0001607062-19-000457.txt : 20191119 0001607062-19-000457.hdr.sgml : 20191119 20191119114832 ACCESSION NUMBER: 0001607062-19-000457 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 69 CONFORMED PERIOD OF REPORT: 20190930 FILED AS OF DATE: 20191119 DATE AS OF CHANGE: 20191119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Clinigence Holdings, Inc. CENTRAL INDEX KEY: 0001479681 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 113363609 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-53862 FILM NUMBER: 191229731 BUSINESS ADDRESS: STREET 1: 55 IVAN ALLEN JR. BLVD STREET 2: NW #875 CITY: ATLANTA STATE: GA ZIP: 30308 BUSINESS PHONE: 631-670-6777 MAIL ADDRESS: STREET 1: 55 IVAN ALLEN JR. BLVD STREET 2: NW #875 CITY: ATLANTA STATE: GA ZIP: 30308 FORMER COMPANY: FORMER CONFORMED NAME: iGambit, Inc. DATE OF NAME CHANGE: 20091230 10-Q 1 igmb093019form10q.htm FORM 10-Q

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

 

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

 

For the Quarterly period ended September 30, 2019

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from                      to

 

Commission file number 000-53862

 

Clinigence Holdings, Inc.

(Formerly known as iGambit Inc.)

(Exact name of small business issuer as specified in its charter)

 

Delaware   11-3363609
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

55 Ivan Allen Jr. Blvd. NW, Suite 875

Atlanta, Georgia, FL 30308
(Address of Principal Executive Offices) (Zip Code)

 

(678) 607-6393
(Issuer’s Telephone Number, Including Area Code)

 

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

 

Title of each class Trading Symbol Name of each exchange on which registered
Common Stock, $0.001 par value IGMBD OTCMKTS

 

 

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. (Check one):

 

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 Registrant had 4,627,721 (not including 20 thousand shares held in treasury) shares of the Registrant’s $0.001 par value common stock outstanding.

 

 1 

 

 

Clinigence Holdings, Inc.
Form 10-Q

 

Part I — Financial Information  
Item 1. Financial Statements:  
Unaudited Condensed Consolidated Balance Sheets 2
Unaudited Condensed Consolidated Statements of Operations 3
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity 4
Unaudited Condensed Consolidated Statements of Cash Flows 5
Unaudited Condensed Notes to Consolidated Financial Statements 6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23
Item 3. Quantitative and Qualitative Disclosures About Market Risk 28
Item 4. Controls and Procedures 28
Part II — Other Information  
Item 1. Legal Proceedings 29
Item 1A. Risk Factors 29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 29
Item 3. Defaults upon Senior Securities 29
Item 4. Removed and Reserved 29
Item 5. Other Information 29
Item 6. Exhibits 30
 EX-31.1  
 EX-31.2  
 EX-32.1  
 EX-32.2  

 2 

 

 

PART I — FINANCIAL INFORMATION

 

Item 1 — Financial Statements

 

CLINIGENCE HOLDINGS, INC.
(FORMERLY KNOWN AS IGAMBIT INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
       
    SEPTEMBER 30,    DECEMBER 31, 
    2019    2018 
ASSETS          
Current assets          
Cash  $10,029   $369 
Accounts receivable   10,000    14,871 
Inventory   26,988    27,073 
Prepaid expenses   5,971    —   
Total current assets   52,988    42,313 
           
Other assets          
Property and equipment, net   1,376    2,118 
Intangible assets, net   2,050,113    2,572,015 
Deposits   300    2,020 
   $2,104,777   $2,618,466 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities          
Accounts payable and accrued expenses  $740,465   $480,270 
Accrued interest on notes payable   27,165    32,265 
Amounts due to related parties   128,476    145,367 
Deferred revenue   600    9,192 
Notes payable   495,593    52,500 
Convertible notes payable, net   72,546    377,611 
Derivative liability   —      288,242 
Total current liabilities   1,464,845    1,385,447 
           
Stockholders' equity          
Preferred stock, $.001 par value; authorized - 100,000,000 shares;issued and outstanding - 0 shares in 2019 and 2018, respectively   —      —   
Common stock, $.001 par value; authorized - 800,000,000 shares; 797,108 and 429,720 shares issued and 777,108 and 409,720 shares outstanding (net of treasury shares) as of September 30, 2019 and December 31, 2018, respectively          
Additional paid-in capital   15,605,460    14,695,403 
Accumulated deficit   (13,966,325)   (12,462,814)
    1,639,932    2,233,019 
Less: Treasury stock; 20,000 shares, at cost   (1,000,000)   (1,000,000)
Total stockholders' equity   639,932    1,233,019 
   $2,104,777   $2,618,466 
           
See accompanying notes to the condensed consolidated financial statements.

 

 3 

 

 

CLINIGENCE HOLDINGS, INC.
(FORMERLY KNOWN AS IGAMBIT INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
             
             
   THREE MONTHS  NINE MONTHS
   ENDED  ENDED
   SEPTEMBER 30,  SEPTEMBER 30,
   2019  2018  2019  2018
Sales  $7,550   $22,582   $19,175   $30,500 
Cost of sales   10,042    7,834    26,336    23,658 
Gross profit (loss)   (2,492)   14,748    (7,161)   6,842 
                     
Operating expenses                    
General and administrative expenses   187,295    207,793    576,512    752,930 
Amortization   173,967    173,967    521,902    521,902 
Total operating expenses   361,262    381,760    1,098,414    1,274,832 
                     
Loss from operations   (363,754)   (367,012)   (1,105,575)   (1,267,990)
                     
Other income (expenses)                    
Change in fair value of derivative liability   —      76,091    98,944    (128,100)
Loss on extinguishment of debt   —      (95,464)   (262,566)   (233,734)
Interest expense   (9,995)   (222,134)   (234,314)   (314,975)
Total other income (expenses)   (9,995)   (241,507)   (397,936)   (676,809)
                     
Net loss  $(373,749)  $(608,519)  $(1,503,511)  $(1,944,799)
Basic and fully diluted loss per common share:                    
Net loss per common share  $(.48)  $(2.09)  $(2.13)  $(7.39)
Weighted average common shares outstanding - basic and fully diluted   777,108    291,514    704,331    263,269 
                     
See accompanying notes to the condensed consolidated financial statements.

 

 4 

 

 

CLINIGENCE HOLDINGS, INC.
(FORMERLY KNOWN AS IGAMBIT INC.)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(UNAUDITED)
 
                   
                  
   Common stock         
   Shares  Amount  Additional Paid-in Capital  Accumulated Deficit  Treasury Stock  Totals
Balances, December 31, 2017   252,393   $252   $13,017,292   $(9,648,569)  $(1,000,000)  $2,368,975 
Common stock issued for cash   1,500    2    14,998    —      —      15,000 
Notes payable and accrued interest converted to common stock   10,688    11    348,092    —      —      348,103 
Net loss                  (610,033)        (610,033)
Balances, March 31, 2018   264,581   $265   $13,380,382   $(10,258,602)  $(1,000,000)  $2,122,045 
Common stock issued for cash   1,500    2    14,998    —      —      15,000 
Notes payable and accrued interest converted to common stock   20,236    20    365,795    —      —      365,815 
Common stock issued for services   6,000    6    88,794    —      —      88,800 
Net loss                  (726,247)        (726,247)
Balances, June 30, 2018   292,317   $293   $13,849,969   $(10,984,849)  $(1,000,000)  $1,865,413 
Notes payable and accrued interest converted to common stock   34,371    34    308,875    —      —      308,909 
Net loss                  (608,519)        (608,519)
Balances, September 30, 2018   326,688   $327   $14,158,844   $(11,593,368)  $(1,000,000)  $1,565,803 
                               
Balances, December 31, 2018   429,720   $430   $14,695,403   $(12,462,814)  $(1,000,000)  $1,233,019 
Compensation for vested stock options   —      —      1,025    —      —      1,025 
Notes payable and accrued interest converted to common stock   293,455    293    548,515    —      —      548,808 
Net loss                  (559,397)        (559,397)
Balances, March 31, 2019   723,175   $723   $15,244,943   $(13,022,211)  $(1,000,000)  $1,223,455 
Notes payable and accrued interest converted to common stock   71,933    72    355,519    —      —      355,591 
Amounts due to related parties converted to common stock   2,000    2    4,998    —      —      5,000 
Net loss                  (570,365)        (570,365)
Balances, June 30, 2019   797,108   $797   $15,605,460   $(13,592,576)  $(1,000,000)  $1,013,681 
Net loss                  (373,749)        (373,749)
Balances, September 30, 2019   797,108   $797   $15,605,460   $(13,966,325)  $(1,000,000)  $639,932 
                               
See accompanying notes to the condensed consolidated financial statements.

 

 5 

 

  

CLINIGENCE HOLDINGS, INC.
(FORMERLY KNOWN AS IGAMBIT INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
 
       
    2019    2018 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(1,503,511)  $(1,944,799)
Adjustments to reconcile net loss to net cash used in operating activities          
Depreciation   742    1,295 
Amortization   521,902    521,902 
Non cash interest expense   231,563    312,412 
Stock-based compensation expense   1,025    88,800 
Loss on extinguishment of debt   262,566    233,734 
Change in fair value of derivative liability   (98,944)   128,100 
Changes in operating assets and liabilities:          
Accounts receivable   4,871    (19,727)
Inventory   85    —   
Prepaid expenses and other current assets   (5,971)   39,377 
Deposits   1,720    —   
Accounts payable and accrued expenses   260,195    (68,928)
Deferred revenue   (8,592)   (4,933)
NET CASH USED IN OPERATING ACTIVITIES   (332,349)   (712,767)
           
CASH FLOWS FROM INVESTING ACTIVITIES:   —      —   
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from issuance of convertible debentures   168,500    676,500 
Repayments of convertible debentures   (257,693)   —   
Proceeds from sale of common stock   —      30,000 
Proceeds from notes payable   443,093    —   
Proceeds from related party loans   11,254    —   
Repayments of related party loans   (23,145)   —   
NET CASH PROVIDED BY FINANCING ACTIVITIES   342,009    706,500 
           
NET INCREASE (DECREASE) IN CASH   9,660    (6,267)
CASH - BEGINNING OF PERIOD   369    9,449 
CASH - END OF PERIOD  $10,029   $3,182 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Cash paid during the period for:          
Interest  $2,752   $2,563 
           
Non-cash investing and financing activities:          
Debt discount related to derivative liability  $222,500   $533,249 
Notes payable converted to common stock   326,189    387,000 
Common stock issued in payment of accrued interest   19,868    23,746 
           
See accompanying notes to the condensed consolidated financial statements.

 

 6 

 

 

CLINIGENCE HOLDINGS, INC.

(FORMERLY KNOWN AS IGAMBIT INC.)

Notes to Condensed Consolidated Financial Statements

Nine Months Ended September 30, 2019 and 2018

 

Note 1 - Organization and Basis of Presentation

 

The consolidated financial statements presented are those of Clinigence Holdings, Inc., formerly known as iGambit Inc., (the “Company”) and its wholly-owned subsidiary, HealthDatix, Inc. (“HealthDatix”). The name was changed to Clinigence Holdings, Inc. on October 29, 2019. The Company is a holding company which seeks out acquisitions of operating companies in technology markets. HealthDatix, Inc. is engaged in the business of streamlining the process of managing information in the document-intensive medical field for customers throughout the United States. Clinigence Holdings, Inc. is a healthcare information technology company that provides cloud-based platforms that enable healthcare organizations to shift to value-based care reimbursements and to provide population health management (See Note 16).

 

Interim Financial Statements

 

The following (a) condensed consolidated balance sheet as of December 31, 2018, which has been derived from audited financial statements, and (b) the unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2019 are not necessarily indicative of results that may be expected for the year ending December 31, 2019. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on April 16, 2019.

 

Note 2 – Summary of Significant Accounting Policies

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary.  All intercompany accounts and transactions have been eliminated.

 

Use of Estimates in the Preparation of Financial Statements

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

 

 7 

 

 

Fair Value Measurements

 

The Company adopted the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 – quoted prices in active markets for identical assets or liabilities

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

The estimated fair value of the derivative liability was calculated using the Black-Scholes option pricing model. The Company uses Level 3 inputs to value its derivative liabilities. The following table provides a reconciliation of the beginning and ending balances for the major classes of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) and reflects gains and losses for the nine months ended September 30, 2019 and year ended December 31, 2018.

 

   2019  2018
Liabilities:      
Balance of derivative liabilities - beginning of period  $288,242   $66,059 
Issued   292,913    1,122,211 
Converted   (482,211)   (928,773)
Change in fair value recognized in operations   (98,944)   28,745 
Balance of derivative liabilities - end of period  $—     $288,242 

 

 8 

 

 

Convertible Instruments

 

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.

 

Revenue Recognition

 

Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products by: (1) identify the contract (if any) with a customer; (2) identify the performance obligations in the contract (if any); (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract (if any); and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. The Company has no outstanding contracts with any of is’ customers. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the nine months ended September 30, 2019 and 2018.

 

 9 

 

 

Clinigence Holdings, Inc. is a holding company and has no sources of revenue.

 

HealthDatix’s revenues are derived primarily from its Software as a Service (SaaS) offerings that are rendered to healthcare providers.  HealthDatix recognizes revenues when the products or services have been provided or delivered, the fees charged are fixed or determinable, HealthDatix and its customers understand the specific nature and terms of the agreed upon transactions, and collectability is reasonably assured.

 

Advertising Costs

 

The Company expenses advertising costs as incurred. Advertising costs of $329 and $0 were charged to operations for the nine months ended September 30, 2019 and 2018, respectively.

 

Cash and Cash Equivalents

 

For purposes of reporting cash flows, cash and cash equivalents include checking and money market accounts and any highly liquid debt instruments purchased with a maturity of three months or less.

 

Accounts Receivable

 

The Company analyzes the collectability of accounts receivable from continuing operations each accounting period and adjusts its allowance for doubtful accounts accordingly.  A considerable amount of judgment is required in assessing the realization of accounts receivables, including the creditworthiness of each customer, current and historical collection history and the related aging of past due balances.  The Company evaluates specific accounts when it becomes aware of information indicating that a customer may not be able to meet its financial obligations due to deterioration of its financial condition, lower credit ratings, bankruptcy or other factors affecting the ability to render payment.

 

Inventory

 

Inventory consisting of finished products is stated at the lower of cost or net realizable value.

Property and equipment and depreciation

 

Property and equipment are stated at cost. Maintenance and repairs are charged to expense when incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income. Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets as follows:

 

Office equipment and fixtures   5 - 7 years 
Computer hardware   5 years 
Computer software   3 years 
Development equipment   5 years 

 

 10 

 

 

Amortization

Intangible assets are amortized using the straight line method over the estimated lives of the respective assets as follows:

 

Software   5 years 
Technology license   5 years 
Purchased in process R&D   Indefinite 
Customer contracts   10 years 

 

Long-Lived Assets

 

The Company assesses the valuation of components of its property and equipment and other long-lived assets whenever events or circumstances dictate that the carrying value might not be recoverable. The Company bases its evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, the Company determines whether an impairment has occurred by analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If the estimate of undiscounted cash flows during the estimated useful life of the asset is less than the carrying value of the asset, the Company recognizes a loss for the difference between the carrying value of the asset and its estimated fair value, generally measured by the present value of the estimated cash flows.

 

Deferred Revenue

 

Deposits from customers are not recognized as revenues, but as liabilities, until the following conditions are met: revenues are realized when cash or claims to cash (receivable) are received in exchange for goods or services or when assets received in such exchange are readily convertible to cash or claim to cash or when such goods/services are transferred. When such income item is earned, the related revenue item is recognized, and the deferred revenue is reduced. To the extent revenues are generated from the Company’s support and maintenance services, the Company recognizes such revenues when services are completed and billed. The Company has received deposits from its various customers that have been recorded as deferred revenue and presented as current liabilities in the amount of $600 and $9,192 as of September 30, 2019 and December 31, 2018, respectively.

 

 11 

 

 

Stock-Based Compensation

 

The Company accounts for its stock-based awards granted under its employee compensation plan in accordance with ASC Topic No. 718-20, Awards Classified as Equity, which requires the measurement of compensation expense for all share-based compensation granted to employees and non-employee directors at fair value on the date of grant and recognition of compensation expense over the related service period for awards expected to vest.  The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock options and warrants. The Black-Scholes option pricing model requires the input of highly subjective assumptions including the expected stock price volatility of the Company’s common stock, the risk free interest rate at the date of grant, the expected vesting term of the grant, expected dividends, and an assumption related to forfeitures of such grants.  Changes in these subjective input assumptions can materially affect the fair value estimate of the Company’s stock options and warrants.

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC Topic No. 740, Income Taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

 

The Company applies the provisions of ASC Topic No. 740 for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the Company’s financial statements. In accordance with this provision, tax positions must meet a more-likely-than-not recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position.

 

Recent Accounting Pronouncements

 

We have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the condensed consolidated financial statements as a result of future adoption.

 

Note 3 – Going Concern

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has an accumulated deficit of $13,966,325, and a working capital deficit of $1,411,857 at September 30, 2019. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.  The Company’s continuation as a going concern is dependent upon its ability to obtain necessary equity financing and ultimately from generating revenues from its newly acquired subsidiary to continue operations. The Company expects that working capital requirements will continue to be funded through a combination of its existing funds and further issuances of securities. Working capital requirements are expected to increase in line with the growth of the business. Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund operations over the next twelve months. The Company has no lines of credit or other bank financing arrangements. The Company has financed operations to date through the proceeds of a private placement of equity and debt instruments.  In connection with the Company’s business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. The Company intends to finance these expenses with further issuances of securities, and debt issuances. Thereafter, the Company expects it will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to current stockholders. Further, such securities might have rights, preferences or privileges senior to common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict business operations.

 

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The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Note 4 – Property and Equipment

 

Property and equipment are carried at cost and consist of the following at September 30, 2019 and December 31, 2018:

 

   2019  2018
Office equipment and fixtures  $10,964   $10,964 
Less: Accumulated depreciation   9,588    8,846 
   $1,376   $2,118 

 

Depreciation expense of $742 and $1,295 was charged to operations for the nine months ended September 30, 2019 and 2018, respectively.

 

Note 5 – Intangible Assets

 

Intangible assets from the acquisitions of HealthDatix and ECSL consist of the following at September 30, 2019 and December 31, 2018:

 

   2019  2018   
Software  $156,925   $156,925    5 years 
Customer contracts   644,846    644,846    10 years 
FDA 510K clearance   1,396,000    1,396,000    5 years 
Technology license   1,000,000    1,000,000    5 years 
In process research and development   604,000    604,000    Indefinite 
    3,801,771    3,801,771      
Less: Accumulated amortization   1,751,658    1,229,756      
   $2,050,113   $2,572,015      

 

Amortization expense of $521,902 was charged to operations for the nine months ended September 30, 2019 and 2018, respectively.

 

Note 6 - Earnings (Loss) Per Common Share

 

The Company calculates net income (loss) per common share in accordance with ASC 260 “Earnings Per Share” (“ASC 260”). Basic and diluted net earnings (loss) per common share was determined by dividing net earnings (loss) applicable to common stockholders by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive shares, which include outstanding common stock options, common stock warrants, and convertible debt have not been included in the computation of diluted net loss per share for the nine months ended September 30, 2019 and 2018 as the result would be anti-dilutive.

 

 13 

 

 

   Three Months Ended  Nine Months Ended
   September 30,  September 30,
   2019  2018  2019  2018
Stock options   2,000,000    8,463,000    2,000,000    8,463,000 
Stock warrants   1,625,000    1,900,000    1,625,000    1,900,000 
Convertible debt   600    410,802    600    410,802 
Total shares excluded from calculation   3,625,600    10,773,802    3,625,600    10,773,802 

 

Note 7 – Stock Based Compensation

 

Options

 

In 2006, the Company adopted the 2006 Long-Term Incentive Plan (the "2006 Plan").   Awards granted under the 2006 Plan have a ten-year term and may be incentive stock options, non-qualified stock options or warrants. The awards are granted at an exercise price equal to the fair market value on the date of grant and generally vest over a three or four year period. The Plan expired on December 31, 2009, therefore as of June 30, 2019, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2006 plan.

 

The 2006 Plan provided for the granting of options to purchase up to 10,000,000 shares of common stock.  8,146,900 options have been issued under the plan to date of which 7,157,038 have been exercised and 692,962 have expired to date.  There were 296,900 options outstanding under the 2006 Plan on its expiration date of December 31, 2009. All options issued subsequent to this date were not issued pursuant to any plan.

 

Stock option activity during the nine months ended September 30, 2019 and 2018 follows:

 

   Options
Outstanding
  Weighted Average Exercise Price  Weighted Average Grant-Date         Fair Value  Weighted Average Remaining Life (Years)
Options outstanding at December 31, 2017   8,463,000   $0.07   $0.07    7.41 
No option activity   —      —      —        
Options outstanding at  September 30, 2018   8,463,000   $0.07    0.07    6.66 
Options outstanding at  December 31, 2018   20,500,000    0.03    0.03    7.52 
Options cancelled (1)   (18,250,000)   0.03    —        
Options expired   (250,000)   0.05    —        
Options outstanding at  September 30, 2019   2,000,000   $0.07   $0.07    6.49 

 

(1) Options to iGambit management and key consultants were cancelled in connection with the reverse stock split prior to the reverse merger agreement consummated on October 29, 2019.

 

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Options outstanding at September 30, 2019 consist of:

 

Date  Number  Number  Exercise  Expiration
Issued  Outstanding  Exercisable  Price  Date
 March 24, 2015    200,000    200,000   $0.01    March 24, 2020 
 June 6, 2017    1,800,000    1,800,000   $0.07    June 6, 2027 
 Total    2,000,000    2,000,000           

 

Warrants

 

In addition to our 2006 Long Term Incentive Plan, we have issued and outstanding compensatory warrants to two consultants entitling the holders to purchase a total of 275,000 shares of our common stock at an average exercise price of $0.94 per share. Warrants to purchase 25,000 shares of common stock vest upon 6 months after the Company engages in an IPO, have an exercise price of $3.00 per share, and expire 2 years after the Company engages in an IPO. Warrants to purchase 250,000 shares of common stock vest 100,000 shares on issuance (June 1, 2009), and 50,000 shares on each of the following three anniversaries of the date of issuance, have exercise prices ranging from $0.50 per share to $1.15 per share, and expired on June 1, 2019. The issuance of the compensatory warrants was not submitted to our shareholders for their approval.

 

Warrant activity during the nine months ended September 30, 2019 and 2018 follows:

 

  

Warrants

Outstanding

  Weighted Average Exercise Price  Weighted Average Grant-Date Fair Value 

Weighted Average Remaining Contractual Life

(Years)

Warrants outstanding at December 31, 2017   400,000   $0.62   $0.10    3.27 
Warrant granted   1,500,000    0.05    —        
Warrants outstanding at September 30, 2018   1,900,000   $0.21   $0.12    3.49 
Warrants outstanding at December 31, 2018   1,875,000   $0.12   $0.12    3.24 
Warrants expired   (250,000)   0.73    —        
Warrants outstanding at September 30, 2019   1,625,000   $0.03   $0.03    2.90 

 

Warrants outstanding at September 30, 2019 consist of:

 

Date  Number  Number  Exercise  Expiration
Issued  Outstanding  Exercisable  Price  Date
 January 1, 2017    50,000    50,000   $0.25    October 10, 2021 
 January 1, 2017    50,000    50,000   $0.50    November 7, 2021 
 January 5, 2017    25,000    25,000   $0.50    January 5, 2022 
 February 5, 2018    750,000    750,000   $0.05    February 5, 2023 
 April 27, 2018    750,000    750,000   $0.05    April 27, 2023 
   Total    1,625,000    1,625,000           

 

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Note 8 – Convertible Debt

 

Convertible Notes Payable

 

On January 10, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $240,000, convertible into shares of the Company’s common stock, and includes a back-ended note with principal of $120,000 that was funded on July 10, 2018. The back-ended Note, including accrued interest is due July 10, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 15 trading day period ending on the latest complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the noteholder converted $71,732 of the principal balance and accrued interest of $5,366 to 97,388 shares of common stock. The principal balance of the note of $94,268, accrued interest of $7,417, and prepayment penalty of $5,000 were paid on June 24, 2019 with proceeds from the Clinigence note (See note 10 below).

 

On March 6, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $126,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due March 6, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the lowest trading price during the 20 trading day period ending on the latest complete trading day prior to and including the conversion date. During the nine months ended September 30, 2019, the noteholder converted the remaining principal balance of $60,000 and accrued interest of $4,342 to 70,893 shares of common stock.

 

On May 3, 2018, the Company entered into a Convertible Promissory Note pursuant to which the Company borrowed in the aggregate principal amount of $83,500. The convertible note is due 12 months after issuance and bears interest at a rate of 8%. The Note is convertible into shares of common stock of the Company 180 days following the date of funding and thereafter. The conversion price shall be subject to a discount of 35% applied to the average of the three lowest closing bid prices of the Common Stock during the prior twenty (20) trading day period. The Investor will be limited to convert no more than 4.99% of the issued and outstanding Common Stock at the time of conversion at any one time. At any time during the period beginning on the date of the Note and ending on the date which is 180 days thereafter, the Company may repay the Note by paying an amount equal to the then outstanding amount multiplied by 130%. During the nine months ended September 30, 2019, the noteholder converted the remaining principal balance of $53,957 and accrued interest of $4,600 to 51,349 shares of common stock.

 

 16 

 

 

On June 25, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $53,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due April 15, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the noteholder converted the remaining principal balance of $38,000 and accrued interest of $2,120 to 29,719 shares of common stock.

 

On August 13, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $53,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due May 30, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the noteholder converted the principal balance of the note and accrued interest of $2,120 to 52,495 shares of common stock.

 

On September 17, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $33,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due June 30, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the noteholder converted the principal balance of the note and accrued interest of $1,320 to 63,525 shares of common stock.

 

On January 3, 2019, the Company issued an 8% convertible note in the aggregate principal amount of $38,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due October 30, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The principal balance of the note of $38,000, accrued interest of $1,659, and prepayment penalty of $7,600 were paid on June 24, 2019 with proceeds from the Clinigence note (See note 10 below).

 

On February 15, 2019, the Company issued an 8% convertible note in the aggregate principal amount of $38,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due November 30, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The principal balance of the note of $38,000, accrued interest of $1,259, and prepayment penalty of $7,600 were paid on June 24, 2019 with proceeds from the Clinigence note (See note 10 below).

 

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On March 29, 2019, the Company issued an 8% convertible note in the aggregate principal amount of $38,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due February 15, 2020 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The principal balance of the note of $38,000, accrued interest of $810, and prepayment penalty of $7,600 were paid on June 24, 2019 with proceeds from the Clinigence note (See note 10 below).

 

On May 22, 2019, the Company issued an 8% convertible note in the aggregate principal amount of $38,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due March 15, 2020 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The principal balance of the note of $38,000, accrued interest of $280, and prepayment penalty of $7,600 were paid on June 24, 2019 with proceeds from the Clinigence note (See note 10 below).

 

The Company recorded a debt discount related to identified embedded derivatives relating to conversion features and a reset provisions (see Note 9) based fair values as of the inception date of the Notes. The calculated debt discount equaled the face of the 8% note dated January 10, 2018 and was amortized through the date the convertible debt was fully extinguished. The calculated debt discount equaled the face of the 8% note dated March 6, 2018 and was amortized through the date the convertible debt was fully extinguished. The calculated debt discount equaled the face of the 8% note dated May 3, 2018 and was amortized through the date the convertible debt was fully extinguished. The calculated debt discount equaled the face of the 8% note dated June 25, 2018 and was amortized through the date the convertible debt was fully extinguished. The calculated debt discount equaled the face of the 8% note dated August 13, 2018 and was amortized through the date the convertible debt was fully extinguished. The calculated debt discount equaled the face of the 8% note dated September 17, 2018 and was amortized through the date the convertible debt was fully extinguished. Interest expense on the convertible notes of $218,454 and $119,603 was recorded for the nine months ended September 30, 2019 and 2018, respectively.

 

The Company issued convertible debentures in the amount of $75,000 to three individuals. The debentures are convertible into 75,000 shares of common stock for up to 5 years, at the holders’ option, at an exercise price of $.50 and $.25, respectively. The debentures mature on the earlier of the closing of a subsequent financing event by the Company resulting in gross proceeds of at least $10,000,000 or three years from the date of issuance. The debentures bear interest at a rate of 10%. A beneficial conversion feature was not recorded as the fair market value of the Company’s common stock was less than the exercise prices at the dates of issuance and through the end of the year. Interest expense on the convertible debentures of $5,589 was recorded for the nine months ended September 30, 2019 and 2018, respectively.

 

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Convertible notes payable at September 30, 2019 and December 31, 2018 are summarized as follows:

 

   2019  2018
Total face value of notes  $75,000   $478,957 
Less: Discount   2,454    101,346 
Balance  $72,546   $377,611 

 

Note 9 – Derivative Liability

 

The Company has determined that the conversion feature embedded in the convertible notes described in Note 8 contain a potential variable conversion amount which constitutes a derivative which has been bifurcated from the note and recorded as a derivative liability at fair value, with a corresponding discount recorded to the associated debt. The excess of the derivative value over the face amount of the note is recorded immediately to interest expense at inception. The Company used the Binomial Option Pricing model to value the conversion features.

 

The Company used Level 3 inputs for its valuation methodology for the conversion option liability in determining the fair value using a Black-Scholes option-pricing model with the following assumption inputs:

 

       September 30,    December 31, 
    2019    2018 
Annual dividend yield   —      —   
Expected life (years)    0.78 - 1.0     0.77 - 1.0 
Risk-free interest rate    2.44% - 2.52%     2.07% - 2.57% 
Expected volatility    274% - 294%     257% - 293% 

 

Based upon ASC 840-15-25 (EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding convertible notes. Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date.

 

Note 10 – Notes Payable

 

On June 24, 2019, the Company entered into a secured promissory note with Clinigence Holdings, Inc. (“Clinigence”) for proceeds of $393,093, of which $293,093 was utilized to pay outstanding principal, accrued interest and penalties of certain convertible notes payable, and $100,000 was utilized for working capital. The note bears interest at a rate of 6% and is due upon the earlier of December 24, 2019 or the Merger Agreement (See note 16). The Company entered into two additional secured promissory notes with Clinigence for proceeds of $25,000 each on August 6, 2019 and September 9, 2019, respectively under the same terms as the June 24, 2019 note.

 

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Notes payable at September 30, 2019 and December 31, 2018 includes loans to HealthDatix from 3 individuals totaling $52,500. The loans do not bear interest and there are no specific terms for repayment.

 

Note 11 – Stock Transactions

 

Designation of Preferred Stock

 

On August 2, 2018, the Company filed a Certificate of Designation with the Delaware Division of Corporations whereby the Company designated a Series A Preferred Stock and issued 1,000 shares to the Company’s CEO. The holders of Series A Preferred Stock will have voting rights, when combined with their existing holdings of the Company’s common stock, that entitle them to have an aggregate of 51% of the votes eligible to be cast by all stockholders with respect to all matters brought before a vote of the stockholders of the Company.

 

Reverse Stock Split

 

On October 25, 2019, the Company effected a 1-for-500 reverse stock split of its common stock. On the effective date of the reverse stock split, each 500 shares of outstanding common stock were reduced to one share of common stock. The share numbers have been adjusted on a retrospective basis to reflect this 1-for-500 reverse stock split.

 

Common Stock Issued

 

On August 8, 2018, the Board unanimously approved an amendment to the Company’s Articles of Incorporation to increase the number of shares of Common Stock which the Company is authorized to issue from Four hundred million (400,000,000) to Eight Hundred Million (800,000,000) shares of Common Stock, $0.001 par value per share.

 

In connection with the convertible notes payable (see Note 8 above) the noteholders converted $326,189 of principal balance and $19,868 of accrued interest to 365,388 shares of common stock during the nine months ended September 30, 2019. The stock issued was determined based on the terms of the convertible notes.

 

Note 12 - Income Taxes

 

A full valuation allowance was recorded against the Company’s net deferred tax assets. A valuation allowance must be established if it is more likely than not that the deferred tax assets will not be realized. This assessment is based upon consideration of available positive and negative evidence, which includes, among other things, the Company’s most recent results of operations and expected future profitability. Based on the Company’s cumulative losses in recent years, a full valuation allowance against the Company’s deferred tax assets has been established as Management believes that the Company will not realize the benefit of those deferred tax assets.

 

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Note 13 – Concentrations and Credit Risk

 

Sales and Accounts Receivable

 

HealthDatix had sales to two customers which accounted for approximately 15% and 14%, respectively of HealthDatix’s total sales for the nine months ended September 30, 2019. One customer accounted for 100% of accounts receivable at September 30, 2019.

 

HealthDatix had sales to two customers which accounted for approximately 66% and 32%, respectively of HealthDatix’s total sales for the nine months ended September 30, 2018. The two customers accounted for approximately 77% and 19%, respectively of accounts receivable at September 30, 2018.

 

Cash

 

Cash is maintained at a major financial institution. Accounts held at U.S. financial institutions are insured by the FDIC up to $250,000. Cash balances could exceed insured amounts at any given time, however, the Company has not experienced any such losses. The Company did not have any interest-bearing accounts at September 30, 2019 and December 31, 2018, respectively.

 

Note 14 - Related Party Transactions

 

Amounts Due to Related Parties

 

Amounts due to related parties with balances of $128,476 and $145,367 at September 30, 2019 and December 31, 2018, respectively, do not bear interest and are payable on demand. The Company’s former subsidiary, Arcmail owed amounts on a credit card that is guaranteed by the husband of the Company’s Executive Vice President, who was held personally responsible by the credit card company for the unpaid balance.

 

Note 15 – Commitments and Contingencies

 

Lease Commitment

 

The Company was obligated under an operating lease for its premises in Smithtown, New York that expired on May 31, 2019. The lease was not renewed and the officers of the Company are providing office space to the Company at no charge.

 

Rent expense of $17,711 and $21,363 was charged to operations for the nine months ended September 30, 2019 and 2018, respectively.

 

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Employment Arrangements With Executive Officers

 

Effective April 1, 2017, in connection with the acquisition of HealthDatix Inc., the Company entered into employment agreements with Jerry Robinson, MaryJo Robinson, and Kathleen Shepherd each under a three-year term at a base salary of $75,000 per year, bonuses based upon objectives set by the Company, and participation in all benefit programs generally made available to HealthDatix employees. The employment agreements restrict the executive officers from engaging in certain competitive activities for the greater of 60 months from the date of the agreements or two years following the termination of their respective employment.

 

Note 16 – Subsequent Events

 

On August 8, 2019, iGambit, Inc. entered into an Agreement and Plan of Merger (the “Reverse Merger Agreement”) by and among Clinigence Holdings, Inc., a Delaware corporation (“Clinigence”), iGambit, Inc., a Delaware corporation (“iGambit” or the “Company”), HealthDatix, Inc., a Delaware corporation and wholly owned subsidiary of iGambit (“Merger Sub”), and John Salerno, an individual and holder of shares of iGambit capital stock constituting a majority of the votes eligible to be cast by all of the stockholders of iGambit (the “Signing Stockholder”). The transactions contemplated by the Reverse Merger Agreement were consummated on October 29, 2019 (the “Closing”).

 

The Reverse Merger Agreement provided for the merger of Merger Sub with and into Clinigence, hereafter referred to as the “Acquisition.” As a result of the Acquisition, Merger Sub ceased to exist, and Clinigence became the surviving corporation and a direct wholly owned subsidiary of iGambit, and the former stockholders of Clinigence (the “Clinigence Stockholders”) have a direct equity ownership and controlling interest in iGambit. Merger Sub was renamed Clinigence Health Inc. iGambit was renamed Clinigence Holdings, Inc. Merger Sub was originally incorporated in Delaware on October 17, 2013 and had no operating activity prior to the reported transaction.

 

At the Closing, all of the outstanding shares of Clinigence common stock (the “Clinigence Shares”) were converted solely into the right to receive a number of shares of iGambit common stock (the “Company Shares”) such that the holders of outstanding equity of Clinigence immediately prior to the Closing own 85%, on a fully-diluted basis, of the outstanding equity of iGambit immediately following the Closing, and holders of outstanding equity of iGambit immediately prior to the Closing own 15%, on a fully-diluted basis, of the outstanding equity of iGambit. For each share of Clinigence Shares, each former Clinigence Stockholder received 0.22489093 shares of Company Shares after giving effect to the reverse stock split.

 

In connection with the Acquisition, the Company amended its certificate of incorporation to (i) effect a reverse stock split of the Company Shares at a ratio of 1 for 500 (the “Reverse Split Certificate of Amendment”), and (ii) change its name to Clinigence Holdings, Inc. to better align with the business of Clinigence (the “Name Change Certificate of Amendment”).

 

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

 

FORWARD LOOKING STATEMENTS

 

This Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated by reference in this Form 10-Q which address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), finding suitable merger or acquisition candidates, expansion and growth of the Company’s business and operations, and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances.

 

Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements. Factors that could adversely affect actual results and performance include, among others, potential fluctuations in quarterly operating results and expenses, government regulation, technology change and competition. Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.

  

INTRODUCTION

 

On August 8, 2019, the Company entered into an Agreement and Plan of Merger (the “Reverse Merger Agreement”) by and among Clinigence Holdings, Inc., a Delaware corporation (“Clinigence”), iGambit, Inc., a Delaware corporation (“iGambit” or the “Company”), HealthDatix, Inc., a Delaware corporation and wholly owned subsidiary of iGambit (“Merger Sub”), and John Salerno, an individual and holder of shares of iGambit capital stock constituting a majority of the votes eligible to be cast by all of the stockholders of iGambit (the “Signing Stockholder”). The transactions contemplated by the Reverse Merger Agreement were consummated on October 29, 2019 (the “Closing”).

 

The Reverse Merger Agreement provided for the merger of Merger Sub with and into Clinigence, hereafter referred to as the “Acquisition.” As a result of the Acquisition, Merger Sub ceased to exist, and Clinigence became the surviving corporation and a direct wholly owned subsidiary of iGambit, and the former stockholders of Clinigence (the “Clinigence Stockholders”) have a direct equity ownership and controlling interest in iGambit. Merger Sub was renamed Clinigence Health Inc. iGambit was renamed Clinigence Holdings, Inc. Merger Sub was originally incorporated in Delaware on October 17, 2013 and had no operating activity prior to the reported transaction.

 

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At the Closing, all of the outstanding shares of Clinigence common stock (the “Clinigence Shares”) were converted solely into the right to receive a number of shares of iGambit common stock (the “Company Shares”) such that the holders of outstanding equity of Clinigence immediately prior to the Closing own 85%, on a fully-diluted basis, of the outstanding equity of iGambit immediately following the Closing, and holders of outstanding equity of iGambit immediately prior to the Closing own 15%, on a fully-diluted basis, of the outstanding equity of iGambit. For each share of Clinigence Shares, each former Clinigence Stockholder received 0.22489093 shares of Company Shares after giving effect to the reverse stock split.

 

In connection with the Acquisition, the Company amended its certificate of incorporation to (i) effect a reverse stock split of the Company Shares at a ratio of 1 for 500 (the “Reverse Split Certificate of Amendment”), and (ii) change its name to Clinigence Holdings, Inc. to better align with the business of Clinigence (the “Name Change Certificate of Amendment”).

 

The Company is focused on the medical technology markets. Our primary focus is the expansion of our subsidiaries HealthDatix Inc. (“HealthDatix”) and our newly acquired subsidiary Clinigence Health Inc. (“Clinigence”).

 

HealthDatix is an end to end Software-as-a-Service solution that manages, reports, and analyzes critical data, enabling healthcare organizations to deliver positive patient outcomes. HealthDatix provides an opportunity for physicians to identify patients eligible for both “Annual Wellness Visits” (AWV) as well as “Chronic Care Management” both of which are reimbursed by Medicare.

 

The HealthDatix AWV solution offers a fully-hosted cloud service for healthcare providers to conduct the Medicare Annual Wellness Visit (AWV) program to their Medicare patients providing the patient with a 5-10 year Personalized Preventive Plan and physician reports that meet all Medicare audit requirements. The AWV is a program that allows a physician to identify those patients that have 2+ chronic conditions that require additional screening and management.

 

Additionally, the HealthDatix Chronic Care Management System (CCM), encompasses our FDA approved Electronic House Call system and Medicare covered platform, for continuous management of chronic care patients. The CCM platform can be tailored for individual care and health management of patients susceptible to chronic illness. The CCM platform is also designed to accumulate information from our BioDatix HealthBand, or any TeleMedicine or wearable device.

 

The HealthDatix, BioDatix Health Band, provides the ability to passively collect a wearers Heart Rate, Blood Oxygen, Blood Pressure, Sleep and Steps/Distance/Calories.

 

 24 

 

 

Clinigence is a healthcare information technology company providing an advanced, cloud-based platform that enables healthcare organizations to provide value-based care and population health management. The Clinigence platform aggregates clinical and claims data across multiple settings, information systems and sources to create a holistic view of each patient and provider and virtually unlimited insights into patient populations. Clinigence’s solutions help healthcare organizations improve the quality and cost effectiveness of care, enhance population health management and optimize provider networks.

 

 Assets. At September 30, 2019, we had $2,104,777 in total assets, compared to $2,618,466 at December 31, 2018. The decrease in total assets was primarily due to amortization of intangible assets from the acquisition of our HealthDatix subsidiary.

 

 Liabilities. At September 30, 2019, our total liabilities were $1,464,845 compared to $1,385,447 at December 31, 2018. Our current liabilities at September 30, 2019 consisted of accounts payable and accrued expenses of $740,465, accrued interest on notes payable of $27,165, amounts due to related parties of $128,476, deferred revenue of $600, notes payable of $495,593, and convertible notes payable of $72,546, whereas our current liabilities at December 31, 2018 consisted of accounts payable and accrued expenses of $480,270, accrued interest on notes payable of $32,265 amounts due to related parties of $145,367, deferred revenue of $9,192, notes payable of $52,500, convertible notes payable of $377,611, and derivative liability of $288,242.

 

Stockholders’ Equity. Our Stockholders’ Equity was $639,932 at September 30, 2019 compared to Stockholders Equity of $1,233,019 at December 31, 2018. This decrease was primarily due to an increase in accumulated deficit during the nine months ended September 30, 2019.

 

Three Months Ended SEPTEMBER 30, 2019 as Compared to Three Months Ended SEPTEMBER 30, 2018

 

Revenues and Net Income. We had $7,550 of revenue from our HealthDatix subsidiary and a net loss of $373,749 during the three months ended September 30, 2019, compared to revenue of $22,582 and a net loss of $608,519 for the three months ended September 30, 2018. The decrease in revenue was due primarily to revenue generated by our HealthDatix subsidiary.

 

General and Administrative Expenses. General and Administrative Expenses decreased to $187,295 for the three months ended September 30, 2019 from $207,793 for the three months ended September 30, 2018. For the three months ended September 30, 2019 our General and Administrative Expenses consisted of corporate administrative expenses of $23,232, legal and accounting fees of $45,621, employee benefits expenses (health and life insurance) of $2,269, payroll expenses of $98,245, exchange filing fees of $4,081 transfer agent expense of $1,398, rent expense of $2,449, and contract labor expense of $10,000. For the three months ended September 30, 2018 our General and Administrative Expenses consisted of corporate administrative expenses of $28,588, legal and accounting fees of $29,798, employee benefits expenses (health and life insurance) of $7,683, marketing expenses of $6,153, payroll expenses of $89,725, exchange filing fees of $8,897, transfer agent expense of $6,600, rent expense of $7,128, contract labor expense of $10,440, finders fees expense of $5,000, errors and omissions insurance expense of $5,281, and trade show expense of $2,500. The decreases from the three months ended September 30, 2018 to the three months ended September 30, 2019 relate primarily due to: (i) a decrease in employee benefits, (ii) a decrease in marketing expenses; and (iii) a decrease in consulting and commissions expenses. Costs associated with the operations of our HealthDatix and Clinigence subsidiaries are expected to increase going forward, as we expand the business operations of Clinigence and HealthDatix which would likely increase our corporate administrative expenses.

 

 25 

 

 

Other Income (Expense). We reported interest expense of $9,995 for the three months ended September 30, 2019. We reported income from a change in fair value of derivative liability of $76,091, loss on extinguishment of debt of $95,464 and interest expense of $222,134 for the three months ended September 30, 2018.

 

NINE Months Ended SEPTEMBER 30, 2019 as Compared to NINE Months Ended SEPTEMBER 30, 2018

 

Revenues and Net Income (Loss). We had $19,175 of revenue from our HealthDatix subsidiary and a net loss of $1,503,511 during the nine months ended September 30, 2019, compared to $30,500 of revenue from our HealthDatix subsidiary and net income of $1,944,799, for the nine months ended September 30, 2018. The increase in revenue was due primarily to the revenue generated by our HealthDatix subsidiary.

 

General and Administrative Expenses. General and Administrative Expenses decreased to $576,512 for the nine months ended September 30, 2019 from $752,930 for the nine months ended September 30, 2018. For the nine months ended September 30, 2019 our General and Administrative Expenses consisted of corporate administrative expenses of $106,277, legal and accounting fees of $85,862, employee benefits expenses (health and life insurance) of $8,468, payroll expenses of $304,346, filing fees expense of $5,690, rent expense of $17,712, transfer agent expense of $18,940, contract labor expense of $24,500, and consulting fees expense of $4,717. For the nine months ended September 30, 2018 our General and Administrative Expenses consisted of corporate administrative expenses of $32,359, legal and accounting fees of $74,378, employee benefits expenses (health and life insurance) of $28,591, marketing expenses of $49,769, payroll expenses of $298,155, exchange filing fees expense of $19,707, rent expense of $21,363, transfer agent expense of $24,475, contract labor expense of $34,640, consulting fees expense of $89,400, finders fees of $26,000, errors and omissions insurance expense of $5,281, marketing expense of $40,769, and trade show expense of $8,043. The decreases from the nine months ended September 30, 2019 to the nine months ended September 30, 2018 relate primarily due to: (i) a decrease in employee benefits, (ii) a decrease in marketing expenses; (iii) a decrease in filing fees expenses, and (iv) a decrease in consulting and fees expenses. Costs associated with the operations of our HealthDatix and Clinigence subsidiaries are expected to increase going forward, as we expand the business operations of Clinigence and HealthDatix which would likely increase our corporate administrative expenses.

 

Other Income (Expense). We reported income from a change in fair value of derivative liability of $98,944, loss on extinguishment of debt of $262,566 and interest expense of $234,314 for the nine months ended September 30, 2019. We reported expense from a change in fair value of derivative liability of $(128,100), loss on extinguishment of debt of $233,734 and interest expense of $314,975 for the nine months ended September 30, 2018.

 

 26 

 

 

Liquidity and Capital Resources AND ABILITY TO CONTINUE AS A GOING CONCERN

 

General

 

As reflected in the accompanying consolidated financial statements, at September 30, 2019, we had $10,029 of cash and stockholders’ equity of $639,932. At December 31, 2018, we had $369 of cash and stockholders’ equity of $1,233,019.

 

Our primary capital requirements in 2019 are likely to arise from the expansion of our HealthDatix and Clinigence operations. It is not possible to quantify those costs at this point in time, in that they depend on HealthDatix’s and Clinigence’s business opportunities and the state of the overall economy. We anticipate raising capital in the private markets to cover any such costs, though there can be no guaranty we will be able to do so on terms we deem to be acceptable. We do not have any plans at this point in time to obtain a line of credit or other loan facility from a commercial bank.

 

While we believe in the viability of our strategy to improve HealthDatix’s and Clinigence’s sales volume, and in our ability to raise additional funds, there can be no assurances that we will be able to fully effectuate our business plan.

 

We believe we will continue to increase our cash position and liquidity for the foreseeable future. We believe we have enough capital to fund our present operations.

 

Cash Flow Activity

 

Net cash used in operating activities was $332,349, for the nine months ended September 30, 2019, compared to $712,767 for the nine months ended September 30, 2018. Our primary use of operating cash flows from operating activities was from net losses of $1,503,511 and $1,944,799 for the nine months ended September 30, 2019 and 2018, respectively. Additional contributing factors to the change were from depreciation expense of $742, amortization expense of $521,902, non-cash interest expense of $231,563, stock based compensation of $1,025, loss on the extinguishment of debt of $262,566, a change in fair value of derivative liability of $98,944, decrease in accounts receivable of $4,871, a decrease in inventory of $85, an increase in prepaid expenses of $5,971, a decrease in deposits of $1,720, an increase in accounts payable and accrued expenses of $260,195, and a decrease in deferred revenue of $8,592.

 

There was no cash used in investing activities for the nine months ended September 30, 2019 and 2018, respectively.

 

Net Cash provided by financing activities was $342,009 for the nine months ended September 30, 2019 compared to $706,500 for the nine months ended September 30, 2018. The cash flows provided by financing activities for the nine months ended September 30, 2019 was primarily from $443,093 in proceeds from notes payable.

 

 27 

 

 

Plan of Operation and Funding

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has an accumulated deficit of $13,966,325, and a working capital deficit of $1,411,857 at September 30, 2019. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.  The Company’s continuation as a going concern is dependent upon its ability to obtain necessary equity financing and ultimately from generating revenues from its newly acquired subsidiary to continue operations. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business. Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next twelve months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

Not Required.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q.

 

Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, 2019, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in 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 chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 28 

 

 

Limitations on Effectiveness of Controls and Procedures

 

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

PART II — OTHER INFORMATION 

     

Item 1.   Legal Proceedings.

 

From time-to-time, the Company is involved in various civil actions as part of its normal course of business. The Company is not a party to any litigation that is material to ongoing operations as defined in Item 103 of Regulation S-K as of the period ended September 30, 2019.

 

Item 1A. Risk Factors.

 

Not required

 

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

 

None

     

Item 3. Defaults upon Senior Securities.

 

None

     

Item 4. Removed and Reserved.

     

Item 5. Other Information.

 

None

 

 29 

 

 

     

Item 6. Exhibits

         

Exhibit No.   Description
31.1 Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (This exhibit shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
32.2 Certification of the Interim Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (This exhibit shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

 

 30 

 

 

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 19, 2019.

 

  Clinigence Holdings, Inc.
   
  /s/ John Salerno  
  John Salerno 
  Chief Executive Officer 
 
   
   
  /s/ Elisa Luqman  
  Elisa Luqman 
  Chief Financial Officer 

 31 

 

Exhibit Index 

Exhibit No.   Description
31.1 Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (This exhibit shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
32.2 Certification of the Interim Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (This exhibit shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

 

 32 

 

  

EX-31.1 2 ex31_1.htm EXHIBIT 31.1

Exhibit 31.1

I, John Salerno, certify that:

 

     1. I have reviewed this quarterly report on Form 10-Q of Clinigence Holdings, Inc.;

 

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

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

 

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls 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 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.

 

November 19, 2019   /s/ John Salerno
    Chief Executive Officer

 

EX-31.2 3 ex31_2.htm EXHIBIT 31.2

Exhibit 31.2

I, Elisa Luqman, certify that:

 

     1. I have reviewed this quarterly report on Form 10-Q of Clinigence Holdings, Inc..;

 

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

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

 

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls 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 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.

 

November 19, 2019   /s/ Elisa Luqman
    Chief Financial Officer

 

EX-32.1 4 ex32_1.htm EXHIBIT 32.1

Exhibit 32.1

WRITTEN STATEMENT OF THE CHIEF EXECUTIVE OFFICER
Pursuant to 18 U.S.C. Section 1350
As adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002

 

Solely for the purposes of complying with 18 U.S.C. s.1350 as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002, I, the undersigned Chief Executive Officer of Clinigence Holdings, Inc.. (the “Company”), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2019, (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

November 19, 2019   /s/ John Salerno
    Chief Executive Officer

 

EX-32.2 5 ex32_2.htm EXHIBIT 32.2

Exhibit 32.2

WRITTEN STATEMENT OF THE CHIEF FINANCIAL OFFICER
Pursuant to 18 U.S.C. Section 1350
As adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002

 

Solely for the purposes of complying with 18 U.S.C. s.1350 as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002, I, the undersigned Chief Financial Officer of Clinigence Holdings, Inc.. (the “Company”), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2019, (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

November 19, 2019   /s/ Elisa Luqman
    Chief Financial Officer

 

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Disclosure Text Block [Abstract]  
Note 6 - Earnings (Loss) Per Common Share

Note 6 - Earnings (Loss) Per Common Share

 

The Company calculates net income (loss) per common share in accordance with ASC 260 “Earnings Per Share” (“ASC 260”). Basic and diluted net earnings (loss) per common share was determined by dividing net earnings (loss) applicable to common stockholders by the weighted average number of common shares outstanding during the period. The Company’s potentially dilutive shares, which include outstanding common stock options, common stock warrants, and convertible debt have not been included in the computation of diluted net loss per share for the nine months ended September 30, 2019 and 2018 as the result would be anti-dilutive.

 

   Three Months Ended  Nine Months Ended
   September 30,  September 30,
   2019  2018  2019  2018
Stock options   2,000,000    8,463,000    2,000,000    8,463,000 
Stock warrants   1,625,000    1,900,000    1,625,000    1,900,000 
Convertible debt   600    410,802    600    410,802 
Total shares excluded from calculation   3,625,600    10,773,802    3,625,600    10,773,802 
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Note 10 - Note Payable
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Disclosure Text Block [Abstract]  
Note 10 - Note Payable

Note 10 – Notes Payable

 

On June 24, 2019, the Company entered into a secured promissory note with Clinigence Holdings, Inc. (“Clinigence”) for proceeds of $393,093, of which $293,093 was utilized to pay outstanding principal, accrued interest and penalties of certain convertible notes payable, and $100,000 was utilized for working capital. The note bears interest at a rate of 6% and is due upon the earlier of December 24, 2019 or the Merger Agreement (See note 16). The Company entered into two additional secured promissory notes with Clinigence for proceeds of $25,000 each on August 6, 2019 and September 9, 2019, respectively under the same terms as the June 24, 2019 note.

 

Notes payable at September 30, 2019 and December 31, 2018 includes loans to HealthDatix from 3 individuals totaling $52,500. The loans do not bear interest and there are no specific terms for repayment.

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Note 3 - Going Concern (Details Narrative) - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Disclosure Text Block [Abstract]    
Accumulated deficit $ (13,966,325) $ (12,462,814)
Working capital deficit $ (1,411,857)  
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Note 2 - Summary of Significant Accounting Policies (Details) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2019
Dec. 31, 2018
Liabilities:    
Balance of derivative liabilities - beginning of year $ 288,242 $ 66,059
Issued 292,913 1,122,211
Converted (482,211) (928,773)
Change in fair value of derivative liabilities (98,944) 28,745
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Note 5 - Intangible Assets (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Disclosure Text Block [Abstract]    
Amortization expense $ 521,902 $ 521,902
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Note 13 - Concentrations and Credit Risk (Details Narrative) - USD ($)
9 Months Ended
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Sep. 30, 2018
FDIC $ 250,000  
Sales [Member] | First Customers [Member]    
Concentration percentage 15.00% 66.00%
Sales [Member] | Second Customers [Member]    
Concentration percentage 14.00% 32.00%
Accounts Receivable [Member] | Second Customers [Member]    
Concentration percentage   19.00%
Accounts Receivable [Member] | One Customer [Member]    
Concentration percentage 100.00% 77.00%
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Note 8 - Convertible Debt (Details) - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Disclosure Text Block [Abstract]    
Total face value of notes $ 75,000 $ 478,957
Less: Discount 2,454 101,346
Balance $ 72,546 $ 377,611
XML 20 R41.htm IDEA: XBRL DOCUMENT v3.19.3
Note 7 - Stock Based Compensation (Details) - $ / shares
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Disclosure Text Block [Abstract]    
Options, Outstanding, Beginning Balance 20,500,000 8,463,000
Options, Outstanding, Beginning Balance, Weighted Average Exercise Price $ 0.03 $ 0.07
Options, Outstanding, Beginning Balance, Weighted Average Grant-Date Fair Value $ 0.03 $ 0.07
Options, Outstanding, Beginning Weighted Average Remaining Contractual Term 7 years 6 months 7 days 7 years 4 months 28 days
Options, Canceled (18,250,000)  
Options, Canceled, Weighted Average Exercise Price $ 0.03  
Options, Expired (250,000)  
Options, Expired , Weighted Average Exercise Price $ 0.05  
Options, Outstanding, Ending Balance 2,000,000 8,463,000
Options, Outstanding, Ending Balance, Weighted Average Exercise Price $ 0.07 $ 0.07
Options, Outstanding, Ending Balance, Weighted Average Grant-Date Fair Value $ 0.07 $ 0.07
Options, Outstanding, Ending Weighted Average Remaining Contractual Term 6 years 5 months 27 days 6 years 7 months 28 days
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Note 11 - Stock Transactions (Details Narrative) - USD ($)
1 Months Ended 9 Months Ended
Oct. 25, 2019
Sep. 30, 2019
Dec. 31, 2018
Common stock, shares authorized   800,000,000 800,000,000
Reverse stock split 1-for-500    
Noteholder      
Debt Conversion, Converted Instrument, Shares Issued   365,388  
Noteholder | Principal      
Debt Conversion, Converted Instrument, Amount   $ 326,189  
Noteholder | Accrued interest      
Debt Conversion, Converted Instrument, Amount   $ 19,868  
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (1,503,511) $ (1,944,799)
Adjustments to reconcile net loss to net cash used in operating activities    
Depreciation 742 1,295
Amortization 521,902 521,902
Non cash interest expense 231,563 312,412
Stock-based compensation expense 1,025 88,800
Loss on extinguishment of debt 262,566 233,734
Change in fair value of derivative liability (98,944) 128,100
Changes in operating assets and liabilities:    
Accounts receivable 4,871 (19,727)
Inventory 85 0
Prepaid expenses and other current assets (5,971) 39,377
Deposits 1,720 0
Accounts payable and accrued expenses 260,195 (68,928)
Deferred revenue (8,592) (4,933)
NET CASH USED IN OPERATING ACTIVITIES (332,349) (712,767)
CASH FLOWS FROM INVESTING ACTIVITIES 0 0
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from issuance of convertible debentures 168,500 676,500
Repayments of convertible debentures (257,693) 0
Proceeds from sale of common stock 0 30,000
Proceeds from notes payable 443,093 0
Proceeds from related party loans 11,254 0
Repayments of related party loans (23,145) 0
NET CASH PROVIDED BY FINANCING ACTIVITIES 342,009 706,500
NET INCREASE (DECREASE) IN CASH 9,660 (6,267)
CASH - BEGINNING OF PERIOD 369 9,449
CASH - END OF PERIOD 10,029 3,182
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Cash paid during the period for Interest 2,752 2,563
Non-cash investing and financing activities:    
Debt discount related to derivative liability 222,500 533,249
Notes payable converted to common stock 326,189 387,000
Common stock issued in payment of accrued interest $ 19,868 $ 23,746
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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Current assets    
Cash $ 10,029 $ 369
Accounts receivable 10,000 14,871
Inventory 26,988 27,073
Prepaid expenses 5,971 0
Total current assets 52,988 42,313
Other assets    
Property and equipment, net 1,376 2,118
Intangilbe assets, net 2,050,113 2,572,015
Deposits 300 2,020
Total Assets 2,104,777 2,618,466
Current liabilities    
Accounts payable and accrued expenses 740,465 480,270
Accrued interest on notes payable 27,165 32,265
Amounts due to related parties 128,476 145,367
Deferred revenue 600 9,192
Notes payable 495,593 52,500
Convertible notes payable, net 72,546 377,611
Derivative liability 0 288,242
Total current liabilities 1,464,845 1,385,447
Stockholders' equity    
Preferred stock, $.001 par value; authorized - 100,000,000 shares;issued and outstanding - 0 shares in 2019 and 2018, respectively 0 0
Common stock, $.001 par value; authorized - 800,000,000 shares; 797,108 and 429,720 shares issued and 777,108 and 409,720 shares outstanding (net of treasury shares) as of September 30, 2019 and December 31, 2018, respectively 797 430
Additional paid-in capital 15,605,460 14,695,403
Accumulated deficit (13,966,325) (12,462,814)
Total stockholders' equity before Treasury stock 1,639,932 2,233,019
Less: Treasury stock; 10,000,000 shares, at cost (1,000,000) (1,000,000)
Total stockholders' equity 639,932 1,233,019
Liabilities and equity $ 2,104,777 $ 2,618,466
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Note 7 - Stock Based Compensation (Tables)
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Schedule of stock option activities

Stock option activity during the nine months ended September 30, 2019 and 2018 follows:

 

   Options
Outstanding
  Weighted Average Exercise Price  Weighted Average Grant-Date         Fair Value  Weighted Average Remaining Life (Years)
Options outstanding at December 31, 2017   8,463,000   $0.07   $0.07    7.41 
No option activity   —      —      —        
Options outstanding at  September 30, 2018   8,463,000   $0.07    0.07    6.66 
Options outstanding at  December 31, 2018   20,500,000    0.03    0.03    7.52 
Options cancelled (1)   (18,250,000)   0.03    —        
Options expired   (250,000)   0.05    —        
Options outstanding at  September 30, 2019   2,000,000   $0.07   $0.07    6.49 
Schedule of stock options outstanding

Options outstanding at September 30, 2019 consist of:

 

Date  Number  Number  Exercise  Expiration
Issued  Outstanding  Exercisable  Price  Date
 March 24, 2015    200,000    200,000   $0.01    March 24, 2020 
 June 6, 2017    1,800,000    1,800,000   $0.07    June 6, 2027 
 Total    2,000,000    2,000,000           
Schedule of Warrants, Activity

Warrant activity during the nine months ended September 30, 2019 and 2018 follows:

 

  

Warrants

Outstanding

  Weighted Average Exercise Price  Weighted Average Grant-Date Fair Value 

Weighted Average Remaining Contractual Life

(Years)

Warrants outstanding at December 31, 2017   400,000   $0.62   $0.10    3.27 
Warrant granted   1,500,000    0.05    —        
Warrants outstanding at September 30, 2018   1,900,000   $0.21   $0.12    3.49 
Warrants outstanding at December 31, 2018   1,875,000   $0.12   $0.12    3.24 
Warrants expired   (250,000)   0.73    —        
Warrants outstanding at September 30, 2019   1,625,000   $0.03   $0.03    2.90 
Schedule of Outstanding Warrants

Warrants outstanding at September 30, 2019 consist of:

 

Date  Number  Number  Exercise  Expiration
Issued  Outstanding  Exercisable  Price  Date
 January 1, 2017    50,000    50,000   $0.25    October 10, 2021 
 January 1, 2017    50,000    50,000   $0.50    November 7, 2021 
 January 5, 2017    25,000    25,000   $0.50    January 5, 2022 
 February 5, 2018    750,000    750,000   $0.05    February 5, 2023 
 April 27, 2018    750,000    750,000   $0.05    April 27, 2023 
   Total    1,625,000    1,625,000           
XML 25 R20.htm IDEA: XBRL DOCUMENT v3.19.3
Note 14 - Related Party Transactions
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 14 - Related Party Transactions

Note 14 - Related Party Transactions

 

Amounts Due to Related Parties

 

Amounts due to related parties with balances of $128,476 and $145,367 at September 30, 2019 and December 31, 2018, respectively, do not bear interest and are payable on demand. The Company’s former subsidiary, Arcmail owed amounts on a credit card that is guaranteed by the husband of the Company’s Executive Vice President, who was held personally responsible by the credit card company for the unpaid balance.

XML 26 R24.htm IDEA: XBRL DOCUMENT v3.19.3
Note 2 - Summary of Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Fair value assets and liabilities measured on recurring basis

The following table provides a reconciliation of the beginning and ending balances for the major classes of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) and reflects gains and losses for the nine months ended September 30, 2019 and year ended December 31, 2018.

 

   2019  2018
Liabilities:      
Balance of derivative liabilities - beginning of period  $288,242   $66,059 
Issued   292,913    1,122,211 
Converted   (482,211)   (928,773)
Change in fair value recognized in operations   (98,944)   28,745 
Balance of derivative liabilities - end of period  $—     $288,242 
Schedule of estimated lives of respective assets

Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets as follows:

 

Office equipment and fixtures   5 - 7 years 
Computer hardware   5 years 
Computer software   3 years 
Development equipment   5 years 
Schedule of estimated lives of the respective assets of intangible assets

Intangible assets are amortized using the straight line method over the estimated lives of the respective assets as follows:

 

Software   5 years 
Technology license   5 years 
Purchased in process R&D   Indefinite 
Customer contracts   10 years 
XML 27 R48.htm IDEA: XBRL DOCUMENT v3.19.3
Note 10 - Note Payable (Details Narratives) - USD ($)
1 Months Ended 9 Months Ended
Sep. 09, 2019
Aug. 06, 2019
Jun. 24, 2019
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Notes payable from discontinued operations       $ 52,500   $ 52,500
Proceeds from notes payable       $ 443,093 $ 0  
Secured Promissory Notes [Member]            
Proceeds from notes payable $ 25,000 $ 25,000 $ 393,093      
Interest rate     6.00%      
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Note 7 - Stock Based Compensation (Details 3)
9 Months Ended
Sep. 30, 2019
$ / shares
shares
Number of Outstanding 1,625,000
Number Exercisable 1,625,000
Warrants One  
Issued Date Jan. 01, 2017
Number of Outstanding 50,000
Number Exercisable 50,000
Exercise price | $ / shares $ 0.25
Expiration Date Oct. 10, 2021
Warrants Two  
Issued Date Jan. 01, 2017
Number of Outstanding 50,000
Number Exercisable 50,000
Exercise price | $ / shares $ 0.50
Expiration Date Nov. 07, 2021
Warrants Three  
Issued Date Jan. 05, 2017
Number of Outstanding 25,000
Number Exercisable 25,000
Exercise price | $ / shares $ 0.50
Expiration Date Jan. 05, 2022
Warrants Four  
Issued Date Feb. 05, 2018
Number of Outstanding 750,000
Number Exercisable 750,000
Exercise price | $ / shares $ 0.05
Expiration Date Feb. 05, 2023
Warrants Five  
Issued Date Apr. 27, 2018
Number of Outstanding 750,000
Number Exercisable 750,000
Exercise price | $ / shares $ 0.05
Expiration Date Apr. 27, 2023
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Note 6 - Earnings (Loss) Per Common Share (Details) - shares
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Total shares excluded from calculation 3,625,600 10,773,802 3,625,600 10,773,802
Options        
Total shares excluded from calculation 2,000,000 8,463,000 2,000,000 8,463,000
Warrant        
Total shares excluded from calculation 1,625,000 1,900,000 1,625,000 1,900,000
Convertible Debt        
Total shares excluded from calculation 600 410,802 600 410,802
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Note 1 - Organization and Basis of Presentation
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 1 - Organization and Basis of Presentation

Note 1 - Organization and Basis of Presentation

 

The consolidated financial statements presented are those of Clinigence Holdings, Inc., formerly known as iGambit Inc., (the “Company”) and its wholly-owned subsidiary, HealthDatix, Inc. (“HealthDatix”). The name was changed to Clinigence Holdings, Inc. on October 29, 2019. The Company is a holding company which seeks out acquisitions of operating companies in technology markets. HealthDatix, Inc. is engaged in the business of streamlining the process of managing information in the document-intensive medical field for customers throughout the United States. Clinigence Holdings, Inc. is a healthcare information technology company that provides cloud-based platforms that enable healthcare organizations to shift to value-based care reimbursements and to provide population health management (See Note 16).

 

Interim Financial Statements

 

The following (a) condensed consolidated balance sheet as of December 31, 2018, which has been derived from audited financial statements, and (b) the unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2019 are not necessarily indicative of results that may be expected for the year ending December 31, 2019. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on April 16, 2019.

XML 31 R3.htm IDEA: XBRL DOCUMENT v3.19.3
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares
Sep. 30, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Preferred stock, shares authorized 100,000,000 100,000,000
Preferred stock, par value $ .001 $ .001
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ .001 $ .001
Common stock, shares authorized 800,000,000 800,000,000
Common stock, shares issued 797,108 429,720
Common stock, shares outstanding 777,108 409,720
Treasury stock 10,000,000 10,000,000
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.19.3
Note 15 - Commitments and Contingencies
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 15 - Commitments and Contingencies

Note 15 – Commitments and Contingencies

 

Lease Commitment

 

The Company was obligated under an operating lease for its premises in Smithtown, New York that expired on May 31, 2019. The lease was not renewed and the officers of the Company are providing office space to the Company at no charge.

 

Rent expense of $17,711 and $21,363 was charged to operations for the nine months ended September 30, 2019 and 2018, respectively.

 

Employment Arrangements With Executive Officers

 

Effective April 1, 2017, in connection with the acquisition of HealthDatix Inc., the Company entered into employment agreements with Jerry Robinson, MaryJo Robinson, and Kathleen Shepherd each under a three-year term at a base salary of $75,000 per year, bonuses based upon objectives set by the Company, and participation in all benefit programs generally made available to HealthDatix employees. The employment agreements restrict the executive officers from engaging in certain competitive activities for the greater of 60 months from the date of the agreements or two years following the termination of their respective employment.

XML 33 R25.htm IDEA: XBRL DOCUMENT v3.19.3
Note 4 - Property and Equipment (Tables)
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Schedule of property, plant and equipment

Property and equipment are carried at cost and consist of the following at September 30, 2019 and December 31, 2018:

 

   2019  2018
Office equipment and fixtures  $10,964   $10,964 
Less: Accumulated depreciation   9,588    8,846 
   $1,376   $2,118 
XML 34 R29.htm IDEA: XBRL DOCUMENT v3.19.3
Note 8 - Convertible Debt (Tables)
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Schedule of convertible notes payable

Convertible notes payable at September 30, 2019 and December 31, 2018 are summarized as follows:

 

   2019  2018
Total face value of notes  $75,000   $478,957 
Less: Discount   2,454    101,346 
Balance  $72,546   $377,611 
XML 35 R13.htm IDEA: XBRL DOCUMENT v3.19.3
Note 7 - Stock Based Compensation
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 7 - Stock Based Compensation

Note 7 – Stock Based Compensation

 

Options

 

In 2006, the Company adopted the 2006 Long-Term Incentive Plan (the "2006 Plan").   Awards granted under the 2006 Plan have a ten-year term and may be incentive stock options, non-qualified stock options or warrants. The awards are granted at an exercise price equal to the fair market value on the date of grant and generally vest over a three or four year period. The Plan expired on December 31, 2009, therefore as of June 30, 2019, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2006 plan.

 

The 2006 Plan provided for the granting of options to purchase up to 10,000,000 shares of common stock.  8,146,900 options have been issued under the plan to date of which 7,157,038 have been exercised and 692,962 have expired to date.  There were 296,900 options outstanding under the 2006 Plan on its expiration date of December 31, 2009. All options issued subsequent to this date were not issued pursuant to any plan.

 

Stock option activity during the nine months ended September 30, 2019 and 2018 follows:

 

   Options
Outstanding
  Weighted Average Exercise Price  Weighted Average Grant-Date         Fair Value  Weighted Average Remaining Life (Years)
Options outstanding at December 31, 2017   8,463,000   $0.07   $0.07    7.41 
No option activity   —      —      —        
Options outstanding at  September 30, 2018   8,463,000   $0.07    0.07    6.66 
Options outstanding at  December 31, 2018   20,500,000    0.03    0.03    7.52 
Options cancelled (1)   (18,250,000)   0.03    —        
Options expired   (250,000)   0.05    —        
Options outstanding at  September 30, 2019   2,000,000   $0.07   $0.07    6.49 

 

(1) Options to iGambit management and key consultants were cancelled in connection with the reverse stock split prior to the reverse merger agreement consummated on October 29, 2019.

 

Options outstanding at September 30, 2019 consist of:

 

Date  Number  Number  Exercise  Expiration
Issued  Outstanding  Exercisable  Price  Date
 March 24, 2015    200,000    200,000   $0.01    March 24, 2020 
 June 6, 2017    1,800,000    1,800,000   $0.07    June 6, 2027 
 Total    2,000,000    2,000,000           

 

Warrants

 

In addition to our 2006 Long Term Incentive Plan, we have issued and outstanding compensatory warrants to two consultants entitling the holders to purchase a total of 275,000 shares of our common stock at an average exercise price of $0.94 per share. Warrants to purchase 25,000 shares of common stock vest upon 6 months after the Company engages in an IPO, have an exercise price of $3.00 per share, and expire 2 years after the Company engages in an IPO. Warrants to purchase 250,000 shares of common stock vest 100,000 shares on issuance (June 1, 2009), and 50,000 shares on each of the following three anniversaries of the date of issuance, have exercise prices ranging from $0.50 per share to $1.15 per share, and expired on June 1, 2019. The issuance of the compensatory warrants was not submitted to our shareholders for their approval.

 

Warrant activity during the nine months ended September 30, 2019 and 2018 follows:

 

  

Warrants

Outstanding

  Weighted Average Exercise Price  Weighted Average Grant-Date Fair Value 

Weighted Average Remaining Contractual Life

(Years)

Warrants outstanding at December 31, 2017   400,000   $0.62   $0.10    3.27 
Warrant granted   1,500,000    0.05    —        
Warrants outstanding at September 30, 2018   1,900,000   $0.21   $0.12    3.49 
Warrants outstanding at December 31, 2018   1,875,000   $0.12   $0.12    3.24 
Warrants expired   (250,000)   0.73    —        
Warrants outstanding at September 30, 2019   1,625,000   $0.03   $0.03    2.90 

 

Warrants outstanding at September 30, 2019 consist of:

 

Date  Number  Number  Exercise  Expiration
Issued  Outstanding  Exercisable  Price  Date
 January 1, 2017    50,000    50,000   $0.25    October 10, 2021 
 January 1, 2017    50,000    50,000   $0.50    November 7, 2021 
 January 5, 2017    25,000    25,000   $0.50    January 5, 2022 
 February 5, 2018    750,000    750,000   $0.05    February 5, 2023 
 April 27, 2018    750,000    750,000   $0.05    April 27, 2023 
   Total    1,625,000    1,625,000           
XML 36 R17.htm IDEA: XBRL DOCUMENT v3.19.3
Note 11 - Stock Transactions
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 11 - Stock Transactions

Note 11 – Stock Transactions

 

Designation of Preferred Stock

 

On August 2, 2018, the Company filed a Certificate of Designation with the Delaware Division of Corporations whereby the Company designated a Series A Preferred Stock and issued 1,000 shares to the Company’s CEO. The holders of Series A Preferred Stock will have voting rights, when combined with their existing holdings of the Company’s common stock, that entitle them to have an aggregate of 51% of the votes eligible to be cast by all stockholders with respect to all matters brought before a vote of the stockholders of the Company.

 

Reverse Stock Split

 

On October 25, 2019, the Company effected a 1-for-500 reverse stock split of its common stock. On the effective date of the reverse stock split, each 500 shares of outstanding common stock were reduced to one share of common stock. The share numbers have been adjusted on a retrospective basis to reflect this 1-for-500 reverse stock split.

 

Common Stock Issued

 

On August 8, 2018, the Board unanimously approved an amendment to the Company’s Articles of Incorporation to increase the number of shares of Common Stock which the Company is authorized to issue from Four hundred million (400,000,000) to Eight Hundred Million (800,000,000) shares of Common Stock, $0.001 par value per share.

 

In connection with the convertible notes payable (see Note 8 above) the noteholders converted $326,189 of principal balance and $19,868 of accrued interest to 365,388 shares of common stock during the nine months ended September 30, 2019. The stock issued was determined based on the terms of the convertible notes.

XML 37 R38.htm IDEA: XBRL DOCUMENT v3.19.3
Note 5 - Intangible Assets (Details) - USD ($)
9 Months Ended
Sep. 30, 2019
Dec. 31, 2018
Intangible Assets, Gross $ 3,801,771 $ 3,801,771
Less: Accumulated amortization 1,751,658 1,229,756
Intangible Assets, Net 2,050,113 2,572,015
Software    
Intangible Assets, Gross $ 156,925 156,925
Intangible assets useful life 5 years  
Customer contracts    
Intangible Assets, Gross $ 644,846 644,846
Intangible assets useful life 10 years  
FDA 510K clearance    
Intangible Assets, Gross $ 1,396,000 1,396,000
Intangible assets useful life 5 years  
Technology license    
Intangible Assets, Gross $ 1,000,000 1,000,000
Intangible assets useful life 5 years  
In process research and development    
Intangible Assets, Gross $ 604,000 $ 604,000
Intangible assets useful life Indefinite  
XML 38 R34.htm IDEA: XBRL DOCUMENT v3.19.3
Note 2 - Summary of Significant Accounting Policies (Details Narratives) - USD ($)
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Disclosure Text Block [Abstract]      
Advertising costs $ 329 $ 0  
Deferred revenue $ 600   $ 9,192
XML 39 R30.htm IDEA: XBRL DOCUMENT v3.19.3
Note 9 - Derivative Liability (Tables)
9 Months Ended
Sep. 30, 2019
Notes to Financial Statements  
Schedule of Valuation Assumptions

The Company used Level 3 inputs for its valuation methodology for the conversion option liability in determining the fair value using a Black-Scholes option-pricing model with the following assumption inputs:

 

       September 30,    December 31, 
    2019    2018 
Annual dividend yield   —      —   
Expected life (years)    0.78 - 1.0     0.77 - 1.0 
Risk-free interest rate    2.44% - 2.52%     2.07% - 2.57% 
Expected volatility    274% - 294%     257% - 293% 
XML 40 R51.htm IDEA: XBRL DOCUMENT v3.19.3
Note 14 - Related Party Transactions (Details Narratives) - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Disclosure Text Block [Abstract]    
Amounts due to related parties $ 128,476 $ 145,367
XML 41 R46.htm IDEA: XBRL DOCUMENT v3.19.3
Note 8 - Convertible Debt (Details Narrative) - USD ($)
1 Months Ended 9 Months Ended
Jan. 03, 2019
Aug. 13, 2018
May 03, 2018
Mar. 06, 2018
Jan. 10, 2018
Jun. 24, 2019
Mar. 29, 2019
Feb. 15, 2019
Sep. 17, 2018
Jun. 25, 2018
Mar. 30, 2017
Sep. 30, 2019
Sep. 30, 2018
Interest expense on the convertible notes                       $ 218,454 $ 119,603
Interest expense on the convertible debentures                       $ 5,589 $ 5,589
8% Convertible Note                          
Debt Conversion, Converted Instrument, Shares Issued                       97,388  
Principal payment           $ 94,268              
Payment of accrued interest           7,417              
Prepayment penalty           5,000              
8% Convertible Note | Principal                          
Debt Conversion, Converted Instrument, Amount         $ 240,000             $ 71,732  
Interest rate         8.00%                
Maturity date         Jul. 10, 2018                
8% Convertible Note | Accrued interest                          
Debt Conversion, Converted Instrument, Amount                       $ 5,366  
8% Convertible Note | Principal                          
Debt Conversion, Converted Instrument, Amount                     $ 75,000    
Interest rate                     8.00%    
Maturity date                     Jun. 25, 2018    
8% Convertible Note                          
Debt Conversion, Converted Instrument, Shares Issued                       70,893  
8% Convertible Note | Principal                          
Debt Conversion, Converted Instrument, Amount       $ 126,000               $ 60,000  
Interest rate       8.00%                  
Maturity date       Mar. 06, 2019                  
8% Convertible Note | Accrued interest                          
Debt Conversion, Converted Instrument, Amount                       $ 4,342  
8% Convertible Note                          
Debt Conversion, Converted Instrument, Shares Issued                       51,349  
8% Convertible Note | Principal                          
Debt Conversion, Converted Instrument, Amount     $ 83,500                 $ 53,957  
Interest rate     8.00%                    
Maturity date     May 03, 2019                    
8% Convertible Note | Accrued interest                          
Debt Conversion, Converted Instrument, Amount                       $ 4,600  
8% Convertible Note                          
Debt Conversion, Converted Instrument, Shares Issued                       29,719  
8% Convertible Note | Principal                          
Debt Conversion, Converted Instrument, Amount                   $ 53,000   $ 38,000  
Interest rate                   8.00%      
Maturity date                   Apr. 15, 2019      
8% Convertible Note | Accrued interest                          
Debt Conversion, Converted Instrument, Amount                       $ 2,120  
8% Convertible Note                          
Debt Conversion, Converted Instrument, Shares Issued                       52,495  
8% Convertible Note | Principal                          
Debt Conversion, Converted Instrument, Amount   $ 53,000                   $ 53,000  
Interest rate   8.00%                      
Maturity date   May 30, 2019                      
8% Convertible Note | Accrued interest                          
Debt Conversion, Converted Instrument, Amount                       $ 2,120  
8% Convertible Note                          
Debt Conversion, Converted Instrument, Shares Issued                       63,525  
8% Convertible Note | Principal                          
Debt Conversion, Converted Instrument, Amount                 $ 33,000     $ 33,000  
Interest rate                 8.00%        
Maturity date                 Jun. 30, 2019        
8% Convertible Note | Accrued interest                          
Debt Conversion, Converted Instrument, Amount                       $ 1,320  
8% Convertible Note                          
Debt Conversion, Converted Instrument, Amount $ 38,000                        
Interest rate 8.00%                        
Maturity date Oct. 30, 2019                        
Principal payment           38,000              
Payment of accrued interest           1,659              
Prepayment penalty           7,600              
8% Convertible Note                          
Debt Conversion, Converted Instrument, Amount               $ 38,000          
Interest rate               8.00%          
Maturity date               Nov. 30, 2019          
Principal payment           38,000              
Payment of accrued interest           1,259              
Prepayment penalty           7,600              
8% Convertible Note                          
Debt Conversion, Converted Instrument, Amount             $ 38,000            
Interest rate             8.00%            
Maturity date             Feb. 15, 2020            
Principal payment           38,000              
Payment of accrued interest           810              
Prepayment penalty           7,600              
8% Convertible Note                          
Debt Conversion, Converted Instrument, Amount             $ 38,000            
Interest rate             8.00%            
Maturity date             Mar. 15, 2020            
Principal payment           38,000              
Payment of accrued interest           810              
Prepayment penalty           $ 7,600              
XML 42 R42.htm IDEA: XBRL DOCUMENT v3.19.3
Note 7 - Stock Based Compensation (Details 1) - $ / shares
9 Months Ended
Sep. 30, 2019
Dec. 31, 2018
Sep. 30, 2018
Dec. 31, 2017
Number of Outstanding 2,000,000 20,500,000 8,463,000 8,463,000
Number Exercisable 2,000,000      
Exercise price $ 0.07 $ 0.03 $ 0.07 $ 0.07
Options One        
Issued Date Mar. 24, 2015      
Number of Outstanding 200,000      
Number Exercisable 200,000      
Exercise price $ 0.01      
Options outstanding Expiration Date Mar. 24, 2020      
Options Two        
Issued Date Jun. 06, 2017      
Number of Outstanding 1,800,000      
Number Exercisable 1,800,000      
Exercise price $ 0.07      
Options outstanding Expiration Date Jun. 06, 2027      
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Note 2 - Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2019
Policy Text Block [Abstract]  
Principles of Consolidation

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary.  All intercompany accounts and transactions have been eliminated.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Fair Value Measurements

Fair Value Measurements

 

The Company adopted the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 – quoted prices in active markets for identical assets or liabilities

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

The estimated fair value of the derivative liability was calculated using the Black-Scholes option pricing model. The Company uses Level 3 inputs to value its derivative liabilities. The following table provides a reconciliation of the beginning and ending balances for the major classes of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) and reflects gains and losses for the nine months ended September 30, 2019 and year ended December 31, 2018.

 

   2019  2018
Liabilities:      
Balance of derivative liabilities - beginning of period  $288,242   $66,059 
Issued   292,913    1,122,211 
Converted   (482,211)   (928,773)
Change in fair value recognized in operations   (98,944)   28,745 
Balance of derivative liabilities - end of period  $—     $288,242 
Convertible Instruments

Convertible Instruments

 

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.

Revenue Recognition

Revenue Recognition

 

Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products by: (1) identify the contract (if any) with a customer; (2) identify the performance obligations in the contract (if any); (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract (if any); and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. The Company has no outstanding contracts with any of is’ customers. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the nine months ended September 30, 2019 and 2018.

 

Clinigence Holdings, Inc. is a holding company and has no sources of revenue.

 

HealthDatix’s revenues are derived primarily from its Software as a Service (SaaS) offerings that are rendered to healthcare providers.  HealthDatix recognizes revenues when the products or services have been provided or delivered, the fees charged are fixed or determinable, HealthDatix and its customers understand the specific nature and terms of the agreed upon transactions, and collectability is reasonably assured.

Advertising Costs

Advertising Costs

 

The Company expenses advertising costs as incurred. Advertising costs of $329 and $0 were charged to operations for the nine months ended September 30, 2019 and 2018, respectively.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

For purposes of reporting cash flows, cash and cash equivalents include checking and money market accounts and any highly liquid debt instruments purchased with a maturity of three months or less.

Accounts Receivable

Accounts Receivable

 

The Company analyzes the collectability of accounts receivable from continuing operations each accounting period and adjusts its allowance for doubtful accounts accordingly.  A considerable amount of judgment is required in assessing the realization of accounts receivables, including the creditworthiness of each customer, current and historical collection history and the related aging of past due balances.  The Company evaluates specific accounts when it becomes aware of information indicating that a customer may not be able to meet its financial obligations due to deterioration of its financial condition, lower credit ratings, bankruptcy or other factors affecting the ability to render payment.

Inventory

Inventory

 

Inventory consisting of finished products is stated at the lower of cost or net realizable value.

Property and equipment and depreciation

Property and equipment and depreciation

 

Property and equipment are stated at cost. Maintenance and repairs are charged to expense when incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income. Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets as follows:

 

Office equipment and fixtures   5 - 7 years 
Computer hardware   5 years 
Computer software   3 years 
Development equipment   5 years 
Amortization

Amortization

Intangible assets are amortized using the straight line method over the estimated lives of the respective assets as follows:

 

Software   5 years 
Technology license   5 years 
Purchased in process R&D   Indefinite 
Customer contracts   10 years 
Long-Lived Assets

Long-Lived Assets

 

The Company assesses the valuation of components of its property and equipment and other long-lived assets whenever events or circumstances dictate that the carrying value might not be recoverable. The Company bases its evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, the Company determines whether an impairment has occurred by analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If the estimate of undiscounted cash flows during the estimated useful life of the asset is less than the carrying value of the asset, the Company recognizes a loss for the difference between the carrying value of the asset and its estimated fair value, generally measured by the present value of the estimated cash flows.

Deferred Revenue

Deferred Revenue

 

Deposits from customers are not recognized as revenues, but as liabilities, until the following conditions are met: revenues are realized when cash or claims to cash (receivable) are received in exchange for goods or services or when assets received in such exchange are readily convertible to cash or claim to cash or when such goods/services are transferred. When such income item is earned, the related revenue item is recognized, and the deferred revenue is reduced. To the extent revenues are generated from the Company’s support and maintenance services, the Company recognizes such revenues when services are completed and billed. The Company has received deposits from its various customers that have been recorded as deferred revenue and presented as current liabilities in the amount of $600 and $9,192 as of September 30, 2019 and December 31, 2018, respectively.

Stock-Based Compensation

Stock-Based Compensation

 

The Company accounts for its stock-based awards granted under its employee compensation plan in accordance with ASC Topic No. 718-20, Awards Classified as Equity, which requires the measurement of compensation expense for all share-based compensation granted to employees and non-employee directors at fair value on the date of grant and recognition of compensation expense over the related service period for awards expected to vest.  The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock options and warrants. The Black-Scholes option pricing model requires the input of highly subjective assumptions including the expected stock price volatility of the Company’s common stock, the risk free interest rate at the date of grant, the expected vesting term of the grant, expected dividends, and an assumption related to forfeitures of such grants.  Changes in these subjective input assumptions can materially affect the fair value estimate of the Company’s stock options and warrants.

Income Taxes

Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC Topic No. 740, Income Taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

 

The Company applies the provisions of ASC Topic No. 740 for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the Company’s financial statements. In accordance with this provision, tax positions must meet a more-likely-than-not recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

We have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the condensed consolidated financial statements as a result of future adoption.

XML 45 R27.htm IDEA: XBRL DOCUMENT v3.19.3
Note 6 - Earnings (Loss) Per Common Share (Tables)
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Computation of diluted net income (loss) per share

The Company’s potentially dilutive shares, which include outstanding common stock options, common stock warrants, and convertible debt have not been included in the computation of diluted net loss per share for the nine months ended September 30, 2019 and 2018 as the result would be anti-dilutive.

 

   Three Months Ended  Nine Months Ended
   September 30,  September 30,
   2019  2018  2019  2018
Stock options   2,000,000    8,463,000    2,000,000    8,463,000 
Stock warrants   1,625,000    1,900,000    1,625,000    1,900,000 
Convertible debt   600    410,802    600    410,802 
Total shares excluded from calculation   3,625,600    10,773,802    3,625,600    10,773,802 
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GF $! end XML 47 R5.htm IDEA: XBRL DOCUMENT v3.19.3
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($)
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Treasury Stock
Total
Stockholders' Equity, beginning of period, Value at Dec. 31, 2017 $ 252 $ 13,017,292 $ (9,648,569) $ (1,000,000) $ 2,368,975
Stockholders' Equity, beginning of period, Shares at Dec. 31, 2017 252,393        
Common stock issued for cash, Value $ 2 14,998 15,000
Common stock issued for cash, Shares 1,500        
Notes payable and accrued interest converted to common stock, Value $ 11 348,092 348,103
Notes payable and accrued interest converted to common stock, Shares 10,688        
Net loss     (610,033)   (610,033)
Stockholders' Equity, end of period, Value at Mar. 31, 2018 $ 265 13,380,382 (10,258,602) (1,000,000) 2,122,045
Stockholders' Equity, end of period, Shares at Mar. 31, 2018 264,581        
Common stock issued for cash, Value $ 2 14,998 15,000
Common stock issued for cash, Shares 1,500        
Notes payable and accrued interest converted to common stock, Value $ 20 365,795 365,815
Notes payable and accrued interest converted to common stock, Shares 20,236        
Common stock issued for services, Value $ 6 88,794 88,800
Common stock issued for services, Shares 6,000        
Net loss     (726,247)   (726,247)
Stockholders' Equity, end of period, Value at Jun. 30, 2018 $ 293 13,849,969 (10,984,849) (1,000,000) 1,865,413
Stockholders' Equity, end of period, Shares at Jun. 30, 2018 292,317        
Notes payable and accrued interest converted to common stock, Value $ 34 308,875 308,909
Notes payable and accrued interest converted to common stock, Shares 34,371        
Net loss     (608,519)   (608,519)
Stockholders' Equity, end of period, Value at Sep. 30, 2018 $ 327 14,158,844 (11,593,368) (1,000,000) 1,565,803
Stockholders' Equity, end of period, Shares at Sep. 30, 2018 326,688        
Stockholders' Equity, beginning of period, Value at Dec. 31, 2018 $ 430 14,695,403 (12,462,814) (1,000,000) 1,233,019
Stockholders' Equity, beginning of period, Shares at Dec. 31, 2018 429,720        
Compensation for vested stock options 1,025 1,025
Notes payable and accrued interest converted to common stock, Value $ 293 548,515 548,808
Notes payable and accrued interest converted to common stock, Shares 293,455        
Net loss     (559,397)   (559,397)
Stockholders' Equity, end of period, Value at Mar. 31, 2019 $ 723 15,244,943 (13,022,211) (1,000,000) 1,223,455
Stockholders' Equity, end of period, Shares at Mar. 31, 2019 723,175        
Notes payable and accrued interest converted to common stock, Value $ 72 355,519 355,591
Notes payable and accrued interest converted to common stock, Shares 71,933        
Amounts due to related parties converted to common stock, value $ 2 4,998 5,000
Amounts due to related parties converted to common stock, shares 2,000        
Net loss     (570,365)   (570,365)
Stockholders' Equity, end of period, Value at Jun. 30, 2019 $ 797 15,605,460 (13,592,576) (1,000,000) 1,013,681
Stockholders' Equity, end of period, Shares at Jun. 30, 2019 797,108        
Net loss     (373,749)   (373,749)
Stockholders' Equity, end of period, Value at Sep. 30, 2019 $ 797 $ 15,605,460 $ (13,966,325) $ (1,000,000) $ 639,932
Stockholders' Equity, end of period, Shares at Sep. 30, 2019 797,108        

XML 48 R1.htm IDEA: XBRL DOCUMENT v3.19.3
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2019
Nov. 19, 2019
Document and Entity Information:    
Entity Registrant Name Clinigence Holdings, Inc.  
Document Type 10-Q  
Document Period End Date Sep. 30, 2019  
Amendment Flag false  
Entity Central Index Key 0001479681  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   4,627,721
Entity Filer Category Non-accelerated Filer  
Entity's Reporting Status Current Yes  
Entity Emerging Growth Company false  
Entity Small Business true  
Entity Ex Transition Period false  
Entity Shell Company false  
File Number 000-55462  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
XML 49 R9.htm IDEA: XBRL DOCUMENT v3.19.3
Note 3 - Going Concern
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 3 - Going Concern

Note 3 – Going Concern

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has an accumulated deficit of $13,966,325, and a working capital deficit of $1,411,857 at September 30, 2019. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.  The Company’s continuation as a going concern is dependent upon its ability to obtain necessary equity financing and ultimately from generating revenues from its newly acquired subsidiary to continue operations. The Company expects that working capital requirements will continue to be funded through a combination of its existing funds and further issuances of securities. Working capital requirements are expected to increase in line with the growth of the business. Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund operations over the next twelve months. The Company has no lines of credit or other bank financing arrangements. The Company has financed operations to date through the proceeds of a private placement of equity and debt instruments.  In connection with the Company’s business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. The Company intends to finance these expenses with further issuances of securities, and debt issuances. Thereafter, the Company expects it will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to current stockholders. Further, such securities might have rights, preferences or privileges senior to common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict business operations.

 

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

XML 50 R36.htm IDEA: XBRL DOCUMENT v3.19.3
Note 4 - Property and Equipment (Details) - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Disclosure Text Block [Abstract]    
Office equipment and fixtures $ 10,964 $ 10,964
Less: accumulated depreciation 9,588 8,846
Property, Plant and Equipment, Net $ 1,376 $ 2,118
XML 51 R32.htm IDEA: XBRL DOCUMENT v3.19.3
Note 2 - Summary of Significant Accounting Policies (Details 1)
9 Months Ended
Sep. 30, 2019
Office equipment and fixtures | Minimum  
Office equipment useful life 5 years
Office equipment and fixtures | Maximum  
Office equipment useful life 7 years
Computer hardware  
Office equipment useful life 5 years
Computer software  
Office equipment useful life 3 years
Development equipment  
Office equipment useful life 5 years
XML 52 R19.htm IDEA: XBRL DOCUMENT v3.19.3
Note 13 - Concentrations and Credit Risk
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 13 - Concentrations and Credit Risk

Note 13 – Concentrations and Credit Risk

 

Sales and Accounts Receivable

 

HealthDatix had sales to two customers which accounted for approximately 15% and 14%, respectively of HealthDatix’s total sales for the nine months ended September 30, 2019. One customer accounted for 100% of accounts receivable at September 30, 2019.

 

HealthDatix had sales to two customers which accounted for approximately 66% and 32%, respectively of HealthDatix’s total sales for the nine months ended September 30, 2018. The two customers accounted for approximately 77% and 19%, respectively of accounts receivable at September 30, 2018.

 

Cash

 

Cash is maintained at a major financial institution. Accounts held at U.S. financial institutions are insured by the FDIC up to $250,000. Cash balances could exceed insured amounts at any given time, however, the Company has not experienced any such losses. The Company did not have any interest-bearing accounts at September 30, 2019 and December 31, 2018, respectively.

XML 53 R11.htm IDEA: XBRL DOCUMENT v3.19.3
Note 5 - Intangible Assets
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 5 - Intangible Assets

Note 5 – Intangible Assets

 

Intangible assets from the acquisitions of HealthDatix and ECSL consist of the following at September 30, 2019 and December 31, 2018:

 

   2019  2018   
Software  $156,925   $156,925    5 years 
Customer contracts   644,846    644,846    10 years 
FDA 510K clearance   1,396,000    1,396,000    5 years 
Technology license   1,000,000    1,000,000    5 years 
In process research and development   604,000    604,000    Indefinite 
    3,801,771    3,801,771      
Less: Accumulated amortization   1,751,658    1,229,756      
   $2,050,113   $2,572,015      

 

Amortization expense of $521,902 was charged to operations for the nine months ended September 30, 2019 and 2018, respectively.

XML 54 R15.htm IDEA: XBRL DOCUMENT v3.19.3
Note 9 - Derivative Liability
9 Months Ended
Sep. 30, 2019
Notes to Financial Statements  
Note 9 - Derivative Liability

Note 9 – Derivative Liability

 

The Company has determined that the conversion feature embedded in the convertible notes described in Note 8 contain a potential variable conversion amount which constitutes a derivative which has been bifurcated from the note and recorded as a derivative liability at fair value, with a corresponding discount recorded to the associated debt. The excess of the derivative value over the face amount of the note is recorded immediately to interest expense at inception. The Company used the Binomial Option Pricing model to value the conversion features.

 

The Company used Level 3 inputs for its valuation methodology for the conversion option liability in determining the fair value using a Black-Scholes option-pricing model with the following assumption inputs:

 

       September 30,    December 31, 
    2019    2018 
Annual dividend yield   —      —   
Expected life (years)    0.78 - 1.0     0.77 - 1.0 
Risk-free interest rate    2.44% - 2.52%     2.07% - 2.57% 
Expected volatility    274% - 294%     257% - 293% 

 

Based upon ASC 840-15-25 (EITF Issue 00-19, paragraph 11) the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding convertible notes. Pursuant to the sequencing approach, the Company evaluates its contracts based upon earliest issuance date.

XML 55 R53.htm IDEA: XBRL DOCUMENT v3.19.3
Note 16- Subsequent Events (Details Narrative)
1 Months Ended
Aug. 08, 2019
Oct. 25, 2019
Reverse stock split   1-for-500
Clinigence Holdings    
Reverse stock split 1 for 500  
XML 56 R37.htm IDEA: XBRL DOCUMENT v3.19.3
Note 4 - Property and Equipment (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Disclosure Text Block [Abstract]    
Depreciation expense $ 742 $ 1,295
XML 57 R33.htm IDEA: XBRL DOCUMENT v3.19.3
Note 2 - Summary of Significant Accounting Policies (Details 2)
9 Months Ended
Sep. 30, 2019
Software  
Intangible assets useful life 5 years
Technology license  
Intangible assets useful life 5 years
In process research and development  
Intangible assets useful life Indefinite
Customer contracts  
Intangible assets useful life 10 years
XML 58 R10.htm IDEA: XBRL DOCUMENT v3.19.3
Note 4 - Property and Equipment
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 4 - Property and Equipment

Note 4 – Property and Equipment

 

Property and equipment are carried at cost and consist of the following at September 30, 2019 and December 31, 2018:

 

   2019  2018
Office equipment and fixtures  $10,964   $10,964 
Less: Accumulated depreciation   9,588    8,846 
   $1,376   $2,118 

 

Depreciation expense of $742 and $1,295 was charged to operations for the nine months ended September 30, 2019 and 2018, respectively.

XML 60 R14.htm IDEA: XBRL DOCUMENT v3.19.3
Note 8 - Convertible Debt
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 8 - Convertible Debt

Note 8 – Convertible Debt

 

Convertible Notes Payable

 

On January 10, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $240,000, convertible into shares of the Company’s common stock, and includes a back-ended note with principal of $120,000 that was funded on July 10, 2018. The back-ended Note, including accrued interest is due July 10, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 15 trading day period ending on the latest complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the noteholder converted $71,732 of the principal balance and accrued interest of $5,366 to 97,388 shares of common stock. The principal balance of the note of $94,268, accrued interest of $7,417, and prepayment penalty of $5,000 were paid on June 24, 2019 with proceeds from the Clinigence note (See note 10 below).

 

On March 6, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $126,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due March 6, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the lowest trading price during the 20 trading day period ending on the latest complete trading day prior to and including the conversion date. During the nine months ended September 30, 2019, the noteholder converted the remaining principal balance of $60,000 and accrued interest of $4,342 to 70,893 shares of common stock.

 

On May 3, 2018, the Company entered into a Convertible Promissory Note pursuant to which the Company borrowed in the aggregate principal amount of $83,500. The convertible note is due 12 months after issuance and bears interest at a rate of 8%. The Note is convertible into shares of common stock of the Company 180 days following the date of funding and thereafter. The conversion price shall be subject to a discount of 35% applied to the average of the three lowest closing bid prices of the Common Stock during the prior twenty (20) trading day period. The Investor will be limited to convert no more than 4.99% of the issued and outstanding Common Stock at the time of conversion at any one time. At any time during the period beginning on the date of the Note and ending on the date which is 180 days thereafter, the Company may repay the Note by paying an amount equal to the then outstanding amount multiplied by 130%. During the nine months ended September 30, 2019, the noteholder converted the remaining principal balance of $53,957 and accrued interest of $4,600 to 51,349 shares of common stock.

 

On June 25, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $53,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due April 15, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the noteholder converted the remaining principal balance of $38,000 and accrued interest of $2,120 to 29,719 shares of common stock.

 

On August 13, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $53,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due May 30, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the noteholder converted the principal balance of the note and accrued interest of $2,120 to 52,495 shares of common stock.

 

On September 17, 2018, the Company issued an 8% convertible note in the aggregate principal amount of $33,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due June 30, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. During the nine months ended September 30, 2019, the noteholder converted the principal balance of the note and accrued interest of $1,320 to 63,525 shares of common stock.

 

On January 3, 2019, the Company issued an 8% convertible note in the aggregate principal amount of $38,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due October 30, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The principal balance of the note of $38,000, accrued interest of $1,659, and prepayment penalty of $7,600 were paid on June 24, 2019 with proceeds from the Clinigence note (See note 10 below).

 

On February 15, 2019, the Company issued an 8% convertible note in the aggregate principal amount of $38,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due November 30, 2019 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The principal balance of the note of $38,000, accrued interest of $1,259, and prepayment penalty of $7,600 were paid on June 24, 2019 with proceeds from the Clinigence note (See note 10 below).

 

On March 29, 2019, the Company issued an 8% convertible note in the aggregate principal amount of $38,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due February 15, 2020 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The principal balance of the note of $38,000, accrued interest of $810, and prepayment penalty of $7,600 were paid on June 24, 2019 with proceeds from the Clinigence note (See note 10 below).

 

On May 22, 2019, the Company issued an 8% convertible note in the aggregate principal amount of $38,000, convertible into shares of the Company’s common stock. The Note, including accrued interest is due March 15, 2020 and is convertible any time after 180 days at the option of the holder into shares of the Company’s common stock at 65% of the average stock price of the lowest 3 closing bid prices during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The principal balance of the note of $38,000, accrued interest of $280, and prepayment penalty of $7,600 were paid on June 24, 2019 with proceeds from the Clinigence note (See note 10 below).

 

The Company recorded a debt discount related to identified embedded derivatives relating to conversion features and a reset provisions (see Note 9) based fair values as of the inception date of the Notes. The calculated debt discount equaled the face of the 8% note dated January 10, 2018 and was amortized through the date the convertible debt was fully extinguished. The calculated debt discount equaled the face of the 8% note dated March 6, 2018 and was amortized through the date the convertible debt was fully extinguished. The calculated debt discount equaled the face of the 8% note dated May 3, 2018 and was amortized through the date the convertible debt was fully extinguished. The calculated debt discount equaled the face of the 8% note dated June 25, 2018 and was amortized through the date the convertible debt was fully extinguished. The calculated debt discount equaled the face of the 8% note dated August 13, 2018 and was amortized through the date the convertible debt was fully extinguished. The calculated debt discount equaled the face of the 8% note dated September 17, 2018 and was amortized through the date the convertible debt was fully extinguished. Interest expense on the convertible notes of $218,454 and $119,603 was recorded for the nine months ended September 30, 2019 and 2018, respectively.

 

The Company issued convertible debentures in the amount of $75,000 to three individuals. The debentures are convertible into 75,000 shares of common stock for up to 5 years, at the holders’ option, at an exercise price of $.50 and $.25, respectively. The debentures mature on the earlier of the closing of a subsequent financing event by the Company resulting in gross proceeds of at least $10,000,000 or three years from the date of issuance. The debentures bear interest at a rate of 10%. A beneficial conversion feature was not recorded as the fair market value of the Company’s common stock was less than the exercise prices at the dates of issuance and through the end of the year. Interest expense on the convertible debentures of $5,589 was recorded for the nine months ended September 30, 2019 and 2018, respectively.

 

Convertible notes payable at September 30, 2019 and December 31, 2018 are summarized as follows:

 

   2019  2018
Total face value of notes  $75,000   $478,957 
Less: Discount   2,454    101,346 
Balance  $72,546   $377,611 
XML 61 R18.htm IDEA: XBRL DOCUMENT v3.19.3
Note 12 - Income Taxes
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 12 - Income Taxes

Note 12 - Income Taxes

 

A full valuation allowance was recorded against the Company’s net deferred tax assets. A valuation allowance must be established if it is more likely than not that the deferred tax assets will not be realized. This assessment is based upon consideration of available positive and negative evidence, which includes, among other things, the Company’s most recent results of operations and expected future profitability. Based on the Company’s cumulative losses in recent years, a full valuation allowance against the Company’s deferred tax assets has been established as Management believes that the Company will not realize the benefit of those deferred tax assets.

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Note 15 - Commitments and Contingencies (Details Narratives) - USD ($)
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Disclosure Text Block [Abstract]    
Rent expense $ 17,711 $ 21,363
Term 3 years  
Base Salary $ 75,000  

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Note 9 - Derivative Liability (Details)
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Annual dividend yield 0.00% 0.00%
Minimum    
Expected life (years) 9 months 11 days 9 months 7 days
Risk-free interest rate 2.44% 2.07%
Expected volatility 274.00% 257.00%
Maximum    
Expected life (years) 1 year 1 year
Risk-free interest rate 2.52% 2.57%
Expected volatility 294.00% 293.00%
XML 65 R43.htm IDEA: XBRL DOCUMENT v3.19.3
Note 7 - Stock Based Compensation (Details 2) - $ / shares
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Text Block [Abstract]    
Warrants, Outstanding, Beginning Balance 1,875,000 400,000
Warrants, Outstanding, Beginning Balance, Weighted Average Exercise Price $ 0.12 $ 0.62
Warrants, Outstanding, Beginning Balance, Weighted Average Grant-Date Fair Value $ 0.12 $ 0.10
Warrants, Outstanding, Beginning Balance, Weighted Average Remaining Contractual Life 3 years 2 months 27 days 3 years 3 months 8 days
Warrants, Granted   1,500,000
Warrants, Granted, Weighted Average Exercise Price   $ 0.05
Warrants expired (250,000)  
Warrants expired, Weighted Average Exercise Price $ 0.73  
Warrants, Outstanding, Ending Balance 1,625,000 1,900,000
Warrants, Outstanding, Ending Balance, Weighted Average Exercise Price $ 0.03 $ 0.21
Warrants, Outstanding, Ending Balance, Weighted Average Grant-Date Fair Value $ 0.03 $ 0.12
Warrants, Outstanding, Beginning Balance, Weighted Average Remaining Contractual Life 2 years 10 months 25 days 3 years 5 months 27 days
XML 66 R22.htm IDEA: XBRL DOCUMENT v3.19.3
Note 16 - Subsequent Events
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 16 - Subsequent Events

Note 16 – Subsequent Events

 

On August 8, 2019, iGambit, Inc. entered into an Agreement and Plan of Merger (the “Reverse Merger Agreement”) by and among Clinigence Holdings, Inc., a Delaware corporation (“Clinigence”), iGambit, Inc., a Delaware corporation (“iGambit” or the “Company”), HealthDatix, Inc., a Delaware corporation and wholly owned subsidiary of iGambit (“Merger Sub”), and John Salerno, an individual and holder of shares of iGambit capital stock constituting a majority of the votes eligible to be cast by all of the stockholders of iGambit (the “Signing Stockholder”). The transactions contemplated by the Reverse Merger Agreement were consummated on October 29, 2019 (the “Closing”).

 

The Reverse Merger Agreement provided for the merger of Merger Sub with and into Clinigence, hereafter referred to as the “Acquisition.” As a result of the Acquisition, Merger Sub ceased to exist, and Clinigence became the surviving corporation and a direct wholly owned subsidiary of iGambit, and the former stockholders of Clinigence (the “Clinigence Stockholders”) have a direct equity ownership and controlling interest in iGambit. Merger Sub was renamed Clinigence Health Inc. iGambit was renamed Clinigence Holdings, Inc. Merger Sub was originally incorporated in Delaware on October 17, 2013 and had no operating activity prior to the reported transaction.

 

At the Closing, all of the outstanding shares of Clinigence common stock (the “Clinigence Shares”) were converted solely into the right to receive a number of shares of iGambit common stock (the “Company Shares”) such that the holders of outstanding equity of Clinigence immediately prior to the Closing own 85%, on a fully-diluted basis, of the outstanding equity of iGambit immediately following the Closing, and holders of outstanding equity of iGambit immediately prior to the Closing own 15%, on a fully-diluted basis, of the outstanding equity of iGambit. For each share of Clinigence Shares, each former Clinigence Stockholder received 0.22489093 shares of Company Shares after giving effect to the reverse stock split.

 

In connection with the Acquisition, the Company amended its certificate of incorporation to (i) effect a reverse stock split of the Company Shares at a ratio of 1 for 500 (the “Reverse Split Certificate of Amendment”), and (ii) change its name to Clinigence Holdings, Inc. to better align with the business of Clinigence (the “Name Change Certificate of Amendment”).

XML 67 R26.htm IDEA: XBRL DOCUMENT v3.19.3
Note 5 - Intangible Assets (Tables)
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Schedule of intangible assets

Intangible assets from the acquisitions of HealthDatix and ECSL consist of the following at September 30, 2019 and December 31, 2018:

 

   2019  2018   
Software  $156,925   $156,925    5 years 
Customer contracts   644,846    644,846    10 years 
FDA 510K clearance   1,396,000    1,396,000    5 years 
Technology license   1,000,000    1,000,000    5 years 
In process research and development   604,000    604,000    Indefinite 
    3,801,771    3,801,771      
Less: Accumulated amortization   1,751,658    1,229,756      
   $2,050,113   $2,572,015      
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Note 2 - Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2019
Disclosure Text Block [Abstract]  
Note 2 - Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary.  All intercompany accounts and transactions have been eliminated.

 

Use of Estimates in the Preparation of Financial Statements

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

 

Fair Value Measurements

 

The Company adopted the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 – quoted prices in active markets for identical assets or liabilities

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

The estimated fair value of the derivative liability was calculated using the Black-Scholes option pricing model. The Company uses Level 3 inputs to value its derivative liabilities. The following table provides a reconciliation of the beginning and ending balances for the major classes of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) and reflects gains and losses for the nine months ended September 30, 2019 and year ended December 31, 2018.

 

   2019  2018
Liabilities:      
Balance of derivative liabilities - beginning of period  $288,242   $66,059 
Issued   292,913    1,122,211 
Converted   (482,211)   (928,773)
Change in fair value recognized in operations   (98,944)   28,745 
Balance of derivative liabilities - end of period  $—     $288,242 

 

Convertible Instruments

 

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.

 

Revenue Recognition

 

Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products by: (1) identify the contract (if any) with a customer; (2) identify the performance obligations in the contract (if any); (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract (if any); and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. The Company has no outstanding contracts with any of is’ customers. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the nine months ended September 30, 2019 and 2018.

 

Clinigence Holdings, Inc. is a holding company and has no sources of revenue.

 

HealthDatix’s revenues are derived primarily from its Software as a Service (SaaS) offerings that are rendered to healthcare providers.  HealthDatix recognizes revenues when the products or services have been provided or delivered, the fees charged are fixed or determinable, HealthDatix and its customers understand the specific nature and terms of the agreed upon transactions, and collectability is reasonably assured.

 

Advertising Costs

 

The Company expenses advertising costs as incurred. Advertising costs of $329 and $0 were charged to operations for the nine months ended September 30, 2019 and 2018, respectively.

 

Cash and Cash Equivalents

 

For purposes of reporting cash flows, cash and cash equivalents include checking and money market accounts and any highly liquid debt instruments purchased with a maturity of three months or less.

 

Accounts Receivable

 

The Company analyzes the collectability of accounts receivable from continuing operations each accounting period and adjusts its allowance for doubtful accounts accordingly.  A considerable amount of judgment is required in assessing the realization of accounts receivables, including the creditworthiness of each customer, current and historical collection history and the related aging of past due balances.  The Company evaluates specific accounts when it becomes aware of information indicating that a customer may not be able to meet its financial obligations due to deterioration of its financial condition, lower credit ratings, bankruptcy or other factors affecting the ability to render payment.

 

Inventory

 

Inventory consisting of finished products is stated at the lower of cost or net realizable value.

Property and equipment and depreciation

 

Property and equipment are stated at cost. Maintenance and repairs are charged to expense when incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income. Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets as follows:

 

Office equipment and fixtures   5 - 7 years 
Computer hardware   5 years 
Computer software   3 years 
Development equipment   5 years 

 

Amortization

Intangible assets are amortized using the straight line method over the estimated lives of the respective assets as follows:

 

Software   5 years 
Technology license   5 years 
Purchased in process R&D   Indefinite 
Customer contracts   10 years 

 

Long-Lived Assets

 

The Company assesses the valuation of components of its property and equipment and other long-lived assets whenever events or circumstances dictate that the carrying value might not be recoverable. The Company bases its evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, the Company determines whether an impairment has occurred by analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If the estimate of undiscounted cash flows during the estimated useful life of the asset is less than the carrying value of the asset, the Company recognizes a loss for the difference between the carrying value of the asset and its estimated fair value, generally measured by the present value of the estimated cash flows.

 

Deferred Revenue

 

Deposits from customers are not recognized as revenues, but as liabilities, until the following conditions are met: revenues are realized when cash or claims to cash (receivable) are received in exchange for goods or services or when assets received in such exchange are readily convertible to cash or claim to cash or when such goods/services are transferred. When such income item is earned, the related revenue item is recognized, and the deferred revenue is reduced. To the extent revenues are generated from the Company’s support and maintenance services, the Company recognizes such revenues when services are completed and billed. The Company has received deposits from its various customers that have been recorded as deferred revenue and presented as current liabilities in the amount of $600 and $9,192 as of September 30, 2019 and December 31, 2018, respectively.

 

Stock-Based Compensation

 

The Company accounts for its stock-based awards granted under its employee compensation plan in accordance with ASC Topic No. 718-20, Awards Classified as Equity, which requires the measurement of compensation expense for all share-based compensation granted to employees and non-employee directors at fair value on the date of grant and recognition of compensation expense over the related service period for awards expected to vest.  The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock options and warrants. The Black-Scholes option pricing model requires the input of highly subjective assumptions including the expected stock price volatility of the Company’s common stock, the risk free interest rate at the date of grant, the expected vesting term of the grant, expected dividends, and an assumption related to forfeitures of such grants.  Changes in these subjective input assumptions can materially affect the fair value estimate of the Company’s stock options and warrants.

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC Topic No. 740, Income Taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

 

The Company applies the provisions of ASC Topic No. 740 for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the Company’s financial statements. In accordance with this provision, tax positions must meet a more-likely-than-not recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position.

 

Recent Accounting Pronouncements

 

We have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the condensed consolidated financial statements as a result of future adoption.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Income Statement [Abstract]        
Sales $ 7,550 $ 22,582 $ 19,175 $ 30,500
Cost of Sales 10,042 7,834 26,336 23,658
Gross profit (loss) (2,492) 14,748 (7,161) 6,842
Operating Expenses        
General and administrative expenses 187,295 207,793 576,512 752,930
Amortization 173,967 173,967 521,902 521,902
Total operating expenses 361,262 381,760 1,098,414 1,274,832
Loss from operations (363,754) (367,012) (1,105,575) (1,267,990)
Other income (expenses)        
Change in fair value of derivative liability 0 76,091 98,944 (128,100)
Loss on extinguishment of debt 0 (95,464) (262,566) (233,734)
Interest Expense (9,995) (222,134) (234,314) (314,975)
Total other income (expenses) (9,995) (241,507) (397,936) (676,809)
Net loss $ (373,749) $ (608,519) $ (1,503,511) $ (1,944,799)
Basic and fully diluted loss per common share:        
Net loss per common share $ (.48) $ (2.09) $ (2.13) $ (7.39)
Weighted average common shares outstanding - basic and fully diluted 777,108 291,514 704,331 263,269