(Mark One)
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2012
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
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For the transition period from ____________ to ____________
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Delaware
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32-0186005
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer o
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Accelerated filer o
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Non-Accelerated filer o
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Smaller reporting company x
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(Do not check if a smaller reporting company
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Page
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PART I.—FINANCIAL INFORMATION
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Item 1.
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Financial Statements
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Consolidated Balance Sheets
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2
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Consolidated Statements of Operations - unaudited
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3
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Consolidated Statement of Equity –unaudited
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4
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Consolidated Statement of Cash Flows - unaudited
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5
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Notes to Consolidated Financial Statements
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6 | ||
Item 2.
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Management’s Discussion and Analysis of Financial Conditions and Results of Operations
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22 | |
Item 3.
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Quantitative and Qualitative Disclosures About Market Risks
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27 | |
Item 4.
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Controls and Procedures
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27 | |
PART II—OTHER INFORMATION
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Item 1.
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Legal Proceedings
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28 | |
Item 1A.
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Risk Factors
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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28 | |
Item 3.
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Defaults Upon Senior Securities
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28 | |
Item 4.
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Mine Safety Disclosures
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28 | |
Item 5.
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Other Information
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28 | |
Item 6.
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Exhibits
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28 | |
SIGNATURE
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29 |
Progressive Care Inc. and Subsidiaries
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||||||||
Consolidated Balance Sheets
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||||||||
September 30, 2012
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December 31, 2011
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|||||||
(As Restated)
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||||||||
(Unaudited)
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||||||||
Assets
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||||||||
Current Assets
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||||||||
Cash
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$ | 3,572 | $ | 88,874 | ||||
Accounts receivable - net
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1,295,198 | 1,006,835 | ||||||
Income tax receivable
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4,819 | - | ||||||
Inventory
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319,951 | 248,678 | ||||||
Prepaids
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23,546 | 21,741 | ||||||
Total Current Assets
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1,647,086 | 1,366,128 | ||||||
Property and equipment - net
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270,654 | 276,795 | ||||||
Other Assets
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||||||||
Deposits
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47,612 | 44,741 | ||||||
Debt issue costs - net
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105,051 | 22,259 | ||||||
Deferred tax assets - net
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216,322 | 167,613 | ||||||
Total Other Assets
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368,985 | 234,613 | ||||||
Total Assets
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$ | 2,286,725 | $ | 1,877,536 | ||||
Liabilities and Stockholders' Equity
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||||||||
Current Liabilities
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||||||||
Cash overdraft
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$ | - | $ | 71,380 | ||||
Accounts payable and accrued liabilities
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515,642 | 248,785 | ||||||
Deferred rent payable
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39,812 | 17,535 | ||||||
Income taxes payable
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- | 43,344 | ||||||
Debt - net
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449,182 | 87,767 | ||||||
Debt - related party
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85,000 | 73,329 | ||||||
Accrued interest payable - related party
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- | 24,732 | ||||||
Derivative liability
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187,974 | - | ||||||
Deferred tax liabilities - net
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13,000 | 43,599 | ||||||
Total Current Liabilities
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1,290,610 | 610,471 | ||||||
Long Term Debt
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150,000 | 150,000 | ||||||
Total Liabilities
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1,440,610 | 760,471 | ||||||
Stockholders' Equity
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||||||||
Common stock, par value $0.0001; 100,000,000 shares authorized
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||||||||
24,413,602 and 36,348,830 issued and outstanding, respectively
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2,441 | 3,635 | ||||||
Additional paid in capital
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(29,546 | ) | (267,831 | ) | ||||
Retained Earnings
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873,220 | 1,381,261 | ||||||
Total Stockholders' Equity
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846,115 | 1,117,065 | ||||||
Total Liabilities and Stockholders' Equity
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$ | 2,286,725 | $ | 1,877,536 |
Progressive Care Inc. and Subsidiaries
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||||||||||||||||
Consolidated Statements of Operations
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||||||||||||||||
(Unaudited)
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||||||||||||||||
Three Months Ended
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Nine Months Ended
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|||||||||||||||
September 30, 2012
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September 30, 2011
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September 30, 2012
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September 30, 2011
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(As Restated)
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(As Restated)
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(As Restated)
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(As Restated)
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|||||||||||||
Sales - net
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$ | 2,532,257 | $ | 1,937,985 | $ | 7,502,263 | $ | 5,707,894 | ||||||||
Cost of sales
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1,749,911 | 1,085,814 | 5,337,783 | 2,917,767 | ||||||||||||
Gross profit
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782,346 | 852,171 | 2,164,480 | 2,790,127 | ||||||||||||
Selling, general and administrative expenses
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1,099,529 | 946,117 | 2,708,990 | 2,920,008 | ||||||||||||
Loss from operations
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(317,183 | ) | (93,946 | ) | (544,510 | ) | (129,881 | ) | ||||||||
Other income (expense)
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||||||||||||||||
Change in fair value of derivative liability
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40,234 | - | 56,179 | - | ||||||||||||
Gain on AP and debt forgiveness
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- | - | 69,298 | - | ||||||||||||
Gain on forgivensss of accrued interest - former related party
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- | - | - | 12,585 | ||||||||||||
Loss on sale of equipment
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- | (2,671 | ) | - | (2,671 | ) | ||||||||||
Interest expense
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(127,181 | ) | (1,426 | ) | (213,575 | ) | (13,997 | ) | ||||||||
Total other expense
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(86,947 | ) | (4,097 | ) | (88,098 | ) | (4,083 | ) | ||||||||
Loss before provision for income taxes
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(404,130 | ) | (98,043 | ) | (632,608 | ) | (133,964 | ) | ||||||||
Provision for income taxes
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Current income tax benefit (expense)
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26,482 | 25,795 | 45,259 | (14,748 | ) | |||||||||||
Deferred income tax benefit (expense)
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55,115 | (29,601 | ) | 79,308 | (50,002 | ) | ||||||||||
Total income tax benefit (expense)
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81,597 | (3,806 | ) | 124,567 | (64,750 | ) | ||||||||||
Net loss
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$ | (322,533 | ) | $ | (101,849 | ) | $ | (508,041 | ) | $ | (198,714 | ) | ||||
Basic and diluted net loss per common share
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(0.01 | ) | (0.00 | ) | (0.01 | ) | (0.01 | ) | ||||||||
Weighted average number of common shares outstanding
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||||||||||||||||
during the period - basic and diluted
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29,573,281 | 35,879,339 | 34,132,251 | 35,137,784 |
Progressive Care Inc. and Subsidiaries
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||||||||||||||||||||
Consolidated Statement of Stockholders' Equity
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||||||||||||||||||||
For the Years Ended December 31, 2011 and 2010 and the Period Ended September 30, 2010
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||||||||||||||||||||
(Unaudited & Restated)
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||||||||||||||||||||
Common Stock
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Additional
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Total
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||||||||||||||||||
$0.0001 Par Value
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Paid-in
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Retained
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Stockholders'
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|||||||||||||||||
Shares
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Amount
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Capital
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Earnings
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Equity
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Balance, December 31, 2010
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33,562,000 | $ | 3,356 | $ | (1,320,279 | ) | $ | 1,635,538 | $ | 318,615 | ||||||||||
Issuance of common stock for services rendered
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302,261 | 30 | 83,213 | - | 83,243 | |||||||||||||||
Issuance of common stock for services rendered - related parties
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1,385,596 | 139 | 524,861 | - | 525,000 | |||||||||||||||
Issuance of common stock in connection with the conversions of debt and acrrued interest
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1,098,973 | 110 | 439,479 | - | 439,589 | |||||||||||||||
Issuance of warrants as debt issue cost - related party
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- | - | 4,895 | - | 4,895 | |||||||||||||||
Net loss for the year ended December 31, 2011
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- | - | - | (254,277 | ) | (254,277 | ) | |||||||||||||
Balance, December 31, 2011
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36,348,830 | 3,635 | (267,831 | ) | 1,381,261 | 1,117,065 | ||||||||||||||
Issuance of common stock for debt issue costs
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196,078 | 19 | 99,981 | - | 100,000 | |||||||||||||||
Issuance of common stock for services rendered
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45,000 | 5 | 21,096 | - | 21,101 | |||||||||||||||
Issuance of common stock for services rendered - related party
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32,126 | 3 | 14,997 | - | 15,000 | |||||||||||||||
Retirement of cancelled shares
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(12,208,432 | ) | (1,221 | ) | 1,221 | - | - | |||||||||||||
Gain on debt forgiveness - related party
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- | - | 100,990 | - | 100,990 | |||||||||||||||
Net loss for the nine months ended September 30, 2012
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- | - | - | (508,041 | ) | (508,041 | ) | |||||||||||||
Balance, September 30, 2012 (unaudited, as restated)
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24,413,602 | $ | 2,441 | $ | (29,546 | ) | $ | 873,220 | $ | 846,115 |
Progressive Care Inc. and Subsidiaries
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||||||||
Consolidated Statements of Cash Flows
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||||||||
(Unaudited)
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||||||||
Nine Months Ended September 30,
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||||||||
2012
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2011
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|||||||
(As Restated)
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(As Restated)
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|||||||
Cash Flows From Operating Activities:
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||||||||
Net loss
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$ | (508,041 | ) | $ | (198,714 | ) | ||
Adjustments to reconcile net loss to net cash
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||||||||
provided by operating activities:
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||||||||
Depreciation
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193,840 | 30,576 | ||||||
Bad debt
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277,659 | - | ||||||
Recognition of stock-based compensation
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21,101 | 483,243 | ||||||
Recognition of stock-based compensation - related parties
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15,000 | - | ||||||
Forgiveness of accrued interest - former related party
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(12,585 | ) | ||||||
Amortization of debt issue costs and debt discount
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172,052 | - | ||||||
Change in fair value of derivative liability
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(56,179 | ) | - | |||||
Gain on AP and debt forgiveness
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(69,298 | ) | - | |||||
Changes in operating assets and liabilities:
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||||||||
(Increase) decrease in:
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||||||||
Accounts receivable - net
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(566,022 | ) | (393,552 | ) | ||||
Income tax receivable
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(4,819 | ) | - | |||||
Inventory
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(71,273 | ) | 49,990 | |||||
Prepaids
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(1,805 | ) | - | |||||
Deposits
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(2,871 | ) | (35,704 | ) | ||||
Deferred taxes
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(79,308 | ) | 50,002 | |||||
Increase (decrease) in:
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||||||||
Accounts payable and accrued liabilities
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426,723 | 149,350 | ||||||
Deferred rent
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22,277 | 13,100 | ||||||
Income tax payable
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(43,344 | ) | 2,138 | |||||
Accrued interest payable - related party
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2,929 | 4,387 | ||||||
Net Cash Provided by (Used in) Operating Activities
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(271,379 | ) | 142,231 | |||||
Cash Flows From Investing Activities:
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||||||||
Purchase of property and equipment
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(187,699 | ) | (178,902 | ) | ||||
Loss on sale of equipment
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- | 2,671 | ||||||
Net Cash Used in Investing Activities
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(187,699 | ) | (176,231 | ) | ||||
Cash Flows From Financing Activities:
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||||||||
Cash overdraft
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(71,380 | ) | - | |||||
Proceeds from issuance of debt
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540,000 | - | ||||||
Proceeds from issuance of debt - related party
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85,000 | - | ||||||
Repayment of debt
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(127,344 | ) | (71,780 | ) | ||||
Debt issue costs
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(52,500 | ) | - | |||||
Net Cash Provided by (Used in) Financing Activities
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373,776 | (71,780 | ) | |||||
Net decrease in cash
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(85,302 | ) | (105,780 | ) | ||||
Cash at beginning of year
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88,874 | 204,336 | ||||||
Cash at end of period
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$ | 3,572 | $ | 98,556 | ||||
Supplemental disclosures of cash flow information:
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||||||||
Cash paid for interest
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$ | 12,062 | $ | 11,033 | ||||
Cash paid for taxes
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$ | 3,000 | $ | 12,610 | ||||
Supplemental disclosures of non-cash financing activities:
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||||||||
Conversion of accounts payable to notes
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$ | 153,335 | $ | - | ||||
Debt discount recorded on convertible debt accounted for as a derivative liability
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$ | 244,153 | $ | - | ||||
Issuance of common stock for debt issue costs
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$ | 100,000 | $ | - | ||||
Gain on debt forgiveness - related party
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$ | 100,990 | $ | - | ||||
Conversion of notes payable into common shares
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$ | - | $ | 410,000 | ||||
Conversion of accrued interest into common shares
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$ | - | $ | 29,589 |
Progressive Care Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
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September 30, 2012
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(Unaudited)
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(As Restated)
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Progressive Care Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
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September 30, 2012
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(Unaudited)
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(As Restated)
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September 30, 2012
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||||||||||||
As Originally Reported
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Adjustments
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As Restated
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||||||||||
Assets
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||||||||||||
Current Assets
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||||||||||||
Cash
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$ | 3,572 | $ | - | $ | 3,572 | ||||||
Accounts receivable - net
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1,295,198 | - | 1,295,198 | |||||||||
Income tax receivable
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3,849 | 970 | A | 4,819 | ||||||||
Inventory
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319951 | - | 319,951 | |||||||||
Prepaids
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23,546 | - | 23,546 | |||||||||
Total Current Assets
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1,646,116 | 970 | 1,647,086 | |||||||||
Property and equipment - net
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270,654 | - | 270,654 | |||||||||
Other Assets
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||||||||||||
Deposits
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47,612 | - | 47,612 | |||||||||
Debt issue costs - net
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105,051 | 105,051 | ||||||||||
Deferred tax assets - net
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156, 268 | 60,054 | A | 216,322 | ||||||||
Total Other Assets
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308,931 | 60,054 | 368,985 | |||||||||
Total Assets
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$ | 2,225,701 | $ | 61,024 | $ | 2,286,725 | ||||||
Liabilities and Stockholders' Equity
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||||||||||||
Current Liabilities
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||||||||||||
Accounts payable and accrued liabilities
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$ | 515,642 | $ | - | $ | 515,642 | ||||||
Deferred rent payable
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39,812 | - | 39,812 | |||||||||
Debt - net
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449,182 | - | 449,182 | |||||||||
Debt - related parties
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85,000 | - | 85,000 | |||||||||
Derivative liability
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187,974 | - | 187,974 | |||||||||
Deferred tax liabilities - net
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55,268 | (42,268 | ) A | 13,000 | ||||||||
Total Current Liabilities
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1,332,878 | (42,268 | ) | 1,290,610 | ||||||||
Long Term Debt
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150,000 | - | 150,000 | |||||||||
Total Liabilities
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1,482,878 | (42,268 | ) | 1,440,610 | ||||||||
Stockholders' Equity
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||||||||||||
Common stock, par value $0.0001; 100,000,000 shares
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||||||||||||
authorized, 35,280,000 and 5,280,000 issued and outstanding
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2,441 | - | 2,441 | |||||||||
Additional paid in capital
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93,340 | (122,886 | )B | (29,546 | ) | |||||||
Retained earnings
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647,042 | 226,178 | B | 873,220 | ||||||||
Total Stockholders' Equity
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742,823 | 103,292 | 846,115 | |||||||||
Total Liabilities and Stockholders' Equity
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$ | 2,225,701 | $ | 61,024 | $ | 2,286,725 |
Adjustments
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A - Recalculation of taxes including new net operating loss as a result of Reverse Merger; see Note 10
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B- Change in additional paid in capital and retained earnings a result of change in acquirer/acquiree in connection with Reverse Merger; see Note 1
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Progressive Care Inc. and Subsidiaries
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Notes to Consolidated Financial Statements
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September 30, 2012
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(Unaudited)
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(As Restated)
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Three Months Ended
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Nine Months Ended
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|||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2012
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September 30, 2011
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September 30, 2012
|
September 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||
As Originally Reported
|
Adjustments
|
As
Restated
|
As Originally Reported
|
Adjustments
|
As
Restated
|
As Originally Reported
|
Adjustments
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As
Restated
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As Originally Reported
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Adjustments
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As
Restated
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|||||||||||||||||||||||||||||||||||||
Sales - net
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$ | 2,532,257 | $ | - | 2,532,257 | $ | 1,937,985 | $ | - | $ | 1,937,985 | $ | 7,502,263 | $ | - | 7,502,263 | $ | 5,707,894 | $ | - | $ | 5,707,894 | ||||||||||||||||||||||||||
Cost of sales
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1,749,911 | - | 1,749,911 | 1,085,814 | - | 1,085,814 | 5,337,783 | - | 5,337,783 | 2,917,767 | - | 2,917,767 | ||||||||||||||||||||||||||||||||||||
Gross profit
|
782,346 | - | 782,346 | 852,171 | - | 852,171 | 2,164,480 | - | 2,164,480 | 2,790,127 | - | 2,790,127 | ||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses
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1,099,529 | - | 1,099,529 | 1,007,418 | (61,301 | ) | B | 946,117 | 2,708,990 | - | 2,708,990 | 3,101,911 | (181,903 | ) | B | 2,920,008 | ||||||||||||||||||||||||||||||||
Loss from operations
|
(317,183 | ) | - | (317,183 | ) | (155,247 | ) | 61,301 | (93,946 | ) | (544,510 | ) | - | (544,510 | ) | (311,784 | ) | 181,903 | (129,881 | ) | ||||||||||||||||||||||||||||
Other income (expense)
|
||||||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of derivative liability
|
40,234 | - | 40,234 | - | - | - | 56,179 | - | 56,179 | - | - | - | ||||||||||||||||||||||||||||||||||||
Gain on AP and debt forgiveness
|
- | - | - | - | 69,298 | 69,298 | - | - | - | |||||||||||||||||||||||||||||||||||||||
Gain on forgivensss of accrued
interest - former related party
|
- | - | - | - | - | - | 12,585 | - | 12,585 | |||||||||||||||||||||||||||||||||||||||
Loss on sale of equipment
|
- | - | (2,671 | ) | (2,671 | ) | - | - | (2,671 | ) | - | (2,671 | ) | |||||||||||||||||||||||||||||||||||
Interest expense
|
(127,181 | ) | (127,181 | ) | (1,426 | ) | (1,426 | ) | (213,575 | ) | (213,575 | ) | (13,997 | ) | - | (13,997 | ) | |||||||||||||||||||||||||||||||
Total other expense
|
(86,947 | ) | - | (86,947 | ) | (4,097 | ) | (4,097 | ) | (88,098 | ) | - | (88,098 | ) | (4,083 | ) | - | (4,083 | ) | |||||||||||||||||||||||||||||
Loss before provision for income taxes
|
(404,130 | ) | - | (404,130 | ) | (159,344 | ) | 61,301 | (98,043 | ) | (632,608 | ) | - | (632,608 | ) | (315,867 | ) | 181,903 | (133,964 | ) | ||||||||||||||||||||||||||||
Provision for income taxes
|
||||||||||||||||||||||||||||||||||||||||||||||||
Current income tax benefit (expense)
|
- | 26,482 | A | 26,482 | - | 25,795 | A | 25,795 | - | 45,259 | A | 45,259 | - | (14,748 | ) | A | (14,748 | ) | ||||||||||||||||||||||||||||||
Deferred income tax benefit (expense)
|
39,699 | 15,416 | A | 55,115 | - | (29,601 | ) | A | (29,601 | ) | 39,699 | 39,609 | A | 79,308 | - | (50,002 | ) | A | (50,002 | ) | ||||||||||||||||||||||||||||
Total income tax benefit (expense)
|
39,699 | 41,898 | 81,597 | - | (3,806 | ) | (3,806 | ) | 39,699 | 84,868 | 124,567 | - | (64,750 | ) | (64,750 | ) | ||||||||||||||||||||||||||||||||
Net loss
|
$ | (364,431 | ) | $ | 41,898 | (322,533 | ) | $ | (159,344 | ) | $ | 57,495 | $ | (101,849 | ) | $ | (592,909 | ) | $ | 84,868 | (508,041 | ) | $ | (315,867 | ) | $ | 117,153 | $ | (198,714 | ) | ||||||||||||||||||
Basic and diluted loss per share
|
(0.01 | ) | (0.01 | ) | (0.00 | ) | (0.00 | ) | (0.02 | ) | (0.01 | ) | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||||||||||
Weighted average number of common shares outstanding
|
||||||||||||||||||||||||||||||||||||||||||||||||
during the period - basic and diluted
|
29,573,281 | 29,573,281 | 35,879,539 | 35,879,339 | 34,132,251 | 34,132,251 | 35,137,928 | 35,137,784 |
Adjustments
|
A - Recalculation of taxes including new net operating loss as a result of Reverse Merger; see Note 10
|
B - Removal of amortization expense of intangible assets in connection with Reverse Merger; see Note 1
|
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
September 30, 2012
|
September 30, 2011
|
|||||||||||||||||||||||||
As Originally Reported
|
Adjustments
|
As
Restated
|
As Originally Reported
|
Adjustments
|
As
Restated
|
|||||||||||||||||||||
Cash Flows From Operating Activities:
|
||||||||||||||||||||||||||
Net loss
|
$ | (592,909 | ) | 84,868 | $ | (508,041 | ) | $ | (315,867 | ) | 117,153 | $ | (198,714 | ) | ||||||||||||
Adjustments to reconcile net loss to net cash
|
||||||||||||||||||||||||||
provided by operating activities:
|
||||||||||||||||||||||||||
Depreciation
|
193,840 | - | 193,840 | 30,576 | - | 30,576 | ||||||||||||||||||||
Bad debt
|
277,659 | - | 277,659 | - | - | - | ||||||||||||||||||||
Recognition of stock-based compensation
|
21,101 | - | 21,101 | 483,243 | - | 483,243 | ||||||||||||||||||||
Recognition of stock-based compensation - related parties
|
15,000 | - | 15,000 | - | - | - | ||||||||||||||||||||
Forgiveness of accrued interest - former related party
|
- | (12,585 | ) | C | (12,585 | ) | ||||||||||||||||||||
Amortization of intangibles
|
- | - | - | 181,904 | (181,904 | ) | B | - | ||||||||||||||||||
Amortization of debt issue costs and debt discount
|
172,052 | - | 172,052 | - | - | - | ||||||||||||||||||||
Change in fair value of derivative liability
|
(56,179 | ) | - | (56,179 | ) | - | - | - | ||||||||||||||||||
Gain on AP and debt forgiveness
|
(69,298 | ) | - | (69,298 | ) | - | - | - | ||||||||||||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||||||||||||
(Increase) decrease in:
|
||||||||||||||||||||||||||
Accounts receivable - net
|
(566,022 | ) | - | (566,022 | ) | (393,552 | ) | - | (393,552 | ) | ||||||||||||||||
Income tax receivable
|
(3,849 | ) | (970 | ) | A | (4,819 | ) | (12,610 | ) | 12,610 | A | - | ||||||||||||||
Inventory
|
(71,273 | ) | - | (71,273 | ) | 49,990 | - | 49,990 | ||||||||||||||||||
Prepaids
|
(1,805 | ) | - | (1,805 | ) | - | - | - | ||||||||||||||||||
Deposits
|
(2,871 | ) | - | (2,871 | ) | (35,704 | ) | - | (35,704 | ) | ||||||||||||||||
Deferred tax assets - net
|
- | (79,308 | ) | A | (79,308 | ) | - | 50,002 | A | 50,002 | ||||||||||||||||
Increase (decrease) in:
|
||||||||||||||||||||||||||
Accounts payable and accrued liabilities
|
426,723 | - | 426,723 | 142,570 | 6,780 | C/D | 149,350 | |||||||||||||||||||
Deferred rent
|
22,277 | - | 22,277 | 13,100 | - | 13,100 | ||||||||||||||||||||
Income tax payable
|
(38,754 | ) | (4,590 | ) | A | (43,344 | ) | - | 2,138 | A | 2,138 | |||||||||||||||
Accrued interest payable - related party
|
2,929 | - | 2,929 | (1,419 | ) | 5,806 | C | 4,387 | ||||||||||||||||||
Net Cash Provided by (Used in) Operating Activities
|
(271,379 | ) | - | (271,379 | ) | 142,231 | - | 142,231 | ||||||||||||||||||
|
||||||||||||||||||||||||||
Cash Flows From Investing Activities:
|
||||||||||||||||||||||||||
Purchase of property and equipment
|
(187,699 | ) | - | (187,699 | ) | (176,231 | ) | (2,671 | ) | E | (178,902 | ) | ||||||||||||||
Loss on sale of equipment
|
- | - | - | - | 2,671 | E | 2,671 | |||||||||||||||||||
Net Cash Used in Investing Activities
|
(187,699 | ) | - | (187,699 | ) | (176,231 | ) | - | (176,231 | ) | ||||||||||||||||
|
||||||||||||||||||||||||||
Cash Flows From Financing Activities:
|
||||||||||||||||||||||||||
Cash overdraft
|
(71,380 | ) | - | (71,380 | ) | - | - | - | ||||||||||||||||||
Proceeds from issuance of debt
|
540,000 | - | 540,000 | - | - | - | ||||||||||||||||||||
Proceeds from issuance of debt - related party
|
85,000 | - | 85,000 | - | - | - | ||||||||||||||||||||
Debt issue costs
|
(52,500 | ) | - | (52,500 | ) | - | - | - | ||||||||||||||||||
Repayment of debt
|
(127,344 | ) | - | (127,344 | ) | (71,780 | ) | - | (71,780 | ) | ||||||||||||||||
Net Cash Provided by (Used in) Financing Activities
|
373,776 | - | 373,776 | (71,780 | ) | - | (71,780 | ) | ||||||||||||||||||
|
||||||||||||||||||||||||||
Net decrease in cash
|
(85,302 | ) | - | (85,302 | ) | (105,780 | ) | - | (105,780 | ) | ||||||||||||||||
|
||||||||||||||||||||||||||
Cash at beginning of year
|
88,874 | - | 88,874 | 204,336 | - | 204,336 | ||||||||||||||||||||
|
||||||||||||||||||||||||||
Cash at end of period
|
$ | 3,572 | $ | - | $ | 3,572 | $ | 98,556 | $ | - | $ | 98,556 | ||||||||||||||
|
||||||||||||||||||||||||||
Supplemental disclosures of cash flow information:
|
||||||||||||||||||||||||||
Cash paid for interest
|
$ | 12,062 | $ | - | $ | 12,062 | $ | 6,787 | $ | 4,246 | $ | 11,033 | ||||||||||||||
Cash paid for taxes
|
$ | 3,000 | $ | - | $ | 3,000 | $ | 12,610 | $ | - | $ | 12,610 | ||||||||||||||
|
||||||||||||||||||||||||||
Supplemental disclosures of non-cash financing activities:
|
||||||||||||||||||||||||||
Conversion of accounts payable to notes
|
$ | 153,335 | $ | - | $ | 153,335 | $ | - | $ | - | $ | - | ||||||||||||||
Debt discount recorded on convertible debt accounted for as a derivative liability
|
$ | 244,153 | $ | - | $ | 244,153 | $ | - | $ | - | $ | - | ||||||||||||||
Issuance of common stock for debt issue costs
|
$ | 100,000 | $ | - | $ | 100,000 | $ | - | $ | - | $ | - | ||||||||||||||
Gain on debt forgiveness - related party
|
$ | 100,990 | $ | - | $ | 100,990 | $ | - | $ | - | $ | - | ||||||||||||||
Conversion of notes payable into common shares
|
$ | - | $ | - | $ | - | $ | 410,000 | $ | - | $ | 410,000 | ||||||||||||||
Conversion of accrued interest into common shares
|
$ | - | $ | - | $ | - | $ | 29,589 | $ | - | $ | 29,589 |
Adjustments
|
A - Recalculation of taxes including new net operating loss as a result of Reverse Merger; see Note 10
|
B - Removal of amortization expense of intangible assets in connection with Reverse Merger; see Note 1
|
C - Reclassification of accrued interest - related party
|
D - Reclassification from accounts payable and accrued liabilities for presentation purposes
|
E - Reclassification of loss on sale of equipment
|
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
Nine months ended
|
||||||||
Insurance Provider
|
September 30,
2012
|
September 30,
2011
|
||||||
A
|
19% | 9% | ||||||
B
|
16% | 14% | ||||||
C
|
12% | 10% | ||||||
D
|
13% | - | ||||||
E
|
- | 18% | ||||||
F
|
13% | 1% |
●
|
Level 1 – Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.
|
●
|
Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
●
|
Level 3 – Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
|
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
September 30, 2012
|
December 31,
2011
|
|||||||
Derivative Liabilities (Level 2)
|
$ | 187,974 | $ | - |
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
(i)
|
Pharmacy
|
(ii)
|
Durable Medical Equipment
|
Vendor
|
Nine months ended
September 30, 2012
|
Nine months ended
September 30, 2011
|
||||||
A
|
69 | % | 20 | % | ||||
B
|
16 | % | 37 | % | ||||
C
|
1 | % | 29 | % |
Nine months
Ended
September 30, 2012
|
Nine months
Ended
September 30, 2011
|
||||||
$19,153 | $52,289 |
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
Shares
|
||||
Convertible debt – face amount of $150,000; fixed conversion price ; $0.40
|
375,000 | |||
Convertible debt – face amount of $500,000; variable conversion price; $0.46 at September 30, 2012
|
1,096,491 | |||
Common stock warrants - 15,000; exercise price of $0.40
|
15,000 | |||
Total common stock equivalents
|
1,486,491 |
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
September 30, 2012
|
December 31, 2011
|
|||||||
Gross accounts receivable
|
$ | 1,362,880 | $ | 1,057,696 | ||||
Allowance
|
(67,682 | ) | (50,861 | ) | ||||
Accounts receivable – net
|
$ | 1,295,198 | $ | 1,006,835 |
September 30,
2012
|
December 31,
2011
|
Estimated Useful Life
|
|||||||
DME rental equipment
|
$ | 223,055 | $ | 223,685 |
Life of the lease
|
||||
Leasehold improvements and fixtures
|
202,036 | 139,008 |
5 years
|
||||||
Vehicles
|
90,046 | 90,046 |
3 years
|
||||||
Computer equipment and software
|
56,407 | 56,407 |
3-5 years
|
||||||
Furniture and equipment
|
30,575 | 28,486 |
13 months
|
||||||
Total
|
602,119 | 537,632 | |||||||
Less: accumulated depreciation
|
(331,465 | ) | (260,837 | ) | |||||
Property and equipment – net
|
$ | 270,654 | $ | 276,795 |
September 30, 2012
|
December 31, 2011
|
|||||||
A. Convertible debt - Secured
|
$ | 500,000 | $ | - | ||||
Less: debt discount
|
(141,810 | ) | - | |||||
Convertible debt - net
|
358,190 | - | ||||||
B. Convertible debt - Unsecured
|
150,000 | 150,000 | ||||||
C. Notes - Secured
|
36,327 | - | ||||||
D. Notes – Unsecured
|
139,665 | 161,096 | ||||||
Total debt
|
$ |
684,182
|
$ | 311,096 | ||||
Current portion
|
$ |
449,182
|
$ | 87,767 | ||||
Current portion – related party
|
$ | 85,000 | $ | 73,329 | ||||
Long term portion
|
150,000 | 150,000 |
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
Balance, December 31, 2011
|
$
|
-
|
||
Reclassification from Accounts Payable to Notes Payable
|
$ |
80,135
|
||
Repayments
|
(43,808
|
)
|
||
Balance, September 30, 2012
|
$
|
36,327
|
Balance , December 31, 2011
|
$ | 161,096 | ||
Reclassification from Accounts Payable to Notes Payable
|
73,200 | |||
Additional borrowings – related party
|
125,000 | |||
Repayments
|
(83,535 | ) | ||
Debt forgiveness
|
(62,767 | ) | ||
Debt forgiveness – related party
|
$ | (73,329 | ) | |
Balance, September 30, 2012
|
139,665 |
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
September 30, 2012
|
December 31, 2011
|
|||||||
Debt issue costs
|
$
|
175,395
|
$
|
22,895
|
||||
Accumulated amortization of debt issue costs
|
(70,344
|
)
|
(636
|
)
|
||||
Debt issue costs – net
|
$
|
105,051
|
$
|
22,259
|
Year
|
Amount
|
|||
2012 (3 months remaining)
|
$
|
40,362
|
||
2013
|
57,769
|
|||
2014
|
6,920
|
|||
$
|
105,051
|
September 30, 2012
|
September 30, 2012
|
|||||||
Debt discount
|
$ | 244,153 | - | |||||
Accumulated amortization of debt discounts
|
(102,343 | ) | - | |||||
Debt discount – net
|
$ | 141,810 | - |
Derivative liability - December 31, 2011
|
$ | - | ||
Fair value at the commitment date for debt instruments
|
244,153 | |||
Fair value mark to market adjustment for debt instruments
|
(56,179 | ) | ||
Derivative liability – September 30,2012
|
$ | 187,974 |
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
Commitment
Date
|
Re-measurement
Date
|
|||||||
Exercise price
|
$ | 0.52 | $ | 0.46 | ||||
Expected dividends
|
0 | % | 0 | % | ||||
Expected volatility
|
119 | % | 115 | % | ||||
Expected term
|
12 months
|
7 months
|
||||||
Risk free interest rate
|
0.18 | % | 0.17 | % | ||||
Forfeiture rate
|
0 | % | 0 | % |
Number of
Warrants
|
Weighted
Average Exercise
Price
|
|||||||
Balance at December 31, 2011
|
$ | 15,000 | $ | 0.40 | ||||
Granted
|
- | - | ||||||
Exercised
|
- | - | ||||||
Forfeited
|
- | - | ||||||
Balance at September 30, 2012
|
$ | 15,000 | $ | 0.40 |
Exercise Price |
Warrants
Outstanding
|
Warrants
Exercisable
|
Weighted Average
Remaining
Contractual Life
|
Aggregate
Intrinsic
Value
|
||||||||||
$ | 0.40 | 15,000 | 15,000 |
2.16 years
|
$ | 1,200 |
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
Year
|
Amount
|
|||
2012 (3 months remaining)
|
$ | 55,000 | ||
2013
|
251,000
|
|||
2014
|
234,000
|
|||
2015
|
222,000 | |||
2016
|
230,000 | |||
Thereafter
|
763,000 | |||
$ |
1,755,000
|
Balance, December 31, 2011
|
$
|
43,344
|
||
Payments made
|
(2,904
|
)
|
||
Net operating loss carry back - federal
|
(45,259
|
)
|
||
Balance, September 30, 2012
|
$
|
(4,819
|
)
|
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
September 30, 2012
|
September 30, 2011
|
|||||||
Current Income Tax Benefit (Expense): | $ |
45,259
|
$ |
(14,748
|
) | |||
Deferred Income Tax Benefit (Expense):
|
79,308
|
(50,002
|
)
|
|||||
Total income tax benefit (expense)
|
$ |
124,567
|
$
|
(64,750)
|
September 30, 2012
|
December 31, 2011
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carry forward
|
$
|
188,000
|
$
|
156,000
|
||||
Sales allowance
|
19,000
|
12,000
|
||||||
Charitable contributions
|
17,000
|
8,000
|
||||||
Total deferred tax assets
|
224,000
|
176,000
|
||||||
Deferred tax liabilities:
|
||||||||
Property and equipment
|
(29,000
|
)
|
(52,000
|
)
|
||||
Deferred rent
|
8,000
|
-
|
||||||
Total deferred tax liabilities
|
(21,000
|
)
|
(52,000
|
)
|
||||
Less: valuation allowance
|
-
|
-
|
||||||
Deferred tax assets (liabilities) - net
|
$
|
203,000
|
$
|
124,000
|
||||
Current Portion
|
||||||||
Property and equipment
|
|
$
|
(22,000
|
)
|
$
|
(52,000
|
)
|
|
Net operating loss carryforward
|
9,000
|
8,000
|
||||||
Current portion – net
|
(13,000
|
)
|
(44,000
|
)
|
||||
Long term portion
|
||||||||
Property and equipment
|
(7,000
|
)
|
-
|
|||||
Net operating loss carryforward
|
179,000
|
48,000
|
||||||
Charitable contributions
|
17,000
|
8,000
|
||||||
Sales allowance
|
19,000
|
12,000
|
||||||
Deferred rent
|
8,000
|
-
|
||||||
Long term portion – net
|
$
|
216,000
|
$
|
168,000
|
Progressive Care Inc. and Subsidiaries
|
Notes to Consolidated Financial Statements
|
September 30, 2012
|
(Unaudited)
|
(As Restated)
|
●
|
increasing it sales presence in the community by sponsoring health related events
|
●
|
hiring additional sales personnel to target specific market segments
|
●
|
strengthening its internal controls, specifically targeting collections of its accounts receivables
|
●
|
seeking additional third party debt and/or equity financing
|
Three Months Ended
|
||||||||||||||||||||||||
September 30, 2012
|
September 30, 2011
|
|||||||||||||||||||||||
Dollars
|
% of Revenue
|
Dollars
|
% of Revenue
|
$ change
|
% change
|
|||||||||||||||||||
Total revenues - net
|
$ | 2,532,000 | 100 | % | $ | 1,938,000 | 100 | % | $ | 594,000 | 31 | % | ||||||||||||
Total cost of sales
|
1,750,000 | 69 | % | 1,086,000 | 56 | % | $ | 664,000 | 61 | % | ||||||||||||||
Total gross margin
|
782,000 | 31 | % | 852,000 | 44 | % | $ | (70,000 | ) | -8 | % | |||||||||||||
Operating expenses
|
1,100,000 | 43 | % | 946,000 | 49 | % | $ | 154,000 | 16 | % | ||||||||||||||
Other income (expense)
|
(87,000 | ) | -3 | % | (4,000 | ) | 0 | % | $ | (83,000 | ) | 2075 | % | |||||||||||
Operating loss
|
(405,000 | ) | -16 | % | (98,000 | ) | -5 | % | $ | (307,000 | ) | 313 | % | |||||||||||
Income tax benefit (expense)
|
82,000 | 3 | % | (4,000 | ) | 0 | % | $ | 86,000 | -2150 | % | |||||||||||||
Net loss
|
(323,000 | ) | -13 | % | (102,000 | ) | -5 | % | $ | (221,000 | ) | 217 | % |
Three Months Ended
|
||||||||||||||||||||||||
September 30, 2012
|
September 30, 2011
|
|||||||||||||||||||||||
Dollars | % of Revenue | Dollars | % of Revenue | $ change | % change | |||||||||||||||||||
Pharmacy
|
$ | 2,229,000 | 88 | % | $ | 1,622,000 | 84 | % | $ | 607,000 | 37 | % | ||||||||||||
DME
|
$ | 303,000 | 12 | % | $ | 316,000 | 16 | % | (13,000 | ) | -4 | % | ||||||||||||
Total Sales
|
$ | 2,532,000 | $ | 1,938,000 | $ | 594,000 | 31 | % |
Nine Months Ended
|
||||||||||||||||||||||||
September 30, 2012
|
September 30, 2011
|
|||||||||||||||||||||||
Dollars
|
% of Revenue
|
Dollars
|
% of Revenue
|
$ change
|
% change
|
|||||||||||||||||||
Total revenues - net
|
$ | 7,502,000 | 100 | % | $ | 5,708,000 | 100 | % | $ | 1,794,000 | 31 | % | ||||||||||||
Total cost of sales
|
5,338,000 | 71 | % | 2,918,000 | 51 | % | $ | 2,420,000 | 83 | % | ||||||||||||||
Total gross margin
|
2,164,000 | 29 | % | 2,790,000 | 49 | % | $ | (626,000 | ) | -22 | % | |||||||||||||
Operating expenses
|
2,709,000 | 36 | % | 2,920,000 | 51 | % | $ | (211,000 | ) | -7 | % | |||||||||||||
Other income (expense)
|
(88,000 | ) | -1 | % | (4,000 | ) | 0 | % | $ | (84,000 | ) | 2100 | % | |||||||||||
Operating loss
|
(633,000 | ) | -8 | % | (134,000 | ) | -2 | % | $ | (499,000 | ) | 372 | % | |||||||||||
Income tax benefit (expense)
|
125,000 | 2 | % | (65,000 | ) | -1 | % | $ | 190,000 | -292 | % | |||||||||||||
Net loss
|
(508,000 | ) | -7 | % | (199,000 | ) | -3 | % | $ | (309,000 | ) | 155 | % |
Nine Months Ended
|
||||||||||||||||||||||||
September 30, 2012
|
September 30, 2011
|
|||||||||||||||||||||||
Dollars
|
% of Revenue
|
Dollars
|
% of Revenue
|
$ change
|
% change
|
|||||||||||||||||||
Pharmacy
|
$ | 6,510,000 | 87 | % | $ | 5,033,000 | 88 | % | $ | 1,477,000 | 29 | % | ||||||||||||
DME
|
$ | 992,000 | 13 | % | $ | 675,000 | 12 | % | 317,000 | 47 | % | |||||||||||||
Total Sales
|
$ | 7,502,000 | $ | 5,708,000 | $ | 1,794,000 | 31 | % |
Nine Months Ended
|
||||||||
September 30, 2012
|
September 30, 2011
|
|||||||
Net change in cash from:
|
||||||||
Operating activities
|
$ | (271,000 | ) | $ | 142,000 | |||
Investing activities
|
(188,000 | ) | (176,000 | ) | ||||
Financing activities
|
374,000 | (72,000 | ) | |||||
Change in cash
|
$ | (85,000 | ) | $ | (106,000 | ) | ||
Cash at end of Period
|
$ | 4,000 | $ | 99,000 |
●
|
increasing it sales presence in the community by sponsoring health related events
|
●
|
hiring additional sales personnel to target specific market segments
|
●
|
strengthening its internal controls, specifically targeting collections of its accounts receivables
|
●
|
seeking additional third party debt and/or equity financing
|
31.1
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) *
|
31.2
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) *
|
32.1
|
Certification pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 *
|
32.2
|
Certification pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 *
|
EX-101.INS
|
XBRL Instance Document
|
EX-101.SCH
|
XBRL Taxonomy Extension Schema
|
EX-101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
EX-101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
EX-101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
EX-101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
PROGRESSIVE CARE INC.
|
|||
By:
|
/s/ Alan Jay Weisberg
|
||
Alan Jay Weisberg
|
|||
President and Chief Executive Officer
|
|||
(Principal Executive Officer)
|
|||
Date: April 1, 2013
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q/A of Progressive Care Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: April 1, 2013
|
|||
By:
|
/s/ Alan Jay Weisberg
|
||
Name:
|
Alan Jay Weisberg
|
||
Title:
|
President and Chief Executive Officer
|
||
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q/A of Progressive Care Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: April 1, 2013
|
|||
By:
|
/s/ Alan Jay Weisberg
|
||
Name:
|
Alan Jay Weisberg
|
||
Title:
|
Chief Financial Officer
|
||
(Principal Financial Officer)
|
(1)
|
the accompanying Quarterly Report on Form 10-Q/A of the Registrant for the quarter ended September 30, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
Date: April 1, 2013
|
|||
By:
|
/s/ Alan Jay Weisberg
|
||
Name:
|
Alan Jay Weisberg
|
||
Title:
|
President and Chief Executive Officer
|
||
(Principal Executive Officer)
|
(1)
|
the accompanying Quarterly Report on Form 10-Q/A of the Registrant for the quarter ended September 30, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
Date: April 1, 2013
|
|||
By:
|
/s/ Alan Jay Weisberg
|
||
Name:
|
Alan Jay Weisberg
|
||
Title:
|
Chief Financial Officer
|
||
(Principal Financial Officer)
|
Property and Equipment (Details) (USD $)
|
9 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
|
Property and equipment | ||
Total | $ 602,119 | $ 537,632 |
Less: accumulated depreciation | (331,465) | (260,837) |
Property and equipment - net | 270,654 | 276,795 |
DME rental equipment [Member]
|
||
Property and equipment | ||
Total | 223,055 | 223,685 |
Property, Plant and Equipment, Estimated Useful Lives | Life of the lease | |
Leasehold improvements and fixtures [Member]
|
||
Property and equipment | ||
Total | 202,036 | 139,008 |
Property and Equipment, Useful Life | 5 years | |
Vehicles [Member]
|
||
Property and equipment | ||
Total | 90,046 | 90,046 |
Property and Equipment, Useful Life | 3 years | |
Computer equipment and software [Member]
|
||
Property and equipment | ||
Total | 56,407 | 56,407 |
Furniture and equipment [Member]
|
||
Property and equipment | ||
Total | $ 30,575 | $ 28,486 |
Property and Equipment, Useful Life | 13 months | |
Minimum [Member] | Computer equipment and software [Member]
|
||
Property and equipment | ||
Property and Equipment, Useful Life | 3 years | |
Maximum [Member] | Computer equipment and software [Member]
|
||
Property and equipment | ||
Property and Equipment, Useful Life | 5 years |
Taxes (As Restated) (Details) (USD $)
|
9 Months Ended |
---|---|
Sep. 30, 2012
|
|
Summary of income tax receivables | |
Balance, December 31, 2011 | $ 43,344 |
Payment made | (2,904) |
Net operating loss carry back - federal | (45,259) |
Balance, September 30, 2012 | $ (4,819) |
Derivative Liabilities (Details 1) (USD $)
|
9 Months Ended |
---|---|
Sep. 30, 2012
|
|
Commitment Date [Member]
|
|
Fair value at the commitment and re-measurement dates for the Company's derivative liabilities | |
Exercise price | $ 0.52 |
Expected dividends | 0.00% |
Expected volatility | 119.00% |
Expected term: | 12 months |
Risk free interest rate | 0.18% |
Forfeiture rate | 0.00% |
Re-Measurement Date [Member]
|
|
Fair value at the commitment and re-measurement dates for the Company's derivative liabilities | |
Exercise price | $ 0.46 |
Expected dividends | 0.00% |
Expected volatility | 115.00% |
Expected term: | 7 months |
Risk free interest rate | 0.17% |
Forfeiture rate | 0.00% |
Taxes (As Restated) (Details 1) (USD $)
|
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2011
|
|
Provision for income taxes | |||||
Current Income Tax Benefit (Expense) | $ 26,482 | $ 25,795 | $ 45,259 | $ (14,748) | $ (33,260) |
Deferred Income Tax Benefit (Expense) | 55,115 | (29,601) | 79,308 | (50,002) | (43,002) |
Total income tax benefit (expense) | $ 81,597 | $ (3,806) | $ 124,567 | $ (64,750) | $ 76,262 |
Summary of Significant Accounting Policies (Details)
|
9 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Billing Concentrations | ||
A | 19.00% | 9.00% |
B | 16.00% | 14.00% |
C | 12.00% | 10.00% |
D | 13.00% | |
E | 18.00% | |
F | 13.00% | 1.00% |
Vendor concentrations | ||
A | 69.00% | 20.00% |
B | 16.00% | 37.00% |
C | 1.00% | 29.00% |
Taxes (As Restated) (Details Textual) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2011
|
Sep. 30, 2012
|
|
Taxes (Textual) | ||
Income Tax Reconciliation, Meals and entertainment, Percentage | 50.00% | |
Valuation allowance |
Derivative Liabilities (Tables)
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of fair value of the conversion feature |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value at the commitment and re-measurement dates for the Company's derivative liabilities |
|
Stock Warrants (Details 1) (Warrant [Member], USD $)
|
9 Months Ended | |
---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
|
Warrant [Member]
|
||
Summary of all outstanding and exercisable warrants | ||
Exercise Price | $ 0.40 | |
Warrants Outstanding | 15,000 | 15,000 |
Warrants Exercisable | 15,000 | |
Weighted Average Remaining Contractual Life | 2 years 1 month 28 days | |
Aggregate Intrinsic Value | $ 1,200 |
Debt (Details 1) (USD $)
|
9 Months Ended |
---|---|
Sep. 30, 2012
|
|
Summary of Secured Notes | |
Balance | |
Reclassification from Accounts Payable to Notes Payable | 80,135 |
Repayments | (43,808) |
Balance, ending | $ 36,327 |
Accounts Receivable (Details) (USD $)
|
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Accounts receivable | ||
Gross accounts receivable | $ 1,362,880 | $ 1,057,696 |
Allowance | (67,682) | (50,861) |
Accounts receivable - net | $ 1,295,198 | $ 1,006,835 |
Commitments and Contingencies (Details Textual) (USD $)
|
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2011
|
Oct. 06, 2011
sqft
|
Jul. 02, 2011
sqft
|
Jan. 11, 2011
sqft
|
Nov. 15, 2010
sqft
|
|
Commitments and Contingencies (Textual) | |||||||
Approximate leased space of company, (In square feet) | 3,100 | 4,200 | 5,100 | 1,200 | |||
Execution period of lease | 5 years | 5 years | 10 years | 2 years | |||
Rent expense on lease | $ 192,433 | $ 86,053 | |||||
Deferred rent payable | $ 39,812 | $ 17,535 |
Derivative Liabilities (Details) (USD $)
|
9 Months Ended |
---|---|
Sep. 30, 2012
|
|
Summary of fair value of the conversion feature | |
Derivative liability - December 31, 2011 | |
Fair value at the commitment date for debt instruments | 244,153 |
Fair value mark to market adjustment for debt instruments | (56,179) |
Derivative liability September 30,2012 | $ 187,974 |
Accounts Receivable
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
|||||||||||||||||||||||||||||||||||||
Accounts Receivable [Abstract] | |||||||||||||||||||||||||||||||||||||
Accounts Receivable | Note 3 Accounts Receivable
Accounts receivable consisted of the following at September 30, 2012 and December 31, 2011.
The Company recorded an approximate 5% allowance for bad debt for estimated differences between expected and actual payment of accounts receivables. These reductions are made based upon estimates that are determined by historical experience, contractual terms, and current conditions. Each quarter, the Company reevaluates its estimates to assess the adequacy of its allowance, adjusting the amounts as necessary.
For the nine months ended September 30, 2012, the Company wrote off $239,348 of its accounts receivable as bad debt expense. In the first quarter of 2012, Medicare began a standard fraud prevention review processes of almost all the Company’s related billings. As a result, the Company experienced much higher than normal initial denial rates and has had to resubmit (appeal) numerous claims. In some cases, this process can take up to 15 months to complete, and although some payments of appealed claims have been received, the Company believes it is more likely than not that a large number of claims will ultimately be uncollectable. However, should payments be later received, the Company will record these payments as other income. |