994 | 1,209 | |||||||
TOTAL OTHER CURRENT ASSETS | $ | 276,792 | $ | 165,531 |
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Schedule of property and equipment | ' | ||||||||
Property and equipment consist of the following: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Network equipment | $ | 10,256,354 | $ | 10,205,367 | |||||
Office equipment | 148,230 | 140,764 | |||||||
Vehicles | 112,332 | 112,332 | |||||||
Furniture | 75,673 | 75,673 | |||||||
Test equipment | 73,719 | 73,719 | |||||||
Warehouse equipment | 6,866 | 6,866 | |||||||
Leasehold improvements | 5,121 | 5,121 | |||||||
10,678,295 | 10,619,842 | ||||||||
Less: accumulated depreciation | (4,648,102 | ) | (4,255,233 | ) | |||||
TOTAL PROPERTY AND EQUIPMENT | $ | 6,030,193 | $ | 6,364,609 |
OTHER_ASSETS_Tables
OTHER ASSETS (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Other Assets: | ' | ||||||||||||
Schedule of intangible assets | ' | ||||||||||||
Intangible assets consist of the following: | |||||||||||||
31-Mar-14 | |||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
Patents and trademarks | $ | 251,104 | $ | 16,802 | $ | 234,302 | |||||||
Other intangible assets | 50,494 | 33,582 | 16,912 | ||||||||||
TOTAL INTANGIBLE ASSETS | $ | 301,598 | $ | 50,384 | $ | 251,214 | |||||||
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 | |||||||
Schedule of other assets | ' | ||||||||||||
Other assets consist of the following: | |||||||||||||
31-Mar-14 | |||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
Deferred installation costs | $ | 1,119,562 | $ | 659,434 | $ | 460,128 | |||||||
Deferred debt issuance costs | 1,600,000 | 1,457,654 | 142,346 | ||||||||||
Prepaid license fee | 249,999 | 42,349 | 207,650 | ||||||||||
Deferred closing costs | 583,967 | 522,126 | 61,841 | ||||||||||
Security deposit | 83,624 | — | 83,624 | ||||||||||
TOTAL OTHER ASSETS | $ | 3,637,152 | $ | 2,681,563 | $ | 955,589 | |||||||
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 | ||||||||||
TOTAL OTHER ASSETS | $ | 3,601,159 | $ | 2,376,605 | $ | 1,224,554 |
OTHER_CURRENT_LIABILITIES_Tabl
OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Schedule of other current liabilities | ' | ||||||||
Other current liabilities consist of the following: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Other accrued liabilities | $277,086 | $364,204 | |||||||
Accrued taxes | 195,919 | 173,938 | |||||||
Accrued insurance | 118,944 | — | |||||||
TOTAL OTHER CURRENT LIABILITIES | $ | 591,949 | $ | 538,142 |
VARIABLE_INTEREST_ENTITIES_Tab
VARIABLE INTEREST ENTITIES (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Variable Interest Entities | ' | ||||||||
Schedule of VIE assets and liabilities and results of operations | ' | ||||||||
The total consolidated VIE assets and liabilities reflected on our consolidated balance sheets at March 31, 2014 and December 31, 2013 are as follows: | |||||||||
March 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Assets | |||||||||
Cash | $ | 374 | $ | 958 | |||||
Receivables | 4,731 | 4,861 | |||||||
Total current assets | 5,105 | 5,819 | |||||||
Property, net | 84,509 | 99,348 | |||||||
Total assets | $ | 89,614 | $ | 105,167 | |||||
Liabilities | |||||||||
Accounts payable | $ | 116,106 | $ | 114,089 | |||||
Notes payable | 441,594 | 442,519 | |||||||
Mandatorily redeemable interest | 441,594 | 442,519 | |||||||
Accrued interest | 139,488 | 121,597 | |||||||
Other current liabilities | 37,807 | 37,731 | |||||||
Total liabilities | $ | 1,176,589 | $ | 1,158,455 | |||||
The financial performance of the consolidated VIEs reflected on our condensed consolidated statements of operations for the three months ended March 31, 2014 and 2013 is as follows: | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Revenue | $ | 7,162 | $ | 7,285 | |||||
Network operations expense | 4,173 | 4,231 | |||||||
General and administrative expense (cost recovery) | 47 | (9,136 | ) | ||||||
Depreciation | 12,596 | 14,505 | |||||||
Total operating costs | 16,816 | 9,600 | |||||||
Operating loss | (9,654 | ) | (2,315 | ) | |||||
Other expense | (22,026 | ) | (49,243 | ) | |||||
Loss before taxes | (31,680 | ) | (51,558 | ) | |||||
Provision for taxes | — | — | |||||||
Net loss | (31,680 | ) | (51,558 | ) | |||||
Net loss attributable to noncontrolling interest | (15,840 | ) | (25,779 | ) | |||||
Net loss attributable to CareView Communications, Inc. | $ | (15,840 | ) | $ | (25,779 | ) |
BASIS_OF_PRESENTATION_AND_RECE2
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Fair value of warrant liability | ($1,004,007) | ($370,865) |
Recurring Measurement [Member] | Fair Value [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Fair value of warrant liability | -1,004,007 | ' |
Recurring Measurement [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Fair value of warrant liability | ' | ' |
Recurring Measurement [Member] | Significant Other Observable Inputs (Level 2) [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Fair value of warrant liability | ' | ' |
Recurring Measurement [Member] | Significant Other Unobservable Inputs (Level 3) [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Fair value of warrant liability | ($1,004,007) | ' |
BASIS_OF_PRESENTATION_AND_RECE3
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Details 1) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Change in Fair Value of Level 3 Liabilities | ' | ' |
Balance, beginning | ($370,865) | ' |
Issuances of derivative liabilities | ' | ' |
Change in fair value of warrant liability | -633,142 | ' |
Transfers in and/out of Level 3 | ' | ' |
Balance, ending | ($1,004,007) | ' |
LIQUIDITY_AND_MANAGEMENTS_PLAN1
LIQUIDITY AND MANAGEMENTS PLAN (Details Narrative) (USD $) | 8-May-14 | Mar. 31, 2014 | Dec. 31, 2013 | Aug. 19, 2013 | Mar. 31, 2013 | Dec. 31, 2012 |
Liquidity And Managements Plan | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | ' | $7,480,473 | $4,125,180 | ' | $7,552,846 | $5,413,848 |
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 | $277,000 | $59,000 | $19,000,000 | ' | ' | ' |
STOCKHOLDERS_EQUITY_Details_Na
STOCKHOLDERS' EQUITY (Details Narrative) (USD $) | 0 Months Ended | 3 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | |||||||||||||
Apr. 02, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2013 | Jan. 16, 2014 | Jan. 31, 2012 | Apr. 21, 2011 | Jan. 16, 2014 | Jan. 31, 2012 | Apr. 21, 2011 | Apr. 21, 2011 | Mar. 31, 2014 | Jan. 16, 2014 | Jan. 16, 2014 | Aug. 31, 2011 | Jan. 16, 2013 | Jan. 15, 2013 | |
Stock Options [Member] | Stock Options [Member] | Stock Options [Member] | Warrants [Member] | HealthCor Partners Fund [Member] | HealthCor Partners Fund [Member] | HealthCor Partners Fund [Member] | HealthCor Hybrid Offshore Master Fund [Member] | HealthCor Hybrid Offshore Master Fund [Member] | HealthCor Hybrid Offshore Master Fund [Member] | HealthCor [Member] | HealthCor [Member] | HealthCor [Member] | HealthCor [Member] | Comerica Bank and Bridge Bank [Member] | Comerica Bank and Bridge Bank [Member] | Comerica Bank and Bridge Bank [Member] | |||||
Senior Convertible Notes - 2014 Issuance [Member] | Warrants [Member] | Warrants Revised [Member] | |||||||||||||||||||
Senior secured convertible notes | ' | $22,742,935 | ' | $17,941,662 | ' | ' | ' | ' | $2,329,000 | $2,329,000 | $9,316,000 | $2,671,000 | $2,671,000 | $10,684,000 | ' | ' | $5,000,000 | ' | ' | ' | ' |
Fair value of convertible debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,000,000 | ' | ' | ' | ' |
Debt Maturity Date | ' | ' | ' | ' | ' | ' | ' | ' | 15-Jan-24 | 31-Jan-22 | 20-Apr-21 | 15-Jan-24 | 31-Jan-22 | 20-Apr-21 | ' | ' | ' | ' | ' | ' | ' |
Warrants issued for financing costs, warrants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11,782,859 | ' | ' | 4,000,000 | 1,428,572 | ' | ' |
Debt conversion rate | ' | ' | ' | ' | ' | ' | ' | ' | $0.40 | ' | ' | $0.40 | $1.25 | ' | $1.25 | ' | $0.40 | ' | ' | ' | ' |
Fair value of the warrants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,146,732 | ' | ' | ' | ' |
Risk-free interest rate | ' | ' | ' | ' | 1.72% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Volatility | ' | ' | ' | ' | 73.27% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected life | ' | ' | ' | ' | '6 years | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividend yield | ' | ' | ' | ' | 0.00% | ' | 0.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued in private placement, shares | 6,220,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Price per share purchased | $0.50 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants outstanding | 2,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Price per warrant issued | 0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrant exercise price | 0.6 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.4 | ' |
Warrant term | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of warrant liability | ' | 1,004,007 | ' | 370,865 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash received for private placement | 3,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Change in value of warrant liability | ' | 633,142 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization of deferred debt issuance costs | ' | 142,347 | 133,538 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expensed as non-cash costs in general and administration | ' | ' | ' | ' | ' | ' | ' | 79,449 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expensed as Interest Expense | ' | ' | ' | ' | ' | ' | ' | 133,537 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Change in fair value of warrants, amortized to interest expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11,429 |
Share-based compensation expense | ' | 196,444 | ' | ' | ' | ' | ' | 98,151 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrecognized estimated compensation expense | ' | 1,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period for recognization of unrecognized compensation expense | ' | '2 years 4 months 24 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Granted options to purchase shares | ' | ' | ' | ' | 650,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options expired | ' | ' | ' | ' | -31,666 | 1,667 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Resignation or termination of employees options | ' | ' | ' | ' | -15,001 | 16,667 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of warrants issued to Rockwell for providing funding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,146,732 | ' | ' | ' |
Discount on debt recorded | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,122,688 | ' | ' | ' | ' | ' |
Amortization of debt discount | ' | $776,794 | $812,609 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $24,044 | ' | ' | ' | ' | ' |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (Stock Options [Member], USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Stock Options [Member] | ' | ' |
Number Options | ' | ' |
Stock Options Outstanding, Beginning | 12,747,476 | ' |
Granted | 650,000 | 0 |
Exercised | ' | ' |
Expired | -31,666 | 1,667 |
Cancelled | -15,001 | 16,667 |
Stock Options Outstanding, Ending | 13,350,809 | ' |
Stock Options, vested and exercisable | 8,143,972 | ' |
Weighted Average Exercise Price | ' | ' |
Stock Options Outstanding, Beginning | $0.59 | ' |
Granted | $0.40 | ' |
Expired | $1.38 | ' |
Cancelled | $0.85 | ' |
Stock Options Outstanding, Ending | $0.58 | ' |
Stock Options, vested and exercisable | $0.61 | ' |
Weighted Average Remaining Contractual Life | ' | ' |
Stock Options Outstanding, Beginning | '7 years 1 month 6 days | ' |
Granted | '9 years 9 months 18 days | ' |
Stock Options Outstanding, Ending | '6 years 9 months 18 days | ' |
Stock Options, vested and exercisable | '5 years | ' |
Aggregate Intrinsic Value | ' | ' |
Stock Options Outstanding, Beginning | ' | ' |
Stock Options Outstanding, Ending | 1,902,879 | ' |
Stock Options Outstanding, Vested and exercisable | $1,121,329 | ' |
STOCKHOLDERS_EQUITY_Details_1
STOCKHOLDERS' EQUITY (Details 1) (Stock Options [Member]) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Black-Scholes Model: | ' | ' |
Risk-free interest rate | 1.72% | ' |
Volatility | 73.27% | ' |
Expected life in years | '6 years | '3 years |
Dividend yield | 0.00% | 0.00% |
Lower Range [Member] | ' | ' |
Black-Scholes Model: | ' | ' |
Risk-free interest rate | ' | 0.61% |
Volatility | ' | 101.81% |
Upper Range [Member] | ' | ' |
Black-Scholes Model: | ' | ' |
Risk-free interest rate | ' | 0.67% |
Volatility | ' | 102.81% |
OTHER_CURRENT_ASSETS_Details
OTHER CURRENT ASSETS (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ' |
Prepaid expenses | $203,399 | $91,923 |
Sales tax refund | 72,399 | 72,399 |
Other current assets | 994 | 1,209 |
TOTAL OTHER CURRENT ASSETS | $276,792 | $165,531 |
PROPERTY_AND_EQUIPMENT_Details
PROPERTY AND EQUIPMENT (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Property, Plant and Equipment [Abstract] | ' | ' |
Depreciation expense | $392,869 | $371,700 |
PROPERTY_AND_EQUIPMENT_Details1
PROPERTY AND EQUIPMENT (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | $10,678,295 | $10,619,842 |
Less: accumulated depreciation | -4,648,102 | -4,255,233 |
Property and equipment, net | 6,030,193 | 6,364,609 |
Network Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | 10,256,354 | 10,205,367 |
Office Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | 148,230 | 140,764 |
Vehicles [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | 112,332 | 112,332 |
Furniture [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | 75,673 | 75,673 |
Test Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | 73,719 | 73,719 |
Warehouse Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | 6,866 | 6,866 |
Leasehold Improvements [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | $5,121 | $5,121 |
OTHER_ASSETS_Details
OTHER ASSETS (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Cost | $301,598 | $296,910 |
Accumulated Amortization | 50,384 | 43,921 |
Intangible assets, Net | 251,214 | 252,989 |
Patents and trademarks [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Cost | 251,104 | 246,416 |
Accumulated Amortization | 16,802 | 14,487 |
Intangible assets, Net | 234,302 | 231,929 |
Other intangible assets [Member] | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Cost | 50,494 | 50,494 |
Accumulated Amortization | 33,582 | 29,434 |
Intangible assets, Net | $16,912 | $21,060 |
OTHER_ASSETS_Details_1
OTHER ASSETS (Details 1) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Cost | $3,637,152 | $3,601,159 |
Accumulated Amortization | 2,681,563 | 2,376,605 |
Other assets | 955,589 | 1,224,554 |
Deferred installation costs [Member] | ' | ' |
Cost | 1,119,562 | 1,087,295 |
Accumulated Amortization | 659,434 | 559,537 |
Other assets | 460,128 | 527,758 |
Deferred debt issuance costs [Member] | ' | ' |
Cost | 1,600,000 | 1,600,000 |
Accumulated Amortization | 1,457,654 | 1,315,308 |
Other assets | 142,346 | 284,692 |
Prepaid license fee [Member] | ' | ' |
Cost | 249,999 | 249,999 |
Accumulated Amortization | 42,349 | 38,250 |
Other assets | 207,650 | 211,749 |
Deferred closing costs [Member] | ' | ' |
Cost | 583,967 | 580,241 |
Accumulated Amortization | 522,126 | 463,510 |
Other assets | 61,841 | 116,731 |
Security deposit [Member] | ' | ' |
Cost | 83,624 | 83,624 |
Accumulated Amortization | ' | 0 |
Other assets | $83,624 | $83,624 |
OTHER_CURRENT_LIABILITIES_Deta
OTHER CURRENT LIABILITIES (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
OTHER CURRENT LIABILITIES: | ' | ' |
Other accrued liabilities | $277,086 | $364,204 |
Accrued taxes | 195,919 | 173,938 |
Accrued insurance | 118,944 | ' |
Other current liabilities | $591,949 | $538,142 |
JOINT_VENTURE_AGREEMENT_Detail
JOINT VENTURE AGREEMENT (Details Narrative) (USD $) | 3 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | Nov. 16, 2009 | Nov. 16, 2009 | Mar. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2012 | Nov. 16, 2009 | |
Joint Venture - Rockwell [Member] | Joint Venture - Rockwell [Member] | Joint Venture - Rockwell [Member] | Joint Venture - Rockwell [Member] | Joint Venture - Rockwell [Member] | ||||
Warrants [Member] | ||||||||
Percentage owned by company of each joint venture | ' | ' | 50.00% | ' | ' | ' | ' | ' |
Funding by Rockwell into the Joint Venture, cash | ' | ' | ' | $1,151,205 | ' | ' | ' | ' |
Promissory notes issued to Rockwell | ' | ' | ' | 575,603 | ' | 1,023,000 | ' | ' |
Investment Interest issued to Rockwell as Preferential Return | ' | ' | ' | 575,602 | ' | ' | ' | ' |
Interest rate on project notes and preferential returns, per investment agreement | ' | ' | 10.00% | ' | ' | ' | ' | ' |
Warrants issued for financing costs, warrants | ' | ' | ' | ' | ' | ' | ' | 1,151,206 |
Fair value of warrants issued to Rockwell for providing funding | ' | ' | ' | ' | ' | ' | ' | 1,124,728 |
Discount on debt recorded | ' | ' | ' | 636,752 | ' | ' | ' | ' |
Amortization of debt discount | 776,794 | 812,609 | ' | ' | 44,906 | 0 | ' | ' |
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 | ' |
VARIABLE_INTEREST_ENTITIES_Det
VARIABLE INTEREST ENTITIES (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Assets | ' | ' |
Receivables | $556,058 | $305,033 |
Total current assets | 8,313,323 | 4,595,744 |
Property, net | 6,030,193 | 6,364,609 |
Assets | 15,550,319 | 12,437,896 |
Liabilities | ' | ' |
Accounts payable | 75,495 | 414,888 |
Notes payable | ' | 442,519 |
Mandatorily redeemable interest | ' | 442,519 |
Accrued interest | 145,121 | 127,327 |
Other current liabilities | 591,949 | 538,142 |
Total liabilities | 26,429,254 | 21,268,784 |
Variable Interest Entity [Member] | ' | ' |
Assets | ' | ' |
Cash | 374 | 958 |
Receivables | 4,731 | 4,861 |
Total current assets | 5,105 | 5,819 |
Property, net | 84,509 | 99,348 |
Assets | 89,614 | 105,167 |
Liabilities | ' | ' |
Accounts payable | 116,106 | 114,089 |
Notes payable | 441,594 | 442,519 |
Mandatorily redeemable interest | 441,594 | 442,519 |
Accrued interest | 139,488 | 121,597 |
Other current liabilities | 37,807 | 37,731 |
Total liabilities | $1,176,589 | $1,158,455 |
VARIABLE_INTEREST_ENTITIES_Det1
VARIABLE INTEREST ENTITIES (Details 1) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Revenue | $619,409 | $360,830 |
Network operations expense | 601,222 | 734,353 |
General and administrative expense (cost recovery) | 801,977 | 894,588 |
Depreciation | 399,332 | 376,084 |
Total operating expense | 2,179,650 | 2,520,882 |
Operating loss | -1,560,241 | -2,160,052 |
Loss before taxes | -4,416,918 | -4,142,640 |
Provision for taxes | ' | ' |
Net loss | -4,416,918 | -4,142,640 |
Net loss attributable to noncontrolling interest | -15,840 | -25,779 |
Net loss attributable to CareView Communications, Inc. | -4,401,078 | -4,116,861 |
Variable Interest Entity [Member] | ' | ' |
Revenue | 7,162 | 7,285 |
Network operations expense | 4,173 | 4,231 |
General and administrative expense (cost recovery) | 47 | -9,136 |
Depreciation | 12,596 | 14,505 |
Total operating expense | 16,816 | 9,600 |
Operating loss | -9,654 | -2,315 |
Other expense | -22,026 | -49,243 |
Loss before taxes | -31,680 | -51,558 |
Provision for taxes | ' | ' |
Net loss | -31,680 | -51,558 |
Net loss attributable to noncontrolling interest | -15,840 | -25,779 |
Net loss attributable to CareView Communications, Inc. | ($15,840) | ($25,779) |
AGREEMENT_WITH_HEALTHCOR_Detai
AGREEMENT WITH HEALTHCOR (Details Narrative) (USD $) | 3 Months Ended | 0 Months Ended | 3 Months Ended | 3 Months Ended | 60 Months Ended | 3 Months Ended | 0 Months Ended | ||||||||||||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Aug. 19, 2013 | Jan. 16, 2014 | Jan. 31, 2012 | Apr. 21, 2011 | Jan. 16, 2014 | Jan. 31, 2012 | Apr. 21, 2011 | Apr. 21, 2011 | Mar. 31, 2014 | Mar. 31, 2013 | Jan. 16, 2014 | Mar. 31, 2014 | Apr. 20, 2021 | Apr. 20, 2016 | Mar. 31, 2014 | Jan. 16, 2014 | |
HealthCor Partners Fund [Member] | HealthCor Partners Fund [Member] | HealthCor Partners Fund [Member] | HealthCor Hybrid Offshore Master Fund [Member] | HealthCor Hybrid Offshore Master Fund [Member] | HealthCor Hybrid Offshore Master Fund [Member] | HealthCor [Member] | HealthCor [Member] | HealthCor [Member] | HealthCor [Member] | HealthCor [Member] | HealthCor [Member] | HealthCor [Member] | HealthCor [Member] | HealthCor [Member] | |||||
Senior Secured Convertible Notes [Member] | Senior Secured Convertible Notes [Member] | Senior Secured Convertible Notes [Member] | Senior Convertible Notes - 2012 Issuance [Member] | Senior Convertible Notes - 2014 Issuance [Member] | |||||||||||||||
Senior secured convertible notes | $22,742,935 | ' | $17,941,662 | ' | $2,329,000 | $2,329,000 | $9,316,000 | $2,671,000 | $2,671,000 | $10,684,000 | ' | ' | ' | $5,000,000 | ' | ' | ' | ' | ' |
Debt Maturity Date | ' | ' | ' | ' | 15-Jan-24 | 31-Jan-22 | 20-Apr-21 | 15-Jan-24 | 31-Jan-22 | 20-Apr-21 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants issued for financing costs, warrants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11,782,859 | ' | ' | ' | ' | ' | ' | ' | 4,000,000 |
Exercise price of warrants granted | ' | ' | ' | ' | 0.4 | ' | 1.4 | 0.4 | ' | 1.4 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
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 | ' | ' | ' | ' | $0.40 | ' | ' | $0.40 | $1.25 | ' | $1.25 | ' | ' | $0.40 | ' | ' | ' | ' | ' |
Number of shares the note may be converted into | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 23,000,000 | ' | ' | 5,000,000 | 12,800,000 |
Minimum cash balance required under existing loan documents | 5,000,000 | ' | 4,000,000 | 5,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest Expense | $2,225,828 | $1,984,176 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $235,309 | $149,430 | ' | ' | ' | ' | ' | ' |
LOAN_AND_SECURITY_AGREEMENT_WI1
LOAN AND SECURITY AGREEMENT WITH COMERICA BANK AND BRIDGE BANK (Details Narrative) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | ||||||||
Aug. 31, 2011 | Mar. 31, 2014 | Mar. 31, 2013 | 8-May-14 | Dec. 31, 2013 | Aug. 19, 2013 | Apr. 02, 2013 | Aug. 31, 2011 | Mar. 31, 2014 | Mar. 31, 2013 | Jan. 16, 2013 | Jan. 16, 2013 | |
Comerica Bank and Bridge Bank [Member] | Comerica Bank and Bridge Bank [Member] | Comerica Bank and Bridge Bank [Member] | Comerica Bank and Bridge Bank [Member] | Comerica Bank and Bridge Bank [Member] | ||||||||
Warrants [Member] | Warrants [Member] | Warrants [Member] | Warrants Revalued [Member] | |||||||||
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 | ' | 5,000,000 | ' | ' | 4,000,000 | 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 | ' | 59,000 | ' | 277,000 | 19,000,000 | ' | ' | ' | ' | ' | ' | ' |
Warrant exercise price | ' | ' | ' | ' | ' | ' | 0.6 | ' | ' | ' | 1.4 | 1.1 |
Warrants issued for financing costs | 64,286 | 1,146,732 | ' | ' | ' | ' | ' | 1,535,714 | ' | ' | ' | ' |
Warrants issued for financing costs, warrants | ' | ' | ' | ' | ' | ' | ' | 1,428,572 | ' | ' | ' | ' |
Exercise price of warrants granted | ' | ' | ' | ' | ' | ' | ' | 1.1 | ' | ' | ' | ' |
Interest expense | ' | $2,225,828 | $1,984,176 | ' | ' | ' | ' | ' | $142,347 | $133,538 | ' | ' |
SUBSEQUENT_EVENTS_Details_Narr
SUBSEQUENT EVENTS (Details Narrative) (Stock Options [Member], USD $) | 3 Months Ended | 0 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Apr. 02, 2014 | Apr. 02, 2014 | |
Mr. Steven B. Epstein [Member] | Dr. James R. Higgins [Member] | |||
Options granted | 650,000 | 0 | 500,000 | 150,000 |
Option term | '9 years 9 months 18 days | ' | '10 years | '10 years |
Exercise price of options granted | $0.40 | ' | $0.68 | $0.68 |
Vesting period | ' | ' | 'Annually over a three-year period | 'Annually over a three-year period |