x
|
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2012
|
o
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from___________ to ___________
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Nevada | 95-4659068 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer o | Accelerated filer x | Non-accelerated filer x | Smaller reporting company o |
3 | |||||
29 | |||||
40 | |||||
40 | |||||
40 | |||||
40 | |||||
41 | |||||
53 | |||||
54 | |||||
67 | |||||
67 | |||||
67 | |||||
67 | |||||
68 | |||||
69 | |||||
79 | |||||
85 | |||||
88 | |||||
89 | |||||
90 |
ITEM 1.
|
●
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Head-End: This collection of server and networking equipment facilitates the CareView network in the hospital and serves as the aggregation point for all real-time video and patient data. The head-end is typically located in the server room of the hospital and one head-end is typically required per campus.
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●
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Nursing Station: The CareView System provides nurses an all-in-one touch-screen computer for viewing real-time video and clinical monitoring of patients.
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●
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Room Control Platform: One RCP is deployed per patient bed. The RCP is a microprocessor-based system consisting of a hard disk drive, cable modem, NTSC infrared camera and related controls, microphone, USB ports, wireless keyboard and wireless remote control. The complementary suite of software applications on the RCP are designed to streamline workflow and improve value-added services offered.
|
●
|
Tablet: Wireless tablet devices pre-loaded with CareView software are provided to the hospitals for use by various staff members at the hospitals. The software available on the tablet allows clinical and sitter staff to monitor patients remotely and allows administrative staff to manage the bed control process from the tablet.
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●
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Wireless Handheld: Wireless handheld devices pre-loaded with CareView software are provided to nurses to enable them to remotely monitor patients.
|
·
|
Servers: The CareView System employs two servers: the video gateway and the application server. Both are identical servers with each being able to provide the services of the other in the case of a failure. The servers we deploy are a mid-level enterprise server positioned for low power usage and high performance. These servers are typically two rack unit servers with moderate storage capabilities with the processing power to handle hundreds of RCPs and dozens of web-based clients (located at nursing stations or other areas in the hospital). CareView installs the servers in a CareView provided rolling rack, or if requested, can install them in the hospital's existing data rack.
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·
|
Cable Modem Termination System (CMTS): The CMTS acts as a network bridge between the Ethernet network (which all of the servers, nursing stations and end users are connected to) and the hybrid fiber/coaxial (HFC) cable network (which extends into each room to provide cable TV). The CMTS allows the RCPs, with their embedded cable modems, to communicate on the data network over the television cable in patient rooms. The CMTS resides near the cable demarcation point, or must have cable run to connect the demarcation point with a sufficiently cooled room which houses the CMTS. Typically, one hospital installation requires only one CMTS; however, occasionally a hospital will have an additional campus connected with a high-speed private data network, allowing implementation using an additional CMTS, but with no additional servers.
|
·
|
Firewall: The firewall provides the CareView System with secure Internet connectivity and resides in the server room. The CareView System uses this Internet connectivity to remotely manage all hospital installations through the firewall, to provide remote software upgrade service, and to provide services for NetView® and PatientView®, as more fully described herein.
|
·
|
Switch: The Ethernet switch provides network connectivity between the servers, CMTS, firewall, and hospital data network. CareView deploys one switch in the hospital server room.
|
·
|
Uninterruptible Power Supply (UPS): If the hospital's server room does not provide adequate room-level backup power, CareView will deploy one UPS for the hospital's server room.
|
·
|
Doctors, nurses and other healthcare providers with the ability to more efficiently and cost-effectively monitor, treat and visit their patients.
|
·
|
Family members and friends with the ability to use the Internet to monitor, correspond with, and visit with their loved ones in hospitals and nursing homes.
|
·
|
Patients and their visitors with direct access to on-demand high-speed Internet and other digital entertainment products and services in their rooms.
|
·
|
Facilities with the ability to implement audit tools to insure quality standards are being adhered to, safety measures are being complied with and both can be used to further educate caregivers to continually enhance quality and safety.
|
·
|
A patent-pending fall prevention system.
|
·
|
Innovative mobile technology to improve patient safety.
|
·
|
Offers comprehensive patient attention with documentation and recording of all in-room activity.
|
·
|
Provides risk managers with a "Video Incident Report."
|
·
|
Provides a thorough recorded documentation of patient care which will eliminate the need to fund frivolous claims.
|
·
|
Documents and records the provision of care, administration of drugs, nursing visits,housekeeping service, dietary delivery and patient movements.
|
·
|
Provides enhanced patient safety.
|
·
|
Provides a record of "Best Practice."1
|
·
|
Provides a continual observation and monitoring system for nurses.
|
·
|
Provides a room security system.
|
·
|
Provides a documentation system of patient care.
|
·
|
Provides constant visual contact and reduces unnecessary trips to a patient's room.
|
·
|
Uses infrared cameras to allow night viewing without disturbing the patient.
|
·
|
Provides the patient and their family with comfort by knowing that a trained medical professional is always watching.
|
·
|
Provides remote monitoring features that enhance patient care by:
|
·
|
Alerting nurses to patient movement thereby protecting an unsecured patient.
|
·
|
Giving nurses visual confirmation that bed rails are in their proper position.
|
·
|
Creating a team nursing concept – one nurse stays at the nursing station to monitor rooms while another provides a rapid response to a patient's need.
|
·
|
Allows physicians to make video rounds remotely from any computer or PDA.
|
·
|
Promotes immediate access to patients when they need it most.
|
·
|
Improves the quality and timeliness of patient care.
|
·
|
Provides physicians with the capability to leave notes for the patient's family.
|
·
|
Increases physician-to-patient communication.
|
·
|
Provides doctors with a reimbursable event.
|
·
|
Alerts nursing staff of potential patient falls.
|
·
|
Creates an opportunity for immediate intervention to prevent a fall.
|
·
|
Improves safety of patients and saves lives.
|
·
|
Enhances satisfaction of patients, families and friends.
|
·
|
Allows family and friends to monitor the patient's recovery from any computer.
|
·
|
Provides a message board with updated patient condition.
|
·
|
Increases safety and security.
|
·
|
Provides peace of mind for the patient and family.
|
·
|
Enables Internet access in the patient's room without the need of a personal laptop computer.
|
·
|
Provides a high-speed Internet connection to browse favorite Internet sites.
|
·
|
Allows patients to check E-mail and stay in touch with friends and families and with business and personal interests.
|
·
|
Provides a state-of-the-art entertainment system with a wide variety of programming.
|
·
|
Allows patients to view first run movies and a variety of programming on demand in the comfort of their hospital room.
|
●
|
A third generation Room Control Platform (the "Generation 3 RCP"): The Generation 3 RCP will incorporate a much higher percentage of proprietary design. The present RCP uses several third party modules which develops a level of dependence on these third party modules and their suppliers. The Generation 3 RCP will incorporate a Comexpress design to eliminate the variances which can be introduced by third party suppliers. The Generation 3 RCP will have a 7-year parts life guarantee by all of the major component manufacturers to ensure consistency in manufacturing for at least that 7-year period. In addition, the Generation 3 RCP will be physically smaller in size which will reduce the cost of the unit. The Generation 3 RCP will be available for production by the third quarter of 2013.
|
●
|
Ulcer Management Module: This module uses proprietary and patent pending techniques to detect if a patient has moved sufficiently as to relieve pressure areas susceptible to decubitus ulcers. The module works in concert with our Virtual Bed Rails system to alert healthcare employees of the need to turn a patient in a timely manner. The algorithms used detect the motion of a patient even while covered with bed linens. The system remains silent if the patient has moved enough to comply with the maximum times established by the industry to prevent bed sores. In the event the patient has not moved to a sufficient degree, the system will alarm the healthcare professional to turn the patient. Additionally, the module will document the procedure through both the data base and video recordings. The Company performed preliminary beta testing; however, did not release it due to the Company's decision to make an upgrade to take advantage of recent advances to infrared technology. The Company anticipates this module to be complete by the first quarter of 2014.
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●
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RFID: Presently CareView has been testing several RFID products from various manufacturers to be used in connection with the CareView System. It is CareView’s intent to offer its customers a third party RFID solution tied to the CareView System. As the infrastructure of the CareView System will already be in place at each hospital, this approach will allow CareView to provide the service at a greatly reduced price to the hospital versus the hospital contracting directly with other firms in the RFID business. The development of this RFID product has been delayed due to the increased demand for development and deployment of other of the Company's products.
|
(a)
|
During years 1-5, interest will be payable (on a cumulative basis) by the issuance of additional convertible debt (a "PIK") with the same terms as New Senior Convertible Notes, at an interest rate of 12.5%, compounded quarterly.
|
(b)
|
During years 6-10, interest may be paid in cash or as a consideration on the cumulative PIK (at the Company’s option), at an annual interest rate of 10.0%, compounded quarterly.
|
(c)
|
Interest shall be calculated and payable on a quarterly basis in arrears.
|
(d)
|
Notwithstanding the foregoing, during the existence of an event of default, the then applicable interest rate will be increased by 5%.
|
ITEM 1A.
|
·
|
actual or perceived lack of security of information or privacy protection;
|
·
|
possible disruptions, computer viruses or other damage to the Internet servers or to users' computers; and
|
·
|
excessive governmental regulation.
|
·
|
technological innovations by competitors;
|
·
|
governmental regulation of our products and services;
|
·
|
additions or departures of key personnel;
|
·
|
decline in demand for our Common Stock;
|
·
|
our ability to integrate operations, technology, products and services;
|
·
|
our ability to execute our business plan;
|
·
|
operating results below expectations;
|
·
|
loss of any strategic relationships;
|
·
|
industry developments;
|
·
|
lack of funding generated for operations;
|
·
|
investor perception of our industry or our prospects;
|
·
|
general economic trends and other external factors; and
|
·
|
period-to-period fluctuations in our financial results.
|
●
|
our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;
|
●
|
we must use a substantial portion of our cash flow from operations to pay interest and principal on our indebtedness, which will reduce the funds available to us for other purposes such as capital expenditures;
|
●
|
we may be limited in our ability to borrow additional funds;
|
●
|
we may have a higher level of indebtedness than some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in planning for, or responding to, changing conditions in our industry, including increased competition; and
|
●
|
we may be more vulnerable to economic downturns and adverse developments in our business.
|
·
|
Growing and Aging Population – The U.S. Census Bureau predicts that the majority of the U.S. "baby boom" population (28% of the total U.S. population) will begin to turn 65 between 2010 and 2020.
|
·
|
Consumer expectations for improved healthcare are increasing.
|
·
|
Effects of ObamaCare, which effects have not yet been able to be determined, and may or may not have a negative effect on our business.
|
·
|
Reimbursement and coverage of medical expenses by insurance companies and employers are on the decline resulting in patients having to contribute more money
|
·
|
Technology is giving rise to new clinical therapies to address an increased number of medical ailments to aid in earlier diagnosis and prevention of diseases.
|
ITEM 1B.
|
ITEM 2.
|
ITEM 3.
|
ITEM 4.
|
Quarter Ended
|
High
|
Low
|
||||||
Fiscal Year 2012
|
||||||||
Fourth Quarter
|
$ | 1.20 | $ | 0.70 | ||||
Third Quarter
|
$ | 1.38 | $ | 1.01 | ||||
Second Quarter
|
$ | 1.68 | $ | 1.25 | ||||
First Quarter
|
$ | 1.80 | $ | 1.50 | ||||
Fiscal Year 2011
|
||||||||
Fourth Quarter
|
$ | 1.60 | $ | 1.35 | ||||
Third Quarter
|
$ | 1.80 | $ | 1.25 | ||||
Second Quarter
|
$ | 2.03 | $ | 1.54 | ||||
First Quarter
|
$ | 2.05 | $ | 1.40 |
Plan Category
|
Number of Securities
to be issued upon
exercise of
outstanding options
(a)
|
Weighted-
average exercise
price of
outstanding
options
(b)
|
Number of
securities remaining
available for future
issuance under
equity compensation
plans (excluding
securities reflected
in column (a)
(c)
|
|||||||||
Equity compensation plans not approved by security holders
|
-0- | -0- | -0- | |||||||||
Equity compensation plan approved by security holders: 2007 Plan
|
5,310,920 | $ | 0.52 | -0- | ||||||||
Equity compensation plan approved by security holders: 2009 Plan
|
3,783,057 | $ | 0.84 | 5,805,444 | ||||||||
Total
|
9,093,977 | $ | 0.66 | 5,805,444 |
December 31,
|
||||||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Total assets
|
$ | 16,067 | $ | 21,956 | $ | 5,960 | $ | 3,917 | $ | 3,597 | ||||||||||
Total liabilities
|
$ | 14,315 | $ | 6,036 | $ | 868 | $ | 3,995 | $ | 2,013 | ||||||||||
Total stockholders’ equity (deficit)
|
1,752 | 15,920 | 5,092 | (78 | ) | 1,584 | ||||||||||||||
Total liabilities and stockholders’ equity
|
$ | 16,067 | $ | 21,956 | $ | 5,960 | $ | 3,917 | $ | 3,597 |
For years ended December 31,
|
||||||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
(In thousands, except for net loss per share)
|
||||||||||||||||||||
Revenue, net
|
$ | 1,630 | $ | 630 | $ | 326 | $ | 87 | $ | 42 | ||||||||||
Total operating expense
|
12,705 | 9,598 | 13,121 | 4,163 | 2,591 | |||||||||||||||
Total other expense, net)
|
7,531 | 7,407 | 6,155 | 2,118 | 625 | |||||||||||||||
Loss before income taxes
|
(18,606 | ) | (16,375 | ) | (18,950 | ) | (6,194 | ) | (3,174 | ) | ||||||||||
Provision for income taxes
|
-0- | -0- | -0- | -0- | -0- | |||||||||||||||
Net loss
|
(18,606 | ) | (16,375 | ) | (18,950 | ) | (6,194 | ) | (3,174 | ) | ||||||||||
Net loss attributable to noncontrolling interest
|
(103 | ) | (111 | ) | (98 | ) | (18 | ) | -0- | |||||||||||
Net loss attributable to CareView Communications
|
$ | (18,503 | ) | $ | (16,264 | ) | $ | (18,852 | ) | $ | (6,176 | ) | $ | (3,174 | ) | |||||
Earnings per share, basic and diluted
|
||||||||||||||||||||
Net loss per share, basic and diluted
|
$ | (0.14 | ) | $ | (0.13 | ) | $ | (0.15 | ) | $ | (0.06 | ) | $ | (0.03 | ) | |||||
Weighted average common shares outstanding, basic and diluted
|
132,123 | 129,468 | 122,864 | 108,359 | 102,743 |
(000’s) | ||||
At December 31, 2011
|
$ | 8,527 | ||
At December 31, 2012
|
5,414 | |||
Decrease in cash and cash equivalents
|
$ | (3,113 | ) |
(000’s) | ||||
At December 31, 2010
|
$ | 27 | ||
At December 31, 2011
|
8,527 | |||
Increase in cash and cash equivalents
|
$ | 8,500 |
2012
|
2011
|
2010
|
||||||||||
(000’s) | ||||||||||||
Proceeds from notes payable
|
$ | 5,000 | $ | 20,000 | $ | 30 | ||||||
Proceeds from exercise of stock options
|
262 | 1,187 | 83 | |||||||||
Proceeds, net, from issuance of equity securities
|
-0- | -0- | 6,477 | |||||||||
Sources of cash and cash equivalents
|
5,262 | 21,187 | 6,590 | |||||||||
Cash used in operating activities
|
7,322 | 5,739 | 4,131 | |||||||||
Cash used to purchase equipment
|
927 | 6,707 | 2,469 | |||||||||
Repayment of debt
|
42 | 168 | 84 | |||||||||
Cash used in other investing activities
|
84 | 73 | 98 | |||||||||
Uses of cash and cash equivalents
|
8,375 | 12,687 | 6,782 | |||||||||
Increase (decrease) in cash and cash equivalents
|
$ | (3,113 | ) | $ | 8,500 | $ | (192 | ) |
December 31, | ||||||||||||
2012
|
2011
|
Change
|
||||||||||
(000’s)
|
||||||||||||
Current assets
|
$ | 5,976 | $ | 9,245 | $ | (3,269 | ) | |||||
Current liabilities
|
969 | 1,634 | (665 | ) | ||||||||
Working capital
|
$ | 5,007 | $ | 7,611 | $ | (2,604 | ) |
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
Change
|
||||||||||
(000’s)
|
||||||||||||
Revenue, net
|
$ | 1,630 | $ | 630 | $ | 1,000 | ||||||
Operating expenses
|
12,705 | 9,598 | 3,107 | |||||||||
Operating loss
|
(11,075 | ) | (8,968 | ) | (2,107 | ) | ||||||
Other expense, net
|
(7,531 | ) | (7,407 | ) | (124 | ) | ||||||
Net loss
|
(18,606 | ) | (16,375 | ) | (2,231 | ) | ||||||
Net loss attributable to
|
||||||||||||
noncontrolling interest
|
(103 | ) | (111 | ) | (8 | ) | ||||||
Net loss attributable to
|
||||||||||||
CareView
|
$ | (18,503 | ) | $ | (16,264 | ) | $ | (2,239 | ) |
Year Ended
December 31,
|
||||||||
2012
|
2011
|
|||||||
Human resource costs, including benefits
|
30 | % | 28 | % | ||||
Depreciation and amortization expense
|
17 | % | 16 | % | ||||
Professional fees and consulting
|
26 | % | 28 | % | ||||
Product deployment costs
|
10 | % | 10 | % | ||||
Travel and entertainment
|
7 | % | 5 | % | ||||
Other
|
10 | % | 13 | % |
(000’s) | ||||
Increase in human resource costs
|
$ | 1,118 | ||
Increase in depreciation and amortization
|
557 | |||
Increase in production deployment costs
|
364 | |||
Increase in travel and entertainment
|
362 | |||
Increase in professional and consulting
|
567 | |||
Increase in other
|
139 | |||
$ | 3,107 |
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
Change
|
||||||||||
(000’s)
|
||||||||||||
Revenue, net
|
$ | 630 | $ | 326 | $ | 304 | ||||||
Operating expenses
|
9,598 | 13,122 | (3,524 | ) | ||||||||
Operating loss
|
(8,968 | ) | (12,796 | ) | 3,828 | |||||||
Other expense, net
|
(7,407 | ) | (6,155 | ) | (1,252 | ) | ||||||
Net loss
|
(16,375 | ) | (18,951 | ) | 2,576 | |||||||
Net loss attributable to
|
||||||||||||
noncontrolling interest
|
(111 | ) | (99 | ) | 12 | |||||||
Net loss attributable to
|
||||||||||||
CareView
|
$ | (16,264 | ) | $ | (18,852 | ) | $ | 2,588 |
Year Ended
December 31,
|
||||||||
2011
|
2010
|
|||||||
Human resource costs, including benefits
|
28 | % | 13 | % | ||||
Non-cash costs
|
14 | % | 65 | % | ||||
Professional fees and consulting
|
14 | % | 5 | % | ||||
Depreciation and amortization expense
|
16 | % | 5 | % | ||||
Product deployment costs
|
10 | % | 2 | % | ||||
Travel and entertainment
|
5 | % | 2 | % | ||||
Other
|
13 | % | 7 | % |
(000’s)
|
||||
Decrease in non-cash costs
|
$ | (7,249 | ) | |
Increase in human resource costs
|
1,030 | |||
Increase in depreciation and amortization
|
822 | |||
Increase in professional and consulting
|
789 | |||
Increase in production deployment costs
|
675 | |||
Increase in travel and entertainment
|
273 | |||
Increase in other
|
136 | |||
$ | (3,524 | ) |
·
|
if requires assumptions to be made that were uncertain at the time the estimate was made, and
|
·
|
changes in the estimate or different estimates that could have been selected could have a material impact on our results of operations or financial condition.
|
Years
Ending December 31,
|
Total
|
Senior Secured Convertible Notes(1)
|
Notes Payable
|
Mandatorily Redeemable Equity in Joint Venture
|
|||||||||||||
2013
|
$ | 887,148 | $ | -0- | $ | 443,574 | $ | 443,574 | |||||||||
2014
|
-0- | -0- | -0- | -0- | |||||||||||||
2015
|
-0- | -0- | -0- | -0- | |||||||||||||
2016
|
2,562,603 | 2,562,603 | -0- | -0- | |||||||||||||
2017
|
4,553,509 | 4,553,509 | -0- | -0- | |||||||||||||
Thereafter
|
62,374,273 | 62,374,273 | -0- | -0- | |||||||||||||
Total
|
$ | 70,377,533 | $ | 69,490,385 | $ | 443,574 | $ | 443,574 |
ITEM 9A.
|
ITEM 9B.
|
Name
|
Age
|
Position
|
Date Elected Director
|
Date Appointed Officer
|
||||
Tommy G. Thompson
|
70
|
Chairman of the Board
|
October 26, 2005
|
NA
|
||||
Samuel A. Greco
|
61
|
Chief Executive Officer, Director
|
February 17, 2009
|
September 4, 2007
|
||||
Steven G. Johnson
|
52
|
President, Chief Operating Officer, Director
|
April 11, 2006
|
April 11, 2006
|
||||
Anthony P. Piccin
|
49
|
Chief Financial Officer, Treasurer, Secretary
|
N/A
|
November 7, 2011
|
||||
L. Allen Wheeler
|
79
|
Director
|
January 26, 2006
|
NA
|
||||
Jeffrey C. Lightcap
|
54
|
Director
|
April 21, 2011
|
N/A
|
ITEM 11.
|
Name and
Principal Position
|
Year
|
Salary
($)
|
Bonus ($)
|
Stock Awards
($)
|
Option
Awards ($)(1)
|
Non-Equity Incentive Plan Compen-sation
($)
|
Nonquali-fied Deferred Compen-sation Earnings ($)
|
All Other
Compen-sation
($)
|
Total
($)
|
|||||||||||||||||||||||||
Samuel A.
|
2012
|
$ | 250,000 | -0- | -0- | -0- | -0- | -0- | $ | 35,600 | $ | 285,600 | ||||||||||||||||||||||
Greco(2)
|
2011
|
$ | 250,203 | -0- | -0- | -0- | -0- | -0- | $ | 36,781 | $ | 286,984 | ||||||||||||||||||||||
CEO
|
2010
|
$ | 251,599 | -0- | -0- | $ | 68,200 | -0- | -0- | $ | 31,916 | $ | 351,715 | |||||||||||||||||||||
Steven G.
|
2012
|
$ | 250,000 | -0- | -0- | -0- | -0- | -0- | $ | 27,364 | $ | 277,364 | ||||||||||||||||||||||
Johnson(3) |
2011
|
$ | 250,216 | -0- | -0- | -0- | -0- | -0- | $ | 28,573 | $ | 278,789 | ||||||||||||||||||||||
President/COO |
2010
|
$ | 255,371 | -0- | -0- | $ | 68,200 | -0- | -0- | $ | 28,506 | $ | 352,077 | |||||||||||||||||||||
Anthony P.
|
2012
|
$ | 150,101 | -0- | -0- | $ | 24,650 | -0- | -0- | $ | 18,105 | $ | 192,856 | |||||||||||||||||||||
Piccin(4)
|
2011
|
$ | 62,711 | -0- | -0- | $ | 61,650 | -0- | -0- | $ | 7,251 | $ | 69,963 | |||||||||||||||||||||
CFO/Treas./Sec.
|
2010
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- |
(1)
|
The valuation methodology used to determine the fair value of the options granted during the year was the Black-Scholes-Merton option-pricing model, an acceptable model in accordance with ASC 718-10. The Black-Scholes-Merton model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average expected life of the options. For more detail, see NOTE 4 – STOCKHOLDERS’ EQUITY, Stock Options to the audited consolidated financial statements for year ended December 31, 2010, filed herewith.
|
(2)
|
For 2012: All Other Compensation includes $9,000 for car allowance and $27,000 for health insurance premiums paid on Mr. Greco's behalf. For 2011: All Other Compensation includes $9,000 accrued for car allowance and $27,781 for health insurance premiums paid on Mr. Greco's behalf. For 2010: (i) Salary includes $1,599 earned but not accrued in 2009 and paid in 2010, (ii) Option Awards includes Options to purchase 100,000 shares of the Company's Common Stock, and (iii) All Other Compensation includes $9,000 accrued for car allowance and $22,916 for health insurance premiums paid on Mr. Greco's behalf.
|
(3)
|
For 2012: All Other Compensation includes $9,000 for car allowance and $18,364 for health insurance premiums paid on Mr. Johnson's behalf. For 2011: All Other Compensation includes $9,000 accrued for car allowance and $19,573 for health insurance premiums paid on Mr. Johnson's behalf. For 2010: (i) Salary includes $5,371 earned but not accrued in 2009 and paid in 2010, (ii) Option Awards includes Options to purchase 100,000 shares of the Company's Common Stock, and (iii) All Other Compensation includes $9,000 accrued for car allowance and $19,506 for health insurance premiums paid on Mr. Steve Johnson's behalf.
|
(4)
|
For 2012: (i) Option Awards includes Options to purchase 50,000 shares of the Company’s Common Stock, and (ii) All Other Compensation is for health insurance premiums paid on Mr. Piccin’s behalf. For 2011: (i) Salary includes $62,711 paid for services rendered from July 18, 2011 to December 31, 2011, (ii) Option Awards includes Options to purchase 75,000 shares of the Company’s Common Stock, and (iii) All Other Compensation is for health insurance premiums paid on Mr. Piccin’s behalf.
|
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
|
All Other
Stock
Awards:
# of Shares of
|
All Other
Option
Awards:
# of Securities
|
Exercise
or Base Price of
|
Grant
Date Fair
Value of
|
||||||||||||||||||||||||||||
Name and Principal
Position
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
Stocks or
Units
(#)
|
Underlying Options
(#)
|
Option
Award
($/sh)
|
Stock and Option
Award
|
||||||||||||||||||||||
Samuel A. Greco
CEO
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||
Steven G. Johnson
President/COO
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||
Anthony P. Piccin
CFO Treas./Sec
|
12/03/12
|
-0- | -0- | - -0- | -0- | -0- | -0- | -0- | 50,000 | $ | 0.79 | $ | 24,650 |
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||||||||||
Name
|
Number of Securities Underlying Unexercised Options
(#) Exercisable
|
Number of Securities Underlying Unexercised Options
(#) Unexercis-able
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)
|
Option
Exercise Price
($)
|
Option Expiry Date
|
Number of Shares or Units of Stock That Have Not Vested
(#)
|
Market Value of Shares or Units of Stock That Have Not Vested
($)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)
|
Equity Incentive Plan Awards Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)
|
||||||||||||||||||||||||
Samuel A.
|
620,936 | (1) | -0- | -0- | $ | 0.44 |
12/02/17
|
-0- | -0- | -0- | -0- | ||||||||||||||||||||||
Greco,
|
500,000 | (2) | -0- | -0- | $ | 0.52 |
03/09/19
|
-0- | -0- | -0- | -0- | ||||||||||||||||||||||
CEO
|
2,762,809 | (3) | -0- | ) | -0- | $ | 0.52 |
10/08/19
|
-0- | -0- | -0- | -0- | |||||||||||||||||||||
50,000 | (4) | -0- | -0- | $ | 0.52 |
01/05/20
|
-0- | -0- | -0- | -0- | |||||||||||||||||||||||
50,000 | (5) | -0- | -0- | $ | 0.52 |
03/25/20
|
-0- | -0- | -0- | -0- | |||||||||||||||||||||||
Steve G. Johnson,
|
50,000 | (4) | -0- | -0- | $ | 0.52 |
01/05/20
|
-0- | -0- | -0- | -0- | ||||||||||||||||||||||
Pres./COO
|
50,000 | (5) | -0- | -0- | $ | 0.52 |
03/25/20
|
-0- | -0- | -0- | -0- | ||||||||||||||||||||||
Anthony P. Piccin,
|
8,333 | 16,667 | (6) | -0- | $ | 1.69 |
07/18/21
|
-0- | -0- | -0- | -0- | ||||||||||||||||||||||
CFO/Treas./Sec.
|
16,667 | 33,333 | (7) | -0- | $ | 1.51 |
12/22/21
|
-0- | -0- | -0- | -0- | ||||||||||||||||||||||
-0- | 50,000 | (8) | -0- | $ | 0.79 |
12/03/22
|
-0- | -0- | -0- | -0- |
(1)All 620,936 underlying shares vested on December 3, 2007.
|
(2)All 500,000 underlying shares vested on March 15, 2009.
|
(3)An aggregate of 999,074 underlying shares vested on October 9, 2009 and an aggregate of 587,912 underlying shares vested on each of October 9, 2010 and 2011. An additional 587,911 underlying shares vested on October 9, 2012.
|
(4)All underlying shares for these Options vested on January 6, 2010.
|
(5)All underlying shares for these Options vested on December 31, 2010.
|
(6)An aggregate of 8,333 underlying shares vested on July 18, 2012. An additional 8,333 underlying shares vest on July 18, 2013 and 8,334 underlying shares vest on July 18, 2014.
|
(7)An aggregate of 16,667 underlying shares vested on December 22, 2012. An additional 16,333 underlying shares vest on December 22, 2013 and 2014.
|
(8)All underlying shares for this Option vests at the rate of one-third of the shares on the first, second, and third anniversary date of the issuance of the Option on December 3, 2012.
|
Options
|
Warrants
|
|||||||
Tommy G. Thompson(1)
|
922,565 | 1,000,000 | ||||||
L. Allen Wheeler
|
150,000 | -0- | ||||||
Jeffrey C. Lightcap(2)
|
-0- | 11,782,859 |
(1)
|
1,000,000 Warrants were issued to Thompson in conjunction with a consulting agreement (see NOTE 21 – SUBSCRIPTION AND INVESTOR RIGHTS AGREEMENT for details).
|
(2)
|
HealthCor Management, LP, HealthCor Associates, LLC, HealthCor Hybrid Offshore Master Fund, LP, HealthCor Hybrid Offshore GP, LLC, HealthCor Group, LLC, HealthCor Partners Management, L.P., HealthCor Partners Management GP, LLC, HealthCor Partners Fund, LP, HealthCor Partners, LP HealthCor Partners GP, LCC, Jeffrey C. Lightcap, Joseph Healey and Arthur Cohen beneficially own (i) an aggregate of 11,782,859 Warrants, (ii) 4,477,229 shares that may be acquired upon conversion of the 2012 Notes (including interest paid in kind through December 31, 2012), and (iii) 19,706,978 shares that may be acquired upon conversion of the 2011 Notes (including interest paid in kind through December 31, 2012).(See NOTE 15 – AGREEMENT WITH HEALTHCOR for details)
|
ITEM 12.
|
Title of Class
|
Name and Address of Beneficial Owner
|
Amount and Nature of Beneficial Ownership(1)
|
Percent of
Class
|
|||||||
Common Stock
|
Tommy G. Thompson (Chairman of the Board)
405 State Hwy. 121, Suite B 240, Lewisville, TX 75067
|
7,747,787 | (2) | 5.72 | % | |||||
Common Stock
|
Samuel A. Greco (Chief Executive Officer, Director)
405 State Hwy. 121, Suite B 240, Lewisville, TX 75067
|
4,851,906 | (3) | 3.55 | % | |||||
Common Stock
|
Steve G. Johnson (President, COO, Director)
405 State Hwy. 121, Suite B 240, Lewisville, TX 75067
|
12,948,573 | (4) | 9.76 | % | |||||
Common Stock
|
Anthony P. Piccin (Chief Financial Officer, Treas., Sec.)
405 State Hwy. 121, Suite B 240, Lewisville, TX 75067
|
25,000 | (5) | 0.02 | % | |||||
Common Stock
|
L. Allen Wheeler (Director)
405 State Hwy. 121, Suite B 240, Lewisville, TX 75067
|
14,582,224 | (6) | 10.99 | % | |||||
Common Stock
|
Jeffrey C. Lightcap (Director)
405 State Hwy. 121, Suite B 240, Lewisville, TX 75067
|
36,889,143 | (7) | 21.75 | % | |||||
Common Stock
|
All Officers & Directors as a Group (6 persons)
|
77,044,633 | (8) | 43.58 | % |
Title of Class
|
Name and Address of Beneficial Owner
|
Amount and Nature of Beneficial Ownership(1)
|
Percent of
Class
|
|||||||
Common Stock
|
Robert J. Smith (Shareholder)
13650 Fiddlesticks Blvd., Suite 202-324,
Ft. Myers, FL 33912
|
13,285,072 | (9) | 9.73 | % | |||||
Common Stock
|
FMR, LLC (Shareholder)
82 Devonshire St.
Boston, MA 02109
|
10,425,300 | (10) | 7.87 | % | |||||
Common Stock
|
Wellington Management Company, LLP
280 Congress Street
Boston, MA 02210
|
14,538,350 | (11) | 10.97 | % | |||||
Common Stock
|
Hartford Series Fund, Inc.
500 Bielenberg Drive
Woodbury, MN 55125-1400
|
6,844,000 | (12) | 5.16 | % | |||||
Common Stock
|
HealthCor Management, LP et al
Carnegie Hall Tower, 152 West 57th Street
New York, NY 10019
|
36,889,143 | (7) | 21.75 | % |
Exhibit No.
|
Date of Document
|
Name of Document
|
||
2.0
|
09/27/07
|
Securities Exchange Agreement by and between Ecogate, Inc., CareView Communications, Inc. and Shareholders of CareView Communications, Inc.(1)
|
||
3.0
|
07/08/97
|
Articles of Incorporation filed in State of California under Purpose, Inc. (1)
|
||
3.1
|
04/30/99
|
Certificate of Amendment filed in State of California (to change name to Ecogate, Inc. and to increase authorized shares to 100,000 shares) (1)
|
||
3.2
|
04/03/01
|
Certificate of Amendment filed in State of California (to (i) increase the capital stock of the Company to 25,000,000 shares at no par value [20,000,000 authorized common shares and 5,000,000 authorized preferred shares], and (ii) to add provisions for indemnification for officers and directors) (1)
|
||
3.3
|
08/05/04
|
Certificate of Amendment filed in State of California (to amend Articles of Incorporation to increase the capital stock of the Company to 105,000,000 shares at no par value [100,000,000 authorized common shares and 5,000,000 authorized preferred shares]) (1)
|
||
3.4
|
09/20/07
|
Certificate of Amendment filed in State of California (to amend Articles of Incorporation to increase the capital stock of the Company to 320,000,000 shares at no par value [300,000,000 authorized common shares and 20,000,000 authorized preferred shares]) (1)
|
||
3.5
|
09/25/07
|
Certificate of Amendment filed in State of California (to amend Articles of Incorporation to designate 1,000,000 shares of Series A Preferred(1)
|
||
3.6
|
09/25/07
|
Certificate of Amendment filed in State of California (to amend Articles of Incorporation to designate 3,000,000 shares of Series B Preferred Stock) (1)
|
||
3.7
|
10/30/07
|
Certificate of Amendment filed in State of California (to amend Articles of Incorporation to change name to CareView Communications, Inc.) (1)
|
||
3.8
|
11/06/07
|
Notice of Conversion filed in State of Nevada (to convert CareView Communications, Inc. from a California corporation to a Nevada corporation) (1)
|
||
3.9
|
11/06/07
|
Articles of Incorporation for CareView Communications, Inc. filed in State of Nevada(1)
|
||
3.10
|
11/21/07
|
Domestic Stock Corporation Certificate of Election to Wind Up and Dissolve filed in State of California(1)
|
||
3.11
|
11/21/07
|
Domestic Stock Corporation Certificate of Dissolution filed in State of California(1)
|
||
3.12
|
n/a
|
Bylaws of CareView Communications, Inc., a Nevada corporation(1)
|
||
10.00
|
02/28/05
|
Subscription and Investor Rights Agreement(1)
|
||
10.01
|
n/a
|
Products and Services Agreement (a/k/a Hospital Agreement), form of(1)
|
||
10.02
|
09/15/06
|
Promissory Note, form of(1)
|
||
10.03
|
08/16/07
|
Purchase Agreement between the CareView-TX and Cole Investment Hospital Group, LLC (for IP purchase) (1)
|
||
10.07
|
10/17/07
|
Subordinated Convertible Note, form of(1)
|
||
10.08
|
10/29/07
|
Assignment and Assumption Agreement and Consent(1)
|
||
10.09
|
12/03/07
|
CareView Communications, Inc. 2007 Stock Incentive Plan(1)
|
||
10.10
|
12/03/07
|
Non-Qualified Stock Option, form of(1)
|
||
10.11
|
12/13/07
|
Audit Committee Charter(1)
|
10.12
|
12/13/07
|
Compensation Committee Charter(1)
|
||
10.14
|
02/13/08
|
Advisory Board Charter(1)
|
||
10.15
|
05/20/08
|
Investment Banking Services Agreement with Peak Securities Corporation(1)
|
||
10.16
|
n/a
|
Stock Purchase Agreement, form of(1)
|
||
10.17
|
10/01/08
|
Agreement with Develo Financial Group, LLC(1)
|
||
10.25
|
10/02/08
|
6% Promissory Note, form of(1)
|
||
10.26
|
10/02/08
|
Common Stock Purchase Warrant, form of(1)
|
||
10.27
|
10/06/08
|
Investment Banking Services Agreement with William Blair & Company(1)
|
||
10.29
|
04/28/09
|
Promissory Note to David Webb for $83,333(1)
|
||
10.30
|
04/28/09
|
Promissory Note to Allen Wheeler for $83,333(1)
|
||
10.31
|
05/01/09
|
Agreement with Develo Financial Group, LLC(1)
|
||
10.32
|
05/29/09
|
Promissory Note to S. J. Capital, LLC for $1,500(1)
|
||
10.33
|
05/29/09
|
Amendment Agreement with Noteholders of 6% Promissory Notes(1)
|
||
10.34
|
06/01/09
|
Webb & Webb Retainer Agreement(1)
|
||
10.35
|
06/03/09
|
Promissory Note to David Webb for $30,000(1)
|
||
10.36
|
06/03/09
|
Promissory Note to Steve Johnson for $20,000(1)
|
||
10.37
|
06/16/09
|
Promissory Note to Recap Group, LLC for $20,000(1)
|
||
10.38
|
07/18/09
|
Cooperative Agreement with Mann Equity, LLC(1)
|
||
10.39
|
08/25/09
|
Amendment Agreement with Noteholder of 6% Promissory Note(1)
|
||
10.40
|
09/01/09
|
Consulting Agreement with Develo Financial Group, LLC(1)
|
||
10.41
|
09/09/09
|
Investment Banking Agreement with National Securities Corporation(1)
|
||
10.42
|
09/11/09
|
CareView Communications, Inc. 2009 Stock Incentive Plan(1)
|
||
10.43
|
10/01/09
|
Commercial Lease Agreement (for Lewisville location) (1)
|
||
10.44
|
11/16/09
|
Rockwell JV – Master Investment Agreement(1)
|
||
10.45
|
11/16/09
|
Rockwell JV – Project Hospital Contract Assignment, form of(1)
|
||
10.46
|
11/16/09
|
Rockwell JV – Project Escrow Deposit Agreement, form of(1)
|
||
10.47
|
11/16/09
|
Rockwell JV – Limited License of Intellectual Property Rights,, form of(1)
|
||
10.48
|
11/16/09
|
Rockwell JV – Project Note, form of (1)
|
||
10.49
|
11/16/09
|
Rockwell JV – Amended and Restated Project Note, form of(1)
|
||
10.50
|
11/16/09
|
Rockwell JV – Project LLC Operating Agreement, form of(1)
|
||
10.51
|
11/16/09
|
Rockwell JV – Project Security Agreement, form of(1)
|
||
10.52
|
11/16/09
|
Rockwell JV – Project Services Subcontract Agreement, form of(1)
|
||
10.53
|
11/16/09
|
Rockwell JV – Project Warrant, form of(1)
|
||
10.54
|
01/14/10
|
Extension Agreement with Noteholders of Bridge Loans(1)
|
||
10.55
|
01/29/10
|
Master Lease between the Company and Fountain Fund 2 LP(1)
|
||
10.56
|
01/09/10
|
Distribution Agreement between the Company and Foundation Medical(1)
|
||
10.57
|
04/13/10
|
Letter of Intent between the Company and AFH Holding and Advisory, LLC, Discovery Medical Investments, LLC and Mann Equity, LLC(1)
|
||
10.58
|
04/15/10
|
Addendum to Cooperative Agreement with Mann Equity, LLC(1)
|
||
10.59
|
05/26/10
|
Letter of Intent between the Company and Weigao Holding(1)
|
||
10.60
|
07/29/10
|
Amendment Agreement between the Company and AFH Holding and Advisory, LLC, Discovery Medical Investments, LLC and Mann Equity, LLC(1)
|
||
10.61
|
06/21/10
|
Indemnification Agreement, form of(1)
|
||
10.62
|
06/29/10
|
First Amendment to Commercial Lease Agreement(1)
|
||
10.63
|
08/17/10
|
Letter of Waiver from Tommy G. Thompson(1)
|
||
10.64
|
09/20/10
|
Revocation and Substitution Agreement(1)
|
||
10.65
|
09/20/10
|
Agreement Regarding Gross Income Interests with Tommy G. Thompson(1)
|
||
10.66
|
09/20/10
|
Agreement Regarding Gross Income Interests with Gerald L. Murphy(1)
|
||
10.67
|
09/20/10
|
Agreement Regarding Gross Income Interests with Dennis M. Langley(1)
|
||
10.68
|
11/01/10
|
Promissory Note with Plato & Associates, LLC(2)
|
||
10.69
|
12/17/10
|
Consulting Agreement with Gregory Mastroieni(3)
|
10.70
|
12/17/10
|
Common Stock Purchase Warrant to Gregory Mastroieni(3)
|
||
10.72
|
04/21/11
|
Note and Warrant Purchase Agreement between the Company and HealthCor Partners Fund, LP and HealthCor Hybrid Offshore Master Fund, LP(4)
|
||
10.73
|
04/21/11
|
Senior Secured Convertible Note of the Company payable to HealthCor Partners Fund, LP(4)
|
||
10.74
|
04/21/11
|
Senior Secured Convertible Note of the Company payable to HealthCor Hybrid Offshore Master Fund, LP(4)
|
||
10.75
|
04/21/11
|
Warrant to Purchase 5,488,456 shares of the Company issued to HealthCor Partners Fund, LP(4)
|
||
10.76
|
04/21/11
|
Warrant to Purchase 6,293,403 shares of the Company issued to HealthCor Hybrid Offshore Master Fund, LP(4)
|
||
10.77
|
04/21/11
|
Registration Rights Agreements between the Company and HealthCor Partners Fund, LP and HealthCor Hybrid Offshore Master Fund, LP(4)
|
||
10.78
|
04/21/11
|
Pledge and Security Agreement between the Company and HealthCor Partners Fund, LP and HealthCor Hybrid Offshore Master Fund, LP(4)
|
||
10.79
|
04/21/11
|
Intellectual Property Security Agreement between the Company and HealthCor Partners Fund, LP and HealthCor Hybrid Offshore Master Fund, LP(4)
|
||
10.81
|
04/21/11
|
Consulting Agreement with Nick Segal(5)
|
||
10.82
|
05/31/11
|
Consulting Agreement with Dennis McGonigal(5)
|
||
10.83
|
08/31/11
|
Loan and Security Agreement between Comerica Bank and Bridge Bank and CareView Communications, Inc., a Nevada corporation, CareView Communications, Inc., a Texas corporation, and CareView Operations, LLC, a Texas limited liability company(6)
|
||
10.84
|
08/31/11
|
Prime Referenced Rated Addendum between the Company and Comerica Bank as Collateral Agent for the Banks(6)
|
||
10.85
|
08/31/11
|
Subordination Agreement between Comerica Bank and HealthCor Partners Fund, L.P. and HealthCor Hybrid Offshore Master Fund, L.P. (6)
|
||
10.86
|
08/31/11
|
Intellectual Property Security Agreement, form of(6)
|
||
10.87
|
08/31/11
|
Warrant issued to Comerica Bank to purchase 714,286 shares of the Company's Common Stock(6)
|
||
10.88
|
08/31/11
|
Warrant issued to Bridge Bank to purchase 714,286 shares of Company's Common Stock(6)
|
||
10.89
|
11/07/11
|
Separation Agreement and General Release between the Company and John R. Bailey(7)
|
||
10.90
|
12/31/11
|
Note and Warrant Amendment Agreement with HealthCor(8)
|
||
10.91
|
01/09/12
|
Binding Term Sheet with HealthCor(9)
|
||
10.92
|
12/31/11
|
Note and Warrant Amendment Agreement(2)
|
||
10.93
|
01/09/12
|
Binding Term Sheet(3)
|
||
10.94
|
01/31/12
|
Second Amendment to Note and Warrant Purchase Agreement(10)
|
||
10.95
|
01/31/12
|
Senior Secured Convertible Note of the Company payable to HealthCor Partners Fund, LP(10)
|
||
10.96
|
01/31/12
|
Senior Secured Convertible Note of the Company payable to HealthCor Hybrid Offshore Master Fund, LP(10)
|
||
10.97
|
01/31/12
|
First Amendment to Loan and Security Agreement among the Company, certain of its subsidiaries, Comerica Bank and Bridge Bank, National Association(10)
|
||
10.98
|
01/31/12
|
Amendment to and Affirmation of Subordination Agreement(10)
|
||
10.99
|
3/01/12
|
Sales Consulting Agreement with among the Company, Don Shirley and Foundation Medical, LLC(11)
|
||
10.100
|
n/a
|
Insider Trading Policy, form of(11)
|
||
10.101
|
n/a
|
Whistleblower Policy(11)
|
||
10.102
|
n/a
|
Related Party Transactions Policy(11)
|
||
10.103
|
04/29/12
|
Consulting Agreement between the Company and Heartland Energy Partners, LLC(12)
|
||
10.104
|
05/04/12
|
Advisory Services Agreement between the Company and Stonegate Securities, Inc.(12)
|
||
10.105
|
05/31/12
|
Addendum to Consulting Agreement with Foundation Medical(13)
|
10.106
|
03/2011
|
Master Agreement with Health Management Associates, Inc. (15)
|
||
10.107
|
11/02/12
|
Release Agreement with Stephen Ecker(14)
|
||
10.108 | 03/27/13 | Securities Purchase Agreement, form of (16) | ||
10.109 | n/a | Common Stock Purchase Warrant, form of (16) | ||
10.110
|
11/13/12
|
First Addendum to Consulting Agreement between the Company and Heartland Energy Partners, LLC*
|
||
10.111
|
01/15/13
|
|||
10.112
|
01/15/13
|
|||
14.00
|
n/a
|
2011 Code of Business Conduct and Ethics, form of(1)
|
||
14.01
|
n/a
|
2011 Code of Business Ethics for Financial Executives, form of(1)
|
||
21.00
|
04/01/13
|
|||
31.1
|
04/01/13
|
|||
31.2
|
04/01/13
|
|||
32.1
|
04/01/13
|
|||
32.2
|
04/01/13
|
|||
101.INS
|
n/a
|
XBRL Instance Document*
|
||
101.SCH
|
n/a
|
XBRL Taxonomy Extension Schema Document*
|
||
101.CAL
|
n/a
|
XBRL Taxonomy Extension Calculation Linkbase Document*
|
||
101.DEF
|
n/a
|
XBRL Taxonomy Extension Definition Linkbase Document*
|
||
101.LAB
|
n/a
|
XBRL Taxonomy Extension Label Linkbase Document*
|
||
101.PRE
|
n/a
|
XBRL Taxonomy Extension Presentation Linkbase Document*
|
(1)
|
Filed as an exhibit to the Company's Form 10 filed with the SEC on August 23, 2010.
|
(2)
|
Filed as an exhibit to the Company's quarterly report on Form 10-Q filed with the SEC on November 7, 2010, which exhibits may have had a different exhibit number when originally filed.
|
(3)
|
Filed as an exhibit to the Company’s annual report on Form 10-K filed with the SEC on April 15, 2011.
|
(4)
|
Filed as an exhibit to the Company's Current Report on Form 8-K filed with the SEC on April 27, 2011.
|
(5)
|
Filed as an exhibit to the Company's quarterly report on Form 10-Q filed with the SEC on August 22, 2011, which exhibits may have had a different exhibit number when originally filed.
|
(6)
|
Filed as an exhibit to the Company's Current Report on Form 8-K filed with the SEC on September 7, 2011, which exhibits may have had a different exhibit number when originally filed.
|
(7)
|
Filed as an exhibit to the Company's Current Report on Form 8-K filed with the SEC on November 10, 2011, which exhibits may have had a different exhibit number when originally filed.
|
(8)
|
Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on January 5, 2012, which exhibits may have had a different exhibit number when originally filed.
|
(9)
|
Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on January 9, 2012, which exhibits may have had a different exhibit number when originally filed.
|
(10)
|
Filed as an exhibit to the Company's Current Report on Form 8-K filed with the SEC on February 2, 2012, which exhibits may have had a different exhibit number when originally filed.
|
(11)
|
Filed as an exhibit to the Company's annual report on Form 10-K filed with the SEC on March 15, 2012.
|
(12)
|
Filed as an exhibit to the Company's quarterly report on Form 10-Q filed with the SEC on May 9, 2012.
|
(13)
|
Filed as an exhibit to the Company's quarterly report on Form 10-Q filed with the SEC on August 8, 2012.
|
(14)
|
Filed as an exhibit to the Company's quarterly report on Form 10-Q filed with the SEC on November 8, 2012.
|
(15)
|
Filed as an exhibit to the Company's quarterly report on Form 10-Q, Amendment No. 1, filed with the SEC on February 1, 2013. Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
|
(16)
|
Filed as an exhibit to the Company's Current Report on Form 8-K filed with the SEC on March 28, 2013.
|
*
|
Filed herewith.
|
CAREVIEW COMMUNICATIONS, INC.
|
|||
By:
|
/s/ Samuel A. Greco | ||
Samuel A. Greco
Chief Executive Officer
Principal Executive Officer
|
|||
By: | /s/ Anthony P. Piccin | ||
Anthony P. Piccin
Chief Financial Officer
Principal Financial Officer
Principal Accounting Officer
|
Signature
|
Title | Date | |||
/s/ Tommy G. Thompson
|
Chairman of the Board
|
April 1, 2013
|
|||
Tommy G. Thompson
|
|||||
/s/ Steven Johnson
|
President, Chief Operating Officer,
|
April 1, 2013
|
|||
Steven Johnson
|
Director
|
||||
/s/ Samuel A. Greco
|
Chief Executive Officer,
|
April 1, 2013
|
|||
Samuel A. Greco
|
Director
|
||||
/s/ L. Allen Wheeler |
Director
|
April 1, 2013
|
|||
L. Allen Wheeler
|
|||||
/s/ Jeffrey C. Lightcap
|
Director
|
April 1, 2013
|
|||
Jeffrey D. Lightcap
|
|
INDEX TO FINANCIAL STATEMENTS
|
|
Page
|
|
F-1
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
December 31,
|
||||||||
2012
|
2011
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 5,413,848 | $ | 8,526,857 | ||||
Accounts receivable, net of allowance for doubtful accounts
|
||||||||
of $80,235 and $15,984, respectively
|
367,742 | 186,850 | ||||||
Other current assets
|
194,592 | 359,086 | ||||||
Total current assets
|
5,976,182 | 9,072,793 | ||||||
Property and equipment, net of accumulated depreciation
|
||||||||
of $2,726,234 and $1,319,882, respectively
|
7,861,537 | 8,744,792 | ||||||
Other Assets:
|
||||||||
Intangible assets, net of accumulated amortization
|
||||||||
of $2,772,772 and $2,206,762, respectively
|
208,974 | 690,594 | ||||||
Other assets
|
2,019,856 | 3,448,038 | ||||||
2,228,830 | 4,138,632 | |||||||
Total assets
|
$ | 16,066,549 | $ | 21,956,217 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 166,373 | $ | 1,240,347 | ||||
Notes payable, net of debt discount of $32,988 and $32,255, respectively
|
410,586 | 58,602 | ||||||
Mandatorily redeemable equity in joint venture, net of
|
||||||||
debt discount of $32,988 and $32,255, respectively
|
410,586 | 58,602 | ||||||
Accrued interest
|
59,872 | 1,342 | ||||||
Other current liabilities
|
802,528 | 275,268 | ||||||
Total current liabilities
|
1,849,945 | 1,634,161 | ||||||
Long-term Liabilities:
|
||||||||
Senior secured convertible notes, net of debt discount
|
||||||||
of $17,791,104 and $17,925,049, respectively
|
12,439,154 | 3,855,769 | ||||||
Notes payable, net of current portion and net of debt
|
||||||||
discount of $0 and $100,715, respectively
|
— | 273,128 | ||||||
Mandatorily redeemable equity in joint venture, net of current portion
|
||||||||
and net of debt discount of $0 and $100,715, respectively
|
— | 273,128 | ||||||
Lease liability, net of current portion
|
25,824 | — | ||||||
Total long-term liabilities
|
12,464,978 | 4,402,025 | ||||||
Total liabilities
|
14,314,923 | 6,036,186 | ||||||
Commitments and Contingencies
|
||||||||
Stockholders' Equity:
|
||||||||
Preferred stock - par value $0.001; 20,000,000 shares authorized;
|
||||||||
no shares issued and outstanding
|
— | — | ||||||
Common stock - par value $0.001; 300,000,000 shares authorized;
|
||||||||
132,526,042 and 131,455,407 issued and outstanding, respectively
|
132,526 | 131,455 | ||||||
Additional paid in capital
|
67,224,170 | 62,788,134 | ||||||
Accumulated deficit
|
(65,275,518 | ) | (46,772,548 | ) | ||||
Total CareView Communications Inc. stockholders' equity
|
2,081,178 | 16,147,041 | ||||||
Noncontrolling interest
|
(329,552 | ) | (227,010 | ) | ||||
Total stockholders' equity
|
1,751,626 | 15,920,031 | ||||||
Total liabilities and stockholders' equity
|
$ | 16,066,549 | $ | 21,956,217 | ||||
CAREVIEW COMMUNICATIONS INC. AND SUBSIDIARIES
|
||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Revenues, net
|
$ | 1,629,971 | $ | 630,452 | $ | 325,968 | ||||||
Operating expenses:
|
||||||||||||
Network operations
|
2,905,703 | 2,112,947 | 748,482 | |||||||||
General and administration
|
4,807,758 | 4,194,282 | 10,538,476 | |||||||||
Sales and marketing
|
1,927,205 | 913,859 | 402,719 | |||||||||
Research and development
|
951,132 | 821,868 | 698,282 | |||||||||
Depreciation and amortization
|
2,112,609 | 1,555,247 | 733,575 | |||||||||
Total operating expense
|
12,704,407 | 9,598,203 | 13,121,534 | |||||||||
Operating loss
|
(11,074,436 | ) | (8,967,751 | ) | (12,795,566 | ) | ||||||
Other income and (expense)
|
||||||||||||
Interest expense
|
(7,670,396 | ) | (4,443,819 | ) | (324,887 | ) | ||||||
Change in fair value of derivatives
|
— | (2,966,365 | ) | — | ||||||||
Amortization of financing costs
|
— | — | (5,842,370 | ) | ||||||||
Interest income
|
5,250 | 583 | 509 | |||||||||
Other income
|
134,070 | 2,056 | 12,090 | |||||||||
Total other income (expense)
|
(7,531,076 | ) | (7,407,545 | ) | (6,154,658 | ) | ||||||
Loss before taxes
|
(18,605,512 | ) | (16,375,296 | ) | (18,950,224 | ) | ||||||
Provision for income taxes
|
— | — | — | |||||||||
Net loss
|
(18,605,512 | ) | (16,375,296 | ) | (18,950,224 | ) | ||||||
Net loss attributable to noncontrolling
|
||||||||||||
interest
|
(102,542 | ) | (111,044 | ) | (98,466 | ) | ||||||
Net loss attributable to CareView
|
||||||||||||
Communications, Inc.
|
$ | (18,502,970 | ) | $ | (16,264,252 | ) | $ | (18,851,758 | ) | |||
Net loss per share attributable to CareView
|
||||||||||||
Communications, Inc., basic and diluted
|
$ | (0.14 | ) | $ | (0.13 | ) | $ | (0.15 | ) | |||
Weighted average number of common
|
||||||||||||
shares outstanding, basic and diluted
|
132,122,958 | 129,467,830 | 122,864,474 | |||||||||
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||
FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
|
||||||||||||||||||||||||
Additional
|
||||||||||||||||||||||||
Common Stock
|
Paid in
|
Accumulated
|
Noncontrolling
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Interest
|
Total
|
|||||||||||||||||||
Balance, December 31, 2009
|
111,012,684 | $ | 111,013 | $ | 12,096,352 | $ | (11,656,538 | ) | $ | (17,500 | ) | $ | 533,327 | |||||||||||
Shares issued in private placement, net of fees of $433,687
|
12,173,040 | 12,173 | 6,464,562 | — | — | 6,476,735 | ||||||||||||||||||
Shares issued in exchange for debt, accrued interest and accounts payable
|
4,068,982 | 4,069 | 2,111,800 | — | — | 2,115,869 | ||||||||||||||||||
Shares issued as part of settlement of lawsuit
|
25,000 | 25 | 46,225 | — | — | 46,250 | ||||||||||||||||||
Shares issued for exercise of options
|
160,509 | 160 | 83,031 | — | — | 83,191 | ||||||||||||||||||
Shares issued for services
|
100,000 | 100 | 184,900 | — | — | 185,000 | ||||||||||||||||||
Options granted as compensation
|
— | — | 1,200,753 | — | — | 1,200,753 | ||||||||||||||||||
Warrants issued for contract modifications
|
— | — | 4,080,000 | — | — | 4,080,000 | ||||||||||||||||||
Warrants issued for financing costs
|
— | — | 3,601,564 | — | — | 3,601,564 | ||||||||||||||||||
Warrants issued for loan extension costs
|
— | — | 1,958,647 | — | — | 1,958,647 | ||||||||||||||||||
Warrants issued for services
|
— | — | 570,600 | — | — | 570,600 | ||||||||||||||||||
Re-priced warrants related to compensation
|
— | — | 3,189,982 | — | — | 3,189,982 | ||||||||||||||||||
Net loss
|
— | — | — | (18,851,758 | ) | (98,466 | ) | (18,950,224 | ) | |||||||||||||||
Balance, December 31, 2010
|
127,540,215 | 127,540 | 35,588,416 | (30,508,296 | ) | (115,966 | ) | 5,091,694 | ||||||||||||||||
Shares issued for exercise of options
|
2,321,830 | 2,322 | 445,033 | — | — | 447,355 | ||||||||||||||||||
Shares issued for exercise of warrants
|
1,593,362 | 1,593 | 738,240 | — | — | 739,833 | ||||||||||||||||||
Options granted as compensation
|
— | — | 760,866 | — | — | 760,866 | ||||||||||||||||||
Warrants issued for financing costs
|
— | — | 1,535,714 | — | — | 1,535,714 | ||||||||||||||||||
Warrants issued for services
|
— | — | 753,500 | — | — | 753,500 | ||||||||||||||||||
Reclassification of derivatives from liability to equity
|
— | — | 22,966,365 | — | — | 22,966,365 | ||||||||||||||||||
Net loss
|
— | — | — | (16,264,252 | ) | (111,044 | ) | (16,375,296 | ) | |||||||||||||||
Balance, December 31, 2011
|
131,455,407 | 131,455 | 62,788,134 | (46,772,548 | ) | (227,010 | ) | 15,920,031 | ||||||||||||||||
Shares issued for exercise of warrants
|
1,070,635 | 1,071 | 261,380 | — | — | 262,451 | ||||||||||||||||||
Options granted as compensation
|
— | — | 812,045 | — | — | 812,045 | ||||||||||||||||||
Warrants issued for services
|
— | — | 320,812 | — | — | 320,812 | ||||||||||||||||||
Beneficial conversion features for senior secured
|
||||||||||||||||||||||||
convertible notes
|
— | — | 3,041,799 | — | — | 3,041,799 | ||||||||||||||||||
Net loss
|
— | — | — | (18,502,970 | ) | (102,542 | ) | (18,605,512 | ) | |||||||||||||||
Balance, December 31, 2012
|
132,526,042 | $ | 132,526 | $ | 67,224,170 | $ | (65,275,518 | ) | $ | (329,552 | ) | $ | 1,751,626 |
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||||||
Year Ended December, 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITES
|
||||||||||||
Net loss
|
$ | (18,605,512 | ) | $ | (16,375,296 | ) | $ | (18,950,224 | ) | |||
Adjustments to reconcile net loss to net cash flows used in
|
||||||||||||
operating activities:
|
||||||||||||
Depreciation
|
1,546,599 | 1,003,344 | 181,890 | |||||||||
Provision for doubtful accounts
|
64,251 | 15,984 | — | |||||||||
Amortization of intangible assets
|
566,010 | 551,903 | 551,685 | |||||||||
Amortization of debt discount
|
3,375,706 | 2,249,913 | 176,316 | |||||||||
Amortization of prepaid consulting costs
|
457,975 | 547,639 | 86,538 | |||||||||
Amortization of installation costs
|
599,950 | 24,041 | 14,987 | |||||||||
Amortization of distribution/service costs
|
55,334 | 55,333 | 55,333 | |||||||||
Amortization of deferred debt issuance costs
|
526,530 | 219,390 | — | |||||||||
Interest incurred and paid in kind
|
3,449,440 | 1,780,818 | — | |||||||||
Stock based compensation related to options granted
|
812,045 | 760,866 | 1,200,753 | |||||||||
Stock based compensation related to warrants issued
|
320,812 | — | 3,189,982 | |||||||||
(Gain) Loss on disposal of assets
|
(124,944 | ) | — | — | ||||||||
Non-cash compensation associated with HealthCor
|
— | 2,966,365 | — | |||||||||
Amortization of license fee
|
— | 5,464 | — | |||||||||
Warrants issued for contract modification
|
— | — | 4,080,000 | |||||||||
Warrants issued for loan extension costs
|
— | — | 1,958,647 | |||||||||
Non-cash financing costs
|
— | — | 3,673,723 | |||||||||
Shares issued for services
|
— | — | 85,000 | |||||||||
Shares issued as part of settlement of lawsuit
|
— | — | 46,250 | |||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
(245,142 | ) | (114,444 | ) | (80,123 | ) | ||||||
Other current assets
|
162,308 | (242,453 | ) | 124,972 | ||||||||
Other assets
|
178,503 | (492,054 | ) | — | ||||||||
Accounts payable
|
(850,603 | ) | 1,094,547 | 65,649 | ||||||||
Accrued interest, short term
|
58,529 | (23,914 | ) | 39,289 | ||||||||
Accrued expenses and other current liabilities
|
303,890 | 233,724 | (631,485 | ) | ||||||||
Other liabilities
|
25,824 | — | — | |||||||||
Net cash flows used in operating activities
|
(7,322,495 | ) | (5,738,830 | ) | (4,130,818 | ) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Purchase of property and equipment
|
(538,399 | ) | (5,935,661 | ) | (2,455,773 | ) | ||||||
Payment for deferred installation costs
|
(387,923 | ) | (771,427 | ) | (12,555 | ) | ||||||
Patent and trademark costs
|
(62,171 | ) | (49,286 | ) | (23,303 | ) | ||||||
Purchase of computer software and website costs
|
(22,220 | ) | (24,000 | ) | — | |||||||
Security deposits
|
— | — | (75,000 | ) | ||||||||
Net cash flows used in investing activities
|
(1,010,713 | ) | (6,780,374 | ) | (2,566,631 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Proceeds from notes and loans payable
|
5,000,000 | 20,000,000 | 30,000 | |||||||||
Proceeds from exercise of options and warrants
|
262,451 | 1,187,188 | 83,191 | |||||||||
Repayment of notes payable
|
(42,252 | ) | (167,692 | ) | (54,114 | ) | ||||||
Proceeds from sale of common stock, net of issuance costs
|
— | — | 6,476,735 | |||||||||
Repayment of related party loan
|
— | — | (30,100 | ) | ||||||||
Net cash flows provided by financing activities
|
5,220,199 | 21,019,496 | 6,505,712 | |||||||||
Increase (decrease) in cash
|
(3,113,009 | ) | 8,500,292 | (191,737 | ) | |||||||
Cash and cash equivalents, beginning of period
|
8,526,857 | 26,565 | 218,302 | |||||||||
Cash and cash equivalents, end of period
|
$ | 5,413,848 | $ | 8,526,857 | $ | 26,565 | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||||||
Cash paid for interest
|
$ | 81,942 | $ | 635,076 | $ | 109,281 | ||||||
Cash paid for income taxes
|
$ | — | $ | — | $ | — | ||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
|
||||||||||||
Reclassification of derivatives from liability to equity
|
$ | — | $ | 22,966,365 | $ | — | ||||||
Paid in kind interest associated with the HealthCor funding
|
$ | 3,449,440 | $ | 1,780,818 | $ | — | ||||||
Warrants issued for financing
|
$ | — | $ | 1,535,714 | $ | — | ||||||
Warrants issued for services
|
$ | — | $ | 753,500 | $ | 491,500 | ||||||
Shares issued for services
|
$ | — | $ | — | $ | 185,000 | ||||||
Shares issued in exchange for debt, accrued interest, and accounts payable
|
$ | — | $ | — | $ | 2,115,869 | ||||||
Allowance for Doubtful Accounts
|
||||||||
2012
|
2011
|
|||||||
Beginning balance
|
$ | 15,984 | $ | -0- | ||||
Additions
|
85,096 | 15,984 | ||||||
Reductions
|
(20,845 | ) | -0- | |||||
Ending balance
|
$ | 80,235 | $ | 15,984 |
|
• Significant declines in an asset’s market price;
|
|
• Significant deterioration in an asset’s physical condition;
|
|
• Significant changes in the nature or extent of an asset’s use or operation;
|
|
• Significant adverse changes in the business climate that could impact an asset’s value, including adverse actions or assessments by regulators;
|
|
• Accumulation of costs significantly in excess of original expectations related to the acquisition or construction of an asset;
|
|
• Current-period operating or cash flow losses combined with a history of such losses or a forecast that demonstrates continuing losses associated with an asset’s use; and
|
|
• Expectations that it is more likely than not that an asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.
|
Description
|
Assets/
(Liabilities)
Measured at
Fair Value
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Other
Unobservable
Inputs
(Level3)
|
||||||||||||
2012
|
||||||||||||||||
Accrued Gross Income Interest
|
$ | 25,408 | $ | -0- | $ | -0- | $ | 25,408 | ||||||||
2011
|
||||||||||||||||
Accrued Gross Income Interest
|
$ | 10,360 | $ | -0- | $ | -0- | $ | 10,360 |
Fair Value Measurements
Using Significant
Unobservable Inputs
(Level3)
|
||||||||
2012
|
2011
|
|||||||
Beginning balance
|
$ | 10,360 | $ | 29,511 | ||||
Issuances of derivative liabilities
|
-0- | 33,461,512 | ||||||
Settlements of derivative liabilities
|
-0- | (22,966,365 | ) | |||||
Gain recognized on derivative
liabilities
|
-0- | (10,495,147 | ) | |||||
Change in fair value of Accrued
Gross Income Interest
|
15,048 | (19,151 | ) | |||||
Transfers in and/out of Level 3
|
-0- | -0- | ||||||
Ending balance
|
$ | 25,408 | $ | 10,360 |
2012
|
2011
|
2010
|
||||||||||
Risk-free interest rate
|
0.19-1.03 | % | 0.41-2.14 | % | 0.63-3.66 | % | ||||||
Volatility
|
41.63-97.77 | % | 81.83-89.74 | 79.70-96.33 | % | |||||||
Expected life
|
1-5 | 3-7 | 2-10 | |||||||||
Dividend yield
|
0.00 | % | 0.00 | % | 0.00 | % |
Number of
Shares
Under
Warrant
|
Range of
Warrant Price
Per Share
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life
|
|||||||||||||
Balance at December 31, 2009
|
17,422,513 | $ | 0.52-$1.04 | $ | 0.64 | 4.0 | ||||||||||
Granted
|
9,299,658 | $ | 0.52-$1.25 | $ | 0.83 | 4.8 | ||||||||||
Exercised
|
-0- | -0- | -0- | -0- | ||||||||||||
Expired
|
(4,000,000 | ) | $ | 1.04 | $ | 1.04 | -0- | |||||||||
Cancelled
|
-0- | -0- | -0- | -0- | ||||||||||||
Balance at December 31, 2010
|
22,722,171 | $ | 0.52-$1.25 | $ | 0.65 | 4.4 | ||||||||||
Granted
|
13,911,431 | $ | 1.40-$1.59 | $ | 1.40 | 8.8 | ||||||||||
Exercised
|
(1,687,181 | ) | $ | 0.52-$0.55 | $ | 0.54 | -0- | |||||||||
Expired
|
(100,000 | ) | $ | 0.52 | $ | 0.52 | -0- | |||||||||
Cancelled
|
-0- | -0- | -0- | -0- | ||||||||||||
Balance at December 31, 2011
|
34,846,421 | $ | 0.52-$1.25 | $ | 0.95 | 5.7 | ||||||||||
Granted
|
569,638 | $ | 0.77-$1.65 | $ | 1.20 | 3.7 | ||||||||||
Exercised
|
(1,329,349 | ) | $ | 0.52-$0.55 | $ | 0.53 | -0- | |||||||||
Expired
|
-0- | -0- | -0- | -0- | ||||||||||||
Cancelled
|
(10,000 | ) | $ | 0.55 | $ | 0.55 | -0- | |||||||||
Balance at December 31, 2012
|
34,076,710 | $ | 0.52-$1.65 | $ | 0.97 | 4.7 | ||||||||||
Vested and Exercisable at
|
33,976,710 | $ | 0.52-$1.65 | $ | 0.97 | 4.7 | ||||||||||
December 31, 2012
|
·
|
In April 2012, the Company granted an entity a five-year Warrant to purchase 50,000 shares of the Company's Common Stock (with a fair value of $48,200) at an exercise price of $1.52 per share; all of which was charged to expense and recorded as non-cash cost in general and administration. The Warrants were valued on the date of the grant using a term of five (5) years; volatility of 86.04%; risk free rate of 1.03%; and a dividend yield of 0%;
|
·
|
In May 2012, the Company entered into an addendum to a two year sales consulting agreement with an entity (the “Sales Consulting Agreement Addendum”), wherein a portion of the fee was paid through the issuance of a five-year Warrant to purchase 50,000 shares of the Company's Common Stock (with a fair value of $52,300) at an exercise price of $1.55 per share, all of which was charged to expense and recorded as non-cash cost in general and administration. See NOTE 19 – DISTRIBUTION AGREEMENT for further details. The Warrants were valued on the date of the grant using a term of five (5) years; volatility of 87.01%; risk free rate of 0.67%; and a dividend yield of 0%;
|
·
|
Also in May 2012, the Company entered into a 12 month advisory services agreement (the “AS Agreement”) with an unrelated entity, wherein fee was paid through the issuance of a five-year Warrant to purchase 240,000 shares of the Company's Common Stock. Vesting of the underlying shares occurs at the rate of 20,000 shares on the monthly anniversary date of the AS Agreement as long as the AS Agreement has not been terminated. At grant date the Warrant had a fair value of $265,200 at an exercise price of $1.65 per share. Since the Warrant was issued to a non-employee which had specific vesting requirements, the Company follows ASC 505-50, Equity-Based Payments to Non-Employees, which requires that the fair value of the Warrant be re-valued at each reporting period and any change in the fair value of the unvested portion of the Warrant recorded as a charge or gain. Through December 31, 2012, $100,956 was charged to expense and recorded as non-cash cost in general and administration. See NOTE 19 – DISTRIBUTION AGREEMENTS for further details;
|
·
|
In November 2012, the Company and an employee (the "Former Employee") terminated in March 2012 by the Company (the "Former Employee") entered into a Release Agreement (the Former Employee was listed as an inventor on numerous patent applications for inventions he helped develop while an employee as of the date of termination) pursuant to which the Company issued the Former Employee a one (1) year Warrant containing a cashless exercise provision for the purchase of 179,638 shares at a purchase price of $0.52 in exchange for the Former Employee's release of all claims and
|
·
|
In December 2012, in conjunction with the Sales Consulting Agreement Addendum, the Company issued a five-year Warrant to purchase 50,000 shares of the Company's Common Stock (with a fair value of $28,100) at an exercise price of $0.77 per share, all of which was charged to expense and recorded as non-cash costs in general and administration. See NOTE 19 – DISTRIBUTION AGREEMENT for further details. The Warrants were valued on the date of the grant using a term of five (5) years; volatility of 97.77%; risk free rate of 0.63%; and a dividend yield of 0%.
|
·
|
In January 2012, two unaffiliated entities exercised Warrants to purchase an aggregate of 39,683 shares of the Company's Common Stock at an aggregate exercise price of $20,635;
|
·
|
In February 2012, an unaffiliated entity exercised a Warrant to purchase an aggregate of 450,000 shares of the Company’s Common Stock. In order to exercise the Warrant pursuant to the cashless provisions thereof, the individual surrendered its right to receive 136,523 shares, resulting in an issuance to the individual of 313,477 shares of Common Stock;
|
·
|
In January and February 2012, an unaffiliated entity exercised a Warrant to purchase an aggregate of 400,000 shares of the Company’s Common Stock. In order to exercise the Warrant pursuant to the cashless provisions thereof, the unaffiliated entity surrendered its right to receive 122,191 shares, resulting in an issuance to the entity of 277,809 shares of Common Stock; and
|
·
|
In September 2012, Gerald Murphy, a director of the Company at the time, exercised a Warrant to purchase an aggregate of 439,666 shares of the Company's Common Stock at an aggregate exercise price of $241,816. For more details see NOTE 12 – RELATED PARTIES.
|
Number of Warrants Exercised
|
Number of Shares of Common Stock Issued
|
Exercise Amount
|
||||||||||
January 2012
|
141,770 | 100,000 |
Cashless
|
|||||||||
January 2012
|
39,683 | 39,683 | $ | 20,635 | ||||||||
February 2012
|
708,230 | 491,286 |
Cashless
|
|||||||||
September 2012
|
439,666 | 439,666 | 241,816 | |||||||||
1,329,349 | 1,070,635 | $ | 262,451 |
Number of
Shares
Under
Warrant
|
Exercise
Price
|
Exercise
Term in
Years
|
Fair Value
|
|||||||||||||
Loan inducement (see NOTE 15)
|
11,782,859 | $ | 1.40 | 10 | $ | 8,633,000 | ||||||||||
Loan inducement (see NOTE 16)
|
1,428,572 | $ | 1.40 | 3 | 1,535,714 | |||||||||||
Services (see below)
|
700,000 | $ | 1.40-$1.59 | 3-5 | 753,500 | |||||||||||
13,911,431 | $ | 10,922,214 |
·
|
In April 2011, the Company entered into a two-year consulting agreement with an individual, wherein the individual was paid through the issuance of a five-year Warrant to purchase 400,000 shares of the Company's Common Stock (with a fair value of $496,400) at an exercise price of $1.40 per share; through December 31, 2011, $171,669 was charged to expense and recorded as non-cash costs and as of December 31, 2011, $324,731 was reported as prepaid costs in other assets. The Warrants were valued on the date of the grant using a term of five (5) years; volatility of 89.74%; risk free rate of 2.14%; and a dividend yield of 0%;
|
·
|
In May 2011, the Company entered into a three-month consulting agreement with an individual, wherein the consultant was paid through the issuance of a five-year Warrant to purchase 100,000 shares of the Company's Common Stock (with a fair value of $110,300) at an exercise price of $1.59 per share, through December 31, 2011, $110,300 was charged to expense and recorded as non-cash costs. The Warrants were valued on the date of the grant using a term of five (5) years; volatility of 89.00%; risk free rate of 1.68%; and a dividend yield of 0%; and
|
·
|
In August 2011, the Company entered into a six-month consulting agreement with an individual, wherein the fee was paid through the issuance of a three-year Warrant to purchase 200,000 shares of the Company's Common Stock (with a fair value of $146,800) at an exercise price of $1.40 per share; through December 31, 2011, $102,920 was charged to expense and recorded as non-cash costs and as of December 31, 2011, $43,880 was reported as prepaid costs in other assets. The Warrants were valued on the date of the grant using a term of three (3) years; volatility of 81.83%; risk free rate of 0.41%; and a dividend yield of 0%.
|
Number of
Warrants
Exercised
|
Number of
Shares of
Common Stock
Issued
|
Exercise
Amount
|
||||||||||
April 2011
|
148,000 | 109,520 |
Cashless
|
|||||||||
June 2011
|
179,849 | 124,510 |
Cashless
|
|||||||||
September 2011
|
100,000 | 100,000 | $ | 55,000 | ||||||||
October 2011
|
449,666 | 449,666 | 247,316 | |||||||||
December 2011(1) | 809,666 | 809,666 | 437,517 | |||||||||
1,687,181 | 1,593,362 | $ | 739,833 |
Number
of Shares
Under
Warrant
|
Exercise
Price
|
Exercise
Term in
Years
|
Fair Value
|
|||||||||||||
Modification of contract (see NOTE 21)
|
3,000,000 | $ | 1.00 | 5 | $ | 4,080,000 | ||||||||||
Loan extension (see NOTE 9)
|
2,499,975 | $ | 0.52 | 5 | 1,958,647 | |||||||||||
Loan inducement (see NOTE 9)
|
2,300,000 | $ | 1.00 | 5 | 2,852,000 | |||||||||||
Financing costs (see NOTE 20 and below)
|
889,683 | $ | 0.52 | 2-10 | 749,564 | |||||||||||
Services (see below)
|
610,000 | $ | 0.52-$1.25 | 5 | 570,600 | |||||||||||
9,299,658 | $ | 10,210,811 |
·
|
In January 2010, the Company entered into a two-year agreement with an entity, wherein the entity was paid through the issuance of a five-year Warrant to purchase 200,000 shares of the Company's Common Stock (with a fair value of $166,000) at an exercise price of $0.52 per share; through December 31, 2010, $55,333 was charged to distribution expense in network operations and, $110,667 was recorded as deferred distribution costs. The Warrants were valued on the date of the grant using a term of five (5) years; volatility of 89.46%; risk free rate of 1.09%; and a dividend yield of 0%; (see NOTE 19 – DISTRIBUTION AGREEMENT for details);
|
·
|
In April 2010, the Company granted an individual a five-year Warrant to purchase 10,000 shares of the Company's Common Stock (with a fair value of $15,600) at an exercise price of $0.80 per share; $15,600 was reported as consulting expense in general and administration. The Warrants were valued on the date of the grant using a term of five (5) years; volatility of 90.50%; risk free rate of 2.56%; and a dividend yield of 0%;
|
·
|
In September 2010, the Company granted an entity a five-year Warrant to purchase 50,000 shares of the Company's Common Stock (with a fair value of $63,500) at an exercise price of $1.25 per share; $63,500 was reported as non-cash costs in general and administration. The Warrants were valued on the date of the grant using a term of five (5) years; volatility of 94.67%; risk free rate of 1.57%; and a dividend yield of 0%; and
|
·
|
In December 2010, the Company entered into a two-year consulting agreement with an individual, wherein the individual was paid through the issuance of a five-year Warrant to purchase 350,000 shares of the Company's Common Stock (with a fair value of $325,500) at an exercise price of $0.80 per share; through December 31, 2010, $7,438 was recorded as non-cash costs in general and administration, and $318,062 as prepaid consulting expense-long term in other assets. The Warrants were valued on the date of the grant using a term of five (5) years; volatility of 96.66%; risk free rate of 1.97%; and a dividend yield of 0%.
|
2012
|
2011
|
2010
|
||||||||||
Risk-free interest rate
|
0.34 | % | 0.35-1.39 | % | 0.78-1.05 | % | ||||||
Volatility
|
101.90 | % | 80.85-84.78 | % | 92.96-94.34 | % | ||||||
Expected life
|
3 | 3 | 2-5 | |||||||||
Dividend yield
|
0.00 | % | 0.00 | % | 0.00 | % |
Number of
Shares
Under
Option
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contractual
Life
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Balance at December 31, 2009
|
9,344,074 | $ | 0.45 | 8.2 | $ | 10,752,333 | ||||||||||
Granted
|
1,103,982 | $ | 0.72 | |||||||||||||
Exercised
|
(160,509 | ) | $ | 0.52 | $ | 213,750 | ||||||||||
Expired
|
(32,102 | ) | $ | 0.52 | ||||||||||||
Cancelled
|
(5,000 | ) | $ | 0.52 | ||||||||||||
Balance at December 31, 2010
|
10,250,445 | $ | 0.48 | 7.0 | $ | 11,372,288 | ||||||||||
Granted
|
976,500 | $ | 1.54 | |||||||||||||
Exercised
|
(2,321,830 | ) | $ | 0.19 | $ | 3,221,136 | ||||||||||
Expired
|
(150,000 | ) | $ | 1.00 | ||||||||||||
Cancelled
|
(5,000 | ) | $ | 1.62 | ||||||||||||
Balance at December 31, 2011
|
8,750,115 | $ | 0.66 | 7.2 | $ | 8,047,942 | ||||||||||
Granted
|
760,000 | $ | 0.79 | |||||||||||||
Exercised
|
-0- | $ | -0- | |||||||||||||
Expired
|
(215,470 | ) | $ | 0.62 | ||||||||||||
Cancelled
|
(200,668 | ) | $ | 1.40 | ||||||||||||
Balance at December 31, 2012
|
9,093,977 | $ | 0.66 | 6.6 | $ | 2,376,961 | ||||||||||
Vested and Exercisable at
|
7,672,646 | $ | 0.58 | 6.1 | $ | 2,331,961 | ||||||||||
December 31, 2012
|
·
|
In December 2012, the Company granted 2009 Plan Options to purchase 760,000 shares to employees. These options have an exercise price of $0.79 per share, vest over a three year period, one-third per year on the anniversary date of the grant, and are exercisable for ten years after the vesting date;
|
·
|
During 2012, resulting from the termination of employees, 2009 Plan Options to purchase 200,668 shares were cancelled; and
|
·
|
Also during 2012, 2007 Plan Options to purchase 156,305 shares and 2009 Plan Options to purchase 59,165 shares expired.
|
·
|
The table below summarizes 2009 Plan Options granted during 2011, all of which vest over a three year period, one-third per year on the anniversary date of the grant;
|
Month of Grant
|
Number of
Options
Granted
|
Option
Exercise
Price
|
|||
January 2011
|
225,000
|
$1.62
|
|||
February 2011
|
5,000
|
$1.53
|
|||
April 2011
|
5,000
|
$1.66
|
|||
July 2011
|
32,500
|
$1.69
|
|||
August 2011
|
5,000
|
$1.40
|
|||
October 2011
|
24,000
|
$1.50
|
|||
December 2011
|
680,000
|
$1.51
|
|||
976,500
|
·
|
In April 2011, John Bailey, the Company's Chief Financial Officer at that time, exercised 2007 Plan Options to purchase 2,042,830 shares at an aggregate exercise price of $302,339;
|
·
|
In May 2011, an individual exercised 2007 Plan Options to purchase 137,334 shares at an aggregate exercise price of $71,350 and 2009 Plan Options to purchase 41,666 shares at an aggregate exercise price of $21,666;
|
·
|
In June 2011, resulting from the termination of an employee, a 2009 Plan Option to purchase 5,000 shares was cancelled;
|
·
|
Also in June 2011, Mr. Bailey, exercised 2009 Plan Options to purchase an aggregate of 100,000 shares at an aggregate exercise price of $52,000; and
|
·
|
In July 2011, 2007 Plan Options to purchase an aggregate of 150,000 shares expired.
|
·
|
The table below summarizes 2009 Plan Options granted during 2010, all of which vest over a three year period, one-third per year on the anniversary date of the grant;
|
Month of Grant
|
Number of
Options
Granted
|
Option
Exercise Price
|
||
January 2010
|
325,000
|
$0.52
|
||
March 2010
|
325,000
|
$0.52
|
||
May 2010
|
453,982
|
$1.00
|
||
1,103,982
|
·
|
In March 2010, resulting from the termination of an employee, a 2009 Plan Option to purchase 5,000 shares was cancelled;
|
·
|
In May 2010, a 2007 Plan Option to purchase 160,509 shares of was exercised for $83,191; and
|
·
|
In December 2010, a 2007 Plan Option to purchase 32,102 shares expired.
|
Years Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Expected income tax benefit at statutory rate
|
$ | (6,510,535 | ) | $ | (5,730,435 | ) | $ | (6,632,579 | ) | |||
Nondeductible expenses
|
34,736 | 27,199 | -0- | |||||||||
Nondeductible interest expenses
|
1,792,637 | 1,905,598 | -0- | |||||||||
State income tax benefit, net of tax effect at state statutory rate
|
2,590 | 341 | -0- | |||||||||
Other
|
(110,517 | ) | 29,444 | 18,710 | ||||||||
Change in valuation account
|
4,791,089 | 3,767,853 | 6,613,869 | |||||||||
Income tax expense (benefit)
|
$ | -0- | $ | -0- | $ | -0- |
December 31,
|
||||||||
2012
|
2011
|
|||||||
Deferred Tax Assets:
|
||||||||
Tax benefit of net operating loss carry-forward
|
$ | 13,731,810 | $ | 9,843,702 | ||||
Research and development credit carry-forward
|
29,084 | 29,084 | ||||||
Amortization
|
968,441 | 593,741 | ||||||
Depreciation
|
116,953 | -0- | ||||||
Financing fees
|
358,000 | 1,356,200 | ||||||
Stock based compensation
|
1,983,218 | 1,645,279 | ||||||
Officer compensation
|
216,000 | -0- | ||||||
Donations
|
7,724 | 7,706 | ||||||
Accrued interest
|
1,125,256 | 582,385 | ||||||
Bad debt allowance
|
28,083 | 5,594 | ||||||
Valuation allowance for deferred tax assets
|
18,564,569 | 14,063,691 | ||||||
Total deferred tax assets
|
(18,564,569 | ) | (13,102,798 | ) | ||||
Deferred tax assets, net of valuation allowance
|
-0- | 960,893 | ||||||
Deferred Tax Liability:
|
||||||||
Depreciation expense
|
-0- | (960,893 | ) | |||||
Total deferred tax liability
|
-0- | (960,863 | ) | |||||
Deferred assets, net of deferred tax liabilities
|
$ | -0- | $ | -0- |
December 31,
|
||||||||
2012
|
2011
|
|||||||
Prepaid expenses
|
$ | 130,825 | $ | 99,651 | ||||
Legal retainer
|
61,091 | 62,402 | ||||||
Other current assets
|
2,676 | 8,210 | ||||||
Other receivables-related party
|
-0- | 188,823 | ||||||
TOTAL OTHER CURRENT ASSETS
|
$ | 194,592 | $ | 359,086 |
December 31,
|
||||||||
2012
|
2011
|
|||||||
Network equipment
|
$ | 10,170,480 | $ | 9,720,351 | ||||
Vehicles
|
136,082 | 82,622 | ||||||
Office equipment
|
119,830 | 106,008 | ||||||
Furniture
|
75,673 | 67,157 | ||||||
Test equipment
|
73,719 | 81,670 | ||||||
Warehouse equipment
|
6,866 | 6,866 | ||||||
Leasehold improvements
|
5,121 | -0- | ||||||
10,587,771 | 10,064,674 | |||||||
Less: accumulated depreciation
|
(2,726,234 | ) | (1,319,882 | ) | ||||
TOTAL PROPERTY AND EQUIPMENT
|
$ | 7,861,537 | $ | 8,744,792 |
December 31, 2012
|
||||||||||||
Cost
|
Accumulated Amortization
|
Net
|
||||||||||
Patents and trademarks
|
$ | 182,593 | $ | 6,525 | $ | 176,068 | ||||||
Other intangible assets
|
46,220 | 13,314 | 32,906 | |||||||||
Software development costs
|
2,002,933 | 2,002,933 | -0- | |||||||||
Other intellectual property
|
750,000 | 750,000 | -0- | |||||||||
TOTAL INTANGIBLE ASSETS
|
$ | 2,981,746 | $ | 2,772,772 | $ | 208,974 |
December 31,2011
|
||||||||||||
Cost
|
Accumulated Amortization
|
Net
|
||||||||||
Patents and trademarks
|
$ | 120,422 | $ | 3,076 | $ | 117,346 | ||||||
Other intangible assets
|
24,000 | 1,333 | 22,667 | |||||||||
Software development costs
|
2,002,933 | 1,602,352 | 400,581 | |||||||||
Other intellectual property
|
750,000 | 600,000 | 150,000 | |||||||||
TOTAL INTANGIBLE ASSETS
|
$ | 2,897,355 | $ | 2,206,761 | $ | 690,594 |
December 31, 2012
|
||||||||||||
Cost
|
Accumulated Amortization
|
Net
|
||||||||||
Deferred debt issuance costs
|
$ | 1,535,714 | $ | 745,920 | $ | 789,794 | ||||||
Deferred installation costs
|
799,114 | 209,598 | 589,516 | |||||||||
Deferred closing costs
|
516,050 | 247,413 | 268,637 | |||||||||
Prepaid license fee
|
233,606 | 21,857 | 211,749 | |||||||||
Security deposit
|
83,624 | -0- | 83,624 | |||||||||
Prepaid consulting
|
1,131,300 | 1,054,764 | 76,536 | |||||||||
Deferred distribution/service costs
|
166,000 | 166,000 | -0- | |||||||||
TOTAL OTHER ASSETS
|
$ | 4,465,408 | $ | 2,445,552 | $ | 2,019,856 |
December 31,2011
|
||||||||||||
Cost
|
Accumulated Amortization
|
Net
|
||||||||||
Deferred debt issuance costs
|
$ | 1,535,714 | $ | 219,390 | $ | 1,316,324 | ||||||
Deferred installation costs
|
833,985 | 24,041 | 809,944 | |||||||||
Prepaid consulting
|
1,071,562 | 547,639 | 523,923 | |||||||||
Deferred closing costs
|
430,747 | -0- | 430,747 | |||||||||
Prepaid license fee
|
233,606 | 5,464 | 228,142 | |||||||||
Security deposit
|
83,624 | -0- | 83,624 | |||||||||
Deferred distribution/service costs
|
166,000 | 110,666 | 55,334 | |||||||||
TOTAL OTHER ASSETS
|
$ | 4,355,238 | $ | 907,200 | $ | 3,448,038 |
December 31,
|
||||||||
2012
|
2011
|
|||||||
Accrued taxes
|
$ | 360,587 | $ | 261,399 | ||||
Other accrued liabilities
|
441,941 | 13,869 | ||||||
TOTAL OTHER CURRENT LIABILITIES
|
$ | 802,528 | $ | 275,268 |
Years Ending
December 31,
|
||||
2013
|
$ | 168,360 | ||
2014
|
170,628 | |||
2015
|
85,314 | |||
Thereafter
|
-0- | |||
Total
|
$ | 424,302 |
Years
Ending December 31,
|
Total
|
Senior
Secured
Convertible
Notes
|
Notes
Payable
|
Mandatorily
Redeemable
Equity in
Joint Venture
|
||||||||||||
2013
|
$ | 887,148 | $ | -0- | $ | 443,574 | $ | 443,574 | ||||||||
2014
|
-0- | -0- | -0- | -0- | ||||||||||||
2015
|
-0- | -0- | -0- | -0- | ||||||||||||
2016
|
-0- | -0- | -0- | -0- | ||||||||||||
2017
|
-0- | -0- | -0- | -0- | ||||||||||||
Thereafter
|
30,230,258 | 30,230,258 | -0- | -0- | ||||||||||||
Total
|
$ | 31,117,406 | $ | 30,230,258 | $ | 443,574 | $ | 443,574 |
(a)
|
During years 1-5, interest is payable (on a cumulative basis) by the issuance of additional convertible debt (a PIK) with the same terms as New Senior Convertible Notes, at an interest rate of 12.5%, compounded quarterly.
|
(b)
|
During years 6-10, interest may be paid in cash or as a consideration on the cumulative PIK (at the Company’s option), at an annual interest rate of 10.0%, compounded quarterly.
|
(c)
|
Interest shall be calculated and payable on a quarterly basis in arrears.
|
(d)
|
Notwithstanding the foregoing, during the existence of an event of default, the then applicable interest rate will be increased by 5%.
|
2012
|
2011
|
|||||||
Assets
|
||||||||
Cash
|
$ | 956 | $ | 4,161 | ||||
Receivables
|
5,221 | 49,835 | ||||||
Total current assets
|
6,177 | 53,996 | ||||||
Property, net
|
189,003 | 277,088 | ||||||
Total assets
|
$ | 195,180 | $ | 331,084 | ||||
Liabilities
|
||||||||
Accounts payable
|
$ | 103,217 | $ | 90,212 | ||||
Notes payable, net of debt discount of $32,989 and $32,255, respectively
|
410,586 | 58,602 | ||||||
Mandatorily redeemable interest, net of debt discount of $32,989 and $32,255, respectively
|
410,586 | 58,602 | ||||||
Accrued interest
|
59,872 | 1,342 | ||||||
Other current liabilities
|
53,371 | 55,417 | ||||||
Total current liabilities
|
1,037,632 | 264,175 | ||||||
Notes payable, net of debt discount of $0 and $100,715, respectively
|
-0- | 273,128 | ||||||
Mandatorily redeemable interest, net of debt discount of $0 and $100,715, respectively
|
-0- | 273,128 | ||||||
Total long term liabilities
|
-0- | 546,256 | ||||||
Total liabilities
|
$ | 1,037,632 | $ | 810,431 |
Year Ended
December 31,
2012
|
Year Ended
December 31,
2011
|
Year Ended
December 31,
2010
|
||||||||||
Revenue
|
$ | 68,655 | $ | 311,971 | $ | 213,217 | ||||||
Network operations expense
|
22,992 | 73,257 | 36,878 | |||||||||
General and administrative expense
|
31,081 | 64,419 | 4,200 | |||||||||
Depreciation
|
58,705 | 119,747 | 87,525 | |||||||||
Total operating costs
|
112,778 | 257,423 | 128,603 | |||||||||
Operating income (loss)
|
(44,123 | ) | 54,548 | 84,614 | ||||||||
Other income (expense)
|
(160,961 | ) | (276,636 | ) | (281,547 | ) | ||||||
Loss before taxes
|
(205,084 | ) | (222,088 | ) | (196,933 | ) | ||||||
Provision for taxes
|
-0- | -0- | -0- | |||||||||
Net loss
|
(205,084 | ) | (222,088 | ) | (196,933 | ) | ||||||
Net loss attributable to noncontrolling interest
|
(102,542 | ) | (111,044 | ) | (98,467 | ) | ||||||
Net loss attributable to CareView Communications, Inc.
|
$ | (102,542 | ) | $ | (111,044 | ) | $ | (98,466 | ) |
2012 Quarters
|
||||||||||||||||
(In thousands, except per share)
|
1st
|
2nd
|
3rd
|
4th
|
||||||||||||
Revenues
|
$ | 387 | $ | 443 | $ | 542 | $ | 258 | ||||||||
Operating expense
|
$ | 3,363 | $ | 3,019 | $ | 2,806 | $ | 3,516 | ||||||||
Operating loss
|
$ | (2,976 | ) | $ | (2,576 | ) | $ | (2,264 | ) | $ | (3,258 | ) | ||||
Net loss attributable to CareView
|
$ | (4,758 | ) | $ | (4,458 | ) | $ | (4,158 | ) | $ | (5,129 | ) | ||||
Loss per common share, basic and diluted
|
$ | (0.04 | ) | $ | (0.03 | ) | $ | (0.03 | ) | $ | (0.04 | ) |
2011 Quarters
|
||||||||||||||||
(In thousands, except per share)
|
1st
|
2nd
|
3rd
|
4th
|
||||||||||||
Revenues
|
$ | 109 | $ | 80 | $ | 197 | $ | 244 | ||||||||
Operating expense
|
$ | 1,381 | $ | 2,218 | $ | 2,567 | $ | 3,432 | ||||||||
Operating loss
|
$ | (1,272 | ) | $ | (2,138 | ) | $ | (2,370 | ) | $ | (3,188 | ) | ||||
Change in fair value of derivative liabilities
|
$ | -0- | $ | 12,235 | $ | (5,268 | ) | $ | (4,001 | ) | ||||||
Net income (loss) attributable to CareView
|
$ | (1,320 | ) | $ | (15,502 | ) | $ | 1,332 | $ | (774 | ) | |||||
Income (loss) per common share, basic and diluted
|
$ | (0.01 | ) | $ | (0.12 | ) | $ | 0.01 | $ | (0.01 | ) |
Three Months Ended
June 30, 2011
|
Three Months Ended
September 30, 2011
|
|||||||||||||||
(In thousands, except per share)
|
As
Restated
|
As
Originally
Reported
|
As
Restated
|
As
Originally
Reported
|
||||||||||||
Non-cash expense related to valuation of HealthCor derivatives
|
NA
|
$ | 12,235 |
NA
|
$ | (5,268 | ) | |||||||||
Operating income (loss)
|
$ | (2,138 | ) | $ | (14,373 | ) | $ | (2,370 | ) | $ | 2,898 | |||||
Change in fair value of derivative liabilities
|
$ | 12,235 |
NA
|
$ | (5,268 | ) |
NA
|
1.
|
The parties agree that the provisions of 4(b) Warrants in the Agreement is hereby amended in its entirety to read as follows:
|
2.
|
The parties agree that all other terms and conditions of the Agreement shall remain in full force and effect.
|
HEARTLAND ENERGY PARTNERS, LLC
|
CAREVIEW COMMUNICATIONS, INC.
|
|||
By:
|
/s/ John English
|
By:
|
/s/ Steve Johnson
|
|
|
John English, CEO
|
Steve Johnson, President
|
CAREVIEW COMMUNICATIONS, INC.,
a Nevada Corporation
By: /s/ Steve Johnson
Title: President/Chief Operating Officer
|
|
CAREVIEW COMMUNICATIONS, INC.
a Texas Corporation
By: /s/ Steve Johnson
Title: President/Chief Operating Officer
|
|
CAREVIEW OPERATIONS, L.L.C.
a Texas Limited Liability Company
By: Steve Johnson
Title: President
|
|
COLLATERAL AGENT AND LENDER:
COMERICA BANK
By: /s/ Brian Dummett
Title: Senior Vice President
|
|
LENDER:
BRIDGE BANK, NATIONAL ASSOCIATION
By:
Title: Sr. Vice President
|
“Collateral Agent”
COMERICA BANK
By: Brian Dummett
Title: Sr. Vice President
|
|
“Creditors”
HealthCor Partners Fund, L.P.
By: HealthCor Partners Management L.P., its Manager
By: HealthCor Partners Management, G.P., LLC
Its: General Partner
By: /s/ Jeffrey Lightcap
Name: Jeffrey Lightcap
Title: Senior Managing Director
|
|
HealthCor Hybrid Offshore Master Fund, L.P.
By: HealthCor Hybrid Offshore G.P., LLC
Its: General Partner
By: /s/ Steven Musumeci
Name: Steven Musumeci
Title: Chief Operating Officer
|
“Credit Parties”
CAREVIEW COMMUNICATIONS, INC., a Nevada corporation
By: /s/ Steve Johnson
Title: President/Chief Operating Officer
|
CAREVIEW COMMUNICATIONS, INC., a Texas corporation
By: /s/ Steve Johnson
Title: President/Chief Operating Officer
|
“Borrower”
CAREVIEW OPERATIONS, L.L.C., a Texas limited liability company
By: /s/ Steve Johnson
Title: President
|
·
|
CareView Communications, Inc., a Texas corporation ("CareView-TX"), a wholly owned subsidiary
|
·
|
CareView Operations, LLC, a Nevada limited liability company ("CareView Operations"), a wholly owned subsidiary
|
·
|
CareView-Hillcrest, LLC, a Wisconsin limited liability company ("CareView-Hillcrest"), a variable interest entity
|
·
|
CareView-Saline, LLC, a Wisconsin limited liability company ("CareView-Saline"), a variable interest entity
|
(1)
|
I have reviewed this Annual Report on Form 10-K of CareView Communications, 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(s) 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 most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) 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(s) 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 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.
|
April 1, 2013
|
/s/ Samuel A. Greco
|
||
Samuel A. Greco
|
|||
Principal Executive Officer
Chief Executive Officer
|
(1)
|
I have reviewed this Annual Report on Form 10-K of CareView Communications, 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(s) 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 most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) 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(s) 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 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.
|
April 1, 2013
|
/s/ Anthony P. Piccin
|
||
Anthony P. Piccin
|
|||
Principal Financial Officer
Chief Financial Officer
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
/s/ Samuel A. Greco
|
||||
Samuel A. Greco
|
|
|||
Chief Executive Officer
|
|
|||
April 1, 2013
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
/s/Anthony P. Piccin
|
||||
Anthony P. Piccin
|
|
|||
Chief Financial Officer
|
|
|||
April 1, 2013
|
COMMITMENTS AND CONTINGENCIES (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments And Contingencies Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum rental payments | As of December 31, 2012, future minimum rental payments are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future debt payments | As of December 31, 2012, future debt payments due are as follows:
|
INCOME TAXES (Details) (USD $)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Income Taxes Details | |||
Expected income tax benefit at statutory rate | $ (6,510,535) | $ (5,730,435) | $ (6,632,579) |
Nondeductible expenses | 34,736 | 27,199 | |
Nondeductible interest expenses | 1,792,637 | 1,905,598 | |
State income taxes, net of tax effect, at state statutory rate | 2,590 | 341 | |
Other | (110,517) | 29,444 | 18,710 |
Change in valuation account | 4,791,089 | 3,767,853 | 6,613,869 |
Income tax expense (benefit) |
STOCKHOLDERS' EQUITY (Details Narrative 1) (USD $)
|
1 Months Ended | 2 Months Ended | 9 Months Ended | 12 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 2 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2010
|
Feb. 29, 2012
|
Dec. 31, 2011
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
Sep. 30, 2012
Gerald Murphy, Director
|
Dec. 31, 2009
Warrants
|
Dec. 31, 2012
Warrants
|
Nov. 30, 2012
Warrants
|
Sep. 30, 2012
Warrants
|
May 31, 2012
Warrants
|
Apr. 30, 2012
Warrants
|
Feb. 29, 2012
Warrants
|
Jan. 31, 2012
Warrants
|
Oct. 31, 2011
Warrants
|
Sep. 30, 2011
Warrants
|
Aug. 31, 2011
Warrants
|
Jun. 30, 2011
Warrants
|
May 31, 2011
Warrants
|
Apr. 30, 2011
Warrants
|
Dec. 31, 2010
Warrants
|
Sep. 30, 2010
Warrants
|
Jul. 31, 2010
Warrants
|
Apr. 30, 2010
Warrants
|
Jan. 31, 2010
Warrants
|
Feb. 29, 2012
Warrants
|
Dec. 31, 2012
Warrants
|
Dec. 31, 2011
Warrants
|
Dec. 31, 2010
Warrants
|
Dec. 31, 2011
Warrants
Gerald Murphy, Director
|
Dec. 31, 2012
Warrants
Lower Range
|
Dec. 31, 2011
Warrants
Lower Range
|
Dec. 31, 2010
Warrants
Lower Range
|
Dec. 31, 2012
Warrants
Upper Range
|
Dec. 31, 2011
Warrants
Upper Range
|
Dec. 31, 2010
Warrants
Upper Range
|
May 31, 2012
Warrants Under AS Agreement
|
Dec. 31, 2012
Warrants Under AS Agreement
|
Dec. 31, 2010
Warrants Revised
|
|
Warrants issued for services, shares | 449,666 | 50,000 | 179,638 | 50,000 | 50,000 | 200,000 | 100,000 | 400,000 | 350,000 | 50,000 | 39,683 | 10,000 | 200,000 | 240,000 | 4,253,309 | |||||||||||||||||||||||||
Warrants issued for services | $ 320,812 | $ 753,500 | $ 570,600 | $ 28,100 | $ 91,256 | $ 52,300 | $ 48,200 | $ 146,800 | $ 110,300 | $ 496,400 | $ 325,500 | $ 63,500 | $ 67,064 | $ 15,600 | $ 166,000 | $ 265,200 | $ 3,189,982 | |||||||||||||||||||||||
Exercise price of warrants granted | 0.52 | 0.55 | 0.77 | 0.52 | 1.55 | 1.52 | 1.40 | 1.59 | 1.40 | 0.80 | 1.25 | 0.80 | 0.52 | 1.20 | 1.40 | 0.83 | 0.77 | 1.40 | 0.52 | 1.65 | 1.59 | 1.25 | 1.65 | 0.52 | ||||||||||||||||
Term of warrants granted | 10 years | 5 years | 1 year | 5 years | 5 years | 3 years | 5 years | 5 years | 5 years | 5 years | 2 years | 5 years | 5 years | 3 years 8 months 12 days | 8 years 9 months 18 days | 4 years 9 months 18 days | 5 years | 7 years 6 months | ||||||||||||||||||||||
Volatility rate | 79.70% | 97.77% | 41.63% | 87.01% | 86.04% | 81.83% | 89.00% | 89.74% | 96.66% | 94.67% | 92.98% | 90.50% | 89.46% | 79.70% | ||||||||||||||||||||||||||
Risk free rate | 3.66% | 0.63% | 0.19% | 0.67% | 1.03% | 0.41% | 1.68% | 2.14% | 1.97% | 1.57% | 0.63% | 2.56% | 1.09% | 3.66% | ||||||||||||||||||||||||||
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | ||||||||||||||||||||||||||
Vesting terms of warrants granted | vesting of the underlying shares occurs at the rate of 20,000 shares on teh monthly anniversary date of the AS Agreement as long as the AS Agreement has not been terminated | |||||||||||||||||||||||||||||||||||||||
Expensed as non-cash costs in general and administration | 102,920 | 110,300 | 171,669 | 7,438 | 63,500 | 15,600 | 447,388 | 162,750 | 100,956 | |||||||||||||||||||||||||||||||
Charged to pre-paid costs | 43,880 | 324,731 | 318,062 | 110,677 | ||||||||||||||||||||||||||||||||||||
Expensed as distribution/service costs in network operations | 55,333 | 55,334 | 55,333 | |||||||||||||||||||||||||||||||||||||
Interest Expense | 7,670,396 | 4,443,819 | 324,887 | 526,530 | ||||||||||||||||||||||||||||||||||||
Charged to financing costs | 67,064 | |||||||||||||||||||||||||||||||||||||||
Shares issued for exercise of warrants | 20,635 | 739,833 | 262,451 | 739,833 | 439,666 | 241,816 | 20,635 | 247,316 | 55,000 | 262,451 | 739,833 | 283,067 | ||||||||||||||||||||||||||||
Shares issued for exercise of warrants, shares | 630,929 | 1,593,362 | 241,816 | 439,666 | 313,477 | 39,683 | 449,666 | 100,000 | 124,510 | 277,809 | 1,070,635 | 1,593,362 | 514,666 | |||||||||||||||||||||||||||
Noncash exercise of warrants, shares forfeited for exercise | 136,523 | 122,191 | ||||||||||||||||||||||||||||||||||||||
Warrants outstanding, excluding HealthCor Warrants | 22,293,851 | 22,293,851 | 23,063,562 | |||||||||||||||||||||||||||||||||||||
Weighted Average exercise price of warrants excluding HealthCor Warrants | 0.75 | 0.75 | 0.73 | 0.52 | 0.52 | 1.65 | 1.59 | |||||||||||||||||||||||||||||||||
Weighted average contractual life of warrants excluding HealthCor Warrants | 2 years 9 months 24 days | 2 years 9 months 24 days | 3 years 9 months 18 days | |||||||||||||||||||||||||||||||||||||
Unamortized costs associated with warrants, excluding HealthCor warrants | $ 1,031,000 | $ 1,031,000 | $ 1,896,000 |
LOAN AND SECURITY AGREEMENT WITH COMERICA BANK AND BRIDGE BANK (Details Narrative) (USD $)
|
1 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|---|
Apr. 30, 2010
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
Jan. 15, 2013
Comerica Bank and Bridge Bank
|
Aug. 31, 2011
Comerica Bank and Bridge Bank
|
Dec. 31, 2012
Comerica Bank and Bridge Bank
|
Dec. 31, 2011
Comerica Bank and Bridge Bank
|
|
Revolving line of credit maximum borrowing capacity | $ 20,000,000 | |||||||
Terms of interest on revolving line of credit | on the outstanding daily balance of the advances at the rate of 3.75% plus the Prime Referenced Rate, which is a rate equal to Comericaâs prime rate but no less than the sum of 30-day LIBOR rate plus 2.5% per annum | |||||||
Interest rate on revolving line of credit | 7.00% | |||||||
Available revolving line of credit | 20,000,000 | |||||||
Agreed Advances from bank in terms of outstanding amount of revolving line limit | not to exceed the lesser of (i) the $20 million revolving line limit or (ii) the Borrowing Base | |||||||
Borrowing base as a Percentage of Eligible Accounts | 80.00% | |||||||
Terms of eligible accounts | those accounts that (x) arise in the ordinary course of the Company's business; (y) arise from the future, rolling twelve (12) months due to sales of subscriptions to individual hospitals or hospital groups which are associated with (i) existing subscription services that are under contract and have at least twelve (12) months of life left on the contract at the time of inclusion of such account in the Borrowing Base; and (ii) newly executed contracts that have a minimum length of at least four (4) years; and (z) comply with certain Company representations and warranties to the Banks set forth in the Agreement that relate to Eligible Accounts. Subject to the terms and conditions of the Agreement, amounts borrowed may be repaid and re-borrowed at any time prior to the Revolving Maturity Date,ÃÂ (the earlier of (i) two (2) years after the initial Advance or (ii) June 14, 2014), at which time all Advances shall be immediately due and payable | |||||||
Percentage of quarterly unused facility fee based on difference between the amount of the Revolving Line and the average outstanding principal balance | 0.25% | |||||||
Terms of maintaining primary operating accounts with Comerica and Bridge Bank as per agreement | on a 50:50 basis, with no less than 80% of CareView's investment accounts with the Banks or their affiliates, unless CareView's cash falls below $5 million, in which case it must maintain all its cash with the Banks | |||||||
Fixed charge coverage ratio | 5.01 | |||||||
Percentage to pay interest on the outstanding principal balance in occurance of customary events of default | 100.00% | |||||||
Warrants issued for financing costs | 382,500 | 1,535,714 | 1,535,714 | |||||
Warrants issued for financing costs, warrants | 450,000 | 1,428,572 | ||||||
Exercise price of warrants granted | 0.52 | 1.10 | 1.40 | |||||
Interest expense | 7,670,396 | 4,443,819 | 324,887 | 526,530 | 219,390 | |||
Borrowings from the line of credit | $ 560,000 |
INCOME TAXES (Details 1) (USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Deferred Tax Assets: | ||
Tax benefit of net operating loss carry-forward | $ 13,731,810 | $ 9,843,702 |
Research and development credit carry-forward | 29,084 | 29,084 |
Amortization | 968,441 | 593,741 |
Depreciation | 116,953 | |
Financing fees | 358,000 | 1,356,200 |
Stock based compensation | 1,983,218 | 1,645,279 |
Officer compensation | 216,000 | |
Donations | 7,724 | 7,706 |
Accrued interest | 1,125,256 | 582,385 |
Bad debt allowance | 28,083 | 5,594 |
Total deferred tax assets | 18,564,569 | 14,063,691 |
Valuation allowance for deferred tax assets | (18,564,569) | (13,102,798) |
Deferred tax assets, net of valuation allowance | 960,893 | |
Deferred Tax Liability: | ||
Depreciation | (960,893) | |
Total deferred tax liabilities | (960,893) | |
Net deferred tax assets |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) (USD $)
|
0 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2011
|
Dec. 31, 2012
|
Sep. 30, 2012
|
Jun. 30, 2012
|
Mar. 31, 2012
|
Dec. 31, 2011
|
Sep. 30, 2011
|
Jun. 30, 2011
|
Mar. 31, 2011
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Selected Quarterly Financial Data Details | ||||||||||||
Revenues, net | $ 258,000 | $ 542,000 | $ 443,000 | $ 387,000 | $ 244,000 | $ 197,000 | $ 80,000 | $ 109,000 | $ 1,629,971 | $ 630,452 | $ 325,968 | |
Total operating expense | 3,516,000 | 2,806,000 | 3,019,000 | 3,363,000 | 3,432,000 | 2,567,000 | 2,218,000 | 1,381,000 | 12,704,407 | 9,598,203 | 13,121,534 | |
Operating loss | (3,258,000) | (2,264,000) | (2,576,000) | (2,976,000) | (3,188,000) | (2,370,000) | (2,138,000) | (1,272,000) | (11,074,436) | (8,967,751) | (12,795,566) | |
Change in fair value of derivatives | (2,966,365) | (4,001,000) | (5,268,000) | 12,235,000 | (2,966,365) | |||||||
Net loss attributable to CareView Communications, Inc. | $ (5,129,000) | $ (4,158,000) | $ (4,458,000) | $ (4,758,000) | $ (774,000) | $ 1,332,000 | $ (15,502,000) | $ (1,320,000) | $ (18,502,970) | $ (16,264,252) | $ (18,851,758) | |
Net loss per share attributable to CareView Communications, Inc. | $ (0.04) | $ (0.03) | $ (0.03) | $ (0.04) | $ (0.01) | $ 0.01 | $ (0.12) | $ (0.01) | $ (0.14) | $ (0.13) | $ (0.15) |
LIQUIDITY AND MANAGEMENTS PLAN (Details Narrative) (USD $)
|
0 Months Ended | 4 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Mar. 06, 2013
|
Nov. 12, 2010
|
Apr. 30, 2010
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
Jun. 30, 2010
|
|
Liquidity And Managements Plan Details Narrative | |||||||
Cash and cash equivalents | $ 5,413,848 | $ 8,526,857 | |||||
Minimum cash balance required under existing loan documents | 5,000,000 | ||||||
Shares issued in private placement, net of fees | $ 0 | $ 966,550 | $ 5,510,185 | $ 6,476,735 | |||
Shares issued in private placement, shares | 0 | 795,000 | 11,378,040 | ||||
Price per share | $ 0.00 | $ 1.85 | |||||
Expected range for profitability | 11,000 to 12,000 billable RCP units |
STOCKHOLDERS' EQUITY (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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Stockholders Equity Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assumptions used in the Black-Scholes Model - Warrants and Options | The assumptions used in the Black-Scholes Model during the years ended December 31, 2012, 2011, and 2010 are set forth in the table below.
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Schedule of the Company's warrants activity |
A summary of the Company's Warrants activity and related information follows:
The table below summarizes warrant exercise activity during 2012:
During the year ended December 31, 2011, the Company issued the following:
The table below summarizes warrant exercise activity during 2011:
________________ (1) Included among the warrants exercised during December 2011 were 514,666 warrants exercised at an aggregate price of $283,067 by Gerald Murphy, a Director of the Company at the time. All of the 514,666 warrants were granted to Mr. Murphy prior to his appointment as Director.
During the year ended December 31, 2010, the Company issued the following:
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Schedule of the Company's stock option activity under the 2007 and 2009 Plans | A summary of the Company's stock option activity under the 2007 and 2009 Plans and related information follows:
|
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details 1) (USD $)
|
0 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2011
|
Dec. 31, 2012
|
Sep. 30, 2012
|
Jun. 30, 2012
|
Mar. 31, 2012
|
Dec. 31, 2011
|
Sep. 30, 2011
|
Jun. 30, 2011
|
Mar. 31, 2011
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Operating loss | $ (3,258,000) | $ (2,264,000) | $ (2,576,000) | $ (2,976,000) | $ (3,188,000) | $ (2,370,000) | $ (2,138,000) | $ (1,272,000) | $ (11,074,436) | $ (8,967,751) | $ (12,795,566) | |
Change in fair value of derivatives | (2,966,365) | (4,001,000) | (5,268,000) | 12,235,000 | (2,966,365) | |||||||
As Restated
|
||||||||||||
Operating loss | (2,370,000) | (2,138,000) | ||||||||||
Change in fair value of derivatives | (5,268,000) | 12,235,000 | ||||||||||
As Originally Reported
|
||||||||||||
Non-cash expense related to valuation of HealthCor Derivatives | (5,268,000) | 12,235,000 | ||||||||||
Operating loss | $ 2,898,000 | $ (14,373,000) |
PROPERTY AND EQUIPMENT (Details Narrative) (USD $)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Property And Equipment Details Narrative | |||
Depreciation | $ 1,546,599 | $ 1,003,344 | $ 181,890 |
LEASE LINE OF CREDIT (Details) (USD $)
|
0 Months Ended | 1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jan. 28, 2010
|
Apr. 30, 2010
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Lease Line of Credit entered into | $ 5,000,000 | ||||
Origination fee, per lease schedule signed | 1.00% | ||||
Maximum cost of equipment per month to counterparty | 500,000 | ||||
Deposit on Lease Line paid | 100,000 | ||||
Deposit on lease line, percentage of unused Lease Line | 2.00% | ||||
Warrants issued for financing costs | 382,500 | 1,535,714 | |||
Warrants issued for financing costs, warrants | 450,000 | ||||
Exercise price of warrants granted | 0.52 | ||||
Term of warrants granted | 10 years | ||||
Volatility rate | 79.70% | ||||
Risk free rate | 3.66% | ||||
Dividend yield | 0.00% | ||||
Unaffiliated Member - Finder
|
|||||
Warrants issued for financing costs | 300,000 | ||||
Warrants issued for financing costs, warrants | 400,000 | ||||
Exercise price of warrants granted | 0.52 | ||||
Term of warrants granted | 5 years | ||||
Volatility rate | 90.32% | ||||
Risk free rate | 2.30% | ||||
Dividend yield | 0.00% | ||||
Finder's fee paid, as a part of financing costs | $ 100,000 |
SUBSCRIPTION AND INVESTOR RIGHTS AGREEMENT (Details Narrative) (USD $)
|
1 Months Ended | 12 Months Ended | 0 Months Ended |
---|---|---|---|
Apr. 30, 2010
|
Dec. 31, 2010
|
Aug. 20, 2010
Subscription and Investor Rights Agreement
|
|
Warrants issued for contract modifications | $ 4,080,000 | $ 4,080,000 | |
Warrants issued for contract modifications, warrants | 1,000,000 | ||
Exercise price of warrants granted | 0.52 | 1.00 | |
Term of warrants granted | 10 years | 5 years | |
Volatility rate | 79.70% | 94.12% | |
Risk free rate | 3.66% | 1.47% | |
Dividend yield | 0.00% | 0.00% |
VARIABLE INTEREST ENTITIES
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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Variable Interest Entities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
VARIABLE INTEREST ENTITIES | NOTE 18 – VARIABLE INTEREST ENTITIES
The Company consolidates VIEs of which it is the primary beneficiary. The liabilities recognized as a result of consolidating these VIEs do not necessarily represent additional claims on our general assets; rather, they represent claims against the specific assets of the consolidated VIEs. Conversely, assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against our general assets.
The total consolidated VIE assets and liabilities reflected on our consolidated balance sheets at December 31, 2012 and 2011 are as follows:
The financial performance of the consolidated VIEs reflected on our consolidated statements of operations for the years ended December 31, 2012, 2011 and 2010 is as follows:
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STOCKHOLDERS' EQUITY (Details)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Stock Options
|
|||
Black-Scholes Model: | |||
Risk-free interest rate | 34.00% | ||
Volatility | 101.90% | ||
Expected life | 3 years | 3 years | |
Dividend yield | 0.00% | 0.00% | 0.00% |
Lower Range | Stock Options
|
|||
Black-Scholes Model: | |||
Risk-free interest rate | 0.35% | 0.78% | |
Volatility | 80.85% | 92.96% | |
Expected life | 2 years | ||
Upper Range | Stock Options
|
|||
Black-Scholes Model: | |||
Risk-free interest rate | 1.39% | 1.05% | |
Volatility | 84.78% | 94.34% | |
Expected life | 5 years | ||
Warrants
|
|||
Black-Scholes Model: | |||
Dividend yield | 0.00% | 0.00% | 0.00% |
Warrants | Lower Range
|
|||
Black-Scholes Model: | |||
Risk-free interest rate | 0.19% | 0.41% | 3.66% |
Volatility | 41.63% | 81.83% | 96.33% |
Expected life | 1 year | 3 years | 10 years |
Warrants | Upper Range
|
|||
Black-Scholes Model: | |||
Risk-free interest rate | 1.03% | 2.14% | 0.63% |
Volatility | 97.77% | 89.74% | 79.70% |
Expected life | 5 years | 7 years | 2 years |
DISTRIBUTION/CONSULTING AGREEMENT (Details Narrative) (USD $)
|
1 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2010
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
Mar. 01, 2013
Sales Consulting Agreement
|
Dec. 04, 2012
Sales Consulting Agreement
|
May 31, 2012
Sales Consulting Agreement
|
Mar. 01, 2012
Sales Consulting Agreement
|
Dec. 31, 2012
Sales Consulting Agreement
|
Jan. 09, 2010
Distribution Agreement
|
Dec. 31, 2012
Distribution Agreement
|
Dec. 31, 2011
Distribution Agreement
|
Dec. 31, 2010
Distribution Agreement
|
Apr. 29, 2012
Heartland Energy Partners Consulting Agreement
|
Dec. 31, 2012
Heartland Energy Partners Consulting Agreement
|
|
Shares issued for cancellation of distribution agreement | 50,000 | 50,000 | |||||||||||||
Consulting agreement description | greater of (i) $10,000 or (ii) the sum of $250 per month per designated hospital | Under the Consulting Agreement, Heartland will work with the Company to develop a strategy to raise the profile of CareView within the Department of Veteran Affairs and to raise awareness of the value that the Company's offerings related to patient safety for veterans. A monthly fee of $10,000 is payable thereunder beginning immediately after the Company's obtains GSA Approval and continuing for a period of twelve months thereafter unless extended by the parties. | |||||||||||||
Warrants issued for services, shares | 50,000 | 200,000 | |||||||||||||
Warrants issued for services | $ 320,812 | $ 753,500 | $ 570,600 | $ 166,000 | |||||||||||
Warrants issued for termination of agreement, shares | 50,000 | ||||||||||||||
Exercise price of warrants granted | 0.52 | 0.77 | 1.55 | 0.52 | |||||||||||
Term of warrants granted | 10 years | 5 years | 5 years | ||||||||||||
Volatility rate | 79.70% | 89.46% | |||||||||||||
Risk free rate | 3.66% | 1.09% | |||||||||||||
Dividend yield | 0.00% | 0.00% | |||||||||||||
Consulting expense | 83,434 | 10,000 | |||||||||||||
Expensed as distribution/service costs in network operations | 55,334 | 55,333 | 55,333 | ||||||||||||
Charged to pre-paid costs | $ 55,334 | ||||||||||||||
Maximum number of shares consultant is entitled to receive under Warrants | 1,000,000 |
OTHER ASSETS (Tables)
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Dec. 31, 2012
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Other Assets Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangible assets | Intangible assets consist of the following:
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Schedule of other assets | Other assets consist of the following:
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STOCKHOLDERS' EQUITY (Details 2) (USD $)
|
1 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2011
|
May 31, 2010
|
Dec. 31, 2011
Stock Options
|
Oct. 31, 2011
Stock Options
|
Aug. 31, 2011
Stock Options
|
Jul. 31, 2011
Stock Options
|
Apr. 30, 2011
Stock Options
|
Feb. 28, 2011
Stock Options
|
Jan. 31, 2011
Stock Options
|
May 31, 2010
Stock Options
|
Mar. 31, 2010
Stock Options
|
Jan. 31, 2010
Stock Options
|
Dec. 31, 2012
Stock Options
|
Dec. 31, 2011
Stock Options
|
Dec. 31, 2010
Stock Options
|
|
Stock Options Outstanding | 10,250,445 | 9,344,074 | 8,750,115 | 10,250,445 | 9,344,074 | ||||||||||
Granted | 24,000 | 5,000 | 32,500 | 5,000 | 5,000 | 225,000 | 453,982 | 325,000 | 325,000 | 760,000 | 976,500 | 1,103,982 | |||
Exercised | 179,000 | 160,509 | (2,321,830) | (160,509) | |||||||||||
Expired | (215,470) | (150,000) | (32,102) | ||||||||||||
Cancelled | (200,668) | (5,000) | (5,000) | ||||||||||||
Stock Options Outstanding | 8,750,115 | 9,093,977 | 8,750,115 | 10,250,445 | |||||||||||
Stock Options, vested and exercisable | 7,672,646 | ||||||||||||||
Stock Options Outstanding | $ 0.48 | $ 0.45 | $ 0.66 | $ 0.48 | $ 0.45 | ||||||||||
Granted | $ 1.51 | $ 1.50 | $ 1.40 | $ 1.69 | $ 1.66 | $ 1.53 | $ 1.62 | $ 1.00 | $ 0.52 | $ 0.52 | $ 0.79 | $ 1.54 | $ 0.72 | ||
Exercised | $ 0.19 | $ 0.52 | |||||||||||||
Expired | $ 0.62 | $ 1.00 | $ 0.52 | ||||||||||||
Cancelled | $ 1.40 | $ 1.62 | $ 0.52 | ||||||||||||
Weighted Average Exercise Price, Ending Balance | $ 0.66 | $ 0.66 | $ 0.66 | $ 0.48 | |||||||||||
Stock Options Outstanding | $ 0.58 | ||||||||||||||
Stock Options Outstanding | 7 years | 8 years 2 months 12 days | 7 years 2 months 12 days | 7 years | 8 years 2 months 12 days | ||||||||||
Stock Options Outstanding | 7 years 2 months 12 days | 6 years 7 months 6 days | 7 years 2 months 12 days | 7 years | |||||||||||
Stock Options, Vested and Exercisable | 6 years 1 month 6 days | ||||||||||||||
Stock Options Outstanding | $ 11,372,288 | $ 10,752,333 | $ 8,047,942 | $ 11,372,288 | $ 10,752,333 | ||||||||||
Exercised | 3,221,136 | 213,750 | |||||||||||||
Stock Options Outstanding | 8,047,942 | 2,376,961 | 8,047,942 | 11,372,288 | |||||||||||
Stock Options Outstanding, Vested and exercisable | $ 2,331,961 |
COMMITMENTS AND CONTINGENCIES (Details 1) (USD $)
|
Dec. 31, 2012
|
---|---|
Future debt payments for the year ending December 31, | |
2013 | $ 887,148 |
2014 | |
2015 | |
2016 | |
2017 | |
Thereafter | 30,230,258 |
Total | 31,117,406 |
Senior Secured Convertible Notes
|
|
Future debt payments for the year ending December 31, | |
2013 | |
2014 | |
2015 | |
2016 | |
2017 | |
Thereafter | 30,230,258 |
Total | 30,230,258 |
Notes Payable
|
|
Future debt payments for the year ending December 31, | |
2013 | 443,574 |
2014 | |
2015 | |
2016 | |
2017 | |
Thereafter | |
Total | 443,574 |
Mandatorily Redeemable Equity in Joint Venture
|
|
Future debt payments for the year ending December 31, | |
2013 | 443,574 |
2014 | |
2015 | |
2016 | |
2017 | |
Thereafter | |
Total | $ 443,574 |
PROMISSORY NOTES PAYABLE (Details Narrative) (USD $)
|
1 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 0 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2010
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
Apr. 26, 2011
Purchase Order Loan
|
Sep. 30, 2010
Purchase Order Loan
|
Mar. 31, 2011
Purchase Order Loan
|
Jan. 14, 2010
Debt2Member
|
Aug. 25, 2009
Debt2Member
|
May 29, 2009
Debt2Member
|
Dec. 22, 2008
Debt2Member
|
Oct. 02, 2008
Debt2Member
|
Dec. 31, 2010
Debt2Member
|
Dec. 31, 2009
Debt2Member
|
|
Promissory notes issued | $ 2,270,640 | $ 26,000 | $ 500,000 | $ 1,000,000 | ||||||||||
Proceeds from notes payable | 5,000,000 | 20,000,000 | 30,000 | 550,000 | ||||||||||
Repayment of notes payable | (42,252) | (167,692) | (54,114) | 550,000 | ||||||||||
Warrants issued for financing costs | 382,500 | 1,535,714 | 2,852,000 | 47,736 | 174,725 | 268,750 | ||||||||
Warrants issued for financing costs, warrants | 450,000 | 2,300,000 | 58,500 | 725,000 | 1,250,000 | |||||||||
Exercise price of warrants granted | 0.52 | 1.00 | 0.52 | 0.52 | 0.52 | |||||||||
Term of warrants granted | 10 years | 5 years | 5 years | 5 years | 5 years | 2 years | 2 years | |||||||
Volatility rate | 79.70% | 96.33% | 90.00% | 87.82% | 84.78% | 86.36% | 74.99% | |||||||
Risk free rate | 3.66% | 1.17% | 2.40% | 2.48% | 2.55% | 0.87% | 1.62% | |||||||
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | |||||||
Charged to financing costs | 1,021,559 | 72,160 | ||||||||||||
Warrants issued for loan extension costs | $ 1,958,647 | $ 1,958,647 | $ 1,093,719 | |||||||||||
Warrants issued for loan extension costs, warrants | 2,499,975 | 3,375,000 | ||||||||||||
Loan extension description | the maturity date of Notes was extended to June 15, 2010 in exchange for Warrants to be issued to the note holders on a pro rata basis equal to 33,333 underlying shares per day from January 15, 2010 until the Notes are paid in full. |
STOCKHOLDERS' EQUITY (Details Narrative) (USD $)
|
0 Months Ended | 1 Months Ended | 2 Months Ended | 4 Months Ended | 9 Months Ended | 12 Months Ended | 1 Months Ended | 9 Months Ended | 4 Months Ended | 1 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 06, 2013
|
May 31, 2011
|
Jun. 30, 2010
|
May 31, 2010
|
Feb. 29, 2012
|
Nov. 12, 2010
|
Apr. 30, 2010
|
Dec. 31, 2011
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
Mar. 31, 2010
|
Mar. 31, 2010
Related Party Notes Payable
|
Mar. 31, 2010
Bridge Loans
|
Mar. 31, 2010
Loans Payable
|
Mar. 31, 2010
Accounts Payable
|
Apr. 30, 2010
August 2009 Offering
|
Nov. 12, 2010
July 2010 Offering
|
Sep. 30, 2012
Gerald Murphy, Director
|
Jun. 30, 2011
John Bailey, Former Chief Financial Officer
|
Apr. 30, 2011
John Bailey, Former Chief Financial Officer
|
|
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||||||||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | ||||||||||||||||||
Preferred stock, shares issued | 0 | 0 | 0 | ||||||||||||||||||
Preferred stock, shares outstanding | 0 | 0 | 0 | ||||||||||||||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||||||||
Common stock, shares authorized | 300,000,000 | 300,000,000 | 300,000,000 | ||||||||||||||||||
Common stock, shares issued | 131,455,407 | 132,526,042 | 131,455,407 | ||||||||||||||||||
Common stock, shares outstanding | 131,455,407 | 132,526,042 | 131,455,407 | ||||||||||||||||||
Shares issued for exercise of warrants, shares | 630,929 | 1,593,362 | 241,816 | ||||||||||||||||||
Shares issued for exercise of warrants | $ 20,635 | $ 739,833 | $ 262,451 | $ 739,833 | $ 439,666 | ||||||||||||||||
Shares issued for exercise of options, shares | 179,000 | 160,509 | 100,000 | 2,042,830 | |||||||||||||||||
Shares issued for exercise of options | 93,016 | 83,191 | 447,355 | 83,191 | 52,000 | 302,339 | |||||||||||||||
Shares issued in private placement, shares | 0 | 795,000 | 11,378,040 | 15,000,000 | |||||||||||||||||
Shares issued in private placement, gross | 5,916,672 | ||||||||||||||||||||
Shares issued in private placement, net of fees | 0 | 966,550 | 5,510,185 | 6,476,735 | 7,800,000 | ||||||||||||||||
Stock Commission | 27,200 | ||||||||||||||||||||
Price per share | $ 0.00 | $ 1.85 | $ 0.52 | $ 1.25 | |||||||||||||||||
Shares in offering | 15,000,000 | 8,000,000 | |||||||||||||||||||
Aggregate offering value | 10,000,000 | ||||||||||||||||||||
Debt conversion price | $ 0.52 | ||||||||||||||||||||
Shares issued in exchange for debt, accrued interest and accounts payable | 2,115,869 | 239,835 | 1,616,931 | 203,103 | 56,000 | ||||||||||||||||
Shares issued in exchange for debt, accrued interest and accounts payable, shares | 461,220 | 3,109,487 | 390,583 | 107,692 | |||||||||||||||||
Shares issued as part of settlement of lawsuit, shares | 25,000 | ||||||||||||||||||||
Shares issued as part of settlement of lawsuit | $ 46,250 | $ 46,250 | |||||||||||||||||||
Shares issued for services, shares | 100,000 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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Summary Of Significant Accounting Policies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and the Companys LLCs for which the Company controls the operating activities. All material intercompany balances and transactions have been eliminated in consolidation.
The Company reports noncontrolling interests in its VIEs as a component of equity in the Consolidated Balance Sheets and the loss attributable to noncontrolling interests as an adjustment to net loss to arrive at net loss attributable to the Company in the Consolidated Statements of Operations.
Variable Interest Entities
The Company uses a qualitative analysis to determine if it is the primary beneficiary of a VIE. The Company considers whether the enterprise's variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics, among others: (a) the power to direct the activities of a variable interest entity that most significantly impacts the entity's economic performance, and (b) the obligation to absorb losses or the right to receive benefits from the entity, that could potentially be significant to the variable interest entity.
Cash and Cash Equivalents
Cash is maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances. All of our non-interest bearing cash balances were fully insured at December 31, 2012 and 2011 due to a temporary federal program in effect from December 31, 2010 through December 31, 2012. Under the program, there is no limit to the amount of insurance for eligible accounts. Beginning 2013, insurance coverage will revert to $250,000 per depositor at each financial institution and our non-interest bearing cash balances may again exceed federally insured limits. The Company had no interest-bearing amounts on deposit in excess of federally insured limits at December 31, 2012 and 2011.
Trade Accounts Receivable
Trade accounts receivable are customer obligations due under normal trade terms. The Company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Trade accounts receivable past due more than 90 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluations, results of collection efforts, and specific circumstances of the customer. Recoveries of accounts previously written off are recorded as reductions of bad debt expense when received.
The following table provides a summary of changes in the allowance for doubtful accounts for the years ended December 31, 2012 and 2011:
Property and Equipment
Property and equipment is stated at cost, net of accumulated depreciation. Maintenance costs, which do not significantly extend the useful lives of the respective assets, and repair costs are charged to operating expense as incurred. The Company includes Network Equipment in fixed assets upon receipt, and begins depreciating the Network Equipment when such equipment passes the Companys incoming inspection and is available for use. The Company attributes no salvage value to the Network Equipment and depreciation is computed using the straight-line method based on the estimated useful life of seven years. Also using the straight-line method, depreciation of office and test equipment, warehouse equipment and furniture is based on the estimated useful lives of the assets, generally three years for office and test equipment, and five years for warehouse equipment and furniture.
Allowance for System Removal
The Company would remove the CareView System due to a number of factors; including, but not limited to, collection and revenue performance issues. The Company regularly evaluates the installed CareView Systems. An allowance is set up based on the estimated cost to de-install. As of December 31, 2012, an allowance of approximately $28,000 was established. As of December 31, 2011, no allowance was considered necessary.
Impairment of Long-Lived Assets
Carrying values of property and equipment and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable. Such events or circumstances include, but are not limited to:
If impairment indicators are present, the Company determines whether an impairment loss should be recognized by testing the applicable asset or asset groups carrying value for recoverability. This test requires long-lived assets to be grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, the determination of which requires judgment. The Company estimates the undiscounted future cash flows expected to be generated from the use and eventual disposal of the assets and compares that estimate to the respective carrying values in order to determine if such carrying values are recoverable. This assessment requires the exercise of judgment in assessing the future use of and projected value to be derived from the eventual disposal of the assets to be held and used. Assessments also consider changes in asset utilization, including the temporary idling of capacity and the expected timing for placing this capacity back into production. If the carrying value of the assets is not recoverable, then a loss is recorded for the difference between the assets fair value and respective carrying value. The fair value of the assets is determined using an "income approach" based upon a forecast of all the expected discounted future net cash flows associated with the subject assets. Some of the more significant estimates and assumptions include: market size and growth, market share, projected selling prices, manufacturing cost and discount rate. The Companys estimates are based upon its historical experience, its commercial relationships, market conditions and available external information about future trends. The Company believes its current assumptions and estimates are reasonable and appropriate; however, unanticipated events and changes in market conditions could affect such estimates resulting in the need for an impairment charge in future periods. During the years ended December 31, 2012, 2011 and 2010, no impairment was recognized.
Research and Development
Research and development costs are expensed as incurred. Costs regarding the development of software to be sold, leased or otherwise marketed are subject to capitalization beginning when a products technological feasibility has been established and ending when a product is available for general release to customers. The Company did not capitalize any costs during 2012, 2011, or 2010. The Companys costs of research and development activities expensed during the years ended December 31, 2012, 2011, and 2010 totaled approximately $951,000, $822,000, and $698,000, respectively.
Intellectual Property
The Company capitalizes certain costs of developing software upon the establishment of technological feasibility and prior to the availability of the product for general release to customers for its CareView System in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 985-20, "Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed." Capitalized costs are reported at the lower of unamortized cost or net realizable value and are amortized over the estimated useful life of the CareView System not to exceed five years. Additionally, the Company tests its intangible assets for impairment whenever circumstances indicate that their carrying value may not be recoverable. No impairment was recorded for the years ended December 31, 2012, 2011, and 2010.
Intellectual property is comprised of purchased and internally developed software costs totaling $2,752,933, all of which was capitalized prior to 2008 and is fully amortized at December 31, 2012. During the years ended December 31, 2012, 2011 and 2010, the Company capitalized no additional intellectual property costs. The Company's amortization of intellectual property costs totaled $550,581 for the year ended December 31, 2012 and $550,588 for each of the years ended December 31, 2011 and 2010. Accumulated amortization at December 31, 2012 and 2011 was $2,752,933 and $2,202,352, respectively.
Patents and Trademarks
The Company has capitalized certain costs related to registering trademarks and patent pending technology. In accordance with FASB ASC topic 350-30 "Intangibles Other Than Goodwill", the Company amortizes its intangible assets with a finite life on a straight-line basis, over 10 years for trademarks and 20 years for patents. The Company begins amortization of these costs on the date patents or trademarks are awarded.
The Company capitalized $37,599, $27,757, and $23,303 in patent costs for the years ended December 31, 2012, 2011, and 2010, respectively. Amortization charged to operations for the years ended December 31, 2012, 2011, and 2010 was $333, $332, and $332, respectively.
The Company capitalized $24,572, $21,575 and $0 in trademark costs and expensed $0, $46 and $0 for abandoned trademark costs for the years ended December 31, 2012, 2011 and 2010 respectively. Amortization charged to operations for the years ended December 31, 2012, 2011 and 2010 was $3,116, $983, and $766, respectively.
Accumulated amortization at December 31, 2012 and 2011 was $6,525 and $3,076, respectively. The amortization expense for currently amortizable patent and trademark costs for future periods is $2,418 for each year ending December 31, 2013 through 2017 and $7,079 thereafter.
Derivative Financial Instruments
The Company applies the provisions of the Financial Accounting Standards Board Accounting Standards Codification ("ASC") topic 815-10, Derivatives and Hedging. Derivatives within the scope of ASC 815-10 must be recorded on the balance sheet at fair value and changes in fair value are recorded in earnings at each reporting date.
See NOTE 15 AGREEMENT WITH HEALTHCOR for further details regarding derivative activity during the years ended December 31, 2012 and 2011. For the year ended December 31, 2010, the Company did not engage in any activity related to derivatives.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of receivables, accounts payable, accrued expenses and short and long-term debt. The carrying amount of receivables, accounts payable and accrued expenses approximates its fair value because of the short-term maturity of such instruments and are considered Level 1 assets under the fair value hierarchy. Interest rates that are currently available to the Company for issuance of short and long-term debt with similar terms and remaining maturities are used to estimate the fair value of the Company's short and long-term debt and would be considered Level 3 inputs under the fair value hierarchy.
The Company has categorized its assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy as defined by ASC 820 "Fair Value Measurements and Disclosures." The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3).
Assets and liabilities recorded in the consolidated balance sheets at fair value are categorized based on a hierarchy of inputs, as follows:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 Quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3 Unobservable inputs for the asset or liability.
The Companys financial assets and liabilities recorded at fair value on a recurring basis include the accrued gross income interest discussed in NOTE 21 SUBSCRIPTION AND INVESTOR RIGHTS AGREEMENT. The fair value of this accrued gross income interest is included in other current liabilities on the accompanying consolidated financial statements. During the year ended December 31, 2011, the Company had derivative liabilities outstanding related to a conversion option of convertible debt and warrants issued with that convertible debt. The derivative liabilities were no longer outstanding as of December 31, 2011. See NOTE 15 AGREEMENT WITH HEALTHCOR for further details regarding derivative activity during the year ended December 31, 2011.
The following table provides the financial assets and liabilities reported at fair value and measured on a recurring basis as of December 31, 2012 and 2011:
The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the years ended December 31, 2012 and 2011:
The above table of Level 3 liabilities begins with the prior period balance and adjusts the balance for changes that occurred during the current period. The ending balance of the Level 3 securities presented above represent our best estimates and may not be substantiated by comparisons to independent markets and, in many cases, could not be realized in immediate settlement of the instruments.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized when the rate change is enacted. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. In accordance with ASC 740, "Income Taxes," the Company recognizes the effect of uncertain income tax positions only if the positions are more likely than not of being sustained in an audit, based on the technical merits of the position. Recognized uncertain income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which those changes in judgment occur. The Company recognizes both interest and penalties related to uncertain tax positions as part of the income tax provision.
Revenue Recognition
Revenue is recognized when persuasive evidence of a sales arrangement exists, when the selling price is fixed or determinable, when installation and official acceptance by the facility occurs, and when collection is probable. Because the Company consolidates its financial statements, 100% of the revenue generated by the Project LLCs is included in the Company's results with all intra-company accounts and transactions eliminated in consolidation.
The Company offers CareViews services through a subscription-based contract with each facility for a standard term of five years. The Company begins to bill monthly subscription fees to the facility upon official acceptance of the CareView System by the facility. The contract requires the facility to pay the Company the subscription fee monthly. During the term of the contract, the Company provides continuous monitoring of the CareView System and is required to maintain and service all CareView System equipment. If the customer requires additional products or services, the contract is amended with new pricing or revenue sharing terms and conditions.
Earnings Per Share
The Company calculates earnings per share ("EPS") in accordance with ASC 260, "Earnings Per Share," which requires the computation and disclosure of two EPS amounts, basic and diluted. Basic EPS is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of common shares outstanding plus all potentially dilutive common shares outstanding during the period under the treasury stock method. Such potential dilutive common shares consist of stock options, warrants and convertible debt. Potential common shares totaling 67,354,894, 61,021,190, and 32,972,616 at December 31, 2012, 2011 and 2010, respectively have been excluded from the diluted earnings per share calculation as they are anti-dilutive due to the net loss reported by the Company.
Stock Based Compensation
The Company recognizes compensation expense for all share-based payments granted based on the grant date fair value estimated in accordance with ASC 718-10, "Share Based Payments." Compensation expense is generally recognized on a straight-line basis over the employees requisite service period based on the award's estimated lives for fixed awards with ratable vesting provisions.
Debt Discounts and Deferred Debt Issuance Costs
Costs incurred with parties who are providing long-term financing, which include warrants issued with the underlying debt, are reflected as a debt discount based on the relative fair value of the debt and warrants. These discounts are generally amortized over the life of the related debt using the effective interest rate method. In connection with debt issued during the years ended December 31, 2012 and 2011, the Company recorded debt discounts totaling $3,041,799 and $20,000,000, respectively. The aggregate balance of unamortized debt discount at December 31, 2012 and 2011 was $17,857,082 and $18,190,989, respectively. Amortization expense related to debt discounts totaled $3,375,706, $2,249,913, and $176,316 for the years ended December 31, 2012, 2011, and 2010, respectively, and is included in interest expense on the accompanying consolidated financial statements.
Amortization of deferred debt issuance costs for the years ended December 31, 2012 and 2011 was $526,530 and $219,390, respectively.
Installation Costs
The Company defers all costs associated with the installation of the CareView System into a particular hospital until the CareView System is fully operational and accepted by the hospital. Upon acceptance, the associated costs are expensed ratably over the life of the hospital contract. These costs are included in network operations on the accompanying consolidated financial statements. The Companys amortization of installation costs during 2012, 2011, and 2010 totaled $599,950, $24,041, and $14,987, respectively.
Shipping and Handling Costs
The Company expenses all shipping and handling costs as incurred. These costs are included in network operations on the accompanying consolidated financial statements.
Advertising Costs
The Company considers advertising costs as costs associated with the promotion of the Companys products through the various media outlets. The Company expenses all advertising costs as incurred. The Company incurred advertising costs of $2,250 in 2012 and no advertising costs during 2011 and 2010.
Concentration of Credit Risks and Customer Data
The Company derives all of its revenues from hospitals. For the year ended December 31, 2012, 55 hospitals accounted for all of Companys revenue. For the same period, HMA accounted for 80% of the Companys revenue. HMA is a hospital management group which consisted of 45 individually billed hospitals of which none of those hospitals separately accounted for more than 7% of the Companys revenue. For the year ended December 31, 2011, 18 hospitals accounted for the all of Companys revenue. Three hospitals generated approximately 40%, 14% and 12%, with no other hospital accounting for more than 10%. For the year ended December 31, 2010, two hospitals accounted for approximately 56% and 20% of the Companys revenues, while no other hospital accounted for 10% or more of the Companys revenues.
Use of Estimates
The Companys financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates, including those related to contingencies, on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Recently Issued Accounting Pronouncements
In July 2012, the Financial Accounting Standards Board (FASB) issued ASU No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02). ASU 2012-02 gives entities an option to first assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that the indefinite-lived intangible asset impaired. If based on its qualitative assessment an entity concludes that it is more likely than not that the fair value of an indefinite lived intangible asset is less than its carrying amount, quantitative impairment testing is required. However, if an entity concludes otherwise, quantitative impairment testing is not required. ASU is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. ASU 2012-02 is not expected to have a material impact on the Companys financial position or results of operations.
In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (ASU 2011-11). ASU 2011-11 enhances current disclosures about financial instruments and derivative instruments that are either offset on the statement of financial position or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset on the statement of financial position. Entities are required to provide both net and gross information for these assets and liabilities in order to facilitate comparability between financial statements prepared on the basis of U.S. GAAP and financial statements prepared on the basis of IFRS. ASU 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. ASU 2011-11 is not expected to have a material impact on the Companys financial position or results of operations.
In September 2011, the FASB issued Accounting Standards Update No. 2011-08 (ASU 2011-08), which updates the guidance in ASC Topic 350, Intangibles Goodwill & Other. The amendments in ASU 2011-08 permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than fifty percent. If, after assessing the totality of events or circumstances, an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. The amendments in ASU 2011-08 include examples of events and circumstances that an entity should consider in evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. However, the examples are not intended to be all-inclusive and an entity may identify other relevant events and circumstances to consider in making the determination. The examples in this ASU 2011-08 supersede the previous examples under ASC Topic 350 of events and circumstances an entity should consider in determining whether it should test for impairment between annual tests, and also supersede the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to perform the second step of the impairment test. Under the amendments in ASU 2011-08, an entity is no longer permitted to carry forward its detailed calculation of a reporting units fair value from a prior year as previously permitted under ASC Topic 350. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of ASU 2011-08 did not have a material impact on the Companys financial position or results of operations.
In May 2011, the FASB issued Accounting Standards Update ("ASU") 2011-05, Comprehensive Income: Presentation of Comprehensive Income, to allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders equity. The amendments do not change the guidance regarding the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments should be applied retrospectively, and is effective for fiscal years and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted. The adoption did not have a material impact on the Companys results of operations, financial position or cash flows.
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU represents the converged guidance of the FASB and the IASB (the "Boards") on fair value measurement, and results in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term "fair value." These amendments change some of the terminology used to describe many of the existing requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments should be applied prospectively, and they are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The adoption did not have a material impact on the Companys results of operations, financial position or cash flows.
In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements, which clarifies certain existing disclosure requirements in ASC 820, Fair Value Measurements and Disclosures, as well as requires disclosures related to significant transfers between each level and additional information about Level 3 activity. ASU 2010-06 begins phasing in the first fiscal period after December 15, 2009. The Company did not make nor anticipates a significant transfer between each level as of December 31, 2012. As such, this ASU 2010-06 as required on January 1, 2010. The provision had no impact on the Companys consolidated financial position, results of operations or cash flows upon adoption.
Reclassifications
Certain 2011 and 2010 amounts have been reclassified to conform to current year presentation.
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OTHER CURRENT LIABILITIES (Details) (USD $)
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Dec. 31, 2012
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Dec. 31, 2011
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OTHER CURRENT LIABILITIES: | ||
Accrued taxes | $ 360,587 | $ 261,399 |
Other accrued liabilities | 441,941 | 13,869 |
Other current liabilities | $ 802,528 | $ 275,268 |