UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2011.
or
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:000-54384
NEOGENOMICS, INC.
(Exact name of registrant as specified in its charter)
Nevada | 74-2897368 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
12701 Commonwealth Drive, Suite 9, Fort Myers, Florida |
33913 | |
(Address of principal executive offices) | (Zip Code) |
(239) 768-0600
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act:
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of July 22, 2011, the registrant had 43,094,499 shares of common stock, par value $0.001 per share outstanding.
EXPLANATORY NOTE
This Amendment No. 1 to the Quarterly Report on Form 10-Q/A (the Amendment) amends the Quarterly Report on Form 10-Q of NeoGenomics, Inc. (the Company) for the quarter ended June 30, 2011 (the Original Filing), that was originally filed with the U.S. Securities and Exchange Commission on July 26, 2011. The Amendment is being filed to submit Exhibit 101. The Amendment revises the exhibit index included in Part II, Item 6 of the Original Filing and Exhibit 101 (XBRL interactive data) is included as an exhibit to the Amendment.
In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (Exchange Act), new certifications by the Companys principal executive officer and principal financial officers are filed as exhibits hereto.
Except as described above, the Amendment does not modify or update the disclosures presented in, or exhibits to, the Original Filing in any way. Those sections of the Original Filing that are unaffected by the Amendment are not included herein. The Amendment continues to speak as of the date of the Original Filing. Furthermore, the Amendment does not reflect events occurring after the filing of the Original Filing. Accordingly, the Amendment should be read in conjunction with the Original Filing, as well as the Companys other filings made with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act subsequent to the filing of the Original Filing.
PART II OTHER INFORMATION
ITEM 6 EXHIBITS
EXHIBIT NO. |
DESCRIPTION | |
14.1 | NeoGenomics Code of Business Conduct and Ethics as approved by the Board of Directors on July 14, 2011 as incorporated by reference from the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on July 20, 2011. | |
31.1** | Certification by Principal Executive Officer pursuant to Rule 13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2** | Certification by Principal Financial Officer pursuant to Rule 13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.3** | Certification by Principal Accounting Officer pursuant to Rule 13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1** | Certification by Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101** | The following materials from the Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) related notes. |
** | Provided herewith |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 1, 2011 | NEOGENOMICS, INC. | |||||
By: | /s/ Douglas M. VanOort | |||||
Name: | Douglas M. VanOort | |||||
Title: | Chairman and Chief Executive Officer | |||||
By: | /s/ George Cardoza | |||||
Name: | George Cardoza | |||||
Title: | Chief Financial Officer | |||||
By: | /s/ Jerome J. Dvonch | |||||
Name: | Jerome J. Dvonch | |||||
Title: | Director of Finance and Principal Accounting Officer |
EXHIBIT 31.1
CERTIFICATIONS
I, Douglas M. VanOort, certify that:
1. I have reviewed this Amendment No. 1 to Quarterly Report on Form 10-Q/A for the three months ended June 30, 2011 of NeoGenomics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
August 1, 2011 | /s/ Douglas M. VanOort | |||
Douglas M. VanOort | ||||
Chairman and Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATIONS
I, George Cardoza, certify that:
1. I have reviewed this Amendment No. 1 to Quarterly Report on Form 10-Q/A for the three months ended June 30, 2011 of NeoGenomics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
August 1, 2011 | /s/ George Cardoza | |||
George Cardoza | ||||
Chief Financial Officer |
EXHIBIT 31.3
CERTIFICATIONS
I, Jerome J. Dvonch, certify that:
1. I have reviewed this Amendment No. 1 to Quarterly Report on Form 10-Q/A for the three months ended June 30, 2011 of NeoGenomics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
August 1, 2011 | /s/ Jerome J. Dvonch | |||
Jerome J. Dvonch | ||||
Director of Finance and Principal Accounting Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Amendment No. 1 to Quarterly Report of NeoGenomics, Inc. (the Company) on Form 10-Q/A for the three months ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the Report), each of the undersigned, in the capacities and on the dates indicated below, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 1, 2011 | /s/ Douglas M. VanOort | |
Douglas M. VanOort | ||
Chairman and Chief Executive Officer | ||
Date: August 1, 2011 | /s/ George Cardoza | |
George Cardoza | ||
Chief Financial Officer | ||
Date: August 1, 2011 | /s/ Jerome J. Dvonch | |
Jerome J. Dvonch | ||
Director of Finance and Principal Accounting Officer |
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Condensed Consolidated Balance Sheets | Â | Â |
Allowance for doubtful accounts | $ 1,843 | $ 1,459 |
Accumulated depreciation | $ 5,530 | $ 4,568 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 42,890,203 | 37,341,285 |
Common stock, shares outstanding | 42,890,203 | 37,341,285 |
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Condensed Consolidated Statements of Operations | Â | Â | Â | Â |
NET REVENUE | $ 10,466 | $ 8,490 | $ 19,271 | $ 16,908 |
COST OF REVENUE | 5,810 | 4,575 | 10,750 | 8,918 |
GROSS PROFIT | 4,656 | 3,915 | 8,521 | 7,990 |
OPERATING EXPENSES | Â | Â | Â | Â |
General and administrative | 3,086 | 2,769 | 5,909 | 5,671 |
Sales and marketing | 1,684 | 1,943 | 3,437 | 3,706 |
Total operating expenses | 4,770 | 4,712 | 9,346 | 9,377 |
LOSS FROM OPERATIONS | (114) | (797) | (825) | (1,387) |
INTEREST AND OTHER INCOME (EXPENSE) - NET | (179) | (181) | (361) | (341) |
NET LOSS | $ (293) | $ (978) | $ (1,186) | $ (1,728) |
NET LOSS PER SHARE | Â | Â | Â | Â |
- Basic and diluted | $ (0.01) | $ (0.03) | $ (0.03) | $ (0.05) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | Â | Â | Â | Â |
- Basic and diluted | 42,856,578 | 37,307,232 | 42,298,594 | 37,264,112 |
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Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jul. 22, 2011
|
|
Document and Entity Information | Â | Â |
Document Type | 10-Q | Â |
Amendment Flag | true | Â |
Amendment Description | The information in this Quarterly Report on Form 10-Q contains "forward-looking statements" relating to NeoGenomics, Inc., a Nevada corporation (referred to individually as the "Parent Company" or collectively with all of its subsidiaries as "NeoGenomics" or the "Company") within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which are subject to the "safe harbor" created by those sections. These "forward looking statements" represent the Company's current expectations or beliefs including, but not limited to, statements concerning the Company's operations, performance, financial condition and growth. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would" or the negative or other comparable terminology are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements by their nature involve substantial risks and uncertainties, such as credit losses, dependence on management and key personnel, variability of quarterly results, competition and the ability of the Company to continue its growth strategy, certain of which are beyond the Company's control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual outcomes and results could differ materially from those indicated in the forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. | Â |
Document Period End Date | Jun. 30, 2011 | |
Document Fiscal Period Focus | Q2 | Â |
Document Fiscal Year Focus | 2011 | Â |
Entity Registrant Name | NEOGENOMICS INC | Â |
Entity Central Index Key | 0001077183 | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Filer Category | Smaller Reporting Company | Â |
Entity Common Stock, Shares Outstanding | Â | 43,094,499 |
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Related Party Transactions
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Related Party Transactions | Â |
Related Party Transactions | NOTE G — RELATED PARTY TRANSACTIONS Consulting Agreements During the three and six months ended June 30, 2011 Steven C. Jones, a director of the Company, earned approximately $50,000 and $101,000, respectively, for various consulting work performed in connection with his duties as Executive Vice President of Finance. Mr. Jones earned approximately $53,000 and $115,000, respectively for the three and six months ended June 30, 2010. During May 2010 Mr. Jones received 450,000 warrants as described in more detail in Note L of our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 23, 2011 and as such we recorded $13,000 and $24,000, respectively, in stock compensation expense for these warrants for the three and six months ended June 30, 2011. During the three and six months ended June 30, 2010 we recorded $77,000 of stock compensation expense for these warrants. |
Revolving Credit Facility
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Revolving Credit Facility | Â |
Revolving Credit Facility | NOTE C — REVOLVING CREDIT FACILITY On February 1, 2008, we entered into a revolving credit facility with CapitalSource, which allowed us to borrow up to $3,000,000 based on a formula tied to our eligible accounts receivable that are aged less than 150 days. On April 26, 2010, the Parent Company, NeoGenomics Laboratories, Inc., the wholly-owned subsidiary of the Parent Company ("Borrower"), and CapitalSource entered into an Amended and Restated Revolving Credit and Security Agreement (the "Amended and Restated Credit Agreement" or the "Credit Facility"). The Amended and Restated Credit Agreement amended and restated the Revolving Credit and Security Agreement dated February 1, 2008, as amended, among the Parent Company, Borrower and CapitalSource (the "Original Credit Agreement"). The terms of the Amended and Restated Credit Agreement and the Original Credit Agreement are substantially similar except that the Amended and Restated Credit Agreement, among other things, (i) increased the maximum principal amount of the revolving credit facility from $3,000,000 to $5,000,000, (ii) provided that the term of the Amended and Restated Credit Agreement shall end on February 1, 2013, (iii) increased the amount of the collateral management fee and unused line fees paid by Borrower to CapitalSource, (iv) modified the definitions of "Minimum Termination Fee" and "Permitted Indebtedness", (v) provided that the Borrower must maintain a minimum outstanding principal balance under the revolving facility of at least $2,000,000, (vi) increased the interest rate to LIBOR plus 4.25% (provided that LIBOR shall not be less than 2.0%) and (vii) revised certain covenants and representations and warranties. The Amended and Restated Credit Agreement also made permanent a previously enacted temporary change to the methodology for calculating the Fixed Charge Coverage Ratio covenant, which permits us to add amounts of unrestricted cash and cash equivalents and unused availability under the Credit Facility to Adjusted EBITDA for the purposes of calculating this covenant. We paid CapitalSource a commitment fee of $33,500 in connection with the execution of the Amended and Restated Credit Agreement. In addition, CapitalSource credited $25,000 of an amendment fee previously paid by us towards this commitment fee. Interest on outstanding advances under the Credit Facility are payable monthly in arrears on the first day of each calendar month. At June 30, 2011, the effective rate of interest was 6.25%. On June 30, 2011, the available credit under the Credit Facility was approximately $0.9 million and the outstanding borrowing was $3.8 million after netting compensating cash on hand. |
Nature of Business and Basis of Financial Statement Presentation
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Nature of Business and Basis of Financial Statement Presentation | Â |
Nature of Business and Basis of Financial Statement Presentation | NOTE A — NATURE OF BUSINESS AND BASIS OF FINANCIAL STATEMENT PRESENTATION Nature of Business NeoGenomics, Inc., a Nevada corporation (the "Parent"), and its subsidiary, NeoGenomics Laboratories, Inc., a Florida corporation ("NEO", "NeoGenomics Laboratories" or the "Subsidiary") (collectively referred to as "we", "us", "our", "NeoGenomics", or the "Company"), operates as a certified "high complexity" clinical laboratory in accordance with the federal government's Clinical Laboratory Improvement Act, as amended ("CLIA"), and is dedicated to the delivery of clinical diagnostic services to pathologists, oncologists, urologists, hospitals, and other laboratories throughout the United States. Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Parent and the Subsidiary. All significant intercompany accounts and balances have been eliminated in consolidation. The accompanying condensed consolidated financial statements of the Company are unaudited and include all adjustments, in the opinion of management, which are necessary to make the financial statements not misleading. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for a full year. The interim condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not contain certain information included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on February 23, 2011. Use of Estimates The Company prepares its condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. These principles require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the condensed consolidated financial statements. Actual results and outcomes may differ from management's estimates, judgments and assumptions. Significant estimates, judgments and assumptions used in these condensed consolidated financial statements include, but are not limited to, those related to revenues, accounts receivable and related reserves, contingencies, useful lives and recovery of long-term assets, income and other taxes, and the fair value of stock-based compensation. These estimates, judgments, and assumptions are reviewed periodically and the effects of material revisions in estimates are reflected in the condensed consolidated financial statements prospectively from the date of the change in estimate. Research and Development Research and development costs are expensed as incurred and are included in our general and administrative expenses. Research and development expenses consist of compensation and benefits for research and development personnel, license fees, related supplies, inventory and payment for samples to complete validation studies. These expenses were incurred to develop our melanoma test (MelanoSITE), new FISH assays and to develop other new molecular tests. Net Income (Loss) Per Share We compute net income (loss) per share in accordance with FASB ASC Topic 260, Earnings per Share. Under the provisions of ASC 260, basic net income (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common and common equivalent shares outstanding, using the treasury stock method, during the period. Equivalent shares consist of employee stock options and certain warrants issued to consultants and other providers of financing to the Company that are in-the-money based on the weighted average closing share price for the period. Under the treasury stock method, the number of in-the-money shares that are considered outstanding for this calculation is reduced by the number of common shares that theoretically could have been re-purchased by the Company with the aggregate exercise proceeds of such warrant and option exercises if such shares were re-purchased at the weighted average market price for the period.
There were no common equivalent shares included in the calculation of diluted earnings per share for the three and six month periods ended June 30, 2011 and 2010 because the Company had a net loss for such periods and therefore such common equivalent shares were anti-dilutive. Concentrations of Credit Risk Concentrations of credit risk with respect to revenue and accounts receivable are primarily limited to certain clients to whom the Company provides a significant volume of its services, and to specific payors of our services such as Medicare and individual insurance companies. The Company's client base consists of a large number of geographically dispersed clients diversified across various customer types. The Company continues to focus its sales efforts to decrease the dependency on any given source of revenue and decrease its credit risk from any one large client or payor type, and these efforts may decrease our credit risk. For the three and six months ended June 30, 2011, one client with multiple locations represented 9.1% and 5.5% of revenue. For the same periods in the previous year no customer accounted for more than 5% of our revenue. There have been no significant changes in payor type mix since the Annual Report on Form 10-K was filed with the SEC on February 23, 2011. The Company orders the majority of its FISH probes from one vendor and as a result of such vendor's dominance of that marketplace and the absence of any competitive alternatives, if they were to have a disruption in the supply of these probes and we did not have inventory available, it could have a material effect on our business. This risk cannot be completely offset due to the fact the vendor has patent protection which limits other vendors from supplying these probes. |
Capital Lease Transactions
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6 Months Ended |
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Jun. 30, 2011
|
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Capital Lease Transactions | Â |
Capital Lease Transactions | NOTE D — CAPITAL LEASE TRANSACTIONS On July 28, 2010 NeoGenomics Laboratories and Leasing Technologies, Inc. (LTI) agreed on the terms and conditions of a new $1.0 million lease line of credit. The new line has the same terms and conditions of our November 5, 2008 Master Lease Agreement with LTI. Advances under the lease line may be made for one year by executing equipment schedules for each advance. The lease term of any equipment schedules issued under the lease line will be for 36 months. The lease rate factor applicable for each equipment schedule is 0.0327/month. If the Subsidiary makes use of the entire lease line, the monthly rent would be $32,700. Monthly rent for the leased equipment is payable in advance on the first day of each month. The obligations of the Subsidiary are guaranteed by the Parent Company. At the end of the term of each equipment schedule the Subsidiary may: (a) renew the lease with respect to such equipment for an additional 12 months at fair market value; (b) purchase the equipment at fair market value, which price will not be less than 10% of cost nor more than 14% of cost; (c) extend the term for an additional six months at 35% of the monthly rent paid by the lessee during the initial term, after which the equipment may be purchased for the lesser of fair market value or 8% of cost; or (d) return the equipment subject to a remarketing charge equal to 6% of cost.
During the second quarter 2011, we entered into additional schedules under our lease facility with LTI of approximately $363,000 to purchase laboratory equipment. On June 30, 2011 we had approximately $142,000 of availability on the line. On July 21, 2011, subsequent to the end of the second quarter, NeoGenomics Laboratories and LTI agreed on the terms and conditions of a new $1.0 million lease line of credit. The terms and conditions are the same as described above and advances under the lease line may be made for a period of one year. During the second quarter 2011, we entered into three leases for the purchase of a total of approximately $40,000 in computer equipment. These were capital leases with 36-month terms and an option to buy the equipment at the end of the lease term for $1. The interest rates of the leases were between 13% and 15%. |
Equity
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
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Equity | Â |
Equity | NOTE E — EQUITY Warrant Exercises During January 2011, Aspen Select Healthcare, LP, Steven C. Jones, Dr. Michael T. Dent, SKL Limited Family Partnership ("SKL"), Larry Kuhnert and John Elliott, who previously received warrants for a) participating in our private equity offering in 2006, b) modifying a debt arrangement with us, or c) waiving certain rights they had with respect to the 2006 offering exercised 1,600,000 warrants at an exercise price of $0.26 per share in a cashless exercise. In order to settle these exercises, we issued 1,326,633 shares of common stock. On January 21, 2011, Aspen Select Healthcare, LP exercised 2,500,000 warrants to purchase common stock at an exercise price of $0.31 per share in a cashless transaction. The Company issued 1,991,391 unrestricted shares of common stock to settle this transaction. These warrants were originally issued as part of the March 23, 2005 loan facility with Aspen Select Healthcare, LP. On January 31, 2011, Hawk & Associates exercised 35,000 warrants to purchase common stock at an exercise price of $0.30 per share in a cashless transaction. Hawk and Associates also exercised 35,000 warrants to purchase common stock at an exercise price of $0.68 per share in a cashless transaction in February 2011. The Company issued a combined total of 47,185 unrestricted shares of common stock to settle these exercises. January 2011 Private Equity Offering Between January 10, 2011 and January 12, 2011 the Company entered into subscription agreements with certain investors (the "Investors") pursuant to which the Company sold 2,001,667 shares of common stock at a price of $1.50 per share, which resulted in gross proceeds to the Company of approximately $3.0 million. In connection with this Common Stock Financing, the Company entered in registration rights agreements with the Investors which entitle them to certain demand and piggyback registration rights. The investors included officers and directors of the Company or an affiliate of officers and directors of the Company. |
Restricted Stock Awards
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6 Months Ended |
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Jun. 30, 2011
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Restricted Stock Awards | Â |
Restricted Stock Awards | NOTE F — RESTRICTED STOCK AWARDS On April 27, 2011, the Company granted 24,000 shares of restricted stock to each of the five non-officer directors of the Company for a total of 120,000 restricted shares. These directors were elected by the shareholders and the stock award is for service on the board of directors only. Such restricted shares vest a rate of 2,000 shares per quarter on the last day of each calendar quarter beginning on June 30, 2011 and ending on March 31, 2014 so long as each director remains a member of the Board of Directors. The fair market value of each grant of restricted stock on award date was deemed to be $34,560 or $1.44 per share, which was the closing price of the Company's common stock on the day before the grant as approved by the board of directors. The company has also agreed to reimburse each director $12,000 over the next six months to offset the income taxes due on such restricted stock awards, again provided they remain a Director of the Company. |
Critical Accounting Policies
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6 Months Ended |
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Jun. 30, 2011
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Critical Accounting Policies | Â |
Critical Accounting Policies | NOTE B — CRITICAL ACCOUNTING POLICIES Revenue Recognition The Company recognizes revenues in accordance with the Securities and Exchange Commission's Staff Accounting Bulletin Topic 13.A.1 and FASB ASC 605-10-S99-1, when (a) the price is fixed or determinable, (b) persuasive evidence of an arrangement exists, (c) the service is performed and (d) collectability of the resulting receivable is reasonably assured. The Company's specialized diagnostic services are performed based on a written test requisition form and revenues are recognized once the diagnostic services have been performed, the results have been delivered to the ordering physician, the payor has been identified and eligibility and insurance have been verified. These diagnostic services are billed to various payors, including Medicare, commercial insurance companies, other directly billed healthcare institutions such as hospitals and clinics, and individuals. The Company reports revenues from contracted payors, including Medicare, certain insurance companies and certain healthcare institutions, based on the contractual rate, or in the case of Medicare, published fee schedules. The Company reports revenues from non-contracted payors, including certain insurance companies and individuals, based on the amount expected to be collected. The difference between the amount billed and the amount expected to be collected from non-contracted payors is recorded as a contractual allowance to arrive at the reported net revenues. The expected revenues from non-contracted payors are based on the historical collection experience of each payor or payor group, as appropriate. In each reporting period, the Company reviews its historical collection experience for non-contracted payors and adjusts its expected revenues for current and subsequent periods accordingly. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are reported, net of an allowance for doubtful accounts, which is estimated and recorded in the same period the related revenue is recorded based on the historical collection experience for each type of payor. In addition, the allowance is adjusted periodically, based upon an evaluation of historical collection experience with specific payors, payor types, and other relevant factors, including regularly assessing the state of our billing operations in order to identify issues which may impact the collectability of receivables or allowance estimates. Revisions to the allowance are recorded as an adjustment to bad debt expense within general and administrative expenses. After appropriate collection efforts have been exhausted, specific receivables deemed to be uncollectible are charged against the allowance in the period they are deemed uncollectible. Recoveries of receivables previously written-off are recorded as credits to the allowance.
Stock-Based Compensation The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718 Compensation – Stock Compensation. ASC 718 requires recognizing compensation costs for all share-based payment awards made to employees and directors based upon the awards' grant-date fair value. The standard covers employee stock options, restricted stock, and other equity awards. For stock options, the Company uses a trinomial lattice option-pricing model to estimate the grant-date fair value of stock option awards, and recognizes compensation cost on a straight-line basis over the awards' vesting periods. The Company estimates an expected forfeiture rate, which is factored into the determination of the Company's periodic expense. Reclassification One amount in the December 31, 2010 statement of cash flows was reclassified to conform to the presentation in the current year statement of cash flows. |