10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________

FORM 10-Q

________________

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2016

OR 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number: 001-33094

________________

American CareSource Holdings, Inc.

(Exact name of Registrant as specified in its charter)

________________

Delaware	20-0428568
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

55 Ivan Allen Jr. Blvd., Suite 510

Atlanta, Georgia 30308

(Address of principal executive offices)

(404) 465-1000

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share	OTC Markets OTCQB

Securities registered pursuant to Section 12(g) of the Act:

None

________________

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 ☒ 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 ☒ 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 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	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐ No☒

As of August 10, 2016, there were 16,597,150 outstanding shares of common stock of the registrant.

1

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements can be identified by forward-looking words such as “may,” “will,” “seek,” “would,” “could,” “should,” “expect,” “intend,” “anticipate,” “believe,” “estimate” and “continue” or similar words and include statements regarding our operational and strategic plans, future operations, future financial position, prospects, expectations and future development or contain other “forward-looking” information.

Such forward-looking statements are based on current information, assumptions and belief of management, and are not guarantees of future performance. Substantial risks and uncertainties could cause actual results or future events to differ materially from those indicated by such forward-looking statements, including, but not limited to:

• our ability to continue as a going concern if we do not obtain additional financing;

• our ability to attract and maintain patients, clients and providers and achieve our financial results;

• our ability to obtain additional capital to meet our liquidity needs;

• changes in national healthcare policy, federal and state regulation, including without limitation the impact of the Patient Protection and Affordable Care Act, the Health Care and Education Reconciliation Act and Medical Loss Ratio regulations;

• our ability to complete the disposition of our ancillary network business to HealthSmart;

• our ability to maintain compliance with OTC listing rules and other regulatory authorities;

• general economic conditions, including economic downturns and increases in unemployment;

• our ability to successfully operate and improve our urgent and primary care centers;

• our ability to develop, identify, acquire and integrate target urgent and primary care centers;

• increased competition in the urgent and primary care market;

• our ability to recruit and retain qualified physicians and other healthcare professionals;

• reduction in reimbursement rates from governmental and commercial payors;

• lower than anticipated demand for services;

• HealthSmart’s ability to manage our ancillary network business;

• changes in the business decisions by significant ancillary network clients;

• increased competition in our ancillary network business from major carriers;

• increased competition from cost containment vendors and solutions;

• implementation and performance difficulties; and

• other risk factors described in our “Risk Factors” section included in this report or in our Annual Report on Form 10-K for the year ended December 31, 2015.

The preceding list is not intended to be an exhaustive list of all of the risks and uncertainties that could cause our actual results or future events to differ materially from those expressed or implied by our forward-looking statements. Our actual results or future events could differ materially from those anticipated in the forward-looking statements for many reasons, including the reasons described in our “Risk Factors” section included in this report or in our Annual Report on Form 10-K for the year ended December 31, 2015. Given these uncertainties, you should not place undue reliance on our forward-looking statements, and we cannot assure you that the forward-looking statements in this report will prove to be accurate. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report, to conform these statements to actual results, or to changes in our expectations.

2

TABLE OF CONTENTS

AMERICAN CARESOURCE HOLDINGS, INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2016

Part I		Financial Information	4
	Item 1.	Financial Statements	4
		Consolidated Balance Sheets (unaudited)	4
		Consolidated Statements of Operations (unaudited)	5
		Consolidated Statements of Stockholders' (Deficit) (unaudited)	6
		Consolidated Statements of Cash Flows (unaudited)	7
		Notes to Unaudited Consolidated Financial Statements	8
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
	Item 4.	Controls and Procedures	26
Part II		Other Information	26
	Item 1.	Legal Proceedings	26
	Item 1A.	Risk Factors	26
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
	Item 6.	Exhibits	26
		Signatures	27
		Exhibit Index	28

3

AMERICAN CARESOURCE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share data)

	June 30, 2016 (Unaudited)			December 31, 2015 (Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	299		$	2,629
Accounts receivable, net		1,603			1,498
Prepaid expenses and other current assets		764			391
Note receivable from sale of subsidiary		293			-
Assets held for sale		2,839			2,644
Total current assets		5,798			7,162
Property and equipment, net		4,604			4,859
Other assets:
Deferred loan fees, net		674			1,154
Other non-current assets		106			104
Note receivable from sale of subsidiary		267			-
Intangible assets, net		1,770			1,885
Goodwill		5,921			5,921
Total other assets		8,738			9,064
Total assets	$	19,140		$	21,085
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Lines of credit	$	11,800		$	11,100
Accounts payable		1,624			1,609
Accrued liabilities		1,287			1,907
Current portion of promissory notes and notes payable		595			210
Capital lease obligations, current portion		139			134
Liabilities held for sale		4,915			5,435
Total current liabilities		20,360			20,395
Long-term liabilities:
Promissory notes and notes payable		1,639			522
Capital lease obligations		1,561			1,630
Other long-term liabilities		382			344
Total long-term liabilities		3,582			2,496
Total liabilities		23,942			22,891
Stockholders' (deficit):
Preferred stock, $0.01 par value; 9,999 shares authorized		-			-
Series A convertible preferred stock; .87 shares authorized; .75 shares issued and outstanding in June 30, 2016 and December 31, 2015		664			664
Common stock, $0.01 par value; 40,000 shares authorized; 16,608 and 16,597 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively		166			165
Additional paid-in capital		33,002			32,535
Accumulated (deficit)		(38,266	)		(35,170	)
Stockholders' (deficit) of American CareSource Holdings, Inc.		(4,434	)		(1,806	)
Equity of non-controlling interest		(368	)		-
Total stockholders' (deficit)		(4,802	)		(1,806	)
Total liabilities and stockholders' (deficit)	$	19,140		$	21,085

The accompanying notes are an integral part of these unaudited financial statements.

4

AMERICAN CARESOURCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(amounts in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net revenues:
Urgent and primary care	$	3,638		$	2,354		$	8,050		$	5,026
Service agreement and other		648			-			1,242			-
Total net revenues		4,286			2,354			9,292			5,026
Operating expenses:
Salaries, wages, contract medical professional fees and related expenses		3,724			3,380			7,730			6,456
Facility expenses		481			349			1,006			711
Medical supplies		174			174			384			398
Other operating expenses		1,512			1,495			3,115			3,543
Intangible asset impairment		-			520			-			520
Depreciation and amortization		227			170			449			336
Total operating expenses		6,118			6,088			12,684			11,964
Operating (loss)		(1,832	)		(3,734	)		(3,392	)		(6,938	)
Other (income) and expense:
(Gain) on cancellation of acquisition promissory note		(90	)		-			(90	)		-
(Gain) on sale of Virginia urgent care clinics		(361	)		-			(361	)		-
Interest expense:
Interest expense		126			93			233			176
Deferred loan fees amortization, net of (gain)/loss on warrant liability		376			(757	)		846			(388	)
Total other (income) and interest expense		51			(664	)		628			(212	)
(Loss) from continuing operations before taxes		(1,883	)		(3,070	)		(4,020	)		(6,726	)
Income tax expense		7			4			13			10
Net (loss) from continuing operations		(1,890	)		(3,074	)		(4,033	)		(6,736	)
Income/(loss) from discontinued operations		270			(269	)		569			(284	)
Net (loss)		(1,620	)		(3,343	)		(3,464	)		(7,020	)
Net (loss) attributable to non-controlling interests		(233	)		-			(368	)		-
Net (loss) attributable to American CareSource Holdings, Inc.	$	(1,387	)	$	(3,343	)	$	(3,096	)	$	(7,020	)
Basic net (loss) per common share, continuing operations	$	(0.10	)	$	(0.45	)	$	(0.21	)	$	(0.99	)
Diluted net (loss) per common share, continuing operations	$	(0.10	)	$	(0.45	)	$	(0.21	)	$	(1.10	)
Basic net income (loss) per common share, discontinued operations	$	0.02		$	(0.04	)	$	0.03		$	(0.04	)
Diluted net income (loss) per common share, discontinued operations	$	0.02		$	(0.04	)	$	0.03		$	(0.04	)
Basic weighted-average common shares outstanding		16,608			6,849			16,606			6,811
Diluted weighted-average common shares outstanding		16,608			6,849			16,606			6,851

The accompanying notes are an integral part of these unaudited financial statements.

5

AMERICAN CARESOURCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT)

(Unaudited)

(amounts in thousands, except shares of Series A Convertible Preferred Stock)

	Series A Convertible Preferred Stock				Common Stock				Additional Paid-In		ACSH Accumulated			Non-controlling Interest Accumulated			Total Stockholders'
	Shares		Amount		Shares		Amount		Capital		(Deficit)			(Deficit)			(Deficit)
Balance at December 31, 2015		750	$	664		16,597	$	165	$	32,535	$	(35,170	)		-		$	(1,806	)
Net (loss)		-		-		-		-		-		(3,096	)		(368	)		(3,464	)
Stock-based compensation expense		-		-		-		-		101		-			-			101
Issuance of deferred warrant costs										366								366
Issuance of common stock upon conversion of restricted stock		-		-		11		1		-		-			-			1
Balance at June 30, 2016		750	$	664		16,608	$	166	$	33,002	$	(38,266	)	$	(368	)	$	(4,802	)

The accompanying notes are an integral part of these unaudited financial statements.

6

AMERICAN CARESOURCE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(amounts in thousands)

	Six Months Ended June 30,
	2016			2015
Cash flows from operating activities:
Net (loss)	$	(3,464	)	$	(7,020	)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Non-cash stock-based compensation expense		101			403
(Gain) on cancellation of acquisition promissory note		(90	)		-
(Gain) on sale of Virginia urgent care clinics		(361	)		-
Intangible asset impairment		-			520
Depreciation and amortization		449			583
Deferred loan fees amortization, net of loss/(gain) on warrant liability		846			(388	)
Change in deferred rent		39			119
Changes in operating assets and liabilities:
Accounts receivable		365			382
Prepaid expenses and other current assets		(679	)		(106	)
Accounts payable		437			(352	)
Accrued liabilities		(588	)		789
Assets held for sale		(195	)		283
Liabilities held for sale		(520	)		(159	)
Net cash (used in) operating activities		(3,660	)		(4,946	)
Cash flows from investing activities:
Net change in other non-current assets		(269	)		371
Proceeds from sale of urgent care subsidiary		50			-
Additions to property and equipment		(257	)		(138	)
Net cash (used in) investing activities		(476	)		233
Cash flows from financing activities:
Proceeds from issuance of common stock and option exercises		-			33
Proceeds from borrowings		2,339			4,784
Principal payments on capital lease obligations		(64	)		(57	)
Principal payments on long-term debt		(47	)		(554	)
Payment of deferred offering costs		(422	)		(22	)
Net cash provided by financing activities		1,806			4,184
Net (decrease) in cash and cash equivalents		(2,330	)		(529	)
Cash and cash equivalents at beginning of period		2,629			1,020
Cash and cash equivalents at end of period	$	299		$	491
Supplemental cash flow information:
Cash paid for interest	$	213		$	117
Supplemental non-cash operating and financing activity:
Offering costs, deferred and unpaid	$	-		$	7
Offering costs, unpaid	$	36		$	-
Reclassified property and equipment from prepaid expenses	$	-		$	51
Sale of Virginia urgent care clinics for note receivable	$	560		$	-

The accompanying notes are an integral part of these unaudited financial statements.

7

AMERICAN CARESOURCE HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(tables in thousands, except per share data)

1. General

Basis of Presentation

The accompanying unaudited consolidated financial statements of American CareSource Holdings, Inc. and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X of the rules and regulations of the Securities and Exchange Commission (“SEC”).  Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these statements include all adjustments necessary to present a fair statement of our consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. Preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts in the financial statements and notes. Actual results could differ from those estimates. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015.  References herein to "the Company," "we," "us," or "our" refer to American CareSource Holdings, Inc. and its subsidiaries.

Significant Accounting Policies

Goodwill resulted from our acquisition of urgent and primary care businesses during the years ended December 31, 2015 and 2014. In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations, the purchase method of accounting requires that the excess of the purchase price paid over the estimated fair value of identifiable tangible and intangible net assets of acquired businesses be recorded as goodwill. In accordance with ASC 350, Intangibles – Goodwill and Other, we are required to test goodwill for impairment annually or when indications of impairment occur. We perform our annual goodwill impairment test for our reporting units as of October 1, using a discounted cash flow method. In the interim, we review goodwill for impairment whenever events or circumstances indicate that the carrying amount might not be recoverable. We do not believe any event or circumstance in the second quarter of 2016 warranted an impairment review of goodwill, other than of our Florida clinics. Due to the closure of one of the Florida clinics we performed an interim goodwill impairment analysis for the Florida reporting unit and found no impairment was required.

Variable Interest Entities ("VIEs") – We consolidate VIEs when we are the “primary beneficiary” of the VIE. The primary beneficiary is the party that has (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) through its interests in the VIE, the obligation to absorb losses or the right to receive benefits from the VIE that could be significant to the VIE.

We have determined that Medac Health Services, P.A. (“Medac”) is a VIE and that we are the primary beneficiary. The financial results of Medac, our consolidated VIE, have been included in our operations since December 15, 2015, the date we closed the acquisition of certain assets from Medac (“the Medac Asset Acquisition”). Refer to Note 4 – Acquisitions and Variable Interest Entity.

For additional Significant Accounting Policies, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Recent Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-09 “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This standard requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid in capital pools. The guidance also allows for the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. The guidance is effective in 2017 with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and the timing of adoption.

2.  Description of Business

The Company engages in two lines of business: our urgent and primary care business, which we operate under the tradenames GoNow Doctors and Medac, and our ancillary network business. These lines of business are supported by a shared services function.

8

On June 15, 2016, we entered into an asset purchase agreement to sell our legacy ancillary network business to our largest client and manager of the business, HealthSmart Preferred Care II, L.P. (“HealthSmart”). The purchase agreement contains customary representations, warranties, covenants, indemnification provisions, and closing conditions, and we anticipate closing the transaction in third or fourth quarter of 2016. Accordingly, we concluded that the ancillary network business qualifies as discontinued operations and financial results for the ancillary network business are presented as discontinued operations in our consolidated statements of operations, and the related asset and liability accounts are presented on our consolidated balance sheets as held for sale. Amounts previously reported have been reclassified, as necessary, to conform to this presentation to allow for meaningful comparison of continuing operations. Refer to Note 5 – Discontinued Operations.

In May 2014, we announced our entry into the urgent and primary care market. During the remainder of 2014, through our wholly-owned subsidiaries, we consummated five transactions resulting in our acquisition of ten urgent and primary care centers, located in Georgia (3), Florida (2), Alabama (3), and Virginia (2). In December 2015, we completed a key acquisition of urgent care assets comprising four sites in North Carolina. In January 2016 we closed one of our Georgia sites, on April 1, 2016 we sold the two Virginia centers, and on May 20, 2016 we closed our facility located in Panama City Beach, Florida.

Our healthcare centers offer a wide array of services for non-life-threatening medical conditions. We strive to improve access to quality medical care by offering extended hours and weekend service primarily on a walk-in basis. Our centers offer a broad range of medical services that generally fall within the urgent care, primary care, family care, and occupational medicine classifications. Specifically, we offer non-life-threatening, out-patient medical care for the treatment of acute, episodic, and some chronic medical conditions. When hospitalization or specialty care is needed, referrals to appropriate providers are made.

Patients typically visit our centers on a walk-in basis when their condition is not severe enough to warrant an emergency visit or when treatment by their primary care provider is inconvenient. We also attempt to capture follow-up, preventative and general primary care business after walk-in visits. The services provided at our centers include, but are not limited to, the following:

• routine treatment of general medical problems, including colds, flu, ear infections, hypertension, asthma, pneumonia, urinary tract infections, and other conditions typically treated by primary care providers;

• treatment of injuries, such as simple fractures, dislocations, sprains, bruises, and cuts;

• minor, non-emergent surgical procedures, including suturing of lacerations and removal of foreign bodies;

• diagnostic tests, such as x-rays, electrocardiograms, complete blood counts, and urinalyses; and

• occupational and industrial medical services, including drug testing, workers' compensation cases, and pre-employment physical examinations.

Our centers are typically equipped with digital x-ray machines, electrocardiograph machines and basic laboratory equipment, and are generally staffed with a combination of licensed physicians, nurse practitioners, physician assistants, medical support staff, and administrative support staff. Our medical support staff includes licensed nurses, certified medical assistants, laboratory technicians, and registered radiographic technologists.

3. Liquidity and Earnings (Loss) Per Share

Liquidity and Capital Resources

As of June 30, 2016, we had cash and cash equivalents of $299,000 and a working capital deficit of $14.6 million. As of December 31, 2015, we had cash and cash equivalents of $2.6 million and a working capital deficit of $13.2 million.

Our cash needs have been funded historically from loan proceeds and equity offerings. We entered into two lines of credit in 2014. As of June 30, 2016, maximum borrowings under these lines of credit was $12,000,000. As of June 30, 2016, we had no additional borrowing capacity under our lines of credit. Furthermore, both lines of credit are scheduled to mature in 2017 at which time the full outstanding principal balance of $11,800,000 will become due and payable. Substantially all of the borrowings under the lines of credit were used to finance acquisition activity, to fund losses, and $200,000, which is not currently available to us, was used to secure a bond required to obtain a state license for our ancillary network business. Although we intend to extend further the maturity dates of the two lines of credit and raise additional capital through the incurrence of additional debt or sale of equity or assets during the remainder of 2016 or in 2017, there is no assurance that we will be successful in completing such actions.

9

If we are unable to obtain additional extensions on our lines of credit or if we are unable to raise additional funds, we will not have sufficient cash on hand to meet our cash requirements over the next 12 months. These uncertainties raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Our financial statements have been prepared on a going concern basis, which contemplates the recoverability of assets and satisfaction of liabilities in the normal course of business. Based on the information herein, there is a substantial doubt as to the Company’s ability to continue as a going concern. We expect to need additional capital during 2016 to fund anticipated operating losses, to satisfy our debt obligations as they become due and to continue to improve the operating performance of our urgent and primary care business; however, there are no assurances we will be able to secure this capital at terms acceptable to us or at all. We may seek to raise such capital through the sale of assets or through one or more public or private equity offerings, debt financings, borrowings or a combination thereof. However, we currently have no plans to conduct equity offerings to raise capital. If we raise funds through the incurrence of additional debt or the issuance of debt securities, the lenders or purchasers of debt securities may require security that is senior to the rights of our common stockholders. In addition, our incurrence of additional debt could result in the imposition of covenants that restrict our operations or limit our ability to achieve our business objectives. The issuance of any new equity securities would likely dilute the interest of our current stockholders. In light of our historical performance, additional capital may not be available when needed on acceptable terms, or at all. If adequate funds are not available, we will need to, among other things, abandon our expansion plans, which would have a material adverse impact on our business prospects and results of operations. In addition, we may be required to reduce our operations, including further reductions in headcount, and sell assets. However, we may be unable to sell assets or undertake other actions to meet our operational needs. As a result, we may be unable to pay our ordinary expenses, including our debt service, on a timely basis, and we may therefore determine to exit the urgent and primary care business.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed using a two-class participating securities method. Losses have been allocated to the preferred stock, on an as-converted basis, without preference to the common stock because the dividend and liquidation rights of the preferred and common stock are equivalent on an as-converted basis.  Diluted earnings (loss) per share is computed similar to basic earnings per share except for adjustments for dilutive potential common shares outstanding during the period using the treasury stock method. We computed earnings (loss) per share for both continuing and discontinued operations for the three and six month periods ended June 30, 2016, and June 30, 2015.

Basic net income (loss) and diluted net income (loss) per share data were computed as follows (in thousands except per share amounts):

	Three Months Ended			Six Months Ended			Three Months Ended			Six Months Ended
	June 30, 2016			June 30, 2016			June 30, 2015			June 30, 2015
Numerator:
(Loss) from continuing operations		(1,890	)		(4,033	)		(3,074	)		(6,736	)
Plus loss from non-controlling interests		233			368			-			-
Plus loss allocated to preferred stock		100			222			-			-
(Loss) from continuing operations, common stock for basic earnings per share		(1,557	)		(3,443	)		(3,074	)		(6,736	)
Less gain on change in fair value of warrant liability		-			-			-			791
(Loss) from continuing operations, common stock for diluted earnings per share		(1,557	)		(3,443	)		(3,074	)		(5,945	)
Income/(loss) from discontinued operations		270			569			(269	)		(284	)
Denominator:
Weighted-average basic common shares outstanding		16,608			16,606			6,849			6,811
Assumed conversion of dilutive securities:
Common stock purchase warrants		-			-			-			40
Denominator for dilutive earnings per share - adjusted weighted-average shares		16,608			16,606			6,849			6,851
Basic net (loss) per share, continuing operations	$	(0.10	)	$	(0.21	)	$	(0.45	)	$	(0.99	)
Diluted net (loss) per share, continuing operations	$	(0.10	)	$	(0.21	)	$	(0.45	)	$	(1.10	)
Basic net income (loss) per share, discontinued operations	$	0.02		$	0.03		$	(0.04	)	$	(0.04	)
Diluted net income (loss) per share, discontinued operations	$	0.02		$	0.03		$	(0.04	)	$	(0.04	)

The following table summarizes potentially dilutive shares outstanding as of June 30, 2016 and June 30, 2015, which were excluded from the calculation due to being anti-dilutive (in thousands):

	2016		2015
Common stock purchase warrants		15,167		1,782
Stock options		1,471		748
Restricted stock units		-		-
Restricted stock		200		-

4.  Acquisitions, Variable Interest Entity, and Disposals

On December 15, 2015, ACSH Medical Management, LLC (“ACSH Management”), a wholly-owned subsidiary of the Company, purchased from Medac and its shareholders, substantially all the assets used in the operation of Medac’s four urgent care centers in the greater Wilmington, North Carolina area for $4,370,000 in cash, the assumption of $768,000 in liabilities and a $560,000 note payable.  Medac remains an urgent care operating entity, owned by a single physician, with which ACSH Management has entered into various agreements. ACSH Management has entered into a $1.0 million secured line of credit for the benefit of Medac to fund certain of Medac’s operating losses and to cover costs necessary to expand the Medac brand in North Carolina.

ACSH Management has the power to direct certain of Medac’s significant activities and has the right to receive benefits from Medac that are significant to Medac. We have determined, therefore, that Medac is a VIE and that ACSH Management is the primary beneficiary. Consequently, we have consolidated Medac and its financial results since the date we closed the Medac Asset Acquisition.

The following table provides the balance sheets of Medac (in thousands):

	June 30, 2016 (Unaudited)			December 31, 2015 (Audited)
Current assets	$	951		$	779
Current liabilities		1,319			759
Stockholder's equity (deficit)		(368	)		20
Total liabilities & stockholder's equity (deficit)	$	951		$	779

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The following table provides certain pro forma financial information for the Company as if the acquisition of Medac had occurred on January 1, 2015.

	Six Months Ended June 30,
(in thousands, except per share amounts)	2016			2015
Net revenue
Urgent and primary care	$	8,050		$	9,070
Service agreement		1,242			868
Total net revenue		9,292			9,938
(Loss) from continuing operations before taxes	$	(4,020	)	$	(6,042	)
Basic net (loss) per common share continuing operations	$	(0.21	)	$	(0.89	)
Diluted net (loss) per common share continuing operations	$	(0.21	)	$	(1.00	)

In January 2016, we closed one of our Georgia clinics. This clinic produced net revenue of approximately $5,000 and $409,000 for the six month periods ending June 30, 2016 and 2015, resulting in net operating losses for such periods of $82,000 and $32,000, respectively.

On April 1, 2016, we exited the Virginia urgent and primary care market by consummating the sale of our two Virginia subsidiaries to UrgeMedical Group, Inc. For the six months ended June 30, 2016 and June 30 2015, our Virginia subsidiaries reported net revenues of approximately $254,000 and $551,000, respectively, and net operating losses of approximately $132,000 and $346,000, respectively.

The sales price for the Virginia subsidiaries was $610,000, $50,000 of which was paid in cash at closing and the balance by delivery of two promissory notes. The first promissory note has an initial principal balance of $160,000 and interest accrues on the outstanding balance at 1.5% per annum. The note is payable in two installments, the first installment of $50,000, which remains outstanding as of the date of this filing, was due within 90 days after closing and the second installment of $110,000 is due within 150 days after closing.

The second promissory note has an initial principal balance of $400,000 and interest accrues on the outstanding balance at 5.0% per annum. Interest-only payments are due each month beginning July 1, 2016. Principal is due in three equal installments of $133,333 on the first, second and third anniversaries of the closing date.

On May 20, 2016 we closed our facility located in Panama City Beach. This clinic produced net revenue of approximately $136,000 and $263,000 for the six month periods ending June 30, 2016 and 2015, resulting in a net operating loss of $120,000 and $116,000 for the six months ended June 30, 2016 and 2015.

5. Discontinued Operations

We expect to consummate our sale of our legacy business to HealthSmart during the 2016 calendar year. As such, we are presenting our ancillary network business as discontinued operations in our consolidated statements of operations and the related asset and liability accounts are presented as held for sale. To allow for meaningful comparison of continuing operations, amounts previously reported have been reclassified, as necessary, to conform to this presentation.

The ancillary network business offers cost containment strategies, primarily through the utilization of a comprehensive national network of ancillary healthcare service providers.  Services are marketed to a number of healthcare companies including third-party administrators, insurance companies, large self-funded organizations, various employer groups, and preferred provider organizations. Since October 1, 2014, HealthSmart has managed our ancillary network business under a management services agreement.

Major classes of assets and liabilities of the ancillary network business held for sale are as follows (in thousands):

	June 30, 2016  (Unaudited)		December 31, 2015 (Audited)
Accounts receivable	$	1,784	$	1,589
Prepaid expenses and other current assets		43		43
Deferred income taxes		18		18
Total current assets held for sale		1,845		1,650
Property and equipment, net		588		588
Intangible assets, net		406		406
Total other assets held for sale		994		994
Total assets held for sale	$	2,839	$	2,644
Due to service providers	$	2,333	$	3,225
Due to HealthSmart		2,582		2,210
Total current liabilities held for sale		4,915		5,435
Total liabilities held for sale	$	4,915	$	5,435

Summary results of operations for the ancillary network business were as follows (in thousands):

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	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016		2015
Net revenues	$	5,095	$	5,604		$	9,790	$	11,347
Operating expenses:
Provider payments		3,667		4,137			6,923		8,468
Administrative fees		354		194			678		524
Other operating costs		804		933			1,620		1,905
Prepaid writeoff		-		487			-		487
Depreciation and amortization		-		122			-		247
Total operating expenses		4,825		5,873			9,221		11,631
Income/(loss) from discontinued operations	$	270	$	(269	)	$	569	$	(284	)

We recognize revenue in our legacy business on the services we provide, which include (i) providing payor clients with a comprehensive network of ancillary healthcare providers; (ii) providing claims management, reporting, processing and payment services; (iii) providing network/need analysis to assess the benefits to payor clients of adding additional/different service providers to the client-specific provider networks; and (iv) providing credentialing of network service providers for inclusion in the client payor-specific provider networks.  Revenue is recognized when services are delivered, which occurs after processed claims are billed to the payor clients and collections are reasonably assured.  We estimate revenues and costs of revenues using average historical collection rates and average historical margins earned on claims.  Revenues are adjusted periodically to reflect actual cash collections so that revenues recognized accurately reflect cash collected.

We record a provision for refunds based on an estimate of historical refund amounts.  Refunds are paid to payors for overpayment on claims, claims paid in error, and claims paid for non-covered services.  In some instances, we will recoup payments made to the ancillary service provider if the claim has been fully resolved.  The evaluation is performed periodically and is based on historical data.  We present revenue net of the provision for refunds on the consolidated statement of operations.

After careful evaluation of the key gross and net revenue recognition indicators, we have concluded that our circumstances are most consistent with those key indicators that support gross revenue reporting, since we are fulfilling the services of a principal versus an agent.

Payments to providers is the largest component of our cost of revenues and it consists of payments for ancillary care services in accordance with contracts negotiated with providers for specific ancillary services, separately from contracts negotiated with our clients.

6.  Revenue Recognition and Accounts Receivable

In our urgent and primary care business, we have agreements with governmental and other third-party payors that provide for payments to us based on contractual adjustments to our established rates. Such agreements typically provide for a portion of the payment obligation to be borne by the patient, which we generally collect at the time services are rendered.

Net revenue is reported at the time of service at the estimated net realizable amounts, after giving effect to estimated contractual adjustments, payments from patients, third-party payors and others, and an estimate for bad debts. 

Contractual adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined.  Although we attempt to collect all patient liability at the time of service, we frequently are left with a patient balance, which we bill expeditiously. Such credit is granted to patients, who consist primarily of local residents insured by third-party payors, without collateral.   A summary of the basis of reimbursement with major third-party payors is as follows:

• Commercial and HMO – We have entered into agreements with certain commercial insurance carriers, health maintenance organizations, and preferred provider organizations. Billing methodologies under these agreements include discounts from established charges and prospectively determined rates.

• Medicare – Services rendered to Medicare program beneficiaries are recorded at prospectively determined rates. These rates vary according to a patient classification system that is based on clinical, diagnostic, and other factors.

In establishing our allowance for bad debts, we consider historical collection experience, the aging of the account, payor classification and patient payment patterns.  We adjust this allowance prospectively.

We collect payment from our uninsured patients at the time of service. When services are rendered to employees or contractors of clients for whom we render occupational medicine services, we typically bill the client employer within 30 days of the date of the services. We grant such client credit without collateral.

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We recognize service agreement revenue through our contractual affiliation with Medac. Under a management services agreement with a local emergency medical business company, Medac leases certain employees and provides administrative services in exchange for a fee. Revenue related to the agreement is recorded during the period when the services are performed.

Below is a summary of accounts receivable as of June 30, 2016 and December 31, 2015, and revenues for the three and six month periods ended June 30, 2016 and 2015, respectively, for our urgent and primary care business. 

(in thousands)	June 30, 2016 (Unaudited)			December 31, 2015 (Audited)
Accounts receivable, trade	$	3,047		$	3,236
Accounts receivable, other	$	158
Less:
Estimated allowance for contractual adjustments uncollectible amounts		(1,602	)		(1,738	)
Accounts receivable, net	$	1,603		$	1,498

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2016			2015			2016			2015
Gross revenue	$	7,386		$	4,333		$	15,804		$	10,119
Less:
Provision for contractual adjustments and estimated uncollectible amounts		(3,100	)		(1,979	)		(6,512	)		(5,093	)
Net revenue	$	4,286		$	2,354		$	9,292		$	5,026

7.  Capital and Operating Lease Obligations

The following reflects the scheduled, minimum required payments under our lease agreements in effect at June 30, 2016 (in thousands):

	Capital Leases			Operating Leases		Total
2016 (remaining 6 months)	$	150		$	614	$	764
2017		288			1,001		1,289
2018		276			926		1,202
2019		273			812		1,085
2020		286			727		1,013
Thereafter		2,612			4,074		6,686
Total minimum lease payments		3,885		$	8,154	$	12,039
Less amount representing interest		(2,185	)
Present value of net minimum obligations		1,700
Less current obligation under capital lease		139
Long-term obligation under capital lease	$	1,561

8.  Lines of Credit, Promissory Notes, and Notes Payable

Below is a summary of our short-term and long-term debt obligations.

Lines of Credit

As of June 30, 2016, we had outstanding borrowings of $11,800,000 under our two credit agreements, with a weighted-average interest rate of 2.19%. Amounts outstanding under these credit agreements were recorded as a current liability on our consolidated balance sheet as of June 30, 2016, since both credit agreements, as amended, mature on June 1, 2017. Substantially all of the borrowings under the credit agreements were used to finance acquisition activity, fund losses, and $200,000, which is not currently available to be borrowed by us, was used to secure a bond required to obtain a state license for our ancillary network business. The obligations under the credit agreements are secured by all the assets of the Company and its subsidiaries, and include ordinary and customary covenants related to, among other things, additional debt, further encumbrances, sales of assets, and investments and lending.

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Borrowings under the credit agreements are also secured by guarantees provided by certain officers and directors of the Company, among others.  In consideration of their guaranteeing such indebtedness, we originally issued the guarantors warrants to purchase an aggregate of 2,060,000 shares of our common stock.

A portion of the indebtedness under the credit agreements matured on June 1, 2016. On June 7, 2016 the Company extended the maturity date of all indebtedness under the credit agreements to June 1, 2017. In connection with the extension, the guarantors agreed to extend their respective guarantees to the modified maturity date. In consideration of such extension, the Company issued warrants to purchase an aggregate of 2,000,000 shares of common stock of the Company at an exercise price of $0.21 per share. The warrants vested immediately and are exercisable any time prior to their expiration on June 6, 2026.

Promissory Notes and Notes Payable

On June 3, 2016, we received a loan of $1,639,000 from the following three board members: John Pappajohn, Mark Oman, and Matt Kinley. The loan is evidenced by promissory notes bearing interest at 6% per annum issued to each of the respective directors. Interest-only payments are due and payable under the promissory notes on the first day of each calendar month after the date of issuance, and all principal and accrued but unpaid interest are due and payable in December 2017. The loans are subordinate to the credit agreements with Wells Fargo.

In 2015, as part of the Medac Asset Acquisition, the Company issued a promissory note to the seller for $560,000. The fair value of the note was subsequently adjusted for reporting purposes to $522,000. The promissory note accrues interest at 5% per annum and matures on June 15, 2017. Other acquisition notes of approximately $73,000 remained outstanding at June 30, 2016, mature in 2016 and bear interest at 5%.

The following is a summary of all Company debt as of June 30, 2016 (in thousands):

Revolving line of credit	$	11,800
Promissory notes		2,234
Total debt		14,034
Less current maturities		12,395
Long-term debt	$	1,639

9. Intangible Assets

Identifiable intangible assets acquired in the urgent and primary care transactions are comprised of relationships with patients and contracts that drive patient volume (and therefore revenue) to our centers.  Identifiable intangible assets and related accumulated amortization consist of the following as of the dates presented (in thousands):

	June 30, 2016 (Unaudited)			December 31, 2015 (Audited)
Gross carrying amount of urgent and primary care intangibles:
Patient relationships and contracts	$	2,014		$	2,074
Accumulated amortization		(244	)		(189	)
Total intangibles, net	$	1,770		$	1,885

Total amortization expense related to intangibles was approximately $57,000 and $80,000 during the three months ended June 30, 2016 and 2015, and $115,000 and $161,000 during the six months ended June 30, 2016 and 2015, respectively. We amortize patient relationships and contracts using the straight-line method over their estimated useful lives between five and ten years. 

Estimated future amortization expense relating to intangibles is as follows (in thousands):

Years ending December 31,	Urgent and  Primary Care
2016 (6 months remaining)	$	114
2017		229
2018		229
2019		202
2020		167
Thereafter		829
Total	$	1,770

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10.  Warrants

Warrants to purchase 15,167,396 shares and 1,782,222 shares of our common stock were outstanding as of June 30, 2016 and June 30, 2015, respectively. Warrants to purchase 11,085,174 shares of common stock were issued in the 2015 Offering. Warrants to purchase 2,060,000 shares of common stock were issued in 2014 and 2015 to the guarantors of our lines of credit, and additional warrants to purchase 2,000,000 shares of common stock were issued to the same guarantors in connection with the recent extension of our credit agreements. The remaining warrants to purchase 22,222 shares of common stock expire on February 1, 2017 and have an exercise price of $1.50 per share. The weighted average price of the outstanding warrants to purchase an aggregate of 15,167,396 of our common stock at June 30, 2016 was $0.76.

The fair value of the additional warrants issued to purchase 2,000,000 shares of common stock was calculated using the Black Sholes options-pricing model. Additional assumptions we used in our valuation calculations were as follows:

Stock price	$0.21
Volatility	100.0%
Risk-free interest rate	1.73%
Exercise price	$0.21
Expected life (years)	10

11.  Segment Reporting

As of June 30, 2016, we operated two segments, urgent and primary care and ancillary network.  We evaluate segment performance based on several factors, the primary financial measure of which is operating income.  We define segment income as income before interest expense, gain or loss on disposal of assets, income taxes, depreciation expense, non-cash amortization of intangible assets, intangible asset impairment, non-cash stock-based compensation expense, shared service expenses, severance charges and any other non-recurring costs.  Shared services primarily consists of compensation costs for our executive management team, corporate headquarters costs, certain transactional costs, support services such as finance and accounting, human resources, legal, marketing and information technology and general administration.  

The following tables set forth a comparison of operations for the following periods presented for our segments and shared services (certain prior year amounts have been reclassified for comparability purposes).

Consolidated statements of operations by segment for the respective three month period ended June 30 are as follows (in thousands):

	Three Months Ended June 30,
	2016											2015
	Urgent and Primary Care			Ancillary Network*		Shared Services			Total			Urgent and Primary Care			Ancillary Network*		Shared Services			Total
Net revenues	$	4,255		$	5,095	$	31		$	9,381		$	2,354		$	5,604	$	-		$	7,958
Total segment operating income (loss)		(84	)		270		(1,364	)		(1,178	)		(795	)		340		(1,610	)		(2,065	)
Additional Segment Disclosures:
Interest expense		55			-		71			126			70			-		23			93
Deferred loan fees amortization, net of loss on warrant liability		282			-		94			376			(568	)		-		(189	)		(757	)
Depreciation and amortization expense		183			-		44			227			151			122		19			292
Income tax expense		-			7		-			7			-			4		-			4
Total asset expenditures		5			-		18			23			19			-		29			48

* Presented as discontinued operations in statement of operations.

	Six Months Ended June 30,
	2016											2015
	Urgent and Primary Care			Ancillary Network*		Shared Services			Total			Urgent and Primary Care			Ancillary Network*		Shared Services			Total
Net revenues	$	9,261		$	9,790	$	31		$	19,082		$	5,026		$	11,347	$	-		$	16,373
Total segment operating income (loss)		(22	)		569		(2,649	)		(2,102	)		(1,245	)		433		(3,621	)		(4,433	)
Additional Segment Disclosures:
Interest expense		101			-		132			233			125			-		51			176
Deferred loan fees amortization, net of (gain)/loss on warrant liability		635			-		211			846			(291	)		-		(97	)		(388	)
Depreciation and amortization expense		377			-		72			449			300			247		36			583
Income tax expense		-			13		-			13			-			10		-			10
Total asset expenditures		59			-		198			257			19			-		119			138

The following provides a reconciliation of reportable segment operating income (loss) to the Company’s consolidated totals (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Total segment operating (loss)	$	(1,178	)	$	(2,065	)	$	(2,102	)	$	(4,433	)
Less:
Severance charges		36			346			47			346
Ancillary network prepaid write-off		-			487			-			487
Depreciation and amortization expense		227			292			449			583
Non-cash stock-based compensation expense		71			256			101			403
Intangible asset impairment		-			520			-			520
Non-recurring professional fees		50			37			124			450
Operating loss, including discontinued operations		(1,562	)		(4,003	)		(2,823	)		(7,222	)
(Gain) on cancellation of acquisition promissory note		(90	)		-			(90	)		-
(Gain) on sale of Virginia urgent care clinics		(361	)		-			(361	)		-
Interest expense		126			93			233			176
Deferred loan fees amortization, net of loss on warrant liability		376			(757	)		846			(388	)
Loss before income taxes, including discontinued operations	$	(1,613	)	$	(3,339	)	$	(3,451	)	$	(7,010	)

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Segment assets include accounts receivable, prepaid expenses and other current assets, property and equipment, and intangibles.  Shared services assets consist of cash and cash equivalents, prepaid insurance, deferred income taxes and property and equipment primarily related to information technology assets.  Consolidated assets, by segment and shared services, as of the periods presented are as follows:

	Urgent and Primary Care		Ancillary Network*		Shared Services		Consolidated
June 30, 2016	$	13,440	$	2,839	$	2,861	$	19,140
December 31, 2015		14,920		2,644		3,521		21,085

* Presented as discontinued operations in balance sheets.

12. Subsequent Events

 On July 26, 2016, we expanded our borrowing capacity with lines of credit with Wells Fargo by $1,000,0000. The additional funds will be used for working capital and will be due and payable on June 1, 2017, the date all indebtedness is due under our credit agreements. The line extension is governed by all terms and conditions set forth in the existing credit agreements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis contains forward-looking statements that are based upon current expectations and involve risks, assumptions and uncertainties. You should review the “Risk Factors” section of this Quarterly Report on Form 10-Q for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements described in the following discussion and analysis.

Overview

We engage in two lines of business: our urgent and primary care business, which we operate under the tradenames GoNow Doctors and Medac, and our legacy ancillary network business. These lines of business are supported through a shared services function.

On June 15, 2016, we entered into an asset purchase agreement to sell our legacy ancillary network business to our largest client and manager of the business, HealthSmart Preferred Care II, L.P. (“HealthSmart”). The purchase agreement contains customary representations, warranties, covenants, indemnification provisions, and closing conditions, and we anticipate closing the transaction in third or fourth quarter of 2016.

Our Urgent and Primary Care Business

In May 2014, we announced our entry into the urgent and primary care market. During the remainder of 2014, through our wholly-owned subsidiaries, we consummated five transactions resulting in our acquisition of ten urgent and primary care centers, located in Georgia (3), Florida (2), Alabama (3), and Virginia (2). In December 2015, we completed a key asset acquisition with a four-site urgent care operator in North Carolina. In January 2016, we closed one of our Georgia centers and in April 2016, we sold the two Virginia centers. We closed one of our Florida centers in May 2016. As of June 30, 2016, we operated ten urgent and primary care facilities.

Our healthcare centers offer a wide array of services for non-life-threatening medical conditions. We strive to improve access to quality medical care by offering extended hours and weekend service primarily on a walk-in basis. Our centers offer a broad range of medical services that generally fall within the urgent care, primary care, family care, and occupational medicine classifications. Specifically, we offer non-life-threatening, out-patient medical care for the treatment of acute, episodic, and some chronic medical conditions. When hospitalization or specialty care is needed, referrals to appropriate providers are made.

Patients typically visit our centers on a walk-in basis when their condition is not severe enough to warrant an emergency visit, when they do not have a relationship with a primary care provider, or when treatment by their primary care provider is inconvenient. We also attempt to capture follow-up, preventative and general primary care business after walk-in visits. The services provided at our centers include, but are not limited to, the following:

• routine treatment of general medical problems, including colds, flu, ear infections, hypertension, asthma, pneumonia, urinary tract infections, and other conditions typically treated by primary care providers,

• treatment of injuries, such as simple fractures, dislocations, sprains, bruises, and cuts;

• minor, non-emergent surgical procedures, including suturing of lacerations and removal of foreign bodies;

• diagnostic tests, such as x-rays, electrocardiograms, complete blood counts, and urinalyses; and

• occupational and industrial medical services, including drug testing, workers’ compensation cases, and pre-employment physical examinations.

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Our centers generally are equipped with digital x-ray machines, electrocardiograph machines and basic laboratory equipment, and are generally staffed with a combination of licensed physicians, nurse practitioners, physician assistants, medical support staff, and administrative support staff. Our medical support staff includes licensed nurses, certified medical assistants, laboratory technicians, and registered radiographic technologists.

Our patient volume, and therefore our revenue, is sensitive to seasonal fluctuations in urgent and primary care activity. Typically, winter months see a higher occurrence of influenza, bronchitis, pneumonia and similar illnesses; however, the timing and severity of these outbreaks can vary dramatically. Additionally, as consumers shift towards high deductible insurance plans, they are responsible for a greater percentage of their bill, particularly in the early months of the year before other healthcare spending has occurred. Our inability to collect the full patient liability portion of the bill at the time of service may lead to an increase in bad debt expense during that period. Our quarterly operating results may fluctuate significantly in the future depending on these and other factors.

In keeping with our retail approach to the business, in the fourth quarter of 2015, we initiated a rebranding campaign with our new tradename, GoNow Doctors. We believe our new name and logo will enable us to effectively market our services in our existing and target communities. We intend to use this name in all states except North Carolina. The trade name acquired in our December 2015 transaction, Medac, has been the trusted brand for urgent care services in the Wilmington, North Carolina market for over 30 years. As a result, we have retained the Medac name and will continue use of the name throughout our North Carolina market. We believe our new logo and tradenames will enable us to effectively market our services in our existing and target communities.

We intend to continue to improve our urgent and primary care business by expanding our service offerings, by increasing the volume of patients treated in our centers through advertising and other efforts, and by improving overall operating efficiency in our centers.

Clinic Closures

In January 2016, we closed one of our Georgia clinics. This clinic produced net revenue of approximately $5,000 and $409,000 for the six month periods ending June 30, 2016 and 2015, respectively.

On May 2016 we closed our facility located in Panama City Beach. This clinic produced net revenue of approximately $136,000 and $263,000 for the six month periods ending June 30, 2016 and 2015, respectively.

Disposition of our Virginia Centers

On April 1, 2016, we exited the Virginia urgent and primary care market by consummating the sale of our two Virginia subsidiaries to UrgeMedical Group, Inc. For the six months ended June 30, 2016 and June 30 2015, our Virginia subsidiaries reported net revenues of approximately $254,000 and $551,000, respectively, and net operating loss of approximately $132,000 and $346,000, respectively.

The sales price for the Virginia subsidiaries was $610,000, $50,000 of which was received at closing and the balance by delivery of two promissory notes. The first promissory note has an initial principal balance of $160,000 and interest accrues on the outstanding balance at 1.5% per annum. The note is payable in two installments, the first installment of $50,000 was due within 90 days after closing and the second installment of $110,000 is due within 150 days after closing.

The second promissory note has an initial principal balance of $400,000 and interest accrues on the outstanding balance at 5.0% per annum. Interest-only payments are due each month beginning July 1, 2016. Principal is due in three equal installments of $133,333 on the first, second and third anniversaries of the effective date of the closing date.

Our Legacy Business

On June 15, 2016, we entered into an asset purchase agreement to sell our legacy ancillary network business to HealthSmart. The purchase agreement contains customary representations, warranties, covenants, indemnification provisions, and closing conditions, and we anticipate closing the transaction in third or fourth quarter of 2016.

We have concluded that our legacy ancillary network business qualifies as discontinued operations. Accordingly, the financial results from the ancillary network business for the periods ended June 30, 2016 and 2015 are presented as discontinued operations in our consolidated statements of operations, and the related asset and liability accounts are presented as held for sale as of June 30, 2016 and 2015. Amounts previously reported have been reclassified, as necessary, to conform to this presentation to allow for meaningful comparison of continuing operations.

Our ancillary network business offers cost containment strategies to our payor clients, primarily through the utilization of a comprehensive national network of ancillary healthcare service providers. This service is marketed to a number of healthcare companies including TPAs, insurance companies, large self-funded organizations, various employer groups and PPOs. We are able to lower the payors’ ancillary care costs through our network of high quality, cost effective providers that we have under contract at more favorable terms than the payors can generally obtain on their own. Payors route healthcare claims to us after service is performed by participant providers in our network. We process those claims and charge the payor according to an agreed upon, contractual rate. Upon processing the claim, we are paid directly by the payor or the insurer for the service. We then pay the medical service provider according to a separately negotiated contractual rate. We assume the risk of generating positive margin, which is calculated as the difference between the payment we receive for the service from the payor and the amount we are obligated to pay the service provider.

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On October 1, 2014, we entered into a management services agreement with HealthSmart. Under the management services agreement, HealthSmart manages the operation of our ancillary network business, subject to the supervision of a five-person oversight committee comprised of three members selected by us and two members selected by HealthSmart. As a result of this arrangement, we no longer employ the workforce of our ancillary network business. Under the management services agreement, HealthSmart operates our ancillary network business for a management fee equal to the sum of (a) 35% of the net profit derived from operation of our ancillary network business, plus (b) 120% of all direct and documented operating expenses and liabilities actually paid during such calendar month by HealthSmart in connection with providing its management services. For purposes of the fee calculation, the term “net profit” means gross ancillary network business revenue, less the sum of (x) the provider payments and administrative fees and (y) 120% of all direct and documented operating expenses and liabilities actually paid during such calendar month by HealthSmart in connection with providing its management services. Any remaining net profit accrues to us on a monthly basis, which we recognize as service agreement revenue. During the term of the agreement, HealthSmart is responsible for the payment of all expenses incurred in providing the management services with respect to our ancillary network business, including personnel salaries and benefits, the cost of supplies and equipment, and rent. The initial term of the management services agreement was three years, and it will terminate upon the consummation of the disposition of the ancillary network business.

Results of Operations

Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015

The following table sets forth a comparison of consolidated statements of operations by our business segments and shared services for the respective three months ended June 30, 2016 and 2015.

	June 30, 2016											June 30, 2015												Change
	Urgent and Primary Care			Ancillary Network*		Shared Services			Total			Urgent and Primary Care			Ancillary Network*			Shared Services			Total			$			%
Urgent and primary care net revenues	$	3,638		$	5,095	$	-		$	8,733		$	2,354		$	5,604		$	-		$	7,958		$	775			10	%
Service revenue		617			-		31			648			-			-			-			-			648
Total revenue		4,255			5,095		31			9,381			2,354			5,604			-			7,958			1,423			18	%
Operating expenses:
Ancillary network provider payments		-			3,667		-			3,667			-			4,137			-			4,137			(470	)		-11	%
Ancillary network administrative fees		-			354		-			354			-			194			-			194			160			82	%
Ancillary network other operating costs		-			804		-			804			-			933			-			933			(129	)		-14	%
Ancillary network prepaid write-off		-			-		-			-			-			487			-			487			(487	)		-100	%
Salaries, wages, contract medical professional fees and related expenses		3,183			-		541			3,724			2,156			-			1,224			3,380			344			10	%
Facility expenses		370			-		111			481			266			-			83			349			132			38	%
Medical supplies		174			-		-			174			174			-			-			174			-			0	%
Other operating expenses		612			-		900			1,512			553			-			942			1,495			17			1	%
Intangible asset impairment		-			-		-			-			520			-			-			520			(520	)		-100	%
Depreciation and amortization		183			-		44			227			151			122			19			292			(65	)		-22	%
Total operating expenses	$	4,522		$	4,825	$	1,596		$	10,943		$	3,820		$	5,873		$	2,268		$	11,961		$	(1,018	)		-9	%
Operating income (loss), including discontinued operations	$	(267	)	$	270	$	(1,565	)	$	(1,562	)	$	(1,466	)	$	(269	)	$	(2,268	)		(4,003	)		2,441			-61	%
Other (income) expense:
(Gain) on cancellation of acquisition promissory note										(90	)											-			(90	)
(Gain)/loss on disposal of assets										(361	)											-			(361	)
Interest expense:
Interest expense										126												93			33			5	%
(Gain)/loss on warrant liability, net of deferred loan fee amortization										376												(757	)		1,133			-150	%
Total other expense and interest expense										51												(664	)		715			-108	%
Loss before income taxes, including income (loss) on discontinued operations									$	(1,613	)										$	(3,339	)	$	1,726			-52	%

* Presented as a discontinued operations in statement of operations.

Our Urgent and Primary Care Business

Our urgent and primary care business segment reported an operating loss before depreciation of $84,000 and an operating loss before depreciation of $1.3 million, respectively, for the three months ended June 30, 2016 and 2015, an improvement of $1.2 million over the prior year period. We entered the urgent and primary care business in May 2014 and we currently own or operate 10 urgent and primary care centers in the east and southeastern United States. The following factors, among several others, contributed to the reduction in our segment operating loss in the three months ended June 30, 2016:

• the execution of our strategic plan by our new executive management team;

• full-quarter inclusion of Medac results;

• improvements to revenue cycle;

• implementation of several cost reduction measures; and

• the sale of our two Virginia clinics

Current period operating loss before depreciation is largely attributable to the predictable reduction in patient volume we experience due to the seasonality of the business. We generally see an increase in our patient visits during winter months due to a higher occurrence of influenza, bronchitis, pneumonia and similar illnesses. Conversely, the late spring and summer months tend to result in fewer patient visits and therefore, less revenue.

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Net Revenues

Net revenues are recognized at the time services are rendered at the estimated net realizable amounts from patients, third-party payors and others, after reduction for estimated contractual adjustments pursuant to agreements with third-party payors and an estimate for bad debts. Our urgent and primary care business net revenues increased to $3.6 million, or 55% over the prior year period.

For the three months ended June 30, 2016, we experienced, in the aggregate, approximately 34,000 patient visits, which resulted in an average of 33 patient visits per day per center and the average reimbursement per patient visit excluding service revenue was approximately $107. For the three months ended June 30, 2015, we experienced, in the aggregate, approximately 20,000 patient visits, which resulted in an average of 22 patient visits per day per center and the average reimbursement per patient visit was approximately $118. We believe our patient volume figures, and therefore our revenue, will improve at our centers as we continue our marketing and advertising efforts in our target markets. Contributing to this projected increase will be the expansion of our occupational medicine service line (on-the-job injuries, pre-employment drug screens, pre-employment physicals), which we intend to grow through our direct marketing efforts.

Salaries, Wages, Contract Medical Professional Fees and Related Expenses

Salaries, wages, contract medical professional fees and related expenses are the most significant operating expense components of our urgent and primary care business and consist of compensation and benefits to our clinical providers and staff at our centers. We employ a staffing model at each center that generally includes at least one board-certified physician, one or more physician assistants or nurse practitioners, nurses or medical assistants and a front office staff member on-site at all times. Salaries, wages, contract medical professional fees and related expenses for the three months ended June 30, 2016 increased $1.0 million, or 48%, over the prior year period. The increase is largely attributable to the addition of the four Medac centers offset by closed and sold facilities no longer in operation this period.

For the three months ended June 30, 2016 and 2015, salaries, wages, contract medical professional fees and related expenses were 87% and 92%, respectively, of our urgent and primary care business net revenues. The reduction in the current year period was the result of, among other things, a decreased usage of temporary and other higher-cost medical providers. Temporary medical providers are generally between 15% and 40% more expensive than our typical, full-time providers. We intend to continue to focus on recruiting and retaining talented physicians and mid-level providers, which we believe will further reduce our clinic staffing costs.

Facility Expenses

Facility expenses consist of our urgent and primary care centers’ rent, property tax, insurance, utilities, telephone, and internet expenses. Facility expenses for the three months ended June 30, 2016 increased $104,000, or 39%, over the prior year period. For the three months ended June 30, 2016 and 2015, facility expenses were 10% and 11%, respectively, of our urgent and primary care business net revenues. The increase in expenses was due to our operation of the four additional Medac facilities during the three months ended June 30, 2016 as compared to the three months ended June 30, 2015, offset by closed and sold facilities no longer in operation this period.

Medical Supplies

Medical supplies consist of medical, pharmaceutical, and laboratory supplies used at our centers. For the three months ended June 30, 2016 and 2015, medical supplies expenses were 5% and 7%, respectively, of our urgent and primary care business net revenues. The decrease in expenses was due to more efficient management, our 2015 consolidation of medical supplies vendors, and entry into a group purchasing relationship to gain access to certain preferential pricing terms for certain supply and service items. We believe we will continue to benefit from these actions as we continue to operate our urgent and primary care centers.

Other Operating Expenses

Other operating expenses (including electronic medical records, computer systems and maintenance and support) primarily consist of radiology and laboratory fees, premiums paid for medical malpractice and other insurance, marketing, information technology, non-medical professional fees, including accounting and legal, merchant fees, equipment rental and amounts paid to our third-party revenue cycle manager to bill and collect our urgent and primary care revenue. Other operating expenses increased $59,000, or 11%, over the prior year period.

The increase was due to our operation of more facilities during the three months ended June 30, 2016 than during the three months ended June 30, 2015. For the three months ended June 30, 2016 and 2015, other operating expenses were 17% and 23% , respectively, of our urgent and primary care business net revenues.

Depreciation and Amortization

Depreciation and amortization primarily consists of depreciation and amortization related to our medical property and equipment. Depreciation and amortization in the first three months of 2016 increased $32,000, or 21%, over the prior year period. The increase was due to our operation of more facilities during the three months ended June 30, 2016 than during the three months ended June 30, 2015. For the three months ended June 30, 2016 and 2015, depreciation and amortization expenses were 5% and 6%, respectively, of our urgent and primary care business net revenues.

Ancillary Network Business

Since October 1, 2014, HealthSmart has managed our ancillary network business under the management agreement discussed above. We experienced deterioration in our ancillary network business segment beginning in 2015 due to continuing changes in the healthcare marketplace. We reported operating income of $270,000 for the three months ended June 30, 2016 compared to an operating loss of $269,000 for the three months ended June 30, 2015. This increase in operating income of $539,000 is due primarily to a $487,000 write-off of an advance to one of our ancillary network customers in the prior year period.

20

As discussed above, we concluded that this line of business qualifies as discontinued operations as of June 30, 2016. Accordingly, financial results for the ancillary network business are presented as discontinued operations in our consolidated statements of operations, and the related asset and liability accounts are presented as held for sale as of June 30, 2016. Amounts previously reported have been reclassified, as necessary, to conform to this presentation to allow for meaningful comparison of continuing operations.

Shared Services

Shared services include the common costs related to both the urgent and primary care and ancillary network lines of business such as the salaries of our executive management team whose time is allocable across both business segments. The following functions are also included in shared services: finance and accounting, human resources, legal, marketing, information technology, and general administration.

As of June 30, 2016, shared services employed 12 full-time employees compared to 17 at June 30, 2015. Shared services expenses totaled $1.6 million and $2.3 million, respectively, for the three months ended June 30, 2016 and 2015, a decrease of $0.7 million, or 30%. The decrease was primarily due to significant reductions in corporate staff and professional fees.

Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015

The following table sets forth a comparison of consolidated statements of operations by our business segments and shared services for the respective six months ended June 30, 2016 and 2015.

	June 30, 2016											June 30, 2015												Change
	Urgent and Primary Care			Ancillary Network*		Shared Services			Total			Urgent and Primary Care			Ancillary Network*			Shared Services			Total			$			%
Urgent and primary care net revenues	$	8,050		$	9,790	$	-		$	17,840		$	5,026		$	11,347		$	-		$	16,373		$	1,467			9	%
Service revenue		1,211			-		31			1,242			-			-			-			-			1,242
Total revenue		9,261			9,790		31			19,082			5,026			11,347			-			16,373			2,709			17	%
Operating expenses:
Ancillary network provider payments		-			6,923		-			6,923			-			8,468			-			8,468			(1,545	)		-18	%
Ancillary network administrative fees		-			678		-			678			-			524			-			524			154			29	%
Ancillary network other operating costs		-			1,620		-			1,620			-			1,905			-			1,905			(285	)		-15	%
Ancillary network prepaid write-off		-			-		-			-			-			487			-			487			(487	)		-100	%
Salaries, wages, contract medical professional fees and related expenses		6,720			-		1,010			7,730			4,330			-			2,126			6,456			1,274			20	%
Facility expenses		811			-		195			1,006			518			-			193			711			295			41	%
Medical supplies		384			-		-			384			398			-			-			398			(14	)		-3	%
Other operating expenses		1,367			-		1,748			3,115			1,025			-			2,518			3,543			(428	)		-12	%
Intangible asset impairment		-			-		-			-			520			-			-			520			(520	)		-100	%
Depreciation and amortization		377			-		72			449			300			247			36			583			(134	)		-23	%
Total operating expenses	$	9,659		$	9,221	$	3,025		$	21,905		$	7,091		$	11,631		$	4,873		$	23,595		$	(1,690	)		-7	%
Operating income (loss), including discontinued operations	$	(398	)	$	569	$	(2,994	)	$	(2,823	)	$	(2,065	)	$	(284	)	$	(4,873	)		(7,222	)		4,399			-61	%
Other (income) expense:
(Gain) on cancellation of acquisition promissory note										(90	)											-			(90	)
(Gain)/loss on disposal of assets										(361	)											-			(361	)
Interest expense:
Interest expense										233												176			57			32	%
(Gain)/loss on warrant liability, net of deferred loan fee amortization										846												(388	)		1,234			-318	%
Total other expense and interest expense										628												(212	)		840			-396	%
Loss before income taxes, including income (loss) on discontinued operations									$	(3,451	)										$	(7,010	)	$	3,559			-51	%

* Presented as a discontinued operations in statement of operations.

Our Urgent and Primary Care Business

Our urgent and primary care business segment reported an operating loss before depreciation of $21,000 and an operating loss before depreciation of $1.8 million, respectively, for the six months ended June 30, 2016 and 2015, an improvement of $1.8 million over the prior year period. A portion of the operating loss in the six months ended June 30, 2016, is attributable to lower collections than originally estimated on accounts receivable outstanding as of December 31, 2015. We entered the urgent and primary care business in May 2014 and we currently own or operate 10 urgent and primary care centers in the east and southeastern United States. The following factors, among several others, contributed to our decreased segment operating loss in the six months ended June 30, 2016:

• the execution of our strategic plan by our new executive management team;

• full-quarter inclusion of Medac results;

• improvements to revenue cycle;

• implementation of several cost reduction measures; and

• closure of one of our underperforming centers and the sale of our two Virginia clinics.

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Net Revenues

Net revenues are recognized at the time services are rendered at the estimated net realizable amounts from patients, third-party payors and others, after reduction for estimated contractual adjustments pursuant to agreements with third-party payors and an estimate for bad debts. Our urgent and primary care business net revenues increased $3.0 million, or 60% over the prior year period. For the six months ended June 30, 2016, we experienced, in the aggregate, approximately 72,000 patient visits, which resulted in an average of 35 patient visits per day per center and the average reimbursement per patient visit excluding service revenue was approximately $112. For the six months ended June 30, 2015, we experienced, in the aggregate, approximately 43,000 patient visits, which resulted in an average of 24 patient visits per day per center and the average reimbursement per patient visit was approximately $117. The year over year reduction of average reimbursement per patient visit is partially due to lower collections than originally estimated on accounts receivable outstanding as of December 31, 2015. We believe our patient volume figures, and therefore our revenue, will improve at our centers as we continue our marketing and advertising efforts in our target markets. Contributing to this projected increase will be the expansion of our occupational medicine service line (on-the-job injuries, pre-employment drug screens, pre-employment physicals), which we intend to grow through our direct marketing efforts.

Salaries, Wages, Contract Medical Professional Fees and Related Expenses

Salaries, wages, contract medical professional fees and related expenses are the most significant operating expense components of our urgent and primary care business and consist of compensation and benefits to our clinical providers and staff at our centers. We employ a staffing model at each center that generally includes at least one board-certified physician, one or more physician assistants or nurse practitioners, nurses or medical assistants and a front office staff member on-site at all times. Salaries, wages, contract medical professional fees and related expenses for the six months ended June 30, 2016 increased $2.4 million, or 55%, over the prior year period. The increase is largely attributable to the addition of the four Medac centers offset by a reduction of costs attributable to closed and sold facilities that are no longer operating this period.

For the six months ended June 30, 2016 and 2015, salaries, wages, contract medical professional fees and related expenses were 83% and 86%, respectively, of our urgent and primary care business net revenues. The reduction in the current year period was the result of, among other things, a decreased usage of temporary and other higher-cost medical providers. Temporary medical providers are generally between 15% and 40% more expensive than our typical, full-time providers. We intend to continue to focus on recruiting and retaining talented physicians and mid-level providers, which we believe will further reduce our clinic staffing costs.

Facility Expenses

Facility expenses consist of our urgent and primary care centers’ rent, property tax, insurance, utilities, telephone, and internet expenses. Facility expenses for the six months ended June 30, 2016 increased $293,000, or 56%, over the prior year period. For the six months ended June 30, 2016 and 2015, facility expenses were 10% of our urgent and primary care business net revenues. The increase in expenses was due to our operation of the four additional Medac facilities during the six months ended June 30, 2016 as compared to the six months ended June 30, 2015, offset by a reduction of costs attributable to closed and sold facilities that are no longer operating this period.

Medical Supplies

Medical supplies consist of medical, pharmaceutical, and laboratory supplies used at our centers. Medical supplies expense in the second quarter of 2016 decreased $14,000, or 4%, from the prior year period. For the six months ended June 30, 2016 and 2015, medical supplies expenses were 5% and 8%, respectively, of our urgent and primary care business net revenues. The decrease in expenses in the current year period was due to more efficient management, our 2015 consolidation of medical supplies vendors, and entry into a group purchasing relationship to gain access to certain preferential pricing terms for certain supply and service items. We believe we will continue to benefit from these actions as we continue to operate our urgent and primary care centers.

Other Operating Expenses

Other operating expenses (including electronic medical records, computer systems and maintenance and support) primarily consist of radiology and laboratory fees, premiums paid for medical malpractice and other insurance, marketing, information technology, non-medical professional fees, including accounting and legal, merchant fees, equipment rental and amounts paid to our third-party revenue cycle manager to bill and collect our urgent and primary care revenue. Other operating expenses increased $342,000, or 33%, over the prior year period. The increase was due to our operation of more facilities during the six months ended June 30, 2016 than during the six months ended June 30, 2015. For the six months ended June 30, 2016 and 2015, other operating expenses were 17% and 20%, respectively, of our urgent and primary care business net revenues.

Depreciation and Amortization

Depreciation and amortization primarily consists of depreciation and amortization related to our medical property and equipment. Depreciation and amortization in the first six months of 2016 increased $77,000, or 26%, over the prior year period. The increase was due to our operation of more facilities during the six months ended June 30, 2016 than during the six months ended June 30, 2015. For the six months ended June 30, 2016 and 2015, depreciation and amortization expenses were 5% and 6%, respectively, of our urgent and primary care business net revenues.

Ancillary Network Business

Since October 1, 2014, HealthSmart has managed our ancillary network business under the management agreement discussed above. We experienced deterioration in our ancillary network business segment beginning in 2015 due to continuing changes in the healthcare marketplace.

We reported operating income of $569,000 for the six months ended June 30, 2016 compared to an operating loss of $284,000 for the six months ended June 30, 2015. This increase in operating income of $853,000 is due to a 4% increase in provider margin and a $487,000 write-off of an advance to one of our ancillary customers in the prior year period.

22

As discussed above, we concluded that this line of business qualifies as discontinued operations as of June 30, 2016. Accordingly, financial results for the ancillary network business are presented as discontinued operations in our consolidated statements of operations, and the related asset and liability accounts are presented as held for sale as of June 30, 2016. Amounts previously reported have been reclassified, as necessary, to conform to this presentation to allow for meaningful comparison of continuing operations.

Shared Services

Shared services include the common costs related to both the urgent and primary care and ancillary network lines of business such as the salaries of our executive management team whose time is allocable across both business segments. The following functions are also included in shared services: finance and accounting, human resources, legal, marketing, information technology, and general administration.

As of June 30, 2016, shared services employed 12 full-time employees compared to 17 at June 30, 2015. Shared services expenses totaled $3.0 million and $4.9 million, respectively, for the six months ended June 30, 2016 and 2015, a decrease of $1.9 million, or 39%. The decrease was primarily due to significant reductions in corporate staff and professional fees.

Liquidity and Capital Resources

We had negative working capital of $14.6 million at June 30, 2016 compared to negative working capital of $13.2 million at December 31, 2015. The decrease in working capital was primarily due to a $2.3 million decrease in cash used to fund losses, a $0.6 million increase in notes receivable due to the sale of our Virginia locations, a $0.6 million decrease in accrued liabilities, and a $0.5 million decrease in liabilities of assets held for sale. We expect to incur additional operating losses unless we acquire or develop sufficient centers to generate positive operating income.

Our financial statements have been prepared on a going concern basis, which contemplates the recoverability of assets and satisfaction of liabilities in the normal course of business. Based on the information herein, there is a substantial doubt as to the Company’s ability to continue as a going concern. We expect to need additional capital during 2016 to fund anticipated operating losses, to satisfy our debt obligations as they become due and to continue to improve the operating performance of our urgent and primary care business; however, there are no assurances we will be able to secure this capital at terms acceptable to us or at all. We may seek to raise such capital through the sale of assets or through one or more public or private equity offerings, debt financings, borrowings or a combination thereof. However, we currently have no plans to conduct equity offerings to raise capital. If we raise funds through the incurrence of additional debt or the issuance of debt securities, the lenders or purchasers of debt securities may require security that is senior to the rights of our common stockholders. In addition, our incurrence of additional debt could result in the imposition of covenants that restrict our operations or limit our ability to achieve our business objectives. The issuance of any new equity securities would likely dilute the interest of our current stockholders. In light of our historical performance, additional capital may not be available when needed on acceptable terms, or at all. If adequate funds are not available, we will need to, among other things, abandon our expansion plans, which would have a material adverse impact on our business prospects and results of operations. In addition, we may be required to reduce our operations, including further reductions in headcount, and sell assets. However, we may be unable to sell assets or undertake other actions to meet our operational needs. As a result, we may be unable to pay our ordinary expenses, including our debt service, on a timely basis, and we may therefore determine to exit the urgent and primary care business. The table below reconciles the loss before income taxes to the net decrease in cash for the six months ended June 30, 2016:

Loss before income taxes	$	(3,451	)
Borrowings under line of credit and notes		2,339
Depreciation and amortization		449
(Gain) on cancellation of acquisition promissory note		(90	)
Payment of deferred offering costs		(422	)
(Gain) on sale of assets		(361	)
Additions to property and equipment		(257	)
Liabilities held for sale		(520	)
Other		(17	)
Decrease in cash	$	(2,330	)

Our cash and cash equivalents balance was approximately $299,000 as of June 30, 2016, as compared to $2.6 million as of December 31, 2015. We had borrowing capacity under existing lines of credit of $0 and $700,000, respectively, at June 30, 2016 and December 31, 2015. We extended the maturity of our lines of credit; however, there are no assurances that we will be successful at further extending them at the modified maturity date of June 1, 2017. At August 15, 2016 we had cash available to us of approximately $76,000, and we had $0.5 million of additional borrowing capacity under our lines of credit. We raised equity capital, net of offering costs, of $6.2 million during the year ended December 31, 2015. We have not raised equity capital in 2016.

23

On December 9, 2015, we consummated a registered firm commitment underwritten public offering and sale (the “2015 Offering”) of (i) 9,642,857 Class A Units, with each Class A Unit consisting of one share of our common stock, par value $0.01 per share (the “Common Stock”) and one immediately exercisable five-year warrant to purchase one share of Common Stock with a warrant exercise price of $0.875 (collectively, the “Class A Units”), (ii) 750 Class B Units, with each Class B Unit consisting of one share of the our Series A Convertible Preferred Stock with a stated value of $1,000 and convertible into 1,429 shares of the Company’s Common Stock and five-year warrants to purchase 1,429 shares of Common Stock, with a warrant exercise price of $0.875 per share (collectively, the “Class B Units” and, together with the Class A Units, the “Securities”) and (iii) immediately exercisable five-year warrants to purchase 370,567 shares of Common Stock with a warrant exercise price of $0.875 per share, sold pursuant to an option we granted to the underwriter, Aegis Capital Corp. (“Aegis”), to purchase additional Securities to cover over allotments. The Securities issued in the 2015 Offering were sold pursuant to an underwriting agreement with Aegis. We received proceeds of $6,221,364, net of all underwriting discounts, commissions and certain reimbursements, pursuant to the underwriting agreement, after legal, accounting and other costs of $1,278,636.

We have two credit agreements with Wells Fargo. On July 30, 2014, we entered into a $5,000,000 revolving line of credit and on December 4, 2014, we entered into a second credit agreement for a $6,000,000 revolving line of credit, which was increased to $7,000,000 on August 12, 2015. Our obligations to repay advances under the credit agreements are evidenced by revolving line of credit notes, each with a fluctuating interest rate per annum of 1.75% above daily one month LIBOR, as in effect from time to time. The July 30, 2014 credit agreement and the December 4, 2014 agreement as amended, both mature on June 1, 2017. The obligations under the credit agreements are secured by all the assets of the Company and its subsidiaries. The credit agreements include ordinary and customary covenants related to, among other things, additional debt, further encumbrances, sales of assets, and investments and lending. As of June 30, 2016, the weighted-average interest rate on these borrowings was approximately 2.19%.

On July 26, 2016, we expanded our borrowing capacity with lines of credit with Wells Fargo by $1,000,0000. The additional funds will be used for working capital and will be due and payable on June 1, 2017, the date all indebtedness is due under our credit agreements. The line extension is governed by all terms and conditions set forth in the existing credit agreements.

On July 28, 2016, we received notice from the bank that the death of one of our guarantors resulted in a technical default under the credit agreements. In the notice, the bank also indicated that although it reserved the right pursue its rights and remedies under the loan documents for such default, that it was electing not to do so as of the date of the notice letter.

Borrowings under the credit agreements are also secured by guarantees provided by certain officers and directors of the Company, among others. On July 30, 2014, we issued to the guarantors of the July 2014 obligations warrants to purchase an aggregate of 800,000 shares of our common stock in consideration of their guaranteeing such indebtedness. The July 2014 warrants vested immediately and are exercisable any time prior to their expiration on October 30, 2019 initially at an exercise price of $3.15 per share. In addition, on December 4, 2014, we issued to the guarantors of the December 2014 obligations warrants to purchase an aggregate of 960,000 shares of our common stock in consideration of their guaranteeing such indebtedness. The December 2014 warrants vested immediately and are exercisable any time prior to their expiration on December 4, 2019 initially at an exercise price of $2.71 per share. In connection with the $1,000,000 increase in the line of credit under the December 2014 credit agreement, on August 12, 2015, we issued warrants to the guarantors to purchase an additional 300,000 shares of our common stock in consideration of their guaranteeing such indebtedness. The August 2015 warrants vested immediately and are exercisable at any time prior to their expiration on August 12, 2020 initially at an exercise price of $1.70 per share.

The exercise prices of the July 2014 warrants, the December 2014 warrants, and one of the August 2015 warrants under which 50,010 shares are purchasable, were adjusted downward to $1.46 per share, the closing price of our common stock on August 28, 2015. The adjustment resulted from our issuing restricted stock to our directors pursuant to our director compensation plan at a price per share less than the exercise price of such warrants. The exercise prices of all such warrants were further adjusted to $0.70 per share, the public offering price of the Class A Units in our 2015 Offering. The remaining, unadjusted August 2015 warrants, under which 249,990 shares are purchasable, were issued to Company directors (Messrs. Pappajohn and Oman). Therefore, any adjustments to such warrants require stockholder approval. We intend to seek such approval at our 2016 annual meeting of stockholders, and if approved, the exercise price of the remaining August 2015 warrants will be adjusted similarly to $0.70 per share.

Holders of warrants representing substantially all of the shares issuable under the July 2014 warrants have waived any adjustment in the number of shares that could be purchased pursuant to their warrants as a result of the change in the exercise price. Furthermore, with the exception of the potential adjustment to the remaining August 2015 warrants held by Messrs. Pappajohn and Oman, all of the warrant holders have waived any further adjustments to the exercise price of the outstanding warrants.

24

On December 15, 2015, our wholly-owned subsidiary, ACSH Management, purchased from Medac and its shareholders, substantially all the assets used in the operations of its four urgent care centers for $4,370,000 in cash, the assumption of $768,000 in liabilities and a $560,000 note payable that accrues interest at 5% that matures on June 15, 2017. Medac remains an urgent care operating entity, owned by a single physician, with which ACSH Management has entered into various agreements. ACSH Management has the power to direct certain of Medac’s significant activities and has the right to receive benefits from Medac that are significant to Medac. We have determined, therefore, that Medac is a VIE and that ACSH Management is the primary beneficiary. Consequently, we have consolidated Medac and its financial results since the date we closed the Medac Asset Acquisition. ACSH Management has entered into a $1.0 million secured line of credit for the benefit of Medac to fund certain of Medac’s operating losses and to cover costs necessary to expand the Medac brand in North Carolina.

At June 30, 2016, $73,000 was due under promissory notes issued to the sellers in the transactions entered into during the year ended December 31, 2014 to acquire primary and urgent care centers. The notes accrue interest at an annual rate of 5%.

A summary of all acquisition notes issued prior to the Medac Asset Acquisition is as follows:

• ACSH Urgent Care of Georgia, LLC, or ACSH Georgia, issued a promissory note in the principal amount of $500,000 to CorrectMed, LLC and other sellers. The note provided for simple interest at a fixed rate of 5% per annum, matured on May 8, 2015 and the full amount due thereunder has been paid.

• ACSH Urgent Care of Florida, LLC issued three promissory notes in the aggregate principal amount of $700,000 to Bay Walk-In Clinic, Inc. One promissory note in the principal amount of $200,000 bears simple interest at a fixed rate of 5% per annum and is payable in two installments: $110,000 on August 29, 2015 and $105,000 on August 29, 2016. On October 21, 2015, as a result of certain working capital adjustments, the seller accepted $91,000 in full satisfaction of the note. The second promissory note also in the principal amount of $200,000 bears simple interest at a fixed rate of 5% per annum and is payable in 24 equal monthly installments of $8,776.51 each, beginning on September 30, 2014. We received notification on August 17, 2015 that the third promissory note in the principal amount of $300,000 was cancelled due to the death of the note’s holder. As a result of the cancellation, we recorded a one-time gain of $289,000 in the third quarter of 2015.

• ACSH Urgent Care Holdings, LLC issued a promissory note in the principal amount of $150,000 to Jason Junkins, M.D. The note is guaranteed by American CareSource Holdings, Inc. and is payable in two equal principal installments of $75,000, plus accrued interest at the rate of 5% per annum, on the first and second annual anniversaries of the closing date, September 12, 2014. The first principal installment was timely paid in 2015. In June of 2016 the remaining installment, plus all accrued but unpaid interest was forgiven in exchange for a reduction of the non-compete radius to which Dr. Junkins was subject.  As a result, the full amount of the note is now satisfied in full.

• ACSH Georgia issued a promissory note in the amount of $100,000 to Han C. Phan, M.D. and Thinh D. Nguyen, M.D. The note matured on the one-year anniversary of the closing date, October 31, 2014 and was satisfied in full in 2015.

• ACSH Urgent Care of Virginia, LLC issued a promissory note in the principal amount of $50,000 to Stat Medical Care, P.C. (d/b/a Fair Lakes Urgent Care Center) and William and Teresa Medical Care, Inc. (d/b/a Virginia Gateway Urgent Care Center). The note bears simple interest at a fixed rate of 5% per annum, matured on December 31, 2015, and is subject to a working capital adjustment as set forth in the applicable purchase agreement. The note remained outstanding as of June 30, 2016, and we intend to contest whether any payments are due thereunder.

Nasdaq Listing

On May 21, 2015, we received a letter from NASDAQ indicating that as of June 30, 2015, our reported stockholders’ equity of $407,000 did not meet the $2.5 million minimum required to maintain continued listing, as set forth in NASDAQ Listing Rule 5550(b)(1). The letter further stated that as of May 20, 2015 we did not meet either of the alternatives of market value of listed securities or net income from continuing operations.

Under NASDAQ rules, we submitted a plan to NASDAQ to regain compliance, which NASDAQ accepted, granting us until November 17, 2015 to evidence compliance. However, because we did not raise equity capital as we anticipated, we did not evidence compliance with NASDAQ Listing Rule 5550(b)(1) by November 17, 2015. On November 18, 2015, we received a letter from NASDAQ stating that we had not regained compliance with the continued listing requirements of The NASDAQ Capital Market. As a result, NASDAQ determined that our common stock would be delisted from The NASDAQ Capital Market effective November 30, 2015. We appealed that determination which stayed the delisting of our common stock until the appeal was heard on January 14, 2016 by the NASDAQ Hearings Panel. Following the hearing, the NASDAQ Hearings Panel continued our listing through May 16, 2016 in order to allow us to meet the $2.5 million minimum stockholders’ equity requirement for continued listing on The NASDAQ Capital Market.

 On January 8, 2016, we received a deficiency letter from NASDAQ indicating that as of January 8, 2016, our common stock failed to maintain a minimum bid price of $1.00 per share for 30 consecutive days in violation of NASDAQ Listing Rule 5550(a)(2). The notification had no immediate effect on the listing of our common stock on The NASDAQ Capital Market and our common stock is continuing to trade on The NASDAQ Capital Market. Under NASDAQ rules, we were granted a 180-day period within which to regain compliance.

We did not meet the applicable compliance requirements in the specified time period, and as a result, on May 17, 2016, we received notification from NASDAQ that the NASDAQ Listing Qualifications Hearings Panel determined to delist the shares of the Company’s common stock from The NASDAQ Capital Market and that trading in the Company’s common stock would be suspended on The NASDAQ Capital Market effective at the open of business on Thursday, May 19, 2016. The Company's shares were delisted due to the Company’s continuing non-compliance with the stockholders’ equity requirement set forth in NASDAQ Listing Rule 5550(b)(1).

On May 19, 2016, our common stock began trading on the OTC Markets’ OTCQB market tier, an electronic quotation service operated by OTC Markets Group Inc. for eligible securities traded over-the-counter under the “GNOW” trading symbol.

25

The delisting of our stock from The NASDAQ Capital Market may adversely affect our ability to, among other things, raise additional financing through the public or private sale of equity securities, may significantly affect the ability of investors to trade our securities and may negatively affect the value and liquidity of our common stock. Delisting also could have other negative results, including the potential loss of employee confidence, the loss of institutional investor interest and the potential loss of business development opportunities.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Pursuant to permissive authority under Rule 305 of Regulation S-K, we have omitted Quantitative and Qualitative Disclosures About Market Risk.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer (“CEO”) and interim Chief Financial Officer, (“CFO”) who has been serving, and is continuing to serve as our Corporate Controller, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures along with the related internal controls over financial reporting were effective to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not currently party to any legal proceedings.

Item 1A. Risk Factors.

There have been no material changes to the risk factors disclosed in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On June 7, 2016, in connection with the extension of the maturity date of our credit agreements to June 1, 2017 and the extension by the guarantors of those credit agreements of their guaranties to the modified maturity date, we issued to those guarantors warrants to purchase an aggregate of 2,000,000 shares of common stock of the Company at an exercise price of $0.21 per share. The warrants vested immediately and are exercisable any time prior to their expiration on June 6, 2026. The warrants were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

Item 6. Exhibits.

Exhibit Number	Description
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements and footnotes from the American CareSource Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Statements of Operations; (ii) Consolidated Balance Sheets; (iii) Consolidated Statement of Stockholders' Equity; (iv) Consolidated Statements of Cash Flows; and (v) the Notes to Unaudited Consolidated Financial Statements.

26

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on May 16, 2016.

		AMERICAN CARESOURCE HOLDINGS, INC.
Date:	August 16, 2016	By:	/s/ Adam S. Winger
			Adam S. Winger
			President and  Chief Executive Officer (Principal Executive Officer)

Date:	August 16, 2016	By:	/s/ Robert Frye
			Robert Frye
			Interim Chief Financial Officer and Controller (Principal Financial Officer and Principal Accounting Officer)

27

Exhibit Index

Exhibit Number	Description
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements and footnotes from the American CareSource Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Statements of Operations; (ii) Consolidated Balance Sheets; (iii) Consolidated Statement of Stockholders' Equity; (iv) Consolidated Statements of Cash Flows; and (v) the Notes to Unaudited Consolidated Financial Statements.

28

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)

as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Adam S. Winger, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of American CareSource Holdings, 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;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 16, 2016

/s/ Adam S. Winger

Name: Adam S. Winger

Title: President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)

as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Robert Frye, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of American CareSource Holdings, 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;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 16, 2016

/s/ Robert Frye

Name: Robert Frye

Title: Interim Chief Financial Officer and Controller

EX-32.1

Exhibit 32.1

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. Section 1350

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Adam S. Winger, the President and Chief Executive Officer of American CareSource Holdings, Inc. (the "Company"), hereby certify, that, to my knowledge:

1. The Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 (the "Report") of the Company 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 16, 2016

/s/ Adam S. Winger

Name: Adam S. Winger

Title: President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Robert Frye, the Interim Chief Financial Officer and Controller of American CareSource Holdings, Inc. (the "Company"), hereby certify, that, to my knowledge:

1. The Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 (the "Report") of the Company 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 16, 2016

/s/ Robert Frye

Name: Robert Frye

Title: Interim Chief Financial Officer and Controller

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 10, 2016
Document Information [Line Items]
Entity Registrant Name	American CareSource Holdings, Inc.
Entity Central Index Key	0001316645
Trading Symbol	gnow
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		16,597,150
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Series A Preferred Stock [Member]
Stockholders' (deficit):
Preferred stock, value	$ 664,000	$ 664,000
Cash and cash equivalents	299,000	2,629,000
Accounts receivable, net	1,603,000	1,498,000
Prepaid expenses and other current assets	764,000	391,000
Note receivable from sale of subsidiary	293,000
Assets held for sale	2,839,000	2,644,000
Total current assets	5,798,000	7,162,000
Property and equipment, net	4,604,000	4,859,000
Deferred loan fees, net	674,000	1,154,000
Other non-current assets	106,000	104,000
Note receivable from sale of subsidiary	267,000
Intangible assets, net	1,770,000	1,885,000
Goodwill	5,921,000	5,921,000
Total other assets	8,738,000	9,064,000
Total assets	19,140,000	21,085,000
Lines of credit	11,800,000	11,100,000
Accounts payable	1,624,000	1,609,000
Accrued liabilities	1,287,000	1,907,000
Current portion of promissory notes and notes payable	595,000	210,000
Capital lease obligations, current portion	139,000	134,000
Liabilities held for sale	4,915,000	5,435,000
Total current liabilities	20,360,000	20,395,000
Promissory notes and notes payable	1,639,000	522,000
Capital lease obligations	1,561,000	1,630,000
Other long-term liabilities	382,000	344,000
Total long-term liabilities	3,582,000	2,496,000
Total liabilities	23,942,000	22,891,000
Preferred stock, value	0	0
Common stock, $0.01 par value; 40,000 shares authorized; 16,608 and 16,597 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively	166,000	165,000
Additional paid-in capital	33,002,000	32,535,000
Accumulated (deficit)	(38,266,000)	(35,170,000)
Stockholders' (deficit) of American CareSource Holdings, Inc.	(4,434,000)	(1,806,000)
Equity of non-controlling interest	(368,000)
Total stockholders' (deficit)	(4,802,000)	(1,806,000)
Total liabilities and stockholders' (deficit)	$ 19,140,000	$ 21,085,000

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Series A Preferred Stock [Member]
Preferred stock, authorized (in shares)	870	870
Preferred stock, issued (in shares)	750	750
Preferred stock, outstanding (in shares)	750	750
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	9,999,000	9,999,000
Common stock par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	16,608,000	16,597,000
Common stock, shares outstanding (in shares)	16,608,000	16,597,000

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net revenues:
Urgent and primary care	$ 3,638	$ 2,354	$ 8,050	$ 5,026
Service agreement and other	648		1,242
Total net revenues	4,286	2,354	9,292	5,026
Operating expenses:
Salaries, wages, contract medical professional fees and related expenses	3,724	3,380	7,730	6,456
Facility expenses	481	349	1,006	711
Medical supplies	174	174	384	398
Other operating expenses	1,512	1,495	3,115	3,543
Intangible asset impairment		520		520
Depreciation and amortization	227	170	449	336
Total operating expenses	6,118	6,088	12,684	11,964
Operating (loss)	(1,832)	(3,734)	(3,392)	(6,938)
(Gain) on cancellation of acquisition promissory note	(90)		(90)
(Gain) on sale of Virginia urgent care clinics	(361)		(361)
Interest expense:
Interest expense	(126)	(93)	(233)	(176)
Deferred loan fees amortization, net of (gain)/loss on warrant liability	376	(757)	846	(388)
Total other (income) and interest expense	51	(664)	628	(212)
(Loss) from continuing operations before taxes	(1,883)	(3,070)	(4,020)	(6,726)
Income tax expense	7	4	13	10
Net (loss) from continuing operations	(1,890)	(3,074)	(4,033)	(6,736)
Income/(loss) from discontinued operations	(270)	269	(569)	284
Net (loss)	(1,620)	(3,343)	(3,464)	(7,020)
Net (loss) attributable to non-controlling interests	(233)		(368)
Net (loss) attributable to American CareSource Holdings, Inc.	$ (1,387)	$ (3,343)	$ (3,096)	$ (7,020)
Basic net (loss) per common share, continuing operations (in dollars per share)	$ (0.10)	$ (0.45)	$ (0.21)	$ (0.99)
Diluted net (loss) per common share, continuing operations (in dollars per share)	(0.10)	(0.45)	(0.21)	(1.10)
Basic net income (loss) per common share, discontinued operations (in dollars per share)	0.02	(0.04)	0.03	(0.04)
Diluted net income (loss) per common share, discontinued operations (in dollars per share)	$ 0.02	$ (0.04)	$ 0.03	$ (0.04)
Basic weighted-average common shares outstanding (in shares)	16,608	6,849	16,606	6,811
Diluted weighted-average common shares outstanding (in shares)	16,608	6,849	16,606	6,851

XML

Consolidated Statements of Stockholders' (Deficit) (Unaudited) - 6 months ended Jun. 30, 2016 - USD ($) shares in Thousands, $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Noncontrolling Interest [Member]	Total
Balance at December 31, 2015 (in shares) at Dec. 31, 2015	750	16,597
Balance at December 31, 2015 at Dec. 31, 2015	$ 664	$ 165	$ 32,535	$ (35,170)		$ (1,806)
Net (loss)				(3,096)	(368)	(3,464)
Stock-based compensation expense			101			101
Issuance of deferred warrant costs			366			366
Issuance of common stock upon conversion of restricted stock (in shares)		11
Issuance of common stock upon conversion of restricted stock		$ 1
Balance at June 30, 2016 (in shares) at Jun. 30, 2016	750	16,608
Balance at June 30, 2016 at Jun. 30, 2016	$ 664	$ 166	$ 33,002	$ (38,266)	$ (368)	$ (4,802)

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net (loss)	$ (3,464,000)	$ (7,020,000)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Non-cash stock-based compensation expense	101,000	403,000
(Gain) on cancellation of acquisition promissory note	(90,000)
(Gain) on sale of Virginia urgent care clinics	(361,000)
Intangible asset impairment		520,000
Depreciation and amortization	449,000	583,000
Deferred loan fees amortization, net of loss/(gain) on warrant liability	846,000	(388,000)
Change in deferred rent	39,000	119,000
Changes in operating assets and liabilities:
Accounts receivable	365,000	382,000
Prepaid expenses and other current assets	(679,000)	(106,000)
Accounts payable	437,000	(352,000)
Accrued liabilities	(588,000)	789,000
Assets held for sale	(195,000)	283,000
Liabilities held for sale	(520,000)	(159,000)
Net cash (used in) operating activities	(3,660,000)	(4,946,000)
Cash flows from investing activities:
Net change in other non-current assets	(269,000)	371,000
Proceeds from sale of urgent care subsidiary	50,000
Additions to property and equipment	(257,000)	(138,000)
Net cash (used in) investing activities	(476,000)	233,000
Cash flows from financing activities:
Proceeds from issuance of common stock and option exercises		33,000
Proceeds from borrowings	2,339,000	4,784,000
Principal payments on capital lease obligations	(64,000)	(57,000)
Principal payments on long-term debt	(47,000)	(554,000)
Payment of deferred offering costs	(422,000)	(22,000)
Net cash provided by financing activities	1,806,000	4,184,000
Net (decrease) in cash and cash equivalents	(2,330,000)	(529,000)
Cash and cash equivalents at beginning of period	2,629,000	1,020,000
Cash and cash equivalents at end of period	299,000	491,000
Supplemental cash flow information:
Cash paid for interest	213,000	117,000
Supplemental non-cash operating and financing activity:
Offering costs, deferred and unpaid		7,000
Offering costs, unpaid	36,000
Reclassified property and equipment from prepaid expenses		51,000
Sale of Virginia urgent care clinics for note receivable	$ 560,000

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Note 1 - General

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Basis of Presentation and Significant Accounting Policies [Text Block]

1. General

Basis of Presentation

The accompanying unaudited consolidated financial statements of American CareSource Holdings, Inc. and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X of the rules and regulations of the Securities and Exchange Commission (“SEC”).  Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these statements include all adjustments necessary to present a fair statement of our consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. Preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts in the financial statements and notes. Actual results could differ from those estimates. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015.  References herein to "the Company," "we," "us," or "our" refer to American CareSource Holdings, Inc. and its subsidiaries.

Significant Accounting Policies

Goodwill resulted from our acquisition of urgent and primary care businesses during the years ended December 31, 2015 and 2014. In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, 

Business Combinations

, the purchase method of accounting requires that the excess of the purchase price paid over the estimated fair value of identifiable tangible and intangible net assets of acquired businesses be recorded as goodwill. In accordance with ASC 350

, Intangibles – Goodwill

 

and Other

, we are required to test goodwill for impairment annually or when indications of impairment occur. We perform our annual goodwill impairment test for our reporting units as of October 1, using a discounted cash flow method. In the interim, we review goodwill for impairment whenever events or circumstances indicate that the carrying amount might not be recoverable. We do not believe any event or circumstance in the second quarter of 2016 warranted an impairment review of goodwill, other than of our Florida clinics. Due to the closure of one of the Florida clinics we performed an interim goodwill impairment analysis for the Florida reporting unit and found no impairment was required.

Variable Interest Entities ("VIEs")

– We consolidate VIEs when we are the “primary beneficiary” of the VIE. The primary beneficiary is the party that has (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) through its interests in the VIE, the obligation to absorb losses or the right to receive benefits from the VIE that could be significant to the VIE.

We have determined that Medac Health Services, P.A. (“Medac”) is a VIE and that we are the primary beneficiary. The financial results of Medac, our consolidated VIE, have been included in our operations since December 15, 2015, the date we closed the acquisition of certain assets from Medac (“the Medac Asset Acquisition”). Refer to

Note 4 – Acquisitions and Variable Interest Entity.

For additional Significant Accounting Policies, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Recent Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-09 “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This standard requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid in capital pools. The guidance also allows for the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. The guidance is effective in 2017 with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and the timing of adoption.

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Note 2 - Description of Business

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

2.  Description of Business

The Company engages in two lines of business: our urgent and primary care business, which we operate under the tradenames GoNow Doctors and Medac, and our ancillary network business. These lines of business are supported by a shared services function.

On June 15, 2016, we entered into an asset purchase agreement to sell our legacy ancillary network business to our largest client and manager of the business, HealthSmart Preferred Care II, L.P. (“HealthSmart”). The purchase agreement contains customary representations, warranties, covenants, indemnification provisions, and closing conditions, and we anticipate closing the transaction in third or fourth quarter of 2016. Accordingly, we concluded that the ancillary network business qualifies as discontinued operations and financial results for the ancillary network business are presented as discontinued operations in our consolidated statements of operations, and the related asset and liability accounts are presented on our consolidated balance sheets as held for sale. Amounts previously reported have been reclassified, as necessary, to conform to this presentation to allow for meaningful comparison of continuing operations. Refer to

Note 5 – Discontinued Operations.

In May 2014, we announced our entry into the urgent and primary care market. During the remainder of 2014, through our wholly-owned subsidiaries, we consummated five transactions resulting in our acquisition of ten urgent and primary care centers, located in Georgia (3), Florida (2), Alabama (3), and Virginia (2). In December 2015, we completed a key acquisition of urgent care assets comprising four sites in North Carolina. In January 2016 we closed one of our Georgia sites, on April 1, 2016 we sold the two Virginia centers, and on May 20, 2016 we closed our facility located in Panama City Beach, Florida.

Our healthcare centers offer a wide array of services for non-life-threatening medical conditions. We strive to improve access to quality medical care by offering extended hours and weekend service primarily on a walk-in basis. Our centers offer a broad range of medical services that generally fall within the urgent care, primary care, family care, and occupational medicine classifications. Specifically, we offer non-life-threatening, out-patient medical care for the treatment of acute, episodic, and some chronic medical conditions. When hospitalization or specialty care is needed, referrals to appropriate providers are made.

Patients typically visit our centers on a walk-in basis when their condition is not severe enough to warrant an emergency visit or when treatment by their primary care provider is inconvenient. We also attempt to capture follow-up, preventative and general primary care business after walk-in visits. The services provided at our centers include, but are not limited to, the following:

• routine treatment of general medical problems, including colds, flu, ear infections, hypertension, asthma, pneumonia, urinary tract infections, and other conditions typically treated by primary care providers;

• treatment of injuries, such as simple fractures, dislocations, sprains, bruises, and cuts;

• minor, non-emergent surgical procedures, including suturing of lacerations and removal of foreign bodies;

• diagnostic tests, such as x-rays, electrocardiograms, complete blood counts, and urinalyses; and

• occupational and industrial medical services, including drug testing, workers' compensation cases, and pre-employment physical examinations.

Our centers are typically equipped with digital x-ray machines, electrocardiograph machines and basic laboratory equipment, and are generally staffed with a combination of licensed physicians, nurse practitioners, physician assistants, medical support staff, and administrative support staff. Our medical support staff includes licensed nurses, certified medical assistants, laboratory technicians, and registered radiographic technologists.

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Note 3 - Liquidity and Earnings (Loss) Per Share

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Liquidity and Earnings (Loss) Per Share [Text Block]

3. Liquidity and Earnings (Loss) Per Share

Liquidity and Capital Resources

As of June 30, 2016, we had cash and cash equivalents of $299,000 and a working capital deficit of $14.6 million. As of December 31, 2015, we had cash and cash equivalents of $2.6 million and a working capital deficit of $13.2 million.

Our cash needs have been funded historically from loan proceeds and equity offerings. We entered into two lines of credit in 2014. As of June 30, 2016, maximum borrowings under these lines of credit was $12,000,000. As of June 30, 2016, we had no additional borrowing capacity under our lines of credit. Furthermore, both lines of credit are scheduled to mature in 2017 at which time the full outstanding principal balance of $11,800,000 will become due and payable. Substantially all of the borrowings under the lines of credit were used to finance acquisition activity, to fund losses, and $200,000, which is not currently available to us, was used to secure a bond required to obtain a state license for our ancillary network business. Although we intend to extend further the maturity dates of the two lines of credit and raise additional capital through the incurrence of additional debt or sale of equity or assets during the remainder of 2016 or in 2017, there is no assurance that we will be successful in completing such actions.

If we are unable to obtain additional extensions on our lines of credit or if we are unable to raise additional funds, we will not have sufficient cash on hand to meet our cash requirements over the next 12 months. These uncertainties raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Our financial statements have been prepared on a going concern basis, which contemplates the recoverability of assets and satisfaction of liabilities in the normal course of business. Based on the information herein, there is a substantial doubt as to the Company’s ability to continue as a going concern. We expect to need additional capital during 2016 to fund anticipated operating losses, to satisfy our debt obligations as they become due and to continue to improve the operating performance of our urgent and primary care business; however, there are no assurances we will be able to secure this capital at terms acceptable to us or at all. We may seek to raise such capital through the sale of assets or through one or more public or private equity offerings, debt financings, borrowings or a combination thereof. However, we currently have no plans to conduct equity offerings to raise capital. If we raise funds through the incurrence of additional debt or the issuance of debt securities, the lenders or purchasers of debt securities may require security that is senior to the rights of our common stockholders. In addition, our incurrence of additional debt could result in the imposition of covenants that restrict our operations or limit our ability to achieve our business objectives. The issuance of any new equity securities would likely dilute the interest of our current stockholders. In light of our historical performance, additional capital may not be available when needed on acceptable terms, or at all. If adequate funds are not available, we will need to, among other things, abandon our expansion plans, which would have a material adverse impact on our business prospects and results of operations. In addition, we may be required to reduce our operations, including further reductions in headcount, and sell assets. However, we may be unable to sell assets or undertake other actions to meet our operational needs. As a result, we may be unable to pay our ordinary expenses, including our debt service, on a timely basis, and we may therefore determine to exit the urgent and primary care business.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed using a two-class participating securities method. Losses have been allocated to the preferred stock, on an as-converted basis, without preference to the common stock because the dividend and liquidation rights of the preferred and common stock are equivalent on an as-converted basis.  Diluted earnings (loss) per share is computed similar to basic earnings per share except for adjustments for dilutive potential common shares outstanding during the period using the treasury stock method. We computed earnings (loss) per share for both continuing and discontinued operations for the three and six month periods ended June 30, 2016, and June 30, 2015.

Basic net income (loss) and diluted net income (loss) per share data were computed as follows (in thousands except per share amounts):

	Three Months Ended			Six Months Ended			Three Months Ended			Six Months Ended
	June 30, 2016			June 30, 2016			June 30, 2015			June 30, 2015
Numerator:
(Loss) from continuing operations		(1,890	)		(4,033	)		(3,074	)		(6,736	)
Plus loss from non-controlling interests		233			368			-			-
Plus loss allocated to preferred stock		100			222			-			-
(Loss) from continuing operations, common stock for basic earnings per share		(1,557	)		(3,443	)		(3,074	)		(6,736	)
Less gain on change in fair value of warrant liability		-			-			-			791
(Loss) from continuing operations, common stock for diluted earnings per share		(1,557	)		(3,443	)		(3,074	)		(5,945	)
Income/(loss) from discontinued operations		270			569			(269	)		(284	)
Denominator:
Weighted-average basic common shares outstanding		16,608			16,606			6,849			6,811
Assumed conversion of dilutive securities:
Common stock purchase warrants		-			-			-			40
Denominator for dilutive earnings per share - adjusted weighted-average shares		16,608			16,606			6,849			6,851
Basic net (loss) per share, continuing operations	$	(0.10	)	$	(0.21	)	$	(0.45	)	$	(0.99	)
Diluted net (loss) per share, continuing operations	$	(0.10	)	$	(0.21	)	$	(0.45	)	$	(1.10	)
Basic net income (loss) per share, discontinued operations	$	0.02		$	0.03		$	(0.04	)	$	(0.04	)
Diluted net income (loss) per share, discontinued operations	$	0.02		$	0.03		$	(0.04	)	$	(0.04	)

The following table summarizes potentially dilutive shares outstanding as of June 30, 2016 and June 30, 2015, which were excluded from the calculation due to being anti-dilutive (in thousands):

	2016		2015
Common stock purchase warrants		15,167		1,782
Stock options		1,471		748
Restricted stock units		-		-
Restricted stock		200		-

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Note 4 - Acquisitions, Variable Interest Entity, and Disposals

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Business Combination Disclosure [Text Block]

4.  Acquisitions, Variable Interest Entity, and Disposals

On December 15, 2015, ACSH Medical Management, LLC (“ACSH Management”), a wholly-owned subsidiary of the Company, purchased from Medac and its shareholders, substantially all the assets used in the operation of Medac’s four urgent care centers in the greater Wilmington, North Carolina area for $4,370,000 in cash, the assumption of $768,000 in liabilities and a $560,000 note payable.  Medac remains an urgent care operating entity, owned by a single physician, with which ACSH Management has entered into various agreements. ACSH Management has entered into a $1.0 million secured line of credit for the benefit of Medac to fund certain of Medac’s operating losses and to cover costs necessary to expand the Medac brand in North Carolina.

ACSH Management has the power to direct certain of Medac’s significant activities and has the right to receive benefits from Medac that are significant to Medac. We have determined, therefore, that Medac is a VIE and that ACSH Management is the primary beneficiary. Consequently, we have consolidated Medac and its financial results since the date we closed the Medac Asset Acquisition.

The following table provides the balance sheets of Medac (in thousands):

	June 30, 2016 (Unaudited)			December 31, 2015 (Audited)
Current assets	$	951		$	779
Current liabilities		1,319			759
Stockholder's equity (deficit)		(368	)		20
Total liabilities & stockholder's equity (deficit)	$	951		$	779

The following table provides certain pro forma financial information for the Company as if the acquisition of Medac had occurred on January 1, 2015.

	Six Months Ended June 30,
(in thousands, except per share amounts)	2016			2015
Net revenue
Urgent and primary care	$	8,050		$	9,070
Service agreement		1,242			868
Total net revenue		9,292			9,938
(Loss) from continuing operations before taxes	$	(4,020	)	$	(6,042	)
Basic net (loss) per common share continuing operations	$	(0.21	)	$	(0.89	)
Diluted net (loss) per common share continuing operations	$	(0.21	)	$	(1.00	)

In January 2016, we closed one of our Georgia clinics. This clinic produced net revenue of approximately $5,000 and $409,000 for the six month periods ending June 30, 2016 and 2015, resulting in net operating losses for such periods of $82,000 and $32,000, respectively.

On April 1, 2016, we exited the Virginia urgent and primary care market by consummating the sale of our two Virginia subsidiaries to UrgeMedical Group, Inc. For the six months ended June 30, 2016 and June 30 2015, our Virginia subsidiaries reported net revenues of approximately $254,000 and $551,000, respectively, and net operating losses of approximately $132,000 and $346,000, respectively.

The sales price for the Virginia subsidiaries was $610,000, $50,000 of which was paid in cash at closing and the balance by delivery of two promissory notes. The first promissory note has an initial principal balance of $160,000 and interest accrues on the outstanding balance at 1.5% per annum. The note is payable in two installments, the first installment of $50,000, which remains outstanding as of the date of this filing, was due within 90 days after closing and the second installment of $110,000 is due within 150 days after closing.

The second promissory note has an initial principal balance of $400,000 and interest accrues on the outstanding balance at 5.0% per annum. Interest-only payments are due each month beginning July 1, 2016. Principal is due in three equal installments of $133,333 on the first, second and third anniversaries of the closing date.

On

May 20, 2016 we closed our facility located in Panama City Beach. This clinic produced net revenue of approximately $136,000 and $263,000 for the six month periods ending June 30, 2016 and 2015, resulting in a net operating loss of $120,000 and $116,000 for the six months ended June 30, 2016 and 2015.

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Note 5 - Discontinued Operations

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

5. Discontinued Operations

We expect to consummate our sale of our legacy business to HealthSmart during the 2016 calendar year. As such, we are presenting our ancillary network business as discontinued operations in our consolidated statements of operations and the related asset and liability accounts are presented as held for sale. To allow for meaningful comparison of continuing operations, amounts previously reported have been reclassified, as necessary, to conform to this presentation.

The ancillary network business offers cost containment strategies, primarily through the utilization of a comprehensive national network of ancillary healthcare service providers.  Services are marketed to a number of healthcare companies including third-party administrators, insurance companies, large self-funded organizations, various employer groups, and preferred provider organizations. Since October 1, 2014, HealthSmart has managed our ancillary network business under a management services agreement.

Major classes of assets and liabilities of the ancillary network business held for sale are as follows (in thousands):

	June 30, 2016  (Unaudited)		December 31, 2015 (Audited)
Accounts receivable	$	1,784	$	1,589
Prepaid expenses and other current assets		43		43
Deferred income taxes		18		18
Total current assets held for sale		1,845		1,650
Property and equipment, net		588		588
Intangible assets, net		406		406
Total other assets held for sale		994		994
Total assets held for sale	$	2,839	$	2,644
Due to service providers	$	2,333	$	3,225
Due to HealthSmart		2,582		2,210
Total current liabilities held for sale		4,915		5,435
Total liabilities held for sale	$	4,915	$	5,435

Summary results of operations for the ancillary network business were as follows (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016		2015
Net revenues	$	5,095	$	5,604		$	9,790	$	11,347
Operating expenses:
Provider payments		3,667		4,137			6,923		8,468
Administrative fees		354		194			678		524
Other operating costs		804		933			1,620		1,905
Prepaid writeoff		-		487			-		487
Depreciation and amortization		-		122			-		247
Total operating expenses		4,825		5,873			9,221		11,631
Income/(loss) from discontinued operations	$	270	$	(269	)	$	569	$	(284	)

We recognize revenue in our legacy business on the services we provide, which include (i) providing payor clients with a comprehensive network of ancillary healthcare providers; (ii) providing claims management, reporting, processing and payment services; (iii) providing network/need analysis to assess the benefits to payor clients of adding additional/different service providers to the client-specific provider networks; and (iv) providing credentialing of network service providers for inclusion in the client payor-specific provider networks.  Revenue is recognized when services are delivered, which occurs after processed claims are billed to the payor clients and collections are reasonably assured.  We estimate revenues and costs of revenues using average historical collection rates and average historical margins earned on claims.  Revenues are adjusted periodically to reflect actual cash collections so that revenues recognized accurately reflect cash collected.

We record a provision for refunds based on an estimate of historical refund amounts.  Refunds are paid to payors for overpayment on claims, claims paid in error, and claims paid for non-covered services.  In some instances, we will recoup payments made to the ancillary service provider if the claim has been fully resolved.  The evaluation is performed periodically and is based on historical data.  We present revenue net of the provision for refunds on the consolidated statement of operations.

After careful evaluation of the key gross and net revenue recognition indicators, we have concluded that our circumstances are most consistent with those key indicators that support gross revenue reporting, since we are fulfilling the services of a principal versus an agent.

Payments to providers is the largest component of our cost of revenues and it consists of payments for ancillary care services in accordance with contracts negotiated with providers for specific ancillary services, separately from contracts negotiated with our clients.

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Note 6 - Revenue Recognition and Accounts Receivable

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Revenue Recognition, Accounts Receivable and Concentration of Credit Risk [Text Block]

6.  Revenue Recognition and Accounts Receivable

In our urgent and primary care business, we have agreements with governmental and other third-party payors that provide for payments to us based on contractual adjustments to our established rates. Such agreements typically provide for a portion of the payment obligation to be borne by the patient, which we generally collect at the time services are rendered.

Net revenue is reported at the time of service at the estimated net realizable amounts, after giving effect to estimated contractual adjustments, payments from patients, third-party payors and others, and an estimate for bad debts. 

Contractual adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined.  Although we attempt to collect all patient liability at the time of service, we frequently are left with a patient balance, which we bill expeditiously. Such credit is granted to patients, who consist primarily of local residents insured by third-party payors, without collateral.   A summary of the basis of reimbursement with major third-party payors is as follows:

• Commercial and HMO  – We have entered into agreements with certain commercial insurance carriers, health maintenance organizations, and preferred provider organizations. Billing methodologies under these agreements include discounts from established charges and prospectively determined rates.

• Medicare  –   Services rendered to Medicare program beneficiaries are recorded at prospectively determined rates. These rates vary according to a patient classification system that is based on clinical, diagnostic, and other factors.

In establishing our allowance for bad debts, we consider historical collection experience, the aging of the account, payor classification and patient payment patterns.  We adjust this allowance prospectively.

We collect payment from our uninsured patients at the time of service. When services are rendered to employees or contractors of clients for whom we render occupational medicine services, we typically bill the client employer within 30 days of the date of the services. We grant such client credit without collateral.

We recognize service agreement revenue through our contractual affiliation with Medac. Under a management services agreement with a local emergency medical business company, Medac leases certain employees and provides administrative services in exchange for a fee. Revenue related to the agreement is recorded during the period when the services are performed.

Below is a summary of accounts receivable as of June 30, 2016 and December 31, 2015, and revenues for the three and six month periods ended June 30, 2016 and 2015, respectively, for our urgent and primary care business. 

(in thousands)	June 30, 2016 (Unaudited)			December 31, 2015 (Audited)
Accounts receivable, trade	$	3,047		$	3,236
Accounts receivable, other	$	158
Less:
Estimated allowance for contractual adjustments uncollectible amounts		(1,602	)		(1,738	)
Accounts receivable, net	$	1,603		$	1,498

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2016			2015			2016			2015
Gross revenue	$	7,386		$	4,333		$	15,804		$	10,119
Less:
Provision for contractual adjustments and estimated uncollectible amounts		(3,100	)		(1,979	)		(6,512	)		(5,093	)
Net revenue	$	4,286		$	2,354		$	9,292		$	5,026

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Note 7 - Capital and Operating Lease Obligations

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Leases of Lessee Disclosure [Text Block]

7.  Capital and Operating Lease Obligations

The following reflects the scheduled, minimum required payments under our lease agreements in effect at June 30, 2016 (in thousands):

	Capital Leases			Operating Leases		Total
2016 (remaining 6 months)	$	150		$	614	$	764
2017		288			1,001		1,289
2018		276			926		1,202
2019		273			812		1,085
2020		286			727		1,013
Thereafter		2,612			4,074		6,686
Total minimum lease payments		3,885		$	8,154	$	12,039
Less amount representing interest		(2,185	)
Present value of net minimum obligations		1,700
Less current obligation under capital lease		139
Long-term obligation under capital lease	$	1,561

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Note 8 - Lines of Credit, Promissory Notes, and Notes Payable

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

8.  Lines of Credit, Promissory Notes, and Notes Payable

Below is a summary of our short-term and long-term debt obligations.

Lines of Credit

As of June 30, 2016, we had outstanding borrowings of $11,800,000 under our two credit agreements, with a weighted-average interest rate of 2.19%. Amounts outstanding under these credit agreements were recorded as a current liability on our consolidated balance sheet as of June 30, 2016, since both credit agreements, as amended, mature on June 1, 2017. Substantially all of the borrowings under the credit agreements were used to finance acquisition activity, fund losses, and $200,000, which is not currently available to be borrowed by us, was used to secure a bond required to obtain a state license for our ancillary network business. The obligations under the credit agreements are secured by all the assets of the Company and its subsidiaries, and include ordinary and customary covenants related to, among other things, additional debt, further encumbrances, sales of assets, and investments and lending.

Borrowings under the credit agreements are also secured by guarantees provided by certain officers and directors of the Company, among others.  In consideration of their guaranteeing such indebtedness, we originally issued the guarantors warrants to purchase an aggregate of 2,060,000 shares of our common stock.

A portion of the indebtedness under the credit agreements matured on June 1, 2016. On June 7, 2016 the Company extended the maturity date of all indebtedness under the credit agreements to June 1, 2017. In connection with the extension, the guarantors agreed to extend their respective guarantees to the modified maturity date. In consideration of such extension, the Company issued warrants to purchase an aggregate of 2,000,000 shares of common stock of the Company at an exercise price of $0.21 per share. The warrants vested immediately and are exercisable any time prior to their expiration on June 6, 2026.

Promissory Notes and Notes Payable

On June 3, 2016, we received a loan of $1,639,000 from the following three board members: John Pappajohn, Mark Oman, and Matt Kinley. The loan is evidenced by promissory notes bearing interest at 6% per annum issued to each of the respective directors. Interest-only payments are due and payable under the promissory notes on the first day of each calendar month after the date of issuance, and all principal and accrued but unpaid interest are due and payable in December 2017. The loans are subordinate to the credit agreements with Wells Fargo.

In 2015, as part of the Medac Asset Acquisition, the Company issued a promissory note to the seller for $560,000. The fair value of the note was subsequently adjusted for reporting purposes to $522,000. The promissory note accrues interest at 5% per annum and matures on June 15, 2017. Other acquisition notes of approximately $73,000 remained outstanding at June 30, 2016, mature in 2016 and bear interest at 5%.

The following is a summary of all Company debt as of June 30, 2016 (in thousands):

Revolving line of credit	$	11,800
Promissory notes		2,234
Total debt		14,034
Less current maturities		12,395
Long-term debt	$	1,639

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Note 9 - Intangible Assets

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

9. Intangible Assets

Identifiable intangible assets acquired in the urgent and primary care transactions are comprised of relationships with patients and contracts that drive patient volume (and therefore revenue) to our centers.  Identifiable intangible assets and related accumulated amortization consist of the following as of the dates presented (in thousands):

	June 30, 2016 (Unaudited)			December 31, 2015 (Audited)
Gross carrying amount of urgent and primary care intangibles:
Patient relationships and contracts	$	2,014		$	2,074
Accumulated amortization		(244	)		(189	)
Total intangibles, net	$	1,770		$	1,885

Total amortization expense related to intangibles was approximately $57,000 and $80,000 during the three months ended June 30, 2016 and 2015, and $115,000 and $161,000 during the six months ended June 30, 2016 and 2015, respectively. We amortize patient relationships and contracts using the straight-line method over their estimated useful lives between five and ten years. 

Estimated future amortization expense relating to intangibles is as follows (in thousands):

Years ending December 31,	Urgent and  Primary Care
2016 (6 months remaining)	$	114
2017		229
2018		229
2019		202
2020		167
Thereafter		829
Total	$	1,770

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Note 10 - Warrants

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Warrants [Text Block]

10.  Warrants

Warrants to purchase 15,167,396 shares and 1,782,222 shares of our common stock were outstanding as of June 30, 2016 and June 30, 2015, respectively. Warrants to purchase 11,085,174 shares of common stock were issued in the 2015 Offering. Warrants to purchase 2,060,000 shares of common stock were issued in 2014 and 2015 to the guarantors of our lines of credit, and additional warrants to purchase 2,000,000 shares of common stock were issued to the same guarantors in connection with the recent extension of our credit agreements. The remaining warrants to purchase 22,222 shares of common stock expire on February 1, 2017 and have an exercise price of $1.50 per share. The weighted average price of the outstanding warrants to purchase an aggregate of 15,167,396 of our common stock at June 30, 2016 was $0.76.

The fair value of the additional warrants issued to purchase 2,000,000 shares of common stock was calculated using the Black Sholes options-pricing model. Additional assumptions we used in our valuation calculations were as follows:

Stock price	$0.21
Volatility	100.0%
Risk-free interest rate	1.73%
Exercise price	$0.21
Expected life (years)	10

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Note 11 - Segment Reporting

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

11.  Segment Reporting

As of June 30, 2016, we operated two segments, urgent and primary care and ancillary network.  We evaluate segment performance based on several factors, the primary financial measure of which is operating income.  We define segment income as income before interest expense, gain or loss on disposal of assets, income taxes, depreciation expense, non-cash amortization of intangible assets, intangible asset impairment, non-cash stock-based compensation expense, shared service expenses, severance charges and any other non-recurring costs.  Shared services primarily consists of compensation costs for our executive management team, corporate headquarters costs, certain transactional costs, support services such as finance and accounting, human resources, legal, marketing and information technology and general administration.  

The following tables set forth a comparison of operations for the following periods presented for our segments and shared services (certain prior year amounts have been reclassified for comparability purposes).

Consolidated statements of operations by segment for the respective three month period ended June 30 are as follows (in thousands):

	Three Months Ended June 30,
	2016											2015
	Urgent and Primary Care			Ancillary Network*		Shared Services			Total			Urgent and Primary Care			Ancillary Network*		Shared Services			Total
Net revenues	$	4,255		$	5,095	$	31		$	9,381		$	2,354		$	5,604	$	-		$	7,958
Total segment operating income (loss)		(84	)		270		(1,364	)		(1,178	)		(795	)		340		(1,610	)		(2,065	)
Additional Segment Disclosures:
Interest expense		55			-		71			126			70			-		23			93
Deferred loan fees amortization, net of loss on warrant liability		282			-		94			376			(568	)		-		(189	)		(757	)
Depreciation and amortization expense		183			-		44			227			151			122		19			292
Income tax expense		-			7		-			7			-			4		-			4
Total asset expenditures		5			-		18			23			19			-		29			48

* Presented as discontinued operations in statement of operations.

	Six Months Ended June 30,
	2016											2015
	Urgent and Primary Care			Ancillary Network*		Shared Services			Total			Urgent and Primary Care			Ancillary Network*		Shared Services			Total
Net revenues	$	9,261		$	9,790	$	31		$	19,082		$	5,026		$	11,347	$	-		$	16,373
Total segment operating income (loss)		(22	)		569		(2,649	)		(2,102	)		(1,245	)		433		(3,621	)		(4,433	)
Additional Segment Disclosures:
Interest expense		101			-		132			233			125			-		51			176
Deferred loan fees amortization, net of (gain)/loss on warrant liability		635			-		211			846			(291	)		-		(97	)		(388	)
Depreciation and amortization expense		377			-		72			449			300			247		36			583
Income tax expense		-			13		-			13			-			10		-			10
Total asset expenditures		59			-		198			257			19			-		119			138

The following provides a reconciliation of reportable segment operating income (loss) to the Company’s consolidated totals (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Total segment operating (loss)	$	(1,178	)	$	(2,065	)	$	(2,102	)	$	(4,433	)
Less:
Severance charges		36			346			47			346
Ancillary network prepaid write-off		-			487			-			487
Depreciation and amortization expense		227			292			449			583
Non-cash stock-based compensation expense		71			256			101			403
Intangible asset impairment		-			520			-			520
Non-recurring professional fees		50			37			124			450
Operating loss, including discontinued operations		(1,562	)		(4,003	)		(2,823	)		(7,222	)
(Gain) on cancellation of acquisition promissory note		(90	)		-			(90	)		-
(Gain) on sale of Virginia urgent care clinics		(361	)		-			(361	)		-
Interest expense		126			93			233			176
Deferred loan fees amortization, net of loss on warrant liability		376			(757	)		846			(388	)
Loss before income taxes, including discontinued operations	$	(1,613	)	$	(3,339	)	$	(3,451	)	$	(7,010	)

Segment assets include accounts receivable, prepaid expenses and other current assets, property and equipment, and intangibles.  Shared services assets consist of cash and cash equivalents, prepaid insurance, deferred income taxes and property and equipment primarily related to information technology assets.  Consolidated assets, by segment and shared services, as of the periods presented are as follows:

	Urgent and Primary Care		Ancillary Network*		Shared Services		Consolidated
June 30, 2016	$	13,440	$	2,839	$	2,861	$	19,140
December 31, 2015		14,920		2,644		3,521		21,085

* Presented as discontinued operations in balance sheets.

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Note 12 - Subsequent Events

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Subsequent Events [Text Block]

12. Subsequent Events

 On July 26, 2016, we expanded our borrowing capacity with lines of credit with Wells Fargo by $1,000,0000. The additional funds will be used for working capital and will be due and payable on June 1, 2017, the date all indebtedness is due under our credit agreements. The line extension is governed by all terms and conditions set forth in the existing credit agreements.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited consolidated financial statements of American CareSource Holdings, Inc. and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X of the rules and regulations of the Securities and Exchange Commission (“SEC”).  Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these statements include all adjustments necessary to present a fair statement of our consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. Preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts in the financial statements and notes. Actual results could differ from those estimates. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015.  References herein to "the Company," "we," "us," or "our" refer to American CareSource Holdings, Inc. and its subsidiaries.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill resulted from our acquisition of urgent and primary care businesses during the years ended December 31, 2015 and 2014. In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, 

Business Combinations

, the purchase method of accounting requires that the excess of the purchase price paid over the estimated fair value of identifiable tangible and intangible net assets of acquired businesses be recorded as goodwill. In accordance with ASC 350

, Intangibles – Goodwill

 

and Other

, we are required to test goodwill for impairment annually or when indications of impairment occur. We perform our annual goodwill impairment test for our reporting units as of October 1, using a discounted cash flow method. In the interim, we review goodwill for impairment whenever events or circumstances indicate that the carrying amount might not be recoverable. We do not believe any event or circumstance in the second quarter of 2016 warranted an impairment review of goodwill, other than of our Florida clinics. Due to the closure of one of the Florida clinics we performed an interim goodwill impairment analysis for the Florida reporting unit and found no impairment was required.

Consolidation, Variable Interest Entity, Policy [Policy Text Block]

Variable Interest Entities ("VIEs")

– We consolidate VIEs when we are the “primary beneficiary” of the VIE. The primary beneficiary is the party that has (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) through its interests in the VIE, the obligation to absorb losses or the right to receive benefits from the VIE that could be significant to the VIE.

We have determined that Medac Health Services, P.A. (“Medac”) is a VIE and that we are the primary beneficiary. The financial results of Medac, our consolidated VIE, have been included in our operations since December 15, 2015, the date we closed the acquisition of certain assets from Medac (“the Medac Asset Acquisition”). Refer to

Note 4 – Acquisitions and Variable Interest Entity.

For additional Significant Accounting Policies, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-09 “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This standard requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid in capital pools. The guidance also allows for the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. The guidance is effective in 2017 with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and the timing of adoption.

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Note 3 - Liquidity and Earnings (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended			Six Months Ended			Three Months Ended			Six Months Ended
	June 30, 2016			June 30, 2016			June 30, 2015			June 30, 2015
Numerator:
(Loss) from continuing operations		(1,890	)		(4,033	)		(3,074	)		(6,736	)
Plus loss from non-controlling interests		233			368			-			-
Plus loss allocated to preferred stock		100			222			-			-
(Loss) from continuing operations, common stock for basic earnings per share		(1,557	)		(3,443	)		(3,074	)		(6,736	)
Less gain on change in fair value of warrant liability		-			-			-			791
(Loss) from continuing operations, common stock for diluted earnings per share		(1,557	)		(3,443	)		(3,074	)		(5,945	)
Income/(loss) from discontinued operations		270			569			(269	)		(284	)
Denominator:
Weighted-average basic common shares outstanding		16,608			16,606			6,849			6,811
Assumed conversion of dilutive securities:
Common stock purchase warrants		-			-			-			40
Denominator for dilutive earnings per share - adjusted weighted-average shares		16,608			16,606			6,849			6,851
Basic net (loss) per share, continuing operations	$	(0.10	)	$	(0.21	)	$	(0.45	)	$	(0.99	)
Diluted net (loss) per share, continuing operations	$	(0.10	)	$	(0.21	)	$	(0.45	)	$	(1.10	)
Basic net income (loss) per share, discontinued operations	$	0.02		$	0.03		$	(0.04	)	$	(0.04	)
Diluted net income (loss) per share, discontinued operations	$	0.02		$	0.03		$	(0.04	)	$	(0.04	)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	2016		2015
Common stock purchase warrants		15,167		1,782
Stock options		1,471		748
Restricted stock units		-		-
Restricted stock		200		-

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Note 4 - Acquisitions, Variable Interest Entity, and Disposals (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Variable Interest Entities [Table Text Block]

	June 30, 2016 (Unaudited)			December 31, 2015 (Audited)
Current assets	$	951		$	779
Current liabilities		1,319			759
Stockholder's equity (deficit)		(368	)		20
Total liabilities & stockholder's equity (deficit)	$	951		$	779

Business Acquisition, Pro Forma Information [Table Text Block]

	Six Months Ended June 30,
(in thousands, except per share amounts)	2016			2015
Net revenue
Urgent and primary care	$	8,050		$	9,070
Service agreement		1,242			868
Total net revenue		9,292			9,938
(Loss) from continuing operations before taxes	$	(4,020	)	$	(6,042	)
Basic net (loss) per common share continuing operations	$	(0.21	)	$	(0.89	)
Diluted net (loss) per common share continuing operations	$	(0.21	)	$	(1.00	)

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Note 5 - Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Disposal Groups, Including Discontinued Operations [Table Text Block]

	June 30, 2016  (Unaudited)		December 31, 2015 (Audited)
Accounts receivable	$	1,784	$	1,589
Prepaid expenses and other current assets		43		43
Deferred income taxes		18		18
Total current assets held for sale		1,845		1,650
Property and equipment, net		588		588
Intangible assets, net		406		406
Total other assets held for sale		994		994
Total assets held for sale	$	2,839	$	2,644
Due to service providers	$	2,333	$	3,225
Due to HealthSmart		2,582		2,210
Total current liabilities held for sale		4,915		5,435
Total liabilities held for sale	$	4,915	$	5,435

Result of Operations for Ancillary Network Business [Table Text Block]

	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016		2015
Net revenues	$	5,095	$	5,604		$	9,790	$	11,347
Operating expenses:
Provider payments		3,667		4,137			6,923		8,468
Administrative fees		354		194			678		524
Other operating costs		804		933			1,620		1,905
Prepaid writeoff		-		487			-		487
Depreciation and amortization		-		122			-		247
Total operating expenses		4,825		5,873			9,221		11,631
Income/(loss) from discontinued operations	$	270	$	(269	)	$	569	$	(284	)

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Note 6 - Revenue Recognition and Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

(in thousands)	June 30, 2016 (Unaudited)			December 31, 2015 (Audited)
Accounts receivable, trade	$	3,047		$	3,236
Accounts receivable, other	$	158
Less:
Estimated allowance for contractual adjustments uncollectible amounts		(1,602	)		(1,738	)
Accounts receivable, net	$	1,603		$	1,498

Schedule of Revenue Sources, Health Care Organization [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2016			2015			2016			2015
Gross revenue	$	7,386		$	4,333		$	15,804		$	10,119
Less:
Provision for contractual adjustments and estimated uncollectible amounts		(3,100	)		(1,979	)		(6,512	)		(5,093	)
Net revenue	$	4,286		$	2,354		$	9,292		$	5,026

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Note 7 - Capital and Operating Lease Obligations (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block]

	Capital Leases			Operating Leases		Total
2016 (remaining 6 months)	$	150		$	614	$	764
2017		288			1,001		1,289
2018		276			926		1,202
2019		273			812		1,085
2020		286			727		1,013
Thereafter		2,612			4,074		6,686
Total minimum lease payments		3,885		$	8,154	$	12,039
Less amount representing interest		(2,185	)
Present value of net minimum obligations		1,700
Less current obligation under capital lease		139
Long-term obligation under capital lease	$	1,561

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Note 8 - Lines of Credit, Promissory Notes, and Notes Payable (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Debt [Table Text Block]

Revolving line of credit	$	11,800
Promissory notes		2,234
Total debt		14,034
Less current maturities		12,395
Long-term debt	$	1,639

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Note 9 - Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	June 30, 2016 (Unaudited)			December 31, 2015 (Audited)
Gross carrying amount of urgent and primary care intangibles:
Patient relationships and contracts	$	2,014		$	2,074
Accumulated amortization		(244	)		(189	)
Total intangibles, net	$	1,770		$	1,885

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Years ending December 31,	Urgent and  Primary Care
2016 (6 months remaining)	$	114
2017		229
2018		229
2019		202
2020		167
Thereafter		829
Total	$	1,770

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Note 10 - Warrants (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Fair Value Inputs, Liabilities, Quantitative Information [Table Text Block]

Stock price	$0.21
Volatility	100.0%
Risk-free interest rate	1.73%
Exercise price	$0.21
Expected life (years)	10

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Note 11 - Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2016

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended June 30,
	2016											2015
	Urgent and Primary Care			Ancillary Network*		Shared Services			Total			Urgent and Primary Care			Ancillary Network*		Shared Services			Total
Net revenues	$	4,255		$	5,095	$	31		$	9,381		$	2,354		$	5,604	$	-		$	7,958
Total segment operating income (loss)		(84	)		270		(1,364	)		(1,178	)		(795	)		340		(1,610	)		(2,065	)
Additional Segment Disclosures:
Interest expense		55			-		71			126			70			-		23			93
Deferred loan fees amortization, net of loss on warrant liability		282			-		94			376			(568	)		-		(189	)		(757	)
Depreciation and amortization expense		183			-		44			227			151			122		19			292
Income tax expense		-			7		-			7			-			4		-			4
Total asset expenditures		5			-		18			23			19			-		29			48

	Six Months Ended June 30,
	2016											2015
	Urgent and Primary Care			Ancillary Network*		Shared Services			Total			Urgent and Primary Care			Ancillary Network*		Shared Services			Total
Net revenues	$	9,261		$	9,790	$	31		$	19,082		$	5,026		$	11,347	$	-		$	16,373
Total segment operating income (loss)		(22	)		569		(2,649	)		(2,102	)		(1,245	)		433		(3,621	)		(4,433	)
Additional Segment Disclosures:
Interest expense		101			-		132			233			125			-		51			176
Deferred loan fees amortization, net of (gain)/loss on warrant liability		635			-		211			846			(291	)		-		(97	)		(388	)
Depreciation and amortization expense		377			-		72			449			300			247		36			583
Income tax expense		-			13		-			13			-			10		-			10
Total asset expenditures		59			-		198			257			19			-		119			138

Reconciliation of Revenue from Segments to Consolidated [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Total segment operating (loss)	$	(1,178	)	$	(2,065	)	$	(2,102	)	$	(4,433	)
Less:
Severance charges		36			346			47			346
Ancillary network prepaid write-off		-			487			-			487
Depreciation and amortization expense		227			292			449			583
Non-cash stock-based compensation expense		71			256			101			403
Intangible asset impairment		-			520			-			520
Non-recurring professional fees		50			37			124			450
Operating loss, including discontinued operations		(1,562	)		(4,003	)		(2,823	)		(7,222	)
(Gain) on cancellation of acquisition promissory note		(90	)		-			(90	)		-
(Gain) on sale of Virginia urgent care clinics		(361	)		-			(361	)		-
Interest expense		126			93			233			176
Deferred loan fees amortization, net of loss on warrant liability		376			(757	)		846			(388	)
Loss before income taxes, including discontinued operations	$	(1,613	)	$	(3,339	)	$	(3,451	)	$	(7,010	)

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	Urgent and Primary Care		Ancillary Network*		Shared Services		Consolidated
June 30, 2016	$	13,440	$	2,839	$	2,861	$	19,140
December 31, 2015		14,920		2,644		3,521		21,085

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Note 2 - Description of Business (Details Textual)		1 Months Ended		8 Months Ended
	Apr. 01, 2016	Jan. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Georgia [Member]
Number of Businesses Closed		1
Number of Businesses Acquired				3
Florida [Member]
Number of Businesses Acquired				2
Alabama [Member]
Number of Businesses Acquired				3
Virginia [Member] | Two Virginia Subsidiaries [Member]
Number of Subsidiaries Sold	2
Virginia [Member]
Number of Businesses Acquired				2
North Carolina [Member]
Number of Businesses Acquired			4
Number of Businesses Closed		1
Number of Businesses Acquired				10

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Note 3 - Liquidity and Earnings (Loss) Per Share (Details Textual)	6 Months Ended
	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)
Revolving Credit Facility [Member] | Wells Fargo [Member]
Line of Credit Facility, Remaining Borrowing Capacity	$ 0
Line of Credit Facility, Maximum Borrowing Capacity	12,000,000
Line of Credit, Current	11,800,000
Proceeds from Line of Credit Used to Secure Bond	$ 200,000
Number of Lines of Credit	2
Cash and Cash Equivalents, at Carrying Value	$ 299,000	$ 2,629,000	$ 491,000	$ 1,020,000
Working Capital	14,600,000	13,200,000
Line of Credit, Current	$ 11,800,000	$ 11,100,000

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Note 3 - Basic Net Loss and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Numerator:
(Loss) from continuing operations	$ (1,890)	$ (3,074)	$ (4,033)	$ (6,736)
Plus loss from non-controlling interests	233		368
Plus loss allocated to preferred stock	100		222
(Loss) from continuing operations, common stock for basic earnings per share	(1,557)	(3,074)	(3,443)	(6,736)
Less gain on change in fair value of warrant liability				791
(Loss) from continuing operations, common stock for diluted earnings per share	(1,557)	(3,074)	(3,443)	(5,945)
Income/(loss) from discontinued operations	$ 270	$ (269)	$ 569	$ (284)
Denominator:
Weighted-average basic common shares outstanding (in shares)	16,608	6,849	16,606	6,811
Assumed conversion of dilutive securities:
Common stock purchase warrants (in shares)				40
Denominator for dilutive earnings per share - adjusted weighted-average shares (in shares)	16,608	6,849	16,606	6,851
Basic net (loss) per share, continuing operations (in dollars per share)	$ (0.10)	$ (0.45)	$ (0.21)	$ (0.99)
Diluted net (loss) per share, continuing operations (in dollars per share)	(0.10)	(0.45)	(0.21)	(1.10)
Basic net income (loss) per common share, discontinued operations (in dollars per share)	0.02	(0.04)	0.03	(0.04)
Diluted net income (loss) per common share, discontinued operations (in dollars per share)	$ 0.02	$ (0.04)	$ 0.03	$ (0.04)

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Note 3 - Potentially Dilutive Adjustments to Weighted Average Number of Common Shares (Details) - shares shares in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Warrant [Member]
Antidilutive securities (in shares)	15,167	1,782
Employee Stock Option [Member]
Antidilutive securities (in shares)	1,471	748
Restricted Stock Units (RSUs) [Member]
Antidilutive securities (in shares)
Restricted Stock [Member]
Antidilutive securities (in shares)	200

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Note 4 - Acquisitions, Variable Interest Entity, and Disposals (Details Textual)			1 Months Ended	3 Months Ended		6 Months Ended		8 Months Ended
	Apr. 01, 2016 USD ($)	Dec. 15, 2015 USD ($)	Jan. 31, 2016	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2014	Apr. 01, 2106
Medac Health Services [Member]
Number of Businesses Acquired		4
Payments to Acquire Businesses, Gross		$ 4,370,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities		768,000
Business Combination, Consideration Transferred, Liabilities Incurred		560,000
Long-term Line of Credit		$ 1,000,000
Georgia Clinic [Member]
Disposal Group, Including Discontinued Operation, Revenue						$ 5,000	$ 409,000
Disposal Group, Including Discontinued Operation, Operating Income (Loss)						(82,000)	(32,000)
Two Virginia Subsidiaries [Member] | Virginia [Member]
Number of Subsidiaries Sold	2
Two Virginia Subsidiaries [Member] | Promissory Note Receivable One [Member]
Promissory Notes ReceivableFaceAmount	$ 160,000
Note Receivable Interest Rate	1.50%
Number of Installments	2
Note Receivable Installment One Due In 90 Days	$ 50,000
Note Receivable Installment Two Due in 150 Days	110,000
Two Virginia Subsidiaries [Member] | Promissory Note Receivable Two [Member]
Promissory Notes ReceivableFaceAmount	$ 400,000
Note Receivable Interest Rate	5.00%
Number of Installments	3
Note receivable Installment	$ 133,333
Two Virginia Subsidiaries [Member]
Disposal Group, Including Discontinued Operation, Revenue						254,000	551,000
Disposal Group, Including Discontinued Operation, Operating Income (Loss)						(132,000)	(346,000)
Disposal Group, Including Discontinued Operation, Consideration	610,000
Proceeds from Divestiture of Businesses	$ 50,000
Number of Promissory Notes Receivable									2
Panama City Beach Facility [Member]
Disposal Group, Including Discontinued Operation, Revenue						136,000	263,000
Disposal Group, Including Discontinued Operation, Operating Income (Loss)						(120,000)	116,000
Virginia [Member]
Number of Businesses Acquired								2
Number of Businesses Acquired								10
Number of Businesses Closed			1
Disposal Group, Including Discontinued Operation, Revenue				$ 5,095,000	$ 5,604,000	$ 9,790,000	$ 11,347,000

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Note 4 - Balance Sheets of Medac (Details) - Variable Interest Entity, Primary Beneficiary [Member] - Medac Health Services [Member] - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets	$ 951	$ 779
Current liabilities	1,319	759
Stockholder's equity (deficit)	(368)	20
Total liabilities & stockholder's equity	$ 951	$ 779

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Note 4 - Pro Forma Financial Information for the Company (Details) - Medac Health Services [Member] - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Urgent and Primary Care [Member]
Net revenues	$ 8,050	$ 9,070
Service Agreement [Member]
Net revenues	1,242	868
Net revenues	9,292	9,938
(Loss) from continuing operations before taxes	$ (4,020)	$ (6,042)
Basic net (loss) per common share continuing operations (in dollars per share)	$ (0.21)	$ (0.89)
Diluted net (loss) per common share continuing operations (in dollars per share)	$ (0.21)	$ (1)

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Note 5 - Major Classes of Assets and Liabilities of the Ancillary Network Business Held for Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Due to Ancillary Network Service Providers [Member]
Due to affiliate	$ 2,333	$ 3,225
Due to Healthsmart [Member]
Due to affiliate	2,582	2,210
Accounts receivable	1,784	1,589
Prepaid expenses and other current assets	43	43
Deferred income taxes	18	18
Total current assets held for sale	1,845	1,650
Property and equipment, net	588	588
Intangible assets, net	406	406
Total other assets held for sale	994	994
Total assets held for sale	2,839	2,644
Total current liabilities held for sale	4,915	5,435
Total liabilities held for sale	$ 4,915	$ 5,435

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Note 5 - Results of Operations for the Ancillary Network Business (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Disposal Group, Including Discontinued Operation, Revenue	$ 5,095	$ 5,604	$ 9,790	$ 11,347
Provider payments	3,667	4,137	6,923	8,468
Administrative fees	354	194	678	524
Other operating costs	804	933	1,620	1,905
Prepaid writeoff		487		487
Depreciation and amortization		122		247
Total operating expenses	4,825	5,873	9,221	11,631
Income/(loss) from discontinued operations	$ 270	$ (269)	$ 569	$ (284)

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Note 6 - Accounts Receivable from Urgent and Primary Care (Details) - Urgent and Primary Care [Member] - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Trade Accounts Receivable [Member]
Accounts receivable	$ 3,047	$ 3,236
Other Accounts Receivable [Member]
Accounts receivable	158
Estimated allowance for contractual adjustments uncollectible amounts	(1,602)	(1,738)
Accounts receivable, net	$ 1,603	$ 1,498

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Note 6 - Revenue from Urgent and Primary Care (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Urgent and Primary Care [Member]
Gross revenue	$ 7,386	$ 4,333	$ 15,804	$ 10,119
Provision for contractual adjustments and estimated uncollectible amounts	(3,100)	(1,979)	(6,512)	(5,093)
Net revenue	$ 4,286	$ 2,354	$ 9,292	$ 5,026

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Note 7 - Future Required Payments under Lease Agreements (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
2016 (remaining 6 months)	$ 150,000
2016 (remaining 6 months)	614,000
2016 (remaining 6 months)	764,000
2017	288,000
2017	1,001,000
2017	1,289,000
2018	276,000
2018	926,000
2018	1,202,000
2019	273,000
2019	812,000
2019	1,085,000
2020	286,000
2020	727,000
2020	1,013,000
Thereafter	2,612,000
Thereafter	4,074,000
Thereafter	6,686,000
Total minimum lease payments	3,885,000
Total minimum lease payments	8,154,000
Total minimum lease payments	12,039,000
Less amount representing interest	(2,185,000)
Present value of net minimum obligations	1,700,000
Less current obligation under capital lease	139,000	$ 134,000
Long-term obligation under capital lease	$ 1,561,000	$ 1,630,000

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Note 8 - Lines of Credit, Promissory Notes, and Notes Payable (Details Textual) - USD ($)		6 Months Ended	12 Months Ended
	Jun. 07, 2016	Jun. 30, 2016	Dec. 31, 2015	Jun. 03, 2016	Jun. 30, 2015	Dec. 31, 2014
Revolving Credit Facility [Member] | Wells Fargo [Member]
Long-term Line of Credit		$ 11,800,000
Debt, Weighted Average Interest Rate		2.19%
Proceeds from Line of Credit Used to Secure Bond		$ 200,000
March 31, 2016 Warrants [Member]
Class of Warrant or Right Issued During Period		2,060,000
Warrants Issued to Individuals who Provided Guarantees in Connection with Lines of Credit [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	2,000,000		2,060,000	2,000,000		2,060,000
Class of Warrant or Right, Issued During Period, Exercise Price	$ 0.21
Promissory Notes To Directors [Member]
Debt Instrument, Face Amount				$ 1,639,000
Debt Instrument, Interest Rate, Stated Percentage				6.00%
Medac Asset Acquisiton [Member]
Business Combination, Consideration Transferred, Liabilities Incurred		$ 522,000	$ 560,000
Debt Instrument, Interest Rate During Period		5.00%
Other Acquisitions [Member]
Debt Instrument, Interest Rate, Stated Percentage		5.00%
Debt, Long-term and Short-term, Combined Amount		$ 73,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		15,167,396			1,782,222
Debt, Long-term and Short-term, Combined Amount		$ 14,034,000

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Note 8 - Summary of All Debt (Details) $ in Thousands	Jun. 30, 2016 USD ($)
Revolving Line of Credit [Member]
Debt, Long-term and Short-term, Combined Amount	$ 11,800
Promissory Notes [Member]
Debt, Long-term and Short-term, Combined Amount	2,234
Debt, Long-term and Short-term, Combined Amount	14,034
Less current maturities	12,395
Long-term debt	$ 1,639

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Note 9 - Intangible Assets (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Patient Base [Member] | Minimum [Member]
Finite-Lived Intangible Asset, Useful Life			5 years
Patient Base [Member] | Maximum [Member]
Finite-Lived Intangible Asset, Useful Life			10 years
Amortization of Intangible Assets	$ 57,000	$ 80,000	$ 115,000	$ 161,000

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Note 9 - Other Intangible Assets and Related Accumulated Amortization (Details) - Urgent and Primary Care [Member] - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Patient Relationships and Contracts [Member]
Finite-lived intangible assets, gross	$ 2,014	$ 2,074
Accumulated amortization	(244)	(189)
Finite-lived intangible assets, net	$ 1,770	$ 1,885

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Note 9 - Finite-lived Intangible Assets Future Amortization Expense (Details) - Urgent and Primary Care [Member] - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
2016 (6 months remaining)	$ 114
2017	229
2018	229
2019	202
2020	167
Thereafter	829
Total	$ 1,770	$ 1,885

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Note 10 - Warrants (Details Textual) - $ / shares	Jun. 30, 2016	Jun. 07, 2016	Jun. 03, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Warrants Issued to Individuals who Provided Guarantees in Connection with Lines of Credit [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		2,000,000	2,000,000	2,060,000		2,060,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		2,000,000	2,000,000	2,060,000		2,060,000
Warrants Issued in 2015 Offering [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights				11,085,174
Class of Warrant or Right, Number of Securities Called by Warrants or Rights				11,085,174
Warrants Expiring February 1, 2017 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						22,222
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						22,222
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 1.50
Weighted Average [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.76
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	15,167,396				1,782,222
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	15,167,396				1,782,222
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.21

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Note 10 - Assumptions Used for Warrants Issued (Details)	6 Months Ended
	Jun. 30, 2016 $ / shares
Stock price (in dollars per share)	$ 0.21
Volatility	100.00%
Risk-free interest rate	1.73%
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.21
Expected life (years)	10 years

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Note 11 - Segment Reporting (Details Textual)	6 Months Ended
	Jun. 30, 2016
Number of Operating Segments	2

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Note 11 - Consolidating Statements of Operations by Industry (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2016		Jun. 30, 2015		Jun. 30, 2016	Jun. 30, 2015
Urgent and Primary Care [Member] | Operating Segments [Member]
Net revenue	$ 4,255		$ 2,354		$ 9,261	$ 5,026
Total segment operating (loss)	(84)		(795)		(22)	(1,245)
Interest expense	55		70		101	125
Deferred loan fees amortization, net of loss on warrant liability	282		(568)		(635)	291
Depreciation and amortization	183		151		377	300
Income tax expense
Total asset expenditures	5		19		59	19
Deferred loan fees amortization, net of (gain)/loss on warrant liability	(282)		568		635	(291)
Ancillary Network [Member] | Operating Segments [Member]
Net revenue	5,095	[1]	5,604	[1]	9,790	11,347
Total segment operating (loss)	270	[1]	340	[1]	569	433
Interest expense		[1]		[1]
Deferred loan fees amortization, net of loss on warrant liability		[1]		[1]
Depreciation and amortization		[1]	122	[1]		247
Income tax expense	7	[1]	4	[1]	13	10
Total asset expenditures		[1]		[1]
Deferred loan fees amortization, net of (gain)/loss on warrant liability		[1]		[1]
Shared Services [Member] | Operating Segments [Member]
Net revenue	31				31
Total segment operating (loss)	(1,364)		(1,610)		(2,649)	(3,621)
Interest expense	71		23		132	51
Deferred loan fees amortization, net of loss on warrant liability	94		(189)		(211)	97
Depreciation and amortization	44		19		72	36
Income tax expense
Total asset expenditures	18		29		198	119
Deferred loan fees amortization, net of (gain)/loss on warrant liability	(94)		189		211	(97)
Operating Segments [Member]
Net revenue	9,381		7,958		19,082	16,373
Total segment operating (loss)	(1,178)		(2,065)		(2,102)	(4,433)
Interest expense	126		93		233	176
Deferred loan fees amortization, net of loss on warrant liability	376		(757)		(846)	388
Depreciation and amortization	227		292		449	583
Income tax expense	7		4		13	10
Total asset expenditures	23		48		257	138
Deferred loan fees amortization, net of (gain)/loss on warrant liability	(376)		757		846	(388)
Net revenue	4,286		2,354		9,292	5,026
Total segment operating (loss)	(1,832)		(3,734)		(3,392)	(6,938)
Interest expense	126		93		233	176
Deferred loan fees amortization, net of loss on warrant liability	376		(757)		846	(388)
Depreciation and amortization	227		170		449	336
Income tax expense	7		4		13	10
Deferred loan fees amortization, net of (gain)/loss on warrant liability	$ (376)		$ 757		$ (846)	$ 388

[1] Presented as discontinued operations in statement of operations.

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Note 11 - Reconciliation of Reportable Segment Operating Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Operating Segments [Member]
Total segment operating (loss)	$ (1,178)	$ (2,065)	$ (2,102)	$ (4,433)
Interest expense	126	93	233	176
Deferred loan fees amortization, net of loss on warrant liability	376	(757)	(846)	388
Virginia Urgent Care Clinics [Member]
(Gain) on sale of Virginia urgent care clinics	(361)		(361)
Total segment operating (loss)	(1,832)	(3,734)	(3,392)	(6,938)
Severance charges	36	346	47	346
Ancillary network prepaid write-off		487		487
Depreciation and amortization expense	227	292	449	583
Non-cash stock-based compensation expense	71	256	101	403
Intangible asset impairment		520		520
Non-recurring professional fees	50	37	124	450
Operating loss, including discontinued operations	(1,562)	(4,003)	(2,823)	(7,222)
(Gain) on cancellation of acquisition promissory note	(90)		(90)
Interest expense	126	93	233	176
Deferred loan fees amortization, net of loss on warrant liability	376	(757)	846	(388)
Loss before income taxes, including discontinued operations	$ (1,613)	$ (3,339)	$ (3,451)	$ (7,010)

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Note 11 - Consolidating Assets, by Segment and Shared Services (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Urgent and Primary Care [Member] | Operating Segments [Member]
Assets	$ 13,440,000	$ 14,920,000
Ancillary Network [Member] | Operating Segments [Member]
Assets	2,839,000	2,644,000
Shared Services [Member] | Operating Segments [Member]
Assets	2,861,000	3,521,000
Operating Segments [Member]
Assets	19,140,000	21,085,000
Assets	$ 19,140,000	$ 21,085,000

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Note 12 - Subsequent Events (Details Textual)	1 Months Ended
	Jul. 31, 2016 USD ($)
Subsequent Event [Member] | Wells Fargo [Member] | Revolving Credit Facility [Member] | December 4, 2014 Agreement [Member]
Line of Credit Facility Maximum Borrowing Capacity Increase (Decrease)	$ 10,000,000