Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 03, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Rennova Health, Inc. | |
Entity Central Index Key | 931,059 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | RNVA | |
Entity Common Stock, Shares Outstanding | 15,926,247 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 27,704 | $ 75,017 |
Accounts receivable, net | 392,213 | 1,199,899 |
Prepaid expenses and other current assets | 227,692 | 149,385 |
Income tax refunds receivable | 1,458,438 | 1,458,438 |
Current assets of AMSG classified as held for sale | 43,829 | 337,900 |
Total current assets | 2,149,876 | 3,220,639 |
Property and equipment, net | 3,381,232 | 3,043,590 |
Deposits | 132,461 | 141,402 |
Non-current assets of AMSG classified as held for sale | 23,750 | 76,762 |
Total assets | 5,687,319 | 6,482,393 |
Current liabilities: | ||
Accounts payable (includes related parties) | 3,252,858 | 2,928,524 |
Accrued expenses | 2,803,004 | 2,882,029 |
Income taxes payable | 443,630 | 790,627 |
Current portion of notes payable | 7,624,614 | 9,011,247 |
Current portion of notes payable, related party | 443,500 | 328,500 |
Current portion of debentures | 1,578,028 | |
Current portion of capital lease obligations | 1,365,547 | 1,796,053 |
Current liabilities of AMSG classified as held for sale | 1,625,260 | 1,827,787 |
Total current liabilities | 19,136,441 | 19,564,767 |
Other liabilities: | ||
Debentures, net of current portion | 3,003,931 | |
Capital lease obligations, net of current portion | 1,063,461 | 1,774,121 |
Derivative liabilities | 2,803 | |
Non-current liabilities of AMSG classified as held for sale | 26,598 | |
Total liabilities | 23,203,833 | 21,368,289 |
Commitments and contingencies | ||
Stockholders’ deficit: | ||
Common stock, $0.01 par value, 500,000,000 shares authorized, 13,408,360 and 2,800,377 shares issued and outstanding | 134,084 | 28,004 |
Additional paid-in-capital | 74,430,142 | 45,726,862 |
Accumulated deficit | (92,080,742) | (60,640,864) |
Total stockholders’ deficit | (17,516,514) | (14,885,896) |
Total liabilities and stockholders’ deficit | 5,687,319 | 6,482,393 |
Series G Preferred Stock [Member] | ||
Stockholders’ deficit: | ||
Preferred stock value | 2 | 2 |
Series H Preferred Stock [Member] | ||
Stockholders’ deficit: | ||
Preferred stock value | $ 100 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Common stock par value | $ 0.01 | $ 0.01 |
Common stock shares authorized | 500,000,000 | 500,000,000 |
Common stock shares issued | 13,408,360 | 2,800,377 |
Common stock shares outstanding | 13,408,360 | 2,800,377 |
Series G Preferred Stock [Member] | ||
Preferred stock par value | $ 0.01 | $ 0.01 |
Preferred stock shares authorized | 14,000 | 14,000 |
Preferred stock shares issued | 215 | 215 |
Preferred stock shares outstanding | 215 | 215 |
Series H Preferred Stock [Member] | ||
Preferred stock par value | $ 0.01 | $ 0.01 |
Preferred stock shares authorized | 14,202 | 14,202 |
Preferred stock shares issued | 60 | 10,019 |
Preferred stock shares outstanding | 60 | 10,019 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Net revenues | $ 898,730 | $ 2,565,272 | $ 1,898,265 | $ 4,026,200 |
Operating expenses: | ||||
Direct costs of revenue | 248,750 | 355,569 | 540,285 | 822,903 |
General and administrative | 3,660,458 | 5,351,555 | 7,808,871 | 10,644,545 |
Sales and marketing expenses | 197,727 | 433,329 | 450,532 | 1,025,346 |
Bad debt | 577,252 | 574,341 | 1,285 | |
Depreciation and amortization | 471,954 | 678,141 | 1,056,445 | 1,357,331 |
Total operating expenses | 5,156,141 | 6,818,594 | 10,430,474 | 13,851,410 |
Loss from continuing operations before other income (expense) and income taxes | (4,257,411) | (4,253,322) | (8,532,209) | (9,825,210) |
Other income (expense): | ||||
Other income | 50,757 | 2 | 50,757 | 100,012 |
Change in fair value of derivative instruments | 1,293,072 | (11,093,012) | 4,726,660 | |
Gain on extinguishment of debt | 11,093,012 | |||
(Loss) gain on legal settlement | (17,652) | (17,652) | ||
Interest expense | (6,135,982) | (2,042,002) | (11,178,844) | (3,049,037) |
Total other income (expense), net | (6,085,225) | (766,580) | (11,128,087) | 1,759,983 |
Net loss from continuing operations before income taxes | (10,342,636) | (5,019,902) | (19,660,296) | (8,065,227) |
(Benefit) provision for income taxes | 3,250 | |||
Net loss from continuing operations | (10,342,636) | (5,019,902) | (19,663,546) | (8,065,227) |
Net loss from discontinued operations | (335,573) | (842,189) | (683,320) | (2,040,875) |
Net loss | (10,678,209) | (5,862,091) | (20,346,866) | (10,106,102) |
Deemed dividend from trigger of down round provision feature | (11,093,012) | |||
Net loss to common shareholders | $ (10,678,209) | $ (5,862,091) | $ (31,439,878) | $ (10,106,102) |
Net loss per common share: | ||||
Basic and diluted: continuing operations | $ (1.37) | $ (10.19) | $ (4.93) | $ (16.40) |
Basic and diluted: discontinued operations | (0.04) | (1.71) | (0.11) | (4.15) |
Total Basic and diluted | $ (1.41) | $ (11.90) | $ (5.04) | $ (20.55) |
Weighted average number of common shares outstanding during the period: | ||||
Basic and diluted | 7,594,314 | 492,568 | 6,236,404 | 491,776 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Stockholders’ Deficit (Unaudited) - 6 months ended Jun. 30, 2017 - USD ($) | Series G Preferred Stock [Member] | Series H Preferred Stock [Member] | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2016 | $ 2 | $ 100 | $ 102 | $ 28,004 | $ 45,726,862 | $ (60,640,864) | $ (14,885,896) |
Balance, shares at Dec. 31, 2016 | 215 | 10,019 | 10,234 | 2,800,377 | |||
Conversion of preferred stock into common stock | $ (78) | $ (78) | $ 55,567 | (55,489) | |||
Conversion of preferred stock into common stock, shares | (7,785) | (7,785) | 5,556,697 | ||||
Common stock issued in exchange for warrants | $ 295 | 57,560 | 57,855 | ||||
Common stock issued in exchange for warrants, shares | 29,518 | ||||||
Shares issued in settlement of notes payable | $ 4,000 | 436,000 | 440,000 | ||||
Shares issued in settlement of notes payable, shares | 400,000 | ||||||
Exchange of preferred stock for convertible debentures | $ (22) | $ (22) | (2,173,978) | (2,174,000) | |||
Exchange of preferred stock for convertible debentures, shares | (2,174) | (2,174) | |||||
Conversion of debentures into common stock | $ 46,111 | 2,605,125 | 2,651,236 | ||||
Conversion of debentures into common stock, shares | 4,611,093 | ||||||
Rounding up of common shares in connection with reverse stock split | $ 79 | (79) | |||||
Rounding up of common shares in connection with reverse stock split, shares | 7,897 | ||||||
Common stock granted to employees | $ 28 | (28) | |||||
Common stock granted to employees, shares | 2,778 | ||||||
Discount on convertible debentures | 252,143 | 252,143 | |||||
Warrants and benefical conversion features related to the issuance of convertible notes | 16,419,784 | 16,419,784 | |||||
Stock-based compensation | 69,230 | 69,230 | |||||
Deemed dividend from trigger of down round provision feature | 11,093,012 | (11,093,012) | |||||
Net loss | (20,346,866) | (20,346,866) | |||||
Balance at Jun. 30, 2017 | $ 2 | $ 0 | $ 2 | $ 134,084 | $ 74,430,142 | $ (92,080,742) | $ (17,516,514) |
Balance, shares at Jun. 30, 2017 | 215 | 60 | 275 | 13,408,360 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows used in operating activities: | ||
Net loss | $ (19,663,546) | $ (8,065,227) |
Adjustments to reconcile net loss to net cash used in operations: | ||
Depreciation and amortization | 1,056,445 | 1,357,331 |
Non-cash gain on derivative instruments | (4,726,660) | |
Stock issued for services | 9,310 | |
Stock-based compensation | 69,230 | 353,271 |
Bad debt (recoveries) expense | 398,424 | 1,385 |
Non-cash interest expense | 7,418,722 | |
Amortization of debt discount | 2,498,120 | 2,087,881 |
Non-cash settlement of debt | (50,000) | |
Loss (gain) on extinguishment of debt | (11,093,012) | |
Change in fair value of derivative instrument | 11,093,012 | (4,726,660) |
Loss from discontinued operations | (683,320) | (2,040,875) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 409,261 | 459,414 |
Prepaid expenses and other current assets | (78,307) | (267,320) |
Security deposits | 8,941 | (2,410) |
Accounts payable | 325,329 | (635,955) |
Accrued expenses | (79,025) | (137,256) |
Income tax assets and liabilities | (346,997) | (101,029) |
Net cash used in operating activities of continuing operations | (8,716,723) | (11,808,140) |
Net cash provided by (used in) discontinued operations | 112,225 | (83,419) |
Net cash used in operating activities | (8,604,498) | (11,891,559) |
Cash flows used in investing activities: | ||
Purchase of property and equipment | (1,394,087) | (15,998) |
Net cash used in investing activities of continuing operations | (1,394,087) | (15,998) |
Net cash provided by (used in) investing activities of discontinued operations | 1,936 | (25,358) |
Net cash used in investing activities | (1,392,151) | (41,356) |
Cash flows provided by financing activities: | ||
Proceeds from issuance of related party notes payable and advances | 3,715,000 | 6,165,000 |
Proceeds from issuance of notes payable and debentures | 11,642,500 | 5,000,000 |
Payments on related party notes payable and advances | (3,550,000) | (1,665,000) |
Payments on notes payable | (716,998) | (5,250,000) |
Payments on capital lease obligations | (1,141,166) | (665,074) |
Net cash provided by financing activities | 9,949,336 | 3,584,926 |
Net (decrease) in cash | (47,313) | (8,347,989) |
Cash at beginning of period | 75,017 | 8,833,230 |
Cash at end of period | $ 27,704 | $ 485,241 |
Organization and Presentation
Organization and Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Organization and Presentation | Note 1 – Organization and Basis of Presentation Rennova Health, Inc. (“Rennova”), together with its subsidiaries (the “Company”, “we”, “us” or “our”), is a vertically integrated provider of healthcare related products and services. The Company’s principal lines of business are (i) clinical laboratory operations; (ii) supportive software solutions to healthcare providers including Electronic Health Records (“EHR”), Medical Billing Services and Laboratory Information Services; and (iii) the recent addition of a rural critical access hospital. Basis of Presentation The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the 2016 audited financial statements included in the Company’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 10, 2017. These condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC, and therefore omit or condense certain footnotes and other information normally included in consolidated interim financial statements prepared in accordance with U.S. GAAP. All material intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) considered necessary for the fair presentation of the financial position and results of operations and cash flows for the interim periods reported herein. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year. During the three and six months ended June 30, 2017 and 2016, comprehensive loss was equal to the net loss amounts presented in the accompanying condensed consolidated statements of operations. In addition, certain prior year balances have been reclassified to conform to the current presentation. Reclassification The Company has reclassified certain amounts in the 2016 consolidated financial statements to be consistent with the 2017 presentation. These principally relate to classification of certain revenues, cost of revenues and related segment data, as well as balance sheet classifications to assets and liabilities held for sale. Reclassifications relating to the discontinued operations of AMSG are described further in Note 13. The reclassifications had no impact on operations or cash flows for the three and six months ended June 30, 2016. Reverse Stock Split On February 7, 2017, the Company’s Board of Directors approved an amendment to the Company’s Certificate of Incorporation to effect a 1-for-30 reverse stock split of the Company’s shares of common stock effective on February 22, 2017 (the “Reverse Stock Split”). The stockholders of the Company had approved an amendment to the Company’s Certificate of Incorporation on December 22, 2016 to effect a reverse split of all of the Company’s shares of common stock at a specific ratio within a range from 1-for-10 to 1-for-30, and granted authorization to the Board of Directors to determine in its discretion the specific ratio and timing of the reverse split prior to December 31, 2017. As a result of the Reverse Stock Split, every 30 shares of the Company’s then outstanding common stock was combined and automatically converted into one share of the Company’s common stock, par value $0.01 per share. In addition, the conversion and exercise prices of all of the Company’s outstanding preferred stock, common stock purchase warrants, stock options and convertible notes payable were proportionately adjusted at the 1:30 reverse split ratio in accordance with the terms of such instruments. Proportionate voting rights and other rights of common stockholders were not affected by the Reverse Stock Split, other than as a result of the rounding up of fractional shares, as no fractional shares were issued in connection with the Reverse Stock Split. The reverse stock split became effective at the close of business on February 22, 2017 and the Company’s common stock began trading on The NASDAQ Capital Market on a post-split basis on February 23, 2017. The par value and other terms of the common stock were not affected by the Reverse Stock Split. The authorized capital of the Company of 500,000,000 shares of common stock and 5,000,000 shares of preferred stock were also unaffected by the Reverse Stock Split. All share, per share and capital stock amounts for all periods presented have been restated to give effect to the Reverse Stock Split. Adoption of ASU 2017-11 In July 2017, the FASB issued ASU 2017-11 “Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815).” The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. Under current GAAP, an equity-linked financial instrument with a down round feature that otherwise is not required to be classified as a liability under the guidance in Topic 480 is evaluated under the guidance in Topic 815, Derivatives and Hedging, to determine whether it meets the definition of a derivative. If it meets that definition, the instrument (or embedded feature) is evaluated to determine whether it is indexed to an entity’s own stock as part of the analysis of whether it qualifies for a scope exception from derivative accounting. Generally, for warrants and conversion options embedded in financial instruments that are deemed to have a debt host (assuming the underlying shares are readily convertible to cash or the contract provides for net settlement such that the embedded conversion option meets the definition of a derivative), the existence of a down round feature results in an instrument not being considered indexed to an entity’s own stock. This results in a reporting entity being required to classify the freestanding financial instrument or the bifurcated conversion option as a liability, which the entity must measure at fair value initially and at each subsequent reporting date. The amendments in this Update revise the guidance for instruments with down round features in Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. An entity still is required to determine whether instruments would be classified in equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities and embedded conversion options with down round features are no longer bifurcated. For entities that present EPS in accordance with Topic 260, and when the down round feature is included in an equity-classified freestanding financial instrument, the value of the effect of the down round feature is treated as a dividend when it is triggered and as a numerator adjustment in the basic EPS calculation. This reflects the occurrence of an economic transfer of value to the holder of the instrument, while alleviating the complexity and income statement volatility associated with fair value measurement on an ongoing basis. Convertible instruments are unaffected by the Topic 260 amendments in this Update. Those amendments in Part 1 of this Update are a cost savings relative to current GAAP. This is because, assuming the required criteria for equity classification in Subtopic 815-40 are met, an entity that issued such an instrument no longer measures the instrument at fair value at each reporting period (in the case of warrants) or separately accounts for a bifurcated derivative (in the case of convertible instruments) on the basis of the existence of a down round feature. For convertible instruments with embedded conversion options that have down round features, applying specialized guidance such as the model for contingent beneficial conversion features rather than bifurcating an embedded derivative also reduces cost and complexity. Under that specialized guidance, the issuer recognizes the intrinsic value of the feature only when the feature becomes beneficial instead of bifurcating the conversion option and measuring it at fair value each reporting period. The amendments in Part II of this Update replace the indefinite deferral of certain guidance in Topic 480 with a scope exception. This has the benefit of improving the readability of the Codification and reducing the complexity associated with navigating the guidance in Topic 480. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part 1 of this Update should be applied in either of the following ways: 1. Retrospectively to outstanding financial instruments with a down round feature by means of a cumulative-effect adjustment to the statement of financial position as of the beginning of the first fiscal year and interim period(s) in which the pending content that links to this paragraph is effective; or 2. Retrospectively to outstanding financial instruments with a down round feature for each prior reporting period presented in accordance with the guidance on accounting changes in paragraphs 250-10-45-5 through 45-10. The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect. The Company has determined that this amendment will have a material impact on its condensed consolidated financial statements and has early adopted this accounting standard update. The cumulative effect of the adoption of ASU 2017-11, resulted in the reclassification of the derivative liability recorded of $56 million and the reversal of $41 million of interest expense recorded in the Company’s first fiscal quarter of 2017. The remaining $16 million was offset to additional paid in capital (discount on convertible debenture). Additionally, the Company recognized a deemed dividend from the trigger of the down round provision feature of $11 million. The adjustments were recorded retrospectively as of the beginning of the issuance of the March 2017 debentures where the initial derivative liability was recorded. Going Concern The Company’s consolidated financial statements are prepared using U.S. GAAP applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has accumulated significant losses and has negative cash flows from operations, and at June 30, 2017 had a working capital deficit and stockholders’ deficit of $17 million and $17.5 million, respectively, which raise substantial doubt about its ability to continue as a going concern. In addition, the Company’s cash position is critically deficient, critical payments are not being made in the ordinary course of business and certain indebtedness in the amount of $6.5 million matured on March 31, 2017, which the Company does not have the financial resources to satisfy (see Note 4), all of which raises substantial doubt about the Company’s ability to continue as a going concern. The Company is currently executing on a plan of action which is in process, to reduce the number of laboratory facilities it operates from five such facilities into one, with a corresponding reduction in the number of employees and associated operating expenses, in order to reduce costs. In addition, the Company received net proceeds of $11.6 million from the issuance of debentures in the first six months of 2017 (see Note 5), and intends to seek additional financing on similar terms within the next few months. There are currently no commitments for any such funding. The Company in July 2017 also announced that it plans to spin off its Advanced Molecular Services Group (“AMSG”) as an independent publicly traded company by way of a tax-free distribution to its shareholders. Completion of the spinoff is expected to occur at the end of September 2017, and is subject to numerous conditions, including effectiveness of a Registration Statement on Form 10 to be filed with the Securities and Exchange Commission. The intent of the spinoff is to create two public companies, each of which can focus on its own strengths and operational plans. In accordance with ASC 205-20 and having met the criteria for “held for sale”, the Company has reflected amounts relating to AMSG as a disposal group classified as held for sale and included as part of discontinued operations. AMSG no longer is included in the segment reporting following the reclassification to discontinued operations. The Company has also announced that the Big South Fork Medical Center received CMS regional office licensure approval and that it opened on August 8, 2017.The Company expects that the opening of the hospital will provide additional revenue and cash flow sources. There can be no assurance that the Company will be able to achieve its business plan, raise any additional capital or secure the additional financing necessary to implement its current operating plan. The ability of the Company to continue as a going concern is dependent upon its ability to significantly reduce its operating costs, increase its revenues 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. |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Jun. 30, 2017 | |
Receivables [Abstract] | |
Accounts Receivable | Note 2 – Accounts Receivable Accounts receivable at June 30, 2017 (unaudited) and December 31, 2016 consisted of the following: June 30, 2017 December 31, 2016 Accounts receivable - laboratory services $ 5,030,125 $ 12,715,835 Accounts receivable - all others 487,675 499,508 Total accounts receivable 5,517,800 13,215,343 Less: Allowance for discounts (4,376,208 ) (11,664,490 ) Allowance for bad debts (749,379 ) (350,954 ) Accounts receivable, net $ 392,213 $ 1,199,899 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3 – Property and Equipment Property and equipment at June 30, 2017 (unaudited) and December 31, 2016 consisted of the following: June 30, 2017 December 31, 2016 Medical equipment $ 704,567 $ 696,195 Building 1,252,104 - Equipment 461,912 461,912 Equipment under capital leases 4,497,025 4,497,025 Furniture 387,302 377,630 Leasehold improvements 1,329,387 1,329,387 Vehicles 196,534 196,534 Computer equipment 564,742 564,742 Software 1,863,287 1,739,348 11,256,860 9,862,773 Less accumulated depreciation (7,875,628 ) (6,819,183 ) Property and equipment, net $ 3,381,232 $ 3,043,590 On January 13, 2017, the Company completed an asset purchase agreement to acquire certain assets related to Scott County Community Hospital, based in Oneida, Tennessee (the “Hospital Assets”). The Hospital Assets include a 52,000 square foot hospital building and 6,300 square foot professional building on approximately 4.3 acres. Scott County Community Hospital, which has since been renamed as Big South Fork Medical Center, is classified as a Critical Access Hospital (rural). The Company acquired the Hospital Assets out of bankruptcy for a purchase price of $1.0 million, and the purchase price has been recorded as property and equipment in the Company’s consolidated balance sheet. The Company opened the hospital on August 8, 2017. Depreciation expense on property and equipment was $0.5 million and $0.7 million for the three months ended June 30, 2017 and 2016, and $1.0 million and $1.4 million for the six months ended June 30, 2017 and 2016, respectively. Management periodically reviews the valuation of long-lived assets, including property and equipment, for potential impairment. Management did not recognize any impairment of these assets during the six months ended June 30, 2017 and 2016. |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 4 – Notes Payable The Company and its subsidiaries are party to a number of loans with affiliates and unrelated parties. At June 30, 2017 (unaudited) and December 31, 2016, notes payable consisted of the following: Notes Payable – Third Parties June 30, 2017 December 31, 2016 Loan payable under prepaid forward purchase contract $ 5,000,000 $ 5,000,000 Loan payable to TCA Global Credit Master Fund, LP (“TCA”) in the original principal amount of $3 million at 16% interest (the “TCA Debenture”). Principal and interest payments due in various installments through September 17, 2017. 2,283,002 3,000,000 Notes payable to CommerceNet and Jay Tenenbaum in the original principal amount of $500,000, bearing interest at 6% per annum (the “Tegal Notes”). Prinicpal and interest payments are due annually from July 12, 2015 through July 12, 2016 341,612 341,612 Other convertible notes payable - 440,000 Unamortized discount on other convertible notes - (179,889 ) Derivative liability associated with the TCA Debenture, at fair value - 409,524 7,624,614 9,011,247 Less current portion (7,624,614 ) (9,011,247 ) Notes payable - third parties, net of current portion $ - $ - 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 whereby the Company received consideration in the amount of $5.0 million. The receivables had an estimated collectable value of $8.7 million which had been adjusted down to approximately $1.5 million on the Company’s balance sheet as of June 30, 2016 and $0 as of June 30, 2017. 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 $0.5 million, (ii) all payments recovered from the accounts receivable up to $5.25 million, if paid in full within six months, or $5.5 million, 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 $6.0 million, the Company was required to pay the difference, plus 30% interest per annum on the total balance. To date, the Company has not recovered any payments against the accounts receivable. As of June 30, 2017, the Company has accrued $1.5 million for the counterparty’s required investment return, which is reflected in accrued expenses in the accompanying condensed consolidated balance sheet, and $6.5 million was due to the counterparty on June 30, 2017. The Company does not have the financial resources to repay this obligation. The Company did not make the required monthly principal and interest payments due under the TCA Debenture for the period from October 2016 through March 2017. On February 2, 2017, the Company made a payment to TCA in the amount of $0.4 million which was applied to accrued and unpaid interest and fees, including default interest, as of the date of payment. On March 21, 2017, the Company made a payment to TCA in the amount of $0.75 million, of which approximately $0.1 million was applied to accrued and unpaid interest and fees in accordance with the terms of the TCA Debenture. Also on March 21, 2017, the Company entered into a letter agreement with TCA, which (i) waived any payment defaults through March 21, 2017; (ii) provided for the $0.75 million payment discussed above; (iii) set forth a revised repayment schedule whereby the remaining principal plus interest aggregating to approximately $2.6 million is repaid in various monthly installments from April of 2017 through September of 2017; and (iv) provided for payment of an additional service fee in the amount of $150,000, which was due on June 27, 2017, the day after the effective date of the registration statement filed by the Company; which amount is reflected in accrued expenses in the accompanying condensed consolidated balance sheet at June 30, 2017. In addition, TCA entered into an intercreditor agreement with the purchasers of the convertible debentures (see Note 5) which sets forth rights, preferences and priorities with respect to the security interests in the Company’s assets. On September 15, 2016, the Company entered into an agreement with two investors whereby the Company sold to the investors convertible notes in the aggregate principal amount of $0.4 million (the “September 2016 Notes”). The September 2016 Notes were convertible into shares of the Company’s common stock at a conversion price of $7.50 per share. In conjunction with the sale of the September 2016 Notes, the Company issued warrants to purchase an aggregate of 66,667 shares of the Company’s common stock at an exercise price of $12.00 per share. Based on the allocation of the net proceeds from the September 2016 Notes to the fair value of the warrants, and the resulting beneficial conversion features, the Company recognized a discount for the entire face value of the September 2016 Notes, which was accreted through the notes’ maturity date of March 15, 2017. On March 13, 2017, the September 2016 Notes, along with the accompanying warrants, were exchanged for 400,000 shares of the Company’s common stock. The Company did not make the principal payments under the Tegal Notes that were due on July 12, 2016. On November 3, 2016, the Company received a default notice from the holders of the Tegal Notes demanding immediate repayment of the outstanding principal and accrued interest aggregating to $0.4 million. On December 7, 2016 the Company received a breach of contract complaint with a request for entry of a default judgment (see Note 10). To date, the Company has yet to repay this amount. Notes Payable – Related Parties June 30, 2017 December 31, 2016 Loan payable to Alcimede LLC, bearing interest at 6% per annum, with all principal and interest due on February 2, 2018 $ 168,500 $ 218,500 Loan payable to Christopher Diamantis 220,000 - Other advances from related parties 55,000 110,000 443,500 328,500 Less current portion (443,500 ) (328,500 ) Total notes payable - related parties, net of current portion $ - $ - On February 3, 2015, the Company borrowed $3.0 million from Alcimede LLC (“Alcimede”). Seamus Lagan, the Company’s President and Chief Executive Officer, is the sole manager of Alcimede. The note has an interest rate of 6% and was originally due on February 2, 2016. Alcimede later agreed to extend the maturity date of the loan to August 2, 2017. 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, and the loan outstanding was reduced in satisfaction of the aggregate exercise price of $2.5 million. In August of 2016, $0.3 million was repaid by the Company through the issuance of shares of common stock. In March of 2017, the Company and Mr. Lagan agreed that a payment made to Mr. Lagan in the amount of $50,000 would be deducted from the outstanding balance of the note, and the remaining balance due on this loan as of June 30, 2017 was $0.2 million. On August 2, 2017, the Company and Alcimede agreed to further extend the maturity date of the loan to February 2, 2018. During the six months ended June 30, 2017, the Company repaid $0.1 million that was outstanding to a former principal stockholder, and borrowed an additional $75,000 from this same stockholder and $0.2 million from Mr. Diamantis, a director of the Company (see Note 6). |
Debentures
Debentures | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debentures | Note 5 – Debentures On February 2, 2017, the Company issued $1.6 million aggregate principal amount of Original Issue Discount Convertible Debentures due three months from the date of issuance (the “February Debentures”) and warrants to purchase an aggregate of 100,000 shares of common stock, which can be exercised at any time after August 17, 2017 at an exercise price of $2.58 per share (the “Warrants”), to an accredited investor for a purchase price of $1.5 million. The February Debentures were convertible at a conversion price of $2.58 per share (subject to adjustment). On March 21, 2017, the Company issued $10.85 million aggregate principal amount of Senior Secured Original Issue Discount Convertible Debentures due March 21, 2019 (the “Convertible Debentures”) and three series of warrants to purchase an aggregate of 19,608,426 shares of the Company’s common stock to several accredited investors. The Company received net proceeds from this transaction in the approximate amount of $8.4 million. The Company used $3.8 million of the net proceeds to repay the 2017 Diamantis Note (see Note 6) and $0.75 million of the net proceeds to make the partial repayment on the TCA Debenture (see Note 4). The remainder of the net proceeds were used for general corporate purposes. In conjunction with the issuance of the Convertible Debentures, the holder of the February Debentures exchanged these debentures for $2.5 million of new debentures (the “Exchange Debentures” and, collectively with the Convertible Debentures, the “Debentures”) on the same terms as, and pari passu with, the Convertible Debentures, and warrants to purchase 4,453,917 shares of the Company’s common stock. The Company recorded non-cash interest expense in the amount of $0.4 million as a result of this exchange. Additionally, the holders of an aggregate of $2.2 million stated value of the Company’s Series H Convertible Preferred Stock (the “Series H Preferred Stock”) exchanged such preferred stock into $2.7 million principal amount of Exchange Debentures and warrants to purchase 4,871,853 shares of the Company’s common stock. All of the Debentures contain a 24% original issue discount, have no regularly scheduled interest payments except in the event of a default and have a maturity date of March 21, 2019. The warrants issued with the Convertible Debentures and the Exchange Debentures are collectively referred to as the “Debenture Warrants.” The Debentures are convertible into shares of the Company’s common stock (initially at a conversion price of $1.66, which has been adjusted pursuant to the terms of the Debentures to $0.39 due to prices at which the Company has subsequently issued shares of common stock). The Debentures will begin to amortize monthly commencing on the 90 th The exercise price of the Debenture Warrants is subject to reset in the event of offerings or other issuances of common stock, or rights to purchase common stock, at a price below the then exercise price, as well as other customary anti-dilution protections. As a result of these provisions, both the Debentures and the Debenture Warrants were deemed to be not indexed to the Company’s common stock, and the Company recognized derivative liabilities for the embedded conversion feature of the Debentures and the Debenture Warrants in the original amount of $15.3 million and $41.3 million, respectively. The Company recognized a discount for 100% of the principal value of the Debentures and non-cash interest expense in the amount of $43.7 million in connection with the recognition of these derivative liabilities. As a result of the adoption of ASU 2017-11, the interest expense and derivative liability originally recognized has since been adjusted and extinguished as reflected herein. On June 2, 2017 and June 22, 2017, the Company issued $1.9 million aggregate principal amount of Original Issue Discount Debentures due three months from the date of issuance in these two issuances (collectively, the “June Debentures”) and warrants to purchase an aggregate of 1,500,000 shares of common stock (500,000 warrants in the June 2, 2017 transaction and 1,000,000 in the June 22, 2017 transaction), which can be exercised at any time after six months at an exercise price of $0.39 per share for the June 2, 2017 warrants and $0.38 per share for the June 22, 2017 warrants (collectively the “Warrants”), to accredited investors for a purchase price of $1.8 million. The Company recorded a discount on the debentures of $107,700 which is to be amortized over the term of the June 22, 2017 debenture. See Note 1 for the adoption of ASU 2017-11 for the retrospective adjustments made to the Company’s condensed consolidated financial statements with respect to the derivative liabilities associated with the Convertible Debentures. The carrying amount of the Debentures as of June 30, 2017 (unaudited), is as follows: June 30, 2017 Debentures $ 15,261,724 Discount on Debentures (10,271,253 ) Deferred financing fees (408,512 ) 4,581,959 Less current portion (1,578,028 ) Debentures, net of current portion $ 3,003,931 There were no debentures as of December 31, 2016. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 6 – Related Party Transactions In addition to the transactions discussed in Note 4, the Company had the following related party transactions during the six months ended June 30, 2017 and 2016: In January and February of 2017, the Company received advances aggregating $3.3 million from Christopher Diamantis, a director of the Company. The advances, along with $0.5 million of previously accrued but unpaid interest, were due on demand, bearing interest at 10% per annum. The Company used the advances to pay the purchase price for the Hospital Assets and for general corporate purposes. On March 7, 2017, the Company issued a promissory note to Mr. Diamantis in the amount of $3.8 million (the “2017 Diamantis Note”) in connection with these advances received in 2017, plus accrued and unpaid interest of $0.5 million. In conjunction with the issuance of the 2017 Diamantis Note, the Company also issued to Mr. Diamantis warrants to purchase 250,000 shares of the Company’s common stock. The 2017 Diamantis Note was repaid on March 21, 2017 with the proceeds received from the issuance of the Convertible Debentures (see Note 5). In May and June of 2017, the Company received advances from Mr. Diamantis, net of repayments totaling $0.2 million, at a 10% per annum interest rate. Alcimede billed the Company $0.2 million and $0.3 million for consulting fees pursuant to a consulting agreement for each of the six months ended June 30, 2017 and 2016, respectively. Monarch Capital, LLC (“Monarch”) billed the Company for consulting fees pursuant to a consulting agreement in the amount of $0.1 million for the six months ended June 30, 2017 and 2016, respectively. Michael Goldberg, a director of the Company up until his resignation effective April 24, 2017, is the Managing Director of Monarch. |
Capital Lease Obligations
Capital Lease Obligations | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Capital Lease Obligations | Note 7 – Capital Lease Obligations The Company leases various assets under capital leases expiring through 2020 as follows. At June 30, 2017 (unaudited) and December 31, 2016, capital lease obligations consisted of the following: June 30, 2017 December 31, 2016 Medical equipment $ 4,497,025 $ 4,497,025 Less accumulated depreciation (3,069,139 ) (2,809,511 ) Net $ 1,427,886 $ 1,687,514 Aggregate future minimum rentals under capital leases are as follows: Year ended December 31, 2017 (July through December) $ 712,011 2018 1,427,375 2019 377,919 2020 32,611 Total 2,549,916 Less interest 120,908 Present value of minimum lease payments 2,429,008 Less current portion of capital lease obligations 1,365,547 Capital lease obligations, net of current portion $ 1,063,461 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Note 8 – Stockholders’ Equity Preferred Stock During the six months ended June 30, 2017, 7,785 shares of Series H Preferred Stock were converted into 5,556,697 shares of common stock in accordance with the terms of the Series H Preferred Stock. Also during the six months ended June 30, 2017, 2,174 shares of Series H Preferred Stock were exchanged for Exchange Debentures with an aggregate principal amount of $2.2 million and warrants (see Note 5). Common Stock On January 17, 2017, 2,778 shares of common stock were issued to an employee. On February 22, 2017, the Reverse Stock Split became effective (see Note 1). The Reverse Stock Split resulted in the issuance of 7,897 shares of common stock due to the rounding up of fractional shares. On March 13, 2017, the Company issued 400,000 shares of common stock in settlement of $0.4 million of outstanding notes and warrants (see Note 4). On March 15, 2017, the Company agreed to issue 29,518 shares of common stock to a holder of a like number of warrants to purchase the Company’s common stock in exchange for the warrants valued at $57,855. During the six months ended June 30, 2017, Exchange Debentures with a principal amount of $2.7 million were converted into 4,611,092 shares of common stock (see Note 5). Stock Options The Company currently maintains and sponsors the Tegal Corporation 2007 Incentive Award Plan (the “2007 Equity Plan”). Tegal Corporation is the predecessor entity to the Company. The 2007 Equity Plan, as amended, provides for the issuance of stock options and other equity awards to the Company’s officers, directors, employees and consultants. During the six months ended June 30, 2017 and 2016, the Company recognized stock-based compensation in the amount of $69,230 and $0.4 million, respectively, for the vesting of outstanding stock options. The following table summarizes the Company’s stock option activity for the six months ended June 30, 2017: Number of options Weighted-average exercise price Weighted-average contractual term Outstanding at December 31, 2016 709,025 $ 129.43 8.93 Granted - - Expired - - Forfeit (127,858 ) - Exercised - - Outstanding at June 30, 2017 581,167 $ 137.37 8.43 Exercisable at June 30, 2017 477,167 $ 147.56 As of June 30, 2017, the Company had approximately $0.3 million of unrecognized compensation cost related to stock options granted under the Company’s 2007 Equity Plan, which is expected to be recognized over a weighted-average period of 1.12 years. Warrants The Company, as part of various debt and equity financing transactions, has issued warrants to purchase shares of the Company’s common stock. The following summarizes the information related to warrants issued and the activity during the six months ended June 30, 2017: Number of warrants Weighted average exercise price Balance at December 31, 2016 1,407,647 $ 11.70 Warrants issued during the period 30,784,193 $ 0.39 Warrants exchanged for other securities (96,185 ) $ 12.46 Warrants exercised during the period - $ - Warrants expired during the period - $ - Balance at June 30, 2017 32,095,655 $ 0.85 Basic and Diluted Loss per Share Basic loss per share excludes dilution and is computed by dividing loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company. For the six months ended June 30, 2017 and 2016, basic loss per share is the same as diluted loss per share. Diluted loss per share excludes all dilutive potential shares if their effect is anti-dilutive. As of June 30, 2017 and 2016, the following potential common stock equivalents were excluded from the calculation of diluted loss per share as their effect was anti-dilutive: As of June 30, 2017 2016 Warrants 32,095,655 227,819 Convertible preferred stock 153,845 398,268 Convertible debt 11,748,613 230,521 Stock options 581,167 574,789 44,579,280 1,431,397 |
Supplemental Disclosure of Cash
Supplemental Disclosure of Cash Flow Information | 6 Months Ended |
Jun. 30, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Disclosure of Cash Flow Information | Note 9 – Supplemental Disclosure of Cash Flow Information The supplemental cash flow information for the six months ended June 30, 2017 and 2016 (unaudited) is as follows: Six Months Ended June 30, 2017 2016 Cash paid for interest $ 976,984 $ 858,741 Cash paid for income taxes $ 401,313 $ - Non-cash investing and financing activities: Exchange of preferred stock for convertible debentures and warrants $ 4,490,760 $ - Exchange of convertible debentures for convertible debentures and warrants $ 2,464,500 Notes payable settled through issuance of common stock $ 440,000 $ - Exchange of Series H Preferred Stock for debentures $ 2,174,000 Debentures converted into common stock $ 2,651,236 $ - Deemed dividend for trigger of down round provision feature $ 11,093,012 Conversions of preferred stock into common stock $ 7,785,000 $ - |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10 – Commitments and Contingencies Legal Matters From time to time, the Company may be involved in a variety of claims, lawsuits, investigations and proceedings related to contractual disputes, employment matters, regulatory and compliance matters, intellectual property rights and other litigation arising in the ordinary course of business. 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. The Company’s Epinex Diagnostics Laboratories, Inc. subsidiary had been sued in a California state court by two former employees who alleged that they were wrongfully terminated, as well as for a variety of unpaid wage claims. The parties entered into a settlement agreement of this matter on July 29, 2016 for approximately $0.2 million, and the settlement was consummated on August 25, 2016. In October of 2016, the plaintiffs in this matter filed a motion with the court seeking payment for attorneys’ fees in the approximate amount of $0.7 million. On March 24, 2017, the court granted plaintiffs’ motion for payment of attorneys’ fees in the amount of $0.3 million, and the Company has accrued this amount in its consolidated financial statements. Additionally, the Company is seeking indemnification for these amounts from Epinex Diagnostics, Inc. (“EDI”), the seller of Epinex Diagnostic Laboratories, Inc. (“EDL”), pursuant to a Stock Purchase Agreement entered into by and among the parties. This matter is pre-litigation, but to the extent a favorable outcome cannot be negotiated, the Company will consider pursuing indemnity claims against EDI in court. In February 2016, the Company received notice that the Internal Revenue Service (the “IRS”) had placed a lien against Medytox Solutions, Inc. and its subsidiaries relating to unpaid 2014 taxes due, plus penalties and interest, in the amount of $5.0 million. The Company paid $0.1 million toward its 2014 tax liability in March 2016. The Company filed its 2015 Federal tax return on March 15, 2016 and the accompanying election to carryback the reported net operating losses was filed in April 2016. On August 24, 2016, the lien was released, and in September of 2016 the Company received a refund from the IRS in the amount of $1.9 million. In November of 2016, the IRS commenced an audit of the Company’s 2015 Federal tax return. The Company is currently unable to predict the outcome of the audit or any liability to the Company that may result from the audit. On September 27, 2016, a tax warrant was issued against the Company by the Florida Department of Revenue (the “DOR”) for unpaid 2014 state income taxes in the approximate amount of $0.9 million, including penalties and interest. On January 25, 2017, the Company paid the DOR $250,000 as partial payment on this liability, and in February 2017 the Company entered into a Stipulation Agreement with the DOR which will allow the Company to make monthly installment payments of $35,000 until February 2018 and negotiate a new payment agreement then, if the balance of $0.3 million cannot be satisfied in a lump sum. If at any time during the Stipulation period the Company fails to timely file any required tax returns with the DOR or does not meet the payment obligations under the Stipulation Agreement, the entire amount due will be accelerated. In December of 2016, TCS-Florida, L.P. (“Tetra”), filed suit against the Company for failure to make the required payments under an equipment leasing contract that the Company had with Tetra (see Note 7). On January 3, 2017, Tetra received a Default Judgment against the Company in the amount of $2.6 million, representing the balance owed on the leases, as well as additional interest, penalties and fees. The Company has recognized this amount in its consolidated financial statements as of December 31, 2016. In January and February of 2017, the Company made payments to Tetra in connection with this judgment aggregating to $0.7 million, and on February 15, 2017 the Company entered into a forbearance agreement with Tetra whereby the remaining $1.9 million due will be paid in 24 equal monthly installments. Payments commenced on May 1, 2017 and have been made in a timely manner. In December of 2016, DeLage Landen Financial Services, Inc. (“DeLage”), filed suit against the Company for failure to make the required payments under an equipment leasing contract that the Company had with DeLage (see Note 7). On January 24, 2017, DeLage received a default judgment against the Company in the approximate amount of $1.0 million, representing the balance owed on the lease, as well as additional interest, penalties and fees. The Company has recognized this amount in its consolidated financial statements as of December 31, 2016. On February 8, 2017, a Stay of Execution was filed and under its terms the balance due will be paid in variable monthly installments through January of 2019, with an implicit interest rate of 4.97%. Payments have been made in a timely manner. On December 7, 2016, the holders of the Tegal Notes (see Note 4) filed suit against the Company seeking payment for the amounts due under the notes in the aggregate of $0.4 million, including accrued interest. A request for entry of default judgment was filed on January 24, 2017. A Case Management Conference is scheduled for September 5, 2017. The Company has attempted to work out a payment arrangement with the plaintiffs but to date has not been able to consummate such an arrangement. Potential De-Listing of the Company’s Stock On April 18, 2017, the Company was notified by Nasdaq that the stockholders’ equity balance reported on its Form 10-K for the year ended December 31, 2016 fell below the $2.5 million minimum requirement for continued listing under the Nasdaq Capital Market’s Listing Rule 5550(b)(1) (the “Rule”). As of December 31, 2016, the Company’s stockholders’ deficit balance was $14.9 million. In accordance with the Rule, the Company submitted 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 18, 2017 to evidence compliance. There can be no guarantee that the Company will be able to regain compliance with the continued listing requirement of Nasdaq Marketplace Rule 5550(b)(1) or that its plan will be accepted by Nasdaq. On June 12, 2017, the Company was notified by Nasdaq that the bid price of the Company’s common stock closed below the minimum $1.00 per share requirement for continued inclusion under Nasdaq Rule 5550(a)(2) (the “Price Rule”). In accordance with Nasdaq Rule 5810(c)(3)(A), the Company has 180 calendar days, or until December 11, 2017, to regain compliance. If at any time before December 11, 2017, 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 Price Rule. If the Company does not regain compliance by December 11, 2017, 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). The Company is required to hold a meeting of stockholders at the earliest practicable date to obtain stockholder approval of at least a 1-for-8 reverse split of the Company’s common stock. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 11 – Segment Information Operating segments are defined under U.S. GAAP as components of an enterprise for which discrete financial information is available and are evaluated regularly by the enterprise’s chief operating decision maker in determining how to allocate resources and assess performance. The Company operates in four reportable business segments: ● Clinical Laboratory Operations ● Supportive Software Solutions ● Hospital Operations ● Corporate, The Company’s Decision Support and Informatics segment is now included in discontinued operations as it has been classified as held for sale as of June 30, 2017. The accounting policies of the reportable segments are the same as those described in Note 2, Summary of Significant Accounting Policies, of the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and in Note 1 for the adoption to ASU 2017-11. Selected financial information for the Company’s operating segments is as follows: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net revenues - External Clinical Laboratory Operations $ 645,386 $ 2,240,170 $ 1,407,976 $ 3,471,072 Supportive Software Solutions 253,344 325,102 490,289 555,128 $ 898,730 $ 2,565,272 $ 1,898,265 $ 4,026,200 Net revenues - Intersegment (*** ) Supportive Software Solutions 206,167 237,993 284,493 534,341 $ 206,167 $ 237,993 $ 284,493 $ 534,341 (Loss) income from operations Clinical Laboratory Operations $ (1,477,754 ) $ (886,541 ) $ (2,770,028 ) $ (3,226,339 ) Supportive Software Solutions (342,348 ) (1,234,194 ) (1,060,894 ) (2,547,507 ) Hospital Operations (553,352 ) - (1,020,668 ) - Corporate (1,884,287 ) (2,166,251 ) (3,688,800 ) (4,118,688 ) Eliminations 330 33,664 8,181 67,324 $ (4,257,411 ) $ (4,253,322 ) $ (8,532,209 ) $ (9,825,210 ) Depreciation and amortization Clinical Laboratory Operations $ 419,905 $ 548,870 $ 854,373 $ 1,096,419 Supportive Software Solutions 45,421 162,059 202,984 326,487 Hospital Operations 6,609 - 6,609 - Corporate 349 875 660 1,749 Eliminations (330 ) (33,663 ) (8,181 ) (67,324 ) $ 471,954 $ 678,141 $ 1,056,445 $ 1,357,331 Capital expenditures Clinical Laboratory Operations $ - $ 14,473 $ - $ 6,000 Supportive Software Solutions - 7,881 - 9,998 Hospital Operations 214,147 - 1,305,069 - $ 214,147 $ 22,354 $ 1,305,069 $ 15,998 *** June 30, 2017 December 31, 2016 Total assets Clinical Laboratory Operations $ 2,195,239 $ 3,986,126 Supportive Software Solutions 1,863,113 2,602,428 Decision Support and Informatics - 60,000 Hospital Operations 1,360,800 - Corporate 2,897,573 2,130,191 Assets of AMSG classified as held for sale 67,579 414,662 Eliminations (2,696,985 ) (2,711,014 ) $ 5,687,319 $ 6,482,393 |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 6 Months Ended |
Jun. 30, 2017 | |
Recently Issued Accounting Standards | |
Recently Issued Accounting Standards | Note 12 – Recently Issued Accounting Standards The following table provides a brief description of recently issued accounting standards: Title and reference Prescribed Effective Date Commentary 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 did not have a significant impact on the Company’s consolidated financial statements upon adoption. ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” Fiscal years beginning after December 15, 2017 and for interim periods therein. In May 2014, the FASB issued guidance that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most recent current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also specifies the accounting for certain incremental costs of obtaining a contract and costs to fulfill a contract with a customer. Entities have the option of applying either a full retrospective approach to all periods presented or a modified approach that reflects differences prior to the date of adoption as an adjustment to equity. In April 2015, FASB deferred the effective date of this guidance until January 1, 2018 and the Company is currently assessing the impact of this guidance on its consolidated financial statements. 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. Adoption of this new standard did not have a significant impact on the Company’s consolidated financial statements. See Note 1 regarding management’s current disclosures regarding the Company’s ability to continue as a going concern. ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” 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. Adoption of ASU 2015-17 did not have a material impact on the Company’s consolidated financial statements. Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” 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. The Company has not yet determined the impact that adoption of ASU 2016-02 will have on its consolidated financial statements. ASU No. 2017-11, “Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815)” (“ASU 2017-11”) Fiscal years beginning on or after December 15, 2018, with early adoption permitted. The Company adopted this amendment as of its period ended June 30, 2017 (see Note 1) |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Note 13: Discontinued Operations On July 12, 2017, the Company announced plans to spin off its Advanced Molecular Services Group (“AMSG”) as an independent publicly traded company by way of a tax-free distribution to Rennova stockholders. Completion of the spinoff is expected to occur at the end of September 2017 and is subject to numerous conditions, including effectiveness of a Registration Statement on Form 10 to be filed with the Securities and Exchange Commission, and consents, including under various funding agreements previously entered into by Rennova. A record date to determine those stockholders entitled to receive shares in the spin off should be approximately 30 to 60 days prior to the date of the spinoff. The strategic goal of the spinoff is to create two public companies, each of which can focus on its own strengths and operational plans. In addition, after the spinoff, each company will provide a distinct and targeted investment opportunity. In accordance with ASC 205-20 and having met the criteria for “held for sale”, as the Company reached this decision prior to June 30, 2017, the Company has reflected amounts relating to AMSG as a disposal group classified as held for sale and included as part of discontinued operations. AMSG had been included in the Decision Support and Informatics segment, except for Alethea which had been included in the Clinical Laboratory Operations segment. Segment disclosures in Note 11 no longer include amounts relating to AMSG following the reclassification to discontinued operations. Carrying amounts of major classes of assets and liabilities classified as held for sale and included as part of discontinued operations in the consolidated balance sheets consisted of the following: June 30, 2017 December 31, 2016 (unaudited) Cash $ 1,967 $ 2,962 Accounts receivable, net 19,125 267,681 Prepaid expenses and other current assets 22,737 67,257 Current assets classified as held for sale $ 43,829 $ 337,900 Property and equipment, net $ - $ 53,012 Deposits 23,750 23,750 Non-current assets classified as held for sale $ 23,750 $ 76,762 Accounts payable (includes related parties) $ 351,541 $ 422,864 Accrued expenses 1,121,913 1,253,117 Income taxes payable 151,806 151,806 Current liabilities classified as held for sale $ 1,625,260 $ 1,827,787 Non-current liabilities classified as held for sale (derivative liabilities) $ - $ 26,598 Major line items constituting loss from discontinued operations in the consolidated statements of operations for the six months ended June 30, 2017 and 2016 consisted of the following: June 30, 2017 June 30, 2016 (unaudited) (unaudited) Revenue from services $ 223,104 $ 906,325 Cost of services 769 131,400 Gross Profit 222,335 774,925 Operating expenses 905,655 2,804,094 Allocated interest expense - 11,706 Loss from discontinued operations $ (683,320 ) $ (2,040,875 s ) |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14 – Subsequent Events Subsequent to June 30, 2017, the Company has announced that we plan to spin off the Advanced Molecular Services Group (“AMSG”) as an independent publicly traded company by way of a tax-free distribution to our shareholders. Completion of the spinoff is expected to occur at the end of September 2017, and is subject to numerous conditions, including effectiveness of a Registration Statement on Form 10 to be filed with the Securities and Exchange Commission. The intent of the spinoff is to create two public companies, each of which can focus on its own strengths and operational plans. See Note 13 for further details. The Company also announced that the Big South Fork Medical Center received CMS regional office licensure approval and opened the Big South Fork Medical Center on August 8, 2017. The Company expects that the hospital will provide additional revenue and cash flow sources. On July 17, 2017, the Company closed an offering of $4,136,862 aggregate principal amount of Original Issue Discount Debentures due October 17, 2017 and warrants to purchase an aggregate of 2,120,000 shares of common stock for consideration of $2,000,000 in cash and the exchange of the $1,902,700 aggregate principal amount of Original Issue Discount Debentures due September 22, 2017 issued by the Company on June 22, 2017. Pursuant to the offering, the purchasers shall have the right, for one year, to participate in any issuance by the Company of common stock or common stock equivalents for cash consideration, indebtedness or a combination of units thereof, with certain exceptions. Also, the Company is required to hold a stockholders’ meeting to obtain stockholder approval for at least a 1-for-8 reverse split of the Company’s common stock. If such approval is not obtained on or before September 20, 2017, it shall be an event of default under the debentures. Promptly following receipt of such approval, the Company shall cause such reverse split to occur. Subsequent to June 30, 2017, the Company has issued 2,392,887 shares of common stock in conversion of $933,226 principal amount of debentures at $0.39 per share. In addition, the Company issued 125,000 shares of stock valued at $48,750 to a former employee under the 2007 equity plan (see Note 8). |
Organization and Basis of Prese
Organization and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the 2016 audited financial statements included in the Company’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 10, 2017. These condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC, and therefore omit or condense certain footnotes and other information normally included in consolidated interim financial statements prepared in accordance with U.S. GAAP. All material intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) considered necessary for the fair presentation of the financial position and results of operations and cash flows for the interim periods reported herein. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year. During the three and six months ended June 30, 2017 and 2016, comprehensive loss was equal to the net loss amounts presented in the accompanying condensed consolidated statements of operations. In addition, certain prior year balances have been reclassified to conform to the current presentation. |
Reclassification | Reclassification The Company has reclassified certain amounts in the 2016 consolidated financial statements to be consistent with the 2017 presentation. These principally relate to classification of certain revenues, cost of revenues and related segment data, as well as balance sheet classifications to assets and liabilities held for sale. Reclassifications relating to the discontinued operations of AMSG are described further in Note 13. The reclassifications had no impact on operations or cash flows for the three and six months ended June 30, 2016. |
Reverse Stock Split | Reverse Stock Split On February 7, 2017, the Company’s Board of Directors approved an amendment to the Company’s Certificate of Incorporation to effect a 1-for-30 reverse stock split of the Company’s shares of common stock effective on February 22, 2017 (the “Reverse Stock Split”). The stockholders of the Company had approved an amendment to the Company’s Certificate of Incorporation on December 22, 2016 to effect a reverse split of all of the Company’s shares of common stock at a specific ratio within a range from 1-for-10 to 1-for-30, and granted authorization to the Board of Directors to determine in its discretion the specific ratio and timing of the reverse split prior to December 31, 2017. As a result of the Reverse Stock Split, every 30 shares of the Company’s then outstanding common stock was combined and automatically converted into one share of the Company’s common stock, par value $0.01 per share. In addition, the conversion and exercise prices of all of the Company’s outstanding preferred stock, common stock purchase warrants, stock options and convertible notes payable were proportionately adjusted at the 1:30 reverse split ratio in accordance with the terms of such instruments. Proportionate voting rights and other rights of common stockholders were not affected by the Reverse Stock Split, other than as a result of the rounding up of fractional shares, as no fractional shares were issued in connection with the Reverse Stock Split. The reverse stock split became effective at the close of business on February 22, 2017 and the Company’s common stock began trading on The NASDAQ Capital Market on a post-split basis on February 23, 2017. The par value and other terms of the common stock were not affected by the Reverse Stock Split. The authorized capital of the Company of 500,000,000 shares of common stock and 5,000,000 shares of preferred stock were also unaffected by the Reverse Stock Split. All share, per share and capital stock amounts for all periods presented have been restated to give effect to the Reverse Stock Split. |
Adoption of ASU 2017-11 | Adoption of ASU 2017-11 In July 2017, the FASB issued ASU 2017-11 “Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815).” The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. Under current GAAP, an equity-linked financial instrument with a down round feature that otherwise is not required to be classified as a liability under the guidance in Topic 480 is evaluated under the guidance in Topic 815, Derivatives and Hedging, to determine whether it meets the definition of a derivative. If it meets that definition, the instrument (or embedded feature) is evaluated to determine whether it is indexed to an entity’s own stock as part of the analysis of whether it qualifies for a scope exception from derivative accounting. Generally, for warrants and conversion options embedded in financial instruments that are deemed to have a debt host (assuming the underlying shares are readily convertible to cash or the contract provides for net settlement such that the embedded conversion option meets the definition of a derivative), the existence of a down round feature results in an instrument not being considered indexed to an entity’s own stock. This results in a reporting entity being required to classify the freestanding financial instrument or the bifurcated conversion option as a liability, which the entity must measure at fair value initially and at each subsequent reporting date. The amendments in this Update revise the guidance for instruments with down round features in Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. An entity still is required to determine whether instruments would be classified in equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities and embedded conversion options with down round features are no longer bifurcated. For entities that present EPS in accordance with Topic 260, and when the down round feature is included in an equity-classified freestanding financial instrument, the value of the effect of the down round feature is treated as a dividend when it is triggered and as a numerator adjustment in the basic EPS calculation. This reflects the occurrence of an economic transfer of value to the holder of the instrument, while alleviating the complexity and income statement volatility associated with fair value measurement on an ongoing basis. Convertible instruments are unaffected by the Topic 260 amendments in this Update. Those amendments in Part 1 of this Update are a cost savings relative to current GAAP. This is because, assuming the required criteria for equity classification in Subtopic 815-40 are met, an entity that issued such an instrument no longer measures the instrument at fair value at each reporting period (in the case of warrants) or separately accounts for a bifurcated derivative (in the case of convertible instruments) on the basis of the existence of a down round feature. For convertible instruments with embedded conversion options that have down round features, applying specialized guidance such as the model for contingent beneficial conversion features rather than bifurcating an embedded derivative also reduces cost and complexity. Under that specialized guidance, the issuer recognizes the intrinsic value of the feature only when the feature becomes beneficial instead of bifurcating the conversion option and measuring it at fair value each reporting period. The amendments in Part II of this Update replace the indefinite deferral of certain guidance in Topic 480 with a scope exception. This has the benefit of improving the readability of the Codification and reducing the complexity associated with navigating the guidance in Topic 480. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part 1 of this Update should be applied in either of the following ways: 1. Retrospectively to outstanding financial instruments with a down round feature by means of a cumulative-effect adjustment to the statement of financial position as of the beginning of the first fiscal year and interim period(s) in which the pending content that links to this paragraph is effective; or 2. Retrospectively to outstanding financial instruments with a down round feature for each prior reporting period presented in accordance with the guidance on accounting changes in paragraphs 250-10-45-5 through 45-10. The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect. The Company has determined that this amendment will have a material impact on its condensed consolidated financial statements and has early adopted this accounting standard update. The cumulative effect of the adoption of ASU 2017-11, resulted in the reclassification of the derivative liability recorded of $56 million and the reversal of $41 million of interest expense recorded in the Company’s first fiscal quarter of 2017. The remaining $16 million was offset to additional paid in capital (discount on convertible debenture). Additionally, the Company recognized a deemed dividend from the trigger of the down round provision feature of $11 million. The adjustments were recorded retrospectively as of the beginning of the issuance of the March 2017 debentures where the initial derivative liability was recorded. |
Going Concern | Going Concern The Company’s consolidated financial statements are prepared using U.S. GAAP applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has accumulated significant losses and has negative cash flows from operations, and at June 30, 2017 had a working capital deficit and stockholders’ deficit of $17 million and $17.5 million, respectively, which raise substantial doubt about its ability to continue as a going concern. In addition, the Company’s cash position is critically deficient, critical payments are not being made in the ordinary course of business and certain indebtedness in the amount of $6.5 million matured on March 31, 2017, which the Company does not have the financial resources to satisfy (see Note 4), all of which raises substantial doubt about the Company’s ability to continue as a going concern. The Company is currently executing on a plan of action which is in process, to reduce the number of laboratory facilities it operates from five such facilities into one, with a corresponding reduction in the number of employees and associated operating expenses, in order to reduce costs. In addition, the Company received net proceeds of $11.6 million from the issuance of debentures in the first six months of 2017 (see Note 5), and intends to seek additional financing on similar terms within the next few months. There are currently no commitments for any such funding. The Company in July 2017 also announced that it plans to spin off its Advanced Molecular Services Group (“AMSG”) as an independent publicly traded company by way of a tax-free distribution to its shareholders. Completion of the spinoff is expected to occur at the end of September 2017, and is subject to numerous conditions, including effectiveness of a Registration Statement on Form 10 to be filed with the Securities and Exchange Commission. The intent of the spinoff is to create two public companies, each of which can focus on its own strengths and operational plans. In accordance with ASC 205-20 and having met the criteria for “held for sale”, the Company has reflected amounts relating to AMSG as a disposal group classified as held for sale and included as part of discontinued operations. AMSG no longer is included in the segment reporting following the reclassification to discontinued operations. The Company has also announced that the Big South Fork Medical Center received CMS regional office licensure approval and that it opened on August 8, 2017.The Company expects that the opening of the hospital will provide additional revenue and cash flow sources. There can be no assurance that the Company will be able to achieve its business plan, raise any additional capital or secure the additional financing necessary to implement its current operating plan. The ability of the Company to continue as a going concern is dependent upon its ability to significantly reduce its operating costs, increase its revenues 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. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable at June 30, 2017 (unaudited) and December 31, 2016 consisted of the following: June 30, 2017 December 31, 2016 Accounts receivable - laboratory services $ 5,030,125 $ 12,715,835 Accounts receivable - all others 487,675 499,508 Total accounts receivable 5,517,800 13,215,343 Less: Allowance for discounts (4,376,208 ) (11,664,490 ) Allowance for bad debts (749,379 ) (350,954 ) Accounts receivable, net $ 392,213 $ 1,199,899 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment at June 30, 2017 (unaudited) and December 31, 2016 consisted of the following: June 30, 2017 December 31, 2016 Medical equipment $ 704,567 $ 696,195 Building 1,252,104 - Equipment 461,912 461,912 Equipment under capital leases 4,497,025 4,497,025 Furniture 387,302 377,630 Leasehold improvements 1,329,387 1,329,387 Vehicles 196,534 196,534 Computer equipment 564,742 564,742 Software 1,863,287 1,739,348 11,256,860 9,862,773 Less accumulated depreciation (7,875,628 ) (6,819,183 ) Property and equipment, net $ 3,381,232 $ 3,043,590 |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes Payable – Third Parties June 30, 2017 December 31, 2016 Loan payable under prepaid forward purchase contract $ 5,000,000 $ 5,000,000 Loan payable to TCA Global Credit Master Fund, LP (“TCA”) in the original principal amount of $3 million at 16% interest (the “TCA Debenture”). Principal and interest payments due in various installments through September 17, 2017. 2,283,002 3,000,000 Notes payable to CommerceNet and Jay Tenenbaum in the original principal amount of $500,000, bearing interest at 6% per annum (the “Tegal Notes”). Prinicpal and interest payments are due annually from July 12, 2015 through July 12, 2016 341,612 341,612 Other convertible notes payable - 440,000 Unamortized discount on other convertible notes - (179,889 ) Derivative liability associated with the TCA Debenture, at fair value - 409,524 7,624,614 9,011,247 Less current portion (7,624,614 ) (9,011,247 ) Notes payable - third parties, net of current portion $ - $ - |
Schedule of Notes Payable - Related Parties | Notes Payable – Related Parties June 30, 2017 December 31, 2016 Loan payable to Alcimede LLC, bearing interest at 6% per annum, with all principal and interest due on February 2, 2018 $ 168,500 $ 218,500 Loan payable to Christopher Diamantis 220,000 - Other advances from related parties 55,000 110,000 443,500 328,500 Less current portion (443,500 ) (328,500 ) Total notes payable - related parties, net of current portion $ - $ - |
Debentures (Tables)
Debentures (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Debentures | The carrying amount of the Debentures as of June 30, 2017 (unaudited), is as follows: June 30, 2017 Debentures $ 15,261,724 Discount on Debentures (10,271,253 ) Deferred financing fees (408,512 ) 4,581,959 Less current portion (1,578,028 ) Debentures, net of current portion $ 3,003,931 |
Capital Lease Obligations (Tabl
Capital Lease Obligations (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Capital Leases | The Company leases various assets under capital leases expiring through 2020 as follows. At June 30, 2017 (unaudited) and December 31, 2016, capital lease obligations consisted of the following: June 30, 2017 December 31, 2016 Medical equipment $ 4,497,025 $ 4,497,025 Less accumulated depreciation (3,069,139 ) (2,809,511 ) Net $ 1,427,886 $ 1,687,514 |
Aggregate Future Minimum Rentals under Capital Leases | Aggregate future minimum rentals under capital leases are as follows: Year ended December 31, 2017 (July through December) $ 712,011 2018 1,427,375 2019 377,919 2020 32,611 Total 2,549,916 Less interest 120,908 Present value of minimum lease payments 2,429,008 Less current portion of capital lease obligations 1,365,547 Capital lease obligations, net of current portion $ 1,063,461 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes the Company’s stock option activity for the six months ended June 30, 2017: Number of options Weighted-average exercise price Weighted-average contractual term Outstanding at December 31, 2016 709,025 $ 129.43 8.93 Granted - - Expired - - Forfeit (127,858 ) - Exercised - - Outstanding at June 30, 2017 581,167 $ 137.37 8.43 Exercisable at June 30, 2017 477,167 $ 147.56 |
Schedule of Warrant Issued Activity | The following summarizes the information related to warrants issued and the activity during the six months ended June 30, 2017: Number of warrants Weighted average exercise price Balance at December 31, 2016 1,407,647 $ 11.70 Warrants issued during the period 30,784,193 $ 0.39 Warrants exchanged for other securities (96,185 ) $ 12.46 Warrants exercised during the period - $ - Warrants expired during the period - $ - Balance at June 30, 2017 32,095,655 $ 0.85 |
Schedule of Anti-Dulutive | As of June 30, 2017 and 2016, the following potential common stock equivalents were excluded from the calculation of diluted loss per share as their effect was anti-dilutive: As of June 30, 2017 2016 Warrants 32,095,655 227,819 Convertible preferred stock 153,845 398,268 Convertible debt 11,748,613 230,521 Stock options 581,167 574,789 44,579,280 1,431,397 |
Supplemental Disclosure of Ca28
Supplemental Disclosure of Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Supplemental Cash Flow Information | The supplemental cash flow information for the six months ended June 30, 2017 and 2016 (unaudited) is as follows: Six Months Ended June 30, 2017 2016 Cash paid for interest $ 976,984 $ 858,741 Cash paid for income taxes $ 401,313 $ - Non-cash investing and financing activities: Exchange of preferred stock for convertible debentures and warrants $ 4,490,760 $ - Exchange of convertible debentures for convertible debentures and warrants $ 2,464,500 Notes payable settled through issuance of common stock $ 440,000 $ - Exchange of Series H Preferred Stock for debentures $ 2,174,000 Debentures converted into common stock $ 2,651,236 $ - Deemed dividend for trigger of down round provision feature $ 11,093,012 Conversions of preferred stock into common stock $ 7,785,000 $ - |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting | Selected financial information for the Company’s operating segments is as follows: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net revenues - External Clinical Laboratory Operations $ 645,386 $ 2,240,170 $ 1,407,976 $ 3,471,072 Supportive Software Solutions 253,344 325,102 490,289 555,128 $ 898,730 $ 2,565,272 $ 1,898,265 $ 4,026,200 Net revenues - Intersegment (*** ) Supportive Software Solutions 206,167 237,993 284,493 534,341 $ 206,167 $ 237,993 $ 284,493 $ 534,341 (Loss) income from operations Clinical Laboratory Operations $ (1,477,754 ) $ (886,541 ) $ (2,770,028 ) $ (3,226,339 ) Supportive Software Solutions (342,348 ) (1,234,194 ) (1,060,894 ) (2,547,507 ) Hospital Operations (553,352 ) - (1,020,668 ) - Corporate (1,884,287 ) (2,166,251 ) (3,688,800 ) (4,118,688 ) Eliminations 330 33,664 8,181 67,324 $ (4,257,411 ) $ (4,253,322 ) $ (8,532,209 ) $ (9,825,210 ) Depreciation and amortization Clinical Laboratory Operations $ 419,905 $ 548,870 $ 854,373 $ 1,096,419 Supportive Software Solutions 45,421 162,059 202,984 326,487 Hospital Operations 6,609 - 6,609 - Corporate 349 875 660 1,749 Eliminations (330 ) (33,663 ) (8,181 ) (67,324 ) $ 471,954 $ 678,141 $ 1,056,445 $ 1,357,331 Capital expenditures Clinical Laboratory Operations $ - $ 14,473 $ - $ 6,000 Supportive Software Solutions - 7,881 - 9,998 Hospital Operations 214,147 - 1,305,069 - $ 214,147 $ 22,354 $ 1,305,069 $ 15,998 *** June 30, 2017 December 31, 2016 Total assets Clinical Laboratory Operations $ 2,195,239 $ 3,986,126 Supportive Software Solutions 1,863,113 2,602,428 Decision Support and Informatics - 60,000 Hospital Operations 1,360,800 - Corporate 2,897,573 2,130,191 Assets of AMSG classified as held for sale 67,579 414,662 Eliminations (2,696,985 ) (2,711,014 ) $ 5,687,319 $ 6,482,393 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operation of Balance Sheet and Operation Statement | Carrying amounts of major classes of assets and liabilities classified as held for sale and included as part of discontinued operations in the consolidated balance sheets consisted of the following: June 30, 2017 December 31, 2016 (unaudited) Cash $ 1,967 $ 2,962 Accounts receivable, net 19,125 267,681 Prepaid expenses and other current assets 22,737 67,257 Current assets classified as held for sale $ 43,829 $ 337,900 Property and equipment, net $ - $ 53,012 Deposits 23,750 23,750 Non-current assets classified as held for sale $ 23,750 $ 76,762 Accounts payable (includes related parties) $ 351,541 $ 422,864 Accrued expenses 1,121,913 1,253,117 Income taxes payable 151,806 151,806 Current liabilities classified as held for sale $ 1,625,260 $ 1,827,787 Non-current liabilities classified as held for sale (derivative liabilities) $ - $ 26,598 |
Organization and Presentation (
Organization and Presentation (Details Narrative) - USD ($) | Jun. 12, 2017 | Mar. 21, 2017 | Feb. 07, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Feb. 22, 2017 | Dec. 31, 2016 |
Reserve stock split, description | 1-for-8 reverse split | 1-for-30 reverse stock split of the Companys shares of common stock effective on February 22, 2017 | |||||
Common stock conversion description | As a result of the Reverse Stock Split, every 30 shares of the Companys then outstanding common stock was combined and automatically converted into one share | ||||||
Common stock par value | $ 0.01 | $ 0.01 | $ 0.01 | ||||
Common stock shares authorized | 500,000,000 | 500,000,000 | 500,000,000 | ||||
Preferred stock shares authorized | 5,000,000 | ||||||
Interest expenses | $ 400,000 | $ (7,418,722) | |||||
Offset to additional paid in capital | 16,000,000 | ||||||
Deemed dividend | 11,000,000 | ||||||
Working capital deficit | 17,000,000 | ||||||
Stockholder's equity | (17,516,514) | $ (14,885,896) | |||||
Indebtedness amount | 6,500,000 | ||||||
Proceeds from issuance debentures | $ 8,400,000 | $ 11,600,000 | |||||
Maximum [Member] | |||||||
Reserve stock split, description | 1-for-30 |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Accounts receivable, gross | $ 5,517,800 | $ 13,215,343 |
Less: Allowance for discounts | (4,376,208) | (11,664,490) |
Less: Allowance for bad debts | (749,379) | (350,954) |
Accounts receivable, net | 392,213 | 1,199,899 |
Laboratory Service [Member] | ||
Accounts receivable, gross | 5,030,125 | 12,715,835 |
Others [Member] | ||
Accounts receivable, gross | $ 487,675 | $ 499,508 |
Property and Equipment (Details
Property and Equipment (Details Narrative) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($)a | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)a | Jun. 30, 2016USD ($) | |
Area of land | a | 4.3 | 4.3 | ||
Payments to acquire assets | $ | $ 1,394,087 | $ 15,998 | ||
Depreciation expenses | $ | $ 500,000 | $ 700,000 | $ 1,000,000 | $ 1,400,000 |
Hospital Building [Member] | ||||
Area of land | a | 52,000 | 52,000 | ||
Professional Building [Member] | ||||
Area of land | a | 6,300 | 6,300 | ||
Hospital Asset [Member] | ||||
Payments to acquire assets | $ | $ 1,000,000 |
Long-Lived Assets - Schedule of
Long-Lived Assets - Schedule of Property and Equipment (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Property and equipment, gross | $ 11,256,860 | $ 9,862,773 |
Accumulated depreciation | (7,875,628) | (6,819,183) |
Property and equipment, net | 3,381,232 | 3,043,590 |
Medical Equipment [Member] | ||
Property and equipment, gross | 704,567 | 696,195 |
Building [Member] | ||
Property and equipment, gross | 1,252,104 | |
Equipment [Member] | ||
Property and equipment, gross | 461,912 | 461,912 |
Equipment under Capital Leases [Member] | ||
Property and equipment, gross | 4,497,025 | 4,497,025 |
Furniture [Member] | ||
Property and equipment, gross | 387,302 | 377,630 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | 1,329,387 | 1,329,387 |
Vehicles [Member] | ||
Property and equipment, gross | 196,534 | 196,534 |
Computer Equipment [Member] | ||
Property and equipment, gross | 564,742 | 564,742 |
Software [Member] | ||
Property and equipment, gross | $ 1,863,287 | $ 1,739,348 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Mar. 21, 2017 | Feb. 02, 2017 | Nov. 03, 2016 | Mar. 31, 2016 | Jun. 29, 2015 | Feb. 02, 2015 | Mar. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Mar. 15, 2017 | Mar. 13, 2017 | Mar. 07, 2017 | Dec. 31, 2016 | Sep. 15, 2016 | Jun. 30, 2016 | Feb. 03, 2015 |
Consideration received | $ 5,000,000 | |||||||||||||||
Estimated value of accounts receivable | $ 8,700,000 | |||||||||||||||
Adjustment value of debt | $ 1,500,000 | $ 0 | ||||||||||||||
Investment percentage | 20.00% | |||||||||||||||
Debt term | 6 months | |||||||||||||||
Repayment of debt | $ 500,000 | |||||||||||||||
Debt instrument description | All payments recovered from the accounts receivable up to $5.25 million, if paid in full within six months, or $5.5 million, 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 $6.0 million, the Company was required to pay the difference, plus 30% interest per annum on the total balance. To date, the Company has not recovered any payments against the accounts receivable. | |||||||||||||||
Accrued expenses | 1,500,000 | |||||||||||||||
Due to related party | 6,500,000 | |||||||||||||||
Debt instrument face amount | $ 10,850,000 | $ 1,600,000 | ||||||||||||||
Debt instrument conversion price | $ 2.58 | |||||||||||||||
Warrant to purchase common stock | $ 2.58 | |||||||||||||||
Warrants exchanged for shares | 4,453,917 | 100,000 | 29,518 | |||||||||||||
Debt instrument periodic payment | $ 400,000 | |||||||||||||||
Loan outstanding | $ 200,000 | |||||||||||||||
Alcimede LLC [Member] | ||||||||||||||||
Debt instrument maturity date | Feb. 2, 2016 | |||||||||||||||
Common stock exercise price | $ 2.50 | |||||||||||||||
Due from related party | $ 3,000,000 | |||||||||||||||
Debt instrument interest rate | 6.00% | |||||||||||||||
Debt instrument extended due date | Aug. 2, 2017 | |||||||||||||||
Loan outstanding | $ 2,500,000 | |||||||||||||||
Repayment of common stock | $ 300,000 | |||||||||||||||
Mr Lagan [Member] | ||||||||||||||||
Repayment of debt | $ 50,000 | 100,000 | ||||||||||||||
Debt instrument extended due date | Feb. 2, 2018 | |||||||||||||||
Stockholder [Member] | ||||||||||||||||
Due to related party | 75,000 | |||||||||||||||
Mr Diamantis [Member] | ||||||||||||||||
Due to related party | $ 200,000 | |||||||||||||||
Debt instrument face amount | $ 3,800,000 | |||||||||||||||
Warrants exchanged for shares | 250,000 | |||||||||||||||
Debt instrument interest rate | 10.00% | 10.00% | ||||||||||||||
TCA Debenture [Member] | ||||||||||||||||
Repayment of debt | $ 750,000 | |||||||||||||||
Accrued and unpaid interest | 100,000 | $ 400,000 | ||||||||||||||
Debt instrument fee | $ 150,000 | |||||||||||||||
Debt instrument maturity date | Jun. 27, 2017 | |||||||||||||||
TCA Debenture [Member] | April 2017 Through September 2017 [Member] | ||||||||||||||||
Repayment of debt | $ 2,600,000 | |||||||||||||||
September 2016 Notes [Member] | ||||||||||||||||
Debt instrument conversion price | $ 7.50 | |||||||||||||||
Warrant to purchase common stock | 66,667 | |||||||||||||||
Common stock exercise price | $ 12 | |||||||||||||||
Warrants exchanged for shares | 400,000 | |||||||||||||||
September 2016 Notes [Member] | Two Investor [Member] | ||||||||||||||||
Debt instrument face amount | $ 400,000 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Jun. 30, 2017 | Mar. 21, 2017 | Feb. 02, 2017 | Dec. 31, 2016 | Jun. 30, 2016 |
Face value of note | $ 10,850,000 | $ 1,600,000 | |||
Unamortized discount on other convertible notes | $ (179,889) | ||||
Derivative liability associated with the TCA Debenture, at fair value | 409,524 | ||||
Loans with affiliates and unrelated parties | 7,624,614 | 9,011,247 | |||
Less current portion | (7,624,614) | (9,011,247) | |||
Notes payable, net of current portion | $ 200,000 | ||||
Notes Payable Third Parties One [Member] | |||||
Face value of note | 5,000,000 | 5,000,000 | |||
Notes Payable Third Parties Two [Member] | |||||
Face value of note | 2,283,002 | 3,000,000 | |||
Notes Payable Third Parties Three [Member] | |||||
Face value of note | 341,612 | 341,612 | |||
Notes Payable Third Parties Four [Member] | |||||
Face value of note | $ 440,000 |
Notes Payable - Schedule of N37
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) - Notes Payable Third Parties Two [Member] - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Purchase contract amount | $ 3,000,000 | $ 500,000 |
Debt instruments interest rate | 16.00% | 6.00% |
Debt maturity description | September 17, 2017 | July 12, 2015 through July 12, 2016 |
Notes Payable - Schedule of N38
Notes Payable - Schedule of Notes Payable - Related Parties (Details) - USD ($) | Jun. 30, 2017 | Mar. 21, 2017 | Feb. 02, 2017 | Dec. 31, 2016 | Jun. 30, 2016 |
Face value of note | $ 10,850,000 | $ 1,600,000 | |||
Notes payable | $ 200,000 | ||||
Less current portion | 443,500 | 328,500 | |||
Notes Payable Related Parties One [Member] | |||||
Face value of note | 168,500 | 218,500 | |||
Notes Payable Related Parties Two [Member] | |||||
Face value of note | 220,000 | ||||
Notes Payable Related Parties [Member] | |||||
Face value of note | 55,000 | ||||
Notes payable | 443,500 | 328,500 | |||
Less current portion | (443,500) | (328,500) | |||
Total notes payable - related parties, net of current portion | |||||
Notes Payable Related Parties Three [Member] | |||||
Face value of note | $ 110,000 |
Notes Payable - Schedule of N39
Notes Payable - Schedule of Notes Payable - Related Parties (Details) (Parenthetical) - Notes Payable Related Parties One [Member] | 6 Months Ended |
Jun. 30, 2016 | |
Debt instruments interest rate | 6.00% |
Debt instuments maturity date | Feb. 2, 2018 |
Debentures (Details Narrative)
Debentures (Details Narrative) - USD ($) | Jun. 22, 2017 | Mar. 21, 2017 | Feb. 02, 2017 | Mar. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 02, 2017 | Mar. 15, 2017 |
Debt instrument face amount | $ 10,850,000 | $ 1,600,000 | |||||||
Warrants to purchase common stock | 4,453,917 | 100,000 | 29,518 | ||||||
Warrant exercise price | $ 2.58 | ||||||||
Warrant purchase price | $ 1,500,000 | ||||||||
Debt instrument conversion price | $ 2.58 | ||||||||
Proceeds from debt | $ 8,400,000 | $ 11,600,000 | |||||||
Repayment of debt | $ 500,000 | ||||||||
Partial repayment of share, per share | $ 0.75 | ||||||||
Convertible debt | $ 2,500,000 | $ 15,261,724 | 15,261,724 | ||||||
Interest expenses | 400,000 | $ (7,418,722) | |||||||
Stock converted into debt | 2,700,000 | $ 4,611,093 | |||||||
Debenture description | The Debentures are convertible into shares of the Companys common stock (initially at a conversion price of $1.66, which has been adjusted pursuant to the terms of the Debentures to $0.39 due to prices at which the Company has subsequently issued shares of common stock). The Debentures will begin to amortize monthly commencing on the 90th day following the closing date, except for the Exchange Debentures related to the Series H Preferred Stock, which began to amortize monthly on the closing date. On each monthly amortization date, the Company may elect to repay 5% of the original principal amount of Debentures in cash or, in lieu thereof, the conversion price of such Debentures will thereafter be 85% of the volume weighted average price at the time of conversion. | ||||||||
Stock converted into debt, value | 2,700,000 | ||||||||
Amortization of debt discount | $ (2,498,120) | $ (2,087,881) | |||||||
Warrant [Member] | |||||||||
Debt instrument original amount | $ 41,300,000 | ||||||||
Debenture Warrant [Member] | |||||||||
Debenture description | The Company recognized a discount for 100% of the principal value of the Debentures and non-cash interest expense in the amount of $43.7 million in connection with the recognition of these derivative liabilities. | ||||||||
2017 Diamantis NoteMember | |||||||||
Repayment of debt | $ 3,800,000 | ||||||||
Exchange Of Debenture [Member] | |||||||||
Warrants to purchase common stock | 4,871,853 | ||||||||
Debt original issue discount, percentage | 24.00% | ||||||||
Debt instrument maturity date | Mar. 21, 2019 | ||||||||
Debenture [Member] | |||||||||
Debt instrument face amount | $ 1,900,000 | ||||||||
Warrants to purchase common stock | 1,000,000 | ||||||||
Warrant exercise price | $ 0.38 | ||||||||
Debt instrument original amount | $ 15,300,000 | ||||||||
Amortization of debt discount | $ 107,700 | ||||||||
June Debentures [Member] | |||||||||
Debt instrument face amount | $ 1,900,000 | ||||||||
Warrants to purchase common stock | 1,500,000 | 1,500,000 | 500,000 | ||||||
Warrant exercise price | $ 0.39 | ||||||||
June Debentures [Member] | Accredited Investor [Member] | |||||||||
Warrant purchase price | $ 1,800,000 |
Debentures - Schedule of Debent
Debentures - Schedule of Debentures (Details) - USD ($) | Jun. 30, 2017 | Mar. 21, 2017 |
Debt Disclosure [Abstract] | ||
Debentures | $ 15,261,724 | $ 2,500,000 |
Discount on Debentures | (10,271,253) | |
Deferred financing fees | (408,512) | |
Total debentures | 4,581,959 | |
Less current portion | (1,578,028) | |
Debentures, net of current portion | $ 3,003,931 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 6 Months Ended | ||||||||
Jun. 30, 2017 | Jun. 30, 2016 | May 31, 2017 | Mar. 21, 2017 | Mar. 15, 2017 | Mar. 07, 2017 | Feb. 28, 2017 | Feb. 02, 2017 | Jan. 31, 2017 | |
Debt face amount | $ 10,850,000 | $ 1,600,000 | |||||||
Warrant to purchase common stock | 4,453,917 | 29,518 | 100,000 | ||||||
Consulting fee | $ 200,000 | $ 300,000 | |||||||
Director [Member] | |||||||||
Advance from director | $ 3,300,000 | $ 3,300,000 | |||||||
Accrued but unpaid interest | $ 500,000 | $ 500,000 | |||||||
Debt instrument interest rate | 10.00% | 10.00% | |||||||
Mr Diamantis [Member] | |||||||||
Accrued but unpaid interest | $ 500,000 | ||||||||
Debt instrument interest rate | 10.00% | 10.00% | |||||||
Debt face amount | $ 3,800,000 | ||||||||
Warrant to purchase common stock | 250,000 | ||||||||
Due to related party | $ 200,000 | $ 200,000 |
Capital Lease Obligations - Sch
Capital Lease Obligations - Schedule of Capital Leases (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Medical equipment | $ 4,997,025 | $ 4,497,025 |
Less accumulated depreciation | 3,069,139 | (2,809,511) |
Capital lease obligations | $ 1,427,886 | $ 1,687,514 |
Capital Lease Obligations - Agg
Capital Lease Obligations - Aggregate Future Minimum Rentals under Capital Leases (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
2017 (July through December) | $ 712,011 | |
2,018 | 1,427,375 | |
2,019 | 377,919 | |
2,020 | 32,611 | |
Total | 2,549,916 | |
Less interest: | 120,908 | |
Present value of minimum lease payments | 2,429,008 | |
Less current portion of capital lease obligations | 1,365,547 | $ 1,796,053 |
Capital lease obligations, net of current portion | $ 1,063,461 | $ 1,774,121 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Feb. 22, 2017 | Jan. 17, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Mar. 21, 2017 | Mar. 15, 2017 | Mar. 13, 2017 | Feb. 02, 2017 |
Debt converted into share | 4,611,092 | |||||||
Debt converted into share, value | $ 2,700,000 | |||||||
Shares issued to settle notes and warrants | 400,000 | |||||||
Shares issued to settle notes and warrants, value | $ 400,000 | |||||||
Warrants to purchase common stock | 4,453,917 | 29,518 | 100,000 | |||||
Warrants to purchase common stock, value | $ 57,855 | |||||||
Stock-based compensation | 69,230 | $ 353,271 | ||||||
2007 Equity Plan [Member] | ||||||||
Unrecognized compensation cost related to stock options | $ 300,000 | |||||||
Weighted average period | 1 year 1 month 13 days | |||||||
Employee [Member] | ||||||||
Stock issued during period for services | 2,278 | |||||||
Series H Preferred Stock [Member] | ||||||||
Stock issued during period, shares | 7,785 | |||||||
Debt converted into share | 5,556,697 | |||||||
Shares converted into debt | 2,174 | |||||||
Debt converted into share, value | $ 2,200,000 | |||||||
Reserve Stock Split [Member] | ||||||||
Stock issued during period, shares | 7,897 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Stock Option Activity (Details) | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Equity [Abstract] | |
Number of Options Outstanding, beginning balance | shares | 709,025 |
Number of Options Granted | shares | |
Number of Options Expired | shares | |
Number of Options Forfeited | shares | (127,858) |
Number of Options Exercised | shares | |
Number of Options Options Outstanding, ending balance | shares | 581,167 |
Weighted average exercise price, Outstanding beginning | $ 129.43 |
Weighted average exercise price, granted | |
Weighted average exercise price, expired | |
Weighted average exercise price, forfeited | |
Weighted average exercise price, exercised | |
Weighted average exercise price, Outstanding, ending balance | 137.37 |
Weighted average exercise price, Exercisable | $ 147.56 |
Weighted average contractual term, Options Outstanding, beginning balance | 8 years 11 months 4 days |
Weighted average contractual term, Options Outstanding, beginning balance | 8 years 5 months 5 days |
Stockholders' Equity - Schedu47
Stockholders' Equity - Schedule of Warrant Issued Activity (Details) - Warrant [Member] | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Warrants outstanding, beginning balance | shares | 1,407,647 |
Warrants issued | shares | 30,784,193 |
Warrants exchanged for other securities | shares | (96,185) |
Warrants exercised | shares | |
Warrants expired | shares | |
Warrants outstanding, ending balance | shares | 32,095,655 |
Weighted average exercise price, warrants outstanding, beginning balance | $ / shares | $ 11.70 |
Weighted average exercise price, warrants issued | $ / shares | 0.39 |
Weighted average exercise price, Warrants exchanged for other securities | $ / shares | 12.46 |
Weighted average exercise price, Warrants exercised | $ / shares | |
Weighted average exercise price, Warrants expired | $ / shares | |
Weighted average exercise price, warrants outstanding, ending balance | $ / shares | $ 0.85 |
Stockholders' Equity - Schedu48
Stockholders' Equity - Schedule of Anti-Dulutive (Details) - shares | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Antidilutive securities | 44,579,280 | 1,431,397 |
Warrant [Member] | ||
Antidilutive securities | 32,095,655 | 227,819 |
Convertible Preferred Stock [Member] | ||
Antidilutive securities | 153,845 | 398,268 |
Convertible Debt [Member] | ||
Antidilutive securities | 11,748,613 | 230,521 |
Stock Options [Member] | ||
Antidilutive securities | 581,167 | 574,789 |
Supplemental Disclosure of Ca49
Supplemental Disclosure of Cash Flow Information - Schedule of Supplemental Cash Flow Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Supplemental Cash Flow Elements [Abstract] | ||
Cash paid for interest | $ 976,984 | $ 858,741 |
Cash paid for income taxes | 401,313 | |
Exchange of preferred stock for convertible debentures and warrants | 4,490,760 | |
Exchange of convertible debentures for convertible debentures and warrants | 2,464,500 | |
Notes payable settled through issuance of common stock | 440,000 | |
Exchange of Series H Preferred Stock for debentures | 2,174,000 | |
Debentures converted into common stock | 2,651,236 | |
Deemed dividend for trigger of down round provision feature | 11,093,012 | |
Conversions of preferred stock into common stock | $ 7,785,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Jun. 12, 2017 | Feb. 15, 2017 | Feb. 08, 2017 | Feb. 07, 2017 | Jan. 03, 2017 | Sep. 27, 2016 | Feb. 28, 2017 | Dec. 31, 2016 | Feb. 29, 2016 | Feb. 28, 2017 | Jun. 30, 2017 | Mar. 24, 2017 | Dec. 07, 2016 | Sep. 30, 2016 | Jul. 29, 2016 | Mar. 31, 2016 |
Income tax penalties and interest accrued | $ 400,000 | |||||||||||||||
Stockholders' deficit | $ 14,885,896 | $ 17,516,514 | ||||||||||||||
Share price | $ 1 | |||||||||||||||
Reverse stock split | 1-for-8 reverse split | 1-for-30 reverse stock split of the Companys shares of common stock effective on February 22, 2017 | ||||||||||||||
Florida Department of Revenue [Member] | ||||||||||||||||
Settlement payable | $ 300,000 | |||||||||||||||
Income tax penalties and interest paid | 250,000 | |||||||||||||||
Income tax penalties and interest accrued | $ 900,000 | |||||||||||||||
TCS-Florida, L.P [Member] | ||||||||||||||||
Litigation Settlement in judgment | $ 2,600,000 | |||||||||||||||
Payment in settlement of judgment | $ 700,000 | |||||||||||||||
DeLage Landen Financial Services, Inc. [Member] | ||||||||||||||||
Litigation Settlement in judgment | $ 1,000,000 | |||||||||||||||
Implicit interest rate | 4.97% | |||||||||||||||
Epinex Diagnostics Laboratories, Inc. [Member] | ||||||||||||||||
Payment of attorneys’ fees | $ 300,000 | |||||||||||||||
Medytox Solutions, Inc [Member] | Internal Revenue Service (IRS) [Member] | ||||||||||||||||
Settlement payable | $ 100,000 | |||||||||||||||
Income tax penalties and interest paid | $ 5,000,000 | |||||||||||||||
Income tax liability refund | $ 1,900,000 | |||||||||||||||
Settlement Agreement [Member] | Epinex Diagnostics Laboratories, Inc. [Member] | ||||||||||||||||
Settlement payable | $ 200,000 | |||||||||||||||
Stipulation Agreement [Member] | Florida Department of Revenue [Member] | ||||||||||||||||
Monthly installment payment | $ 35,000 | |||||||||||||||
Forbearance Agreement [Member] | TCS-Florida, L.P [Member] | ||||||||||||||||
Monthly installment payment | $ 1,900,000 |
Segment Reporting (Details Narr
Segment Reporting (Details Narrative) | 6 Months Ended |
Jun. 30, 2017Integer | |
Segment Reporting [Abstract] | |
Number of reportable segments | 4 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Reporting (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | ||
Net revenues - External | $ 898,730 | $ 2,565,272 | $ 1,898,265 | $ 4,026,200 | ||
Net revenues - Inter Segment | [1] | 206,167 | 237,993 | 284,493 | 534,341 | |
(Loss) income from operations | (4,257,411) | (4,253,322) | (8,532,209) | (9,825,210) | ||
Depreciation and amortization | 471,954 | 678,141 | 1,056,445 | 1,357,331 | ||
Capital expenditures | 214,147 | 22,354 | 1,305,069 | 15,998 | ||
Total assets | 5,687,319 | 6,482,393 | 5,687,319 | 6,482,393 | $ 6,482,393 | |
Clinical Laboratory Operations [Member] | ||||||
Net revenues - External | 645,386 | 2,240,170 | 1,407,976 | 3,471,072 | ||
Net revenues - Inter Segment | ||||||
(Loss) income from operations | (1,477,754) | (886,541) | (2,770,028) | (3,226,339) | ||
Depreciation and amortization | 419,905 | 548,870 | 854,373 | 1,096,419 | ||
Capital expenditures | 14,473 | 6,000 | ||||
Total assets | 2,195,239 | 3,986,126 | 2,195,239 | 3,986,126 | ||
Supportive Software Solutions [Member] | ||||||
Net revenues - External | 253,344 | 325,102 | 490,289 | 555,128 | ||
Net revenues - Inter Segment | [1] | 206,167 | 237,993 | 284,493 | 534,341 | |
(Loss) income from operations | (342,348) | (1,234,194) | (1,060,894) | (2,547,507) | ||
Depreciation and amortization | 45,421 | 162,059 | 202,984 | 326,487 | ||
Capital expenditures | 7,881 | 9,998 | ||||
Total assets | 1,863,113 | 2,602,428 | 1,863,113 | 2,602,428 | ||
Hospital Operations [Member] | ||||||
Net revenues - External | ||||||
Net revenues - Inter Segment | ||||||
(Loss) income from operations | (553,352) | (1,020,668) | ||||
Depreciation and amortization | 6,609 | 6,609 | ||||
Capital expenditures | 214,147 | 1,305,069 | ||||
Total assets | 1,360,800 | 1,360,800 | ||||
Corporate [Member] | ||||||
Net revenues - External | ||||||
Net revenues - Inter Segment | ||||||
(Loss) income from operations | (1,884,287) | (2,166,251) | (3,688,800) | (4,118,688) | ||
Depreciation and amortization | 349 | 875 | 660 | 1,749 | ||
Capital expenditures | ||||||
Total assets | 2,897,573 | 2,130,191 | 2,897,573 | 2,130,191 | ||
Eliminations [Member] | ||||||
Net revenues - External | ||||||
Net revenues - Inter Segment | ||||||
(Loss) income from operations | 330 | 33,664 | 8,181 | 67,324 | ||
Depreciation and amortization | (330) | (33,663) | (8,181) | (67,324) | ||
Capital expenditures | ||||||
Total assets | (2,696,985) | (2,711,014) | (2,696,985) | (2,711,014) | ||
Decision Support And Informatics [Member] | ||||||
Total assets | 60,000 | 60,000 | ||||
Assets of AMSG Classified As Held For Sale[Member] | ||||||
Total assets | $ 67,579 | $ 414,662 | $ 67,579 | $ 414,662 | ||
[1] | Intersegment revenues are eliminated in consolidation. |
Discontinued Operations - Sched
Discontinued Operations - Schedule of Discontinued Operation of Balance Sheet and Operation Statement (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |||
Cash | $ 1,967 | $ 2,962 | |
Accounts receivable, net | 19,125 | 267,681 | |
Prepaid expenses and other current assets | 22,737 | 67,257 | |
Current assets classified as held for sale | 43,829 | 337,900 | |
Property and equipment, net | 53,012 | ||
Deposits | 23,750 | 23,750 | |
Non-current assets classified as held for sale | 23,750 | 76,762 | |
Accounts payable (includes related parties) | 351,541 | 422,864 | |
Accrued expenses | 1,121,913 | 1,253,117 | |
Income taxes payable | 151,806 | 151,806 | |
Current liabilities classified as held for sale | 1,625,260 | 1,827,787 | |
Non-current liabilities classified as held for sale (derivative liabilities) | $ 26,598 | ||
Revenue from services | 223,104 | $ 906,325 | |
Cost of services | 769 | 131,400 | |
Gross Profit | 222,335 | 774,925 | |
Operating expenses | 905,655 | 2,804,094 | |
Allocated interest expense | 11,706 | ||
Loss from discontinued operations | $ (683,320) | $ (2,040,875) |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Jul. 17, 2017 | Jun. 22, 2017 | Jun. 12, 2017 | Feb. 07, 2017 | Jun. 30, 2017 | Feb. 02, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Cash | $ 27,704 | $ 75,017 | $ 485,241 | $ 8,833,230 | |||||
Reverse stock split | 1-for-8 reverse split | 1-for-30 reverse stock split of the Companys shares of common stock effective on February 22, 2017 | |||||||
Debt conversion of shares | 4,611,092 | ||||||||
Debt conversion price per share | $ 2.58 | ||||||||
Subsequent Event [Member] | |||||||||
Principal amount of original debt | $ 4,136,862 | $ 1,902,700 | |||||||
Debt due date | Oct. 17, 2017 | Sep. 22, 2017 | |||||||
Warrant to purchase of common stock | 2,120,000 | ||||||||
Cash | $ 2,000,000 | ||||||||
Reverse stock split | 1-for-8 reverse split | ||||||||
Debt conversion of shares | 2,392,887 | ||||||||
Debt conversion of shares, value | $ 933,226 | ||||||||
Debt conversion price per share | $ 0.39 | ||||||||
Subsequent Event [Member] | 2007 Equity Plan [Member] | |||||||||
Number of common stock shares issued | 125,000 | ||||||||
Number of common stock shares issued, value | $ 48,750 |