UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2019
or
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from________ to ___________
Commission File No. 000-54090
CAREVIEW COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Nevada | 95-4659068 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
405 State Highway 121, Suite B-240, Lewisville, TX 75067
(Address of principal executive offices
(972) 943-6050
(Registrant’s telephone number
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☑ | Smaller reporting company | ☑ |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes☐ No ☑
The number of shares outstanding of each of the issuer’s classes of Common Stock as of August 14, 2019 was 139,380,748.
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
INDEX
2
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, | |||||||
2019 | December 31, | ||||||
(unaudited) | 2018 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 879,335 | $ | 1,200,725 | |||
Accounts receivable | 1,580,405 | 1,276,992 | |||||
Other current assets | 1,497,143 | 1,408,426 | |||||
Total current assets | 3,956,883 | 3,886,143 | |||||
Property and equipment, net | 2,198,747 | 2,486,666 | |||||
Other Assets: | |||||||
Restricted cash | — | 750,000 | |||||
Intangible assets, net | 768,645 | 746,140 | |||||
Right to use asset | 164,697 | — | |||||
Other assets, net | 292,433 | 310,592 | |||||
Total other assets | 1,225,775 | 1,806,732 | |||||
Total assets | $ | 7,381,405 | $ | 8,179,541 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 357,084 | $ | 509,298 | |||
Notes payable, current portion | 18,747,120 | 15,513,786 | |||||
Right to use liability, current portion | 175,539 | — | |||||
Other current liabilities | 2,833,978 | 1,416,240 | |||||
Total current liabilities | 22,113,721 | 17,439,324 | |||||
Long-term Liabilities: | |||||||
Senior secured convertible notes, net of debt discount and debt costs of $12,292,274 and $14,431,614, respectively | 67,866,960 | 64,374,606 | |||||
Notes payable, net of debt costs of $292,814 and $815,062 | 1,573,852 | 4,184,938 | |||||
Total long-term liabilities | 69,440,812 | 68,559,544 | |||||
Total liabilities | 91,554,533 | 85,998,868 | |||||
Commitments and Contingencies | |||||||
Stockholders’ Deficit: | |||||||
Preferred stock - par value $0.001; 20,000,000 shares authorized; no shares issued and outstanding | — | — | |||||
Common stock - par value $0.001; 500,000,000 shares authorized at June 30, 2019 and 300,000,000 shares authorized at December 31, 2018; 139,380,748 shares issued and outstanding at June 30, 2019 and December 31, 2018 | 139,381 | 139,381 | |||||
Additional paid in capital | 84,157,618 | 84,027,883 | |||||
Accumulated deficit | (168,470,127 | ) | (161,986,591 | ) | |||
Total stockholders’ deficit | (84,173,128 | ) | (77,819,327 | ) | |||
Total liabilities and stockholders’ deficit | $ | 7,381,405 | $ | 8,179,541 |
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
3
CAREVIEW COMMUNICATIONS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | |||||||||||||
Revenues, net | $ | 1,546,165 | $ | 1,508,611 | $ | 3,019,456 | $ | 3,091,125 | ||||||||
Operating expenses: | ||||||||||||||||
Network operations | 706,688 | 866,892 | 1,422,512 | 1,852,115 | ||||||||||||
General and administration | 720,369 | 807,910 | 1,469,194 | 1,699,421 | ||||||||||||
Sales and marketing | 68,695 | 73,894 | 138,818 | 229,816 | ||||||||||||
Research and development | 394,879 | 357,482 | 713,520 | 681,580 | ||||||||||||
Depreciation and amortization | 176,702 | 311,153 | 361,348 | 715,575 | ||||||||||||
Total operating expense | 2,067,333 | 2,417,331 | 4,105,392 | 5,178,507 | ||||||||||||
Operating loss | (521,168 | ) | (908,720 | ) | (1,085,936 | ) | (2,087,382 | ) | ||||||||
Other income and (expense) | ||||||||||||||||
Interest expense | (2,887,193 | ) | (3,633,729 | ) | (5,403,831 | ) | (7,268,796 | ) | ||||||||
Interest income | 145 | 864 | 562 | 1,931 | ||||||||||||
Other income | 443 | 434 | 5,669 | 12,035 | ||||||||||||
Total other income (expense) | (2,886,605 | ) | (3,632,431 | ) | (5,397,600 | ) | (7,254,830 | ) | ||||||||
Loss before taxes | (3,407,773 | ) | (4,541,151 | ) | (6,483,536 | ) | (9,342,212 | ) | ||||||||
Provision for income taxes | — | — | — | — | ||||||||||||
Net loss | $ | (3,407,773 | ) | $ | (4,541,151 | ) | $ | (6,483,536 | ) | $ | (9,342,212 | ) | ||||
Net loss per share | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.07 | ) | ||||
Weighted average number of common shares outstanding, basic and diluted | 139,380,748 | 139,380,748 | 139,380,748 | 139,380,748 |
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
4
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
Additional | ||||||||||||||||||||
Common Stock | Paid in | Accumulated | ||||||||||||||||||
Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
Balance, December 31, 2018 | 139,380,748 | $ | 139,381 | $ | 84,027,883 | $ | (161,986,591 | ) | $ | (77,819,327 | ) | |||||||||
Options granted as compensation | — | — | 54,613 | — | 54,613 | |||||||||||||||
Beneficial conversion features for senior secured convertible notes | — | — | 6,391 | — | 6,391 | |||||||||||||||
Net loss | — | — | — | (3,075,763 | ) | (3,075,763 | ) | |||||||||||||
Balance, March 31, 2019 | 139,380,748 | 139,381 | 84,088,887 | (165,062,354 | ) | (80,834,086 | ) | |||||||||||||
Options granted as compensation | — | — | 54,320 | — | 54,320 | |||||||||||||||
Beneficial conversion features for senior secured convertible notes | — | — | 14,411 | — | 14,411 | |||||||||||||||
Net loss | — | — | — | (3,407,773 | ) | (3,407,773 | ) | |||||||||||||
Balance, June 30, 2019 | 139,380,748 | $ | 139,381 | $ | 84,157,618 | $ | (168,470,127 | ) | $ | (84,173,128 | ) | |||||||||
Balance, December 31, 2017 | 139,380,748 | $ | 139,381 | $ | 83,617,896 | $ | (145,908,741 | ) | $ | (62,151,464 | ) | |||||||||
Options granted as compensation | — | — | 89,049 | — | 89,049 | |||||||||||||||
Beneficial conversion features for senior secured convertible notes | — | — | 31,784 | — | 31,784 | |||||||||||||||
Revaluation of Rockwell Holdings I, LLC warrant | — | — | 13,814 | — | 13,814 | |||||||||||||||
Net loss | — | — | — | (4,801,061 | ) | (4,801,061 | ) | |||||||||||||
Balance, March 31, 2018 | 139,380,748 | 139,381 | 83,752,543 | (150,709,802 | ) | (66,817,878 | ) | |||||||||||||
Options granted as compensation | — | — | 58,649 | — | 58,649 | |||||||||||||||
Beneficial conversion features for senior secured convertible notes | — | — | 32,777 | — | 32,777 | |||||||||||||||
Revaluation of Rockwell Holdings I, LLC warrant | — | — | — | — | — | |||||||||||||||
Net loss | — | — | — | (4,541,151 | ) | (4,541,151 | ) | |||||||||||||
Balance, June 30, 2018 | 139,380,748 | $ | 139,381 | $ | 83,843,969 | $ | (155,250,953 | ) | $ | (71,267,603 | ) |
The accompanying footnotes are an integral part of these consolidated financial statements.
5
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(Unaudited)
Six Months Ended | ||||||||
June 30, 2019 | June 30, 2018 | |||||||
CASH FLOWS FROM OPERATING ACTIVITES | ||||||||
Net loss | $ | (6,483,536 | ) | $ | (9,342,212 | ) | ||
Adjustments to reconcile net loss to net cash flows used in | ||||||||
operating activities: | ||||||||
Depreciation | 335,664 | 692,068 | ||||||
Amortization of debt discount and debt costs | 2,160,142 | 1,762,298 | ||||||
Amortization of deferred installation costs | 47,294 | 82,405 | ||||||
Amortization of deferred debt issuance and debt financing costs | 522,247 | 150,480 | ||||||
Amortization of intangible assets | 25,684 | 23,507 | ||||||
Interest incurred and paid in kind | 1,303,014 | 3,876,846 | ||||||
Stock based compensation related to options granted | 108,933 | 147,700 | ||||||
Stock based costs related to warrants issued | — | 13,814 | ||||||
Loss on disposal of assets | — | 6,725 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (303,413 | ) | 41,088 | |||||
Other current assets | (88,717 | ) | (888,638 | ) | ||||
Other assets | 80,458 | 8,197 | ||||||
Accounts payable | (152,214 | ) | 190,662 | |||||
Other current liabilities | 1,356,318 | (14,954 | ) | |||||
Net cash flows used in operating activities | (1,088,126 | ) | (3,250,014 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property and equipment | (47,744 | ) | (430,865 | ) | ||||
Payment for deferred installation costs | (37,332 | ) | (37,084 | ) | ||||
Patent, trademark and other intangible asset costs | (48,188 | ) | (67,100 | ) | ||||
Net cash flows used in investing activities | (133,264 | ) | (535,049 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from senior secured convertible promissory notes | 50,000 | 2,050,000 | ||||||
Proceeds from promissory notes | 200,000 | — | ||||||
Repayment of notes payable | (100,000 | ) | (100,000 | ) | ||||
Net cash flows provided by financing activities | 150,000 | 1,950,000 | ||||||
Decrease in cash | (1,071,390 | ) | (1,835,063 | ) | ||||
Cash, cash equivalents and restricted cash, beginning of period | 1,950,725 | 4,566,392 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 879,335 | $ | 2,731,329 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
Cash paid for interest | $ | 100,000 | $ | 1,350,000 | ||||
Cash paid for income taxes | $ | — | $ | — | ||||
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES: | ||||||||
Beneficial conversion features for senior secured convertible notes | $ | 20,802 | $ | 64,561 | ||||
Revaluation of warrants for modification of loan | $ | — | $ | 13,814 |
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
6
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Interim Financial Statements
The accompanying unaudited interim condensed consolidated financial statements of CareView Communications, Inc. (“CareView”, the “Company”, “we”, “us” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such financial statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The balance sheet at December 31, 2018 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Results of operations for interim periods are not necessarily indicative of results for the full year. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the SEC on March 29, 2019.
Revenue Recognition
We adopted Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”) on January 1, 2018 using the full retrospective transition method for recognizing revenue. The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of our services to our customers and will provide financial statement readers with enhanced disclosures. We have employed the practical expedient discussed in ASC 606-10-55-18 related to invoicing as we have the right to consideration from our customers in the amount that corresponds directly with the value to the customer of our performance completed to date and therefore we recognize revenue upon invoicing as further discussed below. Further, for those customers for which we are required to collect sales taxes, we record such sales taxes on a net basis which has no effect on the amount of revenue or expenses recognized as the sales taxes are a flow through to the taxing authority.
In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation.
7
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
We offer CareView’s services through a subscription-based contract with each healthcare facility for a standard term of three to five years and have determined we have one performance obligation for our services. We begin to bill monthly subscription fees to the healthcare facility upon official acceptance of the CareView System by the healthcare facility which is when the service is initiated. When services begin, the customer simultaneously receives the use and benefit of that service and we recognize the revenue over time based on the service completed to date as the amount invoiced each month. The contract requires the healthcare facility to pay us the subscription fee monthly. During the term of the contract, we provide continuous monitoring of the CareView System and are required to maintain and service all CareView System equipment. If the healthcare facility requires additional services, the contract is amended accordingly. The company evaluated the disaggregation criteria of ASC 606 and determine that based on the nature, amount, timing and uncertainty of our service revenues, there were no material differences that merited further disaggregation as compared to the total revenue as reported in the accompanying consolidated statements of operations.
We defer and capitalize all costs associated with the installation of the CareView System into a healthcare facility until the CareView System is fully operational and accepted by the healthcare facility. Installation costs are specifically identifiable based on the amounts we are charged from third party installers or directly identifiable labor hours incurred for each installation. Upon acceptance, the associated costs are expensed on a straight-line basis over the life of the contract with the healthcare facility. These costs are included in network operations on the accompanying consolidated statements of operations. The table below details the activity in these deferred installation costs during the six months ended June 30, 2019 and 2018.
Six Months Ended
June 30, |
||||||||
2019 | 2018 | |||||||
Balance, beginning of period | $ | 134,686 | $ | 215,548 | ||||
Additions | 37,332 | 37,083 | ||||||
Transfer to expense | (47,294 | ) | (82,405 | ) | ||||
Balance, end of period | $ | 124,724 | $ | 170,226 |
From time to time, we enter into contracts with healthcare facilities wherein full payment of the contractual obligation is paid in advance (“PIA Contracts”). The transaction is recorded as a contract liability in our consolidated financial statements, with revenue recorded and the contract liability reduced as services are provided under the contract. The table below details this activity during the six months ended June 30, 2019 and 2018.
Six Months Ended
June 30, |
||||||||
2019 | 2018 | |||||||
Balance, beginning of period | $ | 58,559 | $ | 17,430 | ||||
Additions | — | 87,061 | ||||||
Transfer to revenue | (52,722 | ) | (69,529 | ) | ||||
Balance, end of period | $ | 5,837 | $ | 34,962 |
Based on our contracts, we invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, except in the case of PIA Contracts as detailed above, our contracts do not give rise to contract assets or liabilities under ASC 606. Accounts receivable are recorded when the right to consideration becomes unconditional and are reported accordingly on our consolidated financial statements.
8
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Accounting Standard Update 2016-02, Leases
Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. The Company has an operating lease primarily consisting of office space with remaining lease terms of 12 months. We adopted Accounting Standard Update (“ASU”) 2016-02, Leases using the cumulative effect transition method for all long-term operating leases as of January 1, 2019. The cumulative impact of the adoption of ASU 2016-02 to the condensed consolidated balance sheet as of January 1, 2019 was as follows:
Right to Use Asset | $ | 236,959 | ||
Right to Use Liability-ST | $ | 166,955 | ||
Right to Use Liability-LT | $ | 83,477 |
The adoption of ASU 2016-02 did not result in an adjustment to retained earnings. The adoption of ASU-2016-02 represents a change in accounting principle.
Earnings Per Share
We calculate earnings per share (“EPS”) in accordance with GAAP, 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 approximately 154,000,000 and 177,000,000 at June 30, 2019 and 2018, respectively, have been excluded from the diluted earnings per share calculation as they are anti-dilutive due to our reported net loss.
CareView Connect
CareView Connect is a platform consisting of several products and applications targeted at improving level of care and efficiency. We offer an array of wearable and stationary buttons that allow a resident to summon help either for an emergency or assistance, which can be anything from toileting help to assistance putting on their shoes. We offer a mobile app capable of delivering an alert to the caregiver and allows them document information around that alert. This allows for workflows and reports around the alerts, i.e. how long before the alert was handled, what was the cause of the alert, and if not acknowledged in a timely manner then escalate the alert to another individual or group. This ensures that every alert is responded to timely and is verifiable.
The decision as to how the Company will distribute CareView Connect has yet to be determined. Our options include direct sales to the end user, lease/buy purchase plans, or the Company may retain ownership and bill for monitoring services, or a combination of these options. Pending the final distribution decision, the equipment included in the CareView Connect product line is recorded as prepaid equipment on the accompanying condensed consolidated financial statements. Once the distribution decision is made, the CareView Connect equipment will be transferred to inventory or deployable fixed assets as appropriate.
Recently Issued and Newly Adopted Accounting Pronouncements
Aside from the change noted in Leases above, there have been no material changes to our significant accounting policies as summarized in NOTE 2 of our Annual Report on Form 10-K for the year ended December 31, 2018. We do not expect that the adoption of any recent accounting pronouncements will have a material impact on our accompanying condensed consolidated financial statements.
9
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – GOING CONCERN, LIQUIDITY AND MANAGEMENT’S PLAN
Our cash position at June 30, 2019 was approximately $879,000.
Accounting standards require management to evaluate our ability to continue as a going concern for a period of one year subsequent to the date of the filing of this Form 10-Q (“evaluation period”). As such, we have evaluated if cash and cash equivalents on hand and cash generated through operating activities would be sufficient to sustain projected operating activities through August 14, 2020. We anticipate that our current resources, along with cash generated from operations, will not be sufficient to meet our cash requirements throughout the evaluation period, including funding anticipated losses and scheduled debt maturities. We expect to seek additional funds from a combination of dilutive and/or nondilutive financings in the future. Because such transactions have not been finalized, receipt of additional funding is not considered probable under current accounting standards. If we do not generate sufficient cash flows from operations and obtain sufficient funds when needed, we expect that we would scale back our operating plan by deferring or limiting some, or all, of our capital spending, reducing our spending on travel, and/or eliminating planned headcount additions, as well as other cost reductions to be determined. Because such contingency plans have not been finalized (the specifics would depend on the situation at the time), such actions also are not considered probable for purposes of current accounting standards. Because, under current accounting standards, neither future cash generated from operating activities, nor management’s contingency plans to mitigate the risk and extend cash resources through the evaluation period, are considered probable, substantial doubt is deemed to exist about the Company’s ability to continue as a going concern. As we continue to incur losses, our transition to profitability is dependent upon achieving a level of revenues adequate to support its cost structure. We may never achieve profitability, and unless and until doing so, we intend to fund future operations through additional dilutive or non-dilutive financings. There can be no assurances, however, that additional funding will be available on terms acceptable to us, if at all.
NOTE 3 – STOCKHOLDERS’ EQUITY
Common Stock
On April 11, 2019 the Board of Directors of the Company approved an amendment (the “Charter Amendment”) to our Articles of Incorporation to increase the number of authorized shares of Common Stock, par value $0.001, from 300,000,000 shares to 500,000,000 shares. Subsequently, on May 14, 2019, the Charter Amendment was approved by written consent of the holders of 72,863,770 shares of our Common Stock, representing approximately 52% of our outstanding shares of Common Stock, in lieu of a special meeting. The Charter Amendment was filed with the Secretary of State of the State of Nevada on, and effective as of, June 26, 2019. Also, on April 11, 2019, the Board of Directors approved an amendment to the Company’s Bylaws to amend Section 8, Action Without a Meeting, to replace the wording of that section in its entirety.
Warrants to Purchase Common Stock of the Company
We use the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) to determine the fair value of warrants to purchase Common Stock of the Company (“Warrants”). The Black-Scholes Model is an acceptable model in accordance with the GAAP. The Black-Scholes 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 term of the Warrant.
10
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the Warrants. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award. Our estimated volatility is an average of the historical volatility of our stock prices (and that of peer entities whose stock prices were publicly available) over a period equal to the expected life of the awards. Where appropriate we used the historical volatility of peer entities due to the lack of sufficient historical data of our stock price during 2007-2009.
Warrant Activity during the Six Months Ended June 30, 2019
On May 15, 2019, we issued 250,000 ten-year Warrants (with a fair value of $4,000) at an exercise price of $0.03 per share to a director.
Warrant Activity during the Six Months Ended June 30, 2018
On February 23, 2018, we issued an aggregate of 487,500 ten-year Warrants (with a fair value of $10,237) at an exercise price of $0.05 per share to certain directors and officers and 25,000 ten-year Warrants (with a fair value of $525) at an exercise price of $0.05 per share to an entity.
On March 31, 2018, 2,500,000 Warrants issued in connection with a private placement completed in April 2013 expired and the fair value of $11,157 was written off and recorded as expense on the accompanying condensed consolidated financial statements.
Options to Purchase Common Stock of the Company
During the six months ended June 30, 2019 and 2018, no options to purchase our Common Stock (the ’‘Option(s)’’) were granted. During the six months ended June 30, 2019, Options totaling 921,999 Options expired and 10,669 Options were canceled. During the six months ended June 30, 2018, no options to purchase our Common Stock (the ’‘Option(s)’’) were granted. During the same six-month period, 567,334 Options expired and 146,664 Options were canceled.
A summary of our stock option activity and related information follows:
Number of
Shares Under Options |
Weighted
Average Exercise Price |
Weighted
Average Remaining Contractual Life |
Aggregate
Intrinsic Value |
|||||||||||||
Balance at December 31, 2018 | 21,700,293 | $ | 0.27 | 7.1 | $ | — | ||||||||||
Expired | (921,999 | ) | ||||||||||||||
Canceled | (12,335 | ) | ||||||||||||||
Balance at June 30, 2019 | 20,765,959 | $ | 0.25 | 6.7 | $ | — | ||||||||||
Vested and Exercisable at June 30, 2019 | 13,690,143 | $ | 0.33 | 6.0 | $ | — |
Share-based compensation expense for Options charged to our operating results for the six months ended June 30, 2019 and 2018 ($108,933 and $147,697, respectively) is based on awards vested. The estimate of forfeitures are to be recorded at the time of grant and revised in subsequent periods if actual forfeitures differ from the estimates. We have not included an adjustment to our stock-based compensation expense based on the nominal amount of the historical forfeiture rate. We do, however, revise our stock-based compensation expense based on actual forfeitures during each reporting period.
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CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2019, total unrecognized estimated compensation expense related to non-vested Options granted prior to that date was approximately $158,000, which is expected to be recognized over a weighted-average period of 1.1 years. No tax benefit was realized due to a continued pattern of operating losses.
NOTE 4 – OTHER CURRENT ASSETS
Other current assets consist of the following:
June 30,
2019 |
December 31,
2018 |
|||||||
Prepaid equipment | $ | 1,276,724 | $ | 1,327,156 | ||||
Oher prepaid expenses | 203,884 | 66,888 | ||||||
Other current assets | 16,535 | 14,382 | ||||||
TOTAL OTHER CURRENT ASSETS | $ | 1,497,143 | $ | 1,408,426 |
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
June 30,
2019 |
December 31,
2018 |
|||||||
Network equipment | $ | 12,326,438 | $ | 12,302,328 | ||||
Office equipment | 301,959 | 293,709 | ||||||
Vehicles | 217,004 | 217,004 | ||||||
Test equipment | 190,474 | 175,603 | ||||||
Furniture | 91,341 | 90,827 | ||||||
Warehouse equipment | 9,524 | 9,524 | ||||||
Leasehold improvements | 5,121 | 5,121 | ||||||
13,141,861 | 13,094,116 | |||||||
Less: accumulated depreciation | (10,943,114 | ) | (10,607,450 | ) | ||||
TOTAL PROPERTY AND EQUIPMENT | $ | 2,198,747 | $ | 2,486,666 |
Depreciation expense for the six months ended June 30, 2019 and 2018 was $335,664 and $634,833, respectively.
12
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 – OTHER ASSETS
Intangible assets consist of the following:
June 30, 2019 | ||||||||||||
Cost | Accumulated
Amortization |
Net | ||||||||||
Patents and trademarks | $ | 980,337 | $ | 216,956 | $ | 763,381 | ||||||
Other intangible assets | 63,508 | 58,244 | 5,264 | |||||||||
TOTAL INTANGIBLE ASSETS | $ | 1,043,845 | $ | 275,200 | $ | 768,645 |
December 31, 2018 | ||||||||||||
Cost | Accumulated
Amortization |
Net | ||||||||||
Patents and trademarks | $ | 932,149 | $ | 192,995 | $ | 739,154 | ||||||
Other intangible assets | 63,508 | 56,522 | 6,986 | |||||||||
TOTAL INTANGIBLE ASSETS | $ | 995,657 | 249,517 | $ | 746,140 |
Other assets consist of the following:
June 30, 2019 | ||||||||||||
Cost | Accumulated
Amortization |
Net | ||||||||||
Deferred installation costs | $ | 1,847,746 | $ | 1,723,022 | $ | 124,724 | ||||||
Prepaid license fee | 249,999 | 128,414 | 121,585 | |||||||||
Security deposit | 46,124 | — | 46,124 | |||||||||
TOTAL OTHER ASSETS | $ | 2,143,869 | $ | 1,851,436 | $ | 292,433 |
Other assets consist of the following:
December 31, 2018 | ||||||||||||
Cost | Accumulated
Amortization |
Net | ||||||||||
Deferred installation costs | $ | 1,810,414 | $ | 1,675,728 | $ | 134,686 | ||||||
Prepaid license fee | 249,999 | 120,217 | 129,782 | |||||||||
Security deposit | 46,124 | — | 46,124 | |||||||||
TOTAL OTHER ASSETS | $ | 2,106,537 | $ | 1,795,945 | $ | 310,592 |
13
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 – OTHER CURRENT LIABILITIES
Other current liabilities consist of the following:
June 30,
2019 |
December 31,
2018 |
|||||||
Accrued interest | $ | 2,167,802 | $ | 750,548 | ||||
Allowance for system removal | 148,750 | 236,650 | ||||||
Deferred commission | 139,041 | 117,206 | ||||||
Accrued insurance | 135,520 | — | ||||||
Other accrued liabilities | 111,645 | 31,568 | ||||||
Accrued paid time off | 76,119 | 129,773 | ||||||
Accrued taxes | 49,264 | 23,156 | ||||||
Deferred revenue | 5,837 | 58,559 | ||||||
Accrued rent expense | — | 68,780 | ||||||
TOTAL OTHER CURRENT LIABILITIES | $ | 2,833,978 | $ | 1,416,240 |
NOTE 8 – INCOME TAXES
Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We do not expect to pay any significant federal or state income tax for 2019 as a result of the losses recorded during the six months ended June 30, 2019 and the additional losses expected for the remainder of 2019 and net operating loss carry forwards from prior years. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized. As of June 30, 2019, we maintained a full valuation allowance for all deferred tax assets. Based on these requirements, no provision or benefit for income taxes has been recorded. There were no recorded unrecognized tax benefits at the end of the reporting period.
The Tax Cuts and Jobs Act (the “Act”) was signed into law on December 22, 2017. Among its numerous changes to the Internal Revenue Code, the Act reduces U.S. corporate rates from 35% to 21%. Additionally, the Act limits the use of net operating loss carry backs, however any future net operating losses will instead be carried forward indefinitely. Net operating losses generated from January 1, 2018 are limited to offset 80% of current income, with the remainder of the net operating loss continuing to carry forward indefinitely. Net operating losses incurred before January 1, 2018 are not subject to the 80% limitations and will begin to expire in 2029. Based on an initial assessment of the Act, the Company believes that the most significant impact on the Company’s consolidated financial statements will be limitations in tax deductions on interest expense. Under the Act, interest deductions disallowed from current income will carryforward indefinitely. The Act did not impact management’s valuation allowance position.
NOTE 9 – AGREEMENT WITH PDL BIOPHARMA, INC.
On June 26, 2015, we entered into a Credit Agreement (as subsequently amended) with PDL BioPharma, Inc. (“PDL”), as administrative agent and lender (“the Lender”) (the “PDL Credit Agreement”). Under the PDL Credit Agreement the Lender made available to us up to $40 million in two tranches of $20 million each. Tranche One was funded on October 8, 2015 (the “Tranche One Loan’). Pursuant to the terms of the PDL Credit Agreement and having not met the Tranche Two Milestones by July 26, 2017, the Tranche Two funding was terminated in full.
14
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
From October 8, 2015 through May 14, 2019, the outstanding borrowings under the Tranche One Loan bore interest at the rate of 13.5% per annum, payable quarterly. On May 15, 2019, pursuant to the terms of the Fifth Amendment to the PDL Credit Agreement (see below for additional details), the interest increased to 15.5% per annum, payable quarterly. Also, on May 15, 2019, pursuant to the terms of the Fourteenth Amendment to the PDL Modification Agreement (see below for additional details), the minimum cash balance requirement of $750,000 was reduced to $0.
On June 26, 2015, we issued Warrants to PDL for the purchase of an aggregate of 4,444,445 shares of our Common Stock at an exercise price of $0.45 per share (the “PDL Warrant”).
On October 7, 2015, we entered into a First Amendment to the PDL Credit Agreement (the “First Amendment”). The First Amendment modified the conditions precedent to the funding of each tranche, such that, among other things, we no longer need to attain a specified milestone relating to the placement of our products in order for the Lender to fund us the Tranche One Loan. Contemporaneously with the execution of the First Amendment we borrowed the Tranche One Loan and issued to the Lender a term note in the principal amount of $20 million (the “Tranche One Term Note”), payable in accordance with the terms of the PDL Credit Agreement, as amended. On October 7, 2015, we also amended and restated the PDL Warrant changing the exercise price from $0.45 to $0.40 per share (the “Amended PDL Warrant”). We evaluated whether there was an increase in fair value which would require recognition of additional costs. No such increase in fair value was noted and no adjustment to the PDL Warrant valuation was necessary.
On December 28, 2017, the Company and PDL Investment Holdings, LLC (as assignee of PDL) (“PDL Investment”) entered into a Binding Forbearance Term Sheet (the “Forbearance Term Sheet”) in order to modify certain provisions of the PDL Credit Agreement to prevent any Events of Default from occurring on December 31, 2017. This Forbearance Term Sheet was the governing document until February 2, 2018, at which time, the Company and PDL Investment entered into a Modification Agreement (the “PDL Modification Agreement”), effective December 28, 2017, with respect to the PDL Credit Agreement which reiterated the terms included in the Forbearance Term Sheet and effective February 2, 2018, entered into certain consents and amendments with respect to other existing agreements. In accordance with GAAP, we accounted for this transaction as a debt modification, wherein consideration given to PDL was recorded as deferred closing costs and all third-party payments were considered an expense and recorded as such on the accompanying condensed consolidated financial statements. Details of the PDL Modification Agreement, as amended, are included in our Form 10-K filed with the SEC on March 29, 2019.
Pursuant to the terms of the PDL Modification Agreement, as amended, the first principal payment on the Tranche One Loan due on December 31, 2017 in the amount of $1,666,667, and similar principal payments due on March 31, 2018, June 30, 2018, September 30, 2018, December 31, 2018, March 31, 2019, and June 30, 2019 have been delayed and are included in the payment due on September 30, 2019 (see Fourteenth Amendment to the PDL Modification Agreement below for additional details).
In accordance with the PDL Credit Agreement, as amended, quarterly interest only payments of $675,000 for each of the first 12 interest payment dates (December 31, 2015 through September 30, 2018) were made timely. Pursuant to the terms of the PDL Modification Agreement, as amended, quarterly interest payments due on December 31, 2018, March 31, 2019, and June 30, 2019 have been delayed and are also included in the payment due on September 30, 2019 (see Fourteenth Amendment to the PDL Modification Agreement below for additional details).
15
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The obligations under the PDL Credit Agreement, as modified, are secured by a pledge of substantially all of the assets of the Company and certain of its domestic subsidiaries. We executed a Subordination and Intercreditor Agreement (the “Subordination and Intercreditor Agreement”), with the Lender, HealthCor, the 2015 Investors, the February 2018 Investors, the July 2018 Investors, and the 2019 Investor (as defined in NOTE 10) pursuant to which we granted first-priority liens on our pledged assets to the Lender and second-priority liens on such pledged assets to HealthCor, the 2015 Investors, the February 2018 Investors, the July 2018 Investors, and the 2019 Investor.
The PDL Credit Agreement, as modified, contains customary affirmative covenants for transactions of this type and other affirmative covenants agreed to by the Company and the Lender, including, among others, the provision of annual and quarterly reports, maintenance of property, insurance, compliance with laws and contractual obligations and payment of taxes. The PDL Credit Agreement, as modified, contains customary negative covenants for transactions of this type and other negative covenants agreed to by the Company and the Lender, including, among others, restrictions on the incurrence of indebtedness, the granting of liens, making restricted payments and investments, entering into affiliate transactions and transferring assets. The PDL Credit Agreement, as modified, calls for a reduction of our operating expenses compared to such expense incurred in October 2017 by at least (i) $113,000 for January 2018, (ii) $148,000 for February 2018 and (iii) $167,000 for each other month for the duration of the Modification Period (see Fourteenth Amendment to the PDL Modification Agreement below for additional details). We are in compliance with this covenant as of the date of this filing. The PDL Credit Agreement, as modified, also provides for a number of customary events of default, including payment, bankruptcy, covenant, representation and warranty and judgment defaults.
In addition, contemporaneously with the execution of the PDL Credit Agreement the Company and the Lender executed (i) a Registration Rights Agreement (as amended in the PDL Modification Agreement as discussed above) pursuant to which we agreed to provide the Lender with certain registration rights with respect to the shares of Common Stock issuable upon exercise of the PDL Warrant, (ii) a Guarantee and Collateral Agreement pursuant to which certain of our subsidiaries guaranteed the performance of our obligations under the PDL Credit Agreement, as modified, and granted the Lender a security interest in such subsidiaries’ tangible and intangible assets securing our performance of the same, and (iii) a Patent Security Agreement and a Trademark Security Agreement pursuant to which we granted the Lender a security interest in a certain subsidiary’s tangible and intangible assets securing the performance of our obligations under the PDL Credit Agreement, as modified.
On January 31, 2019, February 28, 2019, March 29, 2019 and April 29, 2019, the Company and Lender entered into the Tenth, Eleventh, Twelfth, and Thirteenth Amendments to the PDL Modification Agreement, as previously amended, respectively, pursuant to which the parties agreed to amend the PDL Modification Agreement to provide that (A) the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and, pursuant to the Thirteenth Amendment to the PDL Modification Agreement, May 15, 2019 (rather than January 31, February 28, March 31, and April 30, respectively) (with each such date permitted to be extended by the Lender in its sole discretion); (B) the Company could satisfy its obligations under the PDL Modification Agreement, as amended, to obtain financing by obtaining (a) at least $2,050,000 in net cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt on or prior to February 23, 2018 and (b) an additional (i) $750,000 in net cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt on or prior to July 13, 2018 and (ii) $750,000 in net cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt on or prior to May 15, 2019 (rather than January 31, February 28, March 31, and April 30, respectively) (resulting in aggregate net cash proceeds of at least $3,550,000); and (C) the Company’s quarterly interest payments that would otherwise have been due to Lender on December 31, 2018 and March 31, 2019 would be deferred until May 15, 2019 (the end of the extended Modification Period) and that such deferral would be a Covered Event.
16
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On April 9, 2019, the Company, PDL Investment entered into a Fourth Amendment to PDL Credit Agreement (the “Fourth Amendment to the PDL Credit Agreement”), wherein the Company executed an Amended and Restated Tranche One Term Note in the principal amount of $20,000,000 to PDL Investments (the “Amended Tranche One Loan”), pursuant to which the parties agreed, among other things, to amend the note from registered to unregistered form.
On May 15, 2019, the Company, the Lender, Steven G. Johnson (our Chief Executive Officer, President, Secretary and Treasurer), individually, and Dr. James R. Higgins (a member of our board of directors), individually (Mr. Johnson and Dr. Higgins, collectively, the “Tranche Three Lenders”) entered into a Fifth Amendment to the PDL Credit Agreement (the “Fifth PDL Credit Agreement Amendment”), pursuant to which the parties agreed to amend the PDL Credit Agreement to, among other things, (i) provide for a new tranche of term loan in the aggregate principal amount of $200,000, from the Tranche Three Lenders, with a maturity date of October 7, 2020 and bearing interest at the rate of 15.5% per annum, payable quarterly in arrears (subject to the terms of the PDL Modification Agreement, as amended) (the “Tranche Three Loan”); (ii) increase the interest rate for outstanding borrowings under the Amended Tranche One Loan from 13.5% per annum to 15.5% per annum, payable quarterly in arrears (subject to the terms of the PDL Modification Agreement, as amended), effective May 15, 2019,; and (iii) provide for the issuance of the Twelfth Amendment Note, pursuant to the terms of the Twelfth Amendment to the HealthCor Agreement (see Note 10 for details). Under the accounting standards, we determined that the restructuring of the Tranche One Loan resulted in a troubled debt restructuring. As the future cash flows were greater than the carrying amount of the debt at the date of the amendment, we accounted for the change prospectively using the new effective interest rate. Also on May 15, 2019, upon the execution of the Fifth PDL Credit Agreement Amendment, (i) the Company sold and issued the Tranche Three Lenders term notes in the aggregate principal amount of $200,000, payable in accordance with the terms of the PDL Credit Agreement (the “Tranche Three Loans”), $150,000 from Mr. Johnson and $50,000 from Dr. Higgins, and (ii) the Company issued a warrant for the purchase of 250,000 shares of Common Stock, with an exercise price per share equal to $0.03 (subject to adjustment as described therein) and an expiration date of May 15, 2029 (the “Tranche Three Loan Warrant”), to Dr. Higgins in connection with his Tranche Three Loan. Mr. Johnson declined to be issued a Tranche Three Loan Warrant.
On May 15, 2019 the Company and the Lender entered into the Fourteenth Amendment to the PDL Modification Agreement (the “Fourteenth Amendment to the PDL Modification Agreement”), pursuant to which, in connection with the Twelfth Amendment to the HealthCor Purchase Agreement (see NOTE 10 for further details) and the Fifth Amendment to the PDL Credit Agreement, the parties agreed to amend the PDL Modification Agreement, as previously amended, to provide that (A) the dates on which the Lender may elect, in the Lender’s sole discretion, to terminate the Modification Period would be July 31, 2018 and September 30, 2019 (with each such date permitted to be extended by the Lender in its sole discretion); (B) the Borrower could satisfy its obligations under the PDL Modification Agreement, as amended, to obtain financing by obtaining (a) at least $2,050,000 in net cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt on or prior to February 23, 2018 and (b) an additional (i) $1,000,000 in net cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt on or prior to July 13, 2018 and (ii) $250,000 in net cash proceeds from the issuance of Capital Stock (other than Disqualified Capital Stock) or Debt on or prior to May 15, 2019 (resulting in aggregate net cash proceeds of at least $3,300,000); (C) the Liquidity required during the Modification Period would be lowered to $0 from $750,000; and (D) the Company’s interest payments that would otherwise be due to Lender on December 31, 2018, March 31, 2019 and June 30, 2019 would be deferred until September 30, 2019 (the end of the extended Modification Period) and that such deferrals would be a Covered Event.
17
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Accounting Treatment
In connection with the PDL Credit Agreement, as amended, we issued the PDL Warrant to the Lender. The fair value of the PDL Warrant at issuance was $1,257,778, which has been recorded as deferred issuance costs in the accompanying condensed consolidated financial statements. The deferred debt issuance and closing costs associated with the PDL Credit Agreement, as amended, have been presented as contra debt in accordance with the accounting standards. In December 2017, in connection with the PDL Modification Agreement, as amended, the Amended PDL Warrant was again amended (the “Second Amendment to the PDL Warrant’) resulting in an increase in fair value of $44,445, which was recorded as additional deferred debt issuance costs in the accompanying consolidated financial statements. As of June 30, 2019, the Amended PDL Warrant has not been exercised. At June 30, 2019, the outstanding balance of certain debt issuance and closing costs related to the PDL Credit Agreement totaling $292,813 was recorded as deferred closing costs in the accompanying condensed consolidated financial statements. Historically, the deferred closing costs had been presented as other assets, as the costs were incurred prior the first draw down. The costs should have been reclassified as a direct deduction of the debt when the funds were provided. The costs are presented as a direct deduction from the debt as of June 30, 2019, and $815,062 of such costs that were historically presented as other assets have been reclassified as contra debt in the consolidated balance sheet as of December 31, 2018. Management evaluated this classification error on prior period financial statements and concluded the impact was immaterial. Through December 31, 2018, these costs were amortized to interest expense using the straight-line method over the term of the PDL Credit Agreement, as amended.
During the six months ended the Company and Lender entered into five amendments to the PDL Modification Agreement (as detailed above), resulting in restructuring of the PDL Credit Agreement and the accounting treatment of the related costs. Under debt modification/troubled debt guidance, we determined that the first of the five amendments qualified for modification accounting, while the final four qualified for troubled debt restructuring accounting. As appropriate, we expensed the debt issuance costs paid to third parties, recognized the costs paid to PDL as a deferred debt issuance costs and accounted for the change in the effective interest rate prospectively. For the three- and six-month periods ended June 30, 2019 $405,810 and $522,247, respectively, was amortized to interest expense. For the three- and six-month periods ended June 30, 2018 $75,240 and $150,480, respectively, was amortized to interest expense.
At June 30, 2019, pursuant to the terms of the PDL Modification Agreement, as amended, $2,076,111 was recorded as accrued interest on the accompanying condensed consolidated financial statements.
The Tranche Three Warrant issued with the Fifth PDL Credit Agreement Amendment did not contain features requiring liability accounting and were recorded at fair value on the date of issuance with the offsetting credit recorded in equity. The value allocated to the Tranche Three Loan Warrant was $3,704 and was recorded as interest expense at June 30, 2019.
NOTE 10 – AGREEMENT WITH HEALTHCOR
On April 21, 2011, we entered into a Note and Warrant Purchase Agreement (as subsequently amended) with HealthCor Partners Fund, LP (“HealthCor Partners”) and HealthCor Hybrid Offshore Master Fund, LP (“HealthCor Hybrid” and, together with HealthCor Partners, “HealthCor”) (the “HealthCor Purchase Agreement”). Pursuant to the terms of the HealthCor Purchase Agreement, we sold and issued Senior Secured Convertible Notes to HealthCor in the principal amount of $9,316,000 and $10,684,000, respectively (collectively the “2011 HealthCor Notes”). The 2011 HealthCor Notes have a maturity date of April 20, 2021. We also issued Warrants to HealthCor for the purchase of an aggregate of up to 5,488,456 and 6,294,403 shares, respectively, of our Common Stock at an exercise price of $1.40 per share (collectively the “2011 HealthCor Warrants”). So long as no event of default has occurred, the outstanding principal balances of the 2011 HealthCor Notes accrue interest from April 21, 2011 through April 20, 2016 (the “First Five-Year Note Period”) at the rate of 12.5% per annum, compounding quarterly and shall be added to the outstanding principal balances of the 2011 HealthCor Notes on the last day of each calendar quarter. Interest accruing from April 21, 2016 through April 20, 2021 (the “Second Five Year Note Period”) at a rate of 10% per annum, compounding quarterly, may be paid quarterly in arrears in cash or, at our option, such interest may be added to the outstanding principal balances of the 2011 HealthCor Notes on the last day of each calendar quarter. For the period from April 21, 2016 through September 30, 2018 interest has been added to the outstanding principal balance. Pursuant to the terms of the Ninth Amendment, as discussed below, the accrual of interest has been suspended after September 30, 2018. From the date any event of default occurs, the interest rate, then applicable, shall be increased by five percent (5%) per annum. HealthCor has the right, upon an event of default, to declare due and payable any unpaid principal amount of the 2011 HealthCor Notes then outstanding, plus previously accrued but unpaid interest and charges, together with the interest then scheduled to accrue (calculated at the default rate described in the immediately preceding sentence) through the end of the First Five Year Note Period or the Second Five Year Note Period, as applicable. Subject to the terms of the Ninth Amendment as discussed below, HealthCor’s ability to convert any portion of the outstanding and unpaid accrued interest on and principal balances of the 2011 HealthCor Notes into fully paid and non-assessable shares of our Common Stock has been eliminated.
18
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On January 31, 2012, we entered into the Second Amendment to the HealthCor Purchase Agreement with HealthCor (the “Second Amendment”) amending the HealthCor Purchase Agreement and sold Senior Secured Convertible Notes to HealthCor in the principal amounts of $2,329,000 and $2,671,000, respectively (collectively the “2012 HealthCor Notes”). As provided by the Second Amendment, the 2012 HealthCor Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five-Year Note Period” and other terms to take into account the timing of the issuance of the 2012 HealthCor Notes. The 2012 HealthCor Notes have a maturity date of January 30, 2022. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. At any time after January 30, 2012, HealthCor is entitled to convert any portion of the outstanding and unpaid accrued interest on and principal balances of the 2012 HealthCor Notes into fully paid and non-assessable shares of our Common Stock at a conversion rate of $1.25 per share, subject to adjustment in accordance with anti-dilution provisions set forth in the 2012 HealthCor Notes. Pursuant to the terms of the Ninth Amendment, as discussed below, the accrual of interest has been suspended after September 30, 2018
On August 20, 2013, we entered into a Third Amendment to the HealthCor Purchase Agreement with HealthCor (the “Third Amendment”) to redefine our minimum cash balance requirements. Previously we were required to maintain a minimum cash balance of $5,000,000 and should we drop below that balance, it triggered a default. The Third Amendment allowed for a reduced minimum cash period, as defined in the HealthCor Purchase Agreement, which allowed us to drop below $5,000,000, but not below $4,000,000. All other terms and conditions of the HealthCor Purchase Agreement, including all amendments thereto, remain the same. Upon entering the reduced minimum cash period (which occurred on October 7, 2013), we had 120 days to return our minimum cash balance to the original $5,000,000. On January 16, 2014, we increased our cash balance to in excess of the original $5,000,000 minimum allowable balance.
On January 16, 2014, we entered into a Fourth Amendment to the HealthCor Purchase Agreement with HealthCor (the “Fourth Amendment”) and sold Senior Secured Convertible Notes to HealthCor in the principal amounts of $2,329,000 and $2,671,000 (collectively the ’’2014 HealthCor Notes’’). As provided by the Fourth Amendment, the 2014 HealthCor Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five-Year Note Period” and other terms to take into account the timing of the issuance of the 2014 HealthCor Notes. The 2014 HealthCor Notes have a maturity date of January 15, 2024. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. At any time after January 16, 2014, HealthCor is entitled to convert any portion of the outstanding and unpaid accrued interest on and principal balances of the 2014 HealthCor Notes into fully paid and non-assessable shares of our Common Stock at a conversion rate of $0.40 per share, subject to adjustment in accordance with anti-dilution provisions set forth in the 2014 HealthCor Notes. Additionally, we issued Warrants to HealthCor for the purchase of an aggregate of up to 4,000,000 shares of our Common Stock at an exercise price of $0.40 per share (collectively the “2014 HealthCor Warrants”). As of June 30, 2019, the underlying shares of our Common Stock related to the 2014 HealthCor Notes totaled approximately 24,000,000.
19
CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On December 4, 2014, we entered into a Fifth Amendment to the HealthCor Purchase Agreement (the “Fifth Amendment”) with HealthCor and certain additional investors (such additional investors, the “2015 Investors” and, collectively with HealthCor, the “Investors”) and agreed to sell and issue (i) additional notes in the initial aggregate principal amount of $6,000,000,with a conversion price per share of $0.52 (subject to adjustment as described therein) (the “Fifth Amendment Notes”) and (ii) additional Warrants for an aggregate of up to 3,692,308 shares of our Common Stock at an exercise price per share of $0.52 (subject to adjustment as described therein) (the “Fifth Amendment Warrants”). As provided by the Fifth Amendment, the Fifth Amendment Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five-Year Note Period” and other terms to take into account the timing of the issuance of the Fifth Amendment Notes. The Fifth Amendment Notes have a maturity date of February 16, 2025. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. The 2015 Investors are composed of all but one of our current directors and one of our officers. On February 17, 2015, the Company and the Investors closed on the transactions contemplated by the Fifth Amendment. In connection with this closing, the Company and the Investors entered into an Amended and Restated Pledge and Security Agreement (the “Amended Security Agreement”), amending and restating that certain Pledge and Security Agreement dated as of April 20, 2011, and an Amended and Restated Intellectual Property Security Agreement (the “Amended IP Security Agreement”), amending and restating that certain Intellectual Property Security Agreement dated as of April 20, 2011. As of June 30, 2019, the underlying shares of our Common Stock related to the Fifth Amendment Notes totaled approximately 3,000,000 to HealthCor and 17,000,000 to the 2015 Investors.
On March 31, 2015, we entered into the Sixth Amendment to the HealthCor Purchase Agreement (the “Sixth Amendment”) pursuant to which, among other things, (i) the requirement to maintain a minimum cash balance of $5,000,000 was reduced to a minimum cash balance of $2,000,000 and (ii) the amendment provision was revised to permit the HealthCor Purchase Agreement to be amended by the Company and the holders of the majority of the Common Stock underlying the outstanding notes and warrants to purchase shares of our Common Stock sold pursuant to the HealthCor Purchase Agreement. On March 31, 2015, we also issued a warrant to HealthCor to purchase up to an aggregate of 1,000,000 shares of our Common Stock in consideration for certain prior waivers of the minimum cash balance requirement in the HealthCor Purchase Agreement (the “Sixth Amendment Warrant”). The Sixth Amendment Warrant has an exercise price per share of $0.53 (subject to adjustment as described therein) and an expiration date of March 31, 2025.
On June 26, 2015, we (i) entered into a Seventh Amendment to the HealthCor Purchase Agreement (the “Seventh Amendment”) pursuant to which the HealthCor Purchase Agreement was amended to permit the Company to enter into and perform its obligations under the PDL Credit Agreement (as detailed in NOTE 9); (ii) executed an Amendment to the Registration Rights Agreement between the Company and HealthCor dated April 21, 2011 (the “RR Agreement”) pursuant to which the RR Agreement was amended to make its priority of registration consistent with the Registration Rights Agreement executed by the Company and PDL; (iii) amended the 2011 HealthCor Notes to extend the maturity date, in the event that Tranche Two of the PDL Credit Agreement is funded, for such notes to 90 days after the earlier of the Tranche Two maturity date or repayment date, but not later than December 31, 2022, (iv) amended the 2012 HealthCor Notes, to set the maturity date at January 30, 2022 and, in the event that Tranche Two of the PDL Credit Agreement is funded, to extend such maturity date to 90 days after the earlier of the Tranche Two maturity date or repayment date, but later than December 31, 2022; and (v) amended each of the Senior Secured Convertible Notes issued under the HealthCor Purchase Agreement (the “HealthCor Notes”) to, among other things, subordinate the HealthCor Notes to the loans under the PDL Credit Agreement and to increase certain event of default acceleration and payment thresholds. ). As pertains to (iii) and (iv) above, pursuant to the terms of the PDL Credit Agreement and having not met the Tranche Two Milestones by July 26, 2017, the Tranche Two funding was terminated in full.
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CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On February 23, 2018, we entered into an Eighth Amendment to the HealthCor Purchase Agreement (the “Eighth Amendment”) with HealthCor, the 2015 Investors and certain investors (such additional investors, the “February 2018 Investors”) and agreed to sell and issue (i) additional notes in the initial aggregate principal amount of $2,050,000,with a conversion price per share of $0.05 (subject to adjustment as described therein) (the “Eighth Amendment Notes”) and (ii) additional Warrants for an aggregate of up to 512,500 shares of our Common Stock at an exercise price per share of $0.05 (subject to adjustment as described therein) (the “Eighth Amendment Warrants”). As provided by the Eighth Amendment, the Eighth Amendment Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five-Year Note Period” and other terms to take into account the timing of the issuance of the Eighth Amendment Notes. The Eighth Amendment Notes have a maturity date of February 22, 2028. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. The 2018 Investors are composed of all but one of our current directors, one of our officers and an entity. As of June 30, 2019, the underlying shares of our Common Stock related to the Eighth Amendment Notes totaled approximately 48,000,000 to the February 2018 Investors.
On July 10, 2018, we entered into the Ninth Amendment to the HealthCor Purchase Agreement (the “Ninth Amendment”) with HealthCor, the 2015 Investors and the February 2018 Investors, pursuant to which the parties agreed to amend the HealthCor Purchase Agreement, the 2011 HealthCor Notes, the 2012 HealthCor Notes, the 2014 HealthCor Notes, the Fifth Amendment Notes and the Eighth Amendment Notes, as applicable, to (i) remove the rights of the holders of the 2011 HealthCor Notes and the 2012 HealthCor Notes to convert such notes to Common Stock after September 30, 2018; (ii) suspend the accrual of interest on the 2011 HealthCor Notes and the 2012 HealthCor Notes for periods after September 30, 2018; (iii) provide for the potential earlier repayment of the 2011 HealthCor Notes and the 2012 HealthCor Notes by the Company, 120 calendar days following a written demand for payment by the holder of such notes; provided, however, that such written demand may not be given prior to the twelve-month anniversary of the date on which the obligations of the Company under the PDL Credit Agreement are repaid in full; (iv) cancel the 2011 HealthCor Warrants; (v) provide for the seniority of the 2011 HealthCor Notes and the 2012 HealthCor Notes in right of payment over notes subsequently issued pursuant to the Purchase Agreement, including the 2014 HealthCor Notes, the Fifth Amendment Notes and the Eighth Amendment Notes; (vi) amend the terms of the 2014 HealthCor Notes, the Fifth Amendment Notes and the Eighth Amendment Notes to reflect the seniority in payment of the 2011 HealthCor Notes and 2012 HealthCor Notes; and (vii) reduce the number of shares of Common Stock that the Company must at all times have authorized and reserved for the purpose of issuance upon conversion of the notes issued pursuant to the HealthCor Purchase Agreement (collectively, the “Notes”) and exercise of the warrants issued pursuant to the HealthCor Purchase Agreement (collectively, the “Warrants”), from at least 120% of the aggregate number of shares of Common Stock then issuable upon full conversion of the Notes and exercise of the Warrants to at least 100% of such aggregate number of shares. In addition, on July 10, 2018, along with PDL, HealthCor, the 2015 Investors and the February 2018 Investors, we entered into a Second Amendment to the Subordination and Intercreditor Agreement, to amend the Subordination and Intercreditor Agreement dated as of June 26, 2015, as amended to provide that, in the event of a sale of the Company’s hospital assets, after the net proceeds are first applied to repay obligations under the PDL Credit Agreement, as amended, until paid in full, up to the next $5,000,000 of such net proceeds may be retained by the Company for working capital purposes before all remaining net proceeds are then applied to repay the obligations under the Notes in accordance with the priorities set forth in the HealthCor Purchase Agreement and the Notes.
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CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On July 13, 2018, we entered into the Tenth Amendment to the HealthCor Purchase Agreement with HealthCor, the 2015 Investors, the February 2018 Investors and certain investors (all of which are directors of the Company) (such additional investors, the “July 2018 Investors”), pursuant to which we sold and issued convertible secured promissory notes for an aggregate of $1,000,000 to the July 2018 Investors with a conversion price per share equal to $0.05 (subject to adjustment as described therein) (the “Tenth Amendment Notes”). As provided by the Tenth Amendment, the Tenth Amendment Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five-Year Note Period” and other terms to take into account the timing of the issuance of the Tenth Amendment Notes. The Tenth Amendment Notes have a maturity date of July 12, 2028. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. As of June 30, 2019, the underlying shares of our Common Stock related to the Tenth Amendment Notes totaled approximately 23,000,000 to the July 2018 Investors.
On March 27, 2019, we entered into the Eleventh Amendment to the HealthCor Purchase Agreement, as amended, with HealthCor, the 2015 Investors, the February 2018 Investors and the July 2018 Investors, pursuant to which all parties agreed to amend and restate Section 5.3 Minimum Cash Balance (“Section 5.3”), wherein the requirement of maintaining a minimum cash balance has been removed and any breach of Section 5.3 has been waived in perpetuity.
On May 15, 2019, we entered into the Twelfth Amendment to HealthCor Purchase Agreement with HealthCor, the 2015 Investors, the February 2018 Investors, the July 2018 Investors, and an investor (a member of our board of directors) (such additional investor, the “2019 Investor”), pursuant to which we sold and issued a convertible secured promissory note for $50,000 to the 2019 Investor with a conversion price per share equal to $0.03 (subject to adjustment as described therein) (the “Twelfth Amendment Note”). As provided by the Twelfth Amendment, the Twelfth Amendment Notes are in substantially the same form as the 2011 HealthCor Notes, with changes to the “Issuance Date,” “Maturity Date,” “First Five-Year Note Period” and other terms to take into account the timing of the issuance of the Twelfth Amendment Notes. The Twelfth Amendment Notes have a maturity date of May 15, 2029. In addition, the provisions regarding interest payments, interest acceleration, optional conversion, negative covenants, and events of default, preemptive rights and registration rights are the same as those of the 2011 HealthCor Notes. As of June 30, 2019, the underlying shares of our Common Stock related to the Twelfth Amendment Note totaled approximately 2,000,000 to the 2019 Investor.
Accounting Treatment
When issuing debt or equity securities convertible into common stock at a discount to the fair value of the common stock at the date the debt or equity financing is committed, a company is required to record a beneficial conversion feature (“BCF”) charge. We had three separate issuances of equity securities convertible into common stock that qualify under this accounting treatment, (i) the 2011 HealthCor Notes, (ii) the 2012 HealthCor Notes and (iii) the 2014 HealthCor Notes. Because the conversion option and the 2011 HealthCor Warrants on the 2011 HealthCor Notes were originally classified as a liability when issued due to the down round provision and the removal of the provision requiring liability treatment, and subsequently reclassified to equity on December 31, 2011 when the 2011 HealthCor Notes were amended, only the accrued interest capitalized as payment in kind (’‘PIK’’) since reclassification qualifies under this accounting treatment. We recorded an aggregate of $2,171,960 and $1,719,400 in interest for the six months ended June 30, 2019 and 2018, respectively, related to these transactions. The face amount of the 2012 HealthCor Notes, 2014 HealthCor Notes, the Fifth Amendment Notes and the Eighth Amendment Notes and all accrued PIK interest also qualify for BCF treatment as discussed above. Under the accounting standards, we determined that the restructuring of the HealthCor notes, pursuant to the terms of the Ninth Amendment, resulted in a troubled debt restructuring. As the future cash flows were greater than the carrying amount of the debt at the date of the amendment, we accounted for the change prospectively using the new effective interest rate. During the six months ended June 30, 2019 and 2018, we recorded a BCF of $31,951 and $64,561, respectively. The BCF was recorded as a charge to debt discount and a credit to additional paid in capital, with the debt discount, using the effective interest method, amortized to interest expense over the term of the notes.
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CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As Warrants were issued with the Fifth Amendment Notes, the proceeds were allocated to the instruments based on relative fair value as the warrants did not contain any features requiring liability treatment and therefore were classified as equity. The value allocated to the Fifth Amendment Warrants was $1,093,105, which was recorded as debt discount with the credit to additional paid in capital. We recorded an aggregate of $16,598 and $13,997 in interest for the six months ended June 30, 2019 and 2018, respectively, related to the Fifth Amendment Notes and Fifth Amendment Warrants. The carrying value of the Fifth Amendment Notes at December 31, 2018 approximates fair value as the interest rates used are those currently available to us and would be considered level 3 inputs under the fair value hierarchy. The Sixth Amendment Warrants also did not contain features requiring liability accounting and were recorded at fair value on the date of issuance with the offsetting credit recorded in equity. The value allocated to the Sixth Amendment Warrant was $378,000, which was recorded as debt costs with the credit to additional paid in capital. We recorded an aggregate of $28,901 in interest expense for both the six months ended June 30, 2019 and 2018. The Eighth Amendment Warrants also did not contain features requiring liability accounting and were recorded at fair value on the date of issuance with the offsetting credit recorded in equity. The value allocated to the Eighth Amendment Warrants was $10,707, which was recorded as interest expense at June 30, 2019.
NOTE 11 – JOINT VENTURE AGREEMENT
On November 16, 2009, we entered into a Master Investment Agreement (the “Rockwell Agreement”) with Rockwell Holdings I, LLC, a Wisconsin limited liability (“Rockwell”). Under the terms of the Rockwell Agreement, we used funds from Rockwell to fully implement the CareView System™ in Hillcrest Medical Center in Tulsa, Oklahoma (“Hillcrest”) and Saline Memorial Hospital in Benton, Arkansas (“Saline”) (the “Project Hospital(s)”). CareView-Hillcrest, LLC and CareView-Saline, LLC were created as the operating entities for the Project Hospitals under the Rockwell Agreement (the “Project LLCs”).
On January 31, 2017, under the terms of the Rockwell Agreement, wherein we had the option to purchase Rockwell’s interest in the Project LLCs, we exercised that right by entering into a Settlement and LLC Interest Purchase Agreement with Rockwell (the “Settlement Agreement). Pursuant to the terms of the Settlement Agreement, we paid Rockwell the aggregate amount of $1,213,786 by the issuance of a promissory note to Rockwell for $1,113,786 (the “Rockwell Note”) and a cash payment of $100,000. Pursuant to the terms of the Rockwell Note, we were to make quarterly principal payments of $100,000, with each payment being made on the last day of each calendar quarter beginning with the first payment date of March 31, 2017 and continuing on the last business day of each subsequent quarter through September 30, 2019. The final payment due on December 31, 2019 was to be a balloon payment of $13,786 representing the remaining principal balance plus all accrued and unpaid interest. Effective February 2, 2018, pursuant to the terms of the PDL Modification Agreement, as amended, we entered into an amendment to the Rockwell Note wherein the quarterly payments under the Rockwell Note were reduced to $50,000 per quarter, through the end of the PDL Modification Period, September 30, 2019. The final balloon payment of $461,283 representing the remaining principal plus all accrued and unpaid interest is due on December 31, 2019. We were not in default of any conditions under the Settlement Agreement and amended Rockwell Note as of June 30, 2019.
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CAREVIEW COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As additional consideration to Rockwell for entering into the Rockwell Agreement, we granted Rockwell Warrants to purchase 1,151,206 shares of our Common Stock on the date of the Rockwell Agreement, and, using the Black-Scholes Model, valued the Warrants at $1,124,728 (the “Project Warrant”), which amount was fully amortized at December 31, 2015. Pursuant to the terms of the Settlement Agreement, the expiration date of the Project Warrant was extended from November 16, 2017 to November 16, 2022. All other provisions of the Project Warrant remained unchanged. At the time of the extension, the Project Warrant were revalued resulting in a $11,512 increase in fair value, which has been recorded as non-cash costs included in general and administration expense in the accompanying condensed consolidated financial statements. Effective February 2, 2018, pursuant to the terms of the PDL Modification Agreement, we entered into an amendment to the Project Warrant wherein the Project Warrant’s exercise price was changed from $0.52 to $0.05, resulting in a $13,814 increase in fair value, which was recorded as non-cash costs included in general and administration expense in the consolidated financial statements for the year ended December 31, 2018.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
The following discussion and analysis provides information which our management believes to be relevant to an assessment and understanding of our results of operations and financial condition. This discussion should be read together with our financial statements and the notes to the financial statements, which are included in this Quarterly Report on Form 10-Q (the “Report”). This information should also be read in conjunction with the information contained in our Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2019, including the audited consolidated financial statements and notes included therein as of and for the year ended December 31, 2018. The reported results will not necessarily reflect future results of operations or financial condition.
Throughout this Annual Report on Form 10-K (the “Report”), the terms “we,” “us,” “our,” “CareView,” or “Company” refers to CareView Communications, Inc., a Nevada corporation, and unless otherwise specified, includes our wholly owned subsidiaries, CareView Communications, Inc., a Texas corporation (“CareView-TX”) and CareView Operations, LLC, a Nevada limited liability company (“CareView Operations”) (collectively known as the “Company’s Subsidiaries”).
We maintain a website at www.care-view.com and our Common Stock trades on the OTCQB under the symbol “CRVW.”
Company Overview
Our mission is to be the leading provider of products and on-demand application services for the healthcare industry, specializing in bedside video monitoring, software tools to improve hospital communications and operations, and patient education and entertainment packages. Our proprietary, high-speed data network system is the next generation of patient care monitoring that allows real-time bedside and point-of-care video monitoring designed to improve patient safety and overall hospital costs. The entertainment packages and patient education enhance the patient’s quality of stay. Reported results from CareView-driven facilities prove that our products reduce falls, reduce the cost of sitter fees, increase patient satisfaction and reduce bed turnaround time to increase patient flow. For patients, we have a convenient in-room, entertainment package that includes high-speed Internet, access to first-run on-demand movies and visual connectivity to family and friends from anywhere in the world. For the hospital, we offer tools to provide superior patient care, peace of mind and customer service satisfaction.
Our CareView System® suite of video monitoring, guest services and related applications connect patients, families and healthcare providers. Through the use of telecommunications technology and the Internet, our evolving products and on-demand services greatly increase the access to quality medical care and education for patients/consumers and healthcare professionals. We understand the importance of providing high quality patient care in a safe environment and believe in partnering with hospitals to improve the quality of patient care and safety by providing a system that monitors continuously. We are committed to providing an affordable video monitoring tool to improve the practice of nursing, create a better work environment and make the patient’s hospital stay more informative and satisfying. Our suite of products and services can simplify and streamline the task of preventing and managing patients’ falls, enhance patient safety, improve quality of care and reduce costs associated with bringing information technology directly to patients, families and healthcare providers. Our products and services can be used in all types of hospitals, nursing homes, adult living centers and selected outpatient care facilities domestically and internationally.
CareView’s secure video monitoring system connects the patient room to a touchscreen monitor at the nursing station or a mobile handheld device, allowing the nursing staff to maintain a level of visual contact with each patient. This configuration enhances the use of the nurse call system, reduces unnecessary steps to and from patient rooms, and facilitates a host of modules for patient safety and workflow improvements. The CareView System suite can be easily configured to meet the individual privacy and security requirements of any hospital or nursing facility. The Health Insurance Portability and Accountability Act of 1996 (“HIPAA’) compliant, patient approved video record can be included as part of the patient’s medical record and serves as additional documentation of bedside care, procedures performed, patient and hospital ancillary activities, safety or care incidents, support to necessitate additional clinical services, and, if necessary, as evidence. Additional HIPAA-compliance features allow privacy options to be enabled at any time by the patient, nurse or physician.
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In addition to patient safety and security, we also provide a suite of services to increase patient satisfaction scores and enhance the overall image of the hospital including first-run on-demand movies, Internet access via the patient’s television, and video visits with family and friends from most places throughout the world. Through continued investment in patient care technology, our products and services help hospitals and assisted living facilities build a safe, high quality healthcare delivery system that best serves the patient, while striving for the highest level of satisfaction and comfort.
Update to Products and Services Agreement with Healthcare Facilities
We offer our products and services through a subscription-based model with healthcare facilities through a Products and Services Agreement (the “P&S Agreement(s)”). During the term of the P&S Agreement, we provide continuous monitoring of the CareView System’s products and services deployed to a healthcare facility and maintain and service all equipment installed by us. Terms of each P&S Agreement require the healthcare facility to pay us a monthly subscription fee based on the number of selected, installed and activated services. None of the services provided through the Primary Package or GuestView module are paid or reimbursed by any third-party provider including insurance companies, Medicare or Medicaid. We also enter into corporate-wide agreements with healthcare companies (the “Master Agreement(s)”), wherein the healthcare facilities that are a part of these healthcare companies enter into individual facility level agreements that are substantially similar to our P&S Agreements.
Master Agreements and P&S Agreements are currently negotiated for a period of five years with a minimum of two or three years; however, older P&S Agreements were negotiated for a five-year period with a provision for automatic renewal. P&S Agreements specific to pilot programs (“P&S Pilot Agreements”) contain pricing terms substantially similar to P&S Agreements, are generally three or six-months in length and can be extended on a month-to-month basis as required. We own all rights, title, and interest in and to the equipment we install at each location and agree to maintain and repair it; although, we may charge for repairs or replacements due to damage or misuse. We are not responsible for maintaining data arising from use of the CareView System or for transmission errors, corruption or compromise of data carried over local or interchange telecommunication carriers. We grant each healthcare facility a limited, revocable, non-transferable and non-exclusive license to use the software, network facilities, content and documentation on and in the CareView System suite to the extent, and only to the extent, necessary to access, explore and otherwise use the CareView System suite in real time. Such non-exclusive license expires upon termination of the P&S Agreement.
We use specific terminology in an effort to better define and track the staging and billing of the individual components of the CareView System suite. The CareView System suite includes three components which are separately billed; the Room Control Platform (the “RCP”), the Nurse Station, and mobile devices (each component referred to as a “unit”). The term “bed” refers to each healthcare facility bed as part of the overall potential volume that a healthcare facility represents. For example, if a healthcare facility has 200 beds, the aggregate of those beds is the overall potential volume of that healthcare facility. The term “bed” is often used interchangeably with “Room Control Platform” or “RCP” as this component of the CareView System consistently resides within each room where the “bed” is located. On average, there are six Nurse Stations for each 100 beds. The term “deployed” means that the units have been delivered to the healthcare facility but have not yet been installed at their respective locations within the facility. The term “installed” means that the units have been mounted and are operational. The term “billable” refers to the aggregate of all units on which we charge fees. Units become billable once they are installed and the required personnel have been trained in their use. Units are only deployed upon the execution of a P&S Agreement or P&S Pilot Agreement.
Update on Significant Customer Agreements
In the foregoing discussion we use the term Bed Equivalent Units (“BEUs”) describe the number of billed at a specific location. BEUs are calculated by dividing the monthly revenue derived from a healthcare facility’s P&S or P&S Pilot Agreement by the unit price charge for an RCP.
HealthTrust
On December 14, 2016, the Company entered into a Group Purchasing Agreement with HealthTrust Purchasing Group, L.P. (“HealthTrust”) (the “HealthTrust GPO Agreement”), the nation’s only committed-model Group Purchasing Organization (“GPO”) headquartered in Nashville, Tennessee. HealthTrust serves approximately 1,600 acute care facilities and members in more than 26,000 other locations, including ambulatory surgery centers, physician practices, long-term care and alternate care sites. The agreement was effective on January 1, 2017 and all CareView System components and modules are available for purchase by HealthTrust’s exclusive membership. HealthTrust members may order CareView’s products and services included in the agreement directly from CareView.
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On October 1, 2018, the Company added CareView Connect to the HealthTrust GPO Agreement.
Hospital Corporation of America
West Florida Division
On April 26, 2016, we entered into a Master Agreement with the West Florida Division of Health Corporation of America (“HCA”), the nation’s leading provider of healthcare services. The West Florida Division has approximately 2,600 beds. The three-year divisional Master Agreement follows the successful P&S Pilot Agreement with HCA’s Blake Medical Center. Currently, we are billing 417 BEUs monthly.
Capital Division
On January 1, 2017, we entered into a P&S Agreement with HCA Capital Division pursuant to the HealthTrust GPO Agreement. We now have signed P&S Agreements for three facilities in the Capital Division, Lewis-Gale Medical Center, CJW Medical Center and Henrico Doctor’s Hospital totaling 169 units. There are 14 facilities in the division totaling approximately 3,200 staffed beds.
East Florida Division
On January 25, 2017, we entered into a P&S Agreement with HCA East Florida Division pursuant to the HealthTrust GPO Agreement. Under this agreement, our products and services will be available to all 13 facilities in the division, totaling approximately 3,600 staffed beds. Currently, we have 45 BEUs in place at one facility.
Community Health Systems, Inc.
Community Health Systems, Inc. (“CHS”) renewed its corporate agreement with CareView in December 2018. CHS currently has 107 hospitals nationwide. Under the terms of the Master Agreement, currently, we are billing 875 BEUs monthly in 14 hospitals. CHS has begun expanding its CareView portfolio into its behavioral hospitals and within its facilities that are already using CareView’s product.
The Community Medical Centers HealthCare Network-Central California
The Community Medical Centers HealthCare Network-Central California (“Community Medical HealthCare”) owns approximately 1,120 beds in two facilities. We currently have a 68 BEU pilot agreement with Clovis Community Medical Center and are in the process of converting to a three-year agreement. Community Regional Medical Center entered into a three-year agreement for 95 BEUs beginning in March 2017.
Tenet Healthsystem Medical, Inc.
In March 2017, we entered into a Tri-Party Agreement with Tenet Healthsystem Medical, Inc. (“Tenet”) and HealthTrust Purchasing Group, L.P. The terms of this agreement provide for the execution of a facilities level agreement with each hospital. Tenet is currently looking for an enterprise-wide solution. We are currently billing 418 BEUs monthly.
Kaiser Permanente
We currently are billing 570 BEUs monthly in six Kaiser Permanente (“Kaiser”) facilities. In April and May 2014, we executed P&S Pilot Agreements with Kaiser’s Baldwin Park and Panorama City facilities, respectively. This is in addition to our P&S Pilot Agreement with Kaiser Orange County covering its facilities in Anaheim and Irvine, California which was executed in October 2013. The P&S Pilot Agreements for these four facilities provide for a monthly renewal until termination or replacement by a Master Agreement or individual P&S Agreements. We finalized a P&S Agreement with the Irvine facility in October 2016 and we are now in the process of finalizing a conversion from a P&S Pilot Agreement to a P&S Agreement with the Anaheim facility. Both of these facilities are in the process of determining their needs as it relates to adding additional units.
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On November 2, 2015, we signed a P&S Agreement with Kaiser’s San Diego Medical Center. We currently have 16 installed BEUs at this facility and anticipate adding additional beds once use and need has been determined.
In early 2016 we commenced discussions with Kaiser Northwest Region for deployment of the CareView System in Kaiser’s hospitals in Oregon. On November 10, 2016, we signed a P&S Pilot Agreement with the Northwest Division of Kaiser Permanente. Execution of this agreement signals our expanded growth within the Kaiser system. The agreement calls for the installation of 85 BEUs at the Westside Medical Center.
After a successful pilot, in February 2016 we executed a P&S Agreement with Kaiser’s Los Angeles Medical Center for a total of 144 BEUs. We are also in pilot discussions with other Kaiser facilities in the San Diego area. While we are continuing our sales efforts at the hospital and regional level, there are still discussions regarding a possible Master Agreement. Notwithstanding those discussions we will continue to sell into other Kaiser Regions and look to convert our P&S Pilot Agreements into P&S Agreements that can be replaced by a Master Agreement if and when one is finalized.
Parkland
In September 2015 we signed a P&S Agreement with Dallas County Hospital District d/b/a Parkland Health & Hospital System and are currently billing 440 BEUs. The P&S Agreement was renewed for an additional year effective July 1, 2019.
Geisinger Health System
In 2015 we signed a P&S Pilot Agreement with Geisinger Medical Center (“GMC”). Currently there are 144 monthly billable units at GMC. The results of the pilot were favorable and we have finalized the terms of a Master Agreement with GMC. There are approximately 1,800 beds within Geisinger System Services (“GSS”). Upon completion of the Master Agreement, we anticipate rolling out product and services to all owned and affiliated facilities. Currently we are in discussions with two GSS facilities who have expressed interest in installing the CareView System. We will also continue our sales efforts to the balance of GSS.
Baptist Health South Florida
Baptist Health South Florida (“BHSF”) is a system comprised of 6 hospitals with 1,700 beds in the Miami area. BHSF finalized a Master Agreement in July 2017. We are currently billing for 430 BEUs. They have requested an additional 67 BEUs. We are in discussions with two additional BHSF facilities.
AdventHealth
In March 2017 we entered into a P&S Agreement with White Memorial Hospital for 78 units following a successful pilot. White Memorial is part of the AdventHealth. There is a total of 16 facilities in the AdventHealth network. We are working on collecting data in anticipation of setting up a meeting to discuss a Master Agreement and system-wide roll-out. To that end, we began billing on a P&S Agreement with Glendale Adventist for 85 BEUs on January 1, 2018 and on November 14, 2017 we began billing AdventHealth Bakersfield for 56 BEUs.
Baylor Scott & White Health
On June 30, 2017 we executed a Master Agreement with Baylor Scott & White Health (“BSW”) corporate. We have had meetings with the following BSW facilities as we move toward a corporate roll-out, which include: BSW Temple, BSW All-Saints, BSW Hillcrest, BSW Round Rock, BSW Waxahachie, and BSW White Rock. These facilities are gathering data so we can generate proposals. CareView is being used in three facilities where we are billing for a total of 198 BEUs.
VA Central Arkansas Veterans Healthcare System
We accomplished our first contract with a VA facility, specifically the Central Arkansas Veterans Healthcare System (“CAVHS”), for 106 BEUs in April 2017. CAVHS renewed the contract for an additional year in April 2019. Central Arkansas Memorial Veterans Hospital added 46 BEUs to the contract in June 2018 and renewed in July 2019. The CareView System is now completely installed at John L. McClellan Memorial Veterans Hospital in Little Rock with 152 BEUs installed and billable.
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The Eugene J. Towbin Healthcare Center (“Towbin HC”) awarded CareView a contract for 88 BEUs in June 2018. This is the first Community Living Center, a VA Nursing Home, to use CareView, and could lead to adoption by other VA Community Living Centers. Towbin HC renewed the contract in July 2019.
These agreements are pursuant to the Company’s General Service Administration (“GSA”) Multiple Award Schedule contract (“MAS”). The MAS allows us to sell the CareView System at a negotiated rate to the approximate 169 VA facilities with over 39,000 licensed beds and the approximate 42 DOD hospitals with over 2,600 licensed beds. The MAS is one of the most widely accepted government contract vehicles available to agency procurement officers. GSA’s application process requires potential vendors to be recognized as highly credible and well established. We are hopeful that once installation and training is complete, the other VA hospitals will also want to participate. Our products and services represent an enormous opportunity to improve the health and safety of our Nation’s veterans.
Other VA Opportunities
The Company is currently in discussions with several other large VA Hospitals and anticipates additional orders under its MAS. Specifically, the Company is in the contracting process with other VA facilities, including VISN 9, covering all of Tennessee, most of Kentucky, and northern Mississippi, the VA Puget Sound Health Care System in Seattle Washington, the Oklahoma City VA Health Care System, in Oklahoma City, Oklahoma and the Amarillo VA Healthcare System in Amarillo, Texas.
In June 2019, CareView entered into a Reseller Agreement with Professional XRay, Inc, a Service Disabled Veteran Owned Small Business.
Steward Healthcare
On April 13, 2017 the Company signed a Master Agreement under the HealthTrust GPO Agreement with Steward Health Care (“Steward”). Steward is headquartered in Boston, Massachusetts. Steward recently announced the acquisition of IASIS Healthcare and eight hospitals from CHS bringing its total to 35 hospital facilities in its network. Under the Master Agreement, CareView will install approximately 867 units in 11 hospitals in Massachusetts and 66 units in one hospital in Pennsylvania. CareView is installed in 19 facilities with 2,350 BEUs. All totaled, we anticipate being installed in all 35 of the Steward Hospital facilities with a total of over 3,200 units installed.
Atlantic Health System
In March 2019, we executed a P&S Agreement under our HealthTrust GPO Agreement with Atlantic Health System (“AHS”). AHS is headquartered in Morristown, New Jersey and one of the leading non-profit health care systems in the state of New Jersey. AHS consists of five hospitals and approximately 893 staffed beds. AHS has 170 BEUs across three hospitals.
Baptist Southeast Texas
On May 15, 2017 we executed a Purchase Agreement under its HealthTrust GPO Agreement with Baptist Southeast Texas. Billing for 106 BEUs began on November 1, 2017.
Montefiore Medical Center
On June 8, 2017 the Company executed a P&S Pilot Agreement with Montefiore Medical Center (“Montefiore”) located in New York City. The P&S Pilot Agreement called for the installation of 46 units. On November 27, 2018 Montefiore cancelled the P&S Pilot Agreement. On December 18, 2017, CareView executed a three-year P&S Agreement with a Montefiore rehabilitation hospital for 32 BEUs. This became billable on April 11, 2018.
LifePoint Health System
We finalized a P&S Agreement with LifePoint Health Systems (“LifePoint”) in April 2018. LifePoint owns 89 hospitals. We have 354 contracted BEUs in 6 hospitals. We are currently in negotiations with several other LifePoint facilities.
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Kootenai Health
On October 3, 2017, the Company executed a three-year P&S Agreement with Kootenai Health (“Kootenai”) located in Coeur d’ Alene, Idaho. The agreement calls for the installation of 49 BEUs. Kootenai provides a comprehensive range of medical services to patients in north Idaho, eastern Washington, Montana and the Inland Northwest at several facility locations. We began billing Kootenai in February 2018. Following positive results, we anticipate future growth in the Kootenai system.
Hays Medical Center
On November 10, 2017, the Company executed a P&S Agreement with Hays Medical Center located in Hays, Kansas. The agreement calls for the installation of 70 BEUs. The Hays Medical Center is part of the University of Kansas Health System.
Franciscan Missionaries of Our Lady Health System
In December 2018, we executed a three-year agreement with Franciscan Missionaries of Our Lady Health System’s (“FMOL”) Our Lady of the Lake Regional Medical Center (“Our Lady of the Lake RMC”). As of May 2019, Our Lady of the Lake RMC has contracted with us for 361 BEUs. We anticipate future growth in the FMOL which consists of six hospitals and 1,735 staffed beds. Conversations have begun with two other FMOL facilities.
Texas Health Resources
On December 13, 2017, we executed a Master Agreement with Texas Health Resources (“THR”) and a 6-month P&S Pilot Agreement with Texas Health Presbyterian Hospital Dallas for 56 BEUs. Following positive results, we anticipate future growth in the THR system which consists of 14 hospitals and 2,853 staffed beds. THR is in the process of evaluating an enterprise-wide solution.
Kindred Healthcare
On September 5, 2018 we executed a 6-month P&S Pilot Agreement with Kindred Hospital Westminster for 72 BEUs. Kindred Healthcare operates 22 inpatient rehabilitation hospitals and 54 long term acute care hospitals.
UPMC Pinnacle
On February 19, 2019, we executed a 36-month P&S Agreement with UPMC Pinnacle Carlisle for 56 BEUs. UPMC Pinnacle operates seven acute care hospitals in Pennsylvania.
Samaritan Health System
On February 28, 2019, we executed a 36-month P&S Agreement with Samaritan Medical Center in Watertown, New York for 84 BEUs.
Northeast Georgia Health System
On April 30, 2019, we executed a 36-month P&S Agreement with Northeast Georgia Health System for 526 BEUs.
Banner Health
Banner Health operates 28 hospitals with over 5,200 staffed beds. On May 2, 2019, Banner Del Webb Medical Center entered into a 6-month pilot agreement with CareView for 42 BEUs.
Saint Luke’s Health System
Saint Luke’s Health System operates 16 hospitals with over 1,000 beds in the Kansas City, MO area. On May 24, 2019 SLHS executed a 6-month pilot agreement for 180 BEUs in two hospitals with plans to expand to its other locations.
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CareView Connect
Our mission is to be the leading provider of resident monitoring products and services for the long-term care industry. We took what we learned in our medical facility business and applied it to developing a product to serve the long-term care market. With CareView ConnectTM Quality of Life System (“CareView Connect”), CareView has again positioned itself as a technology leader with its innovative suite of products specifically designed for all aspects of the long-term care market, including: Nursing Care, Home Care, Assisted Living and Independent Living.
With this mission in mind, in the second quarter of 2018, the Company introduced a new sensor product that will have application in both the assisted living center market and the home health market. CareView Connect leverages both passive and active sensors to track the activities of daily life. CareView Connect provides peace of mind by using data from the resident’s activity, existing conditions, and environment to notify a caregiver of potential emergencies and identify the need for dignified support. CareView Connect consists of a small emergency assist button, two motion sensors, one sleep sensor, and one event sensor. Resident activity levels, medication administration, sleep patterns, and requests for assistance can all be monitored depending on which options are selected.
The skilled nursing home market consists of approximately 2,000,000 beds, which is double the size of the current hospital/healthcare facility bed market. The assisted living center market is even larger at approximately 3,000,000 beds. Our products flow naturally into the nursing home space as it is substantially the same setting as hospital rooms. To service this intended expansion, we have hired sales staff to pursue new business in these markets and we anticipate that we will sign new contracts in these markets before the end of 2019.
Our Products and Services
CareView Connect is a platform consisting of several products and applications targeted at improving level of care and efficiency. CareView is building a cohesive and tightly integrated solution that solves several problems that long-term care facilities face. We offer an array of wearable and stationary buttons that allow a resident to summon help either for an emergency or assistance, which can be anything from toileting help to assistance putting on their shoes. We offer a mobile app capable of delivering an alert to the caregiver and allows them document information around that alert. This allows for workflows and reports around the alerts, i.e. how long before the alert was handled, what was the cause of the alert, and if it was not acknowledged in a timely manner then the alert is escalated to another individual or group. This ensures that every alert is responded to timely and is verifiable. In addition, the caregiver usually is carrying out a litany of daily activities directed at each facility resident.
Alert Management and Monitoring System
CareView Connect provides a suite of hardware and software that facilitate a data-driven solution for alert management and monitoring. CareView Connect’s solution provides additional context, including location of the resident, which improves response time by the staff. The alert system includes a documentation platform that allows the facility’s staff to classify reason for alerts and provides metrics around response time. CareView Connect’s solution involves several passive sensors that monitor the resident.
Caregiver Platform
The caregiver platform includes a “Leave of Absence” component, which allows the facility to document when the resident is outside of their room for a duration of time. This information is incorporated with known data from the workflows and sensors to improve awareness. The Caregiver Connect mobile application provides a convenient and intuitive interface to the CareView Connect platform. The caregiver can use the mobile app to capture important information and interface with critical workflows, such as acknowledging and documenting alert presses by the resident. CareView Connect also provides a product focused on capturing and measuring the mental state and pain experienced by the resident. “How are you feeling today?” provides a convenient way to capture information about the mental state of the resident using emojis. Similarly, “What is your pain today?” allows the staff to categorize and document pain. Connect Resident is a tablet application intended for the resident’s direct use. This product currently supports video conferencing with a remote caregiver, becoming a communications conduit for tele-health. Connect Resident also supports “How are you feeling today?”, which allows the resident to submit this information directly.
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Quality of Life Metrics
CareView is developing its own algorithm for measuring quality of life based on “best of breed” research and leveraging the data collected by the platform. CareView Connect’s Quality of Life Metrics focuses on several categories, including Physical Activity, Bodily Pain, General Health, Vitality, Social Interaction, Mental Health, and Sleep Quality. Leveraging this data, the facility and their staff have improved visibility into the health and well-being of their residents. By applying machine learning and predictive analytics, subtle patterns and trends that may not otherwise be visible become actionable. The facility can use this information to present a more compassionate and capable level of care, differentiating the facility from their competition. The Quality of Life Metrics information can be made available to the family and loved ones, opening a new channel of remote awareness and care. Because the information is collected automatically, the family gains awareness on issues of which their loved ones may normally be unaware. The Connect Family mobile application allows family members to monitor their loved one and receive alerts and notifications based on their preferences.
CareView is working to integrate additional sensors into the platform, including a ballistocardiogram (BCG) sensor, which allows for improved monitoring and metrics around sleep quality, such as heart and respiration rate. Additional sensors include medical devices, such as scales, pulse oximeters, blood glucose meters, and blood pressure monitors.
Pricing Structure and Revenue Streams
The CareView Connect suite of products and services offers multiple pricing models. We work with each facility on pricing to offer an affordable package based on the demographics of the residents of the facility. The pricing structure with each facility is negotiated separately. Typically, we offer the CareView Connect basic package at a price per monitored room with varying price structures based on number of sensors and number of residents in each facility.
Summary of Product and Service Usage
The following table shows the number of healthcare facilities using our products and services including the number of installed hospitals, installed BEUs and billable BEUs as of June 30, 2019. The table also shows the number of pilot programs in place and hospital proposals pending approval, estimated bed count if the pilot programs and pending proposals result in executed contracts, and the estimated total number of licensed beds available under the pilot programs and hospital proposals. There are no assurances that the pilot programs will be extended, or the pending proposals will be approved to ultimately result in the number of estimated BEUs. Further, there are no assurances that we will have access to the total number of staffed beds in each healthcare facility.
Installed Hospitals |
Installed BEUs |
Billable BEU |
Total Staffed Beds in Contracted/ Pilot Hospitals |
Potential BEUs Available Under Current Contract/ Pilot Contracts (*) |
BEUs in Negotiation Prior to Contract/ Pilot |
102 | 9,280 | 8,855 | 177,938 | 66,772 | 54,690 |
(*) This number represents management’s best estimate of the number of units available to us in hospitals that are currently under contract. We assume that in any given acute care facility, our products and services are appropriate for deployment in approximately 70% of the total staffed beds. If we have specific information from a current contracted or pilot hospital that the number of potential BEUs in that hospital is either higher or lower than 70%, specific number has been used in the aggregate estimate.
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Results of Operations
Three months ended June 30, 2019 compared to three months ended June 30, 2018
Three Months Ended
June 30, |
||||||||||||
2019 | 2018 | Increase (Decrease) | ||||||||||
(000 ’s) | ||||||||||||
Revenue | $ | 1,546 | $ | 1,509 | $ | 37 | ||||||
Operating expenses | 2,067 | 2,418 | (351 | ) | ||||||||
Operating loss | (521 | ) | (909 | ) | (388 | ) | ||||||
Other, net | (2,887 | ) | (3,632 | ) | (745 | ) | ||||||
Net loss | $ | (3,408 | ) | $ | (4,541 | ) | $ | (1,133 | ) |
Revenue
Revenue increased approximately $37,000 for the three months ended June 30, 2019 as compared to the same period in 2018. Hospitals with billable BEUs decreased to 102 on June 30, 2019 from 104 on June 30, 2018. The slight increase in revenue is a result of a change in billable BEU mix within the 102 hospitals. Of the 102 hospitals with billable BEUs on June 30, 2019, one hospital group accounted for 25% of the total. Billable BEUs for all hospitals totaled 8,855 on June 30, 2019 as compared to 8,740 on June 30, 2018.
Operating Expenses
Our principal operating costs include the following items as a percentage of total operating expense.
Three Months Ended
June 30, |
||||||||
2019 | 2018 | |||||||
Human resource costs, including non-cash compensation | 57 | % | 56 | % | ||||
Professional and consulting costs | 7 | % | 5 | % | ||||
Depreciation and amortization | 9 | % | 13 | % | ||||
Other product deployment costs | 4 | % | 6 | % | ||||
Travel and entertainment expense | 8 | % | 6 | % | ||||
Other expenses | 15 | % | 14 | % |
Operating expenses decreased by 15% as a result of the following items:
(000’s) | ||||
Human resource costs, including benefits | $ | (165 | ) | |
Depreciation and amortization | (135 | ) | ||
Other product deployment costs, excluding human resources and travel and entertainment expense | (55 | ) | ||
Professional and consulting costs | 5 | |||
Travel and entertainment expense | 14 | |||
Other expenses | (15 | ) | ||
$ | (351 | ) |
Human resource related costs (including salaries and benefits) decreased primarily as a result of a lower average head count during the three months ended June 30, 2019 compared to the same period in 2018. While we had 54 employees at June 30, 2019 as compared to 62 for the comparable date for the prior year, on average we employed 55 employees over the course of current period as compared to 64 for the comparable prior year period. Depreciation and amortization expense decrease by approximately $135,000, primarily as a result of a reduction in depreciation expense as certain RCP’s purchased in 2011 became fully depreciated in 2018. Other product development costs decreased primarily as a result of decreases in product deployment and installation costs and related non-capital equipment costs. Professional and consulting fees decreased approximately $19,000, primarily as a result of decreased legal and consulting fees. Travel and entertainment expense increased approximately $14,000 as a result of a higher product installations during the three-month period ended June 30, 2019 compared to the same period in 2018. For the comparable periods, other expenses decreased approximately $15,000, primarily a result of a reduction in Sales and Marketing and Research and Development non-personnel and travel costs ($32,000), partially offset by an increase in sales and property taxes ($17,000).
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Other, net
Other non-operating income and expense decreased by $745,000, or 21%, for the three months ended June 30, 2019 in comparison to the same period in 2018, primarily as a result of the Ninth Amendment to the HealthCor Purchase Agreement (see NOTE 10 in the accompanying Notes to Condensed Consolidated Financial Statements for further details), wherein, among other things, paid in kind interest was eliminated on certain loans included in the Purchase Agreement, partially offset by increased interest expense related to certain modifications to the Credit Agreement, as amended, with PDL BioPharma, Inc. (see NOTE 9 in the accompanying Notes to Condensed Consolidated Financial Statements for further details).
Net Loss
As a result of the factors above, our net loss of approximately $3,408,000 for the three months ended decreased approximately $1,133,000, or 25%, as compared to approximately $4,541,000 of net loss for the same period in 2018.
Six months ended June 30, 2019 compared to six months ended June 30, 2018
Three Months Ended
June 30, |
||||||||||||
2019 | 2018 | Increase
(Decrease) |
||||||||||
(000 ’s) | ||||||||||||
Revenue | $ | 3,019 | $ | 3,091 | $ | (72 | ) | |||||
Operating expenses | 4,105 | 5,178 | (1,073 | ) | ||||||||
Operating loss | (1,086 | ) | (2,087 | ) | (1,001 | ) | ||||||
Other, net | (5,398 | ) | (7,255 | ) | (1,857 | ) | ||||||
Net loss | $ | (6,484 | ) | $ | (9,342 | ) | $ | (2,858 | ) |
Revenue
Revenue decreased approximately $72,000 for the six months ended June 30, 2019 as compared to the same period in 2018. This decrease is a direct result of hospitals with billable BEUs decreasing to 102 on June 30, 2019 from 104 on June 30, 2018. Of the 102 hospitals with billable BEUs on June 30, 2019, one hospital group accounted for 25% of the total. Billable BEUs for all hospitals totaled 8,855 on June 30, 2019 as compared to 8,740 on June 30, 2018.
Operating Expenses
Our principal operating costs include the following items as a percentage of total operating expense.
Three Months Ended
June 30, |
||||||||
2019 | 2018 | |||||||
Human resource costs, including non-cash compensation | 55 | % | 54 | % | ||||
Professional and consulting costs | 8 | % | 8 | % | ||||
Depreciation and amortization | 9 | % | 14 | % | ||||
Oher product deployment costs | 4 | % | 6 | % | ||||
Travel and entertainment expense | 8 | % | 6 | % | ||||
Other expenses | 16 | % | 12 | % |
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Operating expenses decreased by 21% as a result of the following items:
(000’s) | ||||
Human resource costs, including benefits | $ | (568 | ) | |
Depreciation and amortization | (354 | ) | ||
Other product deployment costs, excluding human resources and travel and entertainment expense | (152 | ) | ||
Professional and consulting costs | (89 | ) | ||
Travel and entertainment expense | (4 | ) | ||
Other expenses | 94 | |||
$ | (1,073 | ) |
Human resource related costs (including salaries and benefits) decreased primarily as a result of a lower average head count during the six months ended June 30, 2019 compared to the same period in 2018. While we had 54 employees at June 30, 2019 as compared to 62 for the comparable date for the prior year, on average we employed 55 employees over the course of current period as compared to 64 for the comparable prior year period. Depreciation and amortization expense decrease by approximately $354,000, primarily as a result of a reduction in depreciation expense as certain RCP’s purchased in 2011 became fully depreciated in 2018. Other product development costs decreased $152,000 primarily as a result of decreases in product deployment and installation costs and related non-capital equipment costs. Professional and consulting fees decreased approximately $113,000, primarily as a result of decreased legal and consulting fees. Travel and entertainment expense decreased approximately $4,000 as a result of a reduction in product installations during the six-month period ended June 30, 2019 compared to the same period in 2018. For the comparable periods, other expenses increased approximately $94,000, primarily a result a change in disposal of assets ($87,000), an increase in sales and property taxes ($90,000), and an increase in rent expense related to common area maintenance costs ($34,000), partially offset by reductions in Sales and Marketing and Research and Development non-personnel and travel costs ($109,000).
Other, net
Other non-operating income and expense decreased by $1,857,000, or 26%, for the six months ended June 30, 2019 in comparison to the same period in 2018, primarily as a result of the Ninth Amendments to the HealthCor Purchase Agreement (see NOTE 10 in the accompanying Notes to Condensed Consolidated Financial Statements for further details), wherein, among other things, paid in kind interest was eliminated on certain loans included in the Purchase Agreement, partially offset by increased interest expense related to certain modifications to the Credit Agreement, as amended, with PDL BioPharma, Inc. (see NOTE 9 in the accompanying Notes to Condensed Consolidated Financial Statements for further details).
Net Loss
As a result of the factors above, our net loss of approximately $6,484,000 for the six months ended June 30, 2019 decreased approximately $2,858,000, or 31%, as compared to approximately $9,342,000 of net loss for the same period in 2018.
Liquidity and Capital Resources
Our cash position at June 30, 2019 was approximately $879,000.
Accounting standards require management to evaluate our ability to continue as a going concern for a period of one year subsequent to the date of the filing of this Form 10-Q (“evaluation period”). As such, we have evaluated if cash and cash equivalents on hand and cash generated through operating activities would be sufficient to sustain projected operating activities through August 14, 2020. We anticipate that our current resources, along with cash generated from operations, will not be sufficient to meet our cash requirements throughout the evaluation period, including funding anticipated losses and scheduled debt maturities. We expect to seek additional funds from a combination of dilutive and/or non-dilutive financings in the future. Because such transactions have not been finalized, receipt of additional funding is not considered probable under current accounting standards. If we do not generate sufficient cash flows from operations and obtain sufficient funds when needed, we expect that we would scale back our operating plan by deferring or limiting some, or all, of our capital spending, reducing our spending on travel, and/or eliminating planned headcount additions, as well as other cost reductions to be determined. Because such contingency plans have not been finalized (the specifics would depend on the situation at the time), such actions also are not considered probable for purposes of current accounting standards. Because, under current accounting standards, neither future cash generated from operating activities, nor management’s contingency plans to mitigate the risk and extend cash resources through the evaluation period, are considered probable, substantial doubt is deemed to exist about the Company’s ability to continue as a going concern. As we continue to incur losses, our transition to profitability is dependent upon achieving a level of revenues adequate to support its cost structure. We may never achieve profitability, and unless and until doing so, we intend to fund future operations through additional dilutive or non-dilutive financings. There can be no assurances, however, that additional funding will be available on terms acceptable to us, if at all.
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As of June 30, 2019, we had no material off-balance sheet arrangements.
In the ordinary course of business, we enter into agreements with third parties that include indemnification provisions which, in our judgment, are normal and customary for companies in our industry sector. These agreements are typically with business partners, clinical sites, and suppliers. Pursuant to these agreements, we generally agree to indemnify, hold harmless, and reimburse indemnified parties for losses suffered or incurred by the indemnified parties with respect to our product candidates, use of such product candidates, or other actions taken or omitted by us. The maximum potential amount of future payments we could be required to make under these indemnification provisions is unlimited. We have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value of liabilities relating to these provisions is minimal. Accordingly, we have no liabilities recorded for these provisions as of June 30, 2019.
In the normal course of business, we may be confronted with issues or events that may result in a contingent liability. These generally relate to lawsuits, claims, environmental actions or the actions of various regulatory agencies. We consult with counsel and other appropriate experts to assess the claim. If, in our opinion, we have incurred a probable loss as set forth by accounting principles generally accepted in the U.S., an estimate is made of the loss and the appropriate accounting entries are reflected in our financial statements. After consultation with legal counsel, we do not anticipate that liabilities arising out of currently threatened lawsuits and claims, if any, will have a material adverse effect on our financial position, results of operations or cash flows.
Critical Accounting Estimates
Please refer to our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Commission on March 29, 2019 and incorporated herein by reference, for detailed explanations of our critical accounting estimates, which have not changed significantly during the three months ended March 31, 2019.
New Accounting Pronouncements
Aside from the change noted in Leases as summarized in NOTE 1 of the accompanying financial statements, there have been no material changes to our significant accounting policies as summarized in NOTE 2 of our Annual Report on Form 10-K for the year ended December 31, 2018. We do not expect that the adoption of any recent accounting pronouncements will have a material impact on our accompanying condensed consolidated financial statements.
Recent Events
None.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
None.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms and is accumulated and communicated to our management, as appropriate, in order to allow timely decisions in connection with required disclosure.
36
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), we carried out an evaluation, with the participation of our management, including Steve G. Johnson, our Chief Executive Officer (“CEO”) and principal executive officer, and Jason T. Thompson, our principal financial officer and chief accounting officer, of the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Report.
Based upon that evaluation, our CEO and Chief Accounting Officer concluded that our disclosure controls and procedures were effective as of June 30, 2019 to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Controls
During the three months ended June 30, 2019, except for the adoption of the ASU 2016-02 Leases, there were no changes in our internal control over financial reporting that occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
None.
Our Company is a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, is not required to provide the information required under this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
None.
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Exhibit No. |
Date of Document | Name of Document |
3.01 | 11/06/07 | Articles of Incorporation for CareView Communications, Inc. filed in State of Nevada* |
6/26/19 |
Certificate of Amendment to Articles of Incorporation (incorporated herein by reference to Exhibit 3.01 to the Company’s Current Report on Form 8-K filed on June 26, 2019 (File No. 000-54090)) | |
3.03 | n/a | Amended Bylaws of CareView Communications, Inc., a Nevada corporation* |
10.01 | 4/09/19 | Fourth Amendment to Credit Agreement (incorporated herein by reference to Exhibit 10.18 to the Company’s Current Report on Form 8-K filed on April 15, 2019 (File No. 000-54090)) |
10.02 | 4/09/19 | Amended and Restated Tranche One Term Note (incorporated herein by reference to Exhibit 10.19 to the Company’s Current Report on Form 8-K filed on April 15, 2019 (File No. 000-54090)) |
10.03 | 4/29/19 | Thirteenth Amendment to Modification Agreement (incorporated herein by reference to Exhibit 10.20 to the Company’s Current Report on Form 8-K filed on May 1, 2019 (File No. 000-54090)) |
10.04 | 5/15/19 | Fourteenth Amendment to Modification Agreement (incorporated herein by reference to Exhibit 10.32 to the Company’s Current Report on Form 8-K filed on May 20, 2019 (File No. 000-54090)) |
10.05 | 5/15/19 | Twelfth Amendment to Note and Warrant Purchase Agreement (incorporated herein by reference to Exhibit 10.33 to the Company’s Current Report on Form 8-K filed on May 20, 2019 (File No. 000-54090)) |
10.06 | 5/15/19 | Form of Twelfth Amendment Supplemental Closing Note (incorporated herein by reference to Exhibit 10.34 to the Company’s Current Report on Form 8-K filed on May 20, 2019 (File No. 000-54090)) |
10.07 | 5/15/19 | Fifth Amendment to Credit Agreement (incorporated herein by reference to Exhibit 10.35 to the Company’s Current Report on Form 8-K filed on May 20, 2019 (File No. 000-54090)) |
10.08 | 5/15/19 | Form of Tranche Three Term Note (incorporated herein by reference to Exhibit 10.36 to the Company’s Current Report on Form 8-K filed on May 20, 2019 (File No. 000-54090)) |
10.09 | 5/15/19 | Form of Tranche Three Loan Warrant (incorporated herein by reference to Exhibit 10.37 to the Company’s Current Report on Form 8-K filed on May 20, 2019 (File No. 000-54090)) |
8/14/19 |
Certification of Chief Executive Officer of Periodic Report pursuant to Rule 13a-14a and Rule 14d-14(a)* | |
8/14/19 |
Certification of Chief Financial Officer of Periodic Report pursuant to Rule 13a-14a and Rule 15d-14(a)* | |
32 | 8/14/19 | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
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* |
* | Filed herewith. |
38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DATE: August 14, 2019
CAREVIEW COMMUNICATIONS, INC. | |||
By: | /s/ Steven G. Johnson | ||
Steven G. Johnson | |||
Chief Executive Officer | |||
Principal Executive Officer | |||
By: | /s/ Jason T. Thompson | ||
Jason T. Thompson | |||
Principal Financial Officer | |||
Chief Accounting Officer |
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CareView Communications, Inc. 10-Q
EXHIBIT 3.01
Articles of Incorporation
CAREVIEW COMMUNICATIONS, INC.
3. | Shares: |
The total number of shares of stock of all classes which the Corporation has authority to issue is 320,000,000 shares, of which 300,000,000 shall be common stock, with a par value of $.001 per share (“Common Stock”), and 20,000,000 shares shall be preferred stock, with a par value of $.001 per share (“Preferred Stock”).
4. | Additional Directors: |
Henry Burkhalter
5000 Legacy Drive, Suite 480
Plano, TX 75024
David Webb
5000 Legacy Drive, Suite 480
Plano, TX 75024
CareView Communications, Inc. 10-Q
EXHIBIT 3.03
AMENDED BYLAWS
OF
CAREVIEW COMMUNICATIONS, INC.
A Nevada Corporation
ARTICLE I – OFFICES
The registered office of the Corporation in the State of Nevada shall be located in the City and State designated in the Articles of Incorporation. The Corporation may also maintain offices at such other places within or without the State of Nevada as the Board of Directors may determine.
ARTICLE II – MEETING OF SHAREHOLDERS
Section 1 – Annual Meetings: (Chapter 78.310)
The annual meeting of the shareholders of the Corporation shall be held at the time fixed, from time to time, by the Directors.
Section 2 – Special Meetings: (Chapter 78.310)
Special meetings of the shareholders may be called by the Board of Directors or such person or persons authorized by the Board of Directors, and may be held in the State of Nevada or at some other location outside of the State of Nevada as designated by the Board of Directors.
Section 3 – Place of Meetings: (Chapter 78.310)
Meetings of shareholders shall be held at the registered office of the Corporation, or at such other places, within or without the State of Nevada as the Directors may from time to time fix. If no designation is made, the meeting shall be held at the Corporation’s registered office in the State of Nevada.
Section 4 – Notice of Meetings: (Section 78.370)
(a) | Written or printed notice of each meeting of shareholders, whether annual or special, signed by the president, vice president of secretary, stating the time when and place where it is to be held, as well as the purpose for which the meeting is called, shall be served either personally or by mail, by or at the direction of the president, the secretary, or the officer or the person calling the meeting, not less than ten or more than sixty days before the date of the meting, unless the lapse of the prescribed time shall have been waived before or after the taking of such action, upon each shareholder of record entitled to vote at such meeting, and to any other shareholder to whom the giving of notice may be required by law. If mailed, such notice shall be deemed given when deposited in the United States mail, addressed to the shareholder as it appears on the transfer records of the Corporation or to the current address that a shareholder has delivered to the Corporation in a written notice. |
(b) | Further notice to a shareholder is not required when notice of two consecutive annual meetings, and all notices of meetings or of the taking of action by written consent without a meeting to him or her during the period between those two consecutive annual meetings; or all, and at least two payments sent by first-class mail of dividends or interest on securities during a 12-month period have been mailed addressed to him or her at his or her address as shown on the records of the Corporation and have been returned undeliverable. |
Section 5 – Quorum: (Section 78.320)
(a) | Except as otherwise provided herein, or by law, or in the Articles or Incorporation (such Articles and any amendments thereof being hereinafter collectively referred to as the “Articles of Incorporation”), a quorum shall be present at all meetings of shareholders of the Corporation, if the holders of a majority of the shares entitled to vote on that matter are represented at the meeting in person or by proxy.. |
(b) | The subsequent withdrawal of any shareholder from the meeting, after the commencement of a meeting, or the refusal of any shareholder represented in person or by proxy to vote, shall have no effect on the existence of a quorum, after a quorum has been established at such meeting. |
(c) | Despite the absence of a quorum at any meeting of shareholders, the shareholders present may adjourn the meeting. |
Section 6 – Voting and Acting: (Section 78.320 & 78.350)
(a) | Except as otherwise provided by law, the Articles of Incorporation, or these Bylaws, or by any corporate action, the affirmative vote of the majority of shares entitled to vote on that matter and represented either in person or by proxy at a meeting of shareholders at which a quorum is present, shall be the act of the shareholders of the Corporation. |
(b) | Except as otherwise provided by statute, the Articles of Incorporation or the Bylaws, at each meeting of shareholders, each shareholder of the Corporation entitled to vote thereat shall be entitled to one vote for each share registered in his name on the books of the Corporation. |
(c) | Where appropriate communication facilities are reasonably available, any or all shareholders shall have the right to participate in any shareholders’ meeting by means of conference telephone or any means of communication by which all persons participating in the meeting are able to hear each other. |
Section 7 – Proxies: (Section 78.355)
Each shareholder entitled to vote or to express consent or dissent without a meeting, may do so either in person or by proxy, so long as such proxy is executed in writing by the shareholder himself, his authorized officer, director, employee or agent or by causing the signature of the stockholder to be affixed to the writing by any reasonable means, including, but not limited to, a facsimile signature, or by his attorney-in-fact there unto duly authorized in writing. Every proxy shall be revocable at will unless the proxy conspicuously states that it is irrevocable and the proxy is coupled with an interest. A telegram, telex, cablegram, or similar transmission by the shareholder, or a photographic, photocopy, or facsimile, shall be treated as a valid proxy, and treated as a substitution of the original proxy, so long as such transmission is a complete reproduction executed by the shareholder. If it is determined that the telegram, cablegram or other electronic transmission is valid, the persons appointed by the Corporation to count the votes of shareholders and determine the validity of proxies and ballots or other persons making those determinations must specify the information upon which they relied. No proxy shall be valid after the expiration of six months from the date of its execution, unless otherwise provided in the proxy. Such instrument shall be exhibited to the Secretary at the meeting and shall be filed with the records of the Corporation. If any shareholder designates two or more persons to act as proxies, a majority of those persons presents at the meeting, or, if one is present, then that one has and may exercise all of the powers conferred by the shareholder upon all of the persons so designated unless the shareholder provides otherwise.
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Section 8 – Action Without a Meeting: (Section 78.320)
Unless otherwise provided for in the Articles of Incorporation of the Corporation, any action may be taken without a meeting, without prior notice and without a vote if written consents are signed by the shareholders of outstanding shares having not less than the minimum number of votes that would be required to authorize or take the action at a meeting at which all shares entitled to vote on the action were present and voted.
ARTICLE III – BOARD OF DIRECTORS
Section 1 – Number, Term, Election and Qualifications: (Section 78.115, 78.330)
(a) | The first Board of Directors and all subsequent Boards of the Corporation shall consist of a minimum of 5 directors, unless and until it is otherwise determined that the number of directors be increased or decreased by vote of a majority of the entire Board of Directors. The Board of Directors or shareholders all have the power, in the interim between annual and special meetings of the shareholders, to increase or decrease the number of Directors of the Corporation. A Director need not be a shareholder of the Corporation unless the Articles of Incorporation of the Corporation or these Bylaws so require. |
(b) | Except as may otherwise be provided herein or in the Articles of Incorporation, the members of the Board of Directors of the Corporation shall be elected at the first annual shareholders’ meeting and at each annual meeting thereafter, unless their terms are staggered in the Articles of Incorporation of the Corporation or these Bylaws, by a plurality of the votes cast at a meeting of shareholders by the holders of shares entitled to vote in the election. |
(c) | The first Board of Directors shall hold office until the first annual meeting of shareholders and until their successors have been duly elected and qualified or until there is a decrease in the number of Directors. Thereinafter, Directors will be elected at the annual meeting of shareholders and shall hold office until the annual meeting of the shareholders next succeeding his election, unless their terms are staggered in the Articles of Incorporation of the Corporation (so long as at least one-fourth in number of the Directors of the Corporation are elected at each annual shareholders’ meeting) or these Bylaws, or until his prior death, resignation or removal. Any Director may resign at any time upon written notice of such resignation to the Corporation. |
(d) | All Directors of the Corporation shall have equal voting power unless
the Articles of Incorporation of the Corporation provide that the voting power of individual Directors or classes of Directors are greater than or less than that of any other individual Directors or classes of Directors, and the different voting powers may be stated in the Articles of Incorporation or may be dependent upon any fact or event that may be ascertained outside the Articles of Incorporation if the manner in which the fact or event may operate on those voting powers is stated in the Articles of Incorporation. If the Articles of Incorporation provide that any Directors have voting power greater than or less than other Directors of the Corporation, every reference in these Bylaws to a majority or other proportion of Directors shall be deemed to refer to majority or other proportion of the voting power of all the Directors or classes of Directors, as may be required by the Articles of Incorporation. |
Section 2 – Duties and Powers: (Section 78.120)
The Board of Directors shall be responsible for the control and management of the business and affairs, property and interests of the Corporation, and may exercise all powers of the Corporation, except such as those stated under Nevada state law, are in the Articles of Incorporation or by these Bylaws, expressly conferred upon or reserved to the shareholders or any other person or persons named therein.
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Section 3 – Regular Meetings: Notice: (Section 78.310)
(a) | A regular meeting of the Board of Directors shall be held within the State of Nevada or at such other place designed by the Board of Directors at such time and at such place as the Board shall fix. |
(b) | No notice shall be required of any regular meeting of the Board of Directors and, if given, need not specify the purpose of the meeting: provided however, that in case the Board of Directors shall fix or change the time of place of any regular meeting when such time and place was fixed before such change, notice of such action shall be given to each director who shall not have been present at the meting at which such action was taken within the time limited, and in the manner set forth in these Bylaws with respect to special meetings, unless such notice shall be waived in the manner set forth in these Bylaws. |
Section 4 – Special Meetings; Notice: (Section 78.310)
(a) | Special meetings of the Board of Directors shall be held at such time and place as may be specified in the respective notices or waivers of notice thereof. |
(b) | Except as otherwise required by statute, written notice of special meetings shall be mailed directly to each Director, addressed to him at his residence or usual place of business, or delivered orally, with sufficient time for the convenient assembly of Directors thereat, or shall be sent to him personally or given to him orally, not later than the day before the day on which the meeting is to be held. If mailed, the notice of any special meeting shall be deemed delivered on the second day after it is deposited in the United States mail, so addressed, with postage prepaid. If notice is given by telegram, it shall be deemed delivered when the telegram is delivered to the telegraph company. A notice or waiver of notice, except as required by these Bylaws, need not specify the business to be transacted at or the purpose or purposes of the meeting. |
(c) | Notice of any special meeting shall not be required to be given to any Director who shall attend such meeting without protesting prior thereto or at its commencement, the lack of notice to him, or who submits a signed waiver or notice, whether before or after the meeting. Notice of any adjourned meeting shall not be required. |
Section 5 – Chairperson:
The Chairperson of the Board, if any and if present, shall preside at all meetings of the Board of Directors. If there shall be no Chairperson, or he or she shall be absent, then the President shall preside, and in his absence, any other director chosen by the Board of Directors shall preside.
Section 6 – Quorum and Adjournments: (Section 78.315)
(a) | At all meetings of the Board of Directors, or any committee thereof, the presence of a majority of the entire Board, or such committee thereof, shall constitute a quorum for the transaction of business, except as otherwise provided by law, by the Certificate of Incorporation, or these Bylaws. |
(b) | A majority of the directors present at the time and place of any regular or special meeting, although less than a quorum, may adjourn the same from time to time without notice, whether or not a quorum exists. Notice of such adjourned meeting shall be given to Directors not present at time of the adjournment and, unless the time and place of the adjourned meeting are announced at the time of the adjournment, notice shall also be given to the other Directors who were present at the adjourned meeting. |
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Section 7 – Manner of Action: (Section 78.315)
(a) | At all meetings of the Board of Directors, each director present shall have one vote, irrespective of the number of shares of stock, if any, which he may hold. |
(b) | Except as otherwise provided by law, by the Articles of Incorporation, or these Bylaws, action approved by a majority of the votes of the Directors present at any meeting of the Board or any committee thereof at which a quorum is present, shall be the act of the Board of Directors or any committee thereof. |
(c) | Any action authorized in writing made prior or subsequent to such action by all of the Directors entitled to vote thereon and filed with the minutes of the Corporation, shall be the act of the Board of Directors, or any committee thereof, and have the same force and effect as if the same had been passed by unanimous vote at a duly called meeting of the Board or committee for all purposes. |
(d) | Where appropriate communications facilities are reasonably available, any or all directors shall have the right to participate in any Board of Directors meeting, or a committee of the Board of Directors meeting, by means of conference telephone or any means of communications by which all persons participating in the meeting are able to hear each other. |
Section 8 – Vacancies: (Section 78.335)
(a) | Unless otherwise provided for by the Articles of Incorporation of the Corporation, any vacancy in the Board of Directors occurring by reason of an increase in the number of directors, or by reason of the death, resignation, disqualification, removal or inability to act of any director, or other cause, shall be filled by an affirmative vote of a majority of the remaining directors, though less than a quorum of the Board or by a sole remaining Director, at any regular meeting or special meeting of the Board of Directors called for that purpose except whenever the shareholders of any class of classes or series thereof are entitled to elect one or more Directors by the Certificate of such class or classes or series may be filled by a majority of the Directors elected by such class of classes or series thereof then in office, or by a sole remaining Director so elected. |
(b) | Unless otherwise provided for by law, the Articles of Incorporation or these Bylaws, when one or more Directors shall resign from the board and such resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote otherwise to take effect when such resignation or resignations shall become effective. |
Section 9 – Resignation: (Section 78.335)
A Director may resign at any time by giving written notice of such resignation to the Corporation.
Section 10 – Removal: (Section 78.335)
Unless otherwise provided for by the Articles of Incorporation, one of more or all the Directors of the Corporation may be removed with or without cause at any time by a vote of two-thirds of the shareholders entitled to vote thereon, at a special meeting of the shareholders called for that purpose, unless the Articles of Incorporation provide that Directors may only be removed for cause, provided however, such Director shall not be removed if the Corporation states in its Articles of Incorporation that its Directors shall be elected by cumulative voting and there are a sufficient number of shares cast against his or her removal, which if cumulatively voted at an election of Directors would be sufficient to elect him or her. If a Director was elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove that Director.
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Section 11 – Compensation: (Section 78.140)
The Board of Directors may authorize and establish reasonable compensation of the Directors for services to the Corporation as Directors, including but not limited to attendance at any annual or special meeting of the Board.
Section 12 – Committees: (Section 78.125)
Unless otherwise provided for by the Articles of Incorporation of the Corporation, the Board of Directors may from time to time designate from among its members one of more committees, and alternate members thereof, as they deem desirable, each consisting of one of more members, with such powers and authority (to the extent permitted by law and these Bylaws) as may be provided in such resolution. Unless the Articles of Incorporation or Bylaws state otherwise, the Board of Directors may appoint natural persons who are not Directors to serve on such committees authorized herein. Each such committee shall serve at the pleasure of the Board and unless otherwise stated by law, the Certificate of Incorporation or these Bylaws, shall be governed by the rules and regulations stated herein regarding the Board of Elections.
ARTICLE IV – OFFICERS
Section 1 – Number, Qualifications, Election and Term of Office: (Section 78.130)
(a) | The Corporation’s officers shall have such titles and duties as shall be stated in these Bylaws or in a resolution of the Board of Directors that is consistent with these Bylaws. The officers of the Corporation shall consist of a president, secretary and treasurer, and may have one or more vice presidents, assistant secretaries, assistant treasurers, and such other officers as the Board of Directors may from time to time deem advisable. Any officer may hold two or more offices in the Corporation. |
(b) | The officers of the Corporation shall be elected by the Board of Directors at the regular annual meeting of the Board following the annual meeting of shareholders. |
(c) | Each officer shall hold office until the annual meeting of the Board of Directors next succeeding his election and until his successor shall have been duly elected and qualified, subject to earlier termination by his or her death, resignation or removal. |
Section 2 – Resignation:
Any officer may resign at any time by giving written notice of such resignation to the Corporation.
Section 3 – Removal:
Any officer elected by the Board of Directors may be removed, either with or without cause, and a successor elected by the Board at any time, and any officer or assistant officer, if appointed by another officer, may likewise be removed by such officer.
Section 4 – Vacancies:
A vacancy, however caused, occurring in the corporate officers and any newly created corporate officer positions, may be filled by the Board of Directors.
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Section 5 – Bonds:
The Corporation may require any or all of its officers to post a bond to the Corporation for the faithful performance of their positions or duties.
Section 6 – Compensation:
The compensation of the officers of the Corporation shall be fixed from time to time by the Board of Directors.
ARTICLE V – SHARES OF STOCK
Section 1 – Certificate of Stock: (Section 78.235)
(a) | The shares of the Corporation shall be represented by certificates or shall be uncertificated shares. |
(b) | Certificated shares of the Corporation shall be signed (either manually or by facsimile) by officers or agents designated by the Corporation for such purposes, and shall certify the number of shares owned by him in the Corporation. Whenever any certificate is countersigned or otherwise authenticated by a transfer agent or transfer clerk, and by a registrar, then a facsimile of the signatures of the officers or agents, the transfer agent or transfer clerk or the registrar of the Corporation may be printed or lithographed upon the certificate in lieu of the actual signatures. If the Corporation uses facsimile signatures of its officers and agents on its stock certificates, it cannot act as registrar of its own stock, but its transfer agent and registrar may be identical if the institution acting in those dual capacities countersigns or otherwise authenticates any stock certificates in both capacities. If any officer who has signed or whose facsimile signature has been placed upon such certificate, shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue. |
(c) | If the Corporation issues uncertificated shares as provided for in these Bylaws, with a reasonable time after the issuance or transfer of such uncertificated shares, and at least annually thereafter, the Corporation shall send a shareholder a written statement certifying the number of shares owned by such shareholder in the Corporation. |
(d) | Except as otherwise provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series shall be identical. |
Section 2 – Lost or Destroyed Certificates: (Section 104.8405)
The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed if the owner:
(a) | so requests before the Corporation has notice that the shares have been acquired by a bona fide purchaser |
(b) | files with the Corporation a sufficient indemnity bond; and |
(c) | satisfies such other requirements, including evidence of such loss, theft or destruction, as may be imposed by the Corporation. |
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Section 3 – Transfers of Shares: (Section 104.8401, 104.8406 & 104.8416)
(a) | Transfers or registration of transfer of shares of the Corporation shall be made on the stock transfer books of the Corporation by the registered holder thereof, or by his attorney duly authorized by a written power of attorney; and in the case of shares represented by certificates, only after the surrender to the Corporation of the certificates representing such shares with such shares properly endorsed, with such evidence of the authenticity of such endorsement, transfer, authorization and other matters as the Corporation may reasonably require, and the payment of all stock transfer taxes due thereon. |
(b) | The Corporation shall be entitled to treat the holder of record of any share or shares as the absolute owner thereof for all purposes and shall not be bound to recognize any legal, equitable or other claim to, or interest in, such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law. |
Section 4 – Record Date: (Section 78.215 & 78.350)
(a) | The Board of Directors may fix, in advance, which shall not be more than sixty days before the meeting or action requiring a determination of shareholders, as the record date for the determination of shareholders entitled to receive notice of, or to vote at, any meeting of shareholders, or to consent to any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividends, or allotment of any rights, or for the purpose of any other action. If no record date is fixed, the record date for shareholders entitled to notice of meeting shall be at the close of business on the day preceding the day on which notice is given, or, if no notice is given, the day on which the meeting is held, or if notice is waived, at the close of business on the day before the day on which the meeting is held. |
(b) | The Board of Directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted for shareholders entitled to receive payment of any dividend or other distribution or allotment of any rights of shareholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action. |
(c) | A determination of shareholders entitled to notice of or to vote at shareholders’ meeting is effective for any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting. |
Section 5 – Fractions of Shares/Scrip: (Section 78.205)
The Board of Directors may authorize the issuance of certificates or payment of money for fractions of a share, either represented by a certificate or uncertificated, which shall entitle the holder to exercise voting rights, receive dividends and participate in any assets of the Corporation in the event of liquidation, in proportion to the fractional holdings; or it may authorize the payment in case of the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined; or it may authorize the issuance, subject to such conditions as may be permitted by law, of scrip in registered or bearer form over the manual or facsimile signature of an officer or agent of the Corporation or its agent for that purpose, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights of shareholder, except as therein provide. The scrip may contain any provisions or conditions that the Corporation deems advisable. If a scrip ceases to be exchangeable for full share certificates, the shares that would otherwise have been issuable as provided on the scrip are deemed to be treasury shares unless the scrip contains other provisions for their disposition.
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ARTICLE VI – DIVIDENDS (SECTION 78.215 & 78.288)
(a) | Dividends may be declared and paid out of any funds available therefore, as often, in such amounts, and at such time or times as the Board of Directors may determine and shares may be used pro rata and without consideration to the Corporation’s shareholders or to the shareholders of one or more classes or series. |
(b) | Shares of one class or series may not be issued as a share dividend to shareholders of another class or series unless: |
(i) so authorized by the Articles of Incorporation;
(ii) a majority of the shareholders of the class or series to be issued approve the issue; or
(iii) there are no outstanding shares of the class or series of shares that are authorized to be issued.
ARTICLE VII – FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be subject to change by the Board of Directors from time to time, subject to applicable law.
ARTICLE VIII – CORPORATE SEAL (SECTION 78.065)
The corporate seal, if any, shall be in such form as shall be proscribed and altered, from time to time, by the Board of Directors. The use of a seal or stamp by the Corporation on corporate documents is not necessary and the lack thereof shall not in any way affect the legality of a corporate document.
ARTICLE IX – AMENDMENTS
Section 1 – By Shareholders:
All Bylaws of the Corporation shall be subject to alteration or repeal, and new Bylaws may be made, by a majority vote of the shareholders at the time entitled to vote in the election of Directors even though these Bylaws may also be altered, amended or repealed by the Board of Directors.
Section 2 – By Directors: (Section 78.120)
The Board of Directors shall have power to make, adopt, alter, amend and repeal, from time to time, Bylaws of the Corporation.
ARTICLE X – WAIVER OF NOTICE: (Section 78.375)
Whenever any notice is required to be given by law, the Articles of Incorporation or these Bylaws, a written waiver signed by the person or persons entitled to such notice, whether before or after the meeting by any person, shall constitute a waiver of notice of such meeting.
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ARTICLE XI – INTERESTED DIRECTORS (SECTION 78.140)
No contract or transaction shall be void or voidable if such contract or transaction is between the corporation and one of more of its Directors or Officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its Directors or Officers, are directors or officers, or have a financial interest, when such Director or Officer is present at or participates in the meeting of the Board, or the committee of the shareholders which authorizes the contract or transaction or his, her or their votes are counted for such purpose, if:
(a) | the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee and are noted in the minutes of such meeting, and the Board of committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested Directors, even though the disinterested Directors by less than a quorum; or |
(b) | the material facts as to his, her or their relationship or relationships or interest or interests and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholder; or |
(c) | the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee of the shareholders; or |
(d) | the fact of the common directorship, office or financial interest is not disclosed or known to the Director or Officer at the time the transaction is brought before the Board of Directors of the Corporation for such action. |
Such interested Directors may be counted when determining the presence of a quorum at the meeting of the Board of Directors or the committee meeting authorizing the contract or transaction.
ARTICLE XII – ANNUAL LIST OF OFFICERS, DIRECTORS AND REGISTERED AGENT: (Section 78.150 & 78.165)
The Corporation shall, within sixty days after the filing of its Articles of Incorporation with the Secretary of State, and annually thereafter on or before the last day of the month in which the anniversary date of incorporation occurs each year, file with the Secretary of State a list of its president, secretary and treasurer and all of its Directors, along with the post office box or street address, either residence or business, and a designation of its resident agent in the state of Nevada Such list shall be certified by an officer of the Corporation
____________________
*Unless otherwise stated herein, all references to “Sections” in these Bylaws refer to those sections contained in Title 78 of the Nevada Private Corporations Law.
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CareView Communications, Inc. 10-Q
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Steven G. Johnson, certify that:
(1) | I have reviewed this quarterly report on Form 10-Q of CareView Communications, Inc.; |
(2) | Based on my knowledge, this report does not contain any untrue statements 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 evaluations; 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 the internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
August 14, 2019 | /s/ Steven G. Johnson | ||
Steven G. Johnson | |||
Chief Executive Officer | |||
Principal Executive Officer |
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CareView Communications, Inc. 10-Q
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Jason T. Thompson, certify that:
(1) | I have reviewed this quarterly report on Form 10-Q of CareView Communications, Inc.; |
(2) | Based on my knowledge, this report does not contain any untrue statements 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 evaluations; 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 the internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
August 14, 2019 | /s/ Jason T. Thompson | ||
Jason T. Thompson | |||
Principal Financial Officer | |||
Chief Accounting Officer |
41
CareView Communications, Inc. 10-Q
EXHIBIT 32
CERTIFICATIONS UNDER SECTION 906
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of CareView Communications, Inc., a Nevada corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:
The Quarterly Report for the quarter ended June 30, 2019 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 14, 2019 | /s/ Steven G. Johnson | ||
Steven G. Johnson | |||
Chief Executive Officer | |||
Principal Executive Officer | |||
August 14, 2019 | /s/ Jason T. Thompson | ||
Jason T. Thompson | |||
Chief Accounting Officer | |||
Principal Financial Officer |
42
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