Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 10, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | Rennova Health, Inc. | |
Entity Central Index Key | 931,059 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 55,850,932 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 514,344 | $ 8,833,230 |
Accounts receivable, net | 2,655,132 | 8,149,484 |
Prepaid expenses and other current assets | 771,527 | 1,193,077 |
Income tax refunds receivable | 723,410 | 3,813,066 |
Total current assets | 4,664,413 | 21,988,857 |
Property and equipment, net | 5,053,790 | 7,148,295 |
Deposits | 479,734 | 232,774 |
Total assets | 10,197,937 | 29,369,926 |
Current liabilities: | ||
Accounts payable (includes related parties) | 2,627,238 | 4,360,035 |
Accrued expenses | 3,627,188 | 5,285,455 |
Income taxes payable | 942,433 | 1,398,053 |
Current portion of notes payable | 8,528,193 | 269,031 |
Current portion of notes payable, related party | 1,368,500 | 5,133,888 |
Current portion of capital lease obligations | 1,339,498 | 1,323,708 |
Total current liabilities | 18,433,050 | 17,770,170 |
Other liabilities: | ||
Notes payable, net of current portion | 0 | 2,903,898 |
Capital lease obligations, net of current portion | 1,398,481 | 2,394,171 |
Derivative liabilities | 404,492 | 7,495,486 |
Total liabilities | 20,236,023 | 30,563,725 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $0.01 par value, 500,000,000 shares authorized, 55,160,931 shares issued and outstanding at September 30, 2016, 50,000,000 shares authorized, 14,651,837 shares issued and outstanding at December 31, 2015 | 551,609 | 143,951 |
Additional paid-in-capital | 39,552,927 | 26,688,837 |
Accumulated deficit | (50,142,718) | (28,027,177) |
Total stockholders' deficit | (10,038,086) | (1,193,799) |
Total liabilities and stockholders' deficit | 10,197,937 | 29,369,926 |
Series B Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, 5,000,000 shares authorized: | 0 | 50 |
Series C Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, 5,000,000 shares authorized: | 0 | 90 |
Series E Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, 5,000,000 shares authorized: | 0 | 450 |
Series G Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, 5,000,000 shares authorized: | $ 96 | $ 0 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Preferred stock shares authorized | 5,000,000 | |
Common stock par value | $ .01 | $ .01 |
Common stock shares authorized | 500,000,000 | 50,000,000 |
Common stock shares issued | 55,160,931 | 14,651,837 |
Common stock shares outstanding | 55,160,931 | 14,651,837 |
Series B Preferred Stock [Member] | ||
Preferred stock shares authorized | 5,000 | 5,000 |
Preferred stock par value | $ .01 | $ 0.01 |
Preferred stock shares issued | 0 | 5,000 |
Preferred stock shares outstanding | 0 | 5,000 |
Series C Preferred Stock [Member] | ||
Preferred stock shares authorized | 10,350 | 10,350 |
Preferred stock par value | $ .01 | $ 0.01 |
Preferred stock shares issued | 0 | 9,000 |
Preferred stock shares outstanding | 0 | 9,000 |
Series E Preferred Stock [Member] | ||
Preferred stock shares authorized | 45,000 | 45,000 |
Preferred stock par value | $ .01 | $ 0.01 |
Preferred stock shares issued | 0 | 45,000 |
Preferred stock shares outstanding | 0 | 45,000 |
Series G Preferred Stock [Member] | ||
Preferred stock shares authorized | 14,000 | 0 |
Preferred stock par value | $ .01 | $ 0.01 |
Preferred stock shares issued | 9,611 | 0 |
Preferred stock shares outstanding | 9,611 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues | ||||
Net Revenues | $ 290,004 | $ 5,890,918 | $ 5,222,529 | $ 28,921,351 |
Operating expenses: | ||||
Direct costs of revenue | 336,023 | 1,866,741 | 1,290,326 | 8,566,372 |
General and administrative expenses | 7,044,462 | 6,082,929 | 18,892,835 | 21,118,902 |
Sales and marketing expenses | 570,788 | 784,763 | 2,034,499 | 3,106,551 |
Engineering expenses | 546,525 | 0 | 1,636,702 | 0 |
Bad debt expense | 3,666,707 | 0 | 3,668,092 | 99,754 |
Depreciation and amortization | 702,275 | 728,572 | 2,131,232 | 1,979,006 |
Total operating expenses | 12,866,780 | 9,463,005 | 29,653,686 | 34,870,585 |
Loss from operations | (12,576,776) | (3,572,087) | (24,431,157) | (5,949,234) |
Other income (expense): | ||||
Other income | 127,008 | 0 | 227,020 | 23 |
Change in fair value of derivative instruments | 2,087,041 | 190,000 | 6,813,701 | 190,000 |
(Loss) gain on legal settlement | 0 | 0 | (17,652) | 275,028 |
Interest expense | (1,646,712) | (547,378) | (4,707,453) | (1,594,921) |
Total other (expense) income | 567,337 | (357,378) | 2,315,616 | (1,129,870) |
Loss before income taxes | (12,009,439) | (3,929,465) | (22,115,541) | (7,079,104) |
Income tax benefit | 0 | (2,678,777) | 0 | (2,579,977) |
Net loss | (12,009,439) | (1,250,688) | (22,115,541) | (4,499,127) |
Preferred stock dividends | 0 | 268,927 | 0 | 1,589,321 |
Net loss attributable to common stockholders | $ (12,009,439) | $ (1,519,615) | $ (22,115,541) | $ (6,088,448) |
Net loss per common share: Basic and diluted | $ (.29) | $ (.05) | $ (.94) | $ (.21) |
Weighted average number of shares outstanding during the period - Basic and diluted | 41,313,448 | 30,955,483 | 23,574,845 | 29,064,792 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Stockholders' Deficit - 9 months ended Sep. 30, 2016 - USD ($) | Series B Preferred Stock | Series C Preferred Stock | Series E Preferred Stock | Series G Preferred Stock | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Total |
Beginning balance, shares at Dec. 31, 2015 | 5,000 | 9,000 | 45,000 | 0 | 59,000 | ||||
Beginning balance, value at Dec. 31, 2015 | $ 50 | $ 90 | $ 450 | $ 590 | $ 143,951 | $ 26,688,837 | $ (28,027,177) | $ (1,193,799) | |
Conversion of preferred stock into common stock, shares converted | (5,000) | (260) | (4,182) | (9,442) | |||||
Conversion of preferred stock into common stock, converted share value | $ (50) | $ (3) | $ (42) | $ (95) | |||||
Conversion of preferred stock into common stock, common stock issued | 15,194,593 | ||||||||
Conversion of preferred stock into common stock, stock issued value | $ 154,514 | (154,419) | |||||||
Cashless exercise of warrants, shares | 48,783 | ||||||||
Cashless exercise of warrants, value | $ 488 | (488) | |||||||
Shares issued in adjustment of prior conversion of preferred stock, shares | 50,606 | ||||||||
Shares issued in adjustment of prior conversion of preferred stock, value | $ 506 | (506) | |||||||
Common shares cancelled, shares | (40,964) | ||||||||
Common shares cancelled, value | $ (410) | 410 | |||||||
Issuance of shares for services, shares | 13,300 | ||||||||
Issuance of shares for services, value | $ 133 | 9,177 | 9,310 | ||||||
Exchange of Series C Preferred Stock and warrants for Series G Preferred Stock and warrants, shares exchanged | (8,740) | ||||||||
Exchange of Series C Preferred Stock and warrants for Series G Preferred Stock and warrants, value | $ (87) | ||||||||
Exchange of Series C Preferred Stock and warrants for Series G Preferred Stock and warrants. shares issued | 13,793 | 5,053 | |||||||
Exchange of Series C Preferred Stock and warrants for Series G Preferred Stock and warrants, shares issued value | $ 138 | $ 51 | (51) | ||||||
Common stock and warrants issued for cash, shares issued | 19,115,000 | ||||||||
Common stock and warrants issued for cash | $ 191,150 | 7,329,886 | 7,521,036 | ||||||
Conversion of related Conversion of related party liabilities into party liabilities into common stock, shares | 5,544,441 | ||||||||
Conversion of related Conversion of related party liabilities into party liabilities into common stock, value | $ 55,444 | 2,076,385 | 2,131,829 | ||||||
Common stock granted to employees, shares | 583,335 | ||||||||
Common stock granted to employees, value | $ 5,833 | 169,167 | 175,000 | ||||||
Cancellation of Series E Preferred Stock, shares | (45,000) | (45,000) | |||||||
Cancellation of Series E Preferred Stock, value | $ (450) | $ (450) | 450 | ||||||
Reclassification of derivative liabilities | 2,770,511 | 2,770,511 | |||||||
Warrants and beneficial conversion features related to the issuance of convertible notes | 394,500 | 394,500 | |||||||
Issuance of warrants not qualifying for equity treatment | (440,097) | (440,097) | |||||||
Stock-based compensation | 709,165 | 709,165 | |||||||
Net loss | (22,115,541) | (22,115,541) | |||||||
Ending balance, shares at Sep. 30, 2016 | 0 | 0 | 0 | 9,611 | 9,611 | 55,160,931 | |||
Ending balance, value at Sep. 30, 2016 | $ 0 | $ 0 | $ 0 | $ 96 | $ 96 | $ 551,609 | $ 39,552,927 | $ (50,142,718) | $ (10,038,086) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows used in operating activities: | ||
Net loss | $ (22,115,541) | $ (4,499,127) |
Adjustments to reconcile net loss to net cash used in operations: | ||
Depreciation and amortization | 2,131,232 | 1,979,006 |
Non-cash gain on derivative instruments | (6,813,701) | (190,000) |
Stock issued for services | 9,310 | 2,905,001 |
Stock-based compensation | 884,165 | 474,604 |
Bad debts | 3,668,092 | 16,316,784 |
Accretion of beneficial conversion feature and debt discount | 2,474,497 | 1,041,042 |
Gain on extinguishment of debt | (100,000) | 0 |
Gain on disposal of property and equipment | (100,000) | 0 |
Gain on legal settlement | 0 | (275,028) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,826,261 | (21,627,221) |
Prepaid expenses and other current assets | 171,550 | (674,852) |
Security deposits | 3,040 | (42,122) |
Accounts payable | (1,782,266) | 1,556,626 |
Accrued expenses | 500,881 | 1,576,688 |
Income tax assets and liabilities | 2,202,206 | (4,509,565) |
Deferred tax assets and liabilities | 0 | 90,321 |
Net cash used in operating activities | (17,040,274) | (5,877,843) |
Cash flows provided by (used in) investing activities: | ||
Purchase of property and equipment | (36,727) | (359,690) |
Proceeds from the sale of property and equipment | 100,000 | 0 |
Net cash provided by (used in) investing activities | 63,273 | (359,690) |
Cash flows provided by financing activities: | ||
Dividends on Series B preferred stock | 0 | (1,589,321) |
Proceeds from the issuance of common stock and warrants, net of offering costs | 7,521,036 | 0 |
Proceeds from issuance of notes payable, related party | 3,000,000 | 3,530,000 |
Proceeds from issuance of notes payable | 5,394,500 | 3,000,000 |
Payments on notes payable, related party | (6,000,000) | (57,500) |
Payments on capital lease obligations | (827,421) | (751,586) |
Proceeds from related party advances | 5,285,000 | 0 |
Payments on related party advances | (5,715,000) | 0 |
Net cash provided by financing activities | 8,658,115 | 4,131,593 |
Net decrease in cash | (8,318,886) | (2,105,940) |
Cash at beginning of period | 8,833,230 | 2,406,246 |
Cash at end of period | $ 514,344 | $ 300,306 |
1. Organization and Basis of Pr
1. Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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, which includes Electronic Health Records (“EHR”), Medical Billing Services and Laboratory Information Services (“LIS”) and (iii) decision support and informatics operations. Merger between the Company and Medytox Solutions, Inc. On November 2, 2015, pursuant to the terms of the Agreement and Plan of Merger, dated as of April 15, 2015, by and among the Company, CollabRx Merger Sub, Inc. (“Merger Sub”), a direct wholly-owned subsidiary of the Company formed for the purpose of the merger, and Medytox Solutions, Inc. (“Medytox”), Merger Sub merged with and into Medytox, with Medytox as the surviving company and a direct, wholly-owned subsidiary of the Company (the “Merger”). Prior to closing, the Company amended its certificate of incorporation to effect a 1-for-10 reverse stock split and to change its name from CollabRx, Inc. to Rennova Health, Inc. In connection with the Merger, (i) each share of common stock of Medytox was converted into the right to receive approximately 0.4096 shares of common stock of the Company, (ii) each share of Series B Preferred Stock of Medytox was converted into the right to receive one share of Series B Convertible Preferred Stock of the Company, and (iii) each share of Series E Convertible Preferred Stock of Medytox was converted into the right to receive one share of Series E Convertible Preferred Stock of the Company. Holders of Company equity prior to the closing of the Merger (including all outstanding Company common stock and all restricted stock units, options and warrants exercisable for shares of Company common stock) held approximately 10% of the Company's common stock immediately following the closing of the Merger, and holders of Medytox equity prior to the closing of the Merger (including all outstanding Medytox common stock and all outstanding options exercisable for shares of Medytox common stock, but less certain options that were cancelled upon the closing pursuant to agreements between Medytox and such optionees) held approximately 90% of the Company's common stock immediately following the closing of the Merger, in each case on a fully diluted basis, provided, however, outstanding shares of the newly designated Series B Convertible Preferred Stock and Series E Convertible Preferred Stock, certain outstanding convertible promissory notes exercisable for Company common stock after the closing and certain option grants expected to be made following the closing of the Merger are excluded from such ownership percentages. The Merger resulted in a change in control of the Company, and as a result this transaction was accounted for as a reverse merger and recapitalization in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and, as such, the financial statements presented prior to November 2, 2015 are those of Medytox and the financial statements presented after November 2, 2015 reflect the operations of the combined company. All common share amounts prior to November 2, 2015 have been retroactively restated to reflect the 1-for-10 reverse stock split and the conversion ratio of Medytox common stock to common stock of the Company as a result of the Merger. On November 3, 2015, the common stock of Rennova Health, Inc. commenced trading on the Nasdaq Capital Market under the symbol “RNVA.” Prior to that date, the Company’s common stock was listed on the NASDAQ Capital Market under the symbol “CLRX.” Immediately after the consummation of the Merger, the Company had 13,750,010 shares of common stock, 5,000 shares of Series B Convertible Preferred Stock and 45,000 shares of Series E Convertible Preferred Stock issued and outstanding. Basis of Presentation The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the 2015 audited annual financial statements included in the Company’s Annual Report on Form 10-K/A, filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 17, 2016. 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 nine months ended September 30, 2016 and 2015, 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. 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 recently accumulated significant losses and has negative cash flows from operations, and at September 30, 2016 had a working capital deficit and stockholders’ deficit of $13.8 million and $10.0 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 and the Company has not made the required payments under a secured debenture with an outstanding principal amount of $3.0 million, for which the Company currently does not have the financial resources to satisfy (see notes 4 and 13). Management's plans with respect to alleviating the adverse financial conditions which raise substantial doubt about the Company’s ability to continue as a going concern include increasing the volume of samples processed by its laboratories and the number of customers for its supportive software solutions, as well as raising additional funds in the capital markets. In addition, the Company has undertaken additional cost saving measures, including personnel reductions and a reorganization of the Company’s sales force under the direction of the new Chief Executive Officer of the Company’s Medytox Medical Marketing & Sales, Inc. subsidiary. No conclusion can be drawn at this time about the ultimate efficacy of these plans of action. On March 31, 2016, the Company received proceeds of $5.0 million from pledging certain of its accounts receivable as collateral to a prepaid forward purchase contract (see note 4). On July 19, 2016, the Company closed a public offering of its equity securities and received net proceeds of approximately $7.5 million (see note 7). In addition, in September of 2016 the Company received an income tax refund in the amount of $1.8 million and received net proceeds from the sale of convertible notes in the amount of $0.4 million. There can be no assurance that the Company will be able to achieve its business plans, raise any additional capital or secure additional financing, if necessary, to achieve its current operating plan. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraphs and eventually regain profitability. 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. |
2. Accounts Receivable
2. Accounts Receivable | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts receivable at September 30, 2016 and December 31, 2015 consisted of the following: September 30, December 31, 2016 2015 Accounts receivable - clinical laboratory operations $ 86,006,817 $ 105,332,339 Accounts receivable - supportive software solutions 587,731 569,351 Total accounts receivable 86,594,548 105,901,690 Less: Allowance for discounts (80,098,203 ) (97,577,130 ) Allowance for bad debts (3,841,213 ) (175,076 ) Accounts receivable, net $ 2,655,132 $ 8,149,484 During the three months ended September 30, 2016, the Company identified additional accounts receivable related to its Clinical Laboratory Operations business segment that were deemed uncollectible. The primary factors in rendering these receivables uncollectible were the Company’s failure to obtain preauthorization from the third party payer prior to rendering services and the lack of an existing preferred provider contract with the third party payer. As a result, the Company recorded a charge of $3.5 million related to the Company’s inability to collect on these receivables, which is reflected in bad debt expense in the accompanying consolidated statements of operations. |
3. Property and Equipment
3. Property and Equipment | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Long-Lived Assets | Property and equipment at September 30, 2016 and December 31, 2015 consisted of the following: September 30, December 31, 2016 2015 Medical equipment $ 922,551 $ 991,903 Equipment 577,317 547,555 Equipment under capital leases 5,043,095 5,663,332 Furniture 561,688 560,400 Leasehold improvements 1,776,957 1,760,125 Vehicles 196,534 196,534 Computer equipment 753,225 661,234 Software 1,845,054 1,878,848 11,676,421 12,259,931 Less accumulated depreciation (6,622,631 ) (5,111,636 ) Property and equipment, net $ 5,053,790 $ 7,148,295 Depreciation expense on property and equipment was $0.7 million for the three months ended September 30, 2016 and 2015, and $2.1 million and $2.0 million for the nine months ended September 30, 2016 and 2015, 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 three and nine months ended September 30, 2016 and 2015. |
4. Notes Payable
4. Notes Payable | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable | The Company and its subsidiaries are party to a number of loans with affiliates and unrelated parties. At September 30, 2016 and December 31, 2015, notes payable consisted of the following: Notes Payable – Third Parties September 30, 2016 December 31, 2015 Loan payable under prepaid forward purchase contract $ 5,000,000 $ – Loan payable to TCA Global Master Fund, LP ("TCA") in the principal amount of $3,000,000 at 16% interest, with interest only payments through September 11, 2016 (the "TCA Debenture"). Principal and interest payments due monthly from October 11, 2016 through September 11, 2017 3,000,000 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"). Principal and interest payments are made annually from July 12, 2015 through July 12, 2017 341,612 341,612 Loan payable to former shareholder of Epinex Diagnostics Laboratories, Inc. in the original principal amount of $400,000, at 0% interest, with principal payments due in periodic installments of $100,000 from November 26, 2014 through February 26, 2016 (the "Epinex Note") – 100,000 Other convertible notes payable 440,000 – Unamortized discount on TCA Debenture (252,879 ) (453,025 ) Unamortized discount on Epinex Note – (1,775 ) Unamortized discount on other convertible notes (403,536 ) – Derivative liability associated with the TCA Debenture, at fair value 402,996 186,117 8,528,193 3,172,929 Less current portion (8,528,193 ) (269,031 ) Notes payable - third parties, net of current portion $ – $ 2,903,898 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 are convertible into shares of the Company’s common stock at a conversion price of $0.25 per share. In conjunction with the sale of the September 2016 Notes, the Company issued warrants to purchase an aggregate of 2 million shares of the Company’s common stock at an exercise price of $0.40 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 is being accreted through the notes’ maturity date of March 15, 2017. The Company has determined that the warrants issued in this transaction do not qualify for equity treatment in the Company’s consolidated balance sheet. As a result, the Company recognized a derivative liability associated with these warrants in the amount of $0.3 million as of September 30, 2016. 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 $4.3 million on the Company’s balance sheet as of March 31, 2016. As of September 30, 2016, the carrying value of these receivables was $0.2 million. 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 is required to pay the difference. Christopher Diamantis, a director of the Company, guaranteed the Company's payment obligation of up to $6.0 million. For providing the guarantee, and to the extent that the counterparty receives amounts payable under clause (ii) above exceeding $5.0 million, Mr. Diamantis will be paid a fee by the counterparty equal to the amount by which the amount received under clause (ii) above exceeds $5.0 million ($250,000 or $500,000, depending on the timing of payment). In addition, the Company agreed to pay Mr. Diamantis $0.5 million in connection with his providing the guarantee. This amount was settled in August of 2016 with the issuance of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock (see note 5). The Company did not make the monthly principal and interest payments due under the TCA Debenture for October, 2016 and November, 2016, and currently does not have the financial resources to satisfy this obligation. The Company is currently negotiating a forbearance agreement with the lender. The Company had been negotiating with the holders of the Tegal Notes to exchange their notes for equity securities of the Company. In connection with such negotiations, the Company did not make the principal payments that were due on July 12, 2016. As a result, the entire amounts outstanding as of September 30, 2016 are reflected in current liabilities in the accompanying consolidated financial statements. The Company and the holders of the Tegal Notes have not reached an agreement on an exchange and on October 14, 2016 the Company received a letter from the holders demanding payment of the amounts that were due on July 12, 2016, and that the holders reserved the right to declare an event of default under the terms of the notes in the event the amounts due were not paid. To date, the Company has not received further communication from the holders of the Tegal Notes and the entire amount due remains outstanding. Notes Payable – Related Parties September 30, 2016 December 31, 2015 Convertible debenture dated December 31, 2014 which bears interest at 10% per annum and was due December 31, 2016 (the "D&D Debenture"). The lender, D&D Funding II, LLC, had the option to convert the note into the Company's common stock at a 25% discount to the average trading price (as defined in the note agreement) for ten consecutive trading days prior to the conversion date $ – $ 3,000,000 Loan payable to Alcimede LLC, bearing interest at 6% per annum, with all principal and interest due on February 2, 2017 218,500 500,000 Loan payable to Christopher Diamantis 500,000 1,600,000 Other advances from related parties 650,000 – Unamortized discount on D&D Debenture – (2,236,112 ) Derivative liabilities associated with the D&D Debenture, at fair value – 2,270,000 Total notes payable, related parties $ 1,368,500 $ 5,133,888 On December 31, 2014, the Company borrowed $3.0 million from D&D Funding II, LLC (“D&D”) and issued the D&D Debenture. Christopher Diamantis, a director of the Company, is the manager and 50% owner of D&D. In January 2016, the Company temporarily repaid the $3.0 million due under the D&D Debenture. In addition to the principal amount, the Company paid $0.3 million in cash for interest for 2015. In March 2016, the Company re-borrowed 100% of the principal amount repaid in January 2016, repaid $2.25 million in April 2016 using the proceeds from the accounts receivable pledge agreement described above, and repaid the remaining $750,000 in July 2016. The D&D Debenture was convertible into the Company’s Common Stock at a 25% discount to the trailing ten-day average closing price at any time prior to the repayment. In the event of conversion, the holder of the D&D Debenture was also entitled to receive a number of warrants to purchase the Company’s Common Stock equal to the number of shares issued upon conversion with exercise prices equal to the trailing ten-day average closing price of our Common Stock. These two features are derivative instruments that are re-valued quarterly and are reflected in the table above. As a result of the repayment of the D&D Debenture in 2016, the associated derivative liability has been reclassified into stockholders’ equity. 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. 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 February 2016, Alcimede agreed to extend the maturity date of the loan to February 2, 2017. In August of 2016, $0.3 million was repaid by the Company through the issuance of shares of common stock (see note 5), and the remaining balance due on this loan as of September 30, 2016 was $0.2 million. In the fourth quarter of 2015, the Company borrowed $1.6 million from Mr. Diamantis, which was due January 7, 2016. In January 2016, the Company repaid the $1.6 million due Mr. Diamantis, along with $0.1 million in cash for interest. During the nine months ended September 30, 2016, the Company received additional short-term advances from Mr. Diamantis aggregating to $4.2 million, $3.7 million of which was repaid during the period. In connection with these advances, the Company agreed to pay Mr. Diamantis interest in the amount of $0.4 million, which is reflected in accrued expenses in the accompanying consolidated balance sheet as of September 30, 2016. Also during the nine months ended September 30, 2016, the Company received short-term advances from two principal stockholders aggregating to approximately $1.0 million, of which approximately $0.4 million was repaid during the period. These advances are payable on demand. |
5. Related Party Transactions
5. Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | In addition to the transactions discussed in note 4 and note 7, the Company had the following related party transactions during the nine months ended September 30, 2016 and 2015: Alcimede billed the Company $0.3 million for consulting fees pursuant to a consulting agreement for each of the nine months ended September 30, 2016 and 2015. During the second quarter of 2016, the Company received a short-term advance from Jason Adams, the Company’s then Chief Financial Officer, in the amount of $50,000, all of which was repaid during the second quarter. On August 1, 2015, Medytox entered into a non-exclusive consulting agreement with Monarch Capital, LLC ("Monarch"). Michael Goldberg, at the time a director of Medytox and currently a director of the Company, is the Managing Director of Monarch. Under this agreement, Monarch provides business and financial advice. The original term of the agreement was through August 31, 2016, and is subject to automatic renewal for an additional one year unless Medytox provides the consultant with 180 days’ prior written notice of its intent not to renew. The agreement has been renewed for an additional year. Monarch billed the Company $0.2 million and $15,000 for consulting fees pursuant to this agreement for the nine months ended September 30, 2016 and 2015, respectively. In August 2016, the Company exchanged an aggregate of $2.1 million of indebtedness and other obligations to various related parties for an aggregate of 5,544,441 shares of common stock and warrants to purchase 3,123,313 shares of the Company’s common stock. The warrants issued have an exercise price of $0.45 per share, are immediately exercisable and have a five-year term. The issuance of the shares of common stock and warrants was exempt from the registration requirements of the Securities Act of 1933, as amended, in accordance with Section 4(a)(2) thereof, as a transaction by an issuer not involving any public offering. On June 30, 2015, the Company issued 200,000 shares of common stock to SS International Consulting Ltd., of which a former director of the Company is the sole manager, pursuant to a consulting contract. The foregoing transactions were completed at arm’s length at values commensurate with those of independent third parties. |
6. Capital Lease Obligations
6. Capital Lease Obligations | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Capital Lease Obligations | The Company leases various assets under capital leases expiring through 2020 as follows: September 30, December 31, 2016 2015 Medical equipment $ 5,043,095 $ 5,663,332 Less accumulated depreciation (2,480,726 ) (2,093,920 ) Net $ 2,562,369 $ 3,569,412 Aggregate future minimum rentals under capital leases are as follows: December 31, 2016 $ 399,522 2017 1,432,542 2018 845,330 2019 285,199 2020 32,611 Total 2,995,204 Less interest 257,225 Present value of minimum lease payments 2,737,979 Less current portion of capital lease obligations 1,339,498 Capital lease obligations, net of current portion $ 1,398,481 |
7. Stockholders' Equity
7. Stockholders' Equity | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | Preferred Stock During the nine months ended September 30, 2015, the former Medytox Series B preferred shareholders earned dividends totaling $1.6 million. At September 30, 2016 and December 31, 2015, accrued dividends of $0.1 million and $2.1 million, respectively, were included in accrued expenses. In conjunction with the Merger, all outstanding Medytox Series B preferred shares were cancelled in exchange for shares of Rennova Series B Convertible Preferred Stock (the “Series B Preferred Stock”), which were not entitled to receive dividends unless dividends are declared on the Company’s common stock. On September 6, 2016, all of the outstanding shares of Series B Preferred Stock were converted into an aggregate of 5,733,945 shares of the Company’s common stock, in accordance with the terms of the Series B Preferred Stock. On August 26, 2016, in accordance with the terms of a stock purchase agreement between the Company and Epinex Diagnostics, Inc. (“Epinex Diagnostics”), the Company cancelled the 45,000 shares of its Series E Preferred Stock that had previously been issued to Epinex Diagnostics. Between January 1, 2016 and July 10, 2016, holders of the Company’s Series C Convertible Preferred Stock (the “Series C Preferred Stock”) converted a total of 260 shares of Series C Preferred Stock into 167,743 shares of common stock. On July 11, 2016, the Company entered into Exchange Agreements with the holders of the Series C Preferred Stock and the holders of the Company’s 6,451,613 warrants to purchase shares of common stock issued December 30, 2015 (the “December 2015 Warrants”), to exchange such securities for shares of newly-authorized Series G Convertible Preferred Stock with a stated value of $1,000 per share (the “Series G Preferred Stock”) and new warrants to purchase shares of common stock (the “Exchange”). The Exchange closed on July 19, 2016 in conjunction with the public offering discussed below, and the outstanding 8,740 shares of Series C Preferred Stock and the December 2015 Warrants were exchanged for 13,793 shares of Series G Preferred Stock and new warrants to purchase 10,249,517 shares of the Company’s common stock (the “Exchange Warrants”). On July 6, 2016, stockholders representing approximately 74% of the voting power of the Company approved the Exchange. The Exchange was made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 3(a)(9) thereof based on the representations of the holders. No commission or other remuneration was paid or given directly or indirectly for soliciting the Exchange. The Series G Preferred Stock is convertible into common stock at the stated value divided by $0.45. The exercise price of the Exchange Warrants is $0.45 per share. No gain or loss was recognized by the Company as result of the Exchange, however the Company did record a gain on the change in fair value of the December 2015 Warrants of $1.7 million in July 2016. Subsequent to the closing of the Exchange through September 30, 2016, 4,182 shares of Series G Preferred Stock were converted into 9,292,905 shares of the Company’s common stock. Common Stock On March 9, 2016, the Company filed an amendment to its certificate of incorporation to increase the number of shares of common stock that the Company is authorized to issue from 50 million to 500 million. During the nine months ended September 30, 2016, the Company issued an aggregate of 13,300 shares of its common stock to a consultant for services. The Company recognized $9,310 in compensation costs associated with these issuances. Also during the nine months ended September 30, 2016, the Company issued 48,783 shares of common stock for the cashless exercise of outstanding warrants, issued 50,606 shares of common stock as an adjustment to previously converted preferred stock and cancelled 40,964 shares of common stock previously issued to an employee. On July 17, 2016, the Company issued an aggregate of 583,335 shares of common stock to three of its executive officers as compensation, and granted 83,334 shares of restricted common stock to an employee which will vest over a period of six months from the date of grant and have yet to be issued. The Company recognized compensation cost in the amount of $0.2 million in connection with the foregoing grants, which were issued under the 2007 Equity Plan as defined below. During the nine months ended September 30, 2015, the Company recognized $2.9 million in compensation expense related to the issuance of Medytox common stock to employees and consultants. On July 19, 2016, the Company closed a public offering of its equity securities whereby the Company issued 19,115,000 shares of its common stock and warrants to purchase an additional 19,115,000 shares of its common stock and received net proceeds of approximately $7.5 million. In conjunction with this offering, the Company also issued an additional 303,633 warrants to cover over-allotments. The proceeds were used for working capital and general corporate purposes, continued development of new diagnostics processes and methodologies, continued development, roll out and implementation of EHR and Revenue Cycle Management services, acquisitions and expansions of the Company’s business and the repayment of certain related party notes and advances. 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 CollabRx. 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. On May 2, 2016, the Company granted options to employees, directors and consultants to purchase an aggregate of 15,643,000 shares of the Company’s common stock under the 2007 Equity Plan. On July 17, 2016, the Company granted options to purchase an additional 5,155,500 shares of common stock. The Company recorded compensation expense in the amount of $0.7 million during the nine months ended September 30, 2016 in connection with these grants. During the nine months ended September 30, 2015, the Company recorded approximately $0.5 million of compensation expense related to outstanding options to purchase Medytox common stock. These amounts are reflected in General and administrative expenses in the accompanying consolidated statements of operations. The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2016: Number of options Weighted average exercise price Balance at December 31, 2015 1,600,674 $ 7.73 Options granted during the period 20,798,500 $ 3.95 Options exercised during the period – $ – Options forfeited during the period (200,000 ) $ 1.00 Options expired during the period – $ – Options outstanding at September 30, 2016 22,199,174 $ 4.25 Options exercisable at September 30, 2016 16,199,174 $ 5.58 The Company’s stock options are measured at fair value on the date of grant, and compensation expense is recorded over the requisite service period. The options granted during the nine months ended September 30, 2016 were valued using a binomial option-pricing model using the following assumptions: Expected term 9.89 years Expected volatility 168% Risk free interest rate 1.88% Dividend yield 0% As of September 30, 2016, the Company had approximately $0.4 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 1.59 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 nine months ended September 30, 2016: Number of warrants Weighted average exercise price Balance at December 31, 2015 6,898,560 $ 1.83 Cashless exercises (92,348 ) $ 0.23 Exchange of December 30, 2015 warrants (6,451,613 ) $ 1.94 Exchange Warrants issued 10,249,517 $ 0.45 Warrants issued during the period 24,541,946 $ 0.45 Balance at September 30, 2016 35,146,062 $ 0.44 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 three and nine months ended September 30, 2016 and 2015, 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 September 30, 2016 and 2015, the following potential common stock equivalents were excluded from the calculation of diluted loss per share as their effect was anti-dilutive: September 30, September 30, 2016 2015 Stock options outstanding 22,199,174 23,830,000 Warrants outstanding 35,146,062 – Convertible debt 1,760,000 5,378,151 Convertible preferred stock 21,358,222 257,143 Total 80,463,458 29,465,294 |
8. Income Taxes
8. Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The Company recognized no income tax expense or benefit for the nine months ended September 30, 2016. The Company recognized an income tax benefit of $2.6 million for the nine months ended September 30, 2015. The Company applies a “more likely than not” threshold to the recognition and nonrecognition of tax positions. A change in judgment related to prior years’ tax positions is recognized in the quarter of such change. The Company had no reserve for uncertain tax positions as of September 30, 2016 or December 31, 2015. In September of 2016 the Company received a refund of federal income taxes in the amount of $1.8 million related to the carry back of net operating losses generated in fiscal 2015 to the 2014 and 2013 tax years. The amount of the refund reflects penalties and interest in the amount of $1.2 million, of which $0.7 million is reflected in general and administrative expenses. |
9. Supplemental Disclosure of C
9. Supplemental Disclosure of Cash Flow Information | 9 Months Ended |
Sep. 30, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Disclosure of Cash Flow Information | Nine Months Ended September 30, 2016 2015 Cash paid for interest $ 1,237,622 $ 222,898 Cash paid for income taxes $ – $ 1,853,408 Non-cash investing and financing activities: Accrued liabilities settled through the issuance of common stock and warrants $ 2,131,829 $ – Exercise of stock options as reduction of notes payable, related party $ – $ (2,500,000 ) Assets acquired through capital leases $ – $ 1,597,063 Acquisition of noncontrolling interest in Biohealth Medical Laboratory, Inc.: Deposits on acquisition $ – $ 259,875 Goodwill $ – $ (138,871 ) Noncontrolling interest $ – $ (121,004 ) |
10. Commitments and Contingenci
10. Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
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 February 2016, the Company received notice that the Internal Revenue Service had placed a lien against Medytox Solutions, Inc. and its subsidiaries relating to unpaid 2014 taxes due, plus penalties and interest, totaling $4,964,020. The Company paid $100,000 toward its 2014 tax liability in March 2016. The Company filed its 2015 Federal tax return on March 15, 2016 and the accompanying election to carryback the reported net operating losses was filed in April 2016. On August 24, 2016, the lien was released. Potential De-Listing of the Company’s Stock On March 16, 2016, 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 “Bid Price Rule”). In accordance with Nasdaq Rule 5810(c)(3)(A), the Company had 180 calendar days, or until September 12, 2016, to regain compliance. On September 13, 2016, Nasdaq granted the Company an additional 180-day extension, or until March 13, 2017, to regain compliance. If at any time before March 17, 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 Bid Price Rule. Pending Acquisition On July 19, 2016, the Company purchased all of the debt and equity interests in Genomas, Inc. (“Genomas”) held by Hartford Healthcare Corporation, consisting of 500,000 shares of Series A Preferred Stock of Genomas, 345,000 shares of Series B Preferred Stock of Genomas, an aggregate of approximately $1.5 million of Genomas notes payable to Hartford Healthcare Corporation and certain rights to and license participation in technology that is used by Genomas (the “Genomas Assets”). Genomas is a biomedical company that develops PhyzioType Systems for DNA-guided management and prescription of drugs used to treat mental illness, pain, heart disease, and diabetes. The purchase price for the Genomas Assets was $250,000 in cash. The Genomas preferred stock acquired in this transaction represents approximately 15% of the outstanding equity of Genomas. The Company has entered into a definitive agreement, dated as of September 29, 2016, to acquire the remaining equity interests in Genomas for 1,750,000 shares of the Company’s newly created Series F Convertible Preferred Stock and the assumption of approximately $0.8 million of liabilities. Closing of the acquisition remains subject to, among other things, receipt of regulatory and licensure approvals as well as other customary closing conditions. The Company expects the acquisition to close prior to December 31, 2016. |
11. Segment Information
11. Segment Information | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Reporting | 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 three reportable business segments: · Clinical Laboratory Operations · Supportive Software Solutions · Decision Support and Informatics 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/A for the year ended December 31, 2015. Selected financial information for the Company’s operating segments is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net revenues - External Clinical Laboratory Operations $ 169,649 $ 5,972,121 $ 4,146,949 $ 28,396,875 Supportive Software Solutions 50,447 (81,203 ) 605,575 524,476 Decision Support and Informatics 69,908 – 470,005 – $ 290,004 $ 5,890,918 $ 5,222,529 $ 28,921,351 Net revenues - Intersegment Supportive Software Solutions 502,055 743,706 1,036,396 1,572,443 $ 502,055 $ 743,706 $ 1,036,396 $ 1,572,443 (Loss) income from operations Clinical Laboratory Operations $ (7,583,131 ) $ (218,517 ) $ (11,281,361 ) $ 6,138,369 Supportive Software Solutions (1,253,386 ) (1,478,594 ) (3,800,893 ) (4,198,856 ) Decision Support and Informatics (832,965 ) – (2,390,245 ) – Corporate (2,940,956 ) (1,874,976 ) (7,059,644 ) (7,888,747 ) Eliminations 33,662 – 100,986 – $ (12,576,776 ) $ (3,572,087 ) $ (24,431,157 ) $ (5,949,234 ) Depreciation and amortization Clinical Laboratory Operations $ 562,929 $ 593,965 $ 1,706,164 $ 1,562,314 Supportive Software Solutions 163,749 163,299 490,236 499,162 Decision Support and Informatics 8,514 – 33,324 – Corporate 745 – 2,494 – Eliminations (33,662 ) (28,692 ) (100,986 ) (82,470 ) $ 702,275 $ 728,572 $ 2,131,232 $ 1,979,006 Capital expenditures Clinical Laboratory Operations $ – $ 380,196 $ 26,729 $ 363,138 Supportive Software Solutions – 9,554 9,998 61,552 Eliminations – (65,000 ) – (65,000 ) $ – $ 324,750 $ 36,727 $ 359,690 September 30, 2016 December 31, 2015 Total assets Clinical Laboratory Operations $ 7,403,965 $ 15,152,583 Supportive Software Solutions 2,199,119 2,896,473 Decision Support and Informatics 213,465 4,307,053 Corporate 3,209,233 14,109,337 Eliminations (2,827,845 ) (7,095,520 ) $ 10,197,937 $ 29,369,926 |
12. Recently Issued Accounting
12. Recently Issued Accounting Standards | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Issued Accounting Standards | The following table provides a brief description of recently issued accounting standards not yet adopted: Standard Description Effective Date Effect on the Financial Statements In August 2014, the Financial Accounting Standards Board (the “FASB”) issued amended guidance related to disclosure about the ability of an entity to continue as a going concern. While current practice regarding such disclosures is often guided by U.S. auditing standards, the new standard explicitly requires management of all entities to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and, if necessary, to provide related footnote disclosures. December 31, 2016, with earlier application permitted. The Company does not expect this new standard to have a significant impact on its consolidated financial statements. See note 1 regarding management’s current disclosures regarding the Company’s ability to continue as a going concern. In July 2015, the FASB issued an update related to inventory. The new update requires that inventory be measured at the lower of cost or net realizable value. January 1, 2017, with earlier application permitted as of the beginning of an interim or annual reporting period. The Company does not expect the provisions of this update to have any impact on its consolidated financial statements. In May 2014 the FASB issued amended guidance related to revenue from contracts with customers. In August 2014, the FASB issued updated guidance deferring the effective date of the revenue recognition standard. The new standard introduces a new principles-based framework for revenue recognition and disclosure January 1, 2018, with earlier application permitted for reporting periods beginning after December 15, 2016. The Company has not yet determined the impact that this standard will have on its consolidated financial statements. In February 2016, the FASB issued an ASU that amends the accounting for leases. Under the new standard, a lessee will recognize assets and liabilities on its balance sheet for most leases but will recognize expense in its statement of operations similar to current lease accounting. January 1, 2019, with early adoption permitted. The Company has not yet determined the impact that this standard will have on its consolidated financial statements. |
13. Subsequent Events
13. Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | On October 10, 2016, the Company granted 83,333 shares of common stock under the 2007 Equity Plan to its former chief financial officer in connection with a transition and separation agreement. On October 17, 2016, 273 shares of the Company’s Series G Preferred Stock were converted into 606,668 shares of the Company’s common stock. On October 14, 2016, the Company received a letter from the holders of the Tegal Notes (see note 4) demanding payment of the amounts that were due on July 12, 2016 of approximately $0.2 million, and that the holders reserved the right to declare an event of default under the terms of the notes in the event the amounts due were not paid. To date, the Company has not received further communication from the holders of the Tegal Notes and the entire amount due remains outstanding. On October 26, 2016, the Company entered into an agreement to purchase certain assets related to a rural critical access hospital, the owners of which have filed a petition under Chapter 11 of the United States Bankruptcy Code. Closing of the purchase is subject to open bid procedures in connection with the bankruptcy proceedings. The purchase price for the assets is $0.6 million, and the Company has placed a deposit into escrow in the amount of $60,000. The Company has the ability to terminate the agreement without penalty, other than forfeiture of the deposit. The Company has not made the last two required payments under a senior secured convertible debenture with an outstanding principal amount of $3.0 million, and currently does not have the financial resources to satisfy this obligation. The Company is currently negotiating a forbearance agreement with the lender and is exploring several alternatives to refinance the debenture. |
1. Organization and Basis of 20
1. Organization and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the 2015 audited annual financial statements included in the Company’s Annual Report on Form 10-K/A, filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 17, 2016. 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 nine months ended September 30, 2016 and 2015, 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. |
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 recently accumulated significant losses and has negative cash flows from operations, and at September 30, 2016 had a working capital deficit and stockholders’ deficit of $13.8 million and $10.0 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 and the Company has not made the required payments under a secured debenture with an outstanding principal amount of $3.0 million, for which the Company currently does not have the financial resources to satisfy (see notes 4 and 13). Management's plans with respect to alleviating the adverse financial conditions which raise substantial doubt about the Company’s ability to continue as a going concern include increasing the volume of samples processed by its laboratories and the number of customers for its supportive software solutions, as well as raising additional funds in the capital markets. In addition, the Company has undertaken additional cost saving measures, including personnel reductions and a reorganization of the Company’s sales force under the direction of the new Chief Executive Officer of the Company’s Medytox Medical Marketing & Sales, Inc. subsidiary. No conclusion can be drawn at this time about the ultimate efficacy of these plans of action. On March 31, 2016, the Company received proceeds of $5.0 million from pledging certain of its accounts receivable as collateral to a prepaid forward purchase contract (see note 4). On July 19, 2016, the Company closed a public offering of its equity securities and received net proceeds of approximately $7.5 million (see note 7). In addition, in September of 2016 the Company received an income tax refund in the amount of $1.8 million and received net proceeds from the sale of convertible notes in the amount of $0.4 million. There can be no assurance that the Company will be able to achieve its business plans, raise any additional capital or secure additional financing, if necessary, to achieve its current operating plan. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraphs and eventually regain profitability. 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. |
3. Property and Equipment (Tabl
3. Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | September 30, December 31, 2016 2015 Medical equipment $ 922,551 $ 991,903 Equipment 577,317 547,555 Equipment under capital leases 5,043,095 5,663,332 Furniture 561,688 560,400 Leasehold improvements 1,776,957 1,760,125 Vehicles 196,534 196,534 Computer equipment 753,225 661,234 Software 1,845,054 1,878,848 11,676,421 12,259,931 Less accumulated depreciation (6,622,631 ) (5,111,636 ) Property and equipment, net $ 5,053,790 $ 7,148,295 |
2. Accounts Receivable (Tables)
2. Accounts Receivable (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Schedule of accounts receivable | September 30, December 31, 2016 2015 Accounts receivable - clinical laboratory operations $ 86,006,817 $ 105,332,339 Accounts receivable - supportive software solutions 587,731 569,351 Total accounts receivable 86,594,548 105,901,690 Less: Allowance for discounts (80,098,203 ) (97,577,130 ) Allowance for bad debts (3,841,213 ) (175,076 ) Accounts receivable, net $ 2,655,132 $ 8,149,484 |
4. Notes Payable (Tables)
4. Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | September 30, 2016 December 31, 2015 Loan payable under prepaid forward purchase contract $ 5,000,000 $ – Loan payable to TCA Global Master Fund, LP ("TCA") in the principal amount of $3,000,000 at 16% interest, with interest only payments through September 11, 2016 (the "TCA Debenture"). Principal and interest payments due monthly from October 11, 2016 through September 11, 2017 3,000,000 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"). Principal and interest payments are made annually from July 12, 2015 through July 12, 2017 341,612 341,612 Loan payable to former shareholder of Epinex Diagnostics Laboratories, Inc. in the original principal amount of $400,000, at 0% interest, with principal payments due in periodic installments of $100,000 from November 26, 2014 through February 26, 2016 (the "Epinex Note") – 100,000 Other convertible notes payable 440,000 – Unamortized discount on TCA Debenture (252,879 ) (453,025 ) Unamortized discount on Epinex Note – (1,775 ) Unamortized discount on other convertible notes (403,536 ) – Derivative liability associated with the TCA Debenture, at fair value 402,996 186,117 8,528,193 3,172,929 Less current portion (8,528,193 ) (269,031 ) Notes payable - third parties, net of current portion $ – $ 2,903,898 |
Schedule of notes payable - related parties | September 30, 2016 December 31, 2015 Convertible debenture dated December 31, 2014 which bears interest at 10% per annum and was due December 31, 2016 (the "D&D Debenture"). The lender, D&D Funding II, LLC, had the option to convert the note into the Company's common stock at a 25% discount to the average trading price (as defined in the note agreement) for ten consecutive trading days prior to the conversion date $ – $ 3,000,000 Loan payable to Alcimede LLC, bearing interest at 6% per annum, with all principal and interest due on February 2, 2017 218,500 500,000 Loan payable to Christopher Diamantis 500,000 1,600,000 Other advances from related parties 650,000 – Unamortized discount on D&D Debenture – (2,236,112 ) Derivative liabilities associated with the D&D Debenture, at fair value – 2,270,000 Total notes payable, related parties $ 1,368,500 $ 5,133,888 |
6. Capital Lease Obligations (T
6. Capital Lease Obligations (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of capital leases | September 30, December 31, 2016 2015 Medical equipment $ 5,043,095 $ 5,663,332 Less accumulated depreciation (2,480,726 ) (2,093,920 ) Net $ 2,562,369 $ 3,569,412 |
Aggregate future minimum rentals under capital leases | December 31, 2016 $ 399,522 2017 1,432,542 2018 845,330 2019 285,199 2020 32,611 Total 2,995,204 Less interest 257,225 Present value of minimum lease payments 2,737,979 Less current portion of capital lease obligations 1,339,498 Capital lease obligations, net of current portion $ 1,398,481 |
7. Stockholders' Equity (Tables
7. Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Option activity | Number of options Weighted average exercise price Balance at December 31, 2015 1,600,674 $ 7.73 Options granted during the period 20,798,500 $ 3.95 Options exercised during the period – $ – Options forfeited during the period (200,000 ) $ 1.00 Options expired during the period – $ – Options outstanding at September 30, 2016 22,199,174 $ 4.25 Options exercisable at September 30, 2016 16,199,174 $ 5.58 |
Assumptions used | Expected term 9.89 years Expected volatility 168% Risk free interest rate 1.88% Dividend yield 0% |
Warrant activity | Number of warrants Weighted average exercise price Balance at December 31, 2015 6,898,560 $ 1.83 Cashless exercises (92,348 ) $ 0.23 Exchange of December 30, 2015 warrants (6,451,613 ) $ 1.94 Exchange Warrants issued 10,249,517 $ 0.45 Warrants issued during the period 24,541,946 $ 0.45 Balance at September 30, 2016 35,146,062 $ 0.44 |
Antidilutive Securities | September 30, September 30, 2016 2015 Stock options outstanding 22,199,174 23,830,000 Warrants outstanding 35,146,062 – Convertible debt 1,760,000 5,378,151 Convertible preferred stock 21,358,222 257,143 Total 80,463,458 29,465,294 |
9. Supplemental Disclosure of26
9. Supplemental Disclosure of Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Cash Flow Information | Nine Months Ended September 30, 2016 2015 Cash paid for interest $ 1,237,622 $ 222,898 Cash paid for income taxes $ – $ 1,853,408 Non-cash investing and financing activities: Accrued liabilities settled through the issuance of common stock and warrants $ 2,131,829 $ – Exercise of stock options as reduction of notes payable, related party $ – $ (2,500,000 ) Assets acquired through capital leases $ – $ 1,597,063 Acquisition of noncontrolling interest in Biohealth Medical Laboratory, Inc.: Deposits on acquisition $ – $ 259,875 Goodwill $ – $ (138,871 ) Noncontrolling interest $ – $ (121,004 ) |
1. Organization and Presentatio
1. Organization and Presentation (Details Narrative) - USD ($) | 7 Months Ended | 9 Months Ended | ||
Jul. 19, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Working capital | $ (13,800,000) | |||
Stockholder deficit | (10,038,086) | $ (1,193,799) | ||
Proceeds from pledged receivables | 5,000,000 | |||
Proceeds from sale of stock | $ 7,300,000 | 7,521,036 | $ 0 | |
Income tax refund received | 1,800,000 | |||
Proceeds from sale of convertible notes | $ 400,000 |
2. Accounts Receivable (Details
2. Accounts Receivable (Details - Accounts receivable) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Accounts receivable, gross | $ 86,594,548 | $ 105,901,690 |
Less: Allowance for discounts | (80,098,203) | (97,577,130) |
Less: Allowance for bad debts | (3,841,213) | (175,076) |
Accounts receivable, net | 2,655,132 | 8,149,484 |
Clinical Laboratory Operations [Member] | ||
Accounts receivable, gross | 86,006,817 | 105,332,339 |
Supportive Software Solutions [Member] | ||
Accounts receivable, gross | $ 587,731 | $ 569,351 |
3. Property and Equpment (Detai
3. Property and Equpment (Details - Equipment) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Property and equipment, gross | $ 11,676,421 | $ 12,259,931 |
Accumulated depreciation | (6,622,631) | (5,111,636) |
Property and equipment, net | 5,053,790 | 7,148,295 |
Medical equipment [Member] | ||
Property and equipment, gross | 922,551 | 991,903 |
Equipment [Member] | ||
Property and equipment, gross | 577,317 | 547,555 |
Assets Held Under Capital Leases [Member] | ||
Property and equipment, gross | 5,046,095 | 5,663,332 |
Furniture [Member] | ||
Property and equipment, gross | 561,688 | 560,400 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | 1,776,957 | 1,760,125 |
Vehicles [Member] | ||
Property and equipment, gross | 196,534 | 196,534 |
Computer Equipment [Member] | ||
Property and equipment, gross | 753,225 | 661,234 |
Software [Member] | ||
Property and equipment, gross | $ 1,845,054 | $ 1,878,848 |
3. Property and Equipment (Deta
3. Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation | $ 700,000 | $ 700,000 | $ 2,100,000 | $ 2,000,000 |
Impairment expense | $ 0 | $ 0 |
4. Notes Payable (Details-Notes
4. Notes Payable (Details-Notes Payable) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Notes payable | $ 8,528,193 | $ 3,172,929 |
Less: current portion | (8,528,193) | (269,031) |
Notes payable, net of current portion | 0 | 2,903,898 |
Note payable 1 [Member] | ||
Notes payable | 5,000,000 | 0 |
Note payable 2 [Member] | TCA Global Master Fund, LP [Member] | ||
Notes payable | 3,000,000 | 3,000,000 |
Unamortized discount | (252,879) | (453,025) |
Fair value of derivatives | 402,996 | 186,117 |
Note payable 3 [Member] | CommerceNet and Tenenbaum [Member] | ||
Notes payable | 341,612 | 341,612 |
Note payable 4 [Member] | Former Shareholder [Member] | ||
Notes payable | 0 | 100,000 |
Unamortized discount | 0 | (1,775) |
Note payable 5 [Member] | Other Convertible Note Payable [Member] | ||
Notes payable | $ 440,000 | $ 0 |
4. Notes Payable (Details-Not32
4. Notes Payable (Details-Notes Payable Related Party) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Notes payable related parties | $ 1,368,500 | $ 5,133,888 |
Notes payable - related party 1 [Member] | Notes payable - related party [Member] | D & D Funding [Member] | ||
Note payable related parties | 0 | 3,000,000 |
Unamortized discount | 0 | (2,236,112) |
Fair value of derivatives | 0 | 2,270,000 |
Notes payable - related party 2 [Member] | Notes payable - related party [Member] | Alcimede [Member] | ||
Note payable related parties | 218,500 | 500,000 |
Notes payable - related party 3 [Member] | Notes payable - related party [Member] | Diamantis [Member | ||
Note payable related parties | 500,000 | 1,600,000 |
Notes payable - related party 4 [Member] | Notes payable - related party [Member] | Related Parties [Member] | ||
Note payable related parties | $ 650,000 | $ 0 |
4. Notes Payable (Details Narra
4. Notes Payable (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Proceeds from issuance of covertible notes | $ 400,000 | ||
Derivative liability | 404,492 | $ 7,495,486 | |
Proceeds from issuance of related party advances | 5,285,000 | $ 0 | |
Payments on related party advances | (5,715,000) | $ 0 | |
Prepaid Forward Purchase Contract [Member] | |||
Receivables pledged | 4,300,000 | ||
Proceeds from issuance of note payable | 5,000,000 | ||
Note payable 2 [Member] | TCA Global Master Fund, LP [Member] | |||
Debt original face amount | $ 3,000,000 | ||
Interest rate | 16.00% | ||
Maturity date | Sep. 11, 2017 | ||
Note payable 3 [Member] | CommerceNet and Tenenbaum [Member] | |||
Debt original face amount | $ 500,000 | ||
Interest rate | 6.00% | ||
Maturity date | Jul. 12, 2017 | ||
Note payable 4 [Member] | Former Shareholder [Member] | |||
Debt original face amount | $ 400,000 | ||
Interest rate | 0.00% | ||
Maturity date | Feb. 26, 2016 | ||
Notes payable - related party 1 [Member] | D & D Funding [Member] | Notes payable - related party [Member] | |||
Interest rate | 10.00% | ||
Maturity date | Dec. 31, 2016 | ||
Notes payable - related party 2 [Member] | Alcimede [Member] | Notes payable - related party [Member] | |||
Interest rate | 6.00% | ||
Maturity date | Feb. 2, 2017 | ||
Payments on related party advances | $ 300,000 | ||
Notes payable - related party 3 [Member] | Diamantis [Member | Notes payable - related party [Member] | |||
Proceeds from issuance of related party advances | 4,200,000 | ||
Payments on related party advances | 3,700,000 | ||
Accrued interest | $ 400,000 | ||
Notes payable - related party 3 [Member] | Two Stockholders [Member] | Notes payable - related party [Member] | |||
Proceeds from issuance of related party advances | 1,000,000 | ||
Payments on related party advances | 400,000 | ||
Notes payable - related party 4 [Member] | Mendolina [Member] | Notes payable - related party [Member] | |||
Proceeds from issuance of related party advances | 415,000 | ||
Payments on related party advances | 15,000 | ||
September 2016 Notes [Member] | |||
Proceeds from issuance of covertible notes | $ 400,000 | ||
Conversion price | $ .25 | ||
Warrants issued with convertible note | 2,000,000 | ||
Warrant issue price | $ .40 | ||
Derivative liability | $ 300,000 |
5. Related Party Transactions (
5. Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | |
Proceeds from issuance of related party advances | $ 5,285,000 | $ 0 | |
Payments on related party advances | (5,715,000) | 0 | |
Alcimede [Member] | |||
Consulting fees paid | 300,000 | 300,000 | |
Jason Adams [Member] | |||
Proceeds from issuance of related party advances | $ 50,000 | ||
Payments on related party advances | $ 50,000 | ||
Monarch Capital [Member] | |||
Consulting fees paid | $ 200,000 | $ 15,000 | |
SS International Consulting, Ltd. [Member] | |||
Issuance of shares for services, shares | 200,000 | ||
Various Related Parties [Member] | |||
Stock issued for other obligations, shares issued | 5,544,441 | ||
Stock issued for other obligations, aggregate value | $ 2,100,000 | ||
Warrants issued for settlement of other obligations | 3,123,313 | ||
Warrant exercise price | $ .45 |
6. Capital Lease Obligations (D
6. Capital Lease Obligations (Details-Capital leased assets) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Capital Lease Obligations [Abstract] | ||
Medical equipment | $ 5,043,095 | $ 5,663,332 |
Less accumulated depreciation | (2,480,726) | (2,093,920) |
Capital lease obligations | $ 2,562,369 | $ 3,569,412 |
6. Capital Lease Obligations 36
6. Capital Lease Obligations (Details-Future payments) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
December 31 | ||
2,016 | $ 399,522 | |
2,017 | 1,432,542 | |
2,018 | 845,330 | |
2,019 | 285,199 | |
2,020 | 32,611 | |
Total | 2,995,204 | |
Less interest: | 257,225 | |
Present value of minimum lease payments | 2,737,979 | |
Less current portion of capital lease obligations | 1,339,498 | $ 1,323,708 |
Capital lease obligations, net of current portion | $ 1,398,481 | $ 2,394,171 |
7. Stockholders' Equity (Detail
7. Stockholders' Equity (Details - Options) - Stock Options [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Number of options | |
Options outstanding, beginning balance | shares | 1,600,674 |
Options granted | shares | 20,798,500 |
Options exercised | shares | 0 |
Options forfeited | shares | (200,000) |
Options expired | shares | 0 |
Options outstanding, ending balance | shares | 22,199,174 |
Options exercisable | shares | 16,199,174 |
Weighted average exercise price | |
Options outstanding, beginning balance | $ / shares | $ 7.73 |
Options granted | $ / shares | 3.95 |
Options exercised | $ / shares | |
Options forfeited | $ / shares | 1 |
Options expired | $ / shares | |
Options outstanding, ending balance | $ / shares | 4.25 |
Options exercisable | $ / shares | $ 5.58 |
7. Stockholders' Equity (Deta38
7. Stockholders' Equity (Details - Assumptions) | 7 Months Ended |
Jul. 19, 2016 | |
Equity [Abstract] | |
Expected term | 9 years 10 months 21 days |
Expected volatility | 168.00% |
Risk free interest rate | 1.88% |
Dividend yield | 0.00% |
7. Stockholders' Equity (Deta39
7. Stockholders' Equity (Details - Warrant activity) - Warrants [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Number of warrants | |
Warrants outstanding, beginning balance | shares | 6,898,560 |
Cashless exercises | shares | (92,348) |
Exchange of warrants | shares | (6,451,613) |
Exchange warrants issued | shares | 10,249,517 |
Warrants issued | shares | 24,541,946 |
Warrants outstanding, ending balance | shares | 35,146,062 |
Weighted average exercise price | |
Weighted average exercise price, warrants outstanding, beginning balance | $ / shares | $ 1.83 |
Weighted average exercise price, cashless exercises | $ / shares | 0.23 |
Weighted average exercise price, exchange of warrants | $ / shares | 1.94 |
Weighted average exercise price, exchange of warrants issued | $ / shares | 0.45 |
Weighted average exercise price, warrants issued | $ / shares | 0.45 |
Weighted average exercise price, warrants outstanding, ending balance | $ / shares | $ 0.44 |
7. Stockholders' Equity (Deta40
7. Stockholders' Equity (Details - Antidilutive shares) - shares | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Antidilutive shares | 80,463,458 | 29,465,294 |
Stock Options [Member] | ||
Antidilutive shares | 22,199,174 | 23,830,000 |
Warrant [Member] | ||
Antidilutive shares | 35,146,062 | 0 |
Convertible Debt [Member] | ||
Antidilutive shares | 1,760,000 | 5,378,151 |
Convertible Preferred Stock [Member] | ||
Antidilutive shares | 21,358,222 | 257,143 |
7. Stockholders' Equity (Deta41
7. Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 7 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Jul. 19, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Dividends earned | $ 0 | $ 268,927 | $ 0 | $ 1,589,321 | ||
Stock issued for services, value | $ 9,310 | |||||
Unrecognized compensation cost amortization period | 1 year 4 months 10 days | |||||
Gain on change in fair value of warrants | 2,087,041 | $ 190,000 | $ 6,813,701 | 190,000 | ||
Proceeds from sale of stock | $ 7,300,000 | 7,521,036 | 0 | |||
Stock Options [Member] | ||||||
Unrecognized compensation cost | 400,000 | $ 400,000 | ||||
Unrecognized compensation cost amortization period | 1 year 7 months 2 days | |||||
Options granted | 20,798,500 | |||||
Cashless Exercise of Warrants [Member] | ||||||
Stock issued for conversion of securities, shares issued | 48,783 | |||||
Previously Converted Preferred Stock [Member] | ||||||
Stock issued for conversion of securities, shares issued | 50,606 | |||||
Public Offering [Member] | ||||||
Stock issued new, shares | 19,115,000 | |||||
Proceeds from sale of stock | $ 7,500,000 | |||||
Public Offering [Member] | Overallotments [Member] | ||||||
Warrants Issued | 303,633 | |||||
Medytox [Member] | Common stock to employees and consultants [Member] | ||||||
Share based compensation expense | 2,900,000 | |||||
Medytox [Member] | Outstanding options [Member] | ||||||
Share based compensation expense | 500,000 | |||||
Warrant Exercises [Member] | ||||||
Stock issued for warrants exercised | 43,809 | |||||
Previously converted preferred stock [Member] | ||||||
Shares issued in adjustment of prior conversion of preferred stock, shares | 50,606 | |||||
Previously issued to employee [Member] | ||||||
Stock cancelled, shares | 40,964 | |||||
Epinex Diagnostics [Member] | ||||||
Stock cancelled, shares | 45,000 | |||||
Consultant [Member] | ||||||
Stock issued for services, shares issued | 13,300 | |||||
Stock issued for services, value | $ 9,310 | |||||
Three Officers [Member] | ||||||
Stock issued for compensation, shares | 583,335 | |||||
Employee [Member] | ||||||
Share based compensation expense | $ 200,000 | |||||
Restricted stock granted | 83,334 | |||||
Employees, Directors and Consultants [Member] | ||||||
Share based compensation expense | $ 700,000 | |||||
Employees, Directors and Consultants [Member] | May 2, 2016 [Member] | ||||||
Options granted | 15,643,000 | |||||
Employees, Directors and Consultants [Member] | July 17, 2016 [Member] | ||||||
Options granted | 5,155,500 | |||||
Medytox Series B Preferred Stock [Member] | ||||||
Dividends earned | $ 1,600,000 | |||||
Accrued dividends | $ 100,000 | $ 100,000 | $ 2,100,000 | |||
Preferred stock converted into common, common shares issued | 5,733,945 | |||||
Series C Preferred Stock [Member] | ||||||
Preferred stock converted into common, preferred shares converted | 260 | |||||
Preferred stock converted into common, common shares issued | 167,743 | |||||
Series C Preferred Stock [Member] | Exchange Agreement [Member] | ||||||
Preferred stock converted into common, preferred shares converted | 8,740 | |||||
Warrants exchanged | 6,451,613 | |||||
Series G Preferred Stock [Member] | ||||||
Preferred stock converted into common, preferred shares converted | 4,182 | |||||
Preferred stock converted into common, common shares issued | 9,292,905 | |||||
Series G Preferred Stock [Member] | Exchange Agreement [Member] | ||||||
Preferred stock converted into common, common shares issued | 13,793 | |||||
Exhange warrants issued | 10,249,517 | |||||
Warrant conversion price | $ .45 | $ .45 | ||||
Gain on change in fair value of warrants | $ 1,700,000 |
8. Income Taxes (Details Narrat
8. Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 0 | $ (2,678,777) | $ 0 | $ (2,579,977) |
Income tax refund received | $ 1,800,000 |
9. Supplemental Disclosure of43
9. Supplemental Disclosure of Cash Flow Information (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Supplemental Cash Flow Elements [Abstract] | ||
Cash paid for interest | $ 1,237,622 | $ 222,898 |
Cash paid for income taxes | 0 | 1,853,408 |
Non-cash investing and financing activities: | ||
Accrued liabilities settled through the issuance of common stock and warrants | 2,131,829 | 0 |
Exercise of stock options as reduction of notes payable, related party | 0 | (2,500,000) |
Assets acquired through capital leases | 0 | 1,597,063 |
Acquisition of noncontrolling interest in Biohealth Medical Laboratory, Inc.: | ||
Deposits on acquisition | 0 | 259,875 |
Goodwill | 0 | (138,871) |
Noncontrolling interest | $ 0 | $ (121,004) |
10. Commitments and Contingen44
10. Commitments and Contingencies (Details Narrative) - Genomas [Member] | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Cash paid in acquisition | $ 250,000 |
Notes payable received in acquisition | $ 1,500,000 |
Stock ownership | 15.00% |
Series A Preferred Stock [Member] | |
Stock received in acquisition | $ 500,000 |
Series B Preferred Stock [Member] | |
Stock received in acquisition | $ 345,000 |
11. Segment Reporting (Details-
11. Segment Reporting (Details-Operations) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net revenues - External | $ 290,004 | $ 5,890,918 | $ 5,222,529 | $ 28,921,351 |
Net revenues - Inter Segment | 502,055 | 743,706 | 1,036,396 | 1,572,443 |
Income (loss) from operations | (12,576,776) | (3,572,087) | (24,431,157) | (5,949,234) |
Depreciation and amortization | 702,275 | 728,572 | 2,131,232 | 1,979,006 |
Capital expenditures | 0 | 324,750 | 36,727 | 359,690 |
Eliminations [Member] | ||||
Income (loss) from operations | 33,662 | 0 | 100,986 | 0 |
Depreciation and amortization | (33,662) | (28,692) | (100,986) | (82,470) |
Capital expenditures | 0 | (65,000) | 0 | (65,000) |
Clinical Laboratory Operations [Member] | ||||
Net revenues - External | 169,649 | 5,972,121 | 4,146,949 | 28,396,875 |
Income (loss) from operations | (7,583,131) | (218,517) | (11,281,361) | 6,138,369 |
Depreciation and amortization | 562,929 | 593,965 | 1,706,164 | 1,562,314 |
Capital expenditures | 0 | 380,196 | 26,729 | 363,138 |
Supportive Software Solutions [Member] | ||||
Net revenues - External | 50,447 | (81,203) | 605,575 | 524,476 |
Net revenues - Inter Segment | 502,055 | 743,706 | 1,036,396 | 1,572,443 |
Income (loss) from operations | (1,253,386) | (1,478,594) | (3,800,893) | (4,198,856) |
Depreciation and amortization | 163,749 | 163,299 | 490,236 | 499,162 |
Capital expenditures | 0 | 9,554 | 9,998 | 61,552 |
Decision Support and Informatics Operations [Member] | ||||
Net revenues - External | 69,908 | 0 | 470,005 | 0 |
Income (loss) from operations | (832,965) | 0 | (2,390,245) | 0 |
Depreciation and amortization | 8,514 | 0 | 33,324 | 0 |
Corporate [Member] | ||||
Income (loss) from operations | (2,940,956) | (1,874,976) | (7,059,644) | (7,888,747) |
Depreciation and amortization | $ 745 | $ 0 | $ 2,494 | $ 0 |
11. Segment Reporting (Detail46
11. Segment Reporting (Details-Assets) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Total assets | $ 10,197,937 | $ 29,369,926 |
Eliminations [Member] | ||
Total assets | (7,095,520) | (2,827,845) |
Clinical Laboratory Operations [Member] | ||
Total assets | 7,406,965 | 15,152,583 |
Supportive Software Solutions [Member] | ||
Total assets | 2,199,119 | 2,896,473 |
Decision Support and Informatics Operations [Member] | ||
Total assets | 213,465 | 4,307,053 |
Corporate [Member] | ||
Total assets | $ 3,209,233 | $ 14,109,337 |