Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Apr. 15, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Rennova Health, Inc. | ||
Entity Central Index Key | 931,059 | ||
Document Type | 10-K/A | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | true | ||
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 Public Float | $ 6,885,154 | ||
Entity Common Stock, Shares Outstanding | 14,782,557 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 | ||
Amendment description | The Company has determined that it did not correctly record, as of December 31, 2015, $1.2 million in stock issued to its financial adviser related to the merger as of December 31, 2015 and incorrectly recorded $0.5 million in general and administrative costs related to the merger that should have increased goodwill related to the merger. |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 8,833,230 | $ 2,406,246 |
Accounts receivable, net | 8,149,484 | 17,463,947 |
Prepaid expenses and other current assets | 1,193,077 | 170,353 |
Income tax refunds receivable | 2,415,013 | 0 |
Deferred tax assets | 0 | 28,300 |
Deposits on acquisitions | 0 | 259,875 |
Total current assets | 20,590,804 | 20,328,721 |
Property and equipment, net | 7,148,295 | 7,678,123 |
Other assets: | ||
Intangible assets | 0 | 4,436,473 |
Goodwill | 0 | 3,139,942 |
Deposits | 232,774 | 177,495 |
Total assets | 27,971,873 | 35,760,754 |
Current liabilities: | ||
Accounts payable | 4,360,035 | 3,356,797 |
Accrued expenses | 5,285,455 | 2,297,416 |
Income tax liabilities | 0 | 8,087,946 |
Current portion of notes payable | 269,031 | 443,292 |
Current portion of notes payable, related party | 5,133,888 | 3,000,000 |
Current portion of capital lease obligation | 1,323,708 | 962,562 |
Total current liabilities | 16,372,117 | 18,148,013 |
Other liabilities: | ||
Notes payable, net of current portion | 2,903,898 | 93,392 |
Capital lease obligations, net of current portion | 2,394,171 | 2,222,625 |
Derivative liabilities | 7,495,486 | 0 |
Deferred tax liabilities | 0 | 252,900 |
Total liabilities | 29,165,672 | $ 20,716,930 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock | 143,951 | $ 118,987 |
Additional paid-in-capital | 26,688,837 | 5,241,419 |
(Accumulated deficit) retained earnings | (28,027,177) | 9,562,517 |
Total Rennova Health stockholders' equity | (1,193,799) | 14,922,820 |
Noncontrolling interest | 0 | 121,004 |
Total stockholders' equity | (1,193,799) | 15,043,824 |
Total liabilities and stockholders' equity | 27,971,873 | 35,760,754 |
Series B Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, 100,000,000 shares authorized: | 50 | 1 |
Series C Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, 100,000,000 shares authorized: | 90 | |
Series D Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, 100,000,000 shares authorized: | 0 | 20 |
Series E Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, 100,000,000 shares authorized: | $ 450 | $ 10 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Preferred stock shares authorized | 5,000,000 | 100,000,000 |
Common stock par value | $ .01 | $ .01 |
Common stock shares authorized | 50,000,000 | 50,000,000 |
Common stock shares issued | 14,651,837 | 11,885,414 |
Common stock shares outstanding | 14,651,837 | 11,885,414 |
Series B Preferred Stock [Member] | ||
Preferred stock shares authorized | 5,000 | 5,000 |
Preferred stock par value | $ .01 | $ .0001 |
Preferred stock shares issued | 5,000 | 5,000 |
Preferred stock shares outstanding | 5,000 | 5,000 |
Series C Preferred Stock [Member] | ||
Preferred stock shares authorized | 10,350 | |
Preferred stock par value | $ .01 | |
Preferred stock shares issued | 9,000 | |
Preferred stock shares outstanding | 9,000 | |
Series D Preferred Stock [Member] | ||
Preferred stock shares authorized | 200,000 | |
Preferred stock par value | $ .0001 | |
Preferred stock shares issued | 200,000 | |
Preferred stock shares outstanding | 200,000 | |
Series E Preferred Stock [Member] | ||
Preferred stock shares authorized | 45,000 | 100,000 |
Preferred stock par value | $ .01 | $ .0001 |
Preferred stock shares issued | 45,000 | 100,000 |
Preferred stock shares outstanding | 45,000 | 100,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues | ||
Gross charges, net of contractual allowances and discounts | $ 37,887,068 | $ 77,223,964 |
Provision for bad debts | (19,494,030) | (19,296,144) |
Net Revenues | 18,393,038 | 57,927,820 |
Operating expenses: | ||
Direct costs of revenue | 9,339,644 | 15,920,468 |
General and administrative | 27,346,160 | 19,712,018 |
Legal fees related to disputed subsidiary | 0 | 94,217 |
Sales and marketing expenses | 3,763,802 | 4,967,188 |
Engineering | 415,482 | 0 |
Bad debt | 99,754 | 78,482 |
Impairment of goodwill and intangible assets | 20,143,320 | 0 |
Depreciation and amortization | 2,749,850 | 1,500,453 |
Total operating expenses | 63,858,012 | 42,272,826 |
Income (Loss) from operations | (45,464,974) | 15,654,994 |
Other income (expense): | ||
Other income | 252 | 489 |
Realized gain on derivative instruments | 2,327,756 | 0 |
Unrealized gain (loss) on derivative instruments | 560,990 | 0 |
Gain on disposition of subsidiary | 0 | 134,184 |
Gain (Loss) on legal settlement | 275,028 | 105,780 |
Interest expense | (2,689,811) | (513,815) |
Total other income (expense) | 474,215 | (273,362) |
Income (Loss) before income taxes | (44,990,759) | 15,381,632 |
Provision for income taxes | (9,028,253) | 7,561,300 |
Net income (loss) attributable to Rennova Health | (35,962,506) | 7,820,332 |
Preferred stock dividends | 1,627,188 | 5,010,300 |
Net income (loss) attributable to Rennova Health common shareholders | $ (37,589,694) | $ 2,810,032 |
Net income (loss) per common share: Basic | $ (3.02) | $ .23 |
Net income (loss) per common share: Diluted | $ (3.02) | $ .22 |
Weighted average number of shares outstanding during the period - Basic | 12,465,486 | 12,247,978 |
Weighted average number of shares outstanding during the period - Diluted | 12,465,486 | 12,667,858 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from (used in) operating activities: | ||
Net income (loss) | $ (35,962,506) | $ 7,820,332 |
Adjustments to reconcile net income (loss) to net cash provided by operations: | ||
Depreciation and amortization | 2,749,850 | 1,500,453 |
Non-cash gain on derivative instruments | (2,888,746) | 0 |
Stock issued in lieu of cash compensation | 2,905,000 | 162,500 |
Stock issued for services | 0 | 180,000 |
Stock-based compensation | 722,829 | 509,585 |
Bad debts | 99,754 | 78,482 |
Impairment of goodwill and intangible assets | 20,143,320 | 0 |
Accretion of beneficial conversion feature as interest | 1,146,422 | 3,278 |
Accretion of debt discount | 380,000 | 0 |
Write-off of deferred issuance costs | 0 | 12,500 |
Gain on disposition of subsidiary | 0 | (134,184) |
Gain on legal settlement | (275,028) | (105,780) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 9,138,114 | (6,408,774) |
Prepaid expenses and other current assets | (927,024) | 24,025 |
Deposits on acquisitions | 0 | (259,875) |
Deferred tax assets | 28,300 | 1,720,300 |
Security deposits | (45,279) | (79,763) |
Accounts payable | 1,046,802 | 1,272,949 |
Accrued expenses | 584,190 | (840,603) |
Income tax assets and liabilities | (10,502,959) | 2,035,206 |
Deferred tax liabilities | (404,900) | 211,100 |
Net cash provided by (used in) operating activities | (12,561,861) | 7,701,730 |
Cash flows provided by (used in) investing activities: | ||
Purchase of property and equipment | (456,303) | (2,491,567) |
Cash paid for acquisitions | 0 | (1,600,000) |
Cash received in acquisitions | 4,737,773 | 68,348 |
Net cash provided by (used in) investing activities | 4,281,470 | (4,023,219) |
Cash flows provided by (used in) financing activities: | ||
Proceeds from the sale of equity, net of offering costs of $1,156,663 | 8,843,337 | 0 |
Dividends on Series B preferred stock | (441,311) | (4,457,755) |
Proceeds from issuance of notes payable, related party | 5,630,000 | 3,000,000 |
Proceeds from issuance of notes payable | 3,000,000 | 0 |
Payments on notes payable | (1,218,459) | (3,498,800) |
Payments on capital lease obligations | (1,106,192) | (457,126) |
Net cash provided by (used in) financing activities | 14,707,375 | (5,413,681) |
Net increase (decrease) in cash | 6,426,984 | (1,735,170) |
Cash at beginning of period | 2,406,246 | 4,141,416 |
Cash at end of period | 8,833,230 | 2,406,246 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 624,896 | 510,537 |
Cash paid for taxes | 1,386,955 | 3,920,633 |
Non-cash investing and financing activities: | ||
Net liabilities (assets) acquired in acquisitions, net of cash | 0 | (906,819) |
Intangible assets | 0 | 0 |
Goodwill | 0 | (1,713,943) |
Accrued expenses | 0 | 0 |
Contingent acquisition liability | 0 | 10,217 |
Notes payable issued | 0 | 385,545 |
Common Stock | 0 | 1 |
Series D preferred stock | 0 | 20 |
Series E preferred stock | 0 | 10 |
Additional paid in capital | 0 | 2,074,969 |
Exercise of stock options as reduction of notes payable, related party: | ||
Current portion of notes payable, related party | (2,500,000) | 0 |
Common stock | 100 | 0 |
Additional paid-in-capital | 2,499,900 | 0 |
Adjustment of goodwill for Medical Mime, Inc.: | ||
Accounts receivable | 131,270 | 0 |
Goodwill | (87,707) | 0 |
Accounts payable | (43,563) | 0 |
Acquisition of noncontrolling interest in Biohealth Medical Laboratory, Inc.: | ||
Deposits on acquisitions | 259,875 | 0 |
Goodwill | (138,871) | 0 |
Noncontrolling interest | (121,004) | 0 |
Acquisition of CollabRx, Inc. | ||
Cash | 4,737,773 | 0 |
Accounts Receivable | 54,675 | 0 |
Other current assets | 105,700 | 0 |
Property and equipment | 92,636 | 0 |
Accounts payable and accrued expenses | (1,620,000) | 0 |
Deferred revenue | (123,000) | 0 |
Other liabilities | (520,070) | 0 |
Derivative liabilities | (1,578,976) | 0 |
Identifiable intangible assets | 170,000 | 0 |
Goodwill | 12,237,380 | 0 |
Common stock | (10,487) | 0 |
Additional paid in capital | (13,510,777) | 0 |
Capital lease assets acquired | (1,638,884) | (3,043,500) |
Capital lease obligations | 1,638,884 | 3,043,500 |
Series D preferred stock converted to common stock: | ||
Series D preferred stock | (20) | 0 |
Common stock | 16 | 0 |
Additional paid in capital | 4 | 0 |
Series E preferred stock converted to common stock: | ||
Series E preferred stock | (5) | 0 |
Common stock | 5 | 0 |
Additional paid in capital | 0 | 0 |
Common stock issued as payment of accrued bonuses: | ||
Accrued bonuses | 0 | (525,000) |
Common stock | 0 | 21 |
Additional paid in capital | $ 0 | $ 524,979 |
Consolidated Statements of Cas6
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Cash Flows [Abstract] | ||
Offering costs | $ 1,156,663 | $ 0 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) | Series B Preferred Stock [Member] | Non-Designated [Member] | Series C Preferred Stock [Member] | Series D Preferred Stock [Member] | Series E Preferred Stock [Member] | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Other Comprehensive Income / Loss [Member] | Deferred Issuance Costs [Member] | Noncontrolling Interest [Member] | Retained Earnings [Member] | Total |
Beginning balance, shares at Dec. 31, 2013 | 5,000 | 0 | 0 | 0 | 5,000 | 12,274,386 | |||||||
Beginning balance, value at Dec. 31, 2013 | $ 1 | $ 0 | $ 0 | $ 0 | $ 1 | $ 122,744 | $ 1,785,479 | $ 0 | $ (12,500) | $ 121,004 | $ 6,752,485 | $ 8,769,213 | |
Common stock issued for services, shares | 29,494 | ||||||||||||
Common stock issued for services, value | $ 295 | 179,705 | 180,000 | ||||||||||
Common stock issued for accrued bonuses, shares | 86,024 | ||||||||||||
Common stock issued for accrued bonuses, value | $ 860 | 524,140 | 525,000 | ||||||||||
Common stock issued for acquisition of assets, shares | 4,096 | ||||||||||||
Common stock issued for acquisition of assets, value | $ 41 | 24,959 | 25,000 | ||||||||||
Preferred stock issued in acquisition, shares | 200,000 | 100,000 | 300,000 | ||||||||||
Preferred stock issued in acquisition, value | $ 20 | $ 10 | $ 30 | 2,049,970 | 2,050,000 | ||||||||
Stock option expense | 672,079 | 672,079 | |||||||||||
Common stock returned from shareholder and cancelled, shares | (508,586) | ||||||||||||
Common stock returned from shareholder and cancelled, value | $ (5,086) | 5,086 | |||||||||||
Write-off of deferred issuance costs | 12,500 | 12,500 | |||||||||||
Dividends on Series B preferred stock | (5,010,300) | (5,010,300) | |||||||||||
Net income | 7,820,332 | 7,820,332 | |||||||||||
Ending balance, shares at Dec. 31, 2014 | 5,000 | 0 | 200,000 | 100,000 | 305,000 | 11,885,414 | |||||||
Ending balance, value at Dec. 31, 2014 | $ 1 | $ 0 | $ 20 | $ 10 | $ 31 | $ 118,854 | 5,241,418 | 0 | 0 | 121,004 | 9,562,517 | 15,043,824 | |
Common stock issued for services, shares | 317,469 | ||||||||||||
Common stock issued for services, value | $ 3,175 | 2,901,825 | 2,905,000 | ||||||||||
Stock options exercised for common stock, shares | 409,638 | ||||||||||||
Stock options exercised for common stock, value | $ 4,096 | 2,495,904 | 2,500,000 | ||||||||||
Preferred stock converted to common stock, shares converted | (200,000) | (55,000) | (255,000) | ||||||||||
Preferred stock converted to common stock, shares issued | (20) | (6) | (26) | ||||||||||
Preferred stock converted to common stock, value converted | 887 | (861) | |||||||||||
Preferred stock converted to common stock, value issued | $ 88,751 | ||||||||||||
Stock option expense | 722,829 | 722,829 | |||||||||||
Allocation of offering proceeds to derivative liabilities | (7,019,355) | (7,019,355) | |||||||||||
Adjust minority interest in Biohealth | (121,004) | (121,004) | |||||||||||
Ending balance, shares at Nov. 02, 2015 | 5,000 | 0 | 0 | 0 | 45,000 | 50,000 | 12,701,272 | ||||||
Ending balance, value at Nov. 02, 2015 | $ 1 | $ 0 | $ 0 | $ 0 | $ 4 | $ 5 | $ 127,012 | 11,361,115 | 0 | 0 | 0 | 9,562,517 | 21,050,649 |
Beginning balance, shares at Dec. 31, 2014 | 5,000 | 0 | 200,000 | 100,000 | 305,000 | 11,885,414 | |||||||
Beginning balance, value at Dec. 31, 2014 | $ 1 | $ 0 | $ 20 | $ 10 | $ 31 | $ 118,854 | 5,241,418 | 0 | 0 | 121,004 | 9,562,517 | 15,043,824 | |
Write-off of deferred issuance costs | 0 | ||||||||||||
Dividends on Series B preferred stock | (1,627,188) | ||||||||||||
Net income | (35,962,506) | ||||||||||||
Ending balance, shares at Dec. 31, 2015 | 5,000 | 0 | 9,000 | 0 | 45,000 | 59,000 | 14,651,837 | ||||||
Ending balance, value at Dec. 31, 2015 | $ 50 | $ 0 | $ 90 | $ 0 | $ 450 | $ 590 | $ 143,951 | 25,456,870 | 0 | 0 | 0 | (26,795,210) | (1,193,799) |
Beginning balance, shares at Nov. 02, 2015 | 5,000 | 0 | 0 | 0 | 45,000 | 50,000 | 12,701,272 | ||||||
Beginning balance, value at Nov. 02, 2015 | $ 1 | $ 0 | $ 0 | $ 0 | $ 4 | $ 5 | $ 127,012 | 11,361,115 | 0 | 0 | 0 | 9,562,517 | 21,050,649 |
Cancellation of Medytox shares, shares cancelled | (5,000) | (45,000) | (50,000) | ||||||||||
Cancellation of Medytox shares, value | $ (1) | $ (4) | $ (5) | 5 | |||||||||
Issuance of Rennova shares, shares issued | 5,000 | 45,000 | 50,000 | ||||||||||
Issuance of Rennova shares, value | $ 50 | $ 450 | $ 500 | (500) | |||||||||
Common stock issued for cash, shares | 9,000 | 9,000 | 645,161 | ||||||||||
Common stock issued for cash, value | $ 90 | $ 90 | $ 6,452 | 8,836,795 | 8,843,337 | ||||||||
Shares issued in merger with CollabRx, Inc.. shares | 1,305,404 | ||||||||||||
Shares issued in merger with CollabRx, Inc.. value | $ 10,487 | 13,510,777 | 13,521,264 | ||||||||||
Dividends on Series B preferred stock | (1,627,188) | (1,627,188) | |||||||||||
Net income | (35,962,506) | (35,962,506) | |||||||||||
Ending balance, shares at Dec. 31, 2015 | 5,000 | 0 | 9,000 | 0 | 45,000 | 59,000 | 14,651,837 | ||||||
Ending balance, value at Dec. 31, 2015 | $ 50 | $ 0 | $ 90 | $ 0 | $ 450 | $ 590 | $ 143,951 | $ 25,456,870 | $ 0 | $ 0 | $ 0 | $ (26,795,210) | $ (1,193,799) |
1. Description of Business and
1. Description of Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Rennova Health, Inc. (“Rennova”), together with its subsidiaries (the “Company”, “we”, “us” or “our”), is a vertically integrated provider of a suite of healthcare related products and services. Our principal lines of business are diagnostic laboratory services, and supportive software solutions and decision support and informatics operations services. We present our financial results based upon our two business segments listed above. Merger between the Company and Medytox Solutions, Inc. On November 2, 2015, pursuant to the terms of the Agreement and Plan of Merger, dated as of April 15, 2015, by and among the Company, CollabRx Merger Sub, Inc. (“Merger Sub”), a direct wholly owned subsidiary of the Company formed for the purpose of the merger, and Medytox Solutions, Inc. (“Medytox”), Merger Sub merged with and into Medytox, with Medytox as the surviving company and a direct, wholly-owned subsidiary of the Company (the “Merger”). Prior to closing, the Company amended its certificate of incorporation to effect a 1-for-10 reverse stock split and to change its name to Rennova Health, Inc. In connection with the Merger, (i) each share of common stock of Medytox was converted into the right to receive approximately 0.4096 shares of common stock of the Company, (ii) each share of Series B Preferred Stock of Medytox was converted into the right to receive one share of a newly-authorized Series B Convertible Preferred Stock of the Company, and (iii) each share of Series E Convertible Preferred Stock of Medytox was converted into the right to receive one share of a newly-authorized Series E Convertible Preferred Stock of the Company. This transaction has been accounted for as a reverse merger in accordance with Generally Accepted Accounting Policies. Holders of Company equity prior to the closing of the Merger (including all outstanding Company common stock and all restricted stock units, options and warrants exercisable for shares of Company common stock) held 10% of the Company's common stock immediately following the closing of the Merger, and holders of Medytox equity prior to the closing of the Merger (including all outstanding Medytox common stock and all outstanding options exercisable for shares of Medytox common stock, but less certain options that were cancelled upon the closing pursuant to agreements between Medytox and such optionees) held 90% of the Company's common stock following the closing of the Merger, in each case on a fully diluted basis, provided, however, outstanding shares of the newly designated Series B Convertible Preferred Stock and Series E Convertible Preferred Stock, certain outstanding convertible promissory notes exercisable for Company common stock after the closing and certain option grants expected to be made following the closing of the Merger are excluded from such ownership percentages. On November 3, 2015, the common stock of Rennova Health, Inc. commenced trading on the Nasdaq Capital Market under the symbol “RNVA.” Prior to that date, our common stock was listed on the NASDAQ Capital Market under the symbol “CLRX.” Immediately after the consummation of the Merger, the Company had 13,750,010 shares of common stock, 5,000 shares of Series B Convertible Preferred Stock and 45,000 shares of Series E Convertible Preferred Stock issued and outstanding. This transaction was accounted for as a reverse merger, as such, the financial statements presented prior to November 2, 2015 are those of Medytox and the financial statements presented after November 2, 2015 reflect the operations, of the combined company. All Common share amounts prior to November 2, 2015 have been retroactively restated to reflect the conversion ratio. On March 16, 2016, the Company was notified by the Nasdaq that the bid price of the Company's common stock closed below the minimum $1.00 share requirement for continued inclusion under Nasdaq Rule 5550(a)(2) (the “Rule”). In accordance with Nasdaq Rule 5810(c)(3)(A), the Company has 180 calendar days, or until September 12, 2016, to regain compliance. If at any time before September 12, 2016, the bid price of the Company's common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Company will regain compliance with the Rule. If the Company does not regain compliance by September 12, 2016, an additional 180 days may be granted to regain compliance, so long as the Company meets The Nasdaq Capital Market initial listing criteria (except for the bid price requirement). Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company’s consolidated financial statements are prepared using Generally Accepted Accounting Principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has recently accumulated significant losses and has negative cash flows from operations, which raise substantial doubt about its ability to continue as a going concern. Management's plans with respect to alleviating the adverse financial conditions that caused management to express substantial doubt about the Company’s ability to continue as a going concern are as follows: The Company is currently executing on a plan of action to increase the volume of samples processed by its labs. In addition, the Company is executing on a plan of action to increase the number of customers for its supportive software solutions. While the results of these plans of action are encouraging, no conclusion can be drawn at this time about the ultimate efficacy of these plans of action. In order to support the Company’s continued operation, the Company received proceeds of $5,000,000 from pledging certain of its accounts receivable as collateral to a prepaid forward purchase contract. The Company is also entitled to $2,415,103 in income tax refunds, the claim for which was filed with the IRS in early April 2016. There can be no assurance as to the timing of the receipt of the income tax refunds for which the Company has filed. There can be no assurance that the Company will be able to achieve its business plans, raise any more required capital or secure the financing necessary to achieve its current operating plan. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraphs and eventually regain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Reclassifications Certain items on the statement of operations, balance sheets and statements of cash flows for the year ended December 31, 2014 have been reclassified to conform to the current period presentation. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant areas of estimation include the impairment of assets and rates for amortization, accrued liabilities, future income tax obligations and the inputs used in calculating stock-based compensation and transactions. Actual results could differ from those estimates and would impact future results of operations and cash flows. Principles of Consolidation The consolidated financial statements include the accounts of Rennova Health, Inc. and its wholly-owned subsidiaries, Health Technology Solutions, Inc., Medytox Institute of Laboratory Medicine, Inc., Medical Billing Choices, Inc., Medytox Diagnostics, Inc., PB Laboratories, LLC, Medytox Medical Marketing & Sales, Inc., Alethea Laboratories, Inc., EPIC Reference Labs, Inc., International Technologies, LLC, ClinLab, Inc., Medical Mime, Inc., Epinex Diagnostics Laboratories, Inc., Biohealth Medical Laboratory, Inc., Platinum Financial Solutions, Ltd., Platinum Financial Solutions, LLC, and CollabRx, Inc. Due to the dispute with Trident and its selling shareholders (see Note – 4), the accounts of Trident Laboratories, Inc. have been excluded from consolidation. Effective March 31, 2014, the Company’s management determined that the net assets of Trident were not recoverable and, as such, the Company accounted for the disputed assets and liabilities as if they had been disposed, resulting in a gain on disposition of $134,184. All significant inter-company balances and transactions have been eliminated in consolidation. Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2015 and 2014, respectively, the Company had no cash equivalents. Revenue Recognition Service revenues are principally generated from laboratory testing services including chemical diagnostic tests such as blood analysis and urine analysis. Net service revenues are recognized at the time the testing services are performed and are reported at their estimated net realizable amounts. Net service revenues are determined utilizing gross service revenues net of contractual allowances. Even though it is the responsibility of the patient to pay for laboratory service bills, most individuals in the United States have an agreement with a third party payor such as Medicare, Medicaid or a commercial insurance provider to pay all or a portion of their healthcare expenses; the majority of services provided by the Company are to patients covered under a third party payer contract. Despite follow up billing efforts, the Company does not currently anticipate collection of a significant portion of self-pay billings including the patient responsibility portion of the billing for patients covered by third party payers. The Company currently does not have any capitated agreements. In the remainder of the cases, the Company is provided the third party billing information and seeks payment from the third party under the terms and conditions of the third party payer for health service providers like The Company. Each of these third party payers may differ not only with regard to rates, but also with regard to terms and conditions of payment and providing coverage (reimbursement) for specific tests. Estimated revenues are established based on a series of procedures and judgments that require industry specific healthcare experience and an understanding of payer methods and trends. We review our calculations on a monthly basis in order to make certain that we are properly allowing for the uncollectable portion of our gross billings and that our estimates remain sensitive to variances and changes within our payer groups. The contractual allowance calculation is made on the basis of historical allowance rates for the various specific payer groups on a monthly basis with a greater weight being given to the most recent trends; this process is adjusted based on recent changes in underlying contract provisions and shifts in the testing being performed. The provision for bad debts represents our estimate of net revenues that will ultimately be uncollectable and is based upon our analysis of historical payment rates by specific payer groups on a monthly basis with primary weight being given to the most recent trends; this approach allows bad debt to more accurately adjust to short-term changes in the business environment. These two calculations are routinely analyzed by The Company on the basis of actual allowances issued by payers and the actual payments made to determine what adjustments, if any, are needed. Contractual Allowances and Doubtful Accounts Policy Accounts receivable are reported at realizable value, net of allowances for contractual credits and doubtful accounts, which are estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimate and review the collectability of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for contractual credits and doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues which may impact the collectability of these receivables or reserve estimates. Receivables deemed to be uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. Historically, revisions to the allowances for doubtful accounts estimates were recorded as an adjustment to the provision for bad debts within selling, general and administrative expenses. See Note 5 – Accounts Receivable Impairment or Disposal of Long-Lived Assets The Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment”. ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. Goodwill and Other Intangible Assets Goodwill represents the excess of cost over the fair value of net assets acquired in connection with business acquisitions. Goodwill is tested at the reporting unit level, which is defined as an operating segment or a component of an operating segment that constitutes a business for which financial information is available and is regularly reviewed by management. The Company assesses goodwill for impairment at least annually in the absence of an indicator of possible impairment and immediately upon an indicator of possible impairment. The annual impairment review is completed in the fourth quarter of the year. If the carrying amount of a reporting unit exceeds its fair value, the Company measures the possible goodwill impairment based upon an allocation of the estimate of fair value to the underlying assets and liabilities of the reporting unit, including any previously unrecognized intangible assets, based upon known facts and circumstances as if the acquisition occurred currently. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. An impairment loss would be recognized to the extent the carrying value of goodwill exceeds the implied fair value of the goodwill. This test performed in the fourth quarter of 2015 indicated that goodwill and intangible assets related to all operating segments was impaired. Impairment losses, if any, are reflected in operating income or loss in the Consolidated Statements of Operations. In the fourth quarter of 2015, the Company recognized impairment losses on goodwill and other intangible assets of $20,143,320. For the year ended December 31, 2015, total realized and unrealized gains on instruments valued using Level 3 valuation methods was $2,888,746. There were no gains or losses related to instruments valued using Level 3 valuation methods for the year ended December 31, 2014. For beneficial conversion features valued using Level 3 valuation methods, the Company determines the fair value as of each balance sheet date by comparing the discounted conversion price per share multiplied by the number of shares issuable at that date to the actual price per share multiplied by the number of shares issuable at that date. The difference is recorded as a liability. For beneficial conversion features, all inputs are observable and therefore there is no sensitivity in the valuation to unobservable inputs. For contingently issuable variable priced warrants and variable priced warrants, the Company determines the fair value as of each balance sheet date by using the Black-Scholes option pricing model as though the exercise price of the warrants were reduced to the last market closing price of its stock for the period, to the extent that it is less than the then current exercise price. The value calculated is recorded as a liability. For contingently issuable variable priced warrants and variable priced warrants, all inputs are observable and therefore there is no sensitivity in the valuation to unobservable inputs. Fair Value of Financial Instruments The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. ASC 820 “Fair Value Measurements and Disclosures” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) a reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and Level 3 - fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2015 and 2014. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements. As of December 31, 2015 and 2014 the fair values of the Company’s financial instruments approximate their historical carrying amount. The following table sets forth the financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2015 and 2014: December 31, 2015 Total Level 1 Level 2 Level 3 Beneficial conversion features: Current Liabilities $ (324,533 ) $ – $ – $ (324,533 ) Other Liabilities $ (186,119 ) $ – $ – $ (186,119 ) Contingently issuable variable priced warrants: Current Liabilities $ (1,945,467 ) $ – $ – $ (1,945,467 ) Variable priced warrants: Other Liabilities $ (7,495,486 ) $ – $ – $ (7,495,486 ) December 31, 2014 Total Level 1 Level 2 Level 3 Beneficial conversion features: Current Liabilities $ (1,000,000 ) $ – $ – $ (1,000,000 ) Contingently issuable variable priced warrants: Current Liabilities $ (380,000 ) $ – $ – $ (380,000 ) For the year ended December 31, 2015, total realized and unrealized gains on instruments valued using Level 3 valuation methods was $2,888,746. There were no gains or losses related to instruments valued using Level 3 valuation methods for the year ended December 31, 2014. For beneficial conversion features valued using Level 3 valuation methods, the Company determines the fair value as of each balance sheet date by comparing the discounted conversion price per share multiplied by the number of shares issuable at that date to the actual price per share multiplied by the number of shares issuable at that date. The difference is recorded as a liability. For beneficial conversion features, all inputs are observable and therefore there is no sensitivity in the valuation to unobservable inputs. For contingently issuable variable priced warrants and variable priced warrants, the Company determines the fair value as of each balance sheet date by using the Black-Scholes option pricing model as though the exercise price of the warrants were reduced to the last market closing price of its stock for the period, to the extent that it is less than the then current exercise price. The value calculated is recorded as a liability. For contingently issuable variable priced warrants and variable priced warrants, all inputs are observable and therefore there is no sensitivity in the valuation to unobservable inputs. Stock Based Compensation The Company accounts for Stock-Based Compensation under ASC 718 “Compensation – Stock Compensation”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees”. Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Any stock options or warrants issued to non-employees are recorded in expense and additional paid-in capital in stockholders' equity over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options or warrants at the end of each period. The Company issues stock to consultants for various services. The costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expense and a corresponding increase to additional paid-in-capital related to stock issued for services. Income Taxes Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than not to be realized. When projected future taxable income is insufficient to provide for the realization of deferred tax assets, the Company recognizes a valuation allowance. The FASB has issued ASC 740 “Income Taxes”. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by ASC 740 and concluded that the tax position of the Company has not met the more-likely-than-not threshold as of December 31, 2015. As of December 31, 2015, the Company has recorded a valuation allowance on 100% of its deferred tax assets totaling $8,585,313. Basic and Diluted Income per Share The Company computes income per share in accordance with ASC 260, “Earnings per Share”, which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all potential dilutive equivalent shares of common stock outstanding during the period using the treasury stock method and convertible debt and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, convertible debt, convertible preferred stock, or warrants. Segment Information In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, the Company is required to report financial and descriptive information about its reportable operating segments. The Company has three operating segments as of December 31, 2015; Laboratory Services, Supportive Software Solutions, and Decision Support and Informatics Operations. As of December 31, 2014, the Company had two operating segments, Clinical Laboratory Operations and Supportive Software Solutions (formerly titled “Medical Support Solutions”). |
3. Recent Accounting Pronouncem
3. Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Note 3 – Recent Accounting Pronouncements Title and reference Prescribed Commentary Effective Date ASU No. 2105-16, “Business Combinations” (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. Fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations” (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2105-16 requires that (i) an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, (ii) the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date, and (iii) an entity present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The amendments in this Update apply to all entities that have reported provisional amounts for items in a business combination for which the accounting is incomplete by the end of the reporting period in which the combination occurs and during the measurement period have an adjustment to provisional amounts recognized. The amendments in this guidance are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in this guidance are not expected to have a significant impact on our Financial Statements upon adoption. ASU No. 2015-15, “Interest—Imputation of Interest” (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. Effective upon issuance In August 2015, the FASB issued ASU No. 2015-15, “Interest—Imputation of Interest” (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (“ASU 2015-15). In ASU 2015 -15, the SEC adds guidance to Subtopic 835-30 pursuant to the SEC Staff Announcement at the June 18, 2015 Emerging Issues Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. In April 2015, the FASB issued ASU 2015-03, “Interest—Imputation of Interest” (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. According to the SEC, the guidance in ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The guidance in ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The guidance in ASU 2015-15 is effective upon issuance. The guidance in ASU 2015-15 and ASU 2015-03 are not expected to have a significant impact on our Financial Statements upon adoption. ASU No. 2015-14, “Revenue from Contracts with Customers” (Topic 606): Deferral of the Effective Date. Effective upon issuance In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers” (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 effectively defers the effective date of ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606), by one year for all entities. In May 2014, the FASB issued ASU 2014-09 with an effective date for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period for public business entities, certain not-for-profit entities, and certain employee benefit plans. The effective date for all other entities was for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. ASU 2015-14 is effective upon issuance. ASU 2015-14 is not expected to have a significant impact on our Financial Statements. Accounting Standard Update (“ASU”) No. 2015-11, “Inventory” (Topic 330): Simplifying the Measurement of Inventory. Fiscal years beginning after December 15, 2016 and for interim periods therein. In July 2015, the FASB issued ASU No. 2015-11, “Inventory” (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 simplifies the measurement of inventory by requiring certain inventory to be subsequently measured at the lower of cost and net realizable value. The amendments in this guidance are effective for fiscal years beginning after December 15, 2016 and for interim periods therein and are not expected to have a significant impact on our Financial Statements upon adoption. ASU No. 2015-03, “Interest - Imputation of Interest” (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. Fiscal years beginning after December 15, 2015, and interim periods within those fiscal years In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest” (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-.03"). ASU 2015-03 changes the presentation of debt issuance costs from an asset to a direct deduction from the related liability. This guidance, which is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, may be early adopted for financial statements that have not been previously issued and its provisions are to be retrospectively applied as a change in accounting principle. Upon adoption, this guidance is expected to decrease Other Assets, which includes our deferred financing costs on our debt obligations, and comparably decrease Long-term debt on our Balance Sheets. This guidance is not expected to have any impact on our results of operations or cash flows. ASU No. 2015-04, “Compensation - Retirement Benefits” (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets. Interim and fiscal periods beginning after December 15, 2015. In April 2015, the FASB issued ASU No. 2015-04, “Compensation - Retirement Benefits” (Topic 715). ASU 2015-04 will allow employers with fiscal year ends that do not coincide with a calendar month end to make an accounting policy election to measure defined benefit plan assets and obligations as of the end of the month closest to their fiscal year ends (i.e., on an alternative measurement date). An employer that makes this election must consistently apply the practical expedient from year to year and to all of its defined benefit plans. ASU 2015-04 will be effective for interim and fiscal periods beginning after December 15, 2015; prospective application is required and early adoption is permitted. This guidance is not expected to have any impact on our financial position, results of operations or cash flows. ASU No. 2015-02, “Consolidation” (Topic 810): Amendments to the Consolidation Process. Annual periods, and interim periods within those annual periods, beginning after December 15, 2015. In February 2015, the FASB issued ASU No. 2015-02, "Consolidation" (Topic 810): Amendments to the Consolidation Process ("ASU 2015-02") . ASU 2015-02 amends the consolidation analysis for limited partnerships and other variable interest entities ("VIEs"). This guidance, which is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, is not expected to have a significant impact on our Financial Statements upon adoption. ASU No. 2015-01, Income Statement - “Extraordinary and Unusual Items” (Subtopic 225-20): Simplifying the Income Statement Presentation by Eliminating the Concept of Extraordinary Items. Fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. In January 2015, the FASB issued ASU No. 2015-01, Income Statement - “Extraordinary and Unusual Items” (Subtopic 225-20): Simplifying the Income Statement Presentation by Eliminating the Concept of Extraordinary Items ("ASU 2015-01"). ASU 2015-01 eliminates from GAAP the concept of extraordinary items. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The guidance may be applied prospectively or retrospectively and early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. This guidance is not expected to have a material impact on our Financial Statements upon adoption. ASU No. 2014-15, “Presentation of Financial Statements - Going Concern” (Subtopic 205-40): Disclosure of Uncertainty about an Entity's Ability to Continue as a Going Concern. Fiscal years, and interim periods within those years, beginning on or after December 15, 2016, with early adoption permitted. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern” (Subtopic 205-40): Disclosure of Uncertainty about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). ASU 2014-15 provides guidance that establishes management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and setting rules for how this information should be disclosed in the financial statements. This guidance is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2016, with early adoption permitted. We will adopt this guidance on January 1, 2017 and do not expect it to have a material impact on our Financial Statements upon adoption. ASU No. 2014-12, “Compensation - Stock Compensation”(Topic 718): Accounting for Share-based Payments. Annual and interim periods within the annual period beginning after December 15, 2015. In June 2014, the FASB issued ASU No. 2014-12, “Compensation - Stock Compensation” (Topic 718): Accounting for Share-based Payments ("ASU 2014-12"). ASU 2014-12 provides guidance that impacts the accounting for share-based performance awards. This guidance requires that a performance target that affects vesting that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. This guidance is effective for annual and interim periods within the annual period beginning after December 15, 2015. We do not currently have share-based payment awards that fall within the scope of this guidance and therefore do not anticipate an impact on our Financial Statements upon adoption. ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17") Fiscal years beginning on or after December 15, 2016, with early adoption permitted. In November 2015, the FASB issued ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17"). Topic 740, Income Taxes, requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. Deferred tax liabilities and assets that are not related to an asset or liability for financial reporting are classified according to the expected reversal date of the temporary difference. To simplify the presentation of deferred income taxes, the amendments in ASU 2015-17 require that deferred income tax liabilities and assets be classified as noncurrent in a classified statement of financial position. For public business entities, the amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We do not expect the adoption of ASU 2015-17 to have a material impact on our consolidated financial statements. Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02") Annual and interim periods within the annual period beginning after December 15, 2018. In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). The amendments in this update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. Topic 842 specifies the accounting for leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The main difference between Topic 842 and Topic 840 is the recognition of lease assets and lease liabilities for those leases classified as operating leases under Topic 840. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities. Early application of the amendments in ASU 2016-02 is permitted. We are currently in the process of evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements. |
4. Disputed Subsidiary
4. Disputed Subsidiary | 12 Months Ended |
Dec. 31, 2015 | |
Disputed Subsidiary | |
Disputed Subsidiary | Note 4 – Disputed Subsidiary On July 2, 2013, a jury awarded our wholly-owned subsidiary, Medytox Institute of Laboratory Medicine, Inc. ("MILM"), $2,906,844 on its breach of contract claim against Trident Laboratories, Inc. ("Trident"), and its shareholders and awarded Seamus Lagan $750,000 individually against Christopher Hawley for Mr. Hawley's defamatory postings on the internet. The jury rejected every claim made against the MILM parties. All appeals were dismissed on April 9, 2014. The case arose from the August 22, 2011 agreement among MILM and Trident and its shareholders pursuant to which MILM was to acquire 81% of Trident. On January 17, 2012, Trident notified MILM that it was rescinding the agreement. As a result, MILM filed suit against Trident and its shareholders in Florida Circuit Court in Broward County. The jury found that Trident and its shareholders breached the agreement and failed to perform their obligations thereunder. The Company has not received any financial statements of Trident since August 31, 2012. These consolidated financial statements were prepared without the missing activity. Management believes that the missing activity is immaterial to the consolidated financial statements as a whole. Effective March 31, 2014, the Company’s management determined that the net assets of Trident are were not recoverable and, as such, the Company accounted for the disputed assets and liabilities as if they had been disposed, resulting in a gain on disposition of $134,184. Trident was administratively dissolved by the state in September 2014. |
5. Accounts Receivable
5. Accounts Receivable | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts receivable at December 31, 2015 and 2014 consisted of the following: December 31, 2015 December 31 2014 Accounts receivable - laboratory services $ 105,332,339 $ 74,551,707 Accounts receivable - all others 569,351 405,706 Total accounts receivable 105,901,690 74,957,413 Less: Allowance for discounts (97,577,130 ) (55,913,780 ) Allowance for bad debts (175,076 ) (1,579,686 ) Accounts receivable, net $ 8,149,484 $ 17,463,947 For the years ended December 31, 2015 and 2014, bad debt expense totalled $19,593,784 and $19,374,626. Of which amounts $19,494,030 and $19,296,144 were classified as contra-revenue, respectively. |
6. Long-Lived Assets
6. Long-Lived Assets | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Long-Lived Assets | Property and equipment at December 31, 2015 and 2014 consisted of the following: December 31, 2015 December 31, 2014 Medical equipment $ 991,903 $ 896,641 Equipment 547,555 396,551 Equipment under capital leases 5,663,332 4,024,449 Furniture 560,400 333,316 Leasehold improvements 1,760,125 1,665,501 Vehicles 196,534 177,534 Computer equipment 661,234 595,571 Software 1,878,848 1,832,053 12,259,931 9,921,616 Less accumulated depreciation (5,111,636 ) (2,243,493 ) Property and equipment, net $ 7,148,295 $ 7,678,123 Depreciation of property and equipment was $2,717,651 and $1,481,313 for the years ended December 31, 2015 and 2014, respectively. Intangible assets consisted of the following as of December 31, 2015 and 2014, respectively: As of December 31, 2015 As of December 31, 2014 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Definite lived intangible assets: Trade names and trademarks $ – $ – $ – $ 221,000 $ (8,095 ) $ 212,905 Customer relationships – – – 205,000 (8,828 ) 196,172 Non-compete agreements – – – 19,000 (2,217 ) 16,783 – – – 445,000 (19,140 ) 425,860 Indefinite lived intangible assets: Clinical laboratory licenses – – – 4,010,613 – 4,010,613 Total intangible assets $ – $ – $ – $ 4,455,613 $ (19,140 ) $ 4,436,473 Amortization expense was $32,199 and $19,140 for the years ended December 31, 2015 and 2014, respectively. The Company’s management has performed a valuation of the identifiable intangible assets, including medical licenses at the date of acquisition. As a result, the Company recorded medical licenses acquired from all laboratory acquisitions in the amounts noted above. The medical licenses include licenses for Medicare and Medicaid, COLA Laboratory Accreditation, Clinical Laboratory Improvement Amendments (CLIA), and State of Florida (AHCA) Clinical Laboratory Licenses, and have indefinite lives. As such, there was no amortization of intangible assets for the years presented. Management periodically reviews the valuation of long-lived assets for potential impairments. Management recognized an impairment loss on all goodwill and intangible assets as of December 31, 2015 totaling $20,143,320. |
7. Accrued Expenses
7. Accrued Expenses | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued expenses at December 31, 2015 and 2014 consisted of the following: December 31, 2015 2014 Commissions payable $ 106,915 $ 319,270 Dividends payable 2,099,148 913,271 Accrued payroll and related liabilities 1,461,019 554,707 Accrued bonuses 50,628 – Accrued interest 556,646 89,488 Other accrued expenses 1,011,099 420,680 Accrued expenses $ 5,285,455 $ 2,297,416 |
8. Notes Payable
8. Notes Payable | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Notes Payable | The Company and its subsidiaries are party to a number of loans with affiliates and unrelated parties. At December 31, 2015 and 2014, notes payable consisted of the following: December 31, 2015 Face Value of Note Unamortized Discount Fair Value of Derivatives Net Value of Note Loan payable to former shareholder of Epinex Diagnostics Laboratories, Inc. in the amount of $400,000, at 0% interest, with principal payments of $100,000 due in periodic installments from November 26, 2014 through February 26, 2016. Amount recorded is net of imputed discount of $1,775 at December 31, 2015. $ 100,000 $ (1,775 ) $ – $ 98,225 Loan payable to TCA Global Master Fund, LP in the amount of $3,000,000, at 16% interest, with interest only payments monthly through September 11, 2016. Principal and interest payments are due monthly from October 11, 2016 through September 11, 2017. 3,000,000 (453,025 ) 186,117 2,733,092 Loan payable to CommerceNet in the amount of $250,000 at 1.06% interest, increasing to 6% after two years. Principal and interest payments are made annually from July 12, 2015 through July 12, 2017. 170,806 – – 170,806 Loan payable to Jay Tenebaum in the amount of $250,000 at 1.06% interest, increasing to 6% after two years. Principal and interest payments are made annually from July 12, 2015 through July 12, 2017. 170,806 – – 170,806 $ 3,441,612 $ (454,800 ) $ 186,117 3,172,929 Less current portion (269,031 ) Notes payable, net of current portion $ 2,903,898 December 31, 2014 Face Value of Note Unamortized Discount Fair Value of Derivatives Net Value of Note Acquisition convertible note No. 1 to former member of International Technologies, LLC in the amount of $250,000 at 5% interest and was due January 17, 2014. The note was convertible into the Company's common stock at a ten percent (10%) discount to the average market price for the thirty days prior to conversion. See “Acquisition Convertible Notes” below. $ 250,000 $ – $ – $ 250,000 Loan payable to former shareholder of Epinex Diagnostics Laboratories, Inc. in the amount of $400,000, at 0% interest, with principal payments of $100,000 due in periodic installments from November 26, 2014 through February 26, 2016. Amount recorded is net of imputed discount of $13,316 at December 31, 2014. 300,000 (13,316 ) – 286,684 $ 550,000 $ (13,316 ) $ – 536,684 Less current portion (443,292 ) Notes payable, net of current portion $ 93,392 Note Payable - Related Party December 31, 2015 Face Value of Note Unamortized Discount Fair Value of Derivatives Net Value of Note Convertible debenture dated December 31, 2014 in the amount of $3,000,000 which bears interest at 10% and is due December 31, 2016. The note provides the lender the option to convert the note into the Company's common stock at a 25% discount to the average trading price (as defined in the note agreement) for the ten consecutive trading days prior to the conversion date. $ 3,000,000 $ (2,236,112 ) $ 2,270,000 $ 3,033,888 Loan payable to Alcimede, LLC in the amount of $3,000,000, at 6% interest, with one payment of $3,000,000, plus interest, due on February 2, 2017. (On June 29, 2015, Alcimede exercised options to purchase 1,000,000 shares for $2,500,000, which reduced the loan.) $ 500,000 – – $ 500,000 Loan payable to Christopher Diamantis in the amount of $1,600,000. One payment of $1,600,000 due January 7, 2016 plus $100,000 of interest. $ 1,600,000 – – $ 1,600,000 $ 5,100,000 $ (2,236,112 ) $ 2,270,000 $ 5,133,888 December 31, 2014 Face Value of Note Unamortized Discount Fair Value of Derivatives Net Value of Note Convertible debenture dated December 31, 2014 in the amount of $3,000,000 which bears interest at 10% and is due December 31, 2015. The note provides the lender the option to convert the note into the Company's common stock at a 25% discount to the average trading price (as defined in the note agreement) for the ten consecutive trading days prior to the conversion date. $ 3,000,000 $ (1,380,000 ) $ 1,380,000 $ 3,000,000 The following table presents the Company’s principal repayment schedule for notes payable, excluding related parties, for the next five years: Twelve months ending December 31, 2016 $ 269,031 2017 2,903,898 2018 – 2019 – 2020 and thereafter – $ 3,172,929 TCA Global On May 14, 2012, the Company borrowed $550,000 from TCA Global Credit Master Fund, LP (the "Lender") pursuant to the terms of the Senior Secured Revolving Credit Facility Agreement, dated as of April 30, 2012 (the "Credit Agreement"), among Medytox, MMMS, MDI, PB Labs and the Lender. The funds were used for general corporate purposes. Under the Credit Agreement, Medytox could borrow up to an amount equal to the lesser of 80% of its Eligible Accounts (as defined in the Credit Agreement) and the revolving loan commitment, which initially was $550,000. Medytox could request that the revolving loan commitment be raised by various specified amounts at specified times, up to an initial maximum of $4,000,000. In each case, whether to agree to any such increase in the revolving loan commitment was in the Lender's sole discretion. On August 9, 2012, the Company borrowed an additional $525,000 in a second round of funding. These additional funds were also used for general corporate purposes. In this second round of funding, certain changes were made to the terms of the Credit Agreement: · the revolving loan commitment was increased from $550,000 to $1,100,000 and was subject to further increase, up to a maximum of $4,000,000, in the Lender's sole discretion; · the maturity date of the loan was extended to February 8, 2013 from the original maturity date of November 30, 2012 (subject to the Lender's continuing ability to call the loan upon 60 days written notice); and · a prepayment penalty was added of 5% if substantially all of the loan is prepaid between 91 and 180 days prior to the maturity date, or 2.50% if substantially all of the loan is prepaid within 90 days of the maturity date. On December 4, 2012, the Company borrowed an additional $650,000 in a third round of funding. These additional funds were used for general corporate purposes. In this third round of funding, certain additional changes were made to the terms of the Credit Agreement: · the revolving loan commitment was increased from $1,100,000 to $1,725,000 and was subject to further increase, up to a maximum of $15,000,000, in the Lender's sole discretion; · the maturity date of the loan was extended to September 3, 2013 from the previous maturity date of February 8, 2013 (subject to the Lender's continuing ability to call the loan upon 60 days written notice); and · a covenant was added to require that any subsidiary that is formed, acquired or otherwise becomes a subsidiary must guarantee the loan and pledge substantially all of its assets as security for the loan. On March 4, 2013, Medytox borrowed an additional $800,000 from the Lender pursuant to the terms of Amendment No. 3 to Senior Secured Revolving Credit Facility Agreement, dated as of February 28, 2013 ("Amendment No. 3"). These additional funds were used in accordance with management's discretion. In connection with Amendment No. 3, Advantage Reference Labs, Inc., a newly-formed wholly-owned subsidiary of Medytox, now known as EPIC Reference Labs, Inc. ("EPIC"), entered into a Guaranty Agreement to guaranty the TCA loan and a Security Agreement to pledge substantially all its assets to secure its guaranty. In connection with Amendment No. 3, Medytox executed an Amended and Restated Revolving Promissory Note, due September 4, 2013, in the amount of $2,525,000. On July 15, 2013, Medytox borrowed an additional $500,000 from the Lender pursuant to the terms of Amendment No. 4 to Senior Secured Revolving Credit Facility Agreement, dated as of June 30, 2013 ("Amendment No. 4"). These additional funds were used in accordance with management's discretion. In connection with Amendment No. 4, each of International Technologies, LLC ("International") and Alethea Laboratories, Inc. ("Alethea"), wholly-owned subsidiaries of Medytox, entered into a Guaranty Agreement to guaranty the TCA loan and a Security Agreement to pledge substantially all of its assets to secure its guaranty. The maturity date of the loan was extended to January 15, 2014 from the previous maturity date of September 3, 2013 (subject to the Lender’s continuing ability to call the loan upon 60 days written notice). In connection with Amendment No. 4, Medytox executed an Amended and Restated Revolving Promissory Note, due January 15, 2014, in the amount of $3,025,000. On August 12, 2013, the Company made a payment of $550,000 on the note. The note has been extended by the lender from January 15, 2014 to September 15, 2014. All borrowings under this facility were paid in full on September 8, 2014. Effective September 11, 2015, the Company entered into a Securities Purchase Agreement with TCA Global Credit Master Fund, LP. Pursuant to the Securities Agreement, Lender may purchase from the Company up to $6 million of senior secured convertible, redeemable debentures. On September 11, 2015, Lender purchased a $3 million debenture (the “Debenture”). The remaining $3 million of debentures may be purchased by TCA in additional closings through September 11, 2017. The Debenture has a maturity date of September 11, 2017 (the “Maturity Date”) and bears interest at a rate of sixteen percent (16%) per annum. Pursuant to the Debenture, for the first 12 months, the Company will make monthly payments of interest and for the second 12 months, the Company will make monthly payments of principal and interest to Lender until the Maturity Date. The Company may redeem the Debenture in full and for cash at any time prior to the Maturity Date. The debenture is secured by all assets of Medytox Solutions, Inc. and its subsidiaries. The debenture is not secured by the assets of Rennova Health, Inc. or CollabRx, Inc. Acquisition Convertible Notes The Company filed actions against Reginald Samuels and Ralph Perricelli seeking, among other things, a declaration that the convertible debentures in the aggregate amount of $500,000 that the Company issued to Mr. Samuels and Mr. Perricelli as part of the consideration for the purchase of their interests in International Technologies, LLC are null and void. All litigation with Mr. Samuels was settled by the Company on December 8, 2014. Specifics of the settlement are confidential. The Company received a default judgement against Perricelli in January 2015, relieving the Company of its obligations under the convertible debenture. The note payable and related accrued interest will be written off in January 2015. |
9. Related Party Transactions
9. Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | On December 31, 2014, the Company borrowed $3,000,000 from D&D Funding II, LLC (“D&D”), Christopher Diamantis, a director of the Company, is the manager and 50% owner of D&D. (See Note 7 for a description of this Note.) Mr. Forhan was employed as the Company’s Chief Executive Officer pursuant to the terms of an employment agreement dated June 1, 2011, as amended as of September 1, 2013. In connection with his voluntary resignation he entered into an agreement, to be effective as of the date of appointment of a new Chief Executive Officer of the Company, pursuant to which he will receive a severance of $500,000, the first installment of $200,000 was paid prior to the effective date of resignation, and the balance is to be paid in monthly installments through August 31, 2016. In addition, the Agreement provided that Mr. Forhan could participate in any executive bonus plan adopted for calendar year 2014. Mr. Forhan also agreed under the Agreement that any Company stock options previously issued to him, would remain outstanding, subject to their terms, for no longer than 24 months such that the options will expire no later than August 31, 2016. In addition, the Agreement provided, among other things, for the return and cancellation of 1,241,550 shares of Common Stock owned by Mr. Forhan; for the release by Mr. Forhan of any and all claims he may have had against the Company and/or its affiliates; and for Mr. Forhan to abide by certain restrictive covenants, including using his best efforts to protect and maintain the Company's confidential information. Alcimede LLC, of which the CEO of the Company is the sole manager, had advanced loans to the Company for the payment of certain operating expenses. The loans were non-interest bearing and were due on demand. Alcimede was paid $372,000 and $364,375 for consulting fees pursuant to a consulting agreement for the years ended December 31, 2015 and 2014, respectively. The Company reimbursed Alcimede $450,408 for certain operating expenses and asset purchases paid by Alcimede on the Company’s behalf in the year ended December 31, 2014. On February 3, 2015, the Company borrowed $3,000,000 from Alcimede LLC. The note has an interest rate of 6% and is due on February 2, 2016. On June 29, 2015, Alcimede exercised options granted in October 2012 to purchase one million shares of the Company’s common stock at an exercise price of $2.50 per share. The loan outstanding was reduced in satisfaction of the aggregate exercise price of $2,500,000. On February 27, 2015, the Company borrowed $30,000 from Alcimede LLC, of which our CEO is the sole manager. The loan was repaid on April 15, 2015. Dr. Thomas Mendolia, the former Chief Executive Officer of the Company's Laboratories and a shareholder, was reimbursed $32,439 and $254,966 for certain operating expenses and asset purchases paid by Dr. Mendolia on the Company’s behalf in the years ended December 31, 2015 and 2014, respectively. On June 30, 2015, the Company issued 200,000 shares of common stock to SS International Consulting Ltd., of which a former director of the Company is the sole manager. On September 4, 2015, the Company borrowed $500,000 from Christopher Diamantis, a director of the Company. This loan was repaid in the fourth quarter of 2015 with a 10% fee in cash. In the fourth quarter of 2015, the Company borrowed $1,600,000 from Mr. Diamantis which is due January 7, 2016 with $100,000 in interest. All of these transactions were completed at arm’s length at values commensurate with those of independent third parties. |
10. Capital Lease Obligations
10. Capital Lease Obligations | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Capital Lease Obligations | The Company leases various assets under capital leases expiring in 2020 as follows: December 31 December 31 2015 2014 Medical equipment $ 5,663,332 $ 4,024,449 Less accumulated depreciation (2,093,920 ) (883,015 ) Net $ 3,569,412 $ 3,141,434 Depreciation expense on assets under capital leases was $1,210,905 and $518,289 for the years ended December 31, 2015 and 2014, respectively. Aggregate future minimum rentals under capital leases are as follows: December 31, 2016 $ 1,540,946 2017 1,432,542 2018 845,330 2019 217,412 2020 32,611 Total 4,068,841 Less interest 350,962 Present value of minimum lease payments 3,717,879 Less current portion of capital lease obligations 1,323,708 Capital lease obligations, net of current portion $ 2,394,171 |
11. Stockholders' Equity
11. Stockholders' Equity | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Stockholders' Equity | For the period of November 2, 2015 through December 31, 2015 Authorized Capital The Company has 50,000,000 authorized shares of Common Stock at $0.01 par value and 5,000,000 authorized shares of Preferred Stock at a par value of $0.01. Common Stock As of December 31, 2015 14,651,837 shares of common stock were issued and outstanding. On December 30, 2015, the Company issued 645,161 Class A Units consisting of one share of common stock and one warrant to purchase one share of common stock in a public offering at $1.55 per unit with a 7% underwriting discount. See below for information regarding common stock issued other than in the public offering. Series B Convertible Preferred Stock Pursuant to the Certificate of Designation of Series B Convertible Preferred Stock of Rennova (the “Series B Certificate of Designation”) and the resolutions to be duly adopted by the CollabRx Board of Directors prior to the effective time of the Merger, the terms of the Rennova Series B Preferred Stock were designated. Designation and Amount Optional Conversion If the outstanding shares of Rennova common stock are increased or decreased or changed into or exchanged for a different number or kind of shares, other securities of or any other interests in Rennova by reason of any recapitalization, reclassification, reorganization, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock of Rennova, or other increase or decrease in such shares effected without receipt of fair and adequate consideration (as determined by the Rennova board of directors), occurring after the closing date, an appropriate adjustment shall be made by the Rennova board of directors to (i) the number and kind of shares of capital stock issuable upon exercise of the conversion rights; and/or (ii) the Rennova Series B Conversion Price. Mandatory Conversion Series C Convertible Preferred Stock The following summary of certain terms and provisions of our Series C Preferred offered hereby is subject to, and qualified in its entirety by reference to, the terms and provisions set forth in our certificate of designation of preferences, rights and limitations of Series C Preferred. General. Conversion. On December 30, 2015, the Company issued 9,000 Class B Units, each consisting of one share of Series C Preferred Stock and warrants to purchase 645.1613 shares of common stock, in a public offering for $1,000 per unit, less underwriting discounts totaling $70 per share. Series E Convertible Preferred Stock Pursuant to the Certificate of Designation of Series E Convertible Preferred Stock of Rennova (the “Series E Certificate of Designation”) and the resolutions to be duly adopted by the CollabRx Board of Directors prior to the effective time of the Merger, the terms of the Rennova Series E Preferred Stock were designated. Designation and Amount Conversion Any shares of Rennova Series E Preferred Stock outstanding on the mandatory conversion date of August 28, 2016 shall be automatically converted into that number of fully-paid non-assessable shares of Rennova common stock which the holder thereof would have been entitled to receive had such shares of Rennova Series E Preferred Stock been converted into Rennova common stock as described above. For the period through November 2, 2015 The Company had 500,000,000 authorized shares of Common Stock at $0.0001 par value and 100,000,000 authorized shares of Preferred Stock at a par value of $0.0001. On October 1, 2012, the Company filed a certificate of designation with the Secretary of State of Nevada to designate 5,000 shares of Series B Non-convertible Preferred Stock, at $0.0001 par value per share. The Series B shares do not include any voting rights and allow for monthly dividends in an amount equal to the sum of 1) 10% of the amount of gross sales in excess of $1 million collected in the ordinary course of business, not to exceed $150,000, and 2) 15% of the amount of gross sales in excess of $2.5 million collected in the ordinary course of business. On March 27, 2014, each of the holders of shares of Series B Preferred Stock entered into a purchase option agreement with the Company. Each agreement grants the Company an option to purchase any or all shares of Series B Preferred Stock held by the holder at any time through March 27, 2016 at a purchase price of $5,000 per share. Each holder agreed not to transfer or dispose of any shares of Series B Preferred Stock during the term of the option, other than to the Company upon an exercise of the option. Any exercise of an option is completely at the Company's discretion. During the year ended December 31, 2012, the Company issued 5,000 shares of Series B Preferred Stock to executives as compensation. The shares were valued at par totaling $1 and charged to operations. During the year ended December 31, 2015, the Series B preferred shareholders earned dividends totaling $1,627,188 of which $2,099,148 was due and payable at December 31, 2015. During the year ended December 31, 2014, the Series B preferred shareholders earned dividends totaling $5,010,300 of which $913,271 was due and payable at December 31, 2014. On October 7, 2012, the Company filed a certificate of designation with the Secretary of State of Nevada to designate 1,000,000 shares of Series C Convertible Preferred Stock, at $0.0001 par value per share. The Series C shares were convertible into shares of Common Stock by the quotient of 1 divided by the product of 0.80 multiplied by the market price of the Company’s Common Stock at the date of conversion. The Series C shares also included voting rights of 25 votes for every share of Series C Preferred Stock and were entitled to dividends at the same time any dividend was paid or declared on any shares of the Company’s Common Stock. On December 30, 2015, the Company issued 9,000 shares of Series C Preferred Stock in a public offering for $1,000 per share, less underwriting discounts totaling $70 per share. On March 17, 2014, the Company filed a Certificate of Designation with the Secretary of State of Nevada authorizing up to 200,000 shares of Series D Convertible Preferred Stock at $0.0001 par value per share ("Series D Preferred Stock"). Each share of Series D Preferred Stock is convertible into the number of shares of Common Stock equal to the quotient of 5 divided by the product of 0.80 multiplied by the market price, as defined in Certificate of Designation, of the Company’s Common Stock at the date of conversion. After the earlier of the date the trading volume of the Common Stock exceeds an aggregate of 3,000,000 shares in any 30 day period or the date the Company sells shares of Common Stock in a firm commitment underwritten public offering with aggregate gross proceeds of at least $30,000,000, each share of Series D Preferred Stock shall be convertible into the number of shares of Common Stock equal to the quotient of (i) 5 divided by (ii) the market price of the Common Stock. All shares of Series D Preferred Stock outstanding on the second anniversary of the original issuance date shall be automatically converted into shares of Common Stock. The Series D shares also include voting rights of 1 vote for every share of Series D Preferred Stock and are entitled to dividends, at the same time any dividend is paid or declared on any shares of the Company’s Common Stock The dividends are to be in an amount equal to the amount such holder would have received if the Series D Preferred Stock were converted to Common Stock. As of December 31, 2014 and 2013, respectively, there were 200,000 shares and no shares of Series D Preferred Stock outstanding. On August 21, 2014, the Company filed a Certificate of Designation with the Secretary of State of Nevada authorizing 100,000 shares of Series E Convertible Preferred Stock at a par value of $.0001 per share. The Series E shares are convertible into the number of shares of Common Stock equal to the quotient of 8 divided by the average market price of the Company’s Common Stock for thirty trading days prior to the date of conversion, multiplied by the number of Series E shares being converted. Any Series E shares which remain outstanding on August 28, 2016 will be automatically converted into Common Stock using the prescribed formula. The Series E shares also include voting rights of 1 vote for every share of Series E Preferred Stock and are entitled to dividends at the same time any dividend is paid or declared on any shares of the Company’s Common Stock. The dividends are to be in an amount equal to the amount such holder would have received if the Series E Preferred Stock were converted to Common Stock at the same time any dividend is paid or declared on any shares of the Company’s Common Stock. As of December 31, 2014 and 2013, respectively, there were 100,000 shares and no shares of Series E Preferred Stock outstanding. On August 28, 2014, 100,000 shares of Series E Preferred Stock of the Company were issued to the previous owner of Epinex pursuant to a stock purchase agreement whereby the Company purchased all of the outstanding stock of Epinex (See Note 12 – Business Combinations). On March 3, 2015, 55,000 shares of these Series E Preferred stock were converted to 58,856 shares of common stock. 2013 Equity Plan On September 25, 2013, the Company’s board of directors approved and adopted the Medytox Solutions, Inc. 2013 Incentive Compensation Plan (the “2013 Plan”). The 2013 Plan was approved by a majority of stockholders of the Company on November 22, 2013. The 2013 Plan provides for the grant of shares of common stock, options, performance shares, performance units, restricted stock, stock appreciation rights and other awards. No awards of any kind were granted under the 2013 Plan during the year ended December 31, 2013. As a result of the Merger, this Plan was cancelled. Any grants issued prior to the cancellation remain in force. The following summarizes activity under the 2013 Plan for the years ended December 31, 2015 and 2014: 2007 Incentive Award Plan Pursuant to the terms of the Company’s 2007 Equity Participation Plan (“2007 Equity Plan”), which became available upon the acquisition of CollabRx, Inc., an aggregate of 20,000 shares of common stock is available for grant pursuant to the 2007 Equity Plan, plus the number of shares of common stock which are or become available for issuance under the 1998 Equity Plan and the Director Option Plan and which are not thereafter issued under such plans. The 2007 Equity Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights, performance shares, performance stock units, dividend equivalents, stock payments, deferred stock, restricted stock units, other stock-based awards, and performance-based awards. The option exercise price of all stock options granted pursuant to the 2007 Equity Plan will not be less than 100% of the fair market value of the common stock on the date of grant. Stock options may be exercised as determined by the Board, but in no event after the tenth anniversary date of grant, provided that a vested nonqualified stock option may be exercised up to 12 months after the optionee's death. Awards granted under the 2007 Equity Plan are generally subject to vesting at the discretion of the Committee. As of December 31, 2015, 2,130 shares were available for issuance under the 2007 Equity Plan. Stock Options The following summarizes option activity for the 2013 Plan for the years ended December 31, 2015 and 2014: Shares approved for issuance at plan inception 2,048,189 Options granted in 2014 (587,830 ) Options cancelled in 2014 4,096 Restricted shares issued in 2014 (86,024 ) Balance at December 31, 2014 1,378,431 Options granted in 2015 (364,578 ) Options cancelled in 2015 92,168 Plan cancellation (1,106,021 ) Balance at December 31, 2015 – The following table summarizes information with respect to stock options outstanding and exercisable by employees and directors at December 31, 2015: Options outstanding Options vested and exercisable Exercise price Number outstanding Weighted average remaining contractual life (years) Weighted average exercise Aggregate intrinsic value Number vested Weighted average exercise Aggregate intrinsic value $6.10 1,411,094 2.28 $6.10 $ – 1,411,094 $6.10 $9.76 130,874 9.54 $9.76 – 130,874 $9.76 – 1,541,968 $6.41 $ – 1,541,968 $6.41 $ – During the year ended December 31, 2014, the Company issued options to purchase a total of 40,964 shares of the Company’s common stock to an employee pursuant to terms of an employment agreement. These options have contractual lives of two years and were valued at an average grant date fair value of $0.61 per option, or $25,000, using the Black-Scholes Option Pricing Model with the following assumptions: Stock price $6.10 Expected term 1 year Expected volatility 24.43% Risk free interest rate 0.30% Dividend yield 0 The stock price was based on the price of shares sold to investors and volatility was based on comparable volatility of other companies since the Company had no significant historical volatility. As the 40,964 options were vested as during the year ended December 31, 2014, $25,000 of stock-based compensation was recorded for the year. During the year ended December 31, 2014, the Company issued options to purchase a total of 423,975 shares of the Company’s common stock to various employees. These options have contractual lives of ten years and were valued at an average grant date fair value of $1.71 per option, or $724,500, using the Black-Scholes Option Pricing Model with the following assumptions: Stock price $6.10 Expected term 5.375 years Expected volatility 27.72% Risk free interest rate 1.46% Dividend yield 0 The stock price was based on the price of shares sold to investors and volatility was based on comparable volatility of other companies since the Company had no significant historical volatility. As of December 31, 2014, 211,988 of these options had vested and the Company recognized $560,476 of stock-based compensation expense for the year ended December 31, 2014. During the year ended December 31, 2014, the Company issued options to purchase a total of 122,891 shares of the Company’s common stock to a director. These options have contractual lives of four years and were valued at an average grant date fair value of $0.44 per option, or $54,000, using the Black-Scholes Option Pricing Model with the following assumptions: Stock price $6.10 Expected term 2 years Expected volatility 24.43% Risk free interest rate 0.43% Dividend yield 0 The stock price was based on the price of shares sold to investors and volatility was based on comparable volatility of other companies since the Company had no significant historical volatility. As of December 31, 2014, 81,928 of these options had vested and the Company recognized $46,603 of stock-based compensation expense for the year ended December 31, 2014. During the year ended December 31, 2015, the Company issued options to purchase a total of 364,578 shares of the Company’s common stock to employees. These options had contractual lives of four years and were valued at an average grant date fair value of $0.44 per option, or $160,400, using the Black-Scholes Option Pricing Model. The assumptions used to value these options include a stock price of $9.76 per share, an expected term of 2 years, an expected volatility of 24.43%, a risk free rate of 0.43% and no dividend yield. As of December 31, 2015, there were unrecognized compensation costs of $178,159 related to stock options. The Company expects to recognize those costs over a weighted average period of 0.25 years as of December 31, 2015. Future option grants will increase the amount of compensation expense to be recorded in these periods. Warrants The following table summarizes warrants outstanding at December 31, 2015 and 2014: Number of warrants Weighted average exercise price Weighted average remaining contractual term (years) Aggregate intrinsic value Outstanding and Exercisable at December 31, 2014 122,891 $ 8.14 – $ – Outstanding and Exercisable at December 31, 2015 6,898,560 $ 1.83 5.00 $ – Basic and Diluted Income per Share The Company computes income per share in accordance with ASC 260, “Earnings per Share”, which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all potential dilutive equivalent shares of common stock outstanding during the period using the treasury stock method and convertible debt and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, convertible debt, convertible preferred stock, or warrants. Basic and Diluted EPS were calculated as follows: Year Ended December 31, 2015 2014 Basic: Numerator- net income (loss) available to common stockholders $ (37,589,694 ) 2,810,032 Denominator - weighted-average shares outstanding 12,456,486 12,247,978 Net income (loss) per share -Basic $ (3.02 ) $ 0.23 Diluted: Numerator: Net income (loss) available to common stockholders $ (37,589,694 ) $ 2,810,032 Interest expense on convertible debt, net of taxes – 14,436 (37,589,694 ) 2,824,468 Denominator: Weighted-average shares outstanding 12,465,486 12,247,978 Weighted-average equivalent shares options – 249,952 Weighted-average equivalent shares from convertible debt – 91,031 Weighted-average equivalent shares from Series C convertible preferred stock – – Weighted-average equivalent shares from Series D convertible preferred stock – 64,644 Weighted-average equivalent shares from Series E convertible preferred stock – 14,253 12,465,486 12,667,858 Net income (loss) per share - Diluted $ (3.02 ) $ 0.22 Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of December 31, 2015 and 2014, the following potential common stock equivalents were excluded from the calculation of Diluted EPS as their effect was anti-dilutive: December 31 2015 2014 Stock options outstanding 1,822,675 6,042,157 Warrants outstanding 6,898,560 – Convertible debt 1,074,402 – Convertible preferred stock 11,540,397 – 21,336,034 6,042,157 |
12. Income Taxes
12. Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Significant components of the income tax provision are summarized as follows: Income Tax Provision: Year Ended December 31, 2015 2014 Current Provision: Federal $ (7,809,637 ) $ 4,807,000 State (850,251 ) 822,900 Deferred Provision: Federal (331,408 ) 1,745,200 State (36,957 ) 186,200 $ (9,028,253 ) $ 7,561,300 A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate on income before income taxes for the years ended December 31, 2015 and 2014 is as follows: Year Ended December 31, 2015 2014 Expected federal income tax at statutory rate 35.0% 34.0% State income taxes, net of federal deduction 2.1% 4.3% Permanent differences -0.1% 10.9% Change in valuation allowance -16.9% 0.0% 20.1% 49.2% The Company provides for income taxes using the liability method in accordance with FASB ASC Topic 740 “Income Taxes”. Deferred income taxes arise from the differences in the recognition of income and expenses for tax purposes. Deferred tax assets and liabilities are comprised of the following at December 31, 2015 and 2014: December 31, 2015 2014 Deferred income tax assets: Allowance for bad debts $ 67,948 $ 28,300 Stock options 709,375 423,200 Goodwill and intangible assets 7,525,665 – Beneficial conversion feature 602,681 – Charitable contributions 505 – Net operating loss carryforwards 1,144,633 – Valuation allowance (8,585,313 ) – Total deferred income tax assets $ 1,465,494 $ 451,500 Deferred income tax liabilities: Property and equipment $ (344,356 ) $ (513,600 ) Derivative mark to market adjustments (1,121,138 ) – Goodwill and intangible assets – (162,500 ) Total deferred income tax liabilities $ (1,465,494 ) $ (676,100 ) Net deferred income taxes: Current $ – $ 28,300 Non-Current – (252,900 ) $ – $ (224,600 ) Management has reviewed the provisions regarding assessment of their valuation allowance on deferred tax assets and based on that criteria determined that it should record a valuation allowance of $8,585,313 against its deferred tax assets. The Company has net operating loss carryforwards totaling $2,949,285 generated in 2015 and expiring in 2035. The Company recognizes the consolidated financial statement impact of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than–not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company is subject to income taxes in the U.S. federal jurisdiction and the states of Florida, North Carolina, New Mexico, New Jersey, California and Tennessee. The tax regulations within each jurisdiction are subject to interpretation of related tax laws and regulations and require significant judgment to apply. As of December 31, 2015, returns have been filed for tax years 2014, 2013, 2012, 2011, 2010, 2009, 2008, 2007, 2006 and 2005 and remain open for IRS audit. In the second quarter of 2015, the Company received notice that the IRS had placed a lien on it related to unpaid 2013 taxes due. The taxes due were paid and the lien was lifted in September 2015. On September 3, 2015 the Company was notified by the IRS that its 2013 Federal income tax return was selected for examination. The IRS is currently in the process of examining the return and the Company’s supporting documentation. As of December 31, 2015, the Company has not received any proposed adjustments to its 2013 Federal income tax return from the IRS. |
13. Business Combinations
13. Business Combinations | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Business Combinations | Completion of Merger On November 2, 2015, the Company completed its merger (the “Merger”) with CollabRx, Inc. (“CollabRx”). In connection with the Merger, (i) each share of common stock of Medytox was converted into the right to receive about 0.4096 shares of common stock of CollabRx, (ii) each share of Series B Preferred Stock of Medytox was converted into the right to receive one share of a newly-authorized Series B Convertible Preferred Stock of CollabRx, and (iii) each share of Series E Convertible Preferred Stock of Medytox was converted into the right to receive one share of a newly-authorized Series E Convertible Preferred Stock of CollabRx. Holders of CollabRx equity prior to the closing of the Merger (including all outstanding CollabRx common stock and all restricted stock units, options and warrants exercisable for shares of CollabRx common stock) held 10% of CollabRx’s common stock following the closing of the Merger, and holders of Medytox equity prior to the closing of the Merger (including all outstanding Medytox common stock and all outstanding options exercisable for shares of Medytox common stock, but less certain options that were cancelled upon the closing pursuant to agreements between Medytox and such optionees) held 90% of CollabRx’s common stock following the closing of the Merger, in each case on a fully diluted basis, provided, however, outstanding shares of the newly designated Series B Convertible Preferred Stock and Series E Convertible Preferred Stock, certain outstanding convertible promissory notes exercisable for CollabRx common stock after the closing and certain option grants expected to be made at or immediately following the closing of the Merger are excluded from such ownership percentages. Also in connection with the Merger: (i) each of James Karis, Jeffrey M. Kraus and Carl Muscari resigned from CollabRx’s Board of Directors; (ii) each of Seamus Lagan, Christopher Diamantis, Benjamin Frank, Michael L. Goldberg and Robert Lee was appointed to serve on CollabRx’s Board of Directors; and (iii) Thomas R. Mika was appointed Chairman of the Board, Seamus Lagan was appointed Chief Executive Officer and President, Jason Adams was appointed Chief Financial Officer, and Sebastian Sainsbury was appointed as Secretary. In connection with the completion of the merger, CollabRx changed its name to Rennova Health, Inc. (“Rennova”). On November 3, 2015, the common stock of Rennova commenced trading on the Nasdaq Capital Market under the symbol RNVA. Immediately after the consummation of the Merger, Rennova had 13,750,010 shares of common stock, 5,000 shares of Series B Convertible Preferred Stock and 45,000 shares of Series E Convertible Preferred Stock issued and outstanding. The transaction was accounted for as a reverse acquisition. As such, the prior period equity amounts have been retro-actively restated to reflect the equity instruments of the legal acquirer. The consideration given for CollabRx totals $12,289,297, consisting of the fair value of common stock and warrants exchanged in the merger transaction. The following table summarizes the fair values of assets acquired and liabilities assumed at the acquisition date of CollabRx. Cash $ 4,737,773 Accounts receivable 54,675 Other current assets 105,700 Property and equipment 92,636 Accounts payable and accrued expenses (1,620,000 ) Deferred revenue (123,000 ) Other liabilities (520,070 ) Derivative liabilities (1,578,976 ) Identifiable intangible assets 170,000 Total identifiable net assets 1,818,738 Goodwill 12,237,380 Total consideration $ 13,510,777 Epinex Diagnostics Laboratories, Inc. On August 26, 2014, the Company, through its subsidiary, MDI, purchased all of the outstanding stock of Epinex from an unrelated party. The purchase price was an aggregate of $1,241,745, consisting of the items in the table below. The following table summarizes the consideration given for Epinex and the fair values of the assets acquired and liabilities assumed at the acquisition date. Consideration Given: Cash at closing $ 100,000 Acquisition Notes 385,545 Series E Convertible Preferred Stock (100,000 shares) 800,000 Contingent consideration adjustment (43,800 ) $ 1,241,745 Fair value of identifiable assets acquired and liabilities assumed: Cash $ 36,677 Property and equipment, net 26,983 Deposits 285 Accounts payable (227,855 ) Accrued expenses (75,945 ) Identifiable intangible assets 900,000 Total identifiable net assets 660,145 Goodwill 581,600 Total consideration $ 1,241,745 Intangible assets consisting of certain medical licenses ($820,000) and Trade Names ($80,000) were valued based on their fair value. The licenses have indefinite lives and are non-amortizable. Trade Names are being amortized over their estimated useful life. (See Note 6 – Long-Lived Assets) GlobalOne Information Technologies, LLC On May 23, 2014, the Company, through its subsidiary, Mime, purchased certain net assets, primarily consisting of software, of GlobalOne. The purchase price was an aggregate of $675,000, consisting of $500,000 in cash, 10,000 shares of Common Stock, and $150,000 in cash payable six months after the date of closing. The following table summarizes the consideration given for the net assets of GlobalOne and the fair values of the assets acquired and liabilities assumed recognized at the acquisition date. Consideration Given: Cash at closing $ 500,000 Common stock (10,000 shares) 25,000 Contingent acquisition liability 150,000 Total Consideration $ 675,000 Fair value of identifiable assets acquired and liabilities assumed: Accounts receivable $ 93,270 Property and equipment, net 7,005 Software 182,000 Accounts payable (95,086 ) Identifiable intangible assets 213,000 Total identifiable net assets 400,189 Goodwill 274,811 Total consideration $ 675,000 Intangible assets consisting of Trade Names ($66,000), Customer Relationships ($128,000) and Non-Compete arrangements ($19,000) were valued at fair value and are being amortized over their estimated useful lives. (See Note 6 – Long-Lived Assets) ClinLab, Inc. On March 18, 2014, the Company, through its subsidiary, MIT, purchased all of the outstanding stock of ClinLab from two unrelated parties. The purchase price was an aggregate of $2,304,107, consisting of the items shown in the table below. The following table summarizes the consideration given for ClinLab and the fair values of the assets acquired and liabilities assumed recognized at the acquisition date. Consideration Given: Cash at closing $ 1,000,000 Series D Convertible Preferred Stock (200,000 shares) 1,250,000 Contingent acquisition liability 54,017 Total Consideration $ 2,304,017 Fair value of identifiable assets acquired and liabilities assumed: Cash $ 31,671 Accounts receivable 54,017 Other current assets 241 Software 1,252,000 Deposits 700 Accounts payable (4,942 ) Accrued expenses (39,202 ) Identifiable intangible assets 152,000 Total identifiable net assets 1,446,485 Goodwill 857,532 Total consideration $ 2,304,017 Intangible assets consisting of Trade Names ($75,000) and Customer Relationships ($77,000) were valued at fair value and are being amortized over their estimated useful lives. (See Note 6 – Long-Lived Assets) Goodwill was attributable to the following subsidiaries as of December 31, 2015 and December 31, 2014: December 31, 2015 December 31, 2014 Medical Billing Choices, Inc. $ – $ 1,202,112 PB Laboratories, LLC – 107,124 Biohealth Medical Laboratory, Inc. – 116,763 Clinlab, Inc. – 857,532 Medical Mime, Inc. – 274,811 Epinex Diagnostics Laboratories, Inc. – 581,600 $ – $ 3,139,942 At December 31, 2015, the Company determined that all of its goodwill and intangibles were impaired. As a result, it recorded an impairment charge of $20,143,320 for the year ended December 31, 2015. Pro-Forma Financial Information The following unaudited pro forma data summarizes the results of operations for the years ended December 31, 2015 and 2014 as if the acquisitions of CollabRx, Clinlab and Epinex had been completed January 1, 2014. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place on January 1, 2014. For the Year Ended December 31, 2015 Rennova Health, Inc. Historical CollabRx, Inc. (a) Pro-Forma Adjustments Combined Net Revenues $ 18,393,038 $ 425,000 $ – $ 18,818,038 Operating Expenses 63,858,012 4,881,000 – 68,739,012 Income (Loss) from operations (45,464,974 ) (4,456,000 ) – (49,920,974 ) Other income (expense) 474,215 (43,000 ) – 431,215 Income (Loss) before income taxes (44,990,759 ) (4,499,000 ) – (49,489,759 ) Provision for income taxes (9,028,253 ) (269,000 ) – (b) (9,297,253 ) Net income (loss) attributable to Rennova Health (35,962,506 ) (4,230,000 ) – (40,192,506 ) Preferred stock dividends 1,627,188 – (1,627,188 )(c) – Net income (loss) attributable to Rennova Health common shareholders $ (37,589,694 ) $ (4,230,000 ) $ 1,627,188 $ (40,192,506 ) Net income (loss) per common share: Basic $ (3.02 ) $ (2.96 ) Diluted $ (3.02 ) $ (2.96 ) Weighted average number of common shares outstanding during the period: Basic 12,465,486 13,556,303 Diluted 12,465,486 13,556,303 For the Year Ended December 31, 2014 Rennova Health, Inc. Historical Epinex Diagnostics Laboratories, Inc. Clinlab, Inc. CollabRx, Inc. Pro-Forma Adjustments Combined Net Revenues $ 57,927,820 $ 44,299 $ 98,446 $ 498,000 $ – $ 58,568,565 Operating Expenses 42,272,826 329,258 94,414 5,936,000 – 48,632,498 Income (Loss) from operations 15,654,994 (284,959 ) 4,032 (5,438,000 ) – 9,936,067 Other income (expense) (273,362 ) 12,753 1 (27,000 ) – (287,608 ) Income (Loss) before income taxes 15,381,632 (272,206 ) 4,033 (5,465,000 ) – 9,648,459 Provision for income taxes 7,561,300 – – (301,000 ) (2,532,555 )(b) 4,727,745 Net income (loss) attributable to Rennova Health 7,820,332 (272,206 ) 4,033 (5,164,000 ) – 4,920,714 Preferred stock dividends 5,010,300 – – – (5,010,300 )(c) – Net income (loss) attributable to Rennova Health common shareholders $ 2,810,032 $ (272,206 ) $ 4,033 $ (5,164,000 ) $ 5,010,300 $ 4,920,714 Net income (loss) per common share: Basic $ 0.23 $ 0.36 Diluted $ 0.22 $ 0.35 Weighted average number of common shares outstanding during the period: Basic 12,247,978 13,553,382 Diluted 12,667,858 13,973,262 _______________ (a) Reflects 2015 and 2014 results of operations prior to the acquisition dates. Clinlab was acquired on March 18, 2014, Epinex was acquired on August 26, 2014 and CollabRx was acquired on November 2, 2015. For the year ended December 31, 2014, CollabRx is included using its fiscal year ended March 31, 2015 financial statements. (b) Reflects changes in taxes, if any, resulting from including the aggregate net losses of acquired operations in the corporate tax return. (c) Reflects elimination of preferred stock dividend accruals resulting from the reverse merger with CollabRx. |
14. Commitments and Contingenci
14. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Operating Lease Commitments The Company leases office space and business equipment for its corporate office and subsidiaries under multiple year non-cancelable operating leases that expire through 2021. The office lease agreements have certain escalation clauses and renewal options. Additionally, the Company has lease agreements for computer equipment, office copiers and fax machines. The office space lease agreements include escalating rents over the lease term. The Company expenses rent on a straight-line basis over the lease term which commences on the date the Company has the right to control the property. The cumulative expense recognized on a straight-line basis in excess of the cumulative payments is included in Accrued Expenses in the accompanying Consolidated Balance Sheets. At December 31, 2015, future minimum lease payments under these leases are as follows: Year ending December 31, 2016 $ 741,015 2017 735,899 2018 670,479 2019 470,128 2020 365,274 Total minimum future lease payments $ 2,982,795 Rent expense for the years ended December 31, 2015 and 2014 was $608,399 and $350,169, respectively. Purchase Commitments On January 25, 2013 MDI entered into a ten year, automatically renewable, License Agreement with Dry Spot Diagnostics AG (Dry Spot”), the Company will pay to Dry Spot a minimum royalty of $200,000 per year in 2015 and 2016. The agreement provides for a royalty of 10% on sales incorporating the Dry Spot technology in years subsequent to 2016 through the expiry of the agreement. The Company has entered into a purchase agreement for reagent supplies through December, 2020. Minimum commitments as of December 31, 2015 for these obligations are as follows: Year ending December 31, 2015 $ 254,871 2016 254,871 2017 54,871 2018 54,871 2019 54,781 2020 and thereafter 54,961 Total purchase commitments $ 729,226 Significant Risks and Uncertainties Concentration of Credit Risk - Accounts Receivable - A number of proposals for legislation continue to be under discussion which could substantially reduce Medicare and Medicaid (CMS) reimbursements to clinical laboratories. Depending upon the nature of regulatory action, and the content of legislation, the Company could experience a significant decrease in revenues from Medicare and Medicaid (CMS), which could have a material adverse effect on the Company. The Company is unable to predict, however, the extent to which such actions will be taken. Legal Matters During the course of business, litigation commonly occurs. From time to time, the Company may be a party to litigation matters involving claims against the Company. The Company operates in a highly regulated industry which may inherently lend itself to legal matters. Management is aware that litigation has associated costs and that results of adverse litigation verdicts could have a material effect on the Company's financial position or results of operations. Management, in consultation with legal counsel, has addressed known assertions and predicted unasserted claims below. Epinex Diagnostics Laboratories, Inc. (“Epinex”) has been sued in a California state court by two former employees who allege that they were wrongfully terminated, as well as a variety of unpaid wage claims. The Company participated in formal mediation on February 25, 2016 in California. This matter has been reset for trial in April 2016. In February 2016, the Company received notice that the Internal Revenue Service had placed a lien against Medytox Solutions, Inc. and its subsidiaries relating to unpaid 2014 taxes due, plus penalties and interest, totaling $4,964,000. The Company paid $100,000 toward its 2014 tax liability in March 2016. The Company filed its 2015 Federal tax return on March 15, 2016. The 2015 return and the accompanying election to carryback the reported net operating losses will permit the Company to have the lien lifted. |
15. Segment Reporting
15. Segment Reporting | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Reporting | Selected financial information for the Company’s operating segments is as follows: 2015 2014 Net revenues - External Laboratory Services $ 17,501,189 $ 57,180,209 Supportive Software Solutions 805,899 747,611 Decision Support and Informatics Operations 85,950 – Corporate – – Eliminations – – $ 18,393,038 $ 57,927,820 Net revenues - Inter Segment Laboratory Services $ – $ – Supportive Software Solutions 2,096,768 2,928,160 Decision Support and Informatics Operations – – Corporate – – Eliminations – – $ 2,096,768 $ 2,928,160 Income (loss) from operations Laboratory Services $ (17,197,888 ) $ 19,808,354 Supportive Software Solutions (7,810,476 ) (816,916 ) Decision Support and Informatics Operations (13,023,465 ) – Corporate (7,488,351 ) (3,067,138 ) Eliminations 55,206 (269,306 ) $ (44,233,007 ) $ 15,654,994 Depreciation and amortization Laboratory Services $ 2,178,423 $ 1,104,606 Supportive Software Solutions 678,201 442,321 Decision Support and Informatics Operations 8,006 – Corporate 5,424 5,420 Eliminations (120,204 ) (51,894 ) $ 2,749,850 $ 1,500,453 Capital expenditures Laboratory Services $ 2,057,952 $ 5,084,658 Supportive Software Solutions 102,235 450,409 Decision Support and Informatics Operations – – Corporate – – Eliminations (65,000 ) – $ 2,095,187 $ 5,535,067 December 31, December 31, 2015 2014 Total assets Laboratory Services $ 15,152,583 $ 29,362,062 Supportive Software Solutions 2,896,473 5,214,139 Decision Support and Informatics Operations 4,307,053 – Corporate 12,711,284 1,939,989 Eliminations (7,095,520 ) (755,436 ) $ 27,971,873 $ 35,760,754 Intangible assets Laboratory Services $ – $ 4,088,835 Supportive Software Solutions – 347,638 Decision Support and Informatics Operations – – Corporate – – Eliminations – – $ – $ 4,436,473 Goodwill Laboratory Services $ – $ 805,487 Supportive Software Solutions – 2,334,455 Decision Support and Informatics Operations – – Corporate – – Eliminations – – $ – $ 3,139,942 |
16. Subsequent Events
16. Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | In January 2016, the Company repaid $1,600,000 of the amounts due to Christopher Diamantis, a director of the Company, under short term notes payable that were outstanding as of December 31, 2015. In addition to the principal amount, the Company paid $100,000 in cash for interest. In January 2016, the Company temporarily repaid $3,000,000 of the amounts due under the D&D note. In addition to the principal amount, the Company paid $300,000 in cash for interest for 2015. In March 2016, the Company re-borrowed 100% of the principal amount repaid in January 2016. In April 2016, the Company repaid $2,250,000 of the $3,000,000 then outstanding under the D&D note from proceeds of the accounts receivable transaction discussed below. This note was convertible into the Company’s Common Stock at a 25% discount to the trailing ten day average closing price at any time prior to the repayment. As such, the Company elected to repay the note prior to its maturity date. In February 2016, the Company received notice that the Internal Revenue Service had place a lien against it relating to unpaid 2014 taxes due, plus penalties and interest, totaling $4,964,000. The Company paid $100,000 toward its 2014 tax liability in March 2016. The Company filed its 2015 Federal tax return on March 15, 2016. The 2015 return and the accompanying election to carryback the reported net operating losses will permit the Company to have the lien lifted and entitle the Company to the $2,415,013 refund that is recorded as a receivable as of December 31, 2015. On March 31, 2016, the Company entered into an agreement to pledge certain of its accounts receivable as collateral against a prepaid forward purchase contract. The receivables had an estimated collectable value of $8,700,000 and have been adjusted down to approximately $4,300,000 in our books and records. The consideration received was $5,000,000. In exchange for the consideration received, the counterparty received the right to: (i) a 20% per annum investment return from the Company on the consideration, with a minimum repayment term of six months and minimum return of $500,000, (ii) all payments recovered from the accounts receivable up to $5,250,000, if paid in full within six months, or $5,500,000, if not paid in full within six months, and (iii) 20% of all payments of the accounts receivable in excess of amounts received in (i) and (ii). On March 31, 2017, to the extent that the counterparty has not been paid $6,000,000, the Company is required to pay the difference. Christopher Diamantis, a director of the Company, guaranteed the Company's payment obligation of up to $6,000,000. For providing the guarantee, and to the extent that the counterparty receives amounts payable under clause (ii) above exceeding $5,000,000, Mr. Diamantis will be paid a fee by the counterparty equal to the amount by which the amount received under clause (ii) above exceeds $5,000,000 ($250,000 or $500,000, depending on the timing of payment). On April 26, 2016, the Company was notified by Nasdaq that the stockholders’ equity balance reported on its Form 10-K for the year ended December 31, 2015 fell below the $2,500,000 minimum requirement for continued listing under the Nasdaq Capital Market’s Listing Rule 5550(b)(1) (the “Equity Rule”). As of December 31, 2015, the Company’s stockholder’s equity balance was $(1,193,799). In accordance with the Equity Rule, the Company has until June 10, 2016 to prepare and submit a plan to Nasdaq outlining how it intends to regain compliance. If the plan is accepted, the Company can be granted up to 180 calendar days from April 26, 2016 to evidence compliance. There can be no guarantee that the Company will be able to regain compliance with the continued listing requirement of the Equity Rule or that its plan will be accepted by Nasdaq. The Company has evaluated subsequent events through the date the financial statements were issued and filed with SEC. The Company has determined that there are no other events that warrant disclosure or recognition in the financial statements. |
17. Restatement
17. Restatement | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Restatement | The Company restated its December 31, 2015 financial statements. The Company determined that it did not correctly record, as of December 31, 2015, $1,213,967 in stock issued to its financial adviser related to the merger as of December 31, 2015 and incorrectly recorded $500,000 in general and administrative costs related to the merger that should have increased goodwill related to the merger. Correction of these errors had the following effects on the Company’s financial statements as of and for the year ended December 31, 2015: · An increase in impairment of goodwill and intangibles of $1,713,967, · A decrease in general and administrative expenses of $500,000, · A decrease in net income of $1,213,967, · An increase in additional paid-in capital of $$1,213,967, and · A decrease in accumulated deficit of $1,213,967. |
2. Summary of Significant Acc25
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant areas of estimation include the impairment of assets and rates for amortization, accrued liabilities, future income tax obligations and the inputs used in calculating stock-based compensation and transactions. Actual results could differ from those estimates and would impact future results of operations and cash flows. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Rennova Health, Inc. and its wholly-owned subsidiaries, Health Technology Solutions, Inc., Medytox Institute of Laboratory Medicine, Inc., Medical Billing Choices, Inc., Medytox Diagnostics, Inc., PB Laboratories, LLC, Medytox Medical Marketing & Sales, Inc., Alethea Laboratories, Inc., EPIC Reference Labs, Inc., International Technologies, LLC, ClinLab, Inc., Medical Mime, Inc., Epinex Diagnostics Laboratories, Inc., Biohealth Medical Laboratory, Inc., Platinum Financial Solutions, Ltd., Platinum Financial Solutions, LLC, and CollabRx, Inc. Due to the dispute with Trident and its selling shareholders (see Note – 4), the accounts of Trident Laboratories, Inc. have been excluded from consolidation. Effective March 31, 2014, the Company’s management determined that the net assets of Trident were not recoverable and, as such, the Company accounted for the disputed assets and liabilities as if they had been disposed, resulting in a gain on disposition of $134,184. All significant inter-company balances and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2015 and 2014, respectively, the Company had no cash equivalents. |
Revenue Recognition | Revenue Recognition Service revenues are principally generated from laboratory testing services including chemical diagnostic tests such as blood analysis and urine analysis. Net service revenues are recognized at the time the testing services are performed and are reported at their estimated net realizable amounts. Net service revenues are determined utilizing gross service revenues net of contractual allowances. Even though it is the responsibility of the patient to pay for laboratory service bills, most individuals in the United States have an agreement with a third party payor such as Medicare, Medicaid or a commercial insurance provider to pay all or a portion of their healthcare expenses; the majority of services provided by the Company are to patients covered under a third party payer contract. Despite follow up billing efforts, the Company does not currently anticipate collection of a significant portion of self-pay billings including the patient responsibility portion of the billing for patients covered by third party payers. The Company currently does not have any capitated agreements. In the remainder of the cases, the Company is provided the third party billing information and seeks payment from the third party under the terms and conditions of the third party payer for health service providers like The Company. Each of these third party payers may differ not only with regard to rates, but also with regard to terms and conditions of payment and providing coverage (reimbursement) for specific tests. Estimated revenues are established based on a series of procedures and judgments that require industry specific healthcare experience and an understanding of payer methods and trends. We review our calculations on a monthly basis in order to make certain that we are properly allowing for the uncollectable portion of our gross billings and that our estimates remain sensitive to variances and changes within our payer groups. The contractual allowance calculation is made on the basis of historical allowance rates for the various specific payer groups on a monthly basis with a greater weight being given to the most recent trends; this process is adjusted based on recent changes in underlying contract provisions and shifts in the testing being performed. The provision for bad debts represents our estimate of net revenues that will ultimately be uncollectable and is based upon our analysis of historical payment rates by specific payer groups on a monthly basis with primary weight being given to the most recent trends; this approach allows bad debt to more accurately adjust to short-term changes in the business environment. These two calculations are routinely analyzed by The Company on the basis of actual allowances issued by payers and the actual payments made to determine what adjustments, if any, are needed. |
Contractual Allowances and Doubtful Accounts Policy | Contractual Allowances and Doubtful Accounts Policy Accounts receivable are reported at realizable value, net of allowances for contractual credits and doubtful accounts, which are estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimate and review the collectability of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for contractual credits and doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues which may impact the collectability of these receivables or reserve estimates. Receivables deemed to be uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. Historically, revisions to the allowances for doubtful accounts estimates were recorded as an adjustment to the provision for bad debts within selling, general and administrative expenses. See Note 5 – Accounts Receivable. |
Impairment or Disposal of Long-Lived Assets | Impairment or Disposal of Long-Lived Assets The Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 360 “Property, Plant and Equipment”. ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill represents the excess of cost over the fair value of net assets acquired in connection with business acquisitions. Goodwill is tested at the reporting unit level, which is defined as an operating segment or a component of an operating segment that constitutes a business for which financial information is available and is regularly reviewed by management. The Company assesses goodwill for impairment at least annually in the absence of an indicator of possible impairment and immediately upon an indicator of possible impairment. The annual impairment review is completed in the fourth quarter of the year. If the carrying amount of a reporting unit exceeds its fair value, the Company measures the possible goodwill impairment based upon an allocation of the estimate of fair value to the underlying assets and liabilities of the reporting unit, including any previously unrecognized intangible assets, based upon known facts and circumstances as if the acquisition occurred currently. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. An impairment loss would be recognized to the extent the carrying value of goodwill exceeds the implied fair value of the goodwill. This test performed in the fourth quarter of 2015 indicated that goodwill and intangible assets related to all operating segments was impaired. Impairment losses, if any, are reflected in operating income or loss in the Consolidated Statements of Operations. In the fourth quarter of 2015, the Company recognized impairment losses on goodwill and other intangible assets of $20,143,320. For the year ended December 31, 2015, total realized and unrealized gains on instruments valued using Level 3 valuation methods was $2,888,746. There were no gains or losses related to instruments valued using Level 3 valuation methods for the year ended December 31, 2014. For beneficial conversion features valued using Level 3 valuation methods, the Company determines the fair value as of each balance sheet date by comparing the discounted conversion price per share multiplied by the number of shares issuable at that date to the actual price per share multiplied by the number of shares issuable at that date. The difference is recorded as a liability. For beneficial conversion features, all inputs are observable and therefore there is no sensitivity in the valuation to unobservable inputs. For contingently issuable variable priced warrants and variable priced warrants, the Company determines the fair value as of each balance sheet date by using the Black-Scholes option pricing model as though the exercise price of the warrants were reduced to the last market closing price of its stock for the period, to the extent that it is less than the then current exercise price. The value calculated is recorded as a liability. For contingently issuable variable priced warrants and variable priced warrants, all inputs are observable and therefore there is no sensitivity in the valuation to unobservable inputs. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. ASC 820 “Fair Value Measurements and Disclosures” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) a reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and Level 3 - fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2015 and 2014. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements. As of December 31, 2015 and 2014 the fair values of the Company’s financial instruments approximate their historical carrying amount. The following table sets forth the financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2015 and 2014: December 31, 2015 Total Level 1 Level 2 Level 3 Beneficial conversion features: Current Liabilities $ (324,533 ) $ – $ – $ (324,533 ) Other Liabilities $ (186,119 ) $ – $ – $ (186,119 ) Contingently issuable variable priced warrants: Current Liabilities $ (1,945,467 ) $ – $ – $ (1,945,467 ) Variable priced warrants: Other Liabilities $ (7,495,486 ) $ – $ – $ (7,495,486 ) December 31, 2014 Total Level 1 Level 2 Level 3 Beneficial conversion features: Current Liabilities $ (1,000,000 ) $ – $ – $ (1,000,000 ) Contingently issuable variable priced warrants: Current Liabilities $ (380,000 ) $ – $ – $ (380,000 ) For the year ended December 31, 2015, total realized and unrealized gains on instruments valued using Level 3 valuation methods was $2,888,746. There were no gains or losses related to instruments valued using Level 3 valuation methods for the year ended December 31, 2014. For beneficial conversion features valued using Level 3 valuation methods, the Company determines the fair value as of each balance sheet date by comparing the discounted conversion price per share multiplied by the number of shares issuable at that date to the actual price per share multiplied by the number of shares issuable at that date. The difference is recorded as a liability. For beneficial conversion features, all inputs are observable and therefore there is no sensitivity in the valuation to unobservable inputs. For contingently issuable variable priced warrants and variable priced warrants, the Company determines the fair value as of each balance sheet date by using the Black-Scholes option pricing model as though the exercise price of the warrants were reduced to the last market closing price of its stock for the period, to the extent that it is less than the then current exercise price. The value calculated is recorded as a liability. For contingently issuable variable priced warrants and variable priced warrants, all inputs are observable and therefore there is no sensitivity in the valuation to unobservable inputs. |
Stock Based Compensation | Stock Based Compensation The Company accounts for Stock-Based Compensation under ASC 718 “Compensation – Stock Compensation”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees”. Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Any stock options or warrants issued to non-employees are recorded in expense and additional paid-in capital in stockholders' equity over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options or warrants at the end of each period. The Company issues stock to consultants for various services. The costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expense and a corresponding increase to additional paid-in-capital related to stock issued for services. |
Income Taxes | Income Taxes Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled. The effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are recognized to the extent that they are considered more likely than not to be realized. When projected future taxable income is insufficient to provide for the realization of deferred tax assets, the Company recognizes a valuation allowance. The FASB has issued ASC 740 “Income Taxes”. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by ASC 740 and concluded that the tax position of the Company has not met the more-likely-than-not threshold as of December 31, 2015. As of December 31, 2015, the Company has recorded a valuation allowance on 100% of its deferred tax assets totaling $8,585,313. |
Basic and Diluted Income per Share | Basic and Diluted Income per Share The Company computes income per share in accordance with ASC 260, "Earnings per Share", which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all potential dilutive equivalent shares of common stock outstanding during the period using the treasury stock method and convertible debt and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, convertible debt, convertible preferred stock, or warrants. |
Segment Information | Segment Information In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, the Company is required to report financial and descriptive information about its reportable operating segments. The Company has three operating segments as of December 31, 2015; Laboratory Services, Supportive Software Solutions, and Decision Support and Informatics Operations. As of December 31, 2014, the Company had two operating segments, Clinical Laboratory Operations and Supportive Software Solutions (formerly titled “Medical Support Solutions”). |
2. Summary of Significant Acc26
2. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Fair value table | December 31, 2015 Total Level 1 Level 2 Level 3 Beneficial conversion features: Current Liabilities $ (324,533 ) $ – $ – $ (324,533 ) Other Liabilities $ (186,119 ) $ – $ – $ (186,119 ) Contingently issuable variable priced warrants: Current Liabilities $ (1,945,467 ) $ – $ – $ (1,945,467 ) Variable priced warrants: Other Liabilities $ (7,495,486 ) $ – $ – $ (7,495,486 ) December 31, 2014 Total Level 1 Level 2 Level 3 Beneficial conversion features: Current Liabilities $ (1,000,000 ) $ – $ – $ (1,000,000 ) Contingently issuable variable priced warrants: Current Liabilities $ (380,000 ) $ – $ – $ (380,000 ) |
5. Accounts Receivable (Tables)
5. Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
Schedule of accounts receivable | December 31, 2015 December 31 2014 Accounts receivable - laboratory services $ 105,332,339 $ 74,551,707 Accounts receivable - all others 569,351 405,706 Total accounts receivable 105,901,690 74,957,413 Less: Allowance for discounts (97,577,130 ) (55,913,780 ) Allowance for bad debts (175,076 ) (1,579,686 ) Accounts receivable, net $ 8,149,484 $ 17,463,947 |
6. Long-Lived Assets (Tables)
6. Long-Lived Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | December 31, 2015 December 31, 2014 Medical equipment $ 991,903 $ 896,641 Equipment 547,555 396,551 Equipment under capital leases 5,663,332 4,024,449 Furniture 560,400 333,316 Leasehold improvements 1,760,125 1,665,501 Vehicles 196,534 177,534 Computer equipment 661,234 595,571 Software 1,878,848 1,832,053 12,259,931 9,921,616 Less accumulated depreciation (5,111,636 ) (2,243,493 ) Property and equipment, net $ 7,148,295 $ 7,678,123 |
Schedule of intangible assets | As of December 31, 2015 As of December 31, 2014 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Definite lived intangible assets: Trade names and trademarks $ – $ – $ – $ 221,000 $ (8,095 ) $ 212,905 Customer relationships – – – 205,000 (8,828 ) 196,172 Non-compete agreements – – – 19,000 (2,217 ) 16,783 – – – 445,000 (19,140 ) 425,860 Indefinite lived intangible assets: Clinical laboratory licenses – – – 4,010,613 – 4,010,613 Total intangible assets $ – $ – $ – $ 4,455,613 $ (19,140 ) $ 4,436,473 |
7. Accrued Expenses (Tables)
7. Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | December 31, 2015 2014 Commissions payable $ 106,915 $ 319,270 Dividends payable 2,099,148 913,271 Accrued payroll and related liabilities 1,461,019 554,707 Accrued bonuses 50,628 – Accrued interest 556,646 89,488 Other accrued expenses 1,011,099 420,680 Accrued expenses $ 5,285,455 $ 2,297,416 |
8. Notes Payable (Tables)
8. Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | December 31, 2015 Face Value of Note Unamortized Discount Fair Value of Derivatives Net Value of Note Loan payable to former shareholder of Epinex Diagnostics Laboratories, Inc. in the amount of $400,000, at 0% interest, with principal payments of $100,000 due in periodic installments from November 26, 2014 through February 26, 2016. Amount recorded is net of imputed discount of $1,775 at December 31, 2015. $ 100,000 $ (1,775 ) $ – $ 98,225 Loan payable to TCA Global Master Fund, LP in the amount of $3,000,000, at 16% interest, with interest only payments monthly through September 11, 2016. Principal and interest payments are due monthly from October 11, 2016 through September 11, 2017. 3,000,000 (453,025 ) 186,117 2,733,092 Loan payable to CommerceNet in the amount of $250,000 at 1.06% interest, increasing to 6% after two years. Principal and interest payments are made annually from July 12, 2015 through July 12, 2017. 170,806 – – 170,806 Loan payable to Jay Tenebaum in the amount of $250,000 at 1.06% interest, increasing to 6% after two years. Principal and interest payments are made annually from July 12, 2015 through July 12, 2017. 170,806 – – 170,806 $ 3,441,612 $ (454,800 ) $ 186,117 3,172,929 Less current portion (269,031 ) Notes payable, net of current portion $ 2,903,898 December 31, 2014 Face Value of Note Unamortized Discount Fair Value of Derivatives Net Value of Note Acquisition convertible note No. 1 to former member of International Technologies, LLC in the amount of $250,000 at 5% interest and was due January 17, 2014. The note was convertible into the Company's common stock at a ten percent (10%) discount to the average market price for the thirty days prior to conversion. See “Acquisition Convertible Notes” below. $ 250,000 $ – $ – $ 250,000 Loan payable to former shareholder of Epinex Diagnostics Laboratories, Inc. in the amount of $400,000, at 0% interest, with principal payments of $100,000 due in periodic installments from November 26, 2014 through February 26, 2016. Amount recorded is net of imputed discount of $13,316 at December 31, 2014. 300,000 (13,316 ) – 286,684 $ 550,000 $ (13,316 ) $ – 536,684 Less current portion (443,292 ) Notes payable, net of current portion $ 93,392 |
Schedule of notes payable - related parties | December 31, 2015 Face Value of Note Unamortized Discount Fair Value of Derivatives Net Value of Note Convertible debenture dated December 31, 2014 in the amount of $3,000,000 which bears interest at 10% and is due December 31, 2016. The note provides the lender the option to convert the note into the Company's common stock at a 25% discount to the average trading price (as defined in the note agreement) for the ten consecutive trading days prior to the conversion date. $ 3,000,000 $ (2,236,112 ) $ 2,270,000 $ 3,033,888 Loan payable to Alcimede, LLC in the amount of $3,000,000, at 6% interest, with one payment of $3,000,000, plus interest, due on February 2, 2017. (On June 29, 2015, Alcimede exercised options to purchase 1,000,000 shares for $2,500,000, which reduced the loan.) $ 500,000 – – $ 500,000 Loan payable to Christopher Diamantis in the amount of $1,600,000. One payment of $1,600,000 due January 7, 2016 plus $100,000 of interest. $ 1,600,000 – – $ 1,600,000 $ 5,100,000 $ (2,236,112 ) $ 2,270,000 $ 5,133,888 December 31, 2014 Face Value of Note Unamortized Discount Fair Value of Derivatives Net Value of Note Convertible debenture dated December 31, 2014 in the amount of $3,000,000 which bears interest at 10% and is due December 31, 2015. The note provides the lender the option to convert the note into the Company's common stock at a 25% discount to the average trading price (as defined in the note agreement) for the ten consecutive trading days prior to the conversion date. $ 3,000,000 $ (1,380,000 ) $ 1,380,000 $ 3,000,000 |
Future minimum principal repayment schedule | Twelve months ending December 31, 2016 $ 269,031 2017 2,903,898 2018 – 2019 – 2020 and thereafter – $ 3,172,929 |
10. Capital Lease Obligations (
10. Capital Lease Obligations (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of capital leases | December 31 December 31 2015 2014 Medical equipment $ 5,663,332 $ 4,024,449 Less accumulated depreciation (2,093,920 ) (883,015 ) Net $ 3,569,412 $ 3,141,434 |
Aggregate future minimum rentals under capital leases | December 31, 2016 $ 1,540,946 2017 1,432,542 2018 845,330 2019 217,412 2020 32,611 Total 4,068,841 Less interest 350,962 Present value of minimum lease payments 3,717,879 Less current portion of capital lease obligations 1,323,708 Capital lease obligations, net of current portion $ 2,394,171 |
11. Stockholders' Equity (Table
11. Stockholders' Equity (Tables) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of option activity | Shares approved for issuance at plan inception 2,048,189 Options granted in 2014 (587,830 ) Options cancelled in 2014 4,096 Restricted shares issued in 2014 (86,024 ) Balance at December 31, 2014 1,378,431 Options granted in 2015 (364,578 ) Options cancelled in 2015 92,168 Plan cancellation (1,106,021 ) Balance at December 31, 2015 – | |
Schedule of stock option activity by exercise price | Options outstanding Options vested and exercisable Exercise price Number outstanding Weighted average remaining contractual life (years) Weighted average exercise Aggregate intrinsic value Number vested Weighted average exercise Aggregate intrinsic value $6.10 1,411,094 2.28 $6.10 $ – 1,411,094 $6.10 $9.76 130,874 9.54 $9.76 – 130,874 $9.76 – 1,541,968 $6.41 $ – 1,541,968 $6.41 $ – | |
Warrant activity | Number of warrants Weighted average exercise price Weighted average remaining contractual term (years) Aggregate intrinsic value Outstanding and Exercisable at December 31, 2014 122,891 $ 8.14 – $ – Outstanding and Exercisable at December 31, 2015 6,898,560 $ 1.83 5.00 $ – | |
Basic and Diluted Income Per Share | Year Ended December 31, 2015 2014 Basic: Numerator- net income (loss) available to common stockholders $ (37,589,694 ) 2,810,032 Denominator - weighted-average shares outstanding 12,456,486 12,247,978 Net income (loss) per share -Basic $ (3.02 ) $ 0.23 Diluted: Numerator: Net income (loss) available to common stockholders $ (37,589,694 ) $ 2,810,032 Interest expense on convertible debt, net of taxes – 14,436 (37,589,694 ) 2,824,468 Denominator: Weighted-average shares outstanding 12,465,486 12,247,978 Weighted-average equivalent shares options – 249,952 Weighted-average equivalent shares from convertible debt – 91,031 Weighted-average equivalent shares from Series C convertible preferred stock – – Weighted-average equivalent shares from Series D convertible preferred stock – 64,644 Weighted-average equivalent shares from Series E convertible preferred stock – 14,253 12,465,486 12,667,858 Net income (loss) per share - Diluted $ (3.02 ) $ 0.22 | |
Antidilutive Securities | December 31 2015 2014 Stock options outstanding 1,822,675 6,042,157 Warrants outstanding 6,898,560 – Convertible debt 1,074,402 – Convertible preferred stock 11,540,397 – 21,336,034 6,042,157 | |
Granted to employee [Member] | ||
Option assumptions | Stock price $6.10 Expected term 1 year Expected volatility 24.43% Risk free interest rate 0.30% Dividend yield 0 | |
Granted to various employees [Member] | ||
Option assumptions | Stock price $6.10 Expected term 5.375 years Expected volatility 27.72% Risk free interest rate 1.46% Dividend yield 0 | |
Granted to director [Member] | ||
Option assumptions | Stock price $6.10 Expected term 2 years Expected volatility 24.43% Risk free interest rate 0.43% Dividend yield 0 |
12. Income Taxes (Tables)
12. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income tax provision | Year Ended December 31, 2015 2014 Current Provision: Federal $ (7,809,637 ) $ 4,807,000 State (850,251 ) 822,900 Deferred Provision: Federal (331,408 ) 1,745,200 State (36,957 ) 186,200 $ (9,028,253 ) $ 7,561,300 |
Reconciliation of the statutory federal income tax rate | Year Ended December 31, 2015 2014 Expected federal income tax at statutory rate 35.0% 34.0% State income taxes, net of federal deduction 2.1% 4.3% Permanent differences -0.1% 10.9% Change in valuation allowance -16.9% 0.0% 20.1% 49.2% |
Deferred Tax Liability | December 31, 2015 2014 Deferred income tax assets: Allowance for bad debts $ 67,948 $ 28,300 Stock options 709,375 423,200 Goodwill and intangible assets 7,525,665 – Beneficial conversion feature 602,681 – Charitable contributions 505 – Net operating loss carryforwards 1,144,633 – Valuation allowance (8,585,313 ) – Total deferred income tax assets $ 1,465,494 $ 451,500 Deferred income tax liabilities: Property and equipment $ (344,356 ) $ (513,600 ) Derivative mark to market adjustments (1,121,138 ) – Goodwill and intangible assets – (162,500 ) Total deferred income tax liabilities $ (1,465,494 ) $ (676,100 ) Net deferred income taxes: Current $ – $ 28,300 Non-Current – (252,900 ) $ – $ (224,600 ) |
13. Business Combinations (Tabl
13. Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Schedule of goodwill | December 31, 2015 December 31, 2014 Medical Billing Choices, Inc. $ – $ 1,202,112 PB Laboratories, LLC – 107,124 Biohealth Medical Laboratory, Inc. – 116,763 Clinlab, Inc. – 857,532 Medical Mime, Inc. – 274,811 Epinex Diagnostics Laboratories, Inc. – 581,600 $ – $ 3,139,942 |
Proforma information | For the Year Ended December 31, 2015 Rennova Health, Inc. Historical CollabRx, Inc. (a) Pro-Forma Adjustments Combined Net Revenues $ 18,393,038 $ 425,000 $ – $ 18,818,038 Operating Expenses 63,858,012 4,881,000 – 68,739,012 Income (Loss) from operations (45,464,974 ) (4,456,000 ) – (49,920,974 ) Other income (expense) 474,215 (43,000 ) – 431,215 Income (Loss) before income taxes (44,990,759 ) (4,499,000 ) – (49,489,759 ) Provision for income taxes (9,028,253 ) (269,000 ) – (b) (9,297,253 ) Net income (loss) attributable to Rennova Health (35,962,506 ) (4,230,000 ) – (40,192,506 ) Preferred stock dividends 1,627,188 – (1,627,188 )(c) – Net income (loss) attributable to Rennova Health common shareholders $ (37,589,694 ) $ (4,230,000 ) $ 1,627,188 $ (40,192,506 ) Net income (loss) per common share: Basic $ (3.02 ) $ (2.96 ) Diluted $ (3.02 ) $ (2.96 ) Weighted average number of common shares outstanding during the period: Basic 12,465,486 13,556,303 Diluted 12,465,486 13,556,303 For the Year Ended December 31, 2014 Rennova Health, Inc. Historical Epinex Diagnostics Laboratories, Inc. Clinlab, Inc. CollabRx, Inc. Pro-Forma Adjustments Combined Net Revenues $ 57,927,820 $ 44,299 $ 98,446 $ 498,000 $ – $ 58,568,565 Operating Expenses 42,272,826 329,258 94,414 5,936,000 – 48,632,498 Income (Loss) from operations 15,654,994 (284,959 ) 4,032 (5,438,000 ) – 9,936,067 Other income (expense) (273,362 ) 12,753 1 (27,000 ) – (287,608 ) Income (Loss) before income taxes 15,381,632 (272,206 ) 4,033 (5,465,000 ) – 9,648,459 Provision for income taxes 7,561,300 – – (301,000 ) (2,532,555 )(b) 4,727,745 Net income (loss) attributable to Rennova Health 7,820,332 (272,206 ) 4,033 (5,164,000 ) – 4,920,714 Preferred stock dividends 5,010,300 – – – (5,010,300 )(c) – Net income (loss) attributable to Rennova Health common shareholders $ 2,810,032 $ (272,206 ) $ 4,033 $ (5,164,000 ) $ 5,010,300 $ 4,920,714 Net income (loss) per common share: Basic $ 0.23 $ 0.36 Diluted $ 0.22 $ 0.35 Weighted average number of common shares outstanding during the period: Basic 12,247,978 13,553,382 Diluted 12,667,858 13,973,262 _______________ (a) Reflects 2015 and 2014 results of operations prior to the acquisition dates. Clinlab was acquired on March 18, 2014, Epinex was acquired on August 26, 2014 and CollabRx was acquired on November 2, 2015. For the year ended December 31, 2014, CollabRx is included using its fiscal year ended March 31, 2015 financial statements. (b) Reflects changes in taxes, if any, resulting from including the aggregate net losses of acquired operations in the corporate tax return. (c) Reflects elimination of preferred stock dividend accruals resulting from the reverse merger with CollabRx. |
CollabRx [Member] | |
Consideration allocation for acquisitions | Cash $ 4,737,773 Accounts receivable 54,675 Other current assets 105,700 Property and equipment 92,636 Accounts payable and accrued expenses (1,620,000 ) Deferred revenue (123,000 ) Other liabilities (520,070 ) Derivative liabilities (1,578,976 ) Identifiable intangible assets 170,000 Total identifiable net assets 1,818,738 Goodwill 12,237,380 Total consideration $ 13,510,777 |
Epinex Diagnostics Laboratories, Inc. [Member] | |
Consideration allocation for acquisitions | Consideration Given: Cash at closing $ 100,000 Acquisition Notes 385,545 Series E Convertible Preferred Stock (100,000 shares) 800,000 Contingent consideration adjustment (43,800 ) $ 1,241,745 Fair value of identifiable assets acquired and liabilities assumed: Cash $ 36,677 Property and equipment, net 26,983 Deposits 285 Accounts payable (227,855 ) Accrued expenses (75,945 ) Identifiable intangible assets 900,000 Total identifiable net assets 660,145 Goodwill 581,600 Total consideration $ 1,241,745 |
GlobalOne Information Technologies, LLC [Member] | |
Consideration allocation for acquisitions | Consideration Given: Cash at closing $ 500,000 Common stock (10,000 shares) 25,000 Contingent acquisition liability 150,000 Total Consideration $ 675,000 Fair value of identifiable assets acquired and liabilities assumed: Accounts receivable $ 93,270 Property and equipment, net 7,005 Software 182,000 Accounts payable (95,086 ) Identifiable intangible assets 213,000 Total identifiable net assets 400,189 Goodwill 274,811 Total consideration $ 675,000 |
Clinlab, Inc. [Member] | |
Consideration allocation for acquisitions | Consideration Given: Cash at closing $ 1,000,000 Series D Convertible Preferred Stock (200,000 shares) 1,250,000 Contingent acquisition liability 54,017 Total Consideration $ 2,304,017 Fair value of identifiable assets acquired and liabilities assumed: Cash $ 31,671 Accounts receivable 54,017 Other current assets 241 Software 1,252,000 Deposits 700 Accounts payable (4,942 ) Accrued expenses (39,202 ) Identifiable intangible assets 152,000 Total identifiable net assets 1,446,485 Goodwill 857,532 Total consideration $ 2,304,017 |
14. Commitments and Contingen35
14. Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments | Year ending December 31, 2016 $ 741,015 2017 735,899 2018 670,479 2019 470,128 2020 365,274 Total minimum future lease payments $ 2,982,795 |
Schedule of future minimum purchase commitments | Year ending December 31, 2015 $ 254,871 2016 254,871 2017 54,871 2018 54,871 2019 54,781 2020 and thereafter 54,961 Total purchase commitments $ 729,226 |
15. Segment Reporting (Tables)
15. Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment information | 2015 2014 Net revenues - External Laboratory Services $ 17,501,189 $ 57,180,209 Supportive Software Solutions 805,899 747,611 Decision Support and Informatics Operations 85,950 – Corporate – – Eliminations – – $ 18,393,038 $ 57,927,820 Net revenues - Inter Segment Laboratory Services $ – $ – Supportive Software Solutions 2,096,768 2,928,160 Decision Support and Informatics Operations – – Corporate – – Eliminations – – $ 2,096,768 $ 2,928,160 Income (loss) from operations Laboratory Services $ (17,197,888 ) $ 19,808,354 Supportive Software Solutions (7,810,476 ) (816,916 ) Decision Support and Informatics Operations (13,023,465 ) – Corporate (7,488,351 ) (3,067,138 ) Eliminations 55,206 (269,306 ) $ (44,233,007 ) $ 15,654,994 Depreciation and amortization Laboratory Services $ 2,178,423 $ 1,104,606 Supportive Software Solutions 678,201 442,321 Decision Support and Informatics Operations 8,006 – Corporate 5,424 5,420 Eliminations (120,204 ) (51,894 ) $ 2,749,850 $ 1,500,453 Capital expenditures Laboratory Services $ 2,057,952 $ 5,084,658 Supportive Software Solutions 102,235 450,409 Decision Support and Informatics Operations – – Corporate – – Eliminations (65,000 ) – $ 2,095,187 $ 5,535,067 December 31, December 31, 2015 2014 Total assets Laboratory Services $ 15,152,583 $ 29,362,062 Supportive Software Solutions 2,896,473 5,214,139 Decision Support and Informatics Operations 4,307,053 – Corporate 12,711,284 1,939,989 Eliminations (7,095,520 ) (755,436 ) $ 27,971,873 $ 35,760,754 Intangible assets Laboratory Services $ – $ 4,088,835 Supportive Software Solutions – 347,638 Decision Support and Informatics Operations – – Corporate – – Eliminations – – $ – $ 4,436,473 Goodwill Laboratory Services $ – $ 805,487 Supportive Software Solutions – 2,334,455 Decision Support and Informatics Operations – – Corporate – – Eliminations – – $ – $ 3,139,942 |
2. Summary of Significant Acc37
2. Summary of Significant Accounting Policies (Details -Fair Value) - Fair Value, Measurements, Recurring [Member] - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Beneficial Conversion Feature [Member] | ||
Financial assets and liabilities measured on recurring basis | ||
Current liabilities | $ (324,533) | $ (1,000,000) |
Other liabilities | (186,119) | |
Contingently issuable variable priced warrants [Member] | ||
Financial assets and liabilities measured on recurring basis | ||
Current liabilities | (1,945,467) | (380,000) |
Variable priced warrants [Member] | ||
Financial assets and liabilities measured on recurring basis | ||
Other liabilities | (7,495,486) | |
Fair Value, Inputs, Level 1 [Member] | Beneficial Conversion Feature [Member] | ||
Financial assets and liabilities measured on recurring basis | ||
Current liabilities | 0 | 0 |
Other liabilities | 0 | |
Fair Value, Inputs, Level 1 [Member] | Contingently issuable variable priced warrants [Member] | ||
Financial assets and liabilities measured on recurring basis | ||
Current liabilities | 0 | 0 |
Fair Value, Inputs, Level 1 [Member] | Variable priced warrants [Member] | ||
Financial assets and liabilities measured on recurring basis | ||
Other liabilities | 0 | |
Fair Value, Inputs, Level 2 [Member] | Beneficial Conversion Feature [Member] | ||
Financial assets and liabilities measured on recurring basis | ||
Current liabilities | 0 | 0 |
Other liabilities | 0 | |
Fair Value, Inputs, Level 2 [Member] | Contingently issuable variable priced warrants [Member] | ||
Financial assets and liabilities measured on recurring basis | ||
Current liabilities | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Variable priced warrants [Member] | ||
Financial assets and liabilities measured on recurring basis | ||
Other liabilities | 0 | |
Fair Value, Inputs, Level 3 [Member] | Beneficial Conversion Feature [Member] | ||
Financial assets and liabilities measured on recurring basis | ||
Current liabilities | (324,533) | (1,000,000) |
Other liabilities | (186,119) | |
Fair Value, Inputs, Level 3 [Member] | Contingently issuable variable priced warrants [Member] | ||
Financial assets and liabilities measured on recurring basis | ||
Current liabilities | (1,945,467) | $ (380,000) |
Fair Value, Inputs, Level 3 [Member] | Variable priced warrants [Member] | ||
Financial assets and liabilities measured on recurring basis | ||
Other liabilities | $ (7,495,486) |
2. Summary of Significant Acc38
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | ||
Gain on disposition of subsidiary | $ 134,184 | |
Cash equivalents | $ 0 | 0 |
Goodwill and intangible impairment | 20,143,320 | 0 |
Deferred tax asset valuation allowance | 8,585,313 | 0 |
Total realized and unrealized gains on Level 3 instruments | $ 2,888,746 | $ 0 |
5. Accounts Receivable (Details
5. Accounts Receivable (Details - Accounts receivable) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Accounts receivable, gross | $ 105,901,690 | $ 74,957,413 |
Less: Allowance for discounts | (97,577,130) | (55,913,780) |
Less: Allowance for bad debts | (175,076) | (1,579,686) |
Accounts receivable, net | 8,149,484 | 17,463,947 |
Laboratory Services [Member] | ||
Accounts receivable, gross | 105,332,339 | 74,551,707 |
All Others [Member] | ||
Accounts receivable, gross | $ 569,351 | $ 405,706 |
5. Accounts Receivable (Detai40
5. Accounts Receivable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Receivables [Abstract] | ||
Bad debt gross | $ 19,593,784 | $ 19,374,626 |
Bad debt, contra-revenue | 19,494,030 | 19,296,144 |
Bad debt expense | $ 99,754 | $ 78,482 |
6. Long-Lived Assets (Details -
6. Long-Lived Assets (Details - Equipment) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Property and equipment, gross | $ 12,259,931 | $ 9,921,616 |
Accumulated depreciation | (5,111,636) | (2,243,493) |
Property and equipment, net | 7,148,295 | 7,678,123 |
Medical equipment [Member] | ||
Property and equipment, gross | 991,903 | 896,641 |
Equipment [Member] | ||
Property and equipment, gross | 547,555 | 396,551 |
Assets Held Under Capital Leases [Member] | ||
Property and equipment, gross | 5,663,332 | 4,024,449 |
Furniture [Member] | ||
Property and equipment, gross | 560,400 | 333,316 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | 1,760,125 | 1,665,501 |
Vehicles [Member] | ||
Property and equipment, gross | 196,534 | 177,534 |
Computer Equipment [Member] | ||
Property and equipment, gross | 661,234 | 595,571 |
Software [Member] | ||
Property and equipment, gross | $ 1,878,848 | $ 1,832,053 |
6. Long-Lived Assets (Details42
6. Long-Lived Assets (Details - Intangibles) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Indefinite lived intangible assets | $ 0 | $ 4,010,613 |
Finite lived intangible assets, gross | 0 | 445,000 |
Accumulated amortization | 0 | (19,140) |
Finite lived intangible assets, net | 0 | 425,860 |
Total intangible assets, gross | 0 | 4,455,613 |
Total intangible assets, net | 0 | 4,436,473 |
Trademarks and Trade Names [Member] | ||
Finite lived intangible assets, gross | 0 | 221,000 |
Accumulated amortization | 0 | (8,095) |
Finite lived intangible assets, net | 0 | 212,905 |
Customer Relationships [Member] | ||
Finite lived intangible assets, gross | 0 | 205,000 |
Accumulated amortization | 0 | (8,828) |
Finite lived intangible assets, net | 0 | 196,172 |
Noncompete Agreements [Member] | ||
Finite lived intangible assets, gross | 0 | 19,000 |
Accumulated amortization | 0 | (2,217) |
Finite lived intangible assets, net | 0 | 16,783 |
Clinical Laboratory Licenses [Member] | ||
Indefinite lived intangible assets | $ 0 | $ 4,010,613 |
6. Long-Lived Assets (Details N
6. Long-Lived Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 2,717,651 | $ 1,481,313 |
Amortization expense | 32,199 | 19,140 |
Impairment loss on goodwill and intangible assets | $ 20,143,320 | $ 0 |
7. Accrued Expenses (Details)
7. Accrued Expenses (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Commissions payable | $ 106,915 | $ 319,270 |
Dividends payable | 2,099,148 | 913,271 |
Accrued payroll and related liabilities | 1,461,019 | 554,707 |
Accrued bonuses | 50,628 | 0 |
Accrued interest | 556,646 | 89,488 |
Other accrued expenses | 1,011,099 | 420,680 |
Accrued expenses | $ 5,285,455 | $ 2,297,416 |
8. Notes Payable (Details-Notes
8. Notes Payable (Details-Notes Payable) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Face value of note | $ 3,441,612 | $ 550,000 |
Unamortized discount | (454,800) | (13,316) |
Fair value of derivatives | 186,117 | 0 |
Notes payable, net | 3,172,929 | 563,316 |
Less: current portion | (269,031) | (443,292) |
Notes payable, net of current portion | 2,903,898 | 93,392 |
Note payable 1 [Member] | ||
Face value of note | 100,000 | 300,000 |
Unamortized discount | (1,775) | (13,316) |
Fair value of derivatives | 0 | 0 |
Notes payable, net | 98,225 | 286,684 |
Note payable 2 [Member] | ||
Face value of note | 3,000,000 | |
Unamortized discount | (453,025) | |
Fair value of derivatives | 186,117 | |
Notes payable, net | 2,733,092 | |
Note payable 3 [Member] | ||
Face value of note | 170,806 | |
Unamortized discount | 0 | |
Fair value of derivatives | 0 | |
Notes payable, net | 170,806 | |
Note payable 4 [Member] | ||
Face value of note | 170,806 | |
Unamortized discount | 0 | |
Fair value of derivatives | 0 | |
Notes payable, net | $ 170,806 | |
Note payable 5 [Member] | ||
Face value of note | 250,000 | |
Unamortized discount | 0 | |
Fair value of derivatives | 0 | |
Notes payable, net | $ 250,000 |
8. Notes Payable (Details-Not46
8. Notes Payable (Details-Notes Payable Related Party) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Unamortized discount | $ (454,800) | $ (13,316) |
Fair value of derivatives | 186,117 | 0 |
Notes payable related parties | 5,133,888 | 3,000,000 |
Notes payable - related party [Member] | ||
Face value of note | 5,100,000 | 3,000,000 |
Unamortized discount | (2,236,112) | (1,380,000) |
Fair value of derivatives | 2,270,000 | 1,380,000 |
Notes payable related parties | 5,133,888 | 3,000,000 |
Notes payable - related party [Member] | Notes payable - related party 1 [Member] | ||
Face value of note | 3,000,000 | 3,000,000 |
Unamortized discount | (2,236,112) | (1,380,000) |
Fair value of derivatives | 2,270,000 | 1,380,000 |
Notes payable related parties | 3,033,888 | $ 3,000,000 |
Notes payable - related party [Member] | Notes payable - related party 2 [Member] | ||
Face value of note | 500,000 | |
Notes payable related parties | 500,000 | |
Notes payable - related party [Member] | Notes payable - related party 3 [Member] | ||
Face value of note | 1,600,000 | |
Notes payable related parties | $ 1,600,000 |
8. Notes Payable (Details - Fut
8. Notes Payable (Details - Future minimum payments) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
Future minimum payments on long term debt, 2016 | $ 269,031 | |
Future minimum payments on long term debt, 2017 | 2,903,898 | |
Future minimum payments on long term debt, 2018 | 0 | |
Future minimum payments on long term debt, 2019 | 0 | |
Future minimum payments on long term debt, 2020 and thereafter | 0 | |
Future minimum payments on long term debt | $ 3,172,929 | $ 563,316 |
8. Notes Payable (Details Narra
8. Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Note payable 1 [Member] | ||
Debt original face amount | $ 400,000 | |
Interest rate | 0.00% | |
Maturity date | Feb. 26, 2016 | |
Imputed discount | $ 1,775 | |
Note payable 2 [Member] | ||
Debt original face amount | $ 3,000,000 | |
Interest rate | 16.00% | |
Maturity date | Sep. 11, 2017 | |
Note payable 3 [Member] | ||
Debt original face amount | $ 250,000 | |
Interest rate | 1.06% | |
Maturity date | Jul. 12, 2017 | |
Note payable 4 [Member] | ||
Debt original face amount | $ 250,000 | |
Interest rate | 106.00% | |
Maturity date | Jul. 12, 2017 | |
Note payable 5 [Member] | ||
Debt original face amount | $ 250,000 | |
Interest rate | 5.00% | |
Maturity date | Jan. 17, 2014 | |
Notes payable - related party 1 [Member] | Notes payable - related party [Member] | ||
Debt original face amount | $ 3,000,000 | |
Interest rate | 10.00% | |
Maturity date | Dec. 31, 2016 | |
Notes payable - related party 2 [Member] | Notes payable - related party [Member] | ||
Debt original face amount | $ 3,000,000 | |
Interest rate | 6.00% | |
Maturity date | Feb. 2, 2016 | |
Notes payable - related party 3 [Member] | Notes payable - related party [Member] | ||
Debt original face amount | $ 1,600,000 | |
Maturity date | Jan. 7, 2016 |
9. Related Party Transactions (
9. Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accrued interest | $ 556,646 | $ 89,488 |
Alcimede [Member] | ||
Consulting fees paid | 372,000 | 364,375 |
Reimbursed expenses | 450,408 | |
Thomas Mendolia [Member] | ||
Reimbursed expenses | $ 32,439 | $ 254,966 |
SS International Consulting [Member] | ||
Stock issued for services, shares | 200,000 | |
Christopher Diamantis [Member] | ||
Note payable, related party | $ 1,600,000 | |
Maturity date | Jan. 7, 2016 | |
Accrued interest | $ 100,000 |
10. Capital Lease Obligations50
10. Capital Lease Obligations (Details-Capital leased assets) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Capital Lease Obligations [Abstract] | ||
Medical equipment | $ 5,663,332 | $ 4,024,449 |
Less accumulated depreciation | (2,093,920) | (883,015) |
Capital lease obligations | $ 3,569,412 | $ 3,141,434 |
10. Capital Lease Obligations51
10. Capital Lease Obligations (Details-Future payments) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
December 31 | ||
2,016 | $ 1,540,946 | |
2,017 | 1,432,542 | |
2,018 | 845,330 | |
2,019 | 217,412 | |
2,020 | 32,611 | |
Total | 4,068,841 | |
Less interest: | 350,962 | |
Present value of minimum lease payments | 3,717,879 | |
Less current portion of capital lease obligations | 1,323,708 | $ 962,562 |
Capital lease obligations, net of current portion | $ 2,394,171 | $ 2,222,625 |
10. Capital Lease Obligations52
10. Capital Lease Obligations (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Capital Lease Obligations Details Narrative | ||
Depreciation expense on capital leases | $ 1,210,905 | $ 518,289 |
11. Stockholders' Equity (Detai
11. Stockholders' Equity (Details - Option activity) - 2013 Plan [Member] - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Options approved for issuance | 2,048,189 | |
Options available for grant, beginning balance | 1,378,431 | |
Options granted | (364,578) | (587,830) |
Options cancelled | 92,168 | 4,096 |
Restricted shares issued | (86,024) | |
Options available for grant, ending balance | 0 | 1,378,431 |
11. Stockholders Equity (Detail
11. Stockholders Equity (Details-Options outstanding and exercisable) - Employees and Directors [Member] - Stock Options [Member] | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Options Outstanding - Employees and Directors | |
Options outstanding | shares | 1,541,968 |
Weighted average exercise price - outstanding | $ / shares | $ 6.41 |
Aggregate intrinsic value - outstanding | $ | $ 0 |
Options Vested and Exercisable - Employees and Directors | |
Options vested | shares | 1,541,968 |
Weighted average exercise price - vested and exercisable | $ / shares | $ 6.41 |
Aggregate intrinsic value - vested and exercisable | $ | $ 0 |
Exercise price $6.10 [Member] | |
Options Outstanding - Employees and Directors | |
Options outstanding | shares | 1,411,094 |
Weighted average remaining contractual life | 2 years 3 months 11 days |
Weighted average exercise price - outstanding | $ / shares | $ 6.10 |
Aggregate intrinsic value - outstanding | $ | $ 0 |
Options Vested and Exercisable - Employees and Directors | |
Options vested | shares | 1,411,094 |
Weighted average exercise price - vested and exercisable | $ / shares | $ 6.10 |
Aggregate intrinsic value - vested and exercisable | $ | $ 0 |
Exercise price $9.76 [Member] | |
Options Outstanding - Employees and Directors | |
Options outstanding | shares | 130,874 |
Weighted average remaining contractual life | 9 years 6 months 15 days |
Weighted average exercise price - outstanding | $ / shares | $ 9.76 |
Aggregate intrinsic value - outstanding | $ | $ 0 |
Options Vested and Exercisable - Employees and Directors | |
Options vested | shares | 130,874 |
Weighted average exercise price - vested and exercisable | $ / shares | $ 9.76 |
Aggregate intrinsic value - vested and exercisable | $ | $ 0 |
11. Stockholders Equity (Deta55
11. Stockholders Equity (Details-Warrants) - Warrant [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Warrants outstanding | 6,898,560 | 122,891 |
Weighted average exercise price | $ 1.83 | $ 8.14 |
Weighted average remaining contractual term (years) | 5 years | |
Aggregate intrinsic value | $ 0 | $ 0 |
11. Stockholders Equity Earning
11. Stockholders Equity Earnings (Details-EPS) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Basic: | ||
Net income (loss) available to common stockholders | $ (37,589,694) | $ 2,810,032 |
Weighted average number of shares outstanding | 12,465,486 | 12,247,978 |
Net income (loss) per share - Basic | $ (3.02) | $ .23 |
Diluted: | ||
Net income (loss) available to common stockholders | $ (37,589,694) | $ 2,810,032 |
Interest expense on convertible debt, net of taxes | 0 | 14,436 |
Diluted net income | $ (37,589,694) | $ 2,824,468 |
Weighted-average shares outstanding | 12,465,486 | 12,247,978 |
Weighted-average equivalent shares options | 0 | 249,952 |
Weighted-average equivalent shares from convertible debt | 0 | 91,031 |
Diluted Shares Outstanding | 12,465,486 | 12,667,858 |
Net income (loss) per share - Diluted | $ (3.02) | $ .22 |
Series C Preferred Stock [Member] | ||
Diluted: | ||
Weighted-average equivalent shares from convertible preferred stock | 0 | 0 |
Series D Preferred Stock [Member] | ||
Diluted: | ||
Weighted-average equivalent shares from convertible preferred stock | 0 | 64,644 |
Series E Preferred Stock [Member] | ||
Diluted: | ||
Weighted-average equivalent shares from convertible preferred stock | 0 | 14,253 |
11. Stockholders' Equity (Det57
11. Stockholders' Equity (Details - Antidilutive shares) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Antidilutive securities | 21,336,034 | 6,042,157 |
Stock Options [Member] | ||
Antidilutive securities | 1,822,675 | 6,042,157 |
Warrant [Member] | ||
Antidilutive securities | 6,898,560 | 0 |
Convertible Debt [Member] | ||
Antidilutive securities | 1,074,402 | 0 |
Convertible Preferred Stock [Member] | ||
Antidilutive securities | 11,540,397 | 0 |
11. Stockholders' Equity (Det58
11. Stockholders' Equity (Details Narrative) - USD ($) | 2 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Dividends earned | $ 1,627,188 | $ 1,627,188 | $ 5,010,300 |
Accrued dividends | 2,099,148 | 2,099,148 | $ 913,271 |
Unrecognized compensation costs | $ 178,159 | $ 178,159 | |
Unrecognized compensation weighted average amortization period | 3 months | ||
2007 Equity Plan [Member] | |||
Shares available for issuance | 2,130 | 2,130 |
12. Income Taxes (Details-Incom
12. Income Taxes (Details-Income tax components) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current provision: | ||
Federal | $ (7,809,637) | $ 4,807,000 |
State | (850,251) | 822,900 |
Deferred provision: | ||
Federal | (331,408) | 1,745,200 |
State | (36,957) | 186,200 |
Provision for income taxes | $ (9,028,253) | $ 7,561,300 |
12. Income Taxes (Details-Effec
12. Income Taxes (Details-Effective income tax rate) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Expected federal income tax at 34% statutory rate | 35.00% | 34.00% |
State income taxes, net of federal deduction | 2.10% | 4.30% |
Permanent differences | (0.10%) | 10.90% |
Change in valuation allowance | (16.90%) | 0.00% |
Income tax provision (benefit) | 20.10% | 49.20% |
12. Income Taxes (Details-Defer
12. Income Taxes (Details-Deferred income taxes) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets: | ||
Allowance for bad debts | $ 67,948 | $ 28,300 |
Stock options | 709,375 | 423,200 |
Goodwill and intangible assets | 7,525,665 | 0 |
Beneficial conversion feature | 602,681 | 0 |
Charitable contributions | 505 | 0 |
Net operating loss carryforwards | 1,144,633 | 0 |
Valuation allowance | (8,585,313) | 0 |
Total deferred tax assets | 1,465,494 | 451,500 |
Deferred tax liabilities: | ||
Property and equipment | (344,356) | (513,600) |
Derivative mark to market adjustments | (1,121,138) | 0 |
Goodwill and intangible assets | 0 | (162,500) |
Total deferred liabilities | (1,465,494) | (676,100) |
Net deferred income taxes: | ||
Current | 0 | 28,300 |
Non-current | 0 | (252,900) |
Net deferred tax | $ 0 | $ (224,600) |
13. Business Combinations (Deta
13. Business Combinations (Detail-Acquisitions) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2015 | Dec. 31, 2014 | Nov. 02, 2015 | Aug. 26, 2014 | May. 23, 2014 | Mar. 18, 2014 | |
Goodwill | $ 0 | $ 3,139,942 | ||||
Consideration given: | ||||||
Cash at closing | 0 | 1,600,000 | ||||
Stock issued for acquisition, value | 2,050,000 | |||||
CollabRx [Member] | ||||||
Cash | $ 4,737,773 | |||||
Accounts receivable | 54,675 | |||||
Other current assets | 105,700 | |||||
Property and equipment | 92,636 | |||||
Accounts payable and accrued expenses | (1,620,000) | |||||
Deferred revenue | (123,000) | |||||
Other liabilities | (520,070) | |||||
Derivative liabilties | (1,578,976) | |||||
Identifiable intangible assets | 170,000 | |||||
Total identifiable net assets | 1,818,738 | |||||
Goodwill | $ 12,237,380 | |||||
Total consideration | 13,510,777 | |||||
Epinex Diagnostics Laboratories, Inc. [Member] | ||||||
Cash | $ 36,677 | |||||
Property and equipment | 26,983 | |||||
Deposits | 285 | |||||
Accounts payable and accrued expenses | (227,855) | |||||
Accrued expenses | (75,945) | |||||
Identifiable intangible assets | 900,000 | |||||
Total identifiable net assets | 660,145 | |||||
Goodwill | 0 | 581,600 | $ 581,600 | |||
Total consideration | 1,241,745 | |||||
Consideration given: | ||||||
Cash at closing | 100,000 | |||||
Acquisition notes | $ 385,545 | |||||
Stock issued for acquisition, shares | 100,000 | |||||
Stock issued for acquisition, value | $ 800,000 | |||||
Contingent consideration adjustment | (43,800) | |||||
GlobalOne Information Technologies, LLC [Member] | ||||||
Accounts receivable | $ 93,270 | |||||
Property and equipment | 7,005 | |||||
Software | 182,000 | |||||
Accounts payable and accrued expenses | (95,086) | |||||
Identifiable intangible assets | 213,000 | |||||
Total identifiable net assets | 400,189 | |||||
Goodwill | $ 274,811 | |||||
Total consideration | 675,000 | |||||
Consideration given: | ||||||
Cash at closing | $ 500,000 | |||||
Stock issued for acquisition, shares | 10,000 | |||||
Stock issued for acquisition, value | $ 25,000 | |||||
Contingent consideration adjustment | 150,000 | |||||
Clinlab, Inc. [Member] | ||||||
Cash | $ 31,671 | |||||
Accounts receivable | 54,017 | |||||
Other current assets | 241 | |||||
Software | 1,252,000 | |||||
Deposits | 700 | |||||
Accounts payable and accrued expenses | (4,942) | |||||
Accrued expenses | (39,202) | |||||
Identifiable intangible assets | 152,000 | |||||
Total identifiable net assets | 1,446,485 | |||||
Goodwill | $ 0 | 857,532 | $ 857,532 | |||
Total consideration | 2,304,017 | |||||
Consideration given: | ||||||
Cash at closing | $ 1,000,000 | |||||
Stock issued for acquisition, shares | 200,000 | |||||
Stock issued for acquisition, value | $ 1,250,000 | |||||
Contingent consideration adjustment | $ 54,017 |
13. Business Combinations (De63
13. Business Combinations (Detail-Goodwill) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Aug. 26, 2014 | Mar. 18, 2014 |
Goodwill | $ 0 | $ 3,139,942 | ||
Medical Billing Choices [Member] | ||||
Goodwill | 0 | 1,202,112 | ||
PB Laboratories [Member] | ||||
Goodwill | 0 | 107,124 | ||
Biohealth Medical Laboratory [Member] | ||||
Goodwill | 0 | 116,763 | ||
Clinlab, Inc. [Member] | ||||
Goodwill | 0 | 857,532 | $ 857,532 | |
Medical Mime, Inc. [Member] | ||||
Goodwill | 0 | 274,811 | ||
Epinex Diagnostics Laboratories, Inc. [Member] | ||||
Goodwill | $ 0 | $ 581,600 | $ 581,600 |
13. Business Combinations (De64
13. Business Combinations (Details - Proforma) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Net Revenues | $ 18,818,038 | $ 58,568,565 |
Operating Expenses | 68,739,012 | 48,632,498 |
Income (Loss) from operations | (49,920,974) | 9,936,067 |
Other income (expense) | 431,215 | (287,608) |
Income (Loss) before income taxes | (49,489,759) | 9,648,459 |
Provision for income taxes | (9,297,253) | 4,727,745 |
Net income (loss) attributable to Rennova Health | (40,192,506) | 4,920,714 |
Preferred stock dividends | 0 | 0 |
Net income (loss) attributable to Rennova Health common shareholders | $ (40,192,506) | $ 4,920,714 |
Net income (loss) per common share: Basic | $ (2.96) | $ .36 |
Net income (loss) per common share: Diluted | $ (2.96) | $ .35 |
Weighted average number of common shares outstanding during the period: Basic | 13,556,303 | 13,553,382 |
Weighted average number of common shares outstanding during the period: Diluted | 13,566,303 | 13,973,262 |
Pro Forma Adjustments [Member] | ||
Net Revenues | $ 0 | $ 0 |
Operating Expenses | 0 | 0 |
Income (Loss) from operations | 0 | 0 |
Other income (expense) | 0 | 0 |
Income (Loss) before income taxes | 0 | 0 |
Provision for income taxes | 0 | (2,532,555) |
Net income (loss) attributable to Rennova Health | 0 | 0 |
Preferred stock dividends | (1,627,188) | (5,010,300) |
Net income (loss) attributable to Rennova Health common shareholders | 1,627,188 | 5,010,300 |
Rennova Health, Inc. [Member] | ||
Net Revenues | 18,393,038 | 57,927,820 |
Operating Expenses | 63,858,012 | 42,272,826 |
Income (Loss) from operations | (45,464,974) | 15,654,994 |
Other income (expense) | 474,215 | (273,362) |
Income (Loss) before income taxes | (44,990,759) | 15,381,632 |
Provision for income taxes | (9,028,253) | 7,561,300 |
Net income (loss) attributable to Rennova Health | (35,962,506) | 7,820,332 |
Preferred stock dividends | 1,627,188 | 5,010,300 |
Net income (loss) attributable to Rennova Health common shareholders | $ (37,589,694) | $ 2,810,032 |
Net income (loss) per common share: Basic | $ (3.02) | $ 0.23 |
Net income (loss) per common share: Diluted | $ (3.02) | $ 0.22 |
Weighted average number of common shares outstanding during the period: Basic | 12,465,486 | 12,247,978 |
Weighted average number of common shares outstanding during the period: Diluted | 12,465,486 | 12,667,858 |
CollabRx, Inc. [Member] | ||
Net Revenues | $ 425,000 | $ 44,299 |
Operating Expenses | 4,881,000 | 329,258 |
Income (Loss) from operations | (4,456,000) | (284,959) |
Other income (expense) | (43,000) | 12,753 |
Income (Loss) before income taxes | (4,499,000) | (272,206) |
Provision for income taxes | (269,000) | 0 |
Net income (loss) attributable to Rennova Health | (4,230,000) | (272,206) |
Preferred stock dividends | 0 | 0 |
Net income (loss) attributable to Rennova Health common shareholders | $ (4,230,000) | (272,206) |
Clinlab, Inc. [Member] | ||
Net Revenues | 98,446 | |
Operating Expenses | 94,414 | |
Income (Loss) from operations | 4,032 | |
Other income (expense) | 1 | |
Income (Loss) before income taxes | 4,033 | |
Provision for income taxes | 0 | |
Net income (loss) attributable to Rennova Health | 4,033 | |
Preferred stock dividends | 0 | |
Net income (loss) attributable to Rennova Health common shareholders | 4,033 | |
Epinex Diagnostics Laboratories, Inc. [Member] | ||
Net Revenues | 498,000 | |
Operating Expenses | 5,936,000 | |
Income (Loss) from operations | (5,438,000) | |
Other income (expense) | (27,000) | |
Income (Loss) before income taxes | (5,465,000) | |
Provision for income taxes | (301,000) | |
Net income (loss) attributable to Rennova Health | (5,164,000) | |
Preferred stock dividends | 0 | |
Net income (loss) attributable to Rennova Health common shareholders | $ (5,164,000) |
14. Commitments and Contingen65
14. Commitments and Contingencies (Details-Minimum lease payments) | Dec. 31, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Year ending December 31, 2016 | $ 741,015 |
Year ending December 31, 2017 | 735,899 |
Year ending December 31, 2018 | 670,479 |
Year ending December 31, 2019 | 470,128 |
Year ending December 31, 2020 | 365,274 |
Total minimum future lease payments | $ 2,982,795 |
14. Commitments and Contingen66
14. Commitments and Contingencies (Details-Purchase commitments) | Dec. 31, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Mimimum purchase commitment year ended December 31, 2015 | $ 254,871 |
Mimimum purchase commitment year ended December 31, 2016 | 254,871 |
Mimimum purchase commitment year ended December 31, 2017 | 54,871 |
Mimimum purchase commitment year ended December 31, 2018 | 54,871 |
Mimimum purchase commitment year ended December 31, 2019 | 54,871 |
Mimimum purchase commitment year ended December 31, 2020 and thereafter | 54,871 |
Total purchase commitments | $ 729,226 |
14. Commitments and Contingen67
14. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 608,399 | $ 350,169 |
15. Segment Reporting (Details-
15. Segment Reporting (Details-Operations) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Net revenues - External | $ 18,393,038 | $ 57,927,820 |
Net revenues - Inter Segment | 2,096,768 | 2,928,160 |
Income (loss) from operations | (45,464,974) | 15,654,994 |
Depreciation and amortization | 2,749,850 | 1,500,453 |
Capital expenditures | 2,095,187 | 5,535,067 |
Eliminations [Member] | ||
Net revenues - External | 0 | 0 |
Net revenues - Inter Segment | 0 | 0 |
Income (loss) from operations | 55,206 | (269,306) |
Depreciation and amortization | (120,204) | (51,894) |
Capital expenditures | (65,000) | 0 |
Laboratory Services [Member] | ||
Net revenues - External | 17,501,189 | 57,180,209 |
Net revenues - Inter Segment | 0 | 0 |
Income (loss) from operations | (17,197,888) | 19,808,354 |
Depreciation and amortization | 2,178,423 | 1,104,606 |
Capital expenditures | 2,057,952 | 5,084,658 |
Supportive Software Solutions [Member] | ||
Net revenues - External | 805,899 | 747,611 |
Net revenues - Inter Segment | 2,096,768 | 2,928,160 |
Income (loss) from operations | (7,810,476) | (816,916) |
Depreciation and amortization | 678,201 | 442,321 |
Capital expenditures | 102,235 | 450,409 |
Decision Support and Informatics Operations [Member] | ||
Net revenues - External | 85,950 | 0 |
Net revenues - Inter Segment | 0 | 0 |
Income (loss) from operations | (13,023,465) | 0 |
Depreciation and amortization | 8,006 | 0 |
Capital expenditures | 0 | 0 |
Corporate [Member] | ||
Net revenues - External | 0 | 0 |
Net revenues - Inter Segment | 0 | 0 |
Income (loss) from operations | (7,488,351) | (3,067,138) |
Depreciation and amortization | 5,424 | 5,420 |
Capital expenditures | $ 0 | $ 0 |
15. Segment Reporting (Detail69
15. Segment Reporting (Details-Assets) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Total assets | $ 27,971,873 | $ 35,760,754 |
Intangible assets | 0 | 4,436,473 |
Goodwill | 0 | 3,139,942 |
Eliminations [Member] | ||
Total assets | (755,436) | (7,095,520) |
Intangible assets | 0 | 0 |
Goodwill | 0 | 0 |
Laboratory Services [Member] | ||
Total assets | 15,152,583 | 29,362,062 |
Intangible assets | 0 | 4,088,835 |
Goodwill | 0 | 805,487 |
Supportive Software Solutions [Member] | ||
Total assets | 2,896,473 | 5,214,139 |
Intangible assets | 0 | 347,638 |
Goodwill | 0 | 2,334,455 |
Decision Support and Informatics Operations [Member] | ||
Total assets | 4,307,053 | 0 |
Intangible assets | 0 | 0 |
Goodwill | 0 | 0 |
Corporate [Member] | ||
Total assets | 12,711,284 | 1,939,989 |
Intangible assets | 0 | 0 |
Goodwill | $ 0 | $ 0 |