Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 14, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | CareView Communications Inc | |
Entity Central Index Key | 1,377,149 | |
Document Type | 10-Q | |
Trading Symbol | crvw | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 139,380,748 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,015 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash | $ 5,245,503 | $ 2,546,262 |
Accounts receivable, net of allowance for doubtful accounts | 889,731 | 680,143 |
Other current assets | 350,216 | 276,910 |
Total current assets | 6,485,450 | 3,503,315 |
Property and equipment, net | 5,042,805 | 5,344,792 |
Other Assets: | ||
Intangible assets, net | 293,958 | 261,283 |
Other assets | 3,188,107 | 832,930 |
Total other assets | 3,482,065 | 1,094,213 |
Total assets | 15,010,320 | 9,942,320 |
Current Liabilities: | ||
Accounts payable | 511,294 | 244,782 |
Notes payable | 441,594 | 441,594 |
Mandatorily redeemable equity in joint venture | 441,594 | 441,594 |
Accrued interest | 225,226 | 191,596 |
Other current liabilities | 1,121,259 | 791,284 |
Total current liabilities | 2,740,967 | 2,110,850 |
Long-term Liabilities: | ||
Senior secured convertible notes, net of debt discount and debt issuance costs of $22,467,023 and $21,457,970, respectively | 30,914,930 | 22,834,641 |
Fair value of warrant liability | 314,818 | 301,864 |
Total long-term liabilities | 31,229,748 | 23,136,505 |
Total liabilities | $ 33,970,715 | $ 25,247,355 |
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; 139,380,748 issued and outstanding | $ 139,381 | $ 139,381 |
Additional paid in capital | 80,570,085 | 76,502,913 |
Accumulated deficit | (99,200,548) | (91,510,720) |
Total CareView Communications Inc. stockholders' deficit | (18,491,082) | (14,868,426) |
Noncontrolling interest | (469,313) | (436,609) |
Total stockholders' deficit | (18,960,395) | (15,305,035) |
Total liabilities and stockholders' deficit | $ 15,010,320 | $ 9,942,320 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 139,380,748 | 139,380,748 |
Common stock, shares outstanding | 139,380,748 | 139,380,748 |
Senior Secured Convertible Notes [Member] | ||
Debt discount (in dollars) | $ 22,467,023 | $ 21,457,970 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Revenues, net | $ 1,266,391 | $ 698,129 | $ 2,266,945 | $ 1,317,538 |
Operating expenses: | ||||
Network operations | 1,304,973 | 811,178 | 2,135,067 | 1,412,400 |
General and administration | 923,056 | 805,081 | 1,761,365 | 1,607,058 |
Sales and marketing | 233,154 | 155,089 | 430,776 | 363,547 |
Research and development | 306,445 | 232,168 | 531,641 | 400,829 |
Depreciation and amortization | 442,248 | 407,376 | 858,152 | 806,708 |
Total operating expense | 3,209,876 | 2,410,892 | 5,717,001 | 4,590,542 |
Operating loss | (1,943,485) | (1,712,763) | (3,450,056) | (3,273,004) |
Other income and (expense) | ||||
Interest expense | (2,217,846) | (2,054,421) | (4,263,747) | (4,031,872) |
Change in fair value of warrant liability | 225,147 | 55,801 | (12,954) | (577,341) |
Interest income | 1,342 | 963 | 2,485 | 1,962 |
Other income | 615 | 549 | 1,740 | 1,843 |
Total other income (expense) | (1,990,742) | (1,997,108) | (4,272,476) | (4,605,408) |
Loss before taxes | $ (3,934,227) | (3,709,871) | (7,722,532) | (7,878,412) |
Provision for income taxes | ||||
Net loss | $ (3,934,227) | (3,709,871) | (7,722,532) | (7,878,412) |
Net loss attributable to noncontrolling interest | (16,482) | (17,087) | (32,704) | (32,927) |
Net loss attributable to CareView Communications, Inc. | $ (3,917,745) | $ (3,692,784) | $ (7,689,828) | $ (7,845,485) |
Net loss per share attributable to CareView Communications, Inc., basic and diluted (in dollars per share) | $ (0.03) | $ (0.03) | $ (0.06) | $ (0.06) |
Weighted average number of common shares outstanding, basic and diluted (in shares) | 139,380,748 | 138,960,678 | 139,380,748 | 138,857,611 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (Unaudited) - 6 months ended Jun. 30, 2015 - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Noncontrolling Interest [Member] | Total |
Balance at Beginning at Dec. 31, 2014 | $ 139,381 | $ 76,502,913 | $ (91,510,720) | $ (436,609) | $ (15,305,035) |
Balance at Beginning (in shares) at Dec. 31, 2014 | 139,380,748 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock options granted as compensation | 410,033 | 410,033 | |||
Warrants issued in connection with the senior secured convertible notes | 1,471,105 | 1,471,105 | |||
Warrants issued in connection with the credit facility | 1,257,778 | 1,257,778 | |||
Beneficial conversion features for senior secured convertible notes | $ 928,256 | 928,256 | |||
Net loss | $ (7,689,828) | $ (32,704) | (7,722,532) | ||
Balance at End at Jun. 30, 2015 | $ 139,381 | $ 80,570,085 | $ (99,200,548) | $ (469,313) | $ (18,960,395) |
Balance at End (in shares) at Jun. 30, 2015 | 139,380,748 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITES | ||
Net loss | $ (7,722,532) | $ (7,878,412) |
Adjustments to reconcile net loss to net cash flows used in operating activities: | ||
Depreciation | 838,300 | 792,540 |
Provision for doubtful accounts | 5,588 | |
Amortization of debt discount | 1,110,863 | 1,064,250 |
Amortization of installation costs | 168,607 | 212,186 |
Amortization of intangible assets | 19,852 | 14,168 |
Amortization of prepaid expense | 15,915 | |
Amortization of deferred debt issuance costs | 2,431 | 284,692 |
Interest incurred and paid in kind | 3,089,342 | 2,458,994 |
Stock based compensation related to options granted | 410,033 | 341,677 |
Change in fair value of warrant liability | 12,954 | 577,341 |
Loss on disposal of fixed assets | 43,740 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (215,176) | (140,447) |
Other current assets | (73,306) | (66,596) |
Other assets | (747,283) | 124,928 |
Accounts payable | 266,512 | (195,610) |
Accrued expenses and other current liabilities | 363,605 | 102,796 |
Other liabilities | (8,607) | |
Net cash flows used in operating activities | (2,410,555) | (2,316,100) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property and equipment | (580,053) | (308,465) |
Payment for deferred installation costs | (159,069) | (242,566) |
Patent and trademark costs | (52,527) | (9,458) |
Software and website costs | (6,349) | |
Net cash flows used in investing activities | (791,649) | (566,838) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from notes and loans payable, net | 5,901,445 | 5,000,000 |
Repayment of notes and loans payable | (1,850) | |
Net cash flows provided by financing activities | 5,901,445 | 4,998,150 |
Increase in cash | 2,699,241 | 2,115,212 |
Cash, beginning of period | 2,546,262 | 4,125,180 |
Cash, end of period | 5,245,503 | 6,240,392 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 10,170 | $ 70,261 |
Cash paid for income taxes | ||
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES: | ||
Beneficial conversion features for senior secured convertible notes | 928,256 | $ 1,442,385 |
Warrants issued in connection with the credit facility | 1,257,778 | |
Warrants issued in connection with the senior secured convertible notes | $ 1,471,105 | $ 1,146,732 |
BASIS OF PRESENTATION AND RECEN
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2015 | |
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 in the United States of America (“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, 2014 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, 2014 as filed with the SEC on March 31, 2015. 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. 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 Fair value of warrant liability $ (314,818 ) $ — $ — $ (314,818 ) The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the six months ended June 30, 2015: Fair Value Measurements Using Significant Unobservable Inputs Balance at January 1, 2015 $ (301,864 ) Issuances of derivative liabilities — Change in fair value of warrant liability (12,954 ) Transfers in and/out of Level 3 — Ending balance at June 30, 2015 $ (314,818 ) 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. 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 110,516,873 and 91,270,341 at June 30, 2015 and 2014, 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 In April 2015, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs be reported in the balance sheet as a direct deduction from the face amount of the related liability, consistent with the presentation of debt discounts and further requires the amortization of debt issuance cost to be reported as interest expense. Similarly, debt issuance costs and any discount or premium are considered in the aggregate when determining the effective interest rate of the debt. 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, 2014 not expect that the adoption of any recent accounting pronouncements will have a material impact on our accompanying condensed consolidated financial statements. Reclassifications Certain 2014 amounts have been reclassified to conform to current year presentation. |
LIQUIDITY AND MANAGEMENT'S PLAN
LIQUIDITY AND MANAGEMENT'S PLAN | 6 Months Ended |
Jun. 30, 2015 | |
Liquidity And Managements Plan | |
LIQUIDITY AND MANAGEMENT'S PLAN | NOTE 2 – LIQUIDITY AND MANAGEMENT’S PLAN Our cash position at June 30, 2015 was approximately $5,246,000. Pursuant to the terms of a Note and Warrant Purchase Agreement dated April 21, 2011 (as subsequently amended) with HealthCor Partners Fund, LP and HealthCor Hybrid Offshore Master Fund, LP (“HealthCor”) we are required to maintain a minimum cash balance $2,000,000 (see NOTE 11 Our continued successful operation is dependent upon us achieving positive cash flow through operations while maintaining adequate liquidity. 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. 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. To that end, on June 26, 2015, we entered into a Credit Agreement with PLD Biopharma, Inc., as administrative agent and lender (“the Lender”), (the “PDL Credit Agreement”) pursuant to which the Lender made available to us up to $40 million in two tranches of $20 million each, with each tranche contingent upon us meeting certain milestones (see NOTE 12 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2015 | |
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 our Common Stock (the “Warrant(s)”) (except certain Warrants issued to HealthCor and Warrants issued pursuant to the terms our March 2013 private placement (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, risk-free interest rate, and the estimated term of the Warrant. 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 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 Warrant and is calculated by using the average daily historical stock prices through the day preceding the grant date. The fair value of the above mentioned Warrants issued to HealthCor and the Private Placement Warrants was 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 these Warrants, we determined that the Binomial Lattice model was the most appropriate model for valuing these instruments. Warrant Activity during the Six Months Ended June 30, 2015 On June 26, 2015, in conjunction with the PLD Credit Agreement, we issued a warrant to purchase 4,444,445 shares of our Common Stock, subject to adjustment as described therein (the “PDL Warrant”). The PDL Warrant has an exercise price of $0.45, a fair value of $1,257,778, and expires on June 26, 2025 (see NOTE 12 On February 17, 2015, we entered into a Fifth Amendment to the Note and Warrant Purchase Agreement with HealthCor and certain other investors and agreed to sell and issue (i) additional notes in the initial aggregate principal amount of $6,000,000, with a conversion price per share equal to $0.52 (subject to adjustment for standard anti-dilution provisions) and (ii) additional Warrants for an aggregate of up to 3,692,307 shares of our Common Stock at an exercise price per share equal to $0.52 (subject to adjustment for standard anti-dilution provisions) (the “Fifth Amendment Warrants”). The fair value of the convertible debt and the Fifth Amendment Warrants was determined to be $7,336,615, resulting in a relative fair value of $1,093,105 for the Fifth Amendment Warrants on the date of grant (see NOTE 11 On March 31, 2015, we issued HealthCor a Warrant for up to an aggregate of 1,000,000 shares of our Common Stock in consideration for certain prior waivers of the minimum cash balance requirement in the Purchase Agreement. This Warrant has an exercise price of $0.53 per share, expires on March 31, 2025 and has a fair value of $378,000 (see NOTE 11 As of December 31, 2014, we recorded a warrant liability of $301,864 in our consolidated financial statements. At June 30, 2015, the Private Placement Warrants were re-valued with a fair value determination of $314,818, resulting in a difference of $12,954, which was included as change in fair value of warrant liability in other income and expense in the accompanying condensed consolidated financial statements. Warrants to Purchase Common Stock of the Company (continued) Warrant Activity during the Six Months Ended June 30, 2015 (continued) During the six months ended June 30, 2015, warrants to purchase an aggregate of 2,892,686 shares of our Common Stock expired. Warrant Activity during the Six Months Ended June 30, 2014 On January 16, 2014, we entered into a Fourth Amendment to the Note and Warrant Purchase Agreement with HealthCor 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 for 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 “Fourth Amendment Warrants”). The fair value of the convertible debt and the Fourth Amendment Warrants was determined to be $6,488,000, resulting in a relative fair value of $1,146,732 for the Fourth Amendment Warrants on the date of grant. As of December 31, 2013, we recorded a warrant liability of $370,865 in our condensed consolidated financial statements. At June 30, 2014, the Private Placement Warrants were re-valued with a fair value determination of $948,206 and the difference of $577,341 was included as change in fair value of warrant liability in other income and expense in the accompanying condensed consolidated financial statements. Options to Purchase Common Stock of the Company On February 25, 2015, we established the CareView Communications, Inc. 2015 Stock Option Plan (the “2015 Plan”) pursuant to which 5,000,000 shares of Common Stock was reserved for issuance upon the exercise of options (“2015 Plan Option(s)”). The 2015 Plan was designed to serve as an incentive for retaining our qualified and competent key employees, officers and directors. The 2015 Plan Options vest over three years and have an exercise period of ten years from the date of issuance. During the six months ended June 30, 2015, we granted options to purchase 1,815,000 shares of our Common Stock (the ‘‘Option(s)’’) to certain employees and members of our board of directors. We granted 1,300,000 Options to certain employees and members of our board of directors during the six months ended June 30, 2014. During those same six month periods, 77,837 and 15,000 Options, respectively, were canceled and 6,261,308 and 41,666 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, 2014 14,273,810 $ 0.58 6.3 $ — Granted 1,815,000 $ 0.53 9.7 $ — Expired (6,261,308 ) Canceled (77,837 ) Balance at June 30, 2015 9,749,665 $ 0.61 7.9 $ — Vested and Exercisable at June 30, 2015 3,940,489 $ 0.74 6.7 $ — 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. Six Months Ended Year Ended Risk-free interest rate 1.41-1.47 % 1.59-1.83 % Volatility 71.30-71.86 % 72.82-75.42 % Expected life in years 6 6 Dividend yield 0.00 % 0.00 % 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 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 Options charged to our operating results for the six months ended June 30, 2015 and 2014 ($410,034 and $341,677, respectively) is based on awards vested. The estimate of forfeitures are to be recorded at the time of grant and revised in subsequent periods if actual forfeitures differ from the estimates. We have not included an adjustment to our stock based compensation expense based on the nominal amount of the historical forfeiture rate. We do, however, revise our stock based compensation expense based on actual forfeitures during each reporting period. At June 30, 2015, total unrecognized estimated compensation expense related to non-vested Options granted prior to that date was approximately 1,469,000, which is expected to be recognized over a weighted-average period of 1.9 years. No tax benefit was realized due to a continued pattern of operating losses. |
OTHER CURRENT ASSETS
OTHER CURRENT ASSETS | 6 Months Ended |
Jun. 30, 2015 | |
Other Current Assets | |
OTHER CURRENT ASSETS | NOTE 4 – OTHER CURRENT ASSETS Other current assets consist of the following: June 30, December 31, Prepaid expenses $ 350,087 $ 254,998 Other current assets 129 21,912 TOTAL OTHER CURRENT ASSETS $ 350,216 $ 276,910 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2015 | |
Property And Equipment | |
PROPERTY AND EQUIPMENT | NOTE 5 – PROPERTY AND EQUIPMENT Property and equipment consist of the following: June 30, December 31, 2014 Network equipment $ 11,139,319 $ 10,753,542 Office equipment 176,126 160,890 Vehicles 164,501 132,797 Test equipment 115,540 87,059 Furniture 75,673 75,673 Warehouse equipment 8,440 6,867 Leasehold improvements 13,348 5,121 11,692,947 11,221,949 Less: accumulated depreciation (6,650,142 ) (5,877,157 ) TOTAL PROPERTY AND EQUIPMENT $ 5,042,805 $ 5,344,792 Depreciation expense for the six months ended June 30, 2015 and 2014 was $838,300 and $792,540, respectively. At June 30, 2015, 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 June 30, 2015. 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 | 6 Months Ended |
Jun. 30, 2015 | |
Other Assets: | |
OTHER ASSETS | NOTE 6 – OTHER ASSETS Intangible assets consist of the following: June 30, 2015 Cost Accumulated Amortization Net Patents and trademarks $ 323,669 $ 42,354 $ 281,315 Other intangible assets 51,464 38,821 12,643 TOTAL INTANGIBLE ASSETS $ 375,133 $ 81,175 $ 293,958 December 31, 2014 Cost Accumulated Amortization Net Patents and trademarks $ 271,142 $ 26,157 $ 244,985 Other intangible assets 51,464 35,166 16,298 TOTAL INTANGIBLE ASSETS $ 322,606 $ 61,323 $ 261,283 Other assets consist of the following: June 30, 2015 Cost Accumulated Amortization Net Deferred debt issuance costs $ 1,257,778 $ 2,431 $ 1,255,347 Prepaid financing costs 1,133,480 15,915 1,117,565 Deferred installation costs 1,616,167 1,034,254 581,913 Prepaid license fee 249,999 62,841 187,158 Security deposit 46,124 — 46,124 TOTAL OTHER ASSETS $ 4,303,548 $ 1,115,441 $ 3,188,107 December 31, 2014 Cost Accumulated Amortization Net Deferred installation costs $ 1,457,098 $ 865,647 $ 591,451 Prepaid license fee 249,999 54,644 195,355 Security deposit 46,124 — 46,124 TOTAL OTHER ASSETS $ 1,753,221 $ 920,291 $ 832,930 |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 6 Months Ended |
Jun. 30, 2015 | |
Other Current Liabilities | |
OTHER CURRENT LIABILITIES | NOTE 7 – OTHER CURRENT LIABILITIES Other current liabilities consist of the following: June 30, December 31, 2014 Accrued issuance costs $ 550,000 $ — Accrued taxes 201,270 145,183 Accrued paid time off 89,359 87,319 Accrued travel and entertainment 79,097 35,000 Accrued insurance 75,832 — Allowance for system removal 61,121 277,000 Accrued professional services 30,400 204,675 Other accrued liabilities 34,180 42,107 TOTAL OTHER CURRENT LIABILITIES $ 1,121,259 $ 791,284 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2015 | |
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 2015 as a result of the losses recorded during the six months ended June 30, 2015 and the additional losses expected for the remainder of 2015 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 June 30, 2015, 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 | 6 Months Ended |
Jun. 30, 2015 | |
Joint Venture Agreement | |
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 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 was fully amortized as of March 31, 2013. 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. To date, we have incurred system removal costs of approximately $3,000 for removing our equipment from the hospital premises. We currently have approximately 100 units remaining on site at Hillcrest. Included in other current liabilities in the accompanying consolidated financial statements is an allowance for system removal totaling $10,250 to reserve for the removal of the remaining units. As of June 30, 2015, the Project LLCs’ indebtedness to Rockwell, including principal and interest totaled approximately $1,108,000. 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. On February 19, 2015, the Project Notes and Rockwell’s Preferential Returns due dates were extended to June 30, 2016. In conjunction with an August 2013 extension of the due dates of the Project Notes and Rockwell’s Preferential Returns to December 31, 2013, the expiration date of the Project Warrant was also extended from November 16, 2014 to November 16, 2015. All other provisions of the Project Warrant remained unchanged. The Project Warrant 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 | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and December 31, 2014 are as follows: June 30, December 31, 2014 Assets Cash $ 372 $ 2,770 Receivables 4,731 2,365 Total current assets 5,103 5,135 Property, net 24,289 46,762 Total assets $ 29,392 $ 51,897 Liabilities Accounts payable $ 127,962 $ 122,558 Accrued interest 225,226 191,596 Other current liabilities 25,101 24,889 Notes payable-LT 441,594 441,594 Mandatorily redeemable interest-LT 441,594 441,594 Total liabilities $ 1,261,477 $ 1,222,231 The financial performance of the consolidated VIEs reflected on our condensed consolidated statements of operations for the six months ended June 30, 2015 and 2014 is as follows: June 30, 2015 2014 Revenue $ 14,194 $ 14,259 Network operations expense 8,328 8,337 General and administrative expense (cost recovery) 1,485 1,473 Depreciation 24,464 25,264 Total operating costs 34,277 35,074 Operating loss (20,083 ) (20,815 ) Other expense (45,296 ) (45,039 ) Loss before taxes (65,379 ) (65,854 ) Provision for taxes — — Net loss (65,379 ) (65,854 ) Net loss attributable to noncontrolling interest (32,689 ) (32,927 ) Net loss attributable to CareView Communications, Inc. $ (32,689 ) $ (32,927 ) |
AGREEMENT WITH HEALTHCOR
AGREEMENT WITH HEALTHCOR | 6 Months Ended |
Jun. 30, 2015 | |
Agreement With Healthcor | |
AGREEMENT WITH HEALTHCOR | NOTE 11 – AGREEMENT WITH HEALTHCOR On April 21, 2011, we entered into a Note and Warrant Purchase Agreement (as subsequently amended) (the “HealthCor Purchase Agreement”) with HealthCor. Pursuant to the HealthCor Purchase Agreement, we sold Senior Secured Convertible Notes to HealthCor 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 HealthCor 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 “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. HealthCor has 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, HealthCor is 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 June 30, 2015, the underlying shares of our Common Stock related to the 2011 HealthCor Notes totaled approximately 26,808,000. On January 31, 2012, we entered into the Second Amendment to the HealthCor Purchase Agreement with HealthCor (the “Second Amendment”) amending the HealthCor Purchase Agreement, and sold Senior Secured Convertible Notes to HealthCor 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 30, 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 30, 2012, HealthCor is 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 June 30, 2015, the underlying shares of our Common Stock related to the 2012 HealthCor Notes totaled approximately 6,090,000. On August 20, 2013, we entered into a Third Amendment to the HealthCor Purchase Agreement with HealthCor (the “Third Amendment”) to redefine our minimum cash balance requirements. Previously we were required to maintain a minimum cash balance of $5,000,000 and should we drop below that balance, it triggered a default. The Third Amendment allowed for a reduced minimum cash period, as defined in the HealthCor Purchase Agreement, which allowed us to drop below $5,000,000, but not below $4,000,000. All other terms and conditions of the HealthCor 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 HealthCor Purchase Agreement with HealthCor (the “Fourth Amendment”) and sold Senior Secured Convertible Notes to HealthCor 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, HealthCor is 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 HealthCor 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 June 30, 2015, the underlying shares of our Common Stock related to the 2014 HealthCor Notes totaled approximately 14,954,000. On December 4, 2014, we entered into a Fifth Amendment to the HealthCor Purchase Agreement (the “Fifth Amendment”) with HealthCor and certain additional investors (such additional investors, the “New Investors” and, collectively with HealthCor Partners Fund, LP, the “Investors”) and agreed to sell and issue (i) additional notes in the initial aggregate principal amount of $6,000,000,with a conversion price per share of $0.52 (subject to adjustment as described therein) (the “Fifth Amendment Notes”) and (ii) additional Warrants for an aggregate of up to 3,692,308 shares of our Common Stock at an exercise price per share of $0.52 (subject to adjustment as described therein) (the “Fifth Amendment Warrants”). As provided by the Fifth Amendment, the Fifth Amendment 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 Fifth Amendment Notes. The 2014 HealthCor Notes have a maturity date of February 16, 2025. 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. The New Investors are composed of all but one of our current directors and one of our officers. On February 17, 2015, the Company and the Investors closed on the transactions contemplated by the Fifth Amendment. In connection with this closing, the Company and the Investors entered into an Amended and Restated Pledge and Security Agreement (the “Amended Security Agreement”), amending and restating that certain Pledge and Security Agreement dated as of April 20, 2011, and an Amended and Restated Intellectual Property Security Agreement (the “Amended IP Security Agreement”), amending and restating that certain Intellectual Property Security Agreement dated as of April 20, 2011. As of June 30, 2015, the underlying shares of our Common Stock related to the Fifth Amendment Notes totaled approximately 2,012,000 to HealthCor and 10,061,000to the New Investors. On March 31, 2015, we entered into the Sixth Amendment to the HealthCor Purchase Agreement (the “Sixth Amendment”) pursuant to which, among other things, (i) the requirement to maintain a minimum cash balance of $5,000,000 was reduced to a minimum cash balance of $2,000,000 and (ii) the amendment provision was revised to permit the HealthCor Purchase Agreement to be amended by the Company and the holders of the majority of the Common Stock underlying the outstanding notes and warrants to purchase shares of our Common Stock sold pursuant to the HealthCor Purchase Agreement. On March 31, 2015, we also issued a warrant to HealthCor to purchase up to an aggregate of 1,000,000 shares of our Common Stock in consideration for certain prior waivers of the minimum cash balance requirement in the HealthCor Purchase Agreement (the “Sixth Amendment Warrant”). The Sixth Amendment Warrant has an exercise price per share of $0.53 (subject to adjustment as described therein) and an expiration date of March 31, 2025. On June 26, 2015, we (i) entered into a Seventh Amendment to the HealthCor Purchase Agreement (the “Seventh Amendment”) pursuant to which the HealthCor Purchase Agreement was amended to permit the Company to enter into and perform its obligations under the Credit Agreement entered into with PDL BioPharma, Inc., as administrative agent and lender (the “Lender”) (the “PDL Credit Agreement”); (ii) executed an Amendment to the Registration Rights Agreement between the Company and HealthCor dated April 21, 2011 (the “RR Agreement”) pursuant to which the RR Agreement was amended to make its priority of registration consistent with the Registration Rights Agreement executed by the Company and Lender (as detailed in NOTE 12 NOTE 12 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 conversion option and the 2011 HealthCor Warrants on the 2011 HealthCor Notes were originally classified as a liability when issued and, subsequently reclassified to equity on December 31, 2011 when the 2011 HealthCor Notes were amended, only the accrued interest capitalized as payment in kind (‘‘PIK’’) since reclassification qualifies under this accounting treatment. The face amount of the 2012 and 2014 HealthCor Notes and all accrued PIK interest also qualify for this accounting treatment. During the three and six months ended June 30, 2015, we recorded a BCF of $471,268 and $928,255, respectively, and during the three and six months ended June 30, 2014, we recorded a BCF of $416,689 and $817,384, respectively. The BCF was recorded as a charge to debt discount and a credit to additional paid in capital, with the debt discount, using the effective interest method, amortized to interest expense over the term of the notes. As Warrants were issued with the 2014 HealthCor Notes and the Fifth Amendment Notes, the proceeds were allocated to the instruments based on relative fair value. The value allocated to the 2014 HealthCor Warrants and the Fifth Amendment Notes were $1,146,732 and $1,093,105, respectively, which were recorded as a debt discount with the credit to additional paid in capital. The discount associated with the 2014 HealthCor Warrants and the Fifth Amendment Notes is amortized to interest expense using the effective interest method. We recorded an aggregate of $558,797 and $1,110,863 in interest expense for the three and six months ended June 30, 2015, respectively, and $535,833 and $1,064,251 in interest expense for the three and six months ended June 30, 2014, respectively, related to this discount. The carrying value of the debt with HealthCor at June 30, 2015 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. |
AGREEMENT WITH PDL BIOPHARMA
AGREEMENT WITH PDL BIOPHARMA | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
AGREEMENT WITH PDL BIOPHARMA | NOTE 12 – AGREEMENT WITH PDL BIOPHARMA, INC. On June 26, 2015, we entered into a Credit Agreement with PDL BioPharma, Inc., as administrative agent and lender (“the Lender”) (the “PDL Credit Agreement”). Under the PDL Credit Agreement the Lender made available to us up to $40 million in two tranches of $20 million each. In the event that a milestone relating to the placement of 9,000 billable units occurs on or before October 31, 2015, the Lender will fund us $20 million (“Tranche One”). In the event that additional milestones relating to (i) the placement of 27,750 billable units and (ii) the Company recording earnings before interest, tax, depreciation, and amortization (EBITDA) of not less than $7,000,000 on an annualized basis for the three calendar month period prior to the funding (on or before June 30, 2017), the Lender will fund us an additional $20 million (“Tranche Two” and, together with Tranche One, the “Loans”). Outstanding borrowings under Tranche One bear interest at the rate of 13.5% per annum, payable quarterly in arrears. Outstanding borrowings under Tranche Two bear interest at the rate of 13.0% per annum, payable quarterly in arrears. Principal repayment under each of Tranche One and Tranche Two will commence on the ninth interest payment date. We may elect to pay a portion of the interest due in the form of additional loans during the first eight interest payment dates. Each tranche will mature on the fifth anniversary of the date borrowed. We may elect to prepay the Loans at any time without any premium or penalty, subject to certain conditions. The obligations under the PDL Credit Agreement are secured by a pledge of substantially all of the assets of the Company and certain of its domestic subsidiaries. We executed a Subordination and Intercreditor Agreement (the “Subordination and Intercreditor Agreement”), with the Lender, HealthCor and the New Investors (as defined in NOTE 11 The PDL Credit Agreement contains customary affirmative covenants for transactions of this type and other affirmative covenants agreed to by the Company and the Lender, including, among others, the provision of annual and quarterly reports, maintenance of property, insurance, compliance with laws and contractual obligations and payment of taxes. The PDL Credit Agreement contains customary negative covenants for transactions of this type and other negative covenants agreed to by the Company and the Lender, including, among others, restrictions on the incurrence of indebtedness, the granting of liens, making restricted payments and investments, entering into affiliate transactions and transferring assets. The PDL Credit Agreement also provides for a number of customary events of default, including payment, bankruptcy, covenant, representation and warranty and judgment defaults. Contemporaneously with the execution of the PDL Credit Agreement, we issued to the Lender a warrant to purchase 4,444,445 shares of our Common Stock at an exercise price of $0.45 per share, subject to adjustment as described therein (the “PDL Warrant”). The PDL Warrant expires on June 26, 2025. In addition, contemporaneously with the execution of the PDL Credit Agreement the Company and the Lender executed (i) a Registration Rights Agreement pursuant to which the Company agreed to provide the Lender with certain registration rights with respect to the shares of Common Stock issuable upon exercise of the PDL Warrant (the “PDL RRA”), (ii) a Guarantee and Collateral Agreement (the “Guarantee and Collateral Agreement”) pursuant to which certain of our subsidiaries guaranteed the performance of our obligations under the PDL Credit Agreement and granted the Lender a security interest in such subsidiaries’ tangible and intangible assets securing our performance of the same, and (iii) a Patent Security Agreement and a Trademark Security Agreement pursuant to which we granted the Lender a security interest in a certain subsidiary’s tangible and intangible assets securing the performance of our obligations under the PDL Credit Agreement. Accounting Treatment In connection with the Credit Agreement, we issued the PDL Warrant to the Lender. The fair value of the PDL Warrant at issuance was $1,257,778 and has been recorded as deferred issuance costs in the accompanying condensed consolidated financial statements. These costs are amortized to interest expense using the straight line method over the term of the Credit Agreement. Through June 30, 2015, $2,431 was amortized to interest expense. The PDL Warrant has not been exercised. We also incurred certain financing costs totaling $746,811 in the accompanying condensed consolidated financial statements. These costs have been recorded as deferred financing costs and are being amortized to interest expense over the term of the Credit Agreement. Through June 30, 2015, $1,464 has been amortized. |
BASIS OF PRESENTATION AND REC19
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Interim Financial Statements | 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 in the United States of America (“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, 2014 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, 2014 as filed with the SEC on March 31, 2015. |
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. 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. 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 Fair value of warrant liability $ (314,818 ) $ — $ — $ (314,818 ) The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the six months ended June 30, 2015: Fair Value Measurements Using Significant Unobservable Inputs Balance at January 1, 2015 $ (301,864 ) Issuances of derivative liabilities — Change in fair value of warrant liability (12,954 ) Transfers in and/out of Level 3 — Ending balance at June 30, 2015 $ (314,818 ) 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. |
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 110,516,873 and 91,270,341 at June 30, 2015 and 2014, 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 | Recently Issued and Newly Adopted Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs be reported in the balance sheet as a direct deduction from the face amount of the related liability, consistent with the presentation of debt discounts and further requires the amortization of debt issuance cost to be reported as interest expense. Similarly, debt issuance costs and any discount or premium are considered in the aggregate when determining the effective interest rate of the debt. 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, 2014 not expect that the adoption of any recent accounting pronouncements will have a material impact on our accompanying condensed consolidated financial statements. |
Reclassifications | Reclassifications Certain 2014 amounts have been reclassified to conform to current year presentation. |
BASIS OF PRESENTATION AND REC20
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 Fair value of warrant liability $ (314,818 ) $ — $ — $ (314,818 ) |
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 six months ended June 30, 2015: Fair Value Measurements Using Significant Unobservable Inputs Balance at January 1, 2015 $ (301,864 ) Issuances of derivative liabilities — Change in fair value of warrant liability (12,954 ) Transfers in and/out of Level 3 — Ending balance at June 30, 2015 $ (314,818 ) |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Stockholders Equity Tables | |
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, 2014 14,273,810 $ 0.58 6.3 $ — Granted 1,815,000 $ 0.53 9.7 $ — Expired (6,261,308 ) Canceled (77,837 ) Balance at June 30, 2015 9,749,665 $ 0.61 7.9 $ — Vested and Exercisable at June 30, 2015 3,940,489 $ 0.74 6.7 $ — |
Schedule of assumptions used in the Black-Scholes Model - Warrants and Options | The assumptions used in the Black-Scholes Model are set forth in the table below. Six Months Ended Year Ended Risk-free interest rate 1.41-1.47 % 1.59-1.83 % Volatility 71.30-71.86 % 72.82-75.42 % Expected life in years 6 6 Dividend yield 0.00 % 0.00 % |
OTHER CURRENT ASSETS (Tables)
OTHER CURRENT ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Other Current Assets Tables | |
Schedule of other current assets | Other current assets consist of the following: June 30, December 31, Prepaid expenses $ 350,087 $ 254,998 Other current assets 129 21,912 TOTAL OTHER CURRENT ASSETS $ 350,216 $ 276,910 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Property And Equipment Tables | |
Schedule of property and equipment | Property and equipment consist of the following: June 30, December 31, 2014 Network equipment $ 11,139,319 $ 10,753,542 Office equipment 176,126 160,890 Vehicles 164,501 132,797 Test equipment 115,540 87,059 Furniture 75,673 75,673 Warehouse equipment 8,440 6,867 Leasehold improvements 13,348 5,121 11,692,947 11,221,949 Less: accumulated depreciation (6,650,142 ) (5,877,157 ) TOTAL PROPERTY AND EQUIPMENT $ 5,042,805 $ 5,344,792 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Other Assets Tables | |
Schedule of intangible assets | Intangible assets consist of the following: June 30, 2015 Cost Accumulated Amortization Net Patents and trademarks $ 323,669 $ 42,354 $ 281,315 Other intangible assets 51,464 38,821 12,643 TOTAL INTANGIBLE ASSETS $ 375,133 $ 81,175 $ 293,958 December 31, 2014 Cost Accumulated Amortization Net Patents and trademarks $ 271,142 $ 26,157 $ 244,985 Other intangible assets 51,464 35,166 16,298 TOTAL INTANGIBLE ASSETS $ 322,606 $ 61,323 $ 261,283 |
Schedule of other assets | Other assets consist of the following: June 30, 2015 Cost Accumulated Amortization Net Deferred debt issuance costs $ 1,257,778 $ 2,431 $ 1,255,347 Prepaid financing costs 1,133,480 15,915 1,117,565 Deferred installation costs 1,616,167 1,034,254 581,913 Prepaid license fee 249,999 62,841 187,158 Security deposit 46,124 — 46,124 TOTAL OTHER ASSETS $ 4,303,548 $ 1,115,441 $ 3,188,107 December 31, 2014 Cost Accumulated Amortization Net Deferred installation costs $ 1,457,098 $ 865,647 $ 591,451 Prepaid license fee 249,999 54,644 195,355 Security deposit 46,124 — 46,124 TOTAL OTHER ASSETS $ 1,753,221 $ 920,291 $ 832,930 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Other Current Liabilities Tables | |
Schedule of other current liabilities | Other current liabilities consist of the following: June 30, December 31, 2014 Accrued issuance costs $ 550,000 $ — Accrued taxes 201,270 145,183 Accrued paid time off 89,359 87,319 Accrued travel and entertainment 79,097 35,000 Accrued insurance 75,832 — Allowance for system removal 61,121 277,000 Accrued professional services 30,400 204,675 Other accrued liabilities 34,180 42,107 TOTAL OTHER CURRENT LIABILITIES $ 1,121,259 $ 791,284 |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and December 31, 2014 are as follows: June 30, December 31, 2014 Assets Cash $ 372 $ 2,770 Receivables 4,731 2,365 Total current assets 5,103 5,135 Property, net 24,289 46,762 Total assets $ 29,392 $ 51,897 Liabilities Accounts payable $ 127,962 $ 122,558 Accrued interest 225,226 191,596 Other current liabilities 25,101 24,889 Notes payable-LT 441,594 441,594 Mandatorily redeemable interest-LT 441,594 441,594 Total liabilities $ 1,261,477 $ 1,222,231 The financial performance of the consolidated VIEs reflected on our condensed consolidated statements of operations for the six months ended June 30, 2015 and 2014 is as follows: June 30, 2015 2014 Revenue $ 14,194 $ 14,259 Network operations expense 8,328 8,337 General and administrative expense (cost recovery) 1,485 1,473 Depreciation 24,464 25,264 Total operating costs 34,277 35,074 Operating loss (20,083 ) (20,815 ) Other expense (45,296 ) (45,039 ) Loss before taxes (65,379 ) (65,854 ) Provision for taxes — — Net loss (65,379 ) (65,854 ) Net loss attributable to noncontrolling interest (32,689 ) (32,927 ) Net loss attributable to CareView Communications, Inc. $ (32,689 ) $ (32,927 ) |
BASIS OF PRESENTATION AND REC27
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Details Narrative) - shares | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Basis Of Presentation And Recently Issued Accounting Pronouncements Details Narrative | ||
Potentially dilutive common shares | 110,516,873 | 91,270,341 |
BASIS OF PRESENTATION AND REC28
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value of warrant liability | $ (314,818) | $ (301,864) | $ (370,865) |
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 | (314,818) | ||
Recurring Measurement [Member] | Fair Value [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value of warrant liability | $ (314,818) |
BASIS OF PRESENTATION AND REC29
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Change in Fair Value of Level 3 Liabilities | ||||
Change in fair value of warrant liability | $ 225,147 | $ 55,801 | $ (12,954) | $ (577,341) |
Significant Other Unobservable Inputs (Level 3) [Member] | ||||
Change in Fair Value of Level 3 Liabilities | ||||
Balance, beginning | (301,864) | |||
Change in fair value of warrant liability | (12,954) | |||
Balance, ending | $ (314,818) | $ (314,818) |
LIQUIDITY AND MANAGEMENTS PLAN
LIQUIDITY AND MANAGEMENTS PLAN (Details Narrative) - USD ($) | Jun. 30, 2015 | Jun. 26, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Jan. 16, 2014 | Dec. 31, 2013 | Aug. 19, 2013 |
Cash and cash equivalents | $ 5,245,503 | $ 2,546,262 | $ 6,240,392 | $ 4,125,180 | |||
Minimum cash balance required under existing loan documents | 2,000,000 | $ 5,000,000 | $ 5,000,000 | ||||
PDL BioPharma, Inc (Administrative Agent and Lender) [Member] | |||||||
Debt face amount | $ 40,000,000 | ||||||
PDL BioPharma, Inc (Administrative Agent and Lender) [Member] | Tranche One Debt [Member] | |||||||
Debt face amount | 20,000,000 | ||||||
PDL BioPharma, Inc (Administrative Agent and Lender) [Member] | Tranche Two Debt [Member] | |||||||
Debt face amount | $ 20,000,000 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | Feb. 25, 2015 | Feb. 17, 2015 | Dec. 04, 2014 | Jan. 16, 2014 | Mar. 31, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
Senior secured convertible notes | $ 30,914,930 | |||||||||
Fair value of warrant liability | $ 314,818 | $ 301,864 | $ 370,865 | |||||||
2015 Stock Option Plan [Member] | ||||||||||
Common stock shares reserved for future issuance | 5,000,000 | |||||||||
Options vesting period | 3 years | |||||||||
Options exercise period | 10 years | |||||||||
Options granted | 1,815,000 | 1,300,000 | ||||||||
Options cancelled | 77,837 | 15,000 | ||||||||
Options expired | 6,261,308 | 41,666 | ||||||||
Share-based compensation expense | $ 410,034 | $ 341,677 | ||||||||
Unrecognized estimated compensation expense | $ 1,469,000 | |||||||||
Period for recognization of unrecognized compensation expense | 1 year 10 months 24 days | |||||||||
HealthCor Purchase Agreement (the "Fifth Amendment") [Member] | ||||||||||
Senior secured convertible notes | $ 6,000,000 | $ 6,000,000 | ||||||||
Fair value of convertible debt | $ 7,336,615 | |||||||||
Warrants issued for financing costs, warrants | 3,692,308 | |||||||||
Debt conversion rate | $ 0.52 | $ 0.52 | ||||||||
Fair value of the warrants | $ 1,093,105 | |||||||||
Unamortized debt discount | $ 1,146,732 | |||||||||
HealthCor Purchase Agreement (the "Fifth Amendment") [Member] | Senior Convertible Notes - 2014 Issuance [Member] | ||||||||||
Warrants issued for financing costs, warrants | 3,692,307 | |||||||||
HealthCor Purchase Agreement (the "Fourth Amendment") [Member | ||||||||||
Senior secured convertible notes | $ 5,000,000 | |||||||||
Fair value of convertible debt | $ 6,488,000 | |||||||||
Debt conversion rate | $ 0.40 | |||||||||
Fair value of the warrants | $ 1,146,732 | |||||||||
HealthCor Purchase Agreement (the "Fourth Amendment") [Member | Senior Convertible Notes - 2014 Issuance [Member] | ||||||||||
Warrants issued for financing costs, warrants | 4,000,000 | |||||||||
Purchase Agreement Warrants [Member] | ||||||||||
Warrants outstanding | 100,000 | |||||||||
Warrants expired | 2,892,686 | |||||||||
Warrant exercise price | $ 0.53 | |||||||||
Warrant expiration date | Mar. 31, 2025 | |||||||||
Fair value of warrant liability | $ 378,000 | |||||||||
Private Placement Warrants Revalued [Member] | ||||||||||
Fair value of warrants at re-value | $ 314,818 | $ 948,206 | ||||||||
Fair value adjustment recorded as non-cash costs | 12,954 | $ 577,341 | ||||||||
PDL BioPharma, Inc (Administrative Agent and Lender) [Member] | Warrant [Member] | ||||||||||
Fair value of the warrants | $ 1,257,778 | |||||||||
Warrant exercise price | $ 0.45 | |||||||||
Warrant expiration date | Jun. 26, 2025 | |||||||||
Number common stock called | 4,444,445 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - Stock Options [Member] - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Number Options | ||
Stock Options Outstanding, Beginning | 14,273,810 | |
Granted | 1,815,000 | |
Expired | (6,261,308) | |
Cancelled | (77,837) | |
Stock Options Outstanding, Ending | 9,749,665 | 14,273,810 |
Stock Options, vested and exercisable | 3,940,489 | |
Weighted Average Exercise Price | ||
Stock Options Outstanding, Beginning | $ 0.58 | |
Granted | 0.53 | |
Stock Options Outstanding, Ending | 0.61 | $ 0.58 |
Stock Options, vested and exercisable | $ 0.74 | |
Weighted Average Remaining Contractual Life | ||
Stock Options Outstanding | 7 years 10 months 24 days | 6 years 3 months 18 days |
Granted | 9 years 8 months 12 days | |
Stock Options, vested and exercisable | 6 years 8 months 12 days |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) - Stock Options [Member] | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Black-Scholes Model: | ||
Expected life in years | 6 years | 6 years |
Dividend yield | 0.00% | 0.00% |
Lower Range [Member] | ||
Black-Scholes Model: | ||
Risk-free interest rate | 1.41% | 1.59% |
Volatility | 71.30% | 72.82% |
Upper Range [Member] | ||
Black-Scholes Model: | ||
Risk-free interest rate | 1.47% | 1.83% |
Volatility | 71.86% | 75.42% |
OTHER CURRENT ASSETS (Details)
OTHER CURRENT ASSETS (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Other Assets: | ||
Prepaid expenses | $ 350,087 | $ 254,998 |
Other current assets | 129 | 21,912 |
TOTAL OTHER CURRENT ASSETS | $ 350,216 | $ 276,910 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 838,300 | $ 792,540 |
PROPERTY AND EQUIPMENT (Detai36
PROPERTY AND EQUIPMENT (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 11,692,947 | $ 11,221,949 |
Less: accumulated depreciation | (6,650,142) | (5,877,157) |
Property and equipment, net | 5,042,805 | 5,344,792 |
Network Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 11,139,319 | 10,753,542 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 176,126 | 160,890 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 164,501 | 132,797 |
Test Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 115,540 | 87,059 |
Furniture [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 75,673 | 75,673 |
Warehouse Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 8,440 | 6,867 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 13,348 | $ 5,121 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 375,133 | $ 322,606 |
Accumulated Amortization | 81,175 | 61,323 |
Intangible assets, Net | 293,958 | 261,283 |
Patents and trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 323,669 | 271,142 |
Accumulated Amortization | 42,354 | 26,157 |
Intangible assets, Net | 281,315 | 244,985 |
Other intangible assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 51,464 | 51,464 |
Accumulated Amortization | 38,821 | 35,166 |
Intangible assets, Net | $ 12,643 | $ 16,298 |
OTHER ASSETS (Details 1)
OTHER ASSETS (Details 1) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Cost | $ 4,303,548 | $ 1,753,221 |
Accumulated Amortization | 1,115,441 | 920,291 |
Other assets | 3,188,107 | 832,930 |
Deferred debt issuance costs [Member] | ||
Cost | 1,257,778 | |
Accumulated Amortization | 2,431 | |
Other assets | 1,255,347 | |
Prepaid financing costs [Member] | ||
Cost | 1,133,480 | |
Accumulated Amortization | 15,915 | |
Other assets | 1,117,565 | |
Deferred installation costs [Member] | ||
Cost | 1,616,167 | 1,457,098 |
Accumulated Amortization | 1,034,254 | 865,647 |
Other assets | 581,913 | 591,451 |
Prepaid license fee [Member] | ||
Cost | 249,999 | 249,999 |
Accumulated Amortization | 62,841 | 54,644 |
Other assets | 187,158 | 195,355 |
Security deposit [Member] | ||
Cost | 46,124 | 46,124 |
Other assets | $ 46,124 | $ 46,124 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
OTHER CURRENT LIABILITIES: | ||
Accrued issuance costs | $ 550,000 | |
Accrued taxes | 201,270 | $ 145,183 |
Accrued paid time off | 89,359 | 87,319 |
Accrued travel and entertainment | 79,097 | 35,000 |
Accrued insurance | 75,832 | |
Allowance for system removal | 61,121 | 277,000 |
Accrued professional services | 30,400 | 204,675 |
Other accrued liabilities | 34,180 | 42,107 |
TOTAL OTHER CURRENT LIABILITIES | $ 1,121,259 | $ 791,284 |
JOINT VENTURE AGREEMENT (Detail
JOINT VENTURE AGREEMENT (Details Narrative) | Nov. 16, 2009USD ($)shares | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Dec. 31, 2012USD ($)Number | Dec. 31, 2014USD ($) |
Amortization of debt discount | $ 1,110,863 | $ 1,064,250 | |||
Other current liabilities | 1,121,259 | $ 791,284 | |||
Joint Venture - Rockwell [Member] | |||||
Percentage owned by company of each joint venture | 50.00% | ||||
Funding by Rockwell into the Joint Venture, cash | $ 1,151,205 | ||||
Promissory note amounts | 575,603 | 1,108,000 | |||
Investment Interest issued to Rockwell as Preferential Return | $ 575,602 | ||||
Interest rate on project notes and preferential returns, per investment agreement | 10.00% | ||||
Fair value of warrants issued to Rockwell for providing funding | $ 25,327 | ||||
Discount on debt recorded | $ 636,752 | ||||
Monthly revenue lost due to Hillcrest termination | $ 20,000 | ||||
De-installation costs incurred | $ 3,000 | ||||
Number of units remaining at Hillcrest site | Number | 100 | ||||
Other current liabilities | $ 10,250 | ||||
Joint Venture - Rockwell [Member] | Warrants [Member] | |||||
Warrants issued for financing costs, warrants | shares | 1,151,206 | ||||
Fair value of warrants issued to Rockwell for providing funding | $ 1,124,728 |
VARIABLE INTEREST ENTITIES (Det
VARIABLE INTEREST ENTITIES (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Receivables | $ 889,731 | $ 680,143 |
Total current assets | 6,485,450 | 3,503,315 |
Property, net | 5,042,805 | 5,344,792 |
Total assets | 15,010,320 | 9,942,320 |
Liabilities | ||
Accounts payable | 511,294 | 244,782 |
Accrued interest | 225,226 | 191,596 |
Other current liabilities | 1,121,259 | 791,284 |
Total liabilities | 33,970,715 | 25,247,355 |
Variable Interest Entity [Member] | ||
Assets | ||
Cash | 372 | 2,770 |
Receivables | 4,731 | 2,365 |
Total current assets | 5,103 | 5,135 |
Property, net | 24,289 | 46,762 |
Total assets | 29,392 | 51,897 |
Liabilities | ||
Accounts payable | 127,962 | 122,558 |
Accrued interest | 225,226 | 191,596 |
Other current liabilities | 25,101 | 24,889 |
Notes payable-LT | 441,594 | 441,594 |
Mandatorily redeemable interest-LT | 441,594 | 441,594 |
Total liabilities | $ 1,261,477 | $ 1,222,231 |
VARIABLE INTEREST ENTITIES (D42
VARIABLE INTEREST ENTITIES (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenue | $ 1,266,391 | $ 698,129 | $ 2,266,945 | $ 1,317,538 |
Network operations expense | 1,304,973 | 811,178 | 2,135,067 | 1,412,400 |
General and administrative expense (cost recovery) | 923,056 | 805,081 | 1,761,365 | 1,607,058 |
Depreciation | 442,248 | 407,376 | 858,152 | 806,708 |
Total operating costs | 3,209,876 | 2,410,892 | 5,717,001 | 4,590,542 |
Operating loss | (1,943,485) | (1,712,763) | (3,450,056) | (3,273,004) |
Loss before taxes | $ (3,934,227) | (3,709,871) | (7,722,532) | (7,878,412) |
Provision for taxes | ||||
Net loss attributable to noncontrolling interest | $ (16,482) | (17,087) | (32,704) | (32,927) |
Net loss attributable to CareView Communications, Inc. | $ (3,917,745) | $ (3,692,784) | (7,689,828) | (7,845,485) |
Variable Interest Entity [Member] | ||||
Revenue | 14,194 | 14,259 | ||
Network operations expense | 8,328 | 8,337 | ||
General and administrative expense (cost recovery) | 1,485 | 1,473 | ||
Depreciation | 24,464 | 25,264 | ||
Total operating costs | 34,277 | 35,074 | ||
Operating loss | (20,083) | (20,815) | ||
Other expense | (45,296) | (45,039) | ||
Loss before taxes | (65,379) | (65,854) | ||
Net loss | (65,379) | (65,854) | ||
Net loss attributable to noncontrolling interest | (32,689) | (32,927) | ||
Net loss attributable to CareView Communications, Inc. | $ (32,689) | $ (32,927) |
AGREEMENT WITH HEALTHCOR (Detai
AGREEMENT WITH HEALTHCOR (Details Narrative) | Feb. 17, 2015USD ($)$ / sharesshares | Dec. 04, 2014USD ($)$ / sharesshares | Jan. 16, 2014USD ($)$ / sharesshares | Jan. 31, 2012USD ($)$ / shares | Apr. 21, 2011USD ($)$ / sharesshares | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($)$ / sharesshares | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)Number | Jun. 30, 2014USD ($) | Apr. 20, 2021 | Apr. 20, 2016 | Dec. 31, 2014USD ($) | Aug. 19, 2013USD ($) |
Senior secured convertible notes | $ 30,914,930 | $ 30,914,930 | ||||||||||||
Minimum cash balance required under existing loan documents | $ 5,000,000 | 2,000,000 | 2,000,000 | $ 5,000,000 | ||||||||||
Beneficial conversion features for senior secured convertible notes | 928,256 | $ 1,442,385 | ||||||||||||
Interest Expense | 2,217,846 | $ 2,054,421 | 4,263,747 | 4,031,872 | ||||||||||
Senior Secured Convertible Notes [Member] | ||||||||||||||
Debt discount | 22,467,023 | 22,467,023 | $ 21,457,970 | |||||||||||
2014 HealthCor Warrants [Member] | ||||||||||||||
Debt discount | 1,093,105 | 1,093,105 | ||||||||||||
HealthCor Hybrid Offshore Master Fund [Member] | ||||||||||||||
Senior secured convertible notes | $ 2,671,000 | $ 2,671,000 | $ 10,684,000 | |||||||||||
Debt Maturity Date | Jan. 15, 2024 | Jan. 30, 2022 | Apr. 20, 2021 | |||||||||||
Warrants issued for financing costs, warrants | shares | 6,294,403 | |||||||||||||
Exercise price of warrants | $ / shares | $ 1.40 | |||||||||||||
Increase in interest rate (per annum) should default occur | 5.00% | |||||||||||||
Debt conversion rate | $ / shares | $ 1.25 | |||||||||||||
HealthCor Partners Fund [Member] | ||||||||||||||
Senior secured convertible notes | $ 2,329,000 | $ 9,316,000 | ||||||||||||
Debt Maturity Date | Jan. 15, 2024 | Jan. 30, 2022 | Apr. 20, 2021 | |||||||||||
Warrants issued for financing costs, warrants | shares | 5,488,456 | |||||||||||||
Exercise price of warrants | $ / shares | $ 1.40 | |||||||||||||
HealthCor Purchase Agreement [Member | ||||||||||||||
Warrants issued for financing costs, warrants | shares | 4,000,000 | |||||||||||||
Exercise price of warrants | $ / shares | $ 0.40 | |||||||||||||
Increase in interest rate (per annum) should default occur | 5.00% | |||||||||||||
Debt conversion rate | $ / shares | $ 1.25 | |||||||||||||
Minimum cash balance required under existing loan documents | 2,000,000 | 2,000,000 | ||||||||||||
Beneficial conversion features for senior secured convertible notes | 471,268 | 416,689 | 928,255 | 817,384 | ||||||||||
Interest Expense | 558,797 | $ 535,833 | $ 1,110,863 | $ 1,064,251 | ||||||||||
HealthCor Purchase Agreement [Member | Senior Secured Convertible Notes [Member] | ||||||||||||||
Interest rate, provided no default | 10.00% | 12.50% | ||||||||||||
Number of shares the note may be converted into | Number | 26,808,000 | |||||||||||||
HealthCor Purchase Agreement [Member | Senior Convertible Notes - 2012 Issuance [Member] | ||||||||||||||
Number of shares the note may be converted into | Number | 6,090,000 | |||||||||||||
HealthCor Purchase Agreement [Member | Senior Convertible Notes - 2014 Issuance [Member] | ||||||||||||||
Number of shares the note may be converted into | Number | 14,954,000 | |||||||||||||
HealthCor Purchase Agreement (the "Fourth Amendment") [Member | ||||||||||||||
Senior secured convertible notes | $ 5,000,000 | |||||||||||||
Debt conversion rate | $ / shares | $ 0.40 | |||||||||||||
HealthCor Purchase Agreement (the "Fourth Amendment") [Member | Senior Convertible Notes - 2014 Issuance [Member] | ||||||||||||||
Warrants issued for financing costs, warrants | shares | 4,000,000 | |||||||||||||
HealthCor Purchase Agreement (the "Fifth Amendment") [Member] | ||||||||||||||
Senior secured convertible notes | $ 6,000,000 | $ 6,000,000 | ||||||||||||
Warrants issued for financing costs, warrants | shares | 3,692,308 | |||||||||||||
Debt conversion rate | $ / shares | $ 0.52 | $ 0.52 | ||||||||||||
Number of shares the note may be converted into | Number | 2,012,000 | |||||||||||||
Debt discount | $ 1,146,732 | $ 1,146,732 | ||||||||||||
HealthCor Purchase Agreement (the "Fifth Amendment") [Member] | Senior Convertible Notes - 2014 Issuance [Member] | ||||||||||||||
Warrants issued for financing costs, warrants | shares | 3,692,307 | |||||||||||||
HealthCor Purchase Agreement New Investors (the "Fifth Amendment") [Member] | ||||||||||||||
Number of shares the note may be converted into | Number | 10,061,000 | |||||||||||||
HealthCor Purchase Agreement (the "Sixth Amendment") [Member] | ||||||||||||||
Warrants issued for financing costs, warrants | shares | 1,000,000 | |||||||||||||
Debt conversion rate | $ / shares | $ 0.53 | |||||||||||||
Beneficial conversion features for senior secured convertible notes | $ 2,000,000 |
AGREEMENT WITH PDL BIOPHARMA, I
AGREEMENT WITH PDL BIOPHARMA, INC. (Details Narrative) - PDL BioPharma, Inc (Administrative Agent and Lender) [Member] - USD ($) | Jun. 26, 2015 | Jun. 30, 2015 |
Debt face amount | $ 40,000,000 | |
Description of payment terms | Principal repayment under each of Tranche One and Tranche Two will commence on the ninth interest payment date. We may elect to pay a portion of the interest due in the form of additional loans during the first eight interest payment dates. Each tranche will mature on the fifth anniversary of the date borrowed. We may elect to prepay the Loans at any time without any premium or penalty, subject to certain conditions. | |
Description of collateral | Secured by a pledge of substantially all of the assets of the Company and certain of its domestic subsidiaries. | |
Warrants [Member] | ||
Number common stock called | 4,444,445 | |
Exercise price (in dollars per shares) | $ 0.45 | |
Warrant expiration date | Jun. 26, 2025 | |
Fair value | $ 1,257,778 | |
Amortized interest expense | 2,431 | |
Deferred financing costs | 746,811 | |
Amortized deferred financing costs | 1,464 | |
Tranche One Debt [Member] | ||
Debt face amount | $ 20,000,000 | |
Description of debt milestone placement | In the event that a milestone relating to the placement of 9,000 billable units occurs on or before October 31, 2015, | |
Interest rate | 13.50% | |
Tranche Two Debt [Member] | ||
Debt face amount | $ 20,000,000 | |
Description of debt milestone placement | (i) the placement of 27,750 billable units and (ii) the Company recording earnings before interest, tax, depreciation, and amortization (EBITDA) of not less than $7,000,000 on an annualized basis for the three calendar month period prior to the funding (on or before June 30, 2017), | |
Interest rate | 13.00% |