Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 16, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | Health-Right Discoveries, Inc. | ||
Entity Central Index Key | 1,537,663 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
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 Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 22,869,191 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash | $ 1,458,942 | $ 18,373 |
Accounts receivable, net | 471,112 | |
Inventories | 32,580 | |
Total Current Assets | 1,962,634 | 18,373 |
Property and Equipment, net | 10,592 | |
Intangible assets, net | 4,196,717 | |
Goodwill | 3,313,226 | |
TOTAL ASSETS | 9,483,169 | 18,373 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 1,346,317 | 25,261 |
Loans payable - related parties | 33,512 | 193,662 |
Salaries payable - related party | 182,000 | 169,000 |
Current portion - notes payable, net of discounts of $399,252 | 265,196 | |
Total Current Liabilities | 1,827,025 | 387,923 |
Long-term Liabilities: | ||
Notes payable, net of discounts of $757,829 | 6,077,713 | |
Deferred tax liability | 980,212 | |
Total long-term liabilities | 7,057,925 | |
STOCKHOLDERS' EQUITY (DEFICIENCY) | ||
Preferred Stock, .001 par value, 5,000,000 shares authorized no shares issued and outstanding December 31, 2017 and 2016 | ||
Common Stock, .001 par value, 100,000,000 shares authorized 22,869,191 and 17,533,332 shares issued and outstanding December 31, 2017 and 2016, respectively | 22,869 | 17,533 |
Additional Paid in Capital | 1,117,967 | 589,717 |
Accumulated Deficit | (542,617) | (976,800) |
Total stockholders' equity (deficiency) | 598,219 | (369,550) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) | $ 9,483,169 | $ 18,373 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Notes payable, discounts current | $ 399,252 | |
Notes payable, discounts current | $ 757,829 | |
Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, authorized | 5,000,000 | 5,000,000 |
Preferred Stock, issued | 0 | 0 |
Preferred Stock, outstanding | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, authorized | 100,000,000 | 100,000,000 |
Common Stock, issued | 22,869,191 | 17,533,332 |
Common Stock, outstanding | 22,869,191 | 17,533,332 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 2,052,352 | $ 8,959 |
Cost of Revenue | 329,511 | 3,251 |
Gross Profit | 1,722,841 | 5,708 |
COSTS AND EXPENSES: | ||
General and administrative | 1,660,130 | 142,573 |
Interest expense - related parties | 7,938 | 6,071 |
Interest expenses - other | 263,360 | 1,414 |
Total Cost and expenses | 1,931,428 | 150,058 |
Loss before income tax provision | (208,587) | (144,350) |
Income tax benefit | 642,770 | |
NET INCOME (LOSS) | $ 434,183 | $ (144,350) |
Income (loss) per common share (in dollars per share) | $ 0.02 | $ (0.01) |
Weighted average common shares outstanding - basic and diluted (in shares) | 18,907,756 | 17,532,236 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
OPERATING ACTIVITIES: | ||
Net income (loss) | $ 434,183 | $ (144,350) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation expense | 575 | |
Amortization of intangible assets | 116,283 | |
Non-cash interest | 99,813 | |
Stock based compensation | 40,000 | |
Accrued salary to related party | 13,000 | 39,000 |
Accrued interest to related parties | 6,071 | |
Deferred income tax benefit | (642,770) | |
Changes in operating assets and liabilities | ||
Accounts receivable | 136,687 | |
Inventories | (71,643) | (2,269) |
Credit card payable | 7,222 | |
Accounts payable and accrued expenses | 24,863 | 21,715 |
Accrued interest | (1,813) | |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 254,277 | (44,330) |
INVESTING ACTIVITIES: | ||
Cash paid for Acquisition, net of cash acquired of $81,359 | (3,518,641) | |
NET CASH USED IN INVESTING ACTIVITIES | (3,518,641) | |
FINANCING ACTIVITIES: | ||
Proceeds of loan from related parties | 33,512 | 60,746 |
Repayment of related party loan | (193,662) | |
Proceeds from note payable, net of loan costs | 4,865,083 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 4,704,933 | 60,746 |
INCREASE IN CASH | 1,440,569 | 16,416 |
CASH - BEGINNING OF YEAR | 18,373 | 1,957 |
CASH - END OF YEAR | 1,458,942 | 18,373 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | ||
Noncash investing and financing activities: | ||
Debt incurred for acquisition | $ 2,500,000 |
CONSOLIDATED STATEMENTS OF CAS6
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Statement of Cash Flows [Abstract] | |
Cash acquired | $ 81,359 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
BALANCE, BEGINNING at Dec. 31, 2015 | $ 17,133 | $ 550,117 | $ (832,450) | $ (265,200) |
BALANCE, BEGINNING (in shares) at Dec. 31, 2015 | 17,133,332 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued for services | $ 400 | 39,600 | $ 40,000 | |
Common stock issued for services (in shares) | 400,000 | 400,000 | ||
Net Income (loss) | (144,350) | $ (144,350) | ||
BALANCE, ENDING at Dec. 31, 2016 | $ 17,533 | $ 589,717 | (976,800) | $ (369,550) |
BALANCE, ENDING (in shares) at Dec. 31, 2016 | 17,533,332 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Shares issued for acquisition | 1,752 | 173,406 | 175,158 | |
Shares issued for acquisition (in shares) | $ 1,751,581 | |||
Shares issued in financing arrangement | $ 3,584 | $ 354,844 | $ 358,428 | |
Shares issued in financing arrangement (in shares) | 3,584,278 | |||
Net Income (loss) | 434,183 | 434,183 | ||
BALANCE, ENDING at Dec. 31, 2017 | $ 22,869 | $ 1,117,967 | $ (542,617) | $ 598,219 |
BALANCE, ENDING (in shares) at Dec. 31, 2017 | 22,869,191 |
Business
Business | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | NOTE 1 – Business Health-Right Discoveries, Inc. (“the Company”) was formed under the laws of the State of Florida on October 12, 2011 under the name Four Plex Partners, Inc. and subsequently changed its name to Health-Right Discoveries, Inc. on March 22, 2012. The Company’s primary business is to develop and market an innovative portfolio of both prescription nutritional, OTC monograph and natural products that primarily focus on factors relating to stress-induced conditions and diseases. On September 29, 2017, the Company acquired all the outstanding common shares of Common Compounds, Inc. (“CCI”) and EzPharmaRx, LLC (“EZ”). The combined business offers physicians and medical clinics an ancillary program to treat their patients with topical prescription medicine to manage pain. The program is designed for patients with work related injuries managed under worker compensation claims. The program both delivers the topical medicine to the care provider for sale to the patient, as well as providing the care provider with insurance claim processing services on behalf of the patient. This is not a compounding pharmacy and neither business is involved in creating topicals with compounding pharmacies. As of December 31, 2016 the Company disclosed that factors existed that raised substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company has evaluated those factors and as a result of the acquisitions of CCI and EZ, those factors have been alleviated due to the positive earnings and cash flow to be generated by the subsidiaries. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 - Summary of Significant Accounting Policies Use of Estimates The preparation of the financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Certain of the Company’s estimates could be affected by external conditions, including those unique to its industry, and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates that could cause actual results to differ from its estimates. The Company re-evaluates all of its accounting estimates at least quarterly based on these conditions and record adjustments when necessary. Cash The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Concentration of Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains its principal cash balances in various financial institutions. These balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December 31, 2017 and 2016, $796,652 and $0 were in excess of the FDIC insured limit, respectively. Accounts Receivable Accounts receivable are stated at the amount the Company expects to collect from customers. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management has determined there is no allowance for doubtful accounts necessary as of December 31, 2017. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If the financial condition of the Company’s customers was to deteriorate and adversely affecting their ability to make payments, additional allowances would be required. Revenue Recognition The Company follows the guidance of the Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition”. We record revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the selling price to the customer is fixed or determinable and collectability of the revenue is reasonably assured. The Company has not experienced any significant returns from customers and accordingly, in management’s opinion, no reserve for returns has been provided. CCI’s revenue results from the consulting services agreements, which included providing services to physicians for billing insurance companies. CCI remits billings to insurance companies on behalf of the physicians, collect the proceeds and remits an agreed upon percentage amount to the physician. The amounts reported as revenue are net of amounts remitted. The Company accounts for this revenue In accordance with Staff Accounting Bulletin (“SAB”) No. 104, which states that the revenue is not earned until the company has been paid by the insurance company at which time it becomes realized or realizeable. EZ’s revenue from the sale of products are recognized when the sale is consummated and title is transferred. Inventories Inventories, which consist of the Company’s product held for resale, are stated at the lower of cost, determined using the first-in, first-out, or net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose of the product. If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value in the period in which the impairment is first identified. Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of sales in the Company’s statements of operations. During the year ended December 31, 2017, the Company recorded $6,242 loss due to management’s estimation of obsolete inventory. Property and Equipment Property and equipment are stated at cost. Expenditures for additions are capitalized, repairs and maintenance are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are as follows: December 31, 2017 December 31, 2016 Machinery and equipment – 7 years $ 19,195 $ — Accumulated depreciation (8,603 ) — Total property and equipment $ 10,592 $ — Intangible Assets Intangible assets consist primarily of the Tradenames, IP Technologies, Customer list, and a Non-compete agreement resulting from the acquisition referred to in Note 3. These intangible assets have finite lives and are amortized over the periods in which they provide benefit. The Company assesses the impairment of long-lived assets, including identifiable intangible assets subject to amortization, whenever significant events or significant changes in circumstances indicate the carrying value may not be recoverable. Intangible assets with indefinite lives, are subject to impairment testing in accordance with accounting standards governing such on an annual basis, or more frequently if an event or change in circumstances indicates that the fair value of a reporting unit has been reduced below its carrying value. See Note 3 for acquisition to the consolidated financial statements for disclosure on intangible assets. Financial Instruments and Fair Value Measurements The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision. Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments: ● Cash and cash equivalents, restricted cash, operating lease related receivables, and accounts payable ● Goodwill, other intangible assets, and long-lived assets held and used: Stock-based compensation The Company recognizes compensation expense for stock-based compensation in accordance with ASC Topic 718. For employee stock-based awards, the fair value of the award is calculated on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for common shares; the expense is recognized over the service period for awards expected to vest. For non-employee stock-based awards, the fair value of the award on the date of grant is calculated in the same manner as employee awards. However, the awards are revalued at the end of each reporting period and the pro rata compensation expense is adjusted accordingly until such time the nonemployee award is fully vested, at which time the total compensation recognized to date equals the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. Advertising Advertising and marketing expenses are charged to operations as incurred. For the year ended December 31, 2017 and 2016, advertising costs were $252 and $0, respectively. Income Taxes The company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented. Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding, noted above. Accounting for Business Combinations In accordance with ASC Topic 805, “Business Combinations,” when accounting for business combinations we are required to recognize the assets acquired, liabilities assumed, contractual contingencies, noncontrolling interests and contingent consideration at their fair value as of the acquisition date. These items are recorded on our consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of acquired businesses are included in the consolidated statements of income since their respective acquisition dates. The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets, estimated contingent consideration payments and/or pre-acquisition contingencies, all of which ultimately affect the fair value of goodwill established as of the acquisition date. Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date and is then subsequently tested for impairment at least annually. If the fair value of the net assets acquired exceeds the purchase price consideration, we record a gain on bargain purchase. However, in such a case, before the measurement period closes we perform a reassessment to reconfirm whether we have correctly identified all of the assets acquired and all of the liabilities assumed as of the acquisition date. As part of our accounting for business combinations we are required to estimate the useful lives of identifiable intangible assets recognized separately from goodwill. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the acquired business. An intangible asset with a finite useful life shall be amortized; an intangible asset with an indefinite useful life shall not be amortized. We base the estimate of the useful life of an intangible asset on an analysis of all pertinent factors, in particular, all of the following factors with no one factor being more presumptive than the other: ● The expected use of the asset. ● The expected useful life of another asset or a group of assets to which the useful life of the intangible asset may relate. ● Any legal, regulatory, or contractual provisions that may limit the useful life. ● Our own historical experience in renewing or extending similar arrangements, consistent with our intended use of the asset, regardless of whether those arrangements have explicit renewal or extension provisions. ● The effects of obsolescence, demand, competition, and other economic factors. ● The level of maintenance expenditures required to obtain the expected future cash flows from the asset. If no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of an intangible asset to the reporting entity, the useful life of the asset shall be considered to be indefinite. The term indefinite does not mean the same as infinite or indeterminate. The useful life of an intangible asset is indefinite if that life extends beyond the foreseeable horizon—that is, there is no foreseeable limit on the period of time over which it is expected to contribute to the cash flows of the acquired business. Although we believe the assumptions and estimates we have made have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired entity and are inherently uncertain. Examples of critical estimates in accounting for acquisitions include but are not limited to: ● future expected cash flows from sales of products and services and related contracts and agreements; ● discount and long-term growth rates; and ● the estimated fair value of the acquisition-related contingent consideration, which is performed using a probability-weighted income approach based upon the forecasted achievement of post-acquisition pre-determined targets; Recent Accounting Pronouncements Improvements to Employee Share-Based Payment Accounting In March 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update that amends several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification within the statement of cash flows, and accounting for forfeitures. The amendments in this accounting standard update were effective for periods beginning after December 15, 2016. The provisions of this accounting standard update did not have an impact on our financial statements. Simplifying the Goodwill Impairment Test In January 2017, the FASB issued an accounting standard update that simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. Under the new standard, goodwill impairment should be recognized based on the amount by which the carrying amount of a reporting unit exceeds its fair value, but should not exceed the total amount of goodwill allocated to the reporting unit. The amendments in this accounting standard update are to be applied prospectively and are effective for interim or annual goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The provisions of this accounting standard update did not have an impact on our financial statements. Revenue Recognition In May 2014, the FASB issued an accounting standard update that amends the accounting guidance on revenue recognition. The amendments in this accounting standard update are intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices, and improve disclosure requirements. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The principles in the standard should be applied using a five-step model that includes 1) identifying the contract(s) with a customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations in the contract, and 5) recognizing revenue when (or as) the performance obligations are satisfied. The standard also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In addition, the standard amends the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (for example, sales of real estate) to be consistent with the standard’s guidance on recognition and measurement (including the constraint on revenue). The FASB also subsequently issued several amendments to the standard, including clarification on principal versus agent guidance, identifying performance obligations, and immaterial goods and services in a contract. This accounting standard update is effective for reporting periods beginning after December 15, 2017. The Company adopted this accounting standard update effective January 1, 2018. The amendments in this accounting standard update must be applied using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which requires additional footnote disclosures). Effective January 1, 2018, the Company adopted the standard using the modified retrospective approach applied only to contracts not completed as of the date of adoption, with no restatement of comparative periods and a cumulative effect adjustment recognized as of the date of adoption. As part of the implementation process, the Company performed an analysis to identify accounting policies that needed to change and additional disclosures that will be required. The Company considered factors such as customer contracts with unique revenue recognition considerations, the nature and type of goods and services offered, the degree to which contracts include multiple performance obligations or variable consideration, and the pattern in which revenue is currently recognized, among other things. The Company’s two revenue streams, Billing and Sale of Products, were evaluated, and similar performance obligations will result under the new standard as compared with deliverables and separate units of accounting currently identified. Additionally, the Company considered recognition under the new standard and concluded the timing of the Company’s revenue recognition will remain the same. The Company has also evaluated the changes in controls and processes that are necessary to implement the new standard, and no material changes were required. Accounting for Leases In February 2016, the FASB issued an accounting standard update that amends the accounting guidance on leases. The intent of this ASU is to increase transparency and comparability among organizations recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Lessors will account for leases using an approach that is substantially equivalent to existing U.S. GAAP for sales-type leases, direct financing leases and operating leases. Unlike current guidance, however, a lease with collectability uncertainties may be classified as a sales-type lease. If collectability of lease payments, plus any amount necessary to satisfy a lessee residual value guarantee, is not probable, lease payments received will be recognized as a deposit liability and the underlying assets will not be derecognized until collectability of the remaining amounts becomes probable. The ASU is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company plans to adopt this guidance on January 1, 2019, that standard’s effective date, and is currently in the process of determining the impact that the updated accounting guidance will have on the consolidated financial statements and related disclosures. Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued an accounting standard update that provides guidance on the following eight specific cash flow classification issues: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. Current GAAP does not include specific guidance on these eight cash flow classification issues. The amendments of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. We will adopt this accounting standard update effective January 1, 2018. The provisions of this update will not have a material impact on our consolidated statements of cash flows. Tax Cuts and Jobs Act In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” to address stakeholder concerns about the guidance in current U.S. GAAP that requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date. The amendments in this Update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The Company is currently evaluating the timing, methods and impact of adopting this new standard on the consolidated financial statements. |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisition | NOTE 3 – Acquisitions Health-Right Discoveries, Inc. modified its business plan from building a platform of products in the nutraceutical and dietary supplement space to seeking acquisitions in the healthcare field. HRD identified two target companies for sale that fit their plan going forward of acquiring small, profitable, privately held companies in the healthcare space that generate at least $5 million in revenue and $1 million in EBITDA. On September 29, 2017, the Company finalized a securities purchase agreement with CCI and EZ to purchase 100% of their outstanding interests for $6.1 million plus 1,751,580 shares of its common stock. The $6.1 million purchase price consists of $3.6 million cash and a $2.5 million 5-year non-interest bearing note, payable at $500,000 per year. Interest on the non-interest bearing note has been imputed using 12.75% interest rate (see Note 5). In accordance with the acquisition method of accounting, the Company allocated the consideration to the net tangible and identifiable intangible assets based on their estimated fair values which were determined by an independent valuation performed by a third party. Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and identifiable intangible assets. The following table presents the consideration of net assets purchased: Cash $ 3,600,000 1,751,580 shares of common stock issued 175,158 Note payable 2,500,000 Imputed interest (763,558 ) Total Purchase Price $ 5,511,600 The assets acquired and liabilities assumed as part of our acquisition were recognized at their fair values as of the effective acquisition date, September 29, 2017, based upon an appraisal from a third party. The following table summarizes the fair values assigned to the assets acquired and liabilities assumed. Cash $ 81,359 Current assets 759,710 Other non-current assets 11,167 Intangible assets 4,313,000 Goodwill 3,313,226 Current liabilities (1,343,880 ) Deferred tax liability (1,622,982 ) Net assets acquired $ 5,511,600 Acquisition costs of $410,000 were incurred and expensed for the year December 31, 2017. As part of the acquisition the company recognized deferred tax liabilities of $1,622,982 related to the unamortized identifiable intangible assets acquired in the amount of $4,313,000 using a blended 37.63% tax rate. The following table provides unaudited pro forma results of operations for the fiscal years ended December 31, 2017 and 2016 as if the acquisitions had been consummated as of the beginning of each period presented. The pro forma results include the effect of certain purchase accounting adjustments, such as the estimated changes in depreciation and amortization expense on the acquired intangible assets. However, pro forma results do not include any anticipated cost savings or other effects of the planned integration of the companies. Accordingly, such amounts are not necessarily indicative of the results if the acquisition has occurred on the dates indicated, or which may occur in the future. (Unaudited) Pro Forma Results Year ended December 31, 2017 2016 Revenues $ 7,049,331 $ 5,114,670 Income before income taxes $ 1,271,645 $ 1,278,467 Fully diluted earnings per share $ 0.07 $ 0.07 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | NOTE 4 – Intangible Assets Amortizing Intangible Assets Estimates Useful Life Gross Carrying Amount Customer Lists 10 years $ 2,653,000 Tradenames 15 years 377,000 IP Technologies 10 years 819,000 Non-compete 5 years 464,000 4,313,000 Less: Accumulated Amortization (116,283 ) $ 4,196,717 The amortization expense related to the intangible assets was $116,283 and $0 as of December 31, 2017 and 2016, respectively. |
Notes payable
Notes payable | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes payable | NOTE 5 – Notes payable The Company obtained a secured convertible note with a lender for $5 million. Interest is payable monthly, at 12.75% per annum, the note matures on September 29, 2020. The note can be converted at any time in whole or in part at $0.44 per share. In addition, the lender received 3,584,279 shares of common stock valued at $0.10 per share along with a 2 percent original issue discount. The total amount of the discount is $493,345. The Company had incurred $34,917 in loan costs. Both the discount and loan costs are presented as a reduction of the note payable. The Company, as part of consideration for the purchase of CCI and EZ, obtained a $2.5 million note payable. The note is non-interest bearing with 5 annual payments of $500,000, matures on September 30, 2022. Interest has been imputed at 12.75% per annum. Upon each annual payment date the holder may elect to convert the annual installment of the principal amount due into shares of common stock at $2 per share. December 31, 2017 2016 Note payable – monthly interest, 12.75% per annum, matures on September 29, 2020 $ 5,000,000 $ — Less discounts (452,233 ) Note payable – monthly interest, 12.75% per annum, matures on September 30, 2022 2,500,000 — Less discounts (704,858 ) Subtotal 6,342,909 — Less: current portion, net of discount $399,252 265,196 — Long- term portion $ 6,077,713 $ — Principal payments on the above notes mature as follows (exclusive of imputed interest): Year ending December 31: 2018 $ 265,196 $ — 2019 301,057 2020 5,341,766 2021 387,980 — 2022 440,443 — Thereafter $ 6,736,442 $ — |
Related Party
Related Party | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party | NOTE 6 – Related Party Since inception, the Company has relied in large part on loans from James Pande and David Hopkins, its principal shareholders, to fund its operations. Mr. Pande and Mr. Hopkins advanced money to help fund the Company’s operations. Interest rates ranged from 2.9% - 7.5%, per annum. The balance due as of December 31, 2017 and 2016 was $0 and $193,662, respectively, including accrued interest. The related party loan balance of $33,512 as of December 31, 2017 represents reimbursed expenses owed to shareholder. The Company’s board of directors approved a salary to the Company’s president in the amount of $52,000 per annum plus a car allowance of $600 per month. As of December 31, 2017 and 2016 the amount unpaid and accrued amount aggregated is $182,000 and $169,000, respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
STOCKHOLDERS' EQUITY (DEFICIENCY) | |
Stockholders' Equity | NOTE 7 – Stockholders’ Equity The Company has authorized 100,000,000 shares of common stock $.001 par value and 5,000,000 shares of preferred stock $.001 par value. During the year ended December 31, 2016, the Company issued 400,000 shares of common stock for services rendered which were valued at $40,000. The Company valued these shares based on the per share price in which unaffiliated investors purchased shares of common stock in the private placement referred to above. On September 29, 2017, the Company issued 1,751,580 shares of common stock in connection with the acquisition of CCI and EZ (see note 3). Also, on September 29, 2017, the Company issued 3,584,279 shares of its common stock in connection with its $5 million note (see note 5). |
2015 Incentive Stock Plan
2015 Incentive Stock Plan | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
2015 Incentive Stock Plan | NOTE 8 – 2015 Incentive Stock Plan Our 2015 Incentive Stock Plan provides for equity incentives to be granted to our employees, executive officers or directors or to key advisers or consultants. Equity incentives may be in the form of stock options with an exercise price not less than the fair market value of the underlying shares as determined pursuant to the 2015 Incentive Stock Plan, restricted stock awards, other stock based awards, or any combination of the foregoing. The 2015 Incentive Stock Plan is administered by the board of directors. 3,000,000 shares of our common stock are reserved for issuance pursuant to the exercise of awards under the 2015 Incentive Stock Plan. The number of shares so reserved automatically adjusts upward on January 1 of each year, so that the number of shares covered by the 2015 Incentive Stock Plan is equal to 15% of our issued and outstanding common stock. On May 1, 2017, the Company issued 150,000 stock options from its 2015 Stock Option Incentive Plan for legal services rendered. These options are exercisable at $0.35 per share. The Company determined at the date the options were issued they had no value and did not record an amount for stock based compensation. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 9 – Income Taxes The components of income before income taxes and the effect of adjustments to tax computed at the federal statutory rate for the years ended December 31, 2017 and 2016 were as follows: 2017 2016 Loss before income taxes $ (208,587 ) $ (144,350 ) Computed tax at federal statutory rate of 34% $ (70,920 ) $ (49,049 ) State taxes at 6%, net of federal benefit (7,571 ) (5,240 ) Rate change (385,913 ) — Adjustment to valuation allowance (178,366 ) 54,289 Benefit from income taxes $ (642,770 ) $ — The benefit from income taxes in the consolidated statements of operations consists of the following: Year ended December 31, 2017 2016 Current: Federal $ — $ — State — — Deferred: Federal $ (361,203 ) $ — State (103,201 ) — (464,404 ) — Adjustment to valuation allowance (178,366 ) — Benefit from income taxes $ (642,770 ) $ — As of December 31, 2017 and 2016, the components of the deferred tax assets and liabilities are as follows: As of December 31, 2017 Deferred tax As of December 31, 2016 Deferred tax Assets (Liabilities) Assets (Liabilities) Net operating loss carry forward $ 152,902 $ 178,366 Intangible assets (1,133,114 ) — Valuation allowance — (178,366 ) Totals ($ 980,212 ) $ — As of December 31, 2017, the Company had approximately $566,304 of federal and state net operating loss carryovers (“NOLs”) which begin to expire in 2031. Utilization of the NOLs may be subject to limitation under the Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under regulations. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. In the fourth quarter 2017, the Company released the valuation allowance against its U.S. federal and state deferred tax assets. In making the determination to reverse the valuation allowance against U.S. federal and state deferred tax assets, the Company took into consideration its movement into a cumulative income position due to the acquisition of CCI and EZ (see Note 3) which will generate taxable income into the future, the pro forma adjustment of the acquired entities, and forecasts of future earnings for its business. The Company expects to continue to generate income before taxes in the in future periods. The Company files U.S. federal and state of Florida and Arkansas tax returns that are subject to audit by tax authorities beginning with the year ended December 31, 2013. The Company’s policy is to classify assessments, if any, for tax and related interest and penalties as tax expense. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law, making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The Company has calculated the impact of the Act in the year end income tax provision in accordance with management’s understanding of the Act and guidance available as of the date of this filing and as a result have recorded a $385,913 income tax benefit in the fourth quarter of 2017, the period in which the legislation was enacted. The amount related to the re-measurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future, was $385,913, which reduced the fourth quarter tax expense of $385,913 to a benefit of $642,770. On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The deferred tax expense recorded in connection with the remeasurement of deferred tax assets is a provisional amount and a reasonable estimate at December 31, 2017 based upon the best information currently available. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 when the analysis is complete. The accounting is expected to be complete when the 2017 U.S. corporate income tax return is filed in 2018. |
Business Segment Information
Business Segment Information | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Business Segment Information | NOTE 10 – Business Segment Information As of September 29, 2017, the Company operated in two reportable segments (ancillary program and prescription medicine) supported by a corporate group which conducts activities that are non-segment specific. The following table present selected financial information about the Company’s reportable segments for the years ended December 31, 2017. For the year ended December 31, 2017 Consolidated Ancillary Program Prescription Medicine Corporate Revenues $ 2,052,352 $ 1,599,652 $ 452,700 $ — Cost of Revenue 329,511 — 329,511 — Long-lived assets 7,520,535 6,471,356 1,049,179 — Income (loss) before income tax (208,587 ) 683,964 110,415 (1,002,966 ) Identifiable assets 4,207,309 3,158,130 1,049,179 — Depreciation and amortization 119,768 575 — 119,193 |
Commitments, Contingencies, Gua
Commitments, Contingencies, Guarantees and Indemnities | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies, Guarantees and Indemnities | NOTE 11 – Commitments, Contingencies, Guarantees and Indemnities Future minimum payments under operating lease agreements are as follows: Years Ending December 31, 2018 $ 55,763 2019 56,444 2020 58,138 2021 49,653 Total $ 219,998 |
Subsequent events
Subsequent events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent events | NOTE 12 – Subsequent Events The Company has evaluated subsequent events through the date that the financial statements were issued and determined that there were subsequent events requiring adjustment to or disclosure in the financial statements. On January 10, 2018, the Company entered into employment agreement with David Hopkins, its President, effective as of January 1, 2018 (the “Effective Date”). Pursuant to the employment agreement, Mr. Hopkins assumed the additional position of Chief Executive Officer of the Company. The employment agreement is for an initial term of three (3) and automatically renews for additional three (3) year periods, provided that the Company achieves Adjusted EBITDA (as defined) of $3,500,000 for any calendar year during the initial term and any renewal term. The employment agreement provides for an initial base salary of $175,000. In the event in any calendar year during the initial term or any renewal term, Health-Right achieves Adjusted EBITDA of $3,500,000, Mr. Hopkins’ annual base salary shall automatically increase to $250,000 and in the event in any calendar year during the initial term or any renewal term, the Company achieves Adjusted EBITDA of $5,000,000, his annual base salary shall automatically increase to $325,000. Mr. Hopkins will also receive a $600 per month car allowance while the employment agreement is in effect. In addition to the foregoing, pursuant to the employment agreement, Mr. Hopkins was granted an option to purchase 525,000 shares of HRD common stock under the Company’s 2015 Stock Incentive Plan (the “Incentive Plan”) at an exercise price of $0.35 per share. The option vests in six equal semi-annual installments commencing June 30, 2018, expires the ten (10) years from the date of grant and is otherwise subject to the terms of the Incentive Plan. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Certain of the Company’s estimates could be affected by external conditions, including those unique to its industry, and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates that could cause actual results to differ from its estimates. The Company re-evaluates all of its accounting estimates at least quarterly based on these conditions and record adjustments when necessary. |
Cash | Cash The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. |
Concentration of Risk | Concentration of Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains its principal cash balances in various financial institutions. These balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December 31, 2017 and 2016, $796,652 and $0 were in excess of the FDIC insured limit, respectively. |
Accounts Receivable | Accounts Receivable Accounts receivable are stated at the amount the Company expects to collect from customers. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management has determined there is no allowance for doubtful accounts necessary as of December 31, 2017. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If the financial condition of the Company’s customers was to deteriorate and adversely affecting their ability to make payments, additional allowances would be required. |
Revenue Recognition | Revenue Recognition The Company follows the guidance of the Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition”. We record revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the selling price to the customer is fixed or determinable and collectability of the revenue is reasonably assured. The Company has not experienced any significant returns from customers and accordingly, in management’s opinion, no reserve for returns has been provided. CCI’s revenue results from the consulting services agreements, which included providing services to physicians for billing insurance companies. CCI remits billings to insurance companies on behalf of the physicians, collect the proceeds and remits an agreed upon percentage amount to the physician. The amounts reported as revenue are net of amounts remitted. The Company accounts for this revenue In accordance with Staff Accounting Bulletin (“SAB”) No. 104, which states that the revenue is not earned until the company has been paid by the insurance company at which time it becomes realized or realizeable. EZ’s revenue from the sale of products are recognized when the sale is consummated and title is transferred. |
Inventories | Inventories Inventories, which consist of the Company’s product held for resale, are stated at the lower of cost, determined using the first-in, first-out, or net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose of the product. If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value in the period in which the impairment is first identified. Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of sales in the Company’s statements of operations. During the year ended December 31, 2017, the Company recorded $6,242 loss due to management’s estimation of obsolete inventory. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Expenditures for additions are capitalized, repairs and maintenance are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are as follows: December 31, 2017 December 31, 2016 Machinery and equipment – 7 years $ 19,195 $ — Accumulated depreciation (8,603 ) — Total property and equipment $ 10,592 $ — |
Intangible assets | Intangible Assets Intangible assets consist primarily of the Tradenames, IP Technologies, Customer list, and a Non-compete agreement resulting from the acquisition referred to in Note 3. These intangible assets have finite lives and are amortized over the periods in which they provide benefit. The Company assesses the impairment of long-lived assets, including identifiable intangible assets subject to amortization, whenever significant events or significant changes in circumstances indicate the carrying value may not be recoverable. Intangible assets with indefinite lives, are subject to impairment testing in accordance with accounting standards governing such on an annual basis, or more frequently if an event or change in circumstances indicates that the fair value of a reporting unit has been reduced below its carrying value. See Note 3 for acquisition to the consolidated financial statements for disclosure on intangible assets. |
Financial Instruments and Fair Value Measurements | Financial Instruments and Fair Value Measurements The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision. Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments: ● Cash and cash equivalents, restricted cash, operating lease related receivables, and accounts payable ● Goodwill, other intangible assets, and long-lived assets held and used: |
Stock-based compensation | Stock-based compensation The Company recognizes compensation expense for stock-based compensation in accordance with ASC Topic 718. For employee stock-based awards, the fair value of the award is calculated on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for common shares; the expense is recognized over the service period for awards expected to vest. For non-employee stock-based awards, the fair value of the award on the date of grant is calculated in the same manner as employee awards. However, the awards are revalued at the end of each reporting period and the pro rata compensation expense is adjusted accordingly until such time the nonemployee award is fully vested, at which time the total compensation recognized to date equals the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. |
Advertising | Advertising Advertising and marketing expenses are charged to operations as incurred. For the year ended December 31, 2017 and 2016, advertising costs were $252 and $0, respectively. |
Income Taxes | Income Taxes The company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding, noted above. |
Accounting for Business Combinations | Accounting for Business Combinations In accordance with ASC Topic 805, “Business Combinations,” when accounting for business combinations we are required to recognize the assets acquired, liabilities assumed, contractual contingencies, noncontrolling interests and contingent consideration at their fair value as of the acquisition date. These items are recorded on our consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of acquired businesses are included in the consolidated statements of income since their respective acquisition dates. The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets, estimated contingent consideration payments and/or pre-acquisition contingencies, all of which ultimately affect the fair value of goodwill established as of the acquisition date. Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date and is then subsequently tested for impairment at least annually. If the fair value of the net assets acquired exceeds the purchase price consideration, we record a gain on bargain purchase. However, in such a case, before the measurement period closes we perform a reassessment to reconfirm whether we have correctly identified all of the assets acquired and all of the liabilities assumed as of the acquisition date. As part of our accounting for business combinations we are required to estimate the useful lives of identifiable intangible assets recognized separately from goodwill. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the acquired business. An intangible asset with a finite useful life shall be amortized; an intangible asset with an indefinite useful life shall not be amortized. We base the estimate of the useful life of an intangible asset on an analysis of all pertinent factors, in particular, all of the following factors with no one factor being more presumptive than the other: ● The expected use of the asset. ● The expected useful life of another asset or a group of assets to which the useful life of the intangible asset may relate. ● Any legal, regulatory, or contractual provisions that may limit the useful life. ● Our own historical experience in renewing or extending similar arrangements, consistent with our intended use of the asset, regardless of whether those arrangements have explicit renewal or extension provisions. ● The effects of obsolescence, demand, competition, and other economic factors. ● The level of maintenance expenditures required to obtain the expected future cash flows from the asset. If no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of an intangible asset to the reporting entity, the useful life of the asset shall be considered to be indefinite. The term indefinite does not mean the same as infinite or indeterminate. The useful life of an intangible asset is indefinite if that life extends beyond the foreseeable horizon—that is, there is no foreseeable limit on the period of time over which it is expected to contribute to the cash flows of the acquired business. Although we believe the assumptions and estimates we have made have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired entity and are inherently uncertain. Examples of critical estimates in accounting for acquisitions include but are not limited to: ● future expected cash flows from sales of products and services and related contracts and agreements; ● discount and long-term growth rates; and ● the estimated fair value of the acquisition-related contingent consideration, which is performed using a probability-weighted income approach based upon the forecasted achievement of post-acquisition pre-determined targets; |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Improvements to Employee Share-Based Payment Accounting In March 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update that amends several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification within the statement of cash flows, and accounting for forfeitures. The amendments in this accounting standard update were effective for periods beginning after December 15, 2016. The provisions of this accounting standard update did not have an impact on our financial statements. Simplifying the Goodwill Impairment Test In January 2017, the FASB issued an accounting standard update that simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. Under the new standard, goodwill impairment should be recognized based on the amount by which the carrying amount of a reporting unit exceeds its fair value, but should not exceed the total amount of goodwill allocated to the reporting unit. The amendments in this accounting standard update are to be applied prospectively and are effective for interim or annual goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The provisions of this accounting standard update did not have an impact on our financial statements. Revenue Recognition In May 2014, the FASB issued an accounting standard update that amends the accounting guidance on revenue recognition. The amendments in this accounting standard update are intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices, and improve disclosure requirements. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The principles in the standard should be applied using a five-step model that includes 1) identifying the contract(s) with a customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations in the contract, and 5) recognizing revenue when (or as) the performance obligations are satisfied. The standard also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In addition, the standard amends the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (for example, sales of real estate) to be consistent with the standard’s guidance on recognition and measurement (including the constraint on revenue). The FASB also subsequently issued several amendments to the standard, including clarification on principal versus agent guidance, identifying performance obligations, and immaterial goods and services in a contract. This accounting standard update is effective for reporting periods beginning after December 15, 2017. The Company adopted this accounting standard update effective January 1, 2018. The amendments in this accounting standard update must be applied using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which requires additional footnote disclosures). Effective January 1, 2018, the Company adopted the standard using the modified retrospective approach applied only to contracts not completed as of the date of adoption, with no restatement of comparative periods and a cumulative effect adjustment recognized as of the date of adoption. As part of the implementation process, the Company performed an analysis to identify accounting policies that needed to change and additional disclosures that will be required. The Company considered factors such as customer contracts with unique revenue recognition considerations, the nature and type of goods and services offered, the degree to which contracts include multiple performance obligations or variable consideration, and the pattern in which revenue is currently recognized, among other things. The Company’s two revenue streams, Billing and Sale of Products, were evaluated, and similar performance obligations will result under the new standard as compared with deliverables and separate units of accounting currently identified. Additionally, the Company considered recognition under the new standard and concluded the timing of the Company’s revenue recognition will remain the same. The Company has also evaluated the changes in controls and processes that are necessary to implement the new standard, and no material changes were required. Accounting for Leases In February 2016, the FASB issued an accounting standard update that amends the accounting guidance on leases. The intent of this ASU is to increase transparency and comparability among organizations recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Lessors will account for leases using an approach that is substantially equivalent to existing U.S. GAAP for sales-type leases, direct financing leases and operating leases. Unlike current guidance, however, a lease with collectability uncertainties may be classified as a sales-type lease. If collectability of lease payments, plus any amount necessary to satisfy a lessee residual value guarantee, is not probable, lease payments received will be recognized as a deposit liability and the underlying assets will not be derecognized until collectability of the remaining amounts becomes probable. The ASU is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company plans to adopt this guidance on January 1, 2019, that standard’s effective date, and is currently in the process of determining the impact that the updated accounting guidance will have on the consolidated financial statements and related disclosures. Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued an accounting standard update that provides guidance on the following eight specific cash flow classification issues: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. Current GAAP does not include specific guidance on these eight cash flow classification issues. The amendments of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. We will adopt this accounting standard update effective January 1, 2018. The provisions of this update will not have a material impact on our consolidated statements of cash flows. Tax Cuts and Jobs Act In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” to address stakeholder concerns about the guidance in current U.S. GAAP that requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date. The amendments in this Update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The Company is currently evaluating the timing, methods and impact of adopting this new standard on the consolidated financial statements. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Property and Equipment | Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are as follows: December 31, 2017 December 31, 2016 Machinery and equipment – 7 years $ 19,195 $ — Accumulated depreciation (8,603 ) — Total property and equipment $ 10,592 $ — |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Consideration of net assets purchased | The following table presents the consideration of net assets purchased: Cash $ 3,600,000 1,751,580 shares of common stock issued 175,158 Note payable 2,500,000 Imputed interest (763,558 ) Total Purchase Price $ 5,511,600 |
Schedule of allocation of purchase cost | The following table summarizes the fair values assigned to the assets acquired and liabilities assumed. Cash $ 81,359 Current assets 759,710 Other non-current assets 11,167 Intangible assets 4,313,000 Goodwill 3,313,226 Current liabilities (1,343,880 ) Deferred tax liability (1,622,982 ) Net assets acquired $ 5,511,600 |
Acquisition, Pro Forma Information | Accordingly, such amounts are not necessarily indicative of the results if the acquisition has occurred on the dates indicated, or which may occur in the future. (Unaudited) Pro Forma Results Year ended December 31, 2017 2016 Revenues $ 7,049,331 $ 5,114,670 Income before income taxes $ 1,271,645 $ 1,278,467 Fully diluted earnings per share $ 0.07 $ 0.07 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Amortizing Intangible Assets Estimates Useful Life Gross Carrying Amount Customer Lists 10 years $ 2,653,000 Tradenames 15 years 377,000 IP Technologies 10 years 819,000 Non-compete 5 years 464,000 4,313,000 Less: Accumulated Amortization (116,283 ) $ 4,196,717 |
Notes payable (Tables)
Notes payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of note payable | December 31, 2017 2016 Note payable – monthly interest, 12.75% per annum, matures on September 29, 2020 $ 5,000,000 $ — Less discounts (452,233 ) Note payable – monthly interest, 12.75% per annum, matures on September 30, 2022 2,500,000 — Less discounts (704,858 ) Subtotal 6,342,909 — Less: current portion, net of discount $399,252 265,196 — Long- term portion $ 6,077,713 $ — |
Schedule of Principal payments on maturity | Principal payments on the above notes mature as follows (exclusive of imputed interest): Year ending December 31: 2018 $ 265,196 $ — 2019 301,057 2020 5,341,766 2021 387,980 — 2022 440,443 — Thereafter $ 6,736,442 $ — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Components of income before income taxes and effect of adjustments to tax computed at federal statutory rate | The components of income before income taxes and the effect of adjustments to tax computed at the federal statutory rate for the years ended December 31, 2017 and 2016 were as follows: 2017 2016 Loss before income taxes $ (208,587 ) $ (144,350 ) Computed tax at federal statutory rate of 34% $ (70,920 ) $ (49,049 ) State taxes at 6%, net of federal benefit (7,571 ) (5,240 ) Rate change (385,913 ) — Adjustment to valuation allowance (178,366 ) 54,289 Benefit from income taxes $ (642,770 ) $ — |
Schedule of benefit from income taxes | The benefit from income taxes in the consolidated statements of operations consists of the following: Year ended December 31, 2017 2016 Current: Federal $ — $ — State — — Deferred: Federal $ (361,203 ) $ — State (103,201 ) — (464,404 ) — Adjustment to valuation allowance (178,366 ) — Benefit from income taxes $ (642,770 ) $ — |
Schedule of deferred tax assets and liabilities | As of December 31, 2017 and 2016, the components of the deferred tax assets and liabilities are as follows: As of December 31, 2017 Deferred tax As of December 31, 2016 Deferred tax Assets (Liabilities) Assets (Liabilities) Net operating loss carry forward $ 152,902 $ 178,366 Intangible assets (1,133,114 ) — Valuation allowance — (178,366 ) Totals ($ 980,212 ) $ — |
Business Segment Information (T
Business Segment Information (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Business Segment Information | The following table present selected financial information about the Company’s reportable segments for the years ended December 31, 2017. For the year ended December 31, 2017 Consolidated Ancillary Program Prescription Medicine Corporate Revenues $ 2,052,352 $ 1,599,652 $ 452,700 $ — Cost of Revenue 329,511 — 329,511 — Long-lived assets 7,520,535 6,471,356 1,049,179 — Income (loss) before income tax (208,587 ) 683,964 110,415 (1,002,966 ) Identifiable assets 4,207,309 3,158,130 1,049,179 — Depreciation and amortization 119,768 575 — 119,193 |
Commitments, Contingencies, G27
Commitments, Contingencies, Guarantees and Indemnities (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum payments under operating lease | Future minimum payments under operating lease agreements are as follows: Years Ending December 31, 2018 $ 55,763 2019 56,444 2020 58,138 2021 49,653 Total $ 219,998 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Machinery and equipment, estimated useful life | 7 years | |
Machinery and equipment | $ 19,195 | |
Accumulated depreciation | (8,603) | |
Total property and equipment | $ 10,592 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Fdic limit | $ 250,000 | |
FDIC insured limit | 796,652 | $ 0 |
Allowance for doubtful accounts | 0 | |
Obsolete inventory | 6,242 | |
Advertising costs | $ 252 | $ 0 |
Acquisition (Details)
Acquisition (Details) - Common Compounds Inc EzPharmaRx LLC | Sep. 29, 2017USD ($) |
Cash | $ 3,600,000 |
1,751,580 shares of common stock issued | 175,158 |
Note payable | 2,500,000 |
Imputed interest | (763,558) |
Total Purchase Price | $ 5,511,600 |
Acquisition (Details 1)
Acquisition (Details 1) - Common Compounds Inc EzPharmaRx LLC | Sep. 29, 2017USD ($) |
Cash | $ 81,359 |
Current assets | 759,710 |
Other non-current assets | 11,167 |
Intangible assets | 4,313,000 |
Goodwill | 3,313,226 |
Current liabilities | (1,343,880) |
Deferred tax liability | (1,622,982) |
Net assets acquired | $ 5,511,600 |
Acquisition (Details 2)
Acquisition (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Business Combinations [Abstract] | ||
Revenues | $ 7,049,331 | $ 5,114,670 |
Income before income taxes | $ 1,271,645 | $ 1,278,467 |
Fully diluted earnings per share | $ 0.07 | $ 0.07 |
Acquisition (Details Narrative)
Acquisition (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended |
Sep. 29, 2017 | Dec. 31, 2017 | |
Acquisition costs | $ 410,000 | |
Common stock issued for acquisition | 175,158 | |
Common Compounds Inc EzPharmaRx LLC | ||
Purchase price | $ 6,100,000 | |
Common stock issued for acquisition | 1,751,580 | |
Cash | $ 3,600,000 | |
Non-interest-bearing note | 2,500,000 | |
Payable | $ 500,000 | |
Interest on non-interest-bearing | 12.75% | |
Deferred tax liability | $ (1,622,982) | |
Identifiable intangible assets acquired | $ 4,313,000 | |
Blended tax rate | 37.63% |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible Assets, Gross | $ 4,313,000 | |
Less: Accumulated Amortization | (116,283) | |
Intangible Assets, Net | $ 4,196,717 | |
Customer Lists [Member] | ||
Estimates useful life | 10 years | |
Intangible Assets, Gross | $ 2,653,000 | |
Trade Names [Member] | ||
Estimates useful life | 15 years | |
Intangible Assets, Gross | $ 377,000 | |
IP Technologies [Member] | ||
Estimates useful life | 10 years | |
Intangible Assets, Gross | $ 819,000 | |
Noncompete [Member] | ||
Estimates useful life | 5 years | |
Intangible Assets, Gross | $ 464,000 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense related the intangible assets | $ 116,283 |
Notes payable (Details)
Notes payable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Note payable | ||
Subtotal | $ 6,342,909 | |
Less: current portion, net of discount $399,252 | 265,196 | |
Long- term portion | 6,077,713 | |
Notes Payable One [Member] | ||
Note payable | 5,000,000 | |
Less discounts | (452,233) | |
Notes Payable Two [Member] | ||
Note payable | 2,500,000 | |
Less discounts | $ (704,858) |
Notes payable (Details 1)
Notes payable (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Year ending December 31 2018 | $ 265,196 | |
Year ending December 31 2019 | 301,057 | |
Year ending December 31 2020 | 5,341,766 | |
Year ending December 31 2021 | 387,980 | |
Year ending December 31 2022 | 440,443 | |
Thereafter | $ 6,736,442 |
Notes payable (Details Narrativ
Notes payable (Details Narrative) - USD ($) | 1 Months Ended | ||
Sep. 29, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Common stock issued | 22,869,191 | 17,533,332 | |
Discount | $ 399,252 | ||
Loan costs | $ 6,342,909 | ||
Lender | |||
Financing Cost | $ 5,000,000 | ||
Interest rate | 12.75% | ||
Maturity Date | Sep. 29, 2020 | ||
Common stock issued | 3,584,279 | ||
Price per Share | $ 0.10 | ||
Discount | $ 493,345 | ||
Loan costs | 34,917 | ||
Promissory note | 2,500,000 | ||
Common Compounds Inc EzPharmaRx LLC | |||
Financing Cost | $ 2,500,000 | ||
Interest rate | 12.75% | ||
Maturity Date | Sep. 30, 2022 | ||
Annual payment | $ 500,000 | ||
Interest imputed rate | 12.75% |
Related Party (Details Narrativ
Related Party (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | |
Salary to officer per month | $ 13,000 | $ 39,000 | |
Mr. David Hopkins [Member] | |||
Salary to officer per month | 52,000 | ||
Car allowance per month | 600 | ||
Unpaid and accrued amount | 182,000 | $ 169,000 | |
Mr. James. Pande [Member] | Secured Promissory [Member] | |||
Outstanding amount | $ 0 | $ 193,662 | |
Mr. James. Pande [Member] | Secured Promissory [Member] | Minimum [Member] | |||
Borrowing bear interest rate | 2.90% | ||
Mr. James. Pande [Member] | Secured Promissory [Member] | Maximum [Member] | |||
Borrowing bear interest rate | 7.50% | ||
Sareholder [Member] | |||
Related party loan | $ 33,512 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Sep. 29, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | |
Common stock, authorized | 100,000,000 | 100,000,000 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Stock issued | 17,533,332 | 22,869,191 | |
Preferred stock, authorized | 5,000,000 | 5,000,000 | |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Number of share issued for services | 400,000 | ||
Value of share issued for services | $ 40,000 | ||
Lender | |||
Stock issued | 3,584,279 | ||
Financing Cost | $ 5,000,000 | ||
Common Compounds Inc EzPharmaRx LLC | |||
Financing Cost | $ 2,500,000 | ||
Common Compounds Inc EzPharmaRx LLC | Seller | |||
Stock issued | 1,751,580 |
2015 Incentive Stock Plan (Deta
2015 Incentive Stock Plan (Details Narrative) - $ / shares | May 01, 2017 | Dec. 31, 2016 |
Number of share issued for services | 400,000 | |
2015 Stock Option Incentive Plan [Member] | ||
Stock issued for option plan | 3,000,000 | |
Number of share issued for services | 150,000 | |
Option exerciseable price | $ 0.35 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Loss before income taxes | $ (208,587) | $ (144,350) | |
Computed tax at federal statutory rate of 34% | (70,920) | (49,049) | |
State taxes at 6%, net of federal benefit | (7,571) | (5,240) | |
Rate change | (385,913) | ||
Adjustment to valuation allowance | (178,366) | 54,289 | |
Benefit from income taxes | $ 385,913 | $ (642,770) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current: | |||
Federal | |||
State | |||
Current | |||
Deferred: | |||
Federal | (361,203) | ||
State | (103,201) | ||
Deferred | (464,404) | ||
Adjustment to valuation allowance | (178,366) | ||
Benefit from income taxes | $ 385,913 | $ (642,770) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax Assets (Liabilities) | ||
Net operating loss carry forward | $ 152,902 | $ 178,366 |
Intangible assets | (1,133,114) | |
Less: Valuation allowance | (178,366) | |
Totals | $ (980,212) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Federal and state net operating loss carryovers | $ 566,304 | $ 566,304 | |
Operating Loss Carryforwards, Expiration Date | Dec. 31, 2031 | ||
Description of utilization of NOLs | Utilization of the NOLs may be subject to limitation under the Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under regulations. | ||
Change in tax rate | 21.00% | ||
Income tax benefit | $ 385,913 | $ (642,770) |
Business Segment Information (D
Business Segment Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues | $ 2,052,352 | $ 8,959 |
Cost of Revenue | 329,511 | 3,251 |
Long-lived assets | 7,520,535 | |
Income (loss) before income tax | (208,587) | $ (144,350) |
Identifiable assets | 4,207,309 | |
Depreciation and amortization | 119,768 | |
Ancillary Program [Member] | ||
Revenues | 1,599,652 | |
Cost of Revenue | ||
Long-lived assets | 6,471,356 | |
Income (loss) before income tax | 683,964 | |
Identifiable assets | 3,158,130 | |
Depreciation and amortization | 575 | |
Prescription Medicine [Member] | ||
Revenues | 452,700 | |
Cost of Revenue | 329,511 | |
Long-lived assets | 1,049,179 | |
Income (loss) before income tax | 110,415 | |
Identifiable assets | 1,049,179 | |
Depreciation and amortization | ||
Corporate [Member] | ||
Revenues | ||
Cost of Revenue | ||
Long-lived assets | ||
Income (loss) before income tax | (1,002,966) | |
Identifiable assets | ||
Depreciation and amortization | $ 119,193 |
Commitments, Contingencies, G47
Commitments, Contingencies, Guarantees and Indemnities (Details) | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 55,763 |
2,019 | 56,444 |
2,020 | 58,138 |
2,021 | 49,653 |
Total | $ 219,998 |
Subsequent events (Details Narr
Subsequent events (Details Narrative) - USD ($) | Jan. 10, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Adjusted EBITDA | $ 1,271,645 | $ 1,278,467 | |
Annual base salary | 13,000 | $ 39,000 | |
Mr. David Hopkins [Member] | |||
Annual base salary | 52,000 | ||
Car allowance per month | $ 600 | ||
Subsequent Event [Member] | Employment agreement | Mr. David Hopkins [Member] | |||
Adjusted EBITDA | $ 3,500,000 | ||
Initial term | 3 years | ||
Initial base salary | $ 175,000 | ||
Option granted | 525,000 | ||
Exercise price | $ 0.35 | ||
Installment commencing date | Jun. 30, 2018 | ||
Expiration period | 10 years | ||
Subsequent Event [Member] | Employment agreement | Mr. David Hopkins [Member] | Health-Right | |||
Adjusted EBITDA | $ 3,500,000 | ||
Annual base salary | 250,000 | ||
Subsequent Event [Member] | Employment agreement | Mr. David Hopkins [Member] | Health-Right One | |||
Adjusted EBITDA | 5,000,000 | ||
Annual base salary | 325,000 | ||
Car allowance per month | $ 600 |