10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2018

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

For the transition period from ______ to _______

Commission File Number: 000-20190

AEON GLOBAL HEALTH CORP.

(Exact name of registrant as specified in its charter)

Delaware	14-1673067
(State or other jurisdiction	( I.R.S. Employer
of incorporation or organization)	Identification No.)
2225 Centennial Drive	30504
Gainesville, GA 30504	(zip code)
(Address of principal executive offices)

1-888-661-0225

(Registrant's telephone number, including area code)

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 website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 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, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☒
	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 ☒

As of April 30, 2018, there were 7,249,370 shares of common stock, $0.001 par value per share, outstanding.

		Page
PART I FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Condensed Consolidated Balance Sheets at March 31, 2018 (Unaudited) and June 30, 2017	2
	Condensed Consolidated Statements of Income (unaudited)	3
	Condensed Consolidated Statements of Cash Flows (unaudited)	4
	Notes to Unaudited Condensed Consolidated Financial Statements (unaudited)	5
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	32
ITEM 4.	CONTROLS AND PROCEDURES	32
PART II OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	34
ITEM 1A.	RISK FACTORS	34
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	37
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	37
ITEM 4.	MINE SAFETY DISCLOSURES	37
ITEM 5.	OTHER INFORMATION	37
ITEM 6.	EXHIBITS	38
SIGNATURES		39

1

PART I - FINANCIAL INFORMATION 

ITEM 1.    FINANCIAL STATEMENTS

AEON GLOBAL HEALTH CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			June 30,
	2018			2017
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	469,727		$	1,121,763
Restricted cash		-			120,695
Accounts receivable, net		2,665,907			1,020,988
Inventory, net		396,477			347,750
Prepaid expenses and other current assets		92,794			58,711
Total current assets		3,624,905			2,669,907
Property and equipment, net		1,575,192			2,203,543
Other assets
Security deposits		10,211			10,211
Deferred tax asset		7,357,436			11,848,017
Total assets	$	12,567,744		$	16,731,678
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	$	1,360,633		$	2,177,722
Accrued expenses		2,144,413			2,168,090
Accrued commissions		602,857			427,627
Accrued dividends		902,076			644,979
Deferred rent		184,808			141,833
Related party notes payable and related party accrued interest		3,171,660			2,545,199
Derivative liabilities		1,471,018			551,040
Total current liabilities		9,837,465			8,656,490
Deferred rent		112,500			45,000
Total liabilities		9,949,965			8,701,490
Commitments and contingencies
Shareholders’ equity
Preferred stock, $.10 par value; 5,000,000 shares authorized, Series D, 605,000 shares and Series E 25,000 shares issued and outstanding at March 31, 2018 , and June 30, 2017, respectively		63,000			63,000
Common stock, $.001 par value; 190,000,000 shares authorized, 7,249,370 shares issued and outstanding on March 31, 2018, and June 30, 2017 , respectively		25,579			8,938
Additional paid-in capital		44,958,427			44,307,479
(Accumulated deficit)		(42,429,227	)		(36,349,229	)
Total shareholders’ equity		2,617,779			8,030,188
Total liabilities and shareholders’ equity	$	12,567,744		$	16,731,678

The accompanying notes are an integral part of the condensed consolidated financial statements.

2

AEON GLOBAL HEALTH CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	(Unaudited)						(Unaudited)
	2018			2017			2018			2017
				(Restated)						(Restated)
Net revenues
Fees for services	$	3,811,444		$	5,212,634		$	12,199,868		$	15,469,366
Hosted software services		239,535			314,812			731,085			973,417
Telehealth products and services		4,600			4,364			13,900			25,916
Total net revenues		4,055,579			5,531,810			12,944,853			16,468,699
Operating expenses
Cost of revenues		958,113			897,590			2,975,231			2,855,754
Write down of inventory		-			-			-			237,674
Selling, general and administrative		3,221,658			3,748,403			9,426,754			11,624,267
Depreciation and amortization		204,931			393,510			628,351			1,196,435
Total operating expenses		4,384,702			5,039,503			13,030,336			15,914,130
Operating income (loss)		(329,123	)		492,307			(85,483)			554,569
Other income (expense)
Interest		(44,614	)		(73,017	)		(108,976	)		(443,785	)
Change in fair value of derivative liabilities		(1,285,842)			256,806			(919,978	)		392,407
Loss on extinguishment of debt		-			(258,037	)		-			(258,037	)
Other		(49,831	)		-			(212,125	)		-
		(1,380,287	)		(74,248	)		(1,241,079	)		(309,415	)
Income (loss) before provision for income taxes		(1,709,410	)		418,059			(1,326,562	)		245,154
Provision for income taxes		(3,102	)		-			(4,496,341	)		-
Net income (loss)	$	(1,712,512	)	$	418,059		$	(5,822,903	)	$	245,154
Less: preferred dividends	$	(85,699	)	$	(74,863	)	$	(257,095	)	$	(276,111	)
Net income (loss) available to common shareholders	$	(1,798,211	)	$	343,196		$	(6,079,998	)	$	(30,957	)
Income (loss) per share:
Basic income (loss) per common share	$	(0.25	)	$	0.05		$	(0.84	)	$	0.00
Diluted income (loss) per common share	$	(0.25	)	$	0.04		$	(0.84	)	$	0.00
Weighted average number of common shares outstanding:
Basic		7,249,370			7,168,329			7,249,370			6,312,344
Diluted		7,249,370			8,765,657			7,249,370			6,312,344

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

AEON GLOBAL HEALTH CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	March 31,
	(Unaudited)
	2018			2017
				(Restated)
Cash flows from operating activities
Net income (loss)	$	(5,822,903	)	$	245,154
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Impairment of deferred tax asset		4,490,581			-
Change in fair value of derivative liabilities		919,978			(392,407	)
Write off of inventory		-			237,674
Loss on debt extinguishment		-			258,037
Depreciation and amortization		628,351			1,196,435
Share based compensation		650,948			186,753
Changes in assets and liabilities
Restricted cash		120,695			-
Accounts receivable		(1,644,919	)		410,655
Inventory		(48,727	)		(294,378	)
Prepaid expenses and other current assets		(34,083	)		46,011
Accounts payable		(559,992	)		(1,454,907	)
Accrued expenses		(25,170)			(59,229	)
Accrued commissions		175,230			182,054
Deferred rent		(2,025	)		8,629
Net cash provided by (used in) operating activities		(1,152,036	)		570,481
Cash flows from investing activities
Purchases of property and equipment		-			(22,103	)
Net cash (used in) investing activities		-			(22,103	)
Cash flows from financing activities
Proceeds from note payable - related party		500,000			250,000
Repayments of notes payable		-			(1,057,811	)
Net cash provided by (used in) financing activities		500,000			(807,811	)
Net decrease in cash		(652,036	)		(259,433	)
Cash beginning of period		1,121,763			1,414,706
Cash end of period	$	469,727		$	1,155,273
Supplemental disclosure of cash paid for:
Interest paid	$	-		$	-
Income taxes paid	$	108,998		$	-
Non-cash investing and financing activities
Non-cash preferred dividends	$	257,097		$	276,111
Earn-out common dividends paid in stock	$	-		$	5,472,598
Conversion of accrued interest to notes payable	$	4,452		$	375,199
Derivative liability resulting from issuance of convertible notes	$	792,724		$	328,422

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

1. Description of Business, Reverse Merger and Liquidity

Business

AEON Global Health Corp. ("AGHC" or the "Company") and its subsidiaries primarily provides an array of clinical testing services to health care professionals through its wholly-owned subsidiary, Peachstate Health Management, LLC d/b/a AEON Clinical Laboratories ("AEON"). AGHC also continues to provide its legacy secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to increase revenues, improve productivity, reduce costs, coordinate care for patients and enhance related administrative and clinical workflows and compliance with regulatory requirements. Web-based services are delivered as Software as a Service (SaaS) to customers interfacing seamlessly with billing, information and records management systems.

Reverse Merger

On January 27, 2016, AEON merged into a newly formed acquisition subsidiary of AGHC (formerly, Authentidate Holding Corp.) pursuant to a definitive Amended and Restated Agreement and Plan of Merger dated January 26, 2016, as amended on May 31, 2016 and December 15, 2016 (collectively the "Merger Agreement") (the "AEON Acquisition"). The merger certificate was filed with the Secretary of State of Georgia on January 27, 2016. AEON survived the merger as a wholly-owned subsidiary of AGHC (collectively the "Company"). AEON contracts with health care professionals to provide urine and oral fluid testing to patients. The four primary tests provided by AEON are Medical Toxicology, Pharmacogenomics, Cancer Genetic Testing and Molecular Biology. Following the completion of the reverse merger, the business conducted by AEON became primarily the business conducted by the Company.

Under accounting principles generally accepted in the United States of America ("U.S. GAAP"), the merger is treated as a "reverse merger" under the purchase method of accounting. The condensed consolidated financial statements reflect the historical results of AEON prior to the completion of the reverse merger since it was determined to be the accounting acquirer, and do not include historical results of the Company prior to the completion of the merger.

Going Concern

As of the filing date of this Quarterly Report on Form 10-Q, there is outstanding an aggregate principal amount of $3,049,651 of senior secured convertible notes with a maturity date of March 20, 2019 and a secured note subordinated to the interests of the existing senior lenders in the principal amount of $180,000 with a maturity date of June 15, 2018 and is included in accrued expenses on the condensed consolidated balance sheet. We expect existing resources, revenues generated from operations, and proceeds received from other transactions we are considering to satisfy working capital requirements for at least the next twelve months; however, no assurances can be given, that we will be able to generate sufficient cash flow from operations or complete other transactions to satisfy our other obligations. The accompanying condensed consolidated financial statements do not include any adjustments to the recoverability and classification of assets carrying amounts or the amounts and classifications of liabilities that might result from the outcome of these uncertainties. Accordingly, the Company needs to raise additional capital and are exploring potential transactions to improve our capital position. Unless we can increase revenues substantially or generate additional capital from other transactions, our current cash resources will only satisfy our working capital needs for a limited period of time.

The Company's capital requirements have been and will continue to be significant and it is expending significant amounts of capital to develop, promote and market its services. The Company's available cash and cash equivalents as of March 31, 2018 totaled approximately $470,000 and the Company's working capital deficit was approximately $6,217,000. Nevertheless, our available cash and cash equivalents as of the filing date of this Quarterly Report on Form 10-Q is approximately $1,011,000 and our estimated monthly cash requirement is approximately $1,200,000.

The Company does not have a bank line of credit or other fixed source of capital reserves. We are exploring potential transactions to improve our capital position to ensure we can meet our financing and working capital requirements. We would expect to raise additional funds through obtaining a credit facility from an institutional lender or undertaking private debt financings. Raising additional funds by issuing equity or convertible debt securities may cause our stockholders to experience substantial dilution in their ownership interests and new investors may have rights superior to the rights of our other stockholders. Raising additional funds through debt financing or preferred stock, if available, may involve covenants that restrict our business activities and options and such additional securities may have powers, designations, preferences or rights senior to our currently outstanding securities. We may also enter into financing transactions which involve the granting of liens on our assets or which grant preferences of payment from our revenue streams, all of which could adversely impact our ability to rely on our revenue from operations to support our ongoing operating costs. Alternatively, we may seek to obtain new financing from existing security holders, which may include reducing the exercise or conversion prices of outstanding securities, or the issuance of additional equity securities. Currently, we do not have any definitive agreements with any third-parties for such transactions and there can be no assurance; however, that we will be successful in raising additional capital or securing financing when needed or on terms satisfactory to the company. If we are unable to raise additional capital when required, or on acceptable terms, we will need to reduce costs and operations substantially or potentially suspend operations, any of which would have a material adverse effect on our business, financial condition and results of operations.

5

Management has concluded that due to the conditions described above, there is substantial doubt about the entity's ability to continue as a going concern. We have evaluated the significance of the conditions in relation to our ability to meet our obligations and believe that our current cash balance will provide sufficient capital to continue operations through fiscal 2018. In addition to our efforts to improve our capital position through commercial operations and/or product partnering opportunities, we are considering capital raising alternatives, including credit lines from external financial sources. We cannot assure you that financing will be available on acceptable terms. If we are not successful in generating or raising additional capital, we will risk defaulting under the terms of our existing loans. Additionally, if additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities would result in dilution to our existing stockholders. Furthermore, despite our optimism regarding the future of the Company, even if the Company is adequately funded, there is no guarantee that any of our services will perform as hoped or that such services can be successfully commercialized.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company's condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and following the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim financial statements have been prepared on the same basis as the Company's annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company's financial information. These interim results are not necessarily indicative of the results to be expected for the year ending June 30, 2018 or any other interim period or for any other future year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto for the year ended June 30, 2017, included in the Company's 2017 Annual Report on Form 10-K filed with the SEC.

The balance sheet as of June 30, 2017 has been derived from audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 The most sensitive accounting estimates affecting the financial statements are revenue recognition, the allowance for doubtful accounts, depreciation of long-lived assets, fair value of intangible assets and goodwill, amortization of intangible assets, income taxes and associated deferrals and valuation allowances, commitments and contingencies and measurement of derivative liabilities.

Accounts Receivable, Net

Accounts receivable represent customer obligations due under normal trade terms, net of allowance for doubtful accounts. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience and other currently available evidence. The allowance for doubtful accounts was approximately $1,090,000 and $923,000 as of March 31, 2018 and June 30, 2017, respectively.

Fair Value Measurements

The Company follows ASC 820-10, "Fair Value Measurements and Disclosures", of the FASB to measure the fair value of its financial statements and disclosures about fair value of its financial instruments. ASC 820-10 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820-10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy defined by ASC 820-10 are described below:

Level 1	-	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	-	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	-	Pricing inputs that are generally unobservable input and not corroborated by market data.

6

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lower priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The Company's warrant liabilities and certain conversion features underlying the convertible debt are categorized as Level 3.

Revenue Recognition

The Company provides laboratory testing services, web-based hosted software services, telehealth products and post contract customer support services.

In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC-605 "Revenue Recognition", the Company recognizes revenues when there is a persuasive evidence of an arrangement, title and risk of loss have passed, product is shipped or services have been rendered, sales price is fixed or determinable and collection of the related receivable is reasonably assured. Billings for laboratory testing services are reimbursed by third-party payors net of allowances for differences between amounts billed and the cash receipts.

Revenue from laboratory testing services are recognized at the time test results are delivered, net of estimated contractual allowances. Third-party reimbursement revenue is estimated based on cash received over a 12-month period.

Revenue for hosted software services, telehealth products, and customer support services are recognized when persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed and collectability is reasonably assured. Multiple-element arrangements are assessed to determine whether they can be separated into more than one unit of accounting. A multiple-element arrangement is separated into more than one unit of accounting if all the following criteria are met: (i) the delivered item has value to the customer on a standalone basis; (ii) there is objective and reliable evidence of the fair value of the undelivered items in the arrangement; (iii) if the arrangement includes a general right of return relative to the delivered items; (iv) and delivery or performance of the undelivered item is considered probable and substantially in the Company's control. If these criteria are not met, then revenue is deferred until such criteria are met or until the period over which the last undelivered element is delivered, which is typically the life of the contract agreement. If these criteria are met, we allocate total revenue among the elements based on the sales price of each element when sold separately which is referred to as vendor specific objective evidence or VSOE.

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to certain limits. At March 31, 2018 and June 30, 2017, the Company had approximately $223,000 and $871,000 in excess of FDIC-insured limits. The Company has not experienced any losses in such accounts.

At March 31, 2018, one customer had an accounts receivable balance of approximately $1,491,000. This customer had a minimal balance at June 30, 2017. This customer’s accounts receivable balance comprises 39% of gross accounts receivable at March 31, 2018.

Income Taxes

The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in tax laws or rates. The effect on deferred tax assets and liabilities of a change in tax rates will be recognized as income or expense in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Management considers the likelihood of changes by taxing authorities in its filed income tax returns and recognizes a liability for or discloses potential changes that management believes are more likely than not to occur upon examination by tax authorities. Management has not identified any uncertain tax positions that require recognition or disclosure in the accompanying consolidated financial statements.

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation.

7

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers" (Topic 606) ("ASU 2014-09"). This new accounting standard outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. This standard supersedes existing revenue recognition requirements and eliminates most industry specific guidance from GAAP. The core principle of the revenue recognition standard is to require an entity to recognize as revenue the amount that reflects the consideration to which it expects to be entitled in exchange for goods or services as it transfers control to its customers. As a result of this standard, the amounts not reimbursed will now be considered an implicit price concession in determining net revenue as opposed to recording as bad debt expense or another selling, general or administrative expense. Accordingly, the Company will report uncollectible balances associated with customer responsibility as a reduction of the transaction price and a reduction in net revenues. In addition, the adoption of this new accounting standard will result in increased disclosure, including qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company expects to adopt this ASU effective July 1, 2018.

In August 2014, the FASB issued ASU No. 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern". The amendments in this update state that regarding preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued, when applicable). The amendments in this update are effective for the annual reporting period beginning after December 15, 2016 and for annual periods and interim periods thereafter. Early application is permitted. The Company has adopted ASU 2014-15 and has made the necessary disclosures in the "Going Concern" sections of this Quarterly Report on Form 10-Q.

In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory". ASU 2015-11 requires inventory measured using any method other than last-in, first-out ("LIFO") or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Under this ASU, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASU 2015-11 is effective prospectively for fiscal years, and for interim periods within those years, beginning after December 15, 2016. Early application is permitted. The Company has determined that the ASU has no material impact on its consolidated financial statements and related disclosures since it does not sell inventory on a stand-alone basis at net realizable value.

In February 2016, the FASB issued ASU No. 2016-02, "Leases", which establish a right-of-use (ROU) model that requires a lessee to record an ROU asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classifications affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. ASU 2016-02 requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the effect of adoption of this ASU on July 1, 2019.

In March 2016, the FASB issued ASU No. 2016-09, "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting", which makes several modifications to the accounting for employee share-based payment transactions, including the requirement to recognize the income tax effects of awards that vest or settle as income tax expense. This guidance also clarifies the presentation of certain components of share-based awards in the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods, and early adoption is permitted. The Company has adopted this standard with no material impact on the financial statements.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which clarifies how certain cash receipts and payments are to be presented in the statement of cash flows. The guidance is effective for the Company on July 1, 2018 and early adoption is permitted. The Company is currently evaluating the effect of adoption of this ASU on July 1, 2018.

In November 2016, the FASB issued an ASU 2016-18, "Restricted Cash", which clarifies the presentation and classification of restricted cash in the statement of cash flows. The ASU requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU is effective for the Company in the first quarter of fiscal 2019 (July 1, 2018) with early adoption permitted and must be applied retrospectively to all periods presented. The Company is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures with the fiscal year beginning July 1, 2018.

8

In May 2017, the FASB issued ASU 2017-09, "Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting", which amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. The Company is evaluating the impact of this ASU and expects to adopt this ASU effective July 1, 2018.

In July 2017, the FASB issued ASU 2017-11, "Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815); Part I. Accounting for Certain Financial Instruments with Down Round Features and Part II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception", which states that when determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to the Company's own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. The Company is evaluating the provisions of this ASU and plans to adopt this ASU effective July 1, 2019.

In December 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118, which is an application of ASC Topic 740, Income Taxes, in the reporting period that includes December 22, 2017, the date on which the Tax Cuts and Jobs Act (the "Act") was signed into law. The Act changes existing United States tax law and includes numerous provisions that will affect business. Staff Accounting Bulletin No. 118 implies that if a reasonable estimate can be made of the Act's effects on the Company's financial statements, the reasonable estimate should be reported in the period ending after December 22, 2017. The Company has implemented Staff Accounting Bulletin No. 118 is this Form 10-Q ended March 31, 2018 by revaluing its deferred tax asset for the lower tax rates.

 3. Restatement and Correction of Error

As previously reported, the Company has concluded that its results for the quarter ending  March 31, 2017 included errors resulting in the understatement of inventory and the understatement of certain accruals. The financial statements for the quarter have been restated and were presented in the Company's consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2017. Management considered the impact to current and past financial statements under the SEC's authoritative guidance on materiality and determined that the error was material, and a restatement of the prior quarter financial statements was the most appropriate recognition of the adjustment so as not to mislead readers of the financial statements. The following sections detail the impact of the error on the previously issued unaudited consolidated financial statements for the prior quarter.

9

The following adjustments were made to the March 31, 2017 Restated Statements of Income (Unaudited):

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
	As Originally									As Originally
	Reported						As Restated			Reported						As Restated
	Three Months						Three Months			Nine Months						Nine Months
	Ended						Ended			Ended						Ended
	Mar 31,						Mar 31,			Mar 31,						Mar 31,
	2017			Adj			2017			2017			Adj			2017
Net revenues
Fees for services	$	5,212,634		$	-		$	5,212,634		$	15,469,366		$	-		$	15,469,366
Hosted software services		314,812			-			314,812			973,417			-			973,417
Telehealth services		4,364			-			4,364			25,916			-			25,916
Total net revenues		5,531,810			-			5,531,810			16,468,699			-			16,468,699
Cost of revenues		908,290			(10,700	)		897,590			3,203,504			(347,750	)		2,855,754
Write-down of inventory		-			-			-			237,674						237,674
Selling, general and administrative		3,388,403			360,000			3,748,403			11,264,267			360,000			11,624,267
Depreciation and amortization		393,510			-			393,510			1,196,435			-			1,196,435
Total operating expenses		4,690,203			349,300			5,039,503			15,901,880			12,250			15,914,130
Operating income		841,607			(349,300	)		492,307			566,819			(12,250	)		554,569
Other (expense), net		(74,248	)		-			(74,248	)		(309,415	)		-			(309,415	)
		767,359			(349,300	)		418,059			257,404			(12,250	)		245,154
Income tax provision		-			-			-			-			-			-
Net income	$	767,359		$	(349,300	)	$	418,059		$	257,404		$	(12,250	)	$	245,154
less: preferred dividends	$	(74,863	)	$	-		$	(74,863	)	$	(276,111	)	$	-		$	(276,111	)
Net income (loss) available to common shareholders	$	692,496		$	(349,300	)	$	343,196		$	(18,707	)	$	(12,250	)	$	(30,957	)
Basic loss per common share	$	0.10		$	(0.05	)	$	0.05		$	0.00		$	0.00		$	(0.00	)
Diluted loss per common share	$	0.08		$	(0.04	)	$	0.04		$	0.00		$	0.00		$	(0.00	)

10

The following adjustments were made to the March 31, 2017 Restated Statement of Cash Flows (Unaudited):

CONSOLIDATED STATEMENT OF CASH FLOWS

	As Originally
	Reported						As Restated
	Nine Months						Nine Months
	Ended						Ended
	March 31,						March 31,
	2017			Adj			2017
Cash Flows from Operating Activities
Net Income	$	257,404		$	(12,250	)	$	245,154
Adjustments to reconcile net loss to cash provided by operating activities
Write off of inventory		237,674			-			237,674
Loss on debt extinguishment		258,037			-			258,037
Change in fair value of derivative liabilities		(392,407	)		-			(392,407	)
Deferred taxes		-			-			-
Depreciation and amortization		1,196,435			-			1,196,435
Share based compensation		186,753			-			186,753
Deferred rent		-			-			-
Changes in assets and liabilities
Accounts receivable		410,655			-			410,655
Inventory		53,372			(347,750	)		(294,378	)
Prepaid expenses and other current assets		46,011			-			46,011
Accounts payable		(1,454,907	)		-			(1,454,907	)
Accrued expenses		(419,229	)		360,000			(59,229	)
Accrued commissions		182,054			-			182,054
Deferred rent		8,629			-			8,629
Net cash provided by operating activities		570,481			-			570,481
Cash flows from investing activities
Purchases of property and equipment		(22,103	)		-			(22,103	)
Net cash used in investing activities		(22,103	)		-			(22,103	)
Cash flows from financing activities
Proceeds from note payable - related party		250,000			-			-
Repayment of notes payable		(1,057,811	)		-			(1,057,811	)
Net cash used in financing activities		(807,811	)		-			(1,057,811	)
Net decrease in cash and cash equivalents		(259,433	)		-			(259,433	)
Cash and cash equivalents beginning of year		1,414,706			-			1,414,706
Cash and cash equivalents end of year	$	1,155,273		$	-		$	1,155,273

11

4. Inventory

Inventory consists of the following:

	March 31,		June 30,
	2018		2017
Laboratory testing supplies	$	396,477	$	347,750
Total inventory	$	396,477	$	347,750

Purchased components of approximately $31,000 and finished goods of $207,000 were written down in the nine months ended March 31, 2017 to net realizable value. No inventory was written down in the nine months ended March 31, 2018.

5. Income Taxes

The Company's effective tax rate for the three and nine months ended March 31, 2018 was (0.2)% and (371.1)%, respectively. The unusually high tax rate for the nine months ended March 31, 2018 was due to a deferred income tax charge of approximately $4,491,000, as explained below. For the three and nine months ended March 31, 2018, the Company calculated income tax expense based upon an annual effective tax rate forecast adjusted for discrete items that specifically relate to the interim period. Changes in tax laws or rates on deferred tax assets and liabilities are recognized as discrete items in the interim period that includes the enactment date. The differences between the effective tax rate and the U.S. federal statutory tax rate of 21% principally resulted from state and local taxes, graduated federal tax rate reductions, changes in the valuation allowance, non-deductible expenses, and discrete items for the interim period.

On December 22, 2017, the U.S. President signed the Tax Cuts and Jobs Act of 2017 (the "Act"). Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 740, Income Taxes ("ASC 740") requires that the effects of changes in tax laws or tax rates be recognized in the financial statements in the period in which such changes were enacted. During the nine months ended March 31, 2018, the Company incurred a deferred income tax charge of approximately $4,491,000 due to the write-down of deferred tax assets related to the reduction of the corporate income tax rate per the Act.

At March 31, 2018, the Company had a net deferred tax asset of approximately $7,357,000. Management has considered the realizability of the deferred tax assets and has concluded that a valuation allowance of approximately $31,291,000 should be recorded, related to net operating loss carryforwards that are not anticipated to be realized. Management determined that a valuation allowance was required with respect to the remaining net deferred tax assets. Realization of these assets is primarily dependent on achieving the forecast of future taxable income, as well as prudent and feasible tax planning strategies.

6. Related Party Notes Payable

	March 31, 2018								June 30, 2017
			Accrued		Total		Interest rate		Note		Interest rate
	Principal		Interest		Outstanding		per annum		Payable		per annum
Secured								Secured
	$	1,056,875	$	1,593	$	1,058,468	5% interest paid annually		$	1,056,875	5% interest paid annually
		641,294		966		642,260	5% interest paid annually			641,294	5% interest paid annually
		255,417		385		255,802	5% interest paid annually			255,417	5% interest paid annually
		591,613		891		592,504	5% interest paid annually			591,613	5% interest paid annually
		504,452		760		505,212	5% interest paid annually
Total	$	3,049,651	$	4,595	$	3,054,246		Total	$	2,545,199

         The principal amount listed above is principal only and does not include accrued interest of approximately $122,000 from March 20, 2017 to March 20, 2018.  This accrued interest is included in the notes payable amount of $3,171,660 on condensed consolidated balance sheet.

12

Prior Year Exchange Transaction

On March 20, 2017, the Company entered into a note exchange agreement with the holders of an aggregate principal amount of $2,170,000 of outstanding promissory notes (the "Original Notes"), which were due and payable, pursuant to which the Company agreed to issue the holders of such notes, in consideration of the cancellation of the Original Notes, new promissory notes in the aggregate principal amount of $2,545,199, which is equal to the sum of the aggregate principal amount of the Original Notes plus the accrued but unpaid interest on the Original Notes (the "New Senior Notes"). The New Senior Notes were convertible into shares of the Company's common stock at an initial conversion price of $2.03 per share. Based on the initial conversion prices, the New Senior Notes were convertible into up to 1,253,792 shares of common stock. If the Company issues or sells shares of its common stock, rights to purchase shares of its common stock, or securities convertible into shares of its common stock for a price per share that is less than the conversion price then in effect, such conversion price will be decreased to equal 85% of such lower price. The foregoing adjustments to the conversion price will not apply to certain exempt issuances, including issuances pursuant to certain employee benefit plans. The conversion price is also subject to adjustment upon stock splits, reverse stock splits, and similar capital changes. These conversion options resulted in a derivative liability valued at $328,422. All the New Senior Notes have a maturity date of one year from the closing date. The New Senior Notes were issued in consideration of the exchange of (i) an aggregate principal amount of $950,000 of Original Notes convertible at a price of $2.25 per share, (ii) an aggregate principal amount of $520,000 of Original Notes convertible at a price of $3.00 per share, and (iii) an aggregate principal amount of $700,000 of unconvertible Original Notes.

The New Senior Notes bear interest at the rate of 5% per annum with interest payable upon maturity, the conversion of the New Senior Notes or on any earlier redemption date.  Beginning one month after the Company's common stock is listed for trading on a national securities exchange, and the Company will have the right to redeem all or any portion of the outstanding principal balance of the New Senior Notes, plus all accrued but unpaid interest at a price equal to 110% of such amount.  The holders of the New Senior Notes shall have the right to convert any or the entire amount to be redeemed into common stock prior to redemption.  Subject to certain exceptions, the New Senior Notes are senior to existing and future indebtedness of the Company and are secured by a first priority lien on all the Company’s assets to the extent and as provided in a Security Agreement entered into between the Company and the holders. The New Senior Notes contain customary covenants against incurring additional indebtedness and granting additional liens and contain customary event default.  Upon the occurrence of an event of default under the New Senior Notes, the holders may require the Company to repay all or a portion of the note in cash, at a price equal to 110% of the principal, plus accrued and unpaid interest.

During the year ended June 30, 2017, in connection with the exchange of the Original Notes for the New Senior Notes, the Company also agreed with the holder of all outstanding shares of Series B Convertible Preferred Stock (the “Series B Preferred Stock") to exchange all of its outstanding shares of Series B Preferred Stock for shares of a new series of convertible preferred stock designated as Series E Convertible Preferred Stock (the "Series E Preferred Stock").  Accordingly, on March 20, 2017, the Company also entered into a separate exchange agreement with the holder of the shares of Series B Preferred Stock, to exchange such shares for a total of 25,000 shares of Series E Preferred Stock.  Each share of Series E Preferred Stock will have a stated value of $30.00 per share.  Pursuant to this exchange agreement, the holder of the shares of Series B Preferred Stock agreed to waive all unpaid dividends that had accrued on the shares of Series B Preferred Stock.  The shares of Series E Preferred Stock are initially convertible by the holder into an aggregate of 187,500 shares of common stock at the initial conversion rate of $4.00 per share.  The conversion price of the new preferred stock is subject to adjustment solely in the event of stock dividends, combinations, splits, recapitalizations, and similar corporate events.  The right of holders of Series E Preferred Stock to convert these securities into common stock is subject to a 4.99% beneficial ownership limitation, which beneficial ownership limitation may be increased by a holder to a greater percentage not more than 9.99% after providing notice to the Company.   

Prior Year Loss on Extinguishment of Debt

In accordance with ASC 470-50, "Debt - Modifications and Extinguishments", the Company's note exchange agreement was tested to determine whether a debt modification or debt extinguishment had occurred. Based on management's review, debt extinguishment accounting applied. A loss on extinguishment of $258,037 resulted from the exchange, and was recorded in fiscal year 2017. The loss consists of the resulting derivative liability of $328,422 from embedded conversion options in the New Senior Notes and the additional value of $50,000 of the Series E Preferred Stock compared to the Series B Preferred Stock, offset by the waiving of the unpaid Preferred Series B dividends of $120,385.

Current Year Exchange Transaction

On March 27, 2018, the Company entered into an agreement with the holders of outstanding senior secured convertible notes to amend certain terms of such notes as described below ("Note Amendment Transaction").  Contemporaneously with the Note Amendment Transaction, the Company entered into an agreement with its Chief Executive Officer, who held a separate promissory note in the aggregate principal amount of $500,000, to exchange such note for an additional new senior note (the “Additional Senior Note”) on terms substantially the same as the senior secured convertible notes in the Note Amendment Transaction (the “Note Exchange Transaction").

13

Note Amendment Transaction

In the Note Amendment Transaction, the holders (the "Senior Holders") of the outstanding principal amount of $2,545,199 of New Senior Notes entered into a consent and amendment agreement with the Company (the "Consent Agreement"), pursuant to which the New Senior Notes were amended to extend the maturity date for a period of twelve months, to March 20, 2019 and in consideration thereof, the conversion rate of the New Senior Notes was reduced to $1.20 per share.  Based on the adjusted conversion price, the principal amount of the New Senior Notes will be convertible into up to 2,120,999 shares of common stock.  The other material terms and conditions of the New Senior Notes were not amended.  Certain holders of the New Senior Notes are affiliated with the Company as follows: (1) an aggregate principal amount of $255,417 of New Senior Notes are held by Hanif A. Roshan, the Chairman and Chief Executive Officer of the Company and (ii) an aggregate principal amount of $591,613 of New Senior Notes are held by Optimum Ventures, LLC, a party affiliated by ownership with the former owners of Peachstate Health Management, LLC, our subsidiary.  Due to the adjustment of the conversion price of the New Senior Notes, the exercise price of outstanding warrants to purchase an aggregate of 825,144 shares of common stock has been adjusted from $2.07 to $1.22 per share. Unpaid interest on the New Senior Notes as of March 31, 2018 was approximately $122,000, which is not incorporated into the principal balance. Accrued interest on the New Senior Note is due on March 20, 2019 or any earlier payment of the New Senior Notes.

Note Exchange Transaction

In connection with the Note Amendment Transaction, on March 27, 2018, the Company entered into a note exchange agreement (the "Note Exchange Agreement") with its chief executive officer, who also held a promissory note in the aggregate principal amount of $500,000, pursuant to which the Company agreed to issue to him, in consideration of the cancellation of such note, the Additional Senior Note in the aggregate principal amount of $504,452, which is equal to the sum of the aggregate principal amount of the original note plus the accrued but unpaid interest thereon.  The closing of the Note Exchange Transaction occurred on March 27, 2018.

The Additional Senior Note is the same, in all material respects, as the New Senior Notes described above in the Note Amendment Transaction and is convertible into shares of the Company's Common Stock at an initial conversion price of $1.20.  Based on the initial conversion price, the Additional Senior Note is convertible into up to 420,376 shares of common stock.  As the Additional Senior Note is the same in all material respects as the New Senior Notes, the conversion price of the Additional Senior Note may be adjusted upon the occurrence of the same events which would result in an adjustment to the conversion price of the New Senior Notes, as described above, including the issuance of securities at a price per share less than the current conversion price.  Similarly, the maturity date, interest rate, events of default, redemption and other terms of the Additional Senior Note are the same as for the New Senior Notes.  The Additional Senior Note is on parity with the New Senior Notes and, subject to certain exceptions, is senior to other existing and future indebtedness of the Company and, together with the New Senior Notes, is secured by a first priority lien on all of the Company's assets to the extent and as provided in the Security Agreement as amended.

In accordance with ASC 470-50, "Debt - Modifications and Extinguishments", the Company's note exchange agreement was tested to determine whether a debt modification or debt extinguishment had occurred. Based on management's review, debt extinguishment accounting applied.  As a result of the debt exchange, the Company recorded $247,539 of non-cash expense resulting from the conversion feature of the convertible debt, which was recorded in the current quarter of 2018.  The loss consisted of the resulting derivative liability from the embedded conversion options in the new notes.  In addition, a valuation loss from embedded conversion options in the New Senior Notes of $908,728 was recorded during the current quarter.

7. Equity

Preferred Stock

As of March 31, 2018, there were 25,000 shares of Series E Convertible Preferred Stock outstanding. The shares of Series E Preferred Stock are initially convertible into an aggregate of 187,500 shares of common stock at the initial conversion rate of $4.00 per share. The conversion price of the Series E Preferred Stock will be subject to adjustment solely in the event of stock dividends, combinations, splits, recapitalizations, and similar corporate events and does not provide for general price-based anti-dilution adjustments. Each share of Series E Preferred Stock has a stated value of $30.00 per share and has the following rights and preferences: (I) each holder of the Series E Preferred Stock has the right, at any time, to convert the shares of Series E Preferred Stock into shares of common stock, (ii) the Series E Preferred Stock is redeemable at the Company's option commencing one year after the original issuance date, provided that the Company's common stock is listed on a national securities exchange at such time, and (iii) the Series E Preferred Stock will pay dividends at the rate of 5% per annum in cash. The shares of Series E Preferred Stock were issued in a transaction with the holder of the Company's previously outstanding shares of Series B Preferred Stock to exchange the shares of Series B Preferred Stock for the shares of Series E Preferred Stock. Pursuant to the exchange agreement for the preferred stock, the holder of the shares of Series B Preferred Stock agreed to waive all unpaid dividends that had accrued on the shares of Series B Preferred Stock. At March 31, 2018, the Company has accrued dividends of approximately $39,000 on the Series E Preferred Stock which remain unpaid.

14

As of March 31, 2018, there are 605,000 shares of Series D Convertible Preferred Stock outstanding. The Series D Preferred Stock can be converted by the holders into an aggregate of 619,154 shares of common stock at an initial conversion rate of $9.77139 per share. The holders of such shares have the right to convert the preferred shares at any time, although the shares received upon conversion may not be offered or sold except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. The Company has the right to repurchase the outstanding Series D Preferred Stock at a redemption price equal to $10.00 per share, plus accrued and unpaid dividends, and to require holders to convert their Series D Preferred Stock beginning in June 2016. Dividends on the Series D Preferred Stock accrue at a rate of 5% per annum and are payable semi-annually in cash or stock at the Company's option. At March 31, 2018, the Company has accrued dividends in the amount of approximately $863,000 on the Series D Preferred Stock, which remain unpaid. 

The Company's preferred stock takes precedence over Common Stock but ranks below debt in the event of liquidation. In addition, the Series D Convertible Preferred Stock ranks above the Series E Convertible Preferred Stock.

Earnings per Share

FASB ASC Topic 260, Earnings per Share, requires the presentation of basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted-average number of ordinary shares outstanding during the period, while diluted earnings per share is calculated to include any dilutive effects to ordinary shares. For the three and nine months ended March 31, 2018, our ordinary share equivalents consisted of stock options, restricted stock units, convertible debt, preferred stock and warrants.

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2018			2017			2018			2017
Basic earnings (loss) per share
Net (loss) earnings	$	(1,712,512	)	$	418,059		$	(5,822,903	)	$	245,154
Preferred stock dividends		(85,699	)		(74,863	)		(257,095	)		(276,111	)
Net (loss) earnings available to common shareholders after preferred stock dividends	$	(1,798,211	)	$	343,196		$	(6,079,998	)	$	(30,957	)
Weighted average shares used in the computation of basic earnings per share		7,249,370			7,168,329			7,249,370			6,312,344
(Loss) earnings per share - basic	$	(0.25	)	$	0.05		$	(0.84	)	$	(0.00	)
Dilutive earnings (loss) per share
(Loss) earnings available to common shareholders	$	(1,798,211	)	$	343,196		$	(6,079,998	)	$	(30,957	)
Weighted average shares used in the computation of diluted (loss) earnings per share		7,249,370			7,168,329			7,249,370			6,312,344
Dilutive effect of options, warrants, convertible debt and convertible preferred stock		-			1,597,328			-			-
Shares used in the computation of diluted (loss) earnings per share		7,249,370			8,765,657			7,249,370			6,312,344
(Loss) earnings per share - diluted	$	(0.25	)	$	0.04		$	(0.84	)	$	(0.00	)
Anti-Dilutive Options Excluded		6,611,355			3,545,077			6,611,355			6,919,034

15

Common Stock Warrants

A schedule of common stock warrant activity for the nine months ended March 31, 2018 is as follows:

Warrant Activity	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding June 30, 2017		4,150,535		$	4.67		3.87	$	42,582
Issued		-
Expired		(25,000	)	$	12.06		-
Outstanding March 31, 2018		4,125,535		$	4.44		3.11	$	-
Exercisable, March 31, 2018		4,069,979		$	4.05		3.35	$	-

Due to the adjustment of the conversion price of the New Senior Notes, the exercise price of outstanding warrants to purchase an aggregate of 825,144 shares of common stock has been adjusted from $2.07 to $1.22 per share.

 8. Share-Based Compensation

Stock option activity under the Company's stock option plans for employees and non-executive directors for the nine months ended March 31, 2018 is as follows:

Employee Option Activity	Number of Options			Weighted Average Exercise Price		Average Remaining Contractual Life (Years)
Outstanding June 30, 2017		226,902			9.04		6.34
Granted		50,000			2.00		9.45
Expired/Forfeited		(11,556	)		23.40		-
Outstanding March 31, 2018		265,346			7.08		6.80
Exercisable March 31, 2018		143,917			11.50		4.69

				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Non-Executive Option Activity	Options			Price		Life (Years)		Value
Outstanding June 30, 2017		602,311			3.57		6.11	$	-
Granted		45,555			1.59		9.50		-
Expired/forfeited		(102,807	)		5.33		-		-
Outstanding and exercisable March 31, 2018		545,059			3.07		7.99	$	-

16

Share based compensation for the three months ended March 31, 2018 and 2017 was approximately $117,000 and $38,000, respectively. Share-based compensation for the nine months ended March 31, 2018 and 2017 was approximately $562,000 and $186,000, respectively.

No options were granted to the Company's non-employee directors as of March 31, 2018 as each director that would have received such options as of such date under the Company's Non-Employee Director Compensation Policy waived the receipt of such compensation for the quarter ended March 31, 2018.

Restricted stock unit activity under the Company's restricted stock unit plans for employees and non-executive directors for the nine months ended March 31, 2018 is as follows:

	Number of RSUs			Weighted Average Grant Date Fair Value
Outstanding June 30, 2017		411,429		$	1.75
Granted		201,448			0.78
Expired/Forfeited		(57,429	)		0.48
Outstanding March 31, 2018		555,448		$	1.42

On March 31, 2018, the Company's Board of Directors approved the grant of 40,724 restricted stock units to Hanif A. Roshan.  In addition, the Board also approved the grant of an aggregate 40,724 restricted stock units to certain other non-executive employees of the Company.  All of the restricted stock units were granted under the Company's 2011 Omnibus Equity Incentive Plan, as amended (the "2011 Plan").  The Board determined that it was appropriate to grant the restricted stock units in consideration of an agreement by Mr. Roshan and the other non-executive employees to accept such compensation in lieu of cash payment of base salary for the five-week period ending March 31, 2018.

9. Fair Value Measurements and Other Financial Instruments

The carrying amounts of the Company's financial assets and liabilities, such as cash, accounts receivable, inventory, prepaid expenses, and other current assets, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.

In connection with the issuance of a convertible promissory note as discussed in Note 6, the Company evaluated the note agreement to determine if the agreement contained any embedded components that would qualify the agreement as a derivative. The Company identified certain put features embedded in the convertible note agreement that potentially could result in a settlement in the event of a fundamental transaction, requiring the Company to classify the conversion feature as a derivative liability.

The Company's Level 3 financial liabilities consist of the derivative conversion features of underlying convertible debt and warrants issued in 2011 to 2015. The Company valued the conversion features using the Black Scholes model prior to the three months ended September 30, 2016 and the Monte Carlo model for all periods thereafter. These models incorporate transaction details such as the Company's stock price, contractual terms maturity, risk free rates and volatility as of the date of issuance and each balance sheet date. The decrease in the value of the conversion feature of the convertible debt and warrants issued was primarily due to the change in the stock price during 2018 compared with prior years.

The Company utilized the following assumptions in valuing the derivative conversion features:

Exercise Price	$	1.20		-	$	1.22
Risk free interest rate		2.07	%	-		2.55	%
Expected volatility		115	%	-		150	%
Remaining Term (years)		0.97		-		5.32

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Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

The fair value of AGHC financial instruments, using the fair value hierarchy under U.S. GAAP detailed in "Fair Value Measurements" in Note 2, "Summary of Significant Accounting Policies and Recently Issued Accounting Standards," of the Notes to the Condensed Consolidated Financial Statements are included in the tables below.

The Company uses Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative liabilities at every reporting period and recognizes gains and losses in the statement of operations that are attributable to the change in the fair value of the derivative liabilities. Changes in the observable input values would likely cause material changes in the fair value of the Company's Level 3 financial instruments.  The significant unobservable input (probability of a down round event) used in the fair value measurement is the estimation of the likelihood of the occurrence of a change in the contractual terms of the financial instruments.  A significant increase (decrease) in this likelihood or in the volatility assumptions would result in a higher (lower) fair value measurement.

The following tables provide a summary of the changes in fair value, including net transfers in and/or out, of all financial assets / (liabilities) measured at the fair value on a recurring basis using significant unobservable inputs during the nine months ended March 31, 2018.

			Convertible
	Warrants		Notes		Total
Balance - June 30, 2017	$	435,036	$	116,004	$	551,040
Change in fair value of derivative liabilities		127,254		792,724		919,978
Balance - March 31, 2018	$	562,290	$	908,728	$	1,471,018

	Fair
	Value		Level 1		Level 2		Level 3
June 30, 2017 derivative liabilities	$	551,040	$	-	$	-	$	551,040
March 31, 2018 derivative liabilities	$	1,471,018	$	-	$	-	$	1,471,018

Derivative Instruments

For the three and nine months ended  March 31, 2018 and 2017, the Company recorded non-cash (expense) income of approximately ($1,286,000) and ($920,000), compared to income of $257,000 and $392,000 for the prior year periods in other (expense) income for the changes in fair value of the derivative liabilities.

10. Commitments and Contingencies

A complaint was filed by a former independent contractor in the State of Louisiana who was involved in the sales and marketing of the Company's products and services. The caption of the case is Medlogic, LLC and Malena F. Badon v. Peachstate Health Management, LLC., et al. Plaintiff alleges certain commissions had not been paid in full. The Company believes the contractor was overpaid and has asserted a counter claim for reimbursement of such overpayments. The Company intends to vigorously defend the claim and pursue the counter claim. The parties have completed initial discovery and the matter remains pending. The Company believes the resolution of this matter will not have a material effect on its financial statements.

Regarding the termination of the Company's employment relationship with certain executives, including the former Chief Executive Officer ("CEO") of Authentidate Holding Corp., O’Connell Benjamin, the Company has been reviewing its severance obligations to them and the vesting of other post-termination provisions. The Company believes that it has accrued all related severance costs as of  March 31, 2018 related to the past terminations. The former CEO commenced an arbitration proceeding before the American Arbitration Association ("AAA") on or about June 22, 2016 requesting payment of severance compensation of $341,620 and other benefits, including the vesting of certain stock option awards, pursuant to an employment agreement. The parties opted to pursue mediation in their attempt to resolve the matter, and a mediation session was held on October 30, 2017, but no resolution was reached. The Company believes that it has valid defenses to Mr. Benjamin's claims and intends to defend this matter accordingly as the arbitration process ensues.

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On May 3, 2017, the Company received notice from the Office for Civil Rights ("OCR") of the U.S. Department of Health and Human Services ("DHHS") informing the Company that the OCR is conducting a review of the Company's compliance with applicable Federal Standards for Privacy of Individually Identifiable Health Information and/or Security Standards for the Protection of Electronic Protected Health Information (“ePHI”). The OCR is the division of DHHS charged with enforcing the Health Insurance Portability and Accountability Act of 1996, as amended ("HIPAA"), and its privacy, security and data breach rules ("HIPAA Rules"). The OCR compliance review covers both the Company's telehealth business and its clinical laboratory operations. The OCR reviewed the Company's premises and conducted interviews on May 23, 2017 and the Company continues to work on a resolution with the OCR. The OCR may, among other things, require a corrective action, issue penalties, or reach a monetary settlement. The Company does not expect a material adverse determination on its consolidated financial position, results of operations and cash flows.

The Company is the plaintiff in a case captioned Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Radius Foundation, Inc. and William Bramlett, Ph.D., filed on June 13, 2017 in the State Court of Hall County, State of Georgia Case No. 2017-SV-312-Z. Judgement in the amount of $116,865 was awarded by the court on March 29, 2018, against the corporate defendant. The Company continues to pursue its claims against the individual co-defendant.

The Company is the plaintiff in a case captioned Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Trimana, LLC d/b/a Via Medical Center Case No. 2016-SV-246D filed on April 29, 2016 in the State Court of Hall County, State of Georgia. Judgement in the amount of $104,652 was awarded by the Court on March 12, 2018.

The Company is a defendant in an action captioned Cogmedix, Inc. v. Authentidate Holding Corp. in the Superior Court of Worcester County, Commonwealth of Massachusetts, Case No. 1685CV013188. Suit was filed on September 6, 2016, based upon a purchase order dated December 6, 2013, alleging the principal amount of $227,061, and accumulating interest and attorney fees. On February 15, 2018, a default judgment for the amount of $320,638 was awarded. The Company is evaluating this decision and considering its alternatives.

The Company, along with its chief executive officer and certain unnamed persons, are defendants in a case captioned Carlotta Miraflor v. Peachstate Health Management, LLC d/b/a Aeon Global Health, et al., filed on October 4, 2017 in the United States District Court for the Central District of California Case No. 5:17-CV-02046-DSF-SP. Service of the Summons and Complaint was made on January 3, 2018 and an Answer denying liability has been timely filed with the Court Clerk. The plaintiff is a principal of an independent contractor which provided marketing services to the Company pursuant to a services agreement. The lawsuit was preceded by a Dismissal and Notice of Rights by the U.S. Equal Employment Opportunity Commission in July 2017 on the basis that the plaintiff has been identified as an independent contractor, notwithstanding that the plaintiff alleged that the Company was the employer of the plaintiff. Nonetheless, the plaintiff has initiated suit alleging wrongful termination, retaliation, harassment, and other claims. The lawsuit seeks an injunction enjoining the Company from classifying its sales and marketing personnel as independent contractors and unspecified compensatory damages for plaintiff's alleged loss of earnings, emotional distress, punitive damages, and attorneys' fees and costs. The Company believes that it has strong defenses to plaintiff's allegations and intends to vigorously defend the claim. Management is unable to determine at this time whether this claim will have a material adverse impact on the Company’s financial condition, results of operations or cash flow.

            The Company has a lease for its offices in New Jersey, which has a term of six years following the occupancy date and annual rentals ranging from approximately $135,000 in the first year to $148,000 in the final year. The lease also provides AGHC with a one-time option to renew the lease for a term of five years at the then-current market rate and, provided AGHC pays an early termination fee, allows AGHC an early termination option on each of the 18-month, 27-month and 36-month anniversary dates of the effective date of the amendment. As part of the lease agreement, AGHC reduced its letter of credit securing its lease payments to approximately $121,000, which was collected by the landlord in the first quarter of fiscal year 2018. The Company is currently in negotiations to terminate this lease obligation and although not guaranteed, expects to be successful during fiscal year 2018.

The Company is also subject to claims and litigation arising in the ordinary course of business. Management considers that any liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the aggregate, would not have a material adverse effect on the consolidated financial position, results of operations or cash flows. 

The Company has entered into various agreements by which it may be obligated to indemnify the other party with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business under which we customarily agree to hold the indemnified party harmless against losses arising from a breach of representations related to such matters as intellectual property rights. Payments by the Company under such indemnification clauses are generally conditioned on the other party making a claim. Such claims are generally subject to challenge by the Company and to dispute resolution procedures specified in the particular contract. Further, obligations under these arrangements may be limited in terms of time and/or amount and, the Company may have recourse against third parties for certain payments made by the Company. It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to their conditional nature and the unique facts of each particular agreement. Historically, the Company has not made any payments under these agreements that have been material individually or in the aggregate. As of  March 31, 2018, the Company is not aware of any obligations under such indemnification agreements that would require material payments.

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11. Related Party Transactions

Except as disclosed herein, the Company has not entered into any material transactions or series of similar transactions with any director, executive officer or any security holder owning 5% or more of common stock since July 1, 2017.

AEON leases its facilities from Centennial Properties of Georgia, LLC under a lease agreement commencing April 2014, as amended January 20, 2016. The lease provides for a term of 12 years expiring March 2026. The lease payments range from $46,500 to a maximum of $60,000. In connection with the lease agreement, as security for its rent and other obligations under the lease, AEON has provided to the landlord a first priority lien and security interest in substantially all its assets. The landlord under the lease is Centennial Properties of Georgia, LLC a Georgia limited liability company. Centennial is owned by Sonny Roshan, Shawn Desai, Pyarali Roy and Sohail Ali, all of whom were AEON members and received common stock in AGHC as a result of the Acquisition. Mr. Roshan serves as the Chairman and CEO of AGHC. Mr. Desai is the Chief Technology Officer of AEON. Mr. Roy is the Chief Strategy Officer of AEON. Related party rent expense for the three and nine months ending March 31, 2018 and 2017 was approximately $144,000 and $432,000, and $140,000 and $419,000, respectively.

The Company holds certain related party notes payable to certain shareholders, its Chief Executive Officer and affiliates of board members of the Company, as detailed in Note 6. Interest expense relating to these notes amounted to approximately $32,000 and $95,000, and $87,000 and $286,000 for the three and nine months ended March 31, 2018 and 2017, respectively.  In the Note Amendment Transaction, the holders (the "Senior Holders") of the outstanding principal amount of $2,545,199 of New Senior Notes entered into a consent and amendment agreement with the Company (the "Consent Agreement"), pursuant to which the New Senior Notes were amended to extend the maturity date for a period of twelve months to March 20, 2019 and in consideration thereof, the conversion rate of the New Senior Notes was reduced to $1.20 per share.  Based on the adjusted conversion price, the principal amount of the New Senior Notes will be convertible into up to 2,120,999 shares of common stock.  The other material terms and conditions of the New Senior Notes were not amended.  Certain holders of the New Senior Notes are affiliated with the Company as follows: (1) an aggregate principal amount of $255,417 of New Senior Notes are held by Hanif A. Roshan, the Chairman and Chief Executive Officer of the Company and (ii) an aggregate principal amount of $591,613 of New Senior Notes are held by Optimum Ventures, LLC, a party affiliated by ownership with the former owners of Peachstate Health Management, LLC, our subsidiary.  Due to the adjustment of the conversion price of the New Senior Notes, the exercise price of outstanding warrants to purchase an aggregate of 825,144 shares of common stock has been adjusted from $2.07 to $1.22 per share.  Unpaid interest on the New Senior Notes as of March 31, 2018 was approximately $122,000, which is not incorporated into the principal balance.  Accrued interest on the New Senior Notes is Due on March 20, 2019 or any earlier payment of the New Senior Notes.

    Effective January 23, 2018, Hanif A. Roshan, the Company's Chief Executive Officer and Chairman of the Board made a short-term loan of $500,000 to the Company.  To evidence the loan, the Company issued Mr. Roshan a promissory note (the "Note") in the aggregate principal amount of $500,000.  The Note was an unsecured obligation of the Company, and was not convertible into equity securities of the Company.  The Note was due and payable on April 23, 2018 and interest accrued on the Note at the rate of 5% per annum.  The Note was exchanged for a new secured convertible note in the exchange transaction described above in Note 6 under the caption "Current Year Exchange Transaction".

AGHC entered into a lease agreement with Hanif A. ("Sonny") Roshan (the "landlord") for a residential premises at 5455 Golf View Drive, Braselton, Georgia 30517 for a term of one year beginning on January 1, 2018 and ending on December 31, 2018 for a fixed rent in monthly installments of $7,500 due and payable by the first day of each month. The lease is renewable with a 3% increase in rent for each renewal. The tenant is responsible for utilities and insurance with the landlord responsible for maintenance and taxes on the premises. Rent expense was $22,500 and $67,500 for the three and nine months ended March 31, 2018.

On January 4, 2018, the Company entered into a Consulting Agreement with Dr. Armando Moncada, M.D. ("Moncada" or the "Consultant") pursuant to which the Company engaged Moncada to act as its Chief Medical Officer - Pathology and to provide certain consulting services in connection with the operation of the Company's pathology laboratory, as specified in the Consulting Agreement.  The Company paid Moncada $40,000 at the execution of the agreement and $25,000 for February 2018, which was Moncada's monthly pay according to the Consulting Agreement.  In addition, pursuant to the Consulting Agreement, Moncada had agreed to transfer and assign to the Company, in his personal capacity as well as in his capacity as a controlling member and/or officer of PCG Molecular, LLC and Pathology Consultants of Georgia, Inc., all right to the intellectual property of such entities.  The completion of the transaction to acquire the foregoing intellectual property rights was subject to the negotiation and execution of definitive assignment agreement and other customary closing conditions.  The Company and Moncada were not able to reach a final agreement on the acquisition terms of intellectual property rights and the Consulting Agreement was therefore terminated on February 21, 2018. 

 12. Segment Information

The Company is operated as two segments: laboratory testing services, and web-based software.  Laboratory testing services includes the testing of an individual's blood, urine or saliva for the presence of drugs or chemicals and the patient's DNA profile. Web-based software provides secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to increase revenues, improve productivity, reduce costs, coordinate care for patients and enhance related administrative and clinical workflows and compliance with regulatory requirements. Management currently runs each segment separately and measures profitability and operational performance based on the financial statements, which are independently maintained.

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Selected financial information related to the Company's segments is presented below:

				Laboratory
	Web-Based Software			Testing Services			Total
Three Months ended March 31, 2018
Net revenues	$	244,135		$	3,811,444		$	4,055,579
Cost of revenues		44,297			913,816			958,113
Operating expenses		436,359			3,948,343			4,384,702
Operating loss		(192,223	)		(110,629	)		(329,123	)
Nine Months ended March 31, 2018
Net revenues	$	744,985		$	12,199,868		$	12,944,853
Cost of revenues		164,403			2,810,828			2,975,231
Operating expenses		1,644,812			11,385,524			13,030,336
Operating income (loss)		(899,827	)		840,614			(85,483)
Three Months Ended March 31, 2017
Net revenues	$	319,176		$	5,212,634		$	5,531,810
Cost of revenues		52,438			845,152			897,590
Operating expenses		393,510			4,645,993			5,039,503
Operating income (loss)		(74,334	)		566,641			492,307
Nine Months ended March 31, 2017
Net revenues	$	999,333		$	15,469,366		$	16,468,699
Cost of revenues		203,691			2,652,063			2,855,754
Operating expenses		1,558,364			14,355,766			15,914,130
Operating income (loss)		(559,031	)		1,113,600			554,569
March 31, 2018
Total assets	$	7,520,404		$	5,047,339+		$	12,567,74
June 30, 2017
Total assets	$	11,772,874		$	4,958,804		$	16,731,678

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Certain statements in this Quarterly Report on Form 10-Q are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report, words such as "may," "should," "seek," "believe," "expect," "anticipate," "estimate," "project," "intend," "strategy" and similar expressions are intended to identify forward looking statements regarding events, conditions and financial trends that may affect the Company's future plans, operations, business strategies, operating results and financial position. Forward looking statements are subject to a number of known and unknown risks and uncertainties that may cause actual results, trends, performance or achievements of the Company, or industry trends and results, to differ materially from the future results, trends, performance or achievements expressed or implied by such forward looking statements. These risks and uncertainties include:

• Changes in U.S., state, local and third-party payer regulations or policies or other future reforms in the healthcare system (or in the interpretation of current regulations), new insurance or payment systems, including state, regional or private insurance cooperatives (e.g., Health Insurance Exchanges), affecting governmental and third-party coverage or reimbursement for clinical laboratory testing;

• Significant fines, penalties, costs and/or damage to the Company's reputation arising from the failure to comply with U.S. and international privacy and security laws and regulations, including the Health Insurance Portability and Accountability Act of 1996, Health Information Technology for Economic and Clinical Health Act, U.S. state laws and regulations, and laws and regulations of the European Union and other countries;

• Loss or suspension of a license or imposition of a fine or penalties under, or future changes in, or interpretations of, the law or regulations of the Clinical Laboratory Improvement Act of 1967, and the Clinical Laboratory Improvement Amendments of 1988;

• Penalties or loss of license arising from the failure to comply with the U.S. Occupational Safety and Health Administration requirements and the U.S. Needlestick Safety and Prevention Act, or similar laws and regulations of U.S., state, local or international agencies;

• Fines, unanticipated compliance expenditures, suspension of manufacturing, enforcement actions, injunctions, or criminal prosecution arising from failure to maintain compliance with current good manufacturing practice (cGMP) regulations and other applicable requirements of various regulatory agencies;

• Changes in testing guidelines or recommendations by government agencies, medical specialty societies and other authoritative bodies affecting the utilization of laboratory tests;

• Increased competition, including price competition, competitive bidding and/or changes or reductions to fee schedules and competition from companies that do not comply with existing laws or regulations or otherwise disregard compliance standards in the industry;

• Failure to obtain and retain new customers or a reduction in tests ordered, specimens submitted or services requested by existing customers;

• Customers choosing to insource services that are or could be purchased from the Company;

• Damage or disruption to the Company's facilities;

• Failure to identify, successfully close and effectively integrate and/or manage newly acquired businesses; and

• Adverse results in litigation matters.

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These and certain other factors are discussed in this Quarterly Report and from time-to-time in other Company reports filed with the Securities and Exchange Commission (the "SEC"). The Company expressly disclaims any obligation to update or revise any forward-looking statements, whether because of new information, future events or otherwise, except as required by law.

The AEON Acquisition 

On January 27, 2016, AEON was merged into a newly formed acquisition subsidiary of Aeon Global Health Corp. (formerly, Authentidate Holding Corp. (the "Aeon Acquisition")) pursuant to a definitive Amended and Restated Agreement and Plan of Merger dated January 26, 2016, as amended on May 31, 2016 and December 15, 2016 (collectively the "Merger Agreement"). The merger certificate was filed with the Secretary of State of Georgia on January 27, 2016, and AEON survived the merger as a wholly-owned subsidiary of AGHC. The acquisition of AEON requires us to pay certain Earnout Payments (as defined and described below) to the former members of AEON upon achievement of certain financial milestones. The Earn-out Payments must be paid in shares of our common stock. In accordance with the Merger Agreement, the members of AEON prior to the effective time of the AEON Acquisition became holders of shares of common stock, issuable in tranches as described below. The closing of the AEON acquisition occurred on January 27, 2016 and the Company filed a Current Report on Form 8-K on February 1, 2016 regarding the AEON Acquisition in accordance with the SEC regulations.

Pursuant to the terms of the Merger Agreement, among other things:

• Following the AEON Acquisition, AEON is operated as a separate entity.

• The former members of AEON prior to the effective time of the AEON Acquisition became holders of shares of common stock issuable in tranches as follows (the payments referred to in (b), (c), (d) and (e) below are hereinafter be referred to as the "Earn-out Payments"):

(a)    At the closing of the AEON Acquisition, the membership interests of AEON were converted into the right to receive such number of validly issued, fully paid and non-assessable shares of our common stock as is equal to 19.9% of the issued and outstanding shares of our common stock (rounded to the nearest whole share) as of the close of business on the business day immediately prior to the closing date of the AEON Acquisition (958,030 shares of our common stock).

(b)    In December 2016, we issued to the former AEON members 240,711 shares of common stock, representing 5% of the issued and outstanding shares of our common stock as of the close of business on the business day immediately prior to the closing date of the AEON Acquisition, following the approval of our shareholders of the Earn-out Payments.

(c)    In December 2016, we issued to the former AEON members 1,155,415 shares of common stock, representing 24% of the issued and outstanding shares of our common stock as of close of business on the business day immediately prior to the closing date of the AEON Acquisition, due to the determination that AEON achieved at least $16,000,000 in EBITDA for the calendar year ending December 31, 2015.

(d)    In the event AEON achieves at least $65,900,000 in EBITDA, in the aggregate, for the three calendar years ending December 31, 2016, 2017 and 2018, then, on October 1, 2019, subject to the completion of the audited financial statements of AEON for the calendar year ending December 31, 2018, we will issue to the former AEON members such number of additional shares of our common stock as is equal to 36.1% of the issued and outstanding shares of our common stock (rounded to the nearest whole share) as of the close of business on the business day immediately prior to the closing date of the AEON Acquisition; provided; however, we will issue to the former AEON members such number of additional shares of our common stock so that the total number of shares of our common stock issuable to the former AEON members shall equal 85% of the issued and outstanding shares of our common stock on a post-issuance basis (rounded to the nearest whole share) on a Fully Diluted Basis (as defined below).

(e)    In the event AEON achieves at least $100,000,000 in EBITDA, in the aggregate, for the four calendar years ending December 31, 2019, we will issue to the former AEON members such number of shares of our common stock which equals an additional 5% of the issued and outstanding shares of our common stock on a post-issuance basis (rounded to the nearest whole share), on a Fully Diluted Basis, in addition to our common stock issued to the former AEON members under (b), (c) and (d) above (resulting in the AEON members potentially owning 90% of the issued and outstanding shares of our common stock on a post issuance basis on a Fully Diluted Basis if all the additional tranches are earned).

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 The Merger Agreement provides that the above-referenced EBITDA targets are subject to adjustment on an annual basis, for each percentage increase or decrease above a ten percent threshold, of the CMS reimbursement rate levels for the services that AEON provides to its customers. The CMS rates changed in each of 2016, 2017 and 2018 and the Company anticipates that the original EBITDA thresholds will be materially reduced.  The Company engaged a valuation consultant to evaluate the impact of the CMS rate changes on the target EBITDA threshold values, which analysis has not yet been completed.

Basis of Presentation

On January 27, 2016, AEON completed the transactions contemplated by the Merger Agreement with AGHC under which AEON merged with a wholly-owned subsidiary of AGHC and will be operated as a separate entity. The merger was accounted for as a reverse acquisition with AEON treated for accounting purposes as the acquirer. As such, the financial statements of AEON are treated as the historical financial statements of the Company. For the periods prior to the closing of the reverse acquisition the disclosure below relates to the historical business and operations of AEON. The balance sheet as of June 30, 2017 has been derived from audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

Overview of AEON Business

Prior to the closing of the AEON Acquisition, AEON was a privately-held Georgia limited liability company. Subsequent to the Acquisition, the AEON business constitutes the majority of the combined Company's business.

AEON's primary business focus is on the "Personalized Medicine" approach to laboratory testing. This includes the testing of an individual's blood, urine or saliva for the presence of drugs or chemicals and the patient's DNA profile.

AEON is an innovator in genomic testing with a number of established genetic tests in use today in the areas of pharmacogenomics and cancer genetic testing and a pipeline of additional tests in development which it plans to bring to market over the coming eighteen months. AEON is investing to expand its genetic testing capabilities to address the rapidly increasing demand for personalized medical analysis that involves using an individual's genetic profile to guide decisions regarding the prevention, diagnosis, and treatment of disease. AEON strives to offer unique testing specifically designed for its increased focus on personalized medicine, with superior service levels. In this effort, AEON provides advanced testing in DNA pharmacogenomics, cancer genetics and molecular microbiology. Genomic testing is more complex than conventional toxicology testing, requires unique knowledge and significantly more sophisticated equipment and bioinformatics. As a result, genomic testing commands higher prices while enjoying significantly less competition.

Toxicology is a major component of AEON's product mix and will continue to be an important element of AEON's business strategy. AEON's toxicology testing provides information about the medication and other substances in the patient's system from either urine or oral fluid samples. This information helps guide a clinician's treatment of a patient. This testing ensures the safe use of prescriptions and is designed to help doctors provide the highest level of care. AEON offers a comprehensive set of toxicology tests and produce results under quality assurance standards consistent with those required by various regulatory bodies. In addition, AEON intends to expand its anatomic pathology testing business.

AEON supports its national client base from its Gainesville, Georgia headquarters. AEON is focused on technology innovation and efficiency, utilizing state of the art testing equipment and its proprietary methodologies to provide some of the fastest and most reliable test results in the nation. AEON focuses on a service model that emphasizes the importance of the test result for both the client and the patient. By focusing on fast, accurate turnaround of test results and the ability to integrate directly with the electronic medical records of clients, AEON believes it can provide clients a unique service that larger clinical laboratories cannot match. Because of the emphasis on its service model, AEON believes it is ideally positioned to be a preferred lab provider for personalized medicine. The majority of AEON's current testing volume is in toxicology; however, AEON has recently placed focus and emphasis on growing its DNA pharmacogenomics and cancer genetic testing in response to growing market demand for personalized medical testing.

Overview of Web-Based Software Business

AGHC provides secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to (i) increase revenues, (ii) improve productivity, (iii) reduce costs, (iv) organize care for patients and (v) enhance related administrative and clinical workflows and compliance with regulatory requirements. AGHC's web-based services are delivered as Software as a Service (SaaS) to its customers interfacing seamlessly with billing and document management systems. These solutions incorporate multiple features and security technologies such as business-rules based electronic forms, intelligent routing, transaction management, electronic signatures, identity credentialing, content authentication, automated audit trails and remote patient management capabilities. Both web and fax-based communications are integrated into automated, secure and trusted workflow solutions.

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Outlook and Trends

Healthcare Industry Trends

Current industry estimates relied on by management indicate that over $3.0 trillion is spent annually on healthcare in the United States. Management believes that demand for laboratory testing services is expected to continue to grow due to a number of factors including the movement towards preventative care, the aging population, higher illicit drug use and the increasing trend towards personalized and value-based medicine. As such, the healthcare system in the United States will continue to evolve and significant change is taking place in the system. There are a number of key trends that are having, and that we expect will continue to have, a significant impact on the diagnostic information services business in the United States and on our business. These trends present both opportunities and risks. However, because of the nature of the services we provide, we believe that the industry will continue to grow over the long term and that we are well positioned to benefit from the long-term growth expected in the industry.

Consistent with the last few years, we expect downward reimbursement pressure for our AEON business will continue to be experienced in fiscal 2018. As a result of the size of the overall healthcare spend, market participants, including governments, continue to focus on controlling costs, including potentially by changing reimbursement for healthcare services (including but not limited to a shift from fee for service to capitation), changing medical coverage policies (e.g., healthcare benefits design), requiring pre-authorization of laboratory testing, requiring co-pays, introducing laboratory spend management utilities and payment and patient care innovations. As health plans and government programs require greater levels of patient cost-sharing, our patient collections could be negatively impacted and adversely impact our bad debt expense. In addition, there could be a shift to capitation arrangements where we agree to a predetermined monthly reimbursement rate for each member enrolled in a restricted plan, generally regardless of the number or cost of services provided by us.

Fees for the laboratory services we provide are reimbursed by Medicare, Medicaid and commercial payors and are established in the Clinical Laboratory Fee Schedule (CLFS). Historically, these fee schedules are subject to annual adjustments. During the quarter ended March 31, 2018, 19% of the Company's revenue was reimbursed from Medicare under the CLFS with the balance of the Company's revenue derived from commercial insurance providers and Medicaid. For the quarter ended March 31, 2018, toxicology testing represented approximately 86% of all of laboratory testing services that the Company provided.

Over the past several years, the Company has experienced governmental reimbursement reductions as a direct result of the Patient Protection and Affordable Care Act (ACA) and other laws. The Protecting Access to Medicare Act (PAMA), which became law on April 1, 2014, is expected to result in a future net reduction in reimbursement revenue under the CLFS. These laws include provisions designed to control healthcare expenses reimbursed by government programs through a combination of reductions to fee schedules, incentives to physicians to participate in alternative payment models such as risk-sharing, and new methods to establish and adjust fees.

Beginning in calendar 2016, commercial and government payors focused on reducing payments to clinical laboratories by imposing more stringent payment guidelines in their adjudication processes. Additionally, effective January 2016, the Centers for Medicare and Medicaid Services (CMS) substantially reduced the unit reimbursement rate for many of the tests typically performed by the Company, along with the number of tests that CMS would reimburse. Because Medicare and Medicaid accounts for close to 50% of our annual revenue, these factors have had a substantial negative impact on our revenue.  During calendar 2017, CMS reimbursement rates for the tests we performed increased by an average of 18% to $253.87 and decreased 9.9% to $228.76 in calendar year 2018.

We experienced a decrease in revenues for the three and nine months ended March 31, 2018, as compared to the same periods last year which was largely caused by the impact of (i) one customer moving much of its work internally, (ii) a slowdown in reimbursements from two payors caused by the application of more stringent payment guidelines, and (iii) the severe weather experienced in the southeastern United States.

Further payment reductions to Medicare, Medicaid and other government programs could have a direct adverse effect on the Company's net earnings and cash flows. The Company cannot predict whether changes will be implemented that will result in further payment reductions. In addition to changes in reimbursement rates, the Company is also impacted by changes in coverage policies for laboratory tests. For example, CLFS coding and billing changes related to toxicology and other procedures were implemented in 2016. The Company experienced delays in the pricing and implementation of the new toxicology codes. Further coding and billing changes related to toxicology testing and other procedure types were implemented in 2017 and 2018, and we experienced delays in the pricing and implementation of these new codes, which may continue. While the impact on price and margin is currently unclear, the Company anticipates that some of that impact will be mitigated by timely negotiation with payers impacted by these changes.

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The President of the United States has announced that he favors repealing the Affordable Care Act ("ACA"), and leaders of the Republican controlled federal legislature also have taken substantial efforts in an attempt to repeal and replace the ACA during 2017. While no efforts to fully repeal and/or replace the ACA have been successful as of yet, further Congressional efforts to repeal, amend, replace, or reform the ACA are possible, and the individual mandate component of the ACA was repealed as part of the Tax Cuts and Jobs Act of 2017. If such legislation were to become law, it could have a significant impact on the U.S. healthcare system. Uncertainty regarding the ACA prior to any such repeal, amendment, replacement or reform could create uncertainty generally in the healthcare market. Also, the trend of consolidating, converging and diversifying among customers and payers has continued. Consolidation is increasing price transparency and bargaining power, and encouraging internalization of clinical testing.

Despite the market changes regarding reimbursement discussed above, the Company believes that the volume of clinical laboratory testing is positively influenced by several factors, including an expansion of Medicaid, managed care, and private insurance exchanges. Additional factors that may lead to future volume growth include an increase in the number and types of tests that are readily available (due to advances in technology and increased cost efficiencies) for the diagnosis of disease, and the general aging of the U.S. population. 

Federal Tax Policy Trends

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act tax legislation. While the Company continues to assess the impact of the tax reform legislation on its business and consolidated financial statements, the legislation reduces the U.S. corporate tax rate from the current rate of 35% to 21%, imposes limitations on the deductibility of interest, and allows for the expensing of capital expenditures. As detailed in Note 5 to the notes to the consolidated financial statements contained in this Quarterly Report on Form 10-Q, the value of the Company's deferred tax assets was reduced as of March 31, 2018 and management will need to remeasure the Company's deferred tax asset in subsequent periods to incorporate the effect of the new tax rates. The new tax legislation may have a material impact on our future tax liability and the realizability of our net operating losses. We continue to examine the impact this tax legislation may have on our business.

 Critical Accounting Policies

The Company's Critical Accounting Policies are listed in Note 2 of the Notes to Condensed Consolidated Financial Statements.

Going Concern. In connection with preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that an entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued).

Restatement of Previously Issued Financial Statements

While preparing its financial statements for the fiscal year ended June 30, 2017, the Company reviewed its accounting for certain assets held as inventory and determined that its accounting treatment of such items during its fiscal 2017 was not appropriate. After reevaluating its financial statements for each of the quarterly periods of September 30, 2016, December 31, 2016 and March 31, 2017 to assess the impact of this topic, management determined that the changes to the financial statements for the interim quarterly periods occurring during fiscal 2017 were material. Consequently, the Company restated its financial statements reported on Forms 10-Q for the periods ended September 30, 2016, December 31, 2016 and March 31, 2017 in its Annual Report on Form 10-K for the fiscal year ended June 30, 2017. See Note 3 to the Condensed Consolidated Financial Statements. The restatements primarily reflect adjustments to (i) correct for understating the carrying value of inventory in the Condensed Consolidated Balance Sheets for each of the quarterly periods; and (ii) correct for understating net income and overstating cost of cost of revenues in the Condensed Consolidated Statements of income for of the quarterly periods occurring during fiscal 2017.

Recent Accounting Pronouncements. See Note 2 of the Notes to Condensed Consolidated Financial Statements for further information of certain accounting standards that have been adopted during fiscal 2017 and the first and second quarters of fiscal 2018 and certain accounting standards that we have not yet been required to implement but may be applicable to our future operations.

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Results of Operations

Three and nine months ended March 31, 2018 compared to three and nine months ended March 31, 2017

Revenues were approximately $4,056,000 for the three months ended March 31, 2018 compared to $5,532,000 for the three months ended March 31, 2017. Revenue for the nine months ended March 31, 2018 was approximately $12,945,000 compared to $16,469,000 for the nine months ended March 31, 2017. The decreased revenues for the three and nine months ended March 31, 2018 was primarily due to: (i) one customer moving much of its work internally, (ii) a slowdown in reimbursements from two payors caused by the application of more stringent payment guidelines and (iii) the severe weather experienced in the southeastern United States.

Cost of revenues for the three months ended March 31, 2018 was approximately $958,000 (23.6% of total net revenues) compared to $898,000 (16.2% of total net revenues) for the three months ended March 31, 2017. Cost of revenues for the nine months ended March 31, 2018 was approximately $2,975,000 (23.0% of net revenues) compared to $2,856,000 (17.3% of total net revenues) for the nine months ended March 31, 2017.  Cost of revenues is higher in the current year primarily due to increased spending on testing supplies.

Write-down of inventory comprised of purchased components of approximately $31,000 and finished goods of $207,000 were written down in the nine months ended March 31, 2017 to net realizable value. There were no write-downs in the nine months ended March 31, 2018.

Gross margin as a percent of revenue for the three months ended March 31, 2018 was 76.4% as compared to 83.8% for the three months ended March 31, 2017. Gross margin as a percent of revenue for the nine months ended March 31, 2018 was 77.0% versus 82.7% for nine months ended March 31, 2017. The lower gross margin percentage for the three and nine months ended March 31, 2018 was primarily due to the fixed nature of the majority of the Company's cost of revenues and the decreased revenue in the current year.

 Selling, general and administrative (SG&A) expenses were approximately $3,222,000 (79.4% of total net revenues) for the three months ended March 31, 2018 as compared to $3,748,000 (67.8% of total net revenues) for the three months ended March 31, 2017. SG&A expenses were approximately $9,427,000 (72.8% of total net revenues) for the nine months ended March 31, 2018 versus $11,624,000 (70.6% of total net revenues) for the nine months ended March 31, 2017. The decrease in selling, general and administrative expenses during the three and nine months ended March 31, 2018 was due to the continuation of cost containment measures, especially in the areas of payroll and commissions. The decrease in commissions was primarily due to lower revenues.  Share based compensation is included in SG&A expenses.  Share based compensation was approximately $600,000 in the three months ended March 31, 2018 and $38,000 for the three months ended March 31, 2017. Share based compensation was approximately $651,000 in the nine months ended March 31, 2018 compared to $186,000 for the nine months ended March 31, 2017. The increase in share based compensation for the three and nine months ended March 31, 2018 is predominately due to granting of stock compensation in the current year.

Depreciation and amortization expense was approximately $205,000 and $394,000 for the three months ended March 31, 2018 and 2017, respectively. Depreciation and amortization for the nine months ended March 31, 2018 was $628,000 compared to $1,196,000 for the nine months ended March 31, 2017. For decrease in the current year period is primarily due to legacy assets being written off at June 30, 2017 and AEON fixed assets becoming fully depreciated.

Other income (expense) was an expense of approximately $(1,380,000) and $(74,000) for the three months ended March 31, 2018 and 2017, respectively. Other income (expense) was an expense of $(1,241,000) for the nine months ended March 31, 2018 and $(309,000) for the nine months ended March 31, 2017. The change in fair value of derivative liabilities was an expense of  approximately $1,286,000 in the current quarter ended and income of $257,000  for the prior year quarter  The change in fair value of derivative liabilities was approximately an expense $920,000 and income of $392,000 for the nine months ended March 31, 2018 and 2017, respectively.  In the prior year, the Company recorded approximately $258,000 of expense related to the loss on extinguishment. 

The Company decreased its deferred tax asset of approximately $11,848,000 at June 30, 2017 to $7,357,000 at March 31, 2018. Approximately $4,491,000 of the deferred tax asset was written off in the nine months ended March 31, 2018 due to the reduction of the corporate tax rate to 21% from 35% in the new Tax Cuts and Jobs Act enacted in December 2017.

Net loss available to common shareholders for the three months ended March 31, 2018 was approximately $1,798,000 or $0.25 per basic and diluted share as compared to net income available to common shareholders of $343,000 or $0.05 per basic common share and $0.04 per diluted common share for the prior year due to the reasons mentioned above. Net loss available to common shareholders for the nine months ended March 31, 2018 was approximately $6,080,000 or $0.84 per basic and diluted common share versus a net loss available to common shareholders of $31,000 or a loss of $0.00 per basic and diluted common share for the nine months ended March 31, 2017.

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Liquidity and Capital Resources

Overview

Our operations and product development activities have required substantial capital investment to date. As discussed in more detail below, our recurring operating losses and capital needs, among other factors, raise substantial doubt about our ability to continue as a going concern. Our condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Cash Flows

At March 31, 2018, unrestricted cash and cash equivalents amounted to approximately $470,000 and total assets at that date were approximately $12,568,000 compared to cash and cash equivalents at June 30, 2017 of approximately $1,122,000 and total assets of approximately $16,732,000. Our current estimated monthly cash requirement is approximately $1,200,000. Currently, our available cash and cash equivalents as of the filing date of this Quarterly Report on Form 10-Q is approximately $1,011,000. Net cash used by operating activities for the nine months ended March 31, 2018 was approximately $1,152,000.

Going Concern

As of the filing date of this Quarterly Report on Form 10-Q, there is outstanding an aggregate principal amount of $3,049,651 of senior secured convertible notes with a maturity date of March 20, 2019 and a secured note subordinated to the interests of the existing senior lenders in the principal amount of $180,000 with a maturity date of June 15, 2018 and is included in accrued expenses on the condensed consolidated balance sheet. We expect existing resources, revenues generated from operations, and proceeds received from other transactions we are considering to satisfy working capital requirements for at least the next twelve months; however, no assurances can be given, that we will be able to generate sufficient cash flow from operations or complete other transactions to satisfy our other obligations. The accompanying condensed consolidated financial statements do not include any adjustments to the recoverability and classification of assets carrying amounts or the amounts and classifications of liabilities that might result from the outcome of these uncertainties. Accordingly, the Company needs to raise additional capital and are exploring potential transactions to improve our capital position. Unless we can increase revenues substantially or generate additional capital from other transactions, our current cash resources will only satisfy our working capital needs for a limited period of time.

The Company does not have a bank line of credit or other fixed source of capital reserves. We are exploring potential transactions to improve our capital position to ensure we can meet our financing and working capital requirements. We would expect to raise additional funds through obtaining a credit facility from an institutional lender or undertaking private debt financings. Raising additional funds by issuing equity or convertible debt securities may cause our stockholders to experience substantial dilution in their ownership interests and new investors may have rights superior to the rights of our other stockholders. Raising additional funds through debt financing or preferred stock, if available, may involve covenants that restrict our business activities and options and such additional securities may have powers, designations, preferences or rights senior to our currently outstanding securities. We may also enter into financing transactions which involve the granting of liens on our assets or which grant preferences of payment from our revenue streams, all of which could adversely impact our ability to rely on our revenue from operations to support our ongoing operating costs. Alternatively, we may seek to obtain new financing from existing security holders, which may include reducing the exercise or conversion prices of outstanding securities, or the issuance of additional equity securities. Currently, we do not have any definitive agreements with any third-parties for such transactions and there can be no assurance; however, that we will be successful in raising additional capital or securing financing when needed or on terms satisfactory to the company. If we are unable to raise additional capital when required, or on acceptable terms, we will need to reduce costs and operations substantially or potentially suspend operations, any of which would have a material adverse effect on our business, financial condition and results of operations.

Management has concluded that due to the conditions described above, there is substantial doubt about the entity's ability to continue as a going concern. We have evaluated the significance of the conditions in relation to our ability to meet our obligations and believe that our current cash balance will provide sufficient capital to continue operations through fiscal 2018. In addition to our efforts to improve our capital position through commercial operations and/or product partnering opportunities, we are considering capital raising alternatives, including credit lines from external financing sources. We cannot assure you that financing will be available on acceptable terms. If we are not successful in generating or raising additional capital, we will risk defaulting under the terms of our existing loans. Additionally, if additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities would result in dilution to our existing stockholders. Furthermore, despite our optimism regarding the future of the Company, even if the Company is adequately funded, there is no guarantee that any of our services will perform as hoped or that such services can be successfully commercialized.

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Contractual Commitments

                   AEON leases its facilities under a lease agreement dated March 1, 2014, as amended January 20, 2016.  The lease, amended, provided for a term of 12 years expiring March 2026.

	Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
Leases
Operating	$	6,131,000	$	725,000	$	1,511,000	$	1,456,000	$	2,439,000
Capital		670		670		-		-		-
Total lease obligations		6,131,670		725,670		1,511,000		1,456,000		2,439,000
Total debt obligations		2,609,000		2,609,000		-		-		-
Severance		180,000		180,000		-		-		-
Total obligations	$	8,920,670	$	3,514,670	$	1,511,000	$	1,456,000	$	2,439,000

        In connection with the lease agreement, as security for its rent and other obligations under the lease, AEON has provided to the landlord a lien and security interest in substantially all its assets.

The landlord under the lease is Centennial Properties of Georgia, LLC, a Georgia limited liability company. Centennial is owned by Sonny Roshan, Shawn Desai, Pyarali Roy and Sohail Ali, all of whom are former members of AEON and will be received and may in the future receive common stock because of the Merger.

The Company has a lease for its offices in New Jersey, which has a term of six years following the occupancy date and annual rentals ranging from approximately $135,000 in the first year to $148,000 in the final year. The lease also provides AGHC with a one-time option to renew the lease for a term of five years at the then-current market rate and, provided AGHC pays an early termination fee, allows AGHC an early termination option on each of the 18-month, 27-month and 36-month anniversary dates of the effective date of the amendment. As part of the lease agreement, AGHC reduced its letter of credit securing its lease payments to approximately $121,000, which was collected by the landlord in the first quarter of fiscal year 2018. The Company is currently in negotiations to terminate this lease obligation and although not guaranteed, expects to be successful during fiscal year 2018.

Other Matters

The events and contingencies described below have impacted or may impact our liquidity and capital resources.

In connection with the private placement of Series D Preferred Stock in June 2013, we issued 665,000 shares of Series D 5% Convertible Preferred Stock.  Presently, there are 605,000 shares of Series D Preferred Stock outstanding.  The shares of Series D Preferred Stock are convertible into 619,154 shares of common stock at the conversion rate of $9.77139 per share. Each share of Series D Preferred Stock has a stated value of $10.00 per share.  The Company has the right to repurchase these shares at the stated value per share, plus accrued and unpaid dividends and to require the holders to convert such securities into common stock starting in June 2016.  Each holder of Series D Preferred Stock has the right to require the holders to convert such securities into common stock at any time commencing on the six-month anniversary date of the issue date.  The Series D Preferred Stock pays dividends at the rate of 5% per annum, payable in cash or shares of common stock, at the rate of 5% per annum, payable in cash or shares of common stock, at the Company's option, subject to limitations required by the NASDAQ stock market.  At March 31, 2018, the Company has accrued dividends on the shares of Series D Preferred Stock in the amount of approximately $863,000 which remain unpaid.

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Further, there are 25,000 shares of Series E Preferred Stock outstanding which also accrue dividends at the annual rate of 5% of the issue price payable on a semi-annual basis.  The shares of Series E Preferred Stock were issued in March 2017 in exchange for the surrender of the previously outstanding shares of Series B Preferred Stock.  At March 31, 2018, the Company has accrued dividends in the amount of approximately $39,000 on the shares of Series E Preferred Stock which remain unpaid. 

On March 1, 2017, the Company extended the expiration date of an aggregate of 309,547 outstanding common stock purchase warrants which were originally issued in March and September 2012 in separate private placements of the Company's securities. Of the warrants extended, an aggregate of 124,370 warrants would otherwise have expired on March 15, 2017, and 185,177 warrants would have expired on September 29, 2017. In both cases, the expiration date of the warrants has been extended to September 29, 2018. These warrants have an exercise price of $12.06 per share. Other than the extension of the term of these warrants, the provisions of the warrants remain unchanged.

Debt Exchange Transactions

On March 20, 2017, the Company entered into a note exchange agreement with the holders of an aggregate principal amount of $2,170,000 of outstanding promissory notes (the "Original Notes"), which were due and payable, pursuant to which the Company agreed to issue the holders of such notes, in consideration of the cancellation of the Original Notes, new promissory notes in the aggregate principal amount of $2,545,199, which were equal to the sum of the aggregate principal amount of the original notes plus the accrued but unpaid interest on the Original Notes (the "New Senior Notes"). The New Senior Notes are convertible into shares of the Company's Common Stock at an initial conversion price of $2.03 per share. Based on the initial conversion prices, the New Senior Notes were convertible into up to 1,253,792 shares of common stock. If the Company issued or sold shares of its common stock, rights to purchase shares of its common stock, or securities convertible into shares of its common stock for a price per share that was less than the conversion price then in effect, such conversion price would be decreased to equal 85% of such lower price. The foregoing adjustments to the conversion price would not apply to certain exempt issuances, including issuances pursuant to certain employee benefit plans. In addition, the conversion price is subject to adjustment upon stock splits, reverse stock splits, and similar capital changes. All the New Senior Notes had a maturity date of one year from the closing date.

The New Senior Notes earn interest at the rate of 5% per annum with interest payable upon maturity, the conversion of the New Senior Notes or on any earlier redemption date.  Commencing one month after the Company's common stock is listed for trading on national securities exchange the Company will have the right to redeem all or any portion of the outstanding principal balance of the New Senior Notes, plus all accrued but unpaid interest at a price equal to 110% of such amount.  The holders of the New Senior Notes have the right to convert any or the entire amount to be redeemed into common stock prior to redemption.  Subject to certain exceptions, the New Senior Notes are senior to existing and future indebtedness of the Company and are secured by a first priority lien on all the Company's assets to the extent and as provided in a Security Agreement entered between the Company and the holders.  Subject to certain exceptions, the New Senior Notes contain customary covenants against incurring additional indebtedness and granting additional liens and contained customary events of default.  Upon the occurrence of an event of default under the New Senior Notes, the holders have the right to require the Company to repay all or a portion of the note in cash, at a price equal to 110% of the principal, plus accrued and unpaid interest.

On March 27, 2018, the Company entered into an agreement with the holders of the New Senior Notes to amend certain terms of such notes as described below (the "Note Amendment Transaction").  In the Note Amendment Transaction, the holders of the New Senior Notes entered into a consent and amendment agreement with the Company (the "Consent Agreement"), pursuant to which the New Senior Notes were amended to extend the maturity date for a period of twelve months, to March 20, 2019 and in consideration thereof, the conversion rate of the New Senior Notes was reduced to equal $1.20 per share.  Based on the adjusted conversion price, the principal amount of the Senior Notes will be convertible into up to 2,120,199 shares of common stock.  As the conversion price of the New Senior Notes was further reduced, the exercise price of outstanding warrants to purchase an aggregate of 825,184 shares of common stock, which was adjusted to $2.07 following the 2017 note exchange transaction, was further reduced to $1.22 per share. 

Contemporaneously with the Note Amendment Transaction, the Company entered into a note exchange agreement (the "Note Exchange Agreement") with its Chief Executive Officer, who held a separate promissory note in the aggregate principal amount of $500,000, to exchange such note for a new senior note on terms substantially the same as the New Senior Notes (the “2018 Note Exchange Transaction").  Pursuant to the Note Exchange Agreement, the Company issued its chief executive officer, in consideration of the calculation of the then-existing note, a new senior secured note (the "Additional Senior Note") in the aggregate principal amount of $504,452, which is equal to the sum of the aggregate principal amount of the prior note, plus the accrued but unpaid interest thereon.  The closing of the 2018 Note Exchange Transaction occurred on March 27, 2018.  The Additional Senior Note is the same, in all material respects, as the New Senior Notes described above in the Note Amendment Transaction and is convertible into shares of the Company's Common Stock at an initial conversion price of $1.20.  Based on the initial conversion price, this note is convertible into up to 420,376 shares of common stock.  Further, the conversion price of the Additional Senior Note may be adjusted upon the occurrence of the same events which would result in an adjustment to the conversion price of the New Senior Notes, as described above, including the issuance of securities at a price per share less than the current conversion price.  Similarly, the maturity date, interest rate, events of default, redemption and other terms of such Additional Senior Note are the same as for the New Senior Notes.  The Additional Senior Note is on parity with the New Senior Notes and, subject to certain exceptions, is senior to other existing and future indebtedness of the Company and, together with the New Senior Notes, is secured by a first priority lien on all of the Company's assets to the extent and as provided in the Security Agreement, as amended. 

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In connection with the above note exchange transaction consummated in March 2017, the Company exchanged all outstanding shares of Series B Convertible Preferred Stock (the "Series B Preferred Stock") for shares of a new series of convertible preferred stock designated as Series E Convertible Preferred Stock (the "Series E Preferred Stock").  Accordingly, on March 20, 2017, the company also entered into a separate exchange agreement with the holder of the shares of Series B Preferred Stock, to exchange such shares for a total of 25,000 shares of Series E Preferred Stock.  The shares of Series E Preferred Stock are initially convertible by the holder into an aggregate of 187,000 shares of common stock at the initial conversion rate of $4.00 per share.  The conversion price of the new preferred stock will be subject to adjustment solely in the event of stock dividends, combinations splits, recapitalizations, and similar corporate events and does not provide for general price-based anti-dilution adjustments.  Each share of Series E Preferred Stock has a stated value of $30.00 per share.  On March 20, 2017, the Company filed with the State of Delaware a Certificate of Designations, Rights and Preferences and Number of Shares of Series E Convertible Preferred Stock, referred to as the Series E Designation.  The Series E Preferred Stock has the following rights and preferences:  (i) each holder of the Series E Preferred Stock will have the right, at any time, to convert the shares of Series E Preferred Stock into shares of common stock, (ii) the Series E Preferred Stock will be redeemable at option commencing one year after the closing date (provided that the Company's common stock is listed on a national securities exchange at such time and (iii) the Series E Preferred Stock will pay dividends at a rate of 5% per annum in cash.  Pursuant to the exchange agreement for the preferred stock, the holder of the shares of Series B Preferred Stock agreed to waive all unpaid dividends that had accrued on the shares of Series B Preferred Stock.  

On April 24, 2017, the Company entered into a settlement and mutual release with its former Chief Financial Officer, William A. Marshall to resolve an outstanding arbitration proceeding.  Pursuant to the separation agreement and general release, the Company agreed to provide the following to the former CFO:   (i) cash payments totaling $170,000 to be paid over time through May 15, 2018, (ii) a lump sum severance payment of $160,000 payable on June 15, 2018, (iii) the issuance of a total of $12,835 vested shares of common stock pursuant to the terms of the restricted stock units granted in January 2013 and January 2017, and (iv) 27,388 stock options previously granted became vested and exercisable for the duration of their original exercise periods, subject, however to the terms of a lockup agreement.  Pursuant to the settlement agreement. the Company issued a secured senior promissory note, subordinated to the interests of the existing lenders, which provides for events of default that are customary for similar transactions.

Off-Balance Sheet Arrangements

We have not created, and are not party to any special-purpose or off-balance sheet entities for raising capital, incurring debt or operating parts of our business that are not consolidated into our financial statements. We do not have any arrangements or relationships with entities that are not consolidated into AGHC financial statement that are reasonably likely to materially affect liquidity or the availability of capital resources. We have entered into various agreements by which we may be obligated to indemnify the other party with respect to certain matters. These indemnification provisions are generally included in contracts arising in the normal course of business under which we customarily agree to hold the indemnified party harmless against losses arising from a breach of representations related to such matters as intellectual property rights. Payments by us under such indemnification clauses are generally conditioned on the other party making a claim. Such claims are generally subject to challenge by us and to dispute resolution procedures specified in the particular contract. Further, obligations under these arrangements may be limited in terms of time and/or amount and, in some instance, we may have recourse against third parties for certain payments made by us. It is not possible to predict maximum potential amount of future payments under these indemnification agreements due to the conditional nature of these obligations and the unique facts of each particular agreement. We have not historically made any payments under these agreements that have been material individually of in the aggregate. As of March 31, 2018, we are not aware of any obligations under such indemnification agreements that would require material payments.

Effects of Inflation and Changing Prices

The impact of general inflation on our operations has not been significant to date and we believe inflation will continue to have an insignificant impact on us.

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ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 As of March 31, 2018, we are not exposed to significant financial market risks from changes in foreign currency exchange rates and are only minimally impacted by changes in interest rates. Nevertheless, in the future, we may enter into transactions denominated in non-U.S. currencies or increase the level of our borrowings, which could increase our exposure to these market risks. We have not used, and currently do not contemplate using, any derivative financial instruments.

Interest Rate Risk

At any time, fluctuations in interest rates could affect interest earnings on the Company's cash and marketable securities. We believe that the effect, if any, of reasonably possible near-term changes in interest rates on our financial position, results of operations, and cash flows would not be material. We have not used derivative financial instruments in our investment portfolio.

At March 31, 2018, unrestricted cash totaled approximately $470,000 and was in non-interest-bearing checking accounts used to pay operating expenses.

ITEM 4.     CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

 We maintain a system of disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. This information is also accumulated and communicated to management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as appropriate, to allow timely decisions regarding required disclosure. Our management, under the supervision and with the participation of its CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Report. Our management identified material weaknesses in the control environment described below, and based on that evaluation, because of these material weaknesses, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of March 31, 2018. In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure that our financial statements were prepared in accordance with GAAP. Accordingly, the CEO and CFO believe that the financial statements included in this report fairly present in all material respects (and in accordance with U.S. generally accepted accounting principles) our financial condition, results of operations and cash flows for the periods presented.

As previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017 and subsequently filed Quarterly Reports on Form 10-Q for the fiscal quarters ended September 30, 2017 and December 31, 2017, the Company identified the following material weaknesses in its internal control over financial reporting: (i) a lack of sufficient resources in its accounting function and an insufficient level of monitoring and oversight which resulted in the inadequate segregation of duties on the assessment of disclosure controls and procedures and which restricted the Company’s ability to gather, analyze, and properly review information in a timely manner; (ii) inadequate controls to ensure that information necessary to properly record transactions is adequately communicated on a timely basis from non-financial personnel to those responsible for financial reporting; and (iii) the lack of effective controls over the identification of reduced revenue collections due to modifications of payor claims adjudication processes and a lack of communication between financial personnel and non-financial personnel.

Remediation of Material Weaknesses in Internal Control over Financial Reporting

Considering the material weakness described above, we have designed and continue to implement improvements in our internal control over financial reporting to address these material weaknesses. Management is committed to the continued planning and implementation of remediation efforts to address the material weaknesses as well as of the identified areas of risk. These remediation efforts, summarized below, which are either implemented or in process, are intended to both address the identified material weaknesses and to enhance our overall financial control environment. In this regard, these initiatives include:

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Control Environment - to remediate the control environment deficiencies, the leadership team, including the Chief Executive Officer and Chief Financial Officer, have undertaken to reaffirm and reemphasize the importance of internal controls, including general ethical climate and the control environment. In addition, we specifically:

• Hired additional personnel in the accounting department such that the Company currently operates a fully staffed accounting department with sufficient U.S. GAAP and financial reporting experience to provide additional oversight of the accounting function and to participate in the preparation of our Company's financial statements and SEC reports;

• Hired a new Chief Financial Officer in September 2017 to replace the previous CFO, whose position was terminated in January 2017;

• Improved the documentation around conclusions reached in implementing applicable GAAP to our financial statements, formalized procedures and implemented controls for additional elements of transaction cycles, and performed testing on controls mandated in this documentation;

• The Company is in the process of providing further training of individuals in our accounting and reporting functions to ensure the correct application of generally accepted accounting principles to our financial statements. Training will be provided to personnel on a continuing basis as may be necessary to ensure adherence to the controls in the written policies and procedures; and

• The Company is in the process of reviewing, evaluating and upgrading the design of the procedures and implementation of controls for the preparation of financial statements with emphasis on compliance with GAAP and will continue to undertake such measures on an ongoing basis as warranted.

Notwithstanding these remedial measures, due to the size and nature of the Company, segregation of all conflicting duties may not always be possible and may not be economically feasible. Nevertheless, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals.

Monitoring and Control Activities - To further strengthen internal control over financial reporting at the process level, we have performed certain remediation actions, including conducting an internal evaluation of accounting methodologies, reporting architecture, review existing personnel and propose a specific course of action to ensure compliance with all facets of accounting and external reporting. During the third quarter of fiscal 2018, accounting personnel have reviewed and revised written policies and procedures with detailed controls incorporated for each transaction cycle within the Company, including the procedures and controls that need to be in place to properly account and communicate transactions on a timely basis to financial and non-financial personnel.

During and subsequent to the quarter ended March 31, 2018, we have been testing through the use of discussions with team members, these internal controls for existence and effectiveness and making necessary changes where warranted. In addition to the actions taken above, we intend to complete testing the existence and effectiveness of controls detailed in the updated written policies and procedures.

Until the remediation actions are fully implemented and the operational effectiveness of related internal controls validated through testing, the material weaknesses described above will continue to exist. However, when fully implemented and operational, the Company believes the measures described above will remediate the control deficiencies the Company has identified and strengthened its internal control over financial reporting.

Changes in Internal Control over Financial Reporting

Other than the ongoing remediation efforts described above, there have been no changes in our internal control over financial reporting during the quarter ended March 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Restatement of Quarterly Financial Statements during the 2017 Fiscal Year

As described in Note 3 to the Condensed Consolidated Financial Statements filed with this Quarterly Report on Form 10-Q, we restated the financial statements included in our Quarterly Reports on Form 10-Q for the periods ended September 30, 2016, December 31, 2016 and March 31, 2017.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

See Item 1 of Part I, "Financial Statements - Note 10 - Commitments and Contingencies.

ITEM 1A. RISK FACTORS.

As provided for under the Private Securities Litigation Reform Act of 1995, we wish to caution shareholders and investors that the following important factors, among others discussed throughout this Quarterly Report on Form 10-Q is set forth below. Our operating results and financial condition have varied in the past and may in the future vary significantly depending on a number of factors. In addition to the risks described below and the other information set forth elsewhere in this report, you should carefully consider the factors discussed in the "Risk Factors" section in our Annual Report on Form 10-K for the year ended June 30, 2017 and in our other reports filed with the SEC for a discussion of the risks associated with our business, financial condition and results of operations. These risks have affected, and in some cases, could, have a material adverse effect upon our business, results of operations, financial condition or liquidity and cause our actual results to differ materially from those contained in statements made in this report and presented elsewhere by management from time to time. The risks identified by the Company in its reports are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may materially adversely affect our business, results of operations, financial condition or liquidity. If any of the matters or events described in the following risks occurs, our business, financial condition or results of operations could be harmed. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment due to any of these risks. Except as set forth below, we believe there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017 and our other reports filed with the SEC.

Our capital requirements are significant and unless our revenues can sufficiently support our operating costs, we expect to raise additional capital to finance our operations and repay outstanding debt obligations.

Our capital requirements have been and will continue to be significant. We are expending significant amounts of capital to develop, promote and market our services. Our available cash and cash equivalents as of March 31, 2018 totaled approximately $470,000. However, available cash and cash equivalents as of the filing date of this Quarterly Report on Form 10-Q is approximately $1,011,000 and our estimated monthly cash requirement is approximately $1,200,000. Our net cash used in operating activities was approximately $1,152,000 for the nine months ended March 31, 2018, and net cash provided by operating activities was $570,000 in the nine months ended March 31, 2017. Further, as of the filing date of this Quarterly Report on Form 10-Q, there is outstanding an aggregate principal amount of approximately $3,049,000 of notes, consisting of  senior secured convertible notes with a maturity date of March 20, 2019 and a secured note subordinated to the interests of the senior lenders in the amount of $180,000 to the Company's former chief financial officer, with a maturity date of June 15, 2018 and is included in accrued expenses on the condensed consolidated balance sheet.   The Company also has unpaid interest of approximately $122,000 on the notes originally issued on March 20, 2017, which is due and payable on the maturity date of such notes or any earlier repayment.  Although no guarantee can be given, management anticipates that it will be able to extend of otherwise modify the Company's obligations under the notes for an additional period or periods. We expect the Company's existing resources, revenues generated from operations, and proceeds received from other transactions we are considering (of which there can be no assurance) to satisfy working capital requirements for at least the next twelve months, although no assurances can be given that we will be able to generate sufficient cash flow from operations or complete other transactions to satisfy other obligations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to the recoverability and classification of assets carrying amounts or the amount and classifications of liabilities that might result from the outcome of these uncertainties. Accordingly, we need to raise additional capital and are exploring potential transactions to improve the Company's capital position. Unless we can increase revenues substantially or generate additional capital from other transactions, the Company's current cash resources will only satisfy working capital needs for a limited period of time.

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We are exploring potential transactions to improve the Company's capital position to ensure we can meet financing and working capital requirements. We would expect to raise additional funds through obtaining a credit facility from an institutional lender or undertaking private debt financings. Raising additional funds by issuing equity or convertible debt securities may cause stockholders to experience substantial dilution in their ownership interests and new investors may have rights superior to the rights of other stockholders. Raising additional funds through debt financing or preferred stock, if available, may involve covenants that restrict business activities and options and such additional securities may have the granting of liens on the Company's assets or which grant preferences of payment from revenue streams, all of which could adversely impact the Company's ability to rely on revenue from operations to support ongoing operating costs. Alternatively, we may seek to obtain new financing from existing security holders, which may include reducing the exercise or conversion prices of outstanding securities, or the issuance of additional equity securities. Currently, the Company does not have any definitive agreements with any third parties for such transactions, and there can be no assurance that we will be successful in raising additional capital or securing financing when needed or on terms satisfactory to the Company. If we are unable to raise additional capital when required, or on acceptable terms, we will need to reduce costs and operations substantially or potentially suspend operations, any of which would have a material adverse effect on the Company's business, financial condition and results of operations. Future capital requirements will depend on, and could increase substantially because of many factors including:

• the need to utilize cash to support research and development activities and to make incremental investments in our organization;

• the ability to achieve targeted revenue, gross profit margins and cost management objectives;

• the success or our sales and marketing efforts;

• the need to repay indebtedness;

• the extent and terms of any development, marketing or other arrangements; and 

• changes in economic, regulatory or competitive conditions, including changes in payor reimbursement rates or claim adjudication processes.

We have identified material weaknesses in internal control over financial reporting, which could continue to impact negatively the Company's ability to report results of operations and financial condition accurately and in a timely manner.

As required by Section 404 of the Sarbanes-Oxley Act of 2002, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of the end of its most recent fiscal year. As previously reported, management concluded that we did not maintain effective control over financial reporting based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. For a detailed description of these material weaknesses, see Item 4, "Controls and Procedures." Each of our material weaknesses results in more than a remote likelihood that a material misstatement of the annual or interim financial statements that we prepare will not be prevented or detected. As a result, we must perform extensive additional work to obtain reasonable assurance regarding the reliability of our financial statements. As described in Item 4, "Controls and Procedures" and in Note 3 to the Condensed Consolidated Financial Statements filed with this Quarterly Report on Form 10-Q, we restated the financial statements included in our Quarterly Reports on Form 10-Q for the periods ended September 30, 2016, December 31, 2016, and March 31, 2017. In addition, other weaknesses may be identified.

We are in the process of testing compliance with our new written policies and procedures, and this work will continue during fiscal 2018. For a detailed description of the Company's remedial efforts, see Item 4, "Controls and Procedures." There can be no assurance as to when all the material weaknesses will be remedied. Until the Company's remedial efforts are completed, management will continue to devote significant time and attention to these efforts, and we will continue to incur expenses associated with the additional procedures and resources required to prepare the condensed consolidated financial statements. Certain of the Company's remedial actions, such as hiring additional qualified personnel to implement the reconciliation and review procedures, will be ongoing and will result in the Company incurring additional costs even after the material weaknesses are remedied.

If we are unsuccessful in implementing or following the remediation plan, or fail to update the Company's internal control over financial reporting as the business evolves or to integrate acquired businesses into the Company's controls system, we may not be able to timely or accurately report the Company's financial condition, results of operations or cash flows or to maintain effective disclosure controls and procedures, we could be subject to, among other things: (i) regulatory or enforcement actions by the SEC, (ii) an inability for us to be accepted for listing on any national securities exchange in the near future, (iii) securities litigation, or (iv) a general loss of investor confidence, any one of which could adversely affect the Company's business prospects and the market value of AGHC common stock. Further there are inherent limitations to the effectiveness of any system of controls and procedures, including the possibility of human error and the circumvention or overriding of controls and procedures. We could face additional litigation exposure and a greater likelihood of an SEC enforcement or other regulatory action if further restatements were to occur or other accounting-related problems emerge, which may adversely affect the Company's financial condition, results of operations and cash flows.    

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The Company's outstanding debt may impair our financial and operating flexibility.

As of March 31, 2018, there was an aggregate principal amount of secured indebtedness of approximately $3,230,000, consisting of an aggregate principal amount of approximately $3,049,000 of senior secured convertible notes with a maturity date of March 20, 2019 and a secured note subordinated to the interests of the existing senior lenders in the principal amount of $180,000 to the Company's former chief financial officer, with a maturity date of June 15, 2018 and is included in accrued expenses on the condensed consolidated balance sheet. All of the outstanding notes contain covenants and events of default customary for transactions of this nature. The Company also has unpaid interest of approximately $122,000 on the notes originally issued on March 20, 2017 which is due and payable on the maturity date of such notes or any earlier repayment.  For example, the outstanding senior secured notes include restrictions against incurring additional indebtedness and granting further security interests on the Company's assets.  Without the consent of the holders of these senior debt instruments, we must comply with these restrictions. Among the defined events of default are defaults of the Company's payment obligations, breach of any material covenant or representation of the notes or the related transaction agreements, and the commencement of proceedings under applicable U.S. federal or state bankruptcy, insolvency, reorganization or other similar laws either against us or by us. In the event of default under the notes, a holder may require us to repay all or a portion of the outstanding principal, plus interest and certain of the outstanding debt instruments also require that any repayment due to a default will require immediate repayment of the principal and accrued and unpaid interest. If we are unable to consummate an additional financing prior to the maturity date of these debt instruments, or otherwise further extend or exchange them, we will be required to repay these securities, which may have an adverse effect on the Company's cash position. If we are unable to make the scheduled principal and interest payments on these debt instruments or comply with applicable covenants contained therein, we may be in default under one or more these securities which would likely have a material adverse effect on the business, financial condition and results of operations. Further, if we are unable to repay the secured debt instruments when due, or upon an event of default, the holders could foreclose on the Company's encumbered assets.

The exercise of the Company's outstanding options, restricted stock units and warrants, or conversion of our outstanding convertible debt and convertible preferred stock, may depress our stock price and dilute your ownership of the company.

As of March 31, 2018, the following options, restricted stock units and warrants were outstanding:

• Employee stock options to purchase approximately 265,000 shares of common stock at exercise prices ranging from $36.00 to $1.75 per share, not all of which are immediately exercisable. The weighted average exercise price of the outstanding stock options is $7.08 per share.

• Director stock options to purchase approximately 545,000 shares of common stock at exercise prices ranging from $1.58 to $36.54 per share, all of which are exercisable. The weighted average exercise price of the outstanding and exercisable options is $3.07 per share.

• Warrants to purchase approximately 4,126,000 shares of common stock with a weighted average exercise price of $4.44 per share.

• An aggregate of approximately 555,000 unvested restricted stock units.

There are presently outstanding 25,000 shares of Series E Convertible Preferred Stock, which the holder may convert into an aggregate of 187,500 shares of common stock at the initial conversion price of $4.00 per share. Further there is currently outstanding 605,000 shares of Series D Preferred Stock, which are convertible into an aggregate of 619,154 shares of common stock at the initial conversion rate of approximately $9.77 per share (exclusive of any additional shares of common stock that we may elect to issue in lieu of paying cash dividends on the Series D Preferred Stock). Shares of common stock issued upon conversion of Series D or Series E Preferred Stock may be resold from time-to-time by a holder in accordance with Rule 144 under the Securities Act.

As of March 31, 2018, there was an aggregate principal amount of $3,049,651 of outstanding convertible debt, which, subject to certain limitations, may be convertible by holders into an aggregate of 2,541,375 shares of common stock.

To the extent that these securities are exercised or converted, or we issue additional common shares, dilution to stockholders will occur. In addition, the terms upon which we will be able to obtain additional equity capital may be adversely affected since the holders of these securities can be expected to exercise or convert them at a time when we could expect to be able to obtain needed capital on terms more favorable to us than the exercise and conversion terms provided by those securities. Further, in the event the conversion price of outstanding convertible debentures or shares of convertible preferred stock is lower than the actual trading price on the day of conversion, the holders could immediately sell their converted common shares, which would have a dilutive effect on the value of the outstanding common shares. The significant downward pressure on the trading price of common stock as preferred stock or debentures holders converted these securities and sell the common shares received on conversion could encourage short sales by the holders of preferred stock or other security holders. This would place further downward pressure on the trading price of common stock. Even the mere perception of eventual sales of common shares issued on the conversion of the shares of preferred stock or debentures could lead to a decline in the trading price of common stock.

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U.S. federal income tax reform could adversely affect us.

On December 22, 2017, the president signed into law the statute originally named the "Tax Cuts and Jobs Act" (the "2017 Tax Act") which enacts a broad range of changes to the U.S. Internal Revenue Code. The 2017 Tax Act, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and net operating losses, allows for the expensing of certain capital expenditures, and puts into effect a number of changes impacting operations outside of the United States. For the quarter ended March 31, 2018, our net deferred tax asset was valued at the newly enacted corporate rate and was reduced from approximately $11,848,000 at June 30, 2017 to $7,357,000 at March 31, 2018. The revaluation of our deferred tax assets and U.S. federal net operating losses is expected to result in additional charges to the Company's results of operations, which may be material. The Company will continue to assess the impact of the new tax legislation on its net deferred tax assets and liabilities and will continue to examine the impact this tax legislation may have on our business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

a) Sales of Unregistered Securities

Except as previously disclosed in reports filed with the SEC pursuant to the Securities and Exchange Act of 1934, as amended, and as described elsewhere in this Quarterly Report on Form 10-Q, we did not sell unregistered securities during the quarter ended March 31, 2018.

b) Not applicable

c) Repurchase of Equity Securities

We did not repurchase any of our equity securities during the nine months ended March 31, 2018.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 As of March 31, 2018, we had two classes of preferred stock outstanding, the Series D convertible preferred stock and the Series E convertible preferred stock. The Series E preferred stock bears a 5% dividend per annum, payable semi-annually in cash. As of the filing date of this Quarterly Report on Form 10-Q, there was approximately $39,000 of accrued dividends on the Series E Preferred Stock. The Series D preferred stock bears a 5% dividend per annum, payable semi-annually in cash, or shares of common stock, at the Company's option. As of the filing date of this Quarterly Report on Form 10-Q, the aggregate amount of the cumulative dividends on the Series D preferred stock which remain unpaid was approximately $863,000.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

            On January 4, 2018, the Company entered into a Consulting Agreement with Dr. Armando Moncada, M.D. ("Moncada" or the "Consultant") pursuant to which the Company engaged Moncada to act as its Chief Medical Officer - Pathology and to provide certain consulting services in connection with the operation of the Company's pathology laboratory, as specified in the Consulting Agreement.  The Company paid Moncada $40,000 at the execution of the agreement and $25,000 for February 2018, which was Moncada's monthly pay according to the Consulting Agreement.  In addition, pursuant to the Consulting Agreement, Moncada had agreed to transfer and assign to the Company, in his personal capacity as well as in his capacity as a controlling member and/or officer of PCG Molecular, LLC and Pathology Consultants of Georgia, Inc., all right to the intellectual property of such entities.  The completion of the transaction to acquire the foregoing intellectual property rights was subject to the negotiation and execution of definitive assignment agreement and other customary closing conditions.  The Company and Moncada were not able to reach a final agreement on the acquisition terms of intellectual property rights and the Consulting Agreement was therefore terminated on February 21, 2018. 

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ITEM 6. EXHIBITS.

Exhibit Number	Description
3.1	Certificate of Amendment of Certificate of Incorporation filed January 31, 2018 (filed as Exhibit 3.1 to Current Report on Form 8-K, filed February 1, 2018).
4.1	Form of New Senior Note (filed as Exhibit 4.1 to Current Report on Form 8-K, filed March 28, 2018).
10.1	Form of Note Exchange Agreement (filed as Exhibit 10.1 to Current Report on Form 8-K, filed March 28, 2018).
10.2	Form of Consent and Amendment Agreement (filed as Exhibit 10.2 to Current Report on Form 8-K, filed March 28, 2018).
10.3	Form of Amendment to Amended and Restated Security Agreement (filed as Exhibit 10.3 to Current Report on Form 8-K, filed March 28, 2018)
10.4	Form of Restricted Stock Unit Award granted March 31, 2018 (#)(*)
31.1	Certification Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*)
32.1	Section 1350 Certification of Chief Executive Officer (*)
32.2	Section 1350 Certification of Chief Financial Officer (*)
101.INS	XBRL Instance Document (*)
101.SCH	XBRL Taxonomy Extension Schema (*)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase (*)
101.DEF	XBRL Taxonomy Extension Definition Linkbase (*)
101.LAB	XBRL Taxonomy Extension Label Linkbase (*)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase (*)

(*) Filed herewith.

(#) A management contract of compensation plan or arrangement is indicated by the symbol (#).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AEON GLOBAL HEALTH CORP.
By:	/s/ Hanif A. Roshan
	Hanif A. Roshan
	Chief Executive Officer
By:	/s/ Michael J. Poelking
	Michael J. Poelking
	Chief Financial Officer

Dated: May 8, 2018

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EX-10.4

Exhibit 10.4

AEON GLOBAL HEALTH CORP.

NOTICE OF GRANT OF RESTRICTED STOCK UNITS 

The Participant has been granted an award of Restricted Stock Units (the “Award”) pursuant to the Aeon Global Health Corp. 2011 Omnibus Equity Incentive Plan (the “Plan”), each of which represents the right to receive on the Settlement Date (described below) one (1) share of common stock of Aeon Global Health Corp., par value $0.001 per share, as follows:

Participant:	________________
Grant Date:	March 31, 2018
Number of Restricted Stock Units:	______________, subject to adjustment as provided by the Restricted Stock Unit Agreement.
Settlement Date:	For each Restricted Stock Unit (the “RSU”), except as otherwise provided by the Restricted Stock Unit Agreement, the date on which the units become Vested Units in accordance with the vesting schedule set forth below and the provisions of the Restricted Stock Unit Agreement.
Vesting Schedule:	Except as set forth in the Restricted Stock Unit Agreement annexed hereto, provided that the Participant’s Services have not terminated prior to the Vesting Date (as defined below), one hundred percent (100%) of the RSUs shall vest as follows:
	Vesting Date(s)	Number of Shares that Vest
	March 31, 2019

By its signature below, the Participant agrees that the Award is governed by this Notice of Grant of Restricted Stock Units and by the provisions of the Plan and the Restricted Stock Unit Agreement, both of which are made a part of this document. The Participant represents that the Participant has read and is familiar with the provisions of the Plan and Restricted Stock Unit Agreement, and hereby accepts the Award subject to all of their respective terms and conditions. By its signature below, the Participant also acknowledges that there may be tax consequences to it upon the vesting of the RSU, the settlement of the RSU, and/or the disposition of the underlying shares, and that the Participant has been advised to consult a tax advisor prior to acceptance of this grant.

AEON GLOBAL HEALTH CORP.	PARTICIPANT:
By: ______________________________	_________________________________
Name: Michael J. Poelking Title:  Chief Financial Officer	Signature Date: _______________, 2018
ATTACHMENTS:	2011 Omnibus Equity Incentive Plan Restricted Stock Unit Agreement

AEON GLOBAL HEALTH CORP.

RESTRICTED STOCK UNIT AGREEMENT

Aeon Global Health Corp. has granted to the Participant named in the Notice of Grant of Restricted Stock Units (the “Grant Notice”) to which this Restricted Stock Unit Agreement (this “Agreement”) is attached an Award consisting of Restricted Stock Units (the “Units”) subject to the terms and conditions set forth in the Grant Notice and this Agreement. The Award has been granted pursuant to and shall in all respects be subject to the terms and conditions of the Aeon Global Health Corp. 2011 Omnibus Equity Incentive Plan (the “Plan”), as in effect on the Grant Date, the provisions of which are incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges receipt of and represents that the Participant has read and is familiar with the Grant Notice, this Agreement, the Plan and a prospectus for the Plan prepared in connection with the registration with the Securities and Exchange Commission of the shares issuable pursuant to the Award (the “Plan Prospectus”) and (b) accepts the Award subject to all of the terms and conditions of the Grant Notice, this Agreement and the Plan.

1. Definitions and Construction.

1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned in the Grant Notice or the Plan. The term “Company” shall mean Aeon Global Health Corp., a Delaware corporation, and any successor company (or a subsidiary or parent thereof), including any Acquiror (as defined in Section 8).

1.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

2. Administration.

All questions of interpretation concerning the Grant Notice, this Agreement and the Plan shall be determined by the Management Resources and Compensation Committee of the Board of Directors of the Aeon Global Health Corp. (the “Committee”). All determinations by the Committee shall be final and binding upon all persons having an interest in the Award as provided by the Plan. Any officer of the Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided such officer has apparent authority with respect to such matter, right, obligation, or election.

3. The Award.

3.1 Grant of Units. On the Grant Date, the Participant shall acquire, subject to the provisions of this Agreement, the Number of Restricted Stock Units set forth in the Grant Notice, subject to adjustment as provided in Section 9. Each Unit represents a right to receive one (1) share of Common Stock of the Company (the “Shares”) on the date determined in accordance with the Grant Notice and this Agreement, provided the vesting conditions of the Award are satisfied.

By accepting this Award, the Participant hereby agrees that the Award has been granted to the Participant in lieu of his receipt of cash salary for the period commencing on February 24, 2018 and ending March 31, 2018 (the “Covered Period”), based on the per annum salary received by the Participant received immediately prior to the Covered Period. Accordingly, Participant hereby agrees that his acceptance of this Award is in consideration of his right to receive cash payment of the base salary for the Covered Period and Participant hereby waives any right or entitlement to such amount.

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3.2 No Monetary Payment Required. The Participant is not required to make any monetary payment (other than applicable tax withholding, if any) as a condition to receiving the Units or Shares issued upon settlement of the Units, the consideration for which shall be past services actually rendered and/or future services to be rendered to the Company or for its benefit. Notwithstanding the foregoing, if required by applicable state corporate law, the Participant shall furnish consideration in the form of cash or past services rendered to the Company or for its benefit having a value not less than the par value of the Shares issued upon settlement of the Units.

4. Vesting of Units.

4.1     The Units shall vest and become “Vested Units” as provided in Vesting Schedule in the Grant Notice provided you remain continuously employed by the Company or its subsidiaries through the Vesting Date, except as otherwise set forth in this Agreement or expressly provided for in a separate written agreement between the Company and the Participant. All vested amounts shall be paid by the Company in Shares, on a one-for-one basis for each Unit, subject to applicable tax withholding, as soon as administratively feasible but in any event no later than (i) the end of the year in which the vesting date occurs, or (ii) 75 days after the vesting date. Except as set forth in Section 4.2 below or unless otherwise set forth in a written agreement between the Company and the Participant, upon any termination of your Service with the Company, the Units granted to you hereunder that were not vested on the date of such termination of continuous Service will be forfeited at no cost to the Company, and you will have no further right, title or interest in the Units or the Shares to be issued in respect of the Award. Notwithstanding the foregoing, however, in the event that a written agreement between the Company and Participant provides for the vesting of the Units upon the termination of the Participant’s Service with the Company, the Vested Units shall be delivered to the Participant as soon as administratively feasible following the termination of the Participant’s Service with the Company in accordance with the terms and conditions of such written agreement between the Company and the Participant and otherwise in accordance with the provisions of this Agreement.

4.2     Notwithstanding the foregoing, however, and except as may be expressly provided in a written agreement between Participant and Company, in the event that, prior to the Vesting Date, the Participant dies or his or her continuous Service is terminated due to Disability, the Participant shall vest in a number of Units equal to the Pro-Rata Portion (as defined below) of the total number of unvested Units represented by this Award (as set forth in the Grant Notice) which are outstanding at the time of such termination of Service. For purposes of this Agreement, the term “Pro-Rata Portion” means, with respect to the total number of Units represented by this Award (as set forth in the Grant Notice), a fraction, the numerator of which is the number of full months completed between the Date of Grant and the date of such termination of Service, and the denominator of which is the total number of months between the Date of Grant and the Vesting Date applicable to this Award. The Company shall issue and deliver to Participant shares of Common Stock in accordance with Section 4.1 and Section 6 of this Agreement. For purposes of this Agreement, “Disability” means the Participant’s becoming disabled within the meaning of Section 22(e)(3) of the Code or, if applicable, a written employment agreement between the Participant and the Company. The Committee may require such proof of Disability as the Committee in its sole and absolute discretion deems appropriate.

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5. Forfeiture.

5.1     The period over which the Units vest is referred to as the “Restriction Period.” Until the issuance to the Participant of a certificate or certificates for shares of Common Stock subject to the Award, such Shares are not transferable other than by will or by the laws of descent and distribution, or as otherwise permitted by the Plan, and the Units shall not be subject to any levy of any attachment, execution or similar process upon the rights or interest. In the event of any attempt by the Participant to alienate, assign, pledge, hypothecate or otherwise dispose of any Units or any right hereunder, except as provided for in this Agreement, the Company may terminate any unvested portion of the award by notice to the Participant and the award and all rights hereunder shall thereupon become null and void. Except to the extent otherwise provided herein or in an agreement between the Company and the Participant, in the event that the Participant’s Service terminates for any reason or no reason, with or without cause, the Participant shall forfeit and the Company shall automatically reacquire all Units which are not, as of the time of such termination, Vested Units (“Unvested Units”), and the Participant shall not be entitled to any payment for such reacquired Units.

5.2     Clawback Provision. Notwithstanding any other provisions in this Agreement to the contrary, any compensation paid or payable to the Participant pursuant to this Agreement which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

6. Settlement of the Award.

6.1 Issuance of Shares. Subject to the provisions of Section 4 and 6.3 below, as soon as practicable after each applicable Vesting Date, the Company shall issue to the Participant one share of Common Stock for each Unit vesting on the Vesting Date. The date of any such transfer shall be the settlement date for purposes of this Agreement. Shares issued in settlement of the Units shall be made as promptly as practicable thereafter in accordance with Section 4 through, in the sole discretion of the Committee, either the issuance to the Participant (or to the executors or administrators of Participant’s estate in the event of the Participant’s death) of a stock certificate or evidence such Shares have been registered in book entry form in the name of the Participant with the Company’s stock transfer agent for a number of Shares equal to the number of such vested Units. Shares issued in settlement of the Units shall not be subject to any restriction on transfer other than any such restriction as may be required pursuant to Section 6.3, Section 7, the Company’s insider trading policies, any federal, state or foreign law, or any contractual obligation to which the Participant is subject (such as a “lock-up” or “market stand-off” agreement).

6.2 Fractional Shares. The Company shall not be required to issue fractional Shares upon the settlement of the Units and the Committee shall, in its discretion, determine an equivalent benefit for any fractional shares or fractional shares that might be created upon the settlement of the Units.

6.3 Restrictions on Grant of the Award and Issuance of Shares. The grant of the Award and issuance of Shares upon settlement of the Units shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. If the issuance of Shares upon settlement of the Units would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Shares may then be listed, then no such Shares may be issued unless and until all such laws, regulations and stock exchange requirements have been satisfied in full. As a condition to the settlement of the Award, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

4

7. Tax Consequences.

7.1 In General. The Participant acknowledges that the Company has not advised the Participant regarding the Participant’s income tax liability in connection with the grant or vesting of the Units and the delivery of Shares in connection therewith. The Participant has reviewed with the Participant’s own tax advisors the federal, state, and local and tax consequences of the grant and vesting of the Units and the delivery of Shares in connection therewith as contemplated by this Award. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (and not the Company) shall be responsible for the Participant’s own tax liability that may arise as a result of the transactions contemplated by this Award.

7.2 Payment of Tax Withholding. Regardless of any action the Company takes with respect to any or all federal, state, or local income tax, social insurance, payroll tax, payment on account or other tax-related withholding regarding the Award (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the vesting or payment of the Award, the subsequent sale of Shares acquired pursuant to the payment of Shares under the Award and the receipt of any dividends; and (ii) does not commit to structure the terms of the Award to reduce or eliminate your liability for Tax-Related Items. You hereby authorize the Company to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company, or from payment otherwise owed to you under this Award. Alternatively, or in addition, if permissible under local law and expressly authorized by the Committee, the Company may (i) sell or arrange for the sale of Shares that you acquire to meet the withholding obligation for Tax-Related Items, and/or (ii) withhold Shares, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum withholding amount (based on the fair market value, as determined by the Company as of the date on which the tax withholding obligations arise, not in excess of the amount of such tax withholding obligations determined by the applicable minimum statutory withholding rates). Finally, you shall pay to the Company any amount of Tax-Related Items that the Company may be required to withhold as a result of your participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to deliver any Shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section.

7.3 Application of Section 409A of the Code. This Award is intended to comply with section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and shall in all respects be administered in accordance with section 409A of the Code. In no event shall the Participant, directly or indirectly, designate the calendar year of distribution. The terms “cease to be employed” or “termination of employment,” or words of similar import, as used herein, for purposes of any payments that are payments of deferred compensation subject to Section 409A of the Code, shall mean “separation from service” as defined in Section 409A of the Code. To the extent any payment or settlement that is a payment of deferred compensation subject to Section 409A of the Code is contingent upon a “change in control,” such payment or settlement shall only occur if the event giving rise to the change in control would also constitute a change in ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, within the meaning of Section 409A of the Code. The vesting of the Award shall not be affected by the preceding sentence. In the event that this Award fails to satisfy the requirements of Section 409A of the Code (and the applicable Treasury regulations promulgated thereunder) and is otherwise not exempt from, and therefore deemed to be deferred compensation subject to, Section 409A of the Code, and if you are a “specified employee” (within the meaning set forth Section 409A(a)(2)(B)(i) of the Code) as of the date of your separation from service (within the meaning of Treasury Regulation Section 1.409A-1(h)), then the issuance of any Shares that would otherwise be made upon the date of the separation from service or within the first six months thereafter will not be made on the originally scheduled dates and will instead be issued in a lump sum on the date that is six months and one day after the date of the separation from service (or, if earlier, within 15 days after your death), with the balance of the shares issued thereafter in accordance with the original vesting and issuance schedule set forth above, but if and only if such delay in the issuance of the shares is necessary to avoid the imposition of taxation on you in respect of the shares under Section 409A of the Code. This Award may be amended without the consent of the Participant in any respect deemed in good-faith by the Board of Directors or the Committee to be necessary in order to preserve compliance with section 409A of the Code.

5

8. Effect of Change in Control on Award.

In the event of a Change in Control prior to any applicable Vesting Date, the surviving, continuing, successor, or purchasing corporation or other business entity or subsidiary or parent thereof, as the case may be (the “Acquiror”), may, without the consent of the Participant, assume or continue the Company’s rights and obligations with respect to all or any portion of the outstanding Units or substitute for all or any portion of the outstanding Units substantially equivalent rights with respect to the Acquiror’s stock.

9. Adjustments for Changes in Capital Structure.

Subject to any required action by the stockholders of the Company and the requirements of Section 409A of the Code to the extent applicable, in the event of any change in the Shares effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of Shares, exchange of Shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Shares (excepting normal cash dividends) that has a material effect on the Fair Market Value of Shares, appropriate and proportionate adjustments shall be made in the number of Units subject to the Award and/or the number and kind of shares to be issued in settlement of the Units, in order to prevent dilution or enlargement of the Participant’s rights under the Award. Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number. Such adjustments shall be determined by the Committee as contemplated in Section 12.2 of the Plan, and its determination shall be final, binding and conclusive.

10. Rights as a Stockholder or Employee.

The Participant shall have no rights as a stockholder with respect to any Shares which may be issued in settlement of the Units until the date of the issuance of such Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such certificate is issued, except as provided in Section 9 and you shall receive no benefit with respect to any cash dividend, stock dividend or other distribution that does not result from an adjustment as provided in Section 9. If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between the Company and the Participant, the Participant’s employment is “at will” and is for no specified term. Nothing in this Agreement shall confer upon the Participant any right to continue providing Services or interfere in any way with any right of the Company to terminate the Participant’s Services at any time. The right of the Company to terminate at will the Participant’s Service at any time for any reason is specifically reserved.

6

11. Legends.

The Company may at any time determine to issue certificates representing the Shares issued pursuant to this Agreement rather than issue uncertificated Shares and the Company may at any time place legends referencing any applicable restrictions under federal, state or foreign securities law or required under any contractual obligations (as contemplated under Section 6.1) on all certificates representing Shares issued pursuant to this Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing Shares acquired pursuant to settlement of the Units in the possession of the Participant in order to carry out the provisions of this Section.

12. Miscellaneous Provisions.

12.1 Termination or Amendment. The Committee may terminate or amend the Plan or this Agreement at any time; provided, however, that no such termination or amendment may adversely affect the Participant’s rights under this Agreement without the consent of the Participant unless such termination or amendment is necessary to comply with applicable law or government regulation, including, but not limited to, Section 409A of the Code. No amendment or addition to this Agreement shall be effective unless in writing.

12.2 Nontransferability of the Award. Prior to the issuance of Shares on the applicable Settlement Date, neither the Award nor any Units subject to the Award shall be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution. All rights with respect to the Award shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.

12.3 Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement.

12.4 Binding Effect. This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

12.5 Delivery of Documents and Notices. Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided by the Participant to the Company, or upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the address shown below that party’s signature to the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.

7

The Plan documents may be delivered to the Participant electronically. Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the Internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company. The Participant acknowledges that the Participant has read this section and consents to the electronic delivery of the Plan documents and Grant Notice. The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company in writing. The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails. The Participant may revoke his or her consent to the electronic delivery of documents or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company in writing of such revoked consent or revised e-mail address. Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents.

12.6 Data Privacy. The Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described in this Section. The Company holds certain personal information about the Participant, including the Participant’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all options or any other entitlement to Shares awarded, canceled, purchased, vested, unvested or outstanding in the Participant’s favor, for the purpose of managing and administering the Plan (“Data”). The Company and its related entities may transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of the Participant’s participation in the Plan, and the Company and its related entities may each further transfer Data to any third parties assisting the Company or any such related entity in the implementation, administration and management of the Plan. The Participant acknowledges that the transferors and transferees of such Data may be located anywhere in the world and hereby authorizes each of them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan, including any transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on the Participant’s behalf to a broker or to other third party with whom the Participant may elect to deposit any Shares acquired under the Plan (whether pursuant to the Award or otherwise).

12.7 Integrated Agreement. The Grant Notice, this Agreement and the Plan, together with any employment, service or other agreement between the Participant and the Company referring to the Award, shall constitute the entire understanding and agreement of the Participant and the Company with respect to the subject matter contained herein or therein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Company with respect to such subject matter other than those as set forth or provided for herein or therein. To the extent contemplated herein or therein, the provisions of the Grant Notice, this Agreement and the Plan shall survive any settlement of the Award and shall remain in full force and effect.

12.8 Applicable Law. This Agreement shall be governed by the laws of the State of Delaware as such laws are applied to agreements between Delaware residents entered into and to be performed entirely within the State of Delaware.

12.9 Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.

12.10 Counterparts. The Grant Notice to which this Agreement is attached may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages transmitted by facsimile, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

8

12.11 Limitation on Rights; No Right to Future Grants. By accepting this Agreement and the grant of the Units contemplated hereunder, the Participant expressly acknowledges that (a) the Plan is discretionary in nature and may be suspended or terminated by the Corporation at any time; (b) the grant of Units is a one-time benefit that does not create any contractual or other right to receive future grants of restricted units, or benefits in lieu of restricted units; (c) all determinations with respect to future grants of restricted units, if any, including the grant date, the number of Shares granted and the restricted period, will be at the sole discretion of the Corporation; (d) the Participant’s participation in the Plan is voluntary; (e) grants of restricted units are not part of normal or expected compensation for any purpose and are not to be used for calculating any severance, resignation, redundancy, end of service payments, bonuses, retirement benefits or similar payments; and (f) the future value of the underlying Shares is unknown and cannot be predicted with certainty.

*        *        *

This Restricted Stock Unit Agreement will be deemed to be signed by you upon the signing by you of the Restricted Stock Unit Grant Notice to which it is attached.

9

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Hanif A. Roshan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AEON Global Health Corp.;

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 present in this report;

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

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

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

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

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s 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 officers and I have disclosed, based on out 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 on 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.

Dated: May 8, 2018	/s/ Hanif A. Roshan
	Hanif A. Roshan Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

I, Michael J. Poelking, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AEON Global Health Corp.;

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

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

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-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 know 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, as of the end of the period covered by this report based on such evaluations; and

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

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

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

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

Date: May 8, 2018	/s/ Michael J. Poelking
	Michael J. Poelking Chief Financial Officer and Treasurer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of AEON Global Health Corp. (the “Company”) for the quarterly period ended March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Hanif A. Roshan, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13 (a) or 15(d) of the Securities Act of 1934; and

(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 8, 2018

/s/ Hanif A. Roshan

Hanif A. Roshan

Chief Executive Officer

(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of AEON Global Health Corp. (the “Company”) for the quarterly period ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Poelking, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section (13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:   May 8, 2018

/s/ Michael J. Poelking

Michael J. Poelking

Chief Financial Officer and Treasurer

(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	9 Months Ended
	Mar. 31, 2018	Apr. 30, 2018
Document Information [Line Items]
Entity Registrant Name	Aeon Global Health Corp.
Entity Central Index Key	0000885074
Trading Symbol	aghc
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		7,249,370
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Mar. 31, 2018	Jun. 30, 2017
Current assets
Cash and cash equivalents	$ 469,727	$ 1,121,763
Restricted cash		120,695
Accounts receivable, net	2,665,907	1,020,988
Inventory, net	396,477	347,750
Prepaid expenses and other current assets	92,794	58,711
Total current assets	3,624,905	2,669,907
Property and equipment, net	1,575,192	2,203,543
Other assets
Security deposits	10,211	10,211
Deferred tax asset	7,357,436	11,848,017
Total assets	12,567,744	16,731,678
Current liabilities
Accounts payable	1,360,633	2,177,722
Accrued expenses	2,144,413	2,168,090
Accrued commissions	602,857	427,627
Accrued dividends	902,076	644,979
Deferred rent	184,808	141,833
Related party notes payable and related party accrued interest	3,171,660	2,545,199
Derivative liabilities	1,471,018	551,040
Total current liabilities	9,837,465	8,656,490
Deferred rent	112,500	45,000
Total liabilities	9,949,965	8,701,490
Commitments and contingencies
Shareholders’ equity
Preferred stock, $.10 par value; 5,000,000 shares authorized, Series D, 605,000 shares and Series E 25,000 shares issued and outstanding at March 31, 2018 , and June 30, 2017, respectively	63,000	63,000
Common stock, $.001 par value; 190,000,000 shares authorized, 7,249,370 shares issued and outstanding on March 31, 2018, and June 30, 2017 , respectively	25,579	8,938
Additional paid-in capital	44,958,427	44,307,479
(Accumulated deficit)	(4,229,227)	(36,349,229)
Total shareholders’ equity	2,617,779	8,030,188
Total liabilities and shareholders’ equity	$ 12,567,744	$ 16,731,678

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2018	Jun. 30, 2017
Preferred stock, par value (in dollars per share)	$ 0.10	$ 0.10
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	190,000,000	190,000,000
Common stock, shares issued (in shares)	7,249,370	7,249,370
Common stock, shares outstanding (in shares)	7,249,370	7,249,370
Series D Convertible Preferred Stock [Member]
Preferred stock, shares issued (in shares)	605,000	605,000
Preferred stock, shares outstanding (in shares)	605,000	605,000
Series E Convertible Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 30	$ 30
Preferred stock, shares issued (in shares)	25,000	25,000
Preferred stock, shares outstanding (in shares)	25,000	25,000

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Net revenues
Net revenues	$ 4,055,579	$ 5,531,810	$ 12,944,853	$ 16,468,699
Operating expenses
Cost of revenues	958,113	897,590	2,975,231	2,855,754
Write down of inventory			0	237,674
Selling, general and administrative	3,221,658	3,748,403	9,426,754	11,624,267
Depreciation and amortization	204,931	393,510	628,351	1,196,435
Total operating expenses	4,384,702	5,039,503	13,030,336	15,914,130
Operating income (loss)	(329,123)	492,307	(85,483)	554,569
Other income (expense)
Interest	(44,614)	(73,017)	(108,976)	(443,785)
Change in fair value of derivative liabilities	(1,285,842)	256,806	(919,978)	392,407
Loss on extinguishment of debt	(247,539)	(258,037)		(258,037)
Other	(49,831)		(212,125)
Total other (expense) income	(1,380,287)	(74,248)	(1,241,079)	(309,415)
Income (loss) before provision for income taxes	(1,709,410)	418,059	(1,326,562)	245,154
Provision for income taxes	(3,102)		(4,496,341)
Net income (loss)	(1,686,242)	418,059	(5,796,633)	245,154
Less: preferred dividends	(85,699)	(74,863)	(257,095)	(276,111)
Net income (loss) available to common shareholders	$ (1,771,941)	$ 343,196	$ (6,052,581)	$ (30,957)
Income (loss) per share:
Basic income (loss) per common share (in dollars per share)	$ (0.25)	$ 0.05	$ (0.83)	$ 0
Diluted income (loss) per common share (in dollars per share)	$ (0.25)	$ 0.04	$ (0.83)	$ 0
Weighted average number of common shares outstanding:
Basic (in shares)	7,249,370	7,168,329	7,249,370	6,312,344
Diluted (in shares)	7,249,370	8,765,657	7,249,370	6,312,344
Fees for Service [Member]
Net revenues
Net revenues	$ 3,811,444	$ 5,212,634	$ 12,199,868	$ 15,469,366
Hosted Software Service [Member]
Net revenues
Net revenues	239,535	314,812	731,085	973,417
Telehealth Product and Service [Member]
Net revenues
Net revenues	$ 4,600	$ 4,364	$ 13,900	$ 25,916

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities
Net (loss) earnings	$ (5,796,633)	$ 245,154
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Impairment of deferred tax asset	4,490,581
Change in fair value of derivative liabilities	919,978	(392,407)
Write down of inventory	0	237,674
Loss on debt extinguishment		258,037
Depreciation and amortization	628,351	1,196,435
Share based compensation	650,948	186,753
Changes in assets and liabilities
Restricted cash	120,695
Accounts receivable	(1,644,919)	410,655
Inventory	(48,727)	(294,378)
Prepaid expenses and other current assets	(34,083)	46,011
Accounts payable	(559,992)	(1,454,907)
Accrued expenses	(25,170)	(59,229)
Accrued commissions	175,230	182,054
Deferred rent	(2,025)	8,629
Net cash provided by (used in) operating activities	(1,152,036)	570,481
Cash flows from investing activities
Purchases of property and equipment		(22,103)
Net cash (used in) investing activities		(22,103)
Cash flows from financing activities
Proceeds from note payable - related party	500,000	250,000
Repayments of notes payable		(1,057,811)
Net cash provided by (used in) financing activities	500,000	(807,811)
Net decrease in cash	(652,036)	(259,433)
Cash beginning of period	1,121,763	1,414,706
Cash end of period	469,727	1,155,273
Supplemental disclosure of cash paid for:
Interest paid
Income taxes paid	108,998
Non-cash investing and financing activities
Non-cash preferred dividends	257,097	276,111
Earn-out common dividends paid in stock		5,472,598
Conversion of accrued interest to notes payable	4,452	375,199
Derivative liability resulting from issuance of convertible notes	$ 792,724	$ 328,422

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Note 1 - Description of Business, Reverse Merger and Liquidity

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

1. Description of Business, Reverse Merger and Liquidity

Business

AEON Global Health Corp. ("AGHC" or the "Company") and its subsidiaries primarily provides an array of clinical testing services to health care professionals through its wholly-owned subsidiary, Peachstate Health Management, LLC d/b/a AEON Clinical Laboratories ("AEON"). AGHC also continues to provide its legacy secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to increase revenues, improve productivity, reduce costs, coordinate care for patients and enhance related administrative and clinical workflows and compliance with regulatory requirements. Web-based services are delivered as Software as a Service (SaaS) to customers interfacing seamlessly with billing, information and records management systems.

Reverse Merger

On

January 27, 2016,

AEON merged into a newly formed acquisition subsidiary of AGHC (formerly, Authentidate Holding Corp.) pursuant to a definitive Amended and Restated Agreement and Plan of Merger dated

January 26, 2016,

as amended on

May 31, 2016

and

December 15, 2016 (

collectively the "Merger Agreement") (the "AEON Acquisition"). The merger certificate was filed with the Secretary of State of Georgia on

January 27, 2016.

AEON survived the merger as a wholly-owned subsidiary of AGHC (collectively the "Company"). AEON contracts with health care professionals to provide urine and oral fluid testing to patients. The

four

primary tests provided by AEON are Medical Toxicology, Pharmacogenomics, Cancer Genetic Testing and Molecular Biology. Following the completion of the reverse merger, the business conducted by AEON became primarily the business conducted by the Company.

Under accounting principles generally accepted in the United States of America ("U.S. GAAP"), the merger is treated as a "reverse merger" under the purchase method of accounting. The condensed consolidated financial statements reflect the historical results of AEON prior to the completion of the reverse merger since it was determined to be the accounting acquirer, and do

not

include historical results of the Company prior to the completion of the merger.

Going Concern

As of the filing date of this Quarterly Report on Form

10

-Q,there is outstanding an aggregate principal amount of

$3,049,651

of senior secured convertible notes with a maturity date of

March 20, 2019

and a secured note subordinated to the interests of the existing senior lenders in the principal amount of

$180,000

with a maturity date of

June 15, 2018

and is included in accrued expenses on the condensed consolidated balance sheet. We expect existing resources, revenues generated from operations, and proceeds received from other transactions we are considering to satisfy working capital requirements for at least the next

twelve

months; however,

no

assurances can be given, that we will be able to generate sufficient cash flow from operations or complete other transactions to satisfy our other obligations. The accompanying condensed consolidated financial statements do

not

include any adjustments to the recoverability and classification of assets carrying amounts or the amounts and classifications of liabilities that might result from the outcome of these uncertainties. Accordingly, the Company needs to raise additional capital and are exploring potential transactions to improve our capital position. Unless we can increase revenues substantially or generate additional capital from other transactions, our current cash resources will only satisfy our working capital needs for a limited period of time.

The Company's capital requirements have been and will continue to be significant and it is expending significant amounts of capital to develop, promote and market its services. The Company's available cash and cash equivalents as of

March 31, 2018

totaled approximately

$470,000

and the Company's working capital deficit was approximately

$6,217,000.

Nevertheless, our available cash and cash equivalents as of the filing date of this Quarterly Report on Form

10

-Q is approximately

$1,011,000

and our estimated monthly cash requirement is approximately

$1,200,000.

The Company does

not

have a bank line of credit or other fixed source of capital reserves. We are exploring potential transactions to improve our capital position to ensure we can meet our financing and working capital requirements. We would expect to raise additional funds through obtaining a credit facility from an institutional lender or undertaking private debt financings. Raising additional funds by issuing equity or convertible debt securities

may

cause our stockholders to experience substantial dilution in their ownership interests and new investors

may

have rights superior to the rights of our other stockholders. Raising additional funds through debt financing or preferred stock, if available,

may

involve covenants that restrict our business activities and options and such additional securities

may

have powers, designations, preferences or rights senior to our currently outstanding securities. We

may

also enter into financing transactions which involve the granting of liens on our assets or which grant preferences of payment from our revenue streams, all of which could adversely impact our ability to rely on our revenue from operations to support our ongoing operating costs. Alternatively, we

may

seek to obtain new financing from existing security holders, which

may

include reducing the exercise or conversion prices of outstanding securities, or the issuance of additional equity securities. Currently, we do

not

have any definitive agreements with any

third

-parties for such transactions and there can be

no

assurance; however, that we will be successful in raising additional capital or securing financing when needed or on terms satisfactory to the company. If we are unable to raise additional capital when required, or on acceptable terms, we will need to reduce costs and operations substantially or potentially suspend operations, any of which would have a material adverse effect on our business, financial condition and results of operations.

Management has concluded that due to the conditions described above, there is substantial doubt about the entity's ability to continue as a going concern. We have evaluated the significance of the conditions in relation to our ability to meet our obligations and believe that our current cash balance will provide sufficient capital to continue operations through fiscal

2018.

In addition to our efforts to improve our capital position through commercial operations and/or product partnering opportunities, we are considering capital raising alternatives, including credit lines from external financial sources. We cannot assure you that financing will be available on acceptable terms. If we are

not

successful in generating or raising additional capital, we will risk defaulting under the terms of our existing loans. Additionally, if additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities would result in dilution to our existing stockholders. Furthermore, despite our optimism regarding the future of the Company, even if the Company is adequately funded, there is

no

guarantee that any of our services will perform as hoped or that such services can be successfully commercialized.

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Note 2 - Summary of Significant Accounting Policies

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company's condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and following the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim financial statements have been prepared on the same basis as the Company's annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company's financial information. These interim results are

not

necessarily indicative of the results to be expected for the year ending

June 30, 2018

or any other interim period or for any other future year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto for the year ended

June 30, 2017,

included in the Company's

2017

Annual Report on Form

10

-K filed with the SEC.

The balance sheet as of

June 30, 2017

has been derived from audited financial statements at that date but does

not

include all of the information required by U.S. GAAP for complete financial statements.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 The most sensitive accounting estimates affecting the financial statements are revenue recognition, the allowance for doubtful accounts, depreciation of long-lived assets, fair value of intangible assets and goodwill, amortization of intangible assets, income taxes and associated deferrals and valuation allowances, commitments and contingencies and measurement of derivative liabilities.

Accounts Receivable, Net

Accounts receivable represent customer obligations due under normal trade terms, net of allowance for doubtful accounts. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience and other currently available evidence. The allowance for doubtful accounts was approximately

$1,090,000

and

$923,000

as of

March 31, 2018

and

June 30, 2017,

respectively.

Fair Value Measurements

The Company follows ASC

820

-

10,

"Fair Value Measurements and Disclosures"

, of the FASB to measure the fair value of its financial statements and disclosures about fair value of its financial instruments. ASC

820

-

10

establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC

820

-

10

establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into

three

broad levels. The

three

levels of fair value hierarchy defined by ASC

820

-

10

are described below:

Level  1	-	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	-	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	-	Pricing inputs that are generally unobservable input and not corroborated by market data.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lower priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than

one

level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The Company's warrant liabilities and certain conversion features underlying the convertible debt are categorized as Level

3.

Revenue Recognition

The Company provides laboratory testing services, web-based hosted software services, telehealth products and post contract customer support services.

In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC-

605

"Revenue Recognition"

, the Company recognizes revenues when there is a persuasive evidence of an arrangement, title and risk of loss have passed, product is shipped or services have been rendered, sales price is fixed or determinable and collection of the related receivable is reasonably assured. Billings for laboratory testing services are reimbursed by

third

-party payors net of allowances for differences between amounts billed and the cash receipts.

Revenue from laboratory testing services are recognized at the time test results are delivered, net of estimated contractual allowances. Third-party reimbursement revenue is estimated based on cash received over a

12

-month period.

Revenue for hosted software services, telehealth products, and customer support services are recognized when persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed and collectability is reasonably assured. Multiple-element arrangements are assessed to determine whether they can be separated into more than

one

unit of accounting. A multiple-element arrangement is separated into more than

one

unit of accounting if all the following criteria are met: (i) the delivered item has value to the customer on a standalone basis; (ii) there is objective and reliable evidence of the fair value of the undelivered items in the arrangement; (iii) if the arrangement includes a general right of return relative to the delivered items; (iv) and delivery or performance of the undelivered item is considered probable and substantially in the Company's control. If these criteria are

not

met, then revenue is deferred until such criteria are met or until the period over which the last undelivered element is delivered, which is typically the life of the contract agreement. If these criteria are met, we allocate total revenue among the elements based on the sales price of each element when sold separately which is referred to as vendor specific objective evidence or VSOE.

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts which, at times,

may

exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to certain limits. At

March 31, 2018

and

June 30, 2017,

the Company had approximately

$223,000

and

$871,000

in excess of FDIC-insured limits. The Company has

not

experienced any losses in such accounts.

At

March 31, 2018,

one

customer had an accounts receivable balance of approximately

$1,491,000.

This customer had a minimal balance at

June 30, 2017.

This customer’s accounts receivable balance comprises

39%

of gross accounts receivable at

March 31, 2018.

Income Taxes

The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in tax laws or rates. The effect on deferred tax assets and liabilities of a change in tax rates will be recognized as income or expense in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Management considers the likelihood of changes by taxing authorities in its filed income tax returns and recognizes a liability for or discloses potential changes that management believes are more likely than

not

to occur upon examination by tax authorities. Management has

not

identified any uncertain tax positions that require recognition or disclosure in the accompanying consolidated financial statements.

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation.

Recent Accounting Pronouncements

In

May 2014,

the FASB issued Accounting Standards Update ("ASU")

2014

-

09,

"Revenue from Contracts with Customers"

(Topic

606

) ("ASU

2014

-

09"

). This new accounting standard outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. This standard supersedes existing revenue recognition requirements and eliminates most industry specific guidance from GAAP. The core principle of the revenue recognition standard is to require an entity to recognize as revenue the amount that reflects the consideration to which it expects to be entitled in exchange for goods or services as it transfers control to its customers. As a result of this standard, the amounts

not

reimbursed will now be considered an implicit price concession in determining net revenue as opposed to recording as bad debt expense or another selling, general or administrative expense. Accordingly, the Company will report uncollectible balances associated with customer responsibility as a reduction of the transaction price and a reduction in net revenues. In addition, the adoption of this new accounting standard will result in increased disclosure, including qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company expects to adopt this ASU effective

July 1, 2018.

In

August 2014,

the FASB issued ASU

No.

2014

-

15,

"Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern".

The amendments in this update state that regarding preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or within

one

year after the date that the financial statements are available to be issued, when applicable). The amendments in this update are effective for the annual reporting period beginning after

December 15, 2016

and for annual periods and interim periods thereafter. Early application is permitted. The Company has adopted ASU

2014

-

15

and has made the necessary disclosures in the "Going Concern" sections of this Quarterly Report on Form

10

-Q.

In

July 2015,

the FASB issued ASU

2015

-

11,

"Inventory

(

Topic

330

):

Simplifying the Measurement of Inventory"

. ASU

2015

-

11

requires inventory measured using any method other than last-in,

first

-out ("LIFO") or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Under this ASU, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASU

2015

-

11

is effective prospectively for fiscal years, and for interim periods within those years, beginning after

December 15, 2016.

Early application is permitted. The Company has determined that the ASU has

no

material impact on its consolidated financial statements and related disclosures since it does

not

sell inventory on a stand-alone basis at net realizable value.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

"Leases"

, which establish a right-of-use (ROU) model that requires a lessee to record an ROU asset and lease liability on the balance sheet for all leases with terms longer than

12

months. Leases will be classified as either finance or operating, with classifications affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early adoption is permitted. ASU

2016

-

02

requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the effect of adoption of this ASU on

July 1, 2019.

In

March 2016,

the FASB issued ASU

No.

2016

-

09,

"Compensation-Stock Compensation (Topic

718

): Improvements to Employee Share-Based Payment Accounting"

, which makes several modifications to the accounting for employee share-based payment transactions, including the requirement to recognize the income tax effects of awards that vest or settle as income tax expense. This guidance also clarifies the presentation of certain components of share-based awards in the statement of cash flows. This guidance is effective for annual reporting periods beginning after

December 15, 2016,

and interim periods within those annual periods, and early adoption is permitted. The Company has adopted this standard with

no

material impact on the financial statements.

In

August 2016,

the FASB issued ASU

No.

2016

-

15,

"Statement of Cash Flows

(Topic

230

): Classification of Certain Cash Receipts and Cash Payments,"

which clarifies how certain cash receipts and payments are to be presented in the statement of cash flows. The guidance is effective for the Company on

July 1, 2018

and early adoption is permitted. The Company is currently evaluating the effect of adoption of this ASU on

July 1, 2018.

In

November 2016,

the FASB issued an ASU

2016

-

18,

"Restricted Cash"

, which clarifies the presentation and classification of restricted cash in the statement of cash flows. The ASU requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU is effective for the Company in the

first

quarter of fiscal

2019

(July

1,

2018

) with early adoption permitted and must be applied retrospectively to all periods presented. The Company is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures with the fiscal year beginning

July 1, 2018.

In

May 2017,

the FASB issued ASU

2017

-

09,

"Compensation-Stock Compensation (Topic

718

): Scope of Modification Accounting",

which amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after

December 15, 2017.

The Company is evaluating the impact of this ASU and expects to adopt this ASU effective

July 1, 2018.

In

July 2017,

the FASB issued ASU

2017

-

11,

"Earnings Per Share (Topic

260

), Distinguishing Liabilities from Equity (Topic

480

) and Derivatives and Hedging (Topic

815

); Part I. Accounting for Certain Financial Instruments with Down Round Features and Part II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception",

which states that when determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature

no

longer precludes equity classification when assessing whether the instrument is indexed to the Company's own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option)

no

longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic

260

to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. The Company is evaluating the provisions of this ASU and plans to adopt this ASU effective

July 1, 2019.

In

December 2017,

the Securities and Exchange Commission issued Staff Accounting Bulletin

No.

118,

which is an application of ASC Topic

740,

Income Taxes

, in the reporting period that includes

December 22, 2017,

the date on which the Tax Cuts and Jobs Act (the "Act") was signed into law. The Act changes existing United States tax law and includes numerous provisions that will affect business. Staff Accounting Bulletin

No.

118

implies that if a reasonable estimate can be made of the Act's effects on the Company's financial statements, the reasonable estimate should be reported in the period ending after

December 22, 2017.

The Company has implemented Staff Accounting Bulletin

No.

118

is this Form

10

-Q ended

March 31, 2018 

by revaluing its deferred tax asset for the lower tax rates.

XML

Note 3 - Restatement and Correction of Error

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Accounting Changes and Error Corrections [Text Block]

  3. Restatement and Correction of Error

As previously reported, the Company has concluded that its results for the quarter ending 

March 31, 2017

included errors resulting in the understatement of inventory and the understatement of certain accruals. The financial statements for the quarter have been restated and were presented in the Company's consolidated financial statements included in its Annual Report on Form

10

-K for the fiscal year ended

June 30, 2017.

Management considered the impact to current and past financial statements under the SEC's authoritative guidance on materiality and determined that the error was material, and a restatement of the prior quarter financial statements was the most appropriate recognition of the adjustment so as

not

to mislead readers of the financial statements. The following sections detail the impact of the error on the previously issued unaudited consolidated financial statements for the prior quarter.

The following adjustments were made to the

March 31, 2017

Restated Statements of Income (Unaudited):

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
	As Originally									As Originally
	Reported						As Restated			Reported						As Restated
	Three Months						Three Months			Nine Months						Nine Months
	Ended						Ended			Ended						Ended
	Mar 31,						Mar 31,			Mar 31,						Mar 31,
	2017			Adj			2017			2017			Adj			2017
Net revenues
Fees for services	$	5,212,634		$	-		$	5,212,634		$	15,469,366		$	-		$	15,469,366
Hosted software services		314,812			-			314,812			973,417			-			973,417
Telehealth services		4,364			-			4,364			25,916			-			25,916
Total net revenues		5,531,810			-			5,531,810			16,468,699			-			16,468,699
Cost of revenues		908,290			(10,700	)		897,590			3,203,504			(347,750	)		2,855,754
Write-down of inventory		-			-			-			237,674						237,674
Selling, general and administrative		3,388,403			360,000			3,748,403			11,264,267			360,000			11,624,267
Depreciation and amortization		393,510			-			393,510			1,196,435			-			1,196,435
Total operating expenses		4,690,203			349,300			5,039,503			15,901,880			12,250			15,914,130
Operating income		841,607			(349,300	)		492,307			566,819			(12,250	)		554,569
Other (expense), net		(74,248	)		-			(74,248	)		(309,415	)		-			(309,415	)
		767,359			(349,300	)		418,059			257,404			(12,250	)		245,154
Income tax provision		-			-			-			-			-			-
Net income	$	767,359		$	(349,300	)	$	418,059		$	257,404		$	(12,250	)	$	245,154
less: preferred dividends	$	(74,863	)	$	-		$	(74,863	)	$	(276,111	)	$	-		$	(276,111	)
Net income (loss) available to common shareholders	$	692,496		$	(349,300	)	$	343,196		$	(18,707	)	$	(12,250	)	$	(30,957	)
Basic loss per common share	$	0.10		$	(0.05	)	$	0.05		$	0.00		$	0.00		$	(0.00	)
Diluted loss per common share	$	0.08		$	(0.04	)	$	0.04		$	0.00		$	0.00		$	(0.00	)

The following adjustments were made to the

March 31, 2017

Restated Statement of Cash Flows (Unaudited):

CONSOLIDATED STATEMENT OF CASH FLOWS

	As Originally
	Reported						As Restated
	Nine Months						Nine Months
	Ended						Ended
	March 31,						March 31,
	2017			Adj			2017
Cash Flows from Operating Activities
Net Income	$	257,404		$	(12,250	)	$	245,154
Adjustments to reconcile net loss to cash provided by operating activities
Write off of inventory		237,674			-			237,674
Loss on debt extinguishment		258,037			-			258,037
Change in fair value of derivative liabilities		(392,407	)		-			(392,407	)
Deferred taxes		-			-			-
Depreciation and amortization		1,196,435			-			1,196,435
Share based compensation		186,753			-			186,753
Deferred rent		-			-			-
Changes in assets and liabilities
Accounts receivable		410,655			-			410,655
Inventory		53,372			(347,750	)		(294,378	)
Prepaid expenses and other current assets		46,011			-			46,011
Accounts payable		(1,454,907	)		-			(1,454,907	)
Accrued expenses		(419,229	)		360,000			(59,229	)
Accrued commissions		182,054			-			182,054
Deferred rent		8,629			-			8,629
Net cash provided by operating activities		570,481			-			570,481
Cash flows from investing activities
Purchases of property and equipment		(22,103	)		-			(22,103	)
Net cash used in investing activities		(22,103	)		-			(22,103	)
Cash flows from financing activities
Proceeds from note payable - related party		250,000			-			-
Repayment of notes payable		(1,057,811	)		-			(1,057,811	)
Net cash used in financing activities		(807,811	)		-			(1,057,811	)
Net decrease in cash and cash equivalents		(259,433	)		-			(259,433	)
Cash and cash equivalents beginning of year		1,414,706			-			1,414,706
Cash and cash equivalents end of year	$	1,155,273		$	-		$	1,155,273

XML

Note 4 - Inventory

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Inventory Disclosure [Text Block]

4. Inventory

Inventory consists of the following:

	March 31,		June 30,
	2018		2017
Laboratory testing supplies	$	396,477	$	347,750
Total inventory	$	396,477	$	347,750

Purchased components of approximately

$31,000

and finished goods of

$207,000

were written down in the

nine

months ended

March 31, 2017

to net realizable value.

No

inventory was written down in the

nine

months ended

March 31, 2018.

XML

Note 5 - Income Taxes

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

5. Income Taxes

The Company's effective tax rate for the

three

and

nine

months ended

March 31, 2018

was (

0.2

)% and (

371.1

)%, respectively. The unusually high tax rate for the

nine

months ended

March 31, 2018

was due to a deferred income tax charge of approximately

$4,491,000,

as explained below. For the

three

and

nine

months ended

March 31, 2018,

the Company calculated income tax expense based upon an annual effective tax rate forecast adjusted for discrete items that specifically relate to the interim period. Changes in tax laws or rates on deferred tax assets and liabilities are recognized as discrete items in the interim period that includes the enactment date. The differences between the effective tax rate and the U.S. federal statutory tax rate of

21

% principally resulted from state and local taxes, graduated federal tax rate reductions, changes in the valuation allowance, non-deductible expenses, and discrete items for the interim period.

On

December 22, 2017,

the U.S. President signed the Tax Cuts and Jobs Act of

2017

(the "Act"). Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic

740,

Income Taxes ("ASC

740"

) requires that the effects of changes in tax laws or tax rates be recognized in the financial statements in the period in which such changes were enacted. During the

nine

months ended

March 31, 2018,

the Company incurred a deferred income tax charge of approximately

$4,491,000

due to the write-down of deferred tax assets related to the reduction of the corporate income tax rate per the Act.

At

March 31, 2018,

the Company had a net deferred tax asset of approximately

$7,357,000.

Management has considered the realizability of the deferred tax assets and has concluded that a valuation allowance of approximately

$31,291,000

should be recorded, related to net operating loss carryforwards that are

not

anticipated to be realized. Management determined that a valuation allowance was required with respect to the remaining net deferred tax assets. Realization of these assets is primarily dependent on achieving the forecast of future taxable income, as well as prudent and feasible tax planning strategies.

XML

Note 6 - Related Party Notes Payable

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Short-term Debt [Text Block]

6. Related Party Notes Payable

	March 31, 2018								June 30, 2017
			Accrued		Total		Interest rate		Note		Interest rate
	Principal		Interest		Outstanding		per annum		Payable		per annum
Secured								Secured
	$	1,056,875	$	1,593	$	1,058,468	5% interest paid annually		$	1,056,875	5% interest paid annually
		641,294		966		642,260	5% interest paid annually			641,294	5% interest paid annually
		255,417		385		255,802	5% interest paid annually			255,417	5% interest paid annually
		591,613		891		592,504	5% interest paid annually			591,613	5% interest paid annually
		504,452		760		505,212	5% interest paid annually
Total	$	3,049,651	$	4,595	$	3,054,246		Total	$	2,545,199

Prior Year Exchange Transaction

On

March 20, 2017,

the Company entered into a note exchange agreement with the holders of an aggregate principal amount of

$2,170,000

of outstanding promissory notes (the "Original Notes"), which were due and payable, pursuant to which the Company agreed to issue the holders of such notes, in consideration of the cancellation of the Original Notes, new promissory notes in the aggregate principal amount of

$2,545,199,

which is equal to the sum of the aggregate principal amount of the Original Notes plus the accrued but unpaid interest on the Original Notes (the "New Senior Notes"). The New Senior Notes were convertible into shares of the Company's common stock at an initial conversion price of

$2.03

per share. Based on the initial conversion prices, the New Senior Notes were convertible into up to

1,253,792

shares of common stock. If the Company issues or sells shares of its common stock, rights to purchase shares of its common stock, or securities convertible into shares of its common stock for a price per share that is less than the conversion price then in effect, such conversion price will be decreased to equal

85%

of such lower price. The foregoing adjustments to the conversion price will

not

apply to certain exempt issuances, including issuances pursuant to certain employee benefit plans. The conversion price is also subject to adjustment upon stock splits, reverse stock splits, and similar capital changes. These conversion options resulted in a derivative liability valued at

$328,422.

All the New Senior Notes have a maturity date of

one

year from the closing date. The New Senior Notes were issued in consideration of the exchange of (i) an aggregate principal amount of

$950,000

of Original Notes convertible at a price of

$2.25

per share, (ii) an aggregate principal amount of

$520,000

of Original Notes convertible at a price of

$3.00

per share, and (iii) an aggregate principal amount of

$700,000

of unconvertible Original Notes.

The New Senior Notes bear interest at the rate of

5%

per annum with interest payable upon maturity, the conversion of the New Senior Notes or on any earlier redemption date.  Beginning

one

month after the Company's common stock is listed for trading on a national securities exchange, and the Company will have the right to redeem all or any portion of the outstanding principal balance of the New Senior Notes, plus all accrued but unpaid interest at a price equal to

110%

of such amount.  The holders of the New Senior Notes shall have the right to convert any or the entire amount to be redeemed into common stock prior to redemption.  Subject to certain exceptions, the New Senior Notes are senior to existing and future indebtedness of the Company and are secured by a

first

priority lien on all the Company’s assets to the extent and as provided in a Security Agreement entered into between the Company and the holders. The New Senior Notes contain customary covenants against incurring additional indebtedness and granting additional liens and contain customary event default.  Upon the occurrence of an event of default under the New Senior Notes, the holders

may

require the Company to repay all or a portion of the note in cash, at a price equal to

110%

of the principal, plus accrued and unpaid interest.

During the year ended

June 30, 2017,

in connection with the exchange of the Original Notes for the New Senior Notes, the Company also agreed with the holder of all outstanding shares of Series B Convertible Preferred Stock (the “Series B Preferred Stock") to exchange all of its outstanding shares of Series B Preferred Stock for shares of a new series of convertible preferred stock designated as Series E Convertible Preferred Stock (the "Series E Preferred Stock").  Accordingly, on

March 20, 2017,

the Company also entered into a separate exchange agreement with the holder of the shares of Series B Preferred Stock, to exchange such shares for a total of

25,000

shares of Series E Preferred Stock.  Each share of Series E Preferred Stock will have a stated value of

$30.00

per share.  Pursuant to this exchange agreement, the holder of the shares of Series B Preferred Stock agreed to waive all unpaid dividends that had accrued on the shares of Series B Preferred Stock.  The shares of Series E Preferred Stock are initially convertible by the holder into an aggregate of

187,500

shares of common stock at the initial conversion rate of

$4.00

per share.  The conversion price of the new preferred stock is subject to adjustment solely in the event of stock dividends, combinations, splits, recapitalizations, and similar corporate events.  The right of holders of Series E Preferred Stock to convert these securities into common stock is subject to a

4.99%

beneficial ownership limitation, which beneficial ownership limitation

may

be increased by a holder to a greater percentage

not

more than

9.99%

after providing notice to the Company.   

Prior Year Loss on Extinguishment of Debt

In accordance with ASC

470

-

50,

"

Debt - Modifications and Extinguishments

", the Company's note exchange agreement was tested to determine whether a debt modification or debt extinguishment had occurred. Based on management's review, debt extinguishment accounting applied. A loss on extinguishment of

$258,037

resulted from the exchange, and was recorded in fiscal year

2017.

The loss consists of the resulting derivative liability of

$328,422

from embedded conversion options in the New Senior Notes and the additional value of

$50,000

of the Series E Preferred Stock compared to the Series B Preferred Stock, offset by the waiving of the unpaid Preferred Series B dividends of

$120,385.

Current Year Exchange Transaction

On

March 27, 2018, 

the Company entered into an agreement with the holders of outstanding senior secured convertible notes to amend certain terms of such notes as described below ("Note Amendment Transaction").  Contemporaneously with the Note Amendment Transaction, the Company entered into an agreement with its Chief Executive Officer, who held a separate promissory note in the aggregate principal amount of

$500,000,

to exchange such note for an additional new senior note (the “Additional Senior Note”) on terms substantially the same as the senior secured convertible notes in the Note Amendment Transaction (the “Note Exchange Transaction").

Note Amendment Transaction

In the Note Amendment Transaction, the holders (the "Senior Holders") of the outstanding principal amount of

$2,545,199

of New Senior Notes entered into a consent and amendment agreement with the Company (the "Consent Agreement"), pursuant to which the New Senior Notes were amended to extend the maturity date for a period of

twelve

months, to

March 20, 2019

and in consideration thereof, the conversion rate of the New Senior Notes was reduced to

$1.20

per share.  Based on the adjusted conversion price, the principal amount of the New Senior Notes will be convertible into up to

2,120,999

shares of common stock.  The other material terms and conditions of the New Senior Notes were

not

amended.  Certain holders of the New Senior Notes are affiliated with the Company as follows: (

1

) an aggregate principal amount of

$255,417

of New Senior Notes are held by Hanif A. Roshan, the Chairman and Chief Executive Officer of the Company and (ii) an aggregate principal amount of

$591,613

of New Senior Notes are held by Optimum Ventures, LLC, a party affiliated by ownership with the former owners of Peachstate Health Management, LLC, our subsidiary.  Due to the adjustment of the conversion price of the New Senior Notes, the exercise price of outstanding warrants to purchase an aggregate of

825,144

shares of common stock has been adjusted from

$2.07

to

$1.22

per share. Unpaid interest on the New Senior Notes as of

March 31, 2018

was approximately

$122,000,

which is

not

incorporated into the principal balance. Accrued interest on the New Senior Note is due on

March 20, 2019

or any earlier payment of the New Senior Notes.

Note Exchange Transaction

In connection with the Note Amendment Transaction, on

March 27, 2018,

the Company entered into a note exchange agreement (the "Note Exchange Agreement") with its chief executive officer, who also held a promissory note in the aggregate principal amount of

$500,000,

pursuant to which the Company agreed to issue to him, in consideration of the cancellation of such note, the Additional Senior Note in the aggregate principal amount of

$504,452,

which is equal to the sum of the aggregate principal amount of the original note plus the accrued but unpaid interest thereon.  The closing of the Note Exchange Transaction occurred on

March 27, 2018.

The Additional Senior Note is the same, in all material respects, as the New Senior Notes described above in the Note Amendment Transaction and is convertible into shares of the Company's Common Stock at an initial conversion price of

$1.20.

  Based on the initial conversion price, the Additional Senior Note is convertible into up to

420,376

shares of common stock.  As the Additional Senior Note is the same in all material respects as the New Senior Notes, the conversion price of the Additional Senior Note

may

be adjusted upon the occurrence of the same events which would result in an adjustment to the conversion price of the New Senior Notes, as described above, including the issuance of securities at a price per share less than the current conversion price.  Similarly, the maturity date, interest rate, events of default, redemption and other terms of the Additional Senior Note are the same as for the New Senior Notes.  The Additional Senior Note is on parity with the New Senior Notes and, subject to certain exceptions, is senior to other existing and future indebtedness of the Company and, together with the New Senior Notes, is secured by a

first

priority lien on all of the Company's assets to the extent and as provided in the Security Agreement as amended.

In accordance with ASC

470

-

50,

"

Debt - Modifications and Extinguishments

", the Company's note exchange agreement was tested to determine whether a debt modification or debt extinguishment had occurred. Based on management's review, debt extinguishment accounting applied.  As a result of the debt exchange, the Company recorded

$247,539

of non-cash expense resulting from the conversion feature of the convertible debt, which was recorded in the current quarter of

2018.

  The loss consisted of the resulting derivative liability from the embedded conversion options in the new notes.  In addition, a valuation loss from embedded conversion options in the New Senior Notes of

$908,728

was recorded during the current quarter.

XML

Note 7 - Equity

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

7. Equity

Preferred Stock

As of

March 31, 2018,

there were

25,000

shares of Series E Convertible Preferred Stock outstanding. The shares of Series E Preferred Stock are initially convertible into an aggregate of

187,500

shares of common stock at the initial conversion rate of

$4.00

per share. The conversion price of the Series E Preferred Stock will be subject to adjustment solely in the event of stock dividends, combinations, splits, recapitalizations, and similar corporate events and does

not

provide for general price-based anti-dilution adjustments. Each share of Series E Preferred Stock has a stated value of

$30.00

per share and has the following rights and preferences: (I) each holder of the Series E Preferred Stock has the right, at any time, to convert the shares of Series E Preferred Stock into shares of common stock, (ii) the Series E Preferred Stock is redeemable at the Company's option commencing

one

year after the original issuance date, provided that the Company's common stock is listed on a national securities exchange at such time, and (iii) the Series E Preferred Stock will pay dividends at the rate of

5%

per annum in cash. The shares of Series E Preferred Stock were issued in a transaction with the holder of the Company's previously outstanding shares of Series B Preferred Stock to exchange the shares of Series B Preferred Stock for the shares of Series E Preferred Stock. Pursuant to the exchange agreement for the preferred stock, the holder of the shares of Series B Preferred Stock agreed to waive all unpaid dividends that had accrued on the shares of Series B Preferred Stock. At

March 31, 2018,

the Company has accrued dividends of approximately

$39,000

on the Series E Preferred Stock which remain unpaid.

As of

March 31, 2018,

there are

605,000

shares of Series D Convertible Preferred Stock outstanding. The Series D Preferred Stock can be converted by the holders into an aggregate of

619,154

shares of common stock at an initial conversion rate of

$9.77139

per share. The holders of such shares have the right to convert the preferred shares at any time, although the shares received upon conversion

may

not

be offered or sold except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. The Company has the right to repurchase the outstanding Series D Preferred Stock at a redemption price equal to

$10.00

per share, plus accrued and unpaid dividends, and to require holders to convert their Series D Preferred Stock beginning in

June 2016.

Dividends on the Series D Preferred Stock accrue at a rate of

5%

per annum and are payable semi-annually in cash or stock at the Company's option. At 

March 31, 2018,

the Company has accrued dividends in the amount of approximately

$863,000

on the Series D Preferred Stock, which remain unpaid. 

The Company's preferred stock takes precedence over Common Stock but ranks below debt in the event of liquidation. In addition, the Series D Convertible Preferred Stock ranks above the Series E Convertible Preferred Stock.

Earnings per Share

FASB ASC Topic

260,

Earnings per Share

, requires the presentation of basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted-average number of ordinary shares outstanding during the period, while diluted earnings per share is calculated to include any dilutive effects to ordinary shares. For the

three

and 

nine

months ended

March 31, 2018,

our ordinary share equivalents consisted of stock options, restricted stock units, convertible debt, preferred stock and warrants.

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2018			2017			2018			2017
Basic earnings (loss) per share
Net (loss) earnings	$	(1,686,242	)	$	418,059		$	(5,796,633	)	$	245,154
Preferred stock dividends		(85,699	)		(74,863	)		(255,948	)		(276,111	)
Net (loss) earnings available to common shareholders after preferred stock dividends	$	(1,771,941	)	$	343,196		$	(6,052,581	)	$	(30,957	)
Weighted average shares used in the computation of basic earning per share		7,249,370			7,168,329			7,249,370			6,312,344
(Loss) earnings per share - basic	$	(0.25	)	$	0.05		$	(0.83	)	$	(0.00	)
Dilutive earnings (loss) per share
(Loss) earnings available to common shareholders	$	(1,771,941	)	$	343,196		$	(6,052,581	)	$	(30,957	)
Weighted average shares used in the computation of diluted (loss) earnings per share		7,249,370			7,168,329			7,249,370			6,312,344
Dilutive effect of options, warrants, convertible debt and convertible preferred stock		-			1,597,328			-			-
Shares used in the computation of diluted (loss) earnings per share		7,249,370			8,765,657			7,249,370			6,312,344
(Loss) earnings per share - diluted	$	(0.25	)	$	0.04		$	(0.83	)	$	(0.00	)
Anti-Dilutive Options Excluded		6,611,355			3,545,077			6,611,355			6,919,034

Common Stock Warrants

A schedule of common stock warrant activity for the

nine

 months ended

March 31, 2018

is as follows:

Warrant Activity	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding June 30, 2017		4,150,535		$	4.67		3.87	$	42,582
Issued		-
Expired		(25,000	)	$	12.06		-
Outstanding March 31, 2018		4,125,535		$	4.44		3.11	$	-
Exercisable, March 31, 2018		4,069,979		$	4.05		3.35	$	-

Due to the adjustment of the conversion price of the New Senior Notes, the exercise price of outstanding warrants to purchase an aggregate of

825,144

shares of common stock has been adjusted from

$2.07

to

$1.22

per share.

XML

Note 8 - Share-based Compensation

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

  8. Share-Based Compensation

Stock option activity under the Company's stock option plans for employees and non-executive directors for the 

nine

months ended 

March 31, 2018 

is as follows:

Employee Option Activity	Number of Options			Weighted Average Exercise Price		Average Remaining Contractual Life (Years)
Outstanding June 30, 2017		226,902			9.04		6.34
Granted		50,000			2.00		9.45
Expired/Forfeited		(11,556	)		23.40		-
Outstanding March 31, 2018		265,346			7.08		6.80
Exercisable March 31, 2018		143,917			11.50		4.69

				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Non-Executive Option Activity	Options			Price		Life (Years)		Value
Outstanding June 30, 2017		602,311			3.57		6.11	$	-
Granted		45,555			1.59		9.50		-
Expired/forfeited		(102,807	)		5.33		-		-
Outstanding and exercisable March 31, 2018		545,059			3.07		7.99	$	-

Share based compensation for the

three

months ended

March 31, 2018

and

2017

was approximately

$117,000

and

$38,000,

respectively. Share-based compensation for the

nine

months ended

March 31, 2018

and

2017

was approximately

$562,000

and

$186,000,

respectively.

No

options were granted to the Company's non-employee directors as of

March 31, 2018

as each director that would have received such options as of such date under the Company's Non-Employee Director Compensation Policy waived the receipt of such compensation for the quarter ended

March 31, 2018.

Restricted stock unit activity under the Company's restricted stock unit plans for employees and non-executive directors for the

nine

months ended

March 31, 2018

is as follows:

	Number of RSUs			Weighted Average Grant Date Fair Value
Outstanding June 30, 2017		411,429		$	1.75
Granted		201,448			0.78
Expired/Forfeited		(57,429	)		0.48
Outstanding March 31, 2018		555,448		$	1.42

On

March 31, 2018,

the Company's Board of Directors approved the grant of

40,724

restricted stock units to Hanif A. Roshan.  In addition, the Board also approved the grant of an aggregate

40,724

restricted stock units to certain other non-executive employees of the Company.  All of the restricted stock units were  granted under the Company's

2011

Omnibus Equity Incentive Plan, as amended (the

"2011

Plan").  The Board determined that it was appropriate to grant the restricted stock units in consideration of an agreement by Mr. Roshan and the other non-executive employees to accept such compensation in lieu of cash payment of base salary for the

five

-week period ending

March 31, 2018.

XML

Note 9 - Fair Value Measurements and Other Financial Instruments

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Fair Value Disclosures [Text Block]

9. Fair Value Measurements and Other Financial Instruments

The carrying amounts of the Company's financial assets and liabilities, such as cash, accounts receivable, inventory, prepaid expenses, and other current assets, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.

In connection with the issuance of a convertible promissory note as discussed in Note

6,

the Company evaluated the note agreement to determine if the agreement contained any embedded components that would qualify the agreement as a derivative. The Company identified certain put features embedded in the convertible note agreement that potentially could result in a settlement in the event of a fundamental transaction, requiring the Company to classify the conversion feature as a derivative liability.

The Company's Level

3

financial liabilities consist of the derivative conversion features of underlying convertible debt and warrants issued in

2011

to

2015.

The Company valued the conversion features using the Black Scholes model prior to the

three

months ended

September 30, 2016

and the Monte Carlo model for all periods thereafter. These models incorporate transaction details such as the Company's stock price, contractual terms maturity, risk free rates and volatility as of the date of issuance and each balance sheet date. The decrease in the value of the conversion feature of the convertible debt and warrants issued was primarily due to the change in the stock price during

2018

compared with prior years.

The Company utilized the following assumptions in valuing the derivative conversion features:

Exercise Price	$	1.20		-	$	1.22
Risk free interest rate		2.07	%	-		2.55	%
Expected volatility		115	%	-		150	%
Remaining Term (years)		0.97		-		5.32

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

The fair value of AGHC financial instruments, using the fair value hierarchy under U.S. GAAP detailed in "Fair Value Measurements" in Note

2,

"Summary of Significant Accounting Policies and Recently Issued Accounting Standards," of the Notes to the Condensed Consolidated Financial Statements are included in the tables below.

The Company uses Level

3

of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative liabilities at every reporting period and recognizes gains and losses in the statement of operations that are attributable to the change in the fair value of the derivative liabilities. Changes in the observable input values would likely cause material changes in the fair value of the Company's Level

3

financial instruments.  The significant unonservable input (probability of a down round event) used in the fair value measurement is the estimation of the likelihood of the occurrence of a change in the contractual terms of the financial instruments.  A significant increase (decrease) in this likelihood or in the volatility assumptions would result in a higher (lower) fair value measurement.

The following tables provide a summary of the changes in fair value, including net transfers in and/or out, of all financial assets / (liabilities) measured at the fair value on a recurring basis using significant unobservable inputs during the 

nine

months ended

March 31, 2018.

			Convertible
	Warrants		Notes		Total
Balance - June 30, 2017	$	435,036	$	116,004	$	551,040
Change in fair value of derivative liabilities		127,254		792,724		919,978
Balance - March 31, 2018	$	562,290	$	908,728	$	1,471,018

	Fair
	Value		Level 1		Level 2		Level 3
June 30, 2017 derivative liabilities	$	551,040	$	-	$	-	$	551,040
March 31, 2018 derivative liabilities	$	1,471,018	$	-	$	-	$	1,471,018

Derivative Instruments

For the

three

and 

nine

months ended 

March 31, 2018 

and

2017,

the Company recorded non-cash (expense) income of approximately (

$1,286,000

) and (

$920,000

), compared to income of

$257,000

and

$392,000

for the prior year periods in other (expense) income for the changes in fair value of the derivative liabilities.

XML

Note 10 - Commitments and Contingencies

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

10. Commitments and Contingencies

A complaint was filed by a former independent contractor in the State of Louisiana who was involved in the sales and marketing of the Company's products and services. The caption of the case is

Medlogic, LLC and Malena F. Badon v. Peachstate Health Management, LLC.,

et al.

Plaintiff alleges certain commissions had

not

been paid in full. The Company believes the contractor was overpaid and has asserted a counter claim for reimbursement of such overpayments. The Company intends to vigorously defend the claim and pursue the counter claim. The parties have completed initial discovery and the matter remains pending. The Company believes the resolution of this matter will

not

have a material effect on its financial statements.

Regarding the termination of the Company's employment relationship with certain executives, including the former Chief Executive Officer ("CEO") of Authentidate Holding Corp., O’Connell Benjamin, the Company has been reviewing its severance obligations to them and the vesting of other post-termination provisions. The Company believes that it has accrued all related severance costs as of 

March 31, 2018

related to the past terminations. The former CEO commenced an arbitration proceeding before the American Arbitration Association ("AAA") on or about

June 22, 2016

requesting payment of severance compensation of

$341,620

and other benefits, including the vesting of certain stock option awards, pursuant to an employment agreement. The parties opted to pursue mediation in their attempt to resolve the matter, and a mediation session was held on

October 30, 2017,

but

no

resolution was reached. The Company believes that it has valid defenses to Mr. Benjamin's claims and intends to defend this matter accordingly as the arbitration process ensues.

On

May 3, 2017,

the Company received notice from the Office for Civil Rights ("OCR") of the U.S. Department of Health and Human Services ("DHHS") informing the Company that the OCR is conducting a review of the Company's compliance with applicable Federal Standards for Privacy of Individually Identifiable Health Information and/or Security Standards for the Protection of Electronic Protected Health Information (“ePHI”). The OCR is the division of DHHS charged with enforcing the Health Insurance Portability and Accountability Act of

1996,

as amended ("HIPAA"), and its privacy, security and data breach rules ("HIPAA Rules"). The OCR compliance review covers both the Company's telehealth business and its clinical laboratory operations. The OCR reviewed the Company's premises and conducted interviews on

May 23, 2017

and the Company continues to work on a resolution with the OCR. The OCR

may,

among other things, require a corrective action, issue penalties, or reach a monetary settlement. The Company does

not

expect a material adverse determination on its consolidated financial position, results of operations and cash flows.

The Company is the plaintiff in a case captioned

Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Radius Foundation, Inc. and William Bramlett, Ph.D.,

filed on

June 13, 2017

in the State Court of Hall County, State of Georgia Case

No.

2017

-SV-

312

-Z. Judgement in the amount of

$116,865

was awarded by the court on

March 29, 2018,

against the corporate defendant. The Company continues to pursue its claims against the individual co-defendant.

The Company is the plaintiff in a case captioned

Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Trimana, LLC d/b/a Via Medical Center

Case

No.

2016

-SV-

246D

filed on

April 29, 2016

in the State Court of Hall County, State of Georgia. Judgement in the amount of

$104,652

was awarded by the Court on

March 12, 2018.

The Company is a defendant in an action captioned

Cogmedix, Inc. v. Authentidate Holding Corp

. in the Superior Court of Worcester County, Commonwealth of Massachusetts, Case

No.

1685CV013188.

Suit was filed on

September 6, 2016,

based upon a purchase order dated

December 6, 2013,

alleging the principal amount of

$227,061,

and accumulating interest and attorney fees. On

February 15, 2018,

a default judgment for the amount of

$320,638

was awarded. The Company is evaluating this decision and considering its alternatives.

The Company, along with its chief executive officer and certain unnamed persons, are defendants in a case captioned

Carlotta Miraflor v. Peachstate Health Management, LLC d/b/a Aeon Global Health, et al.

, filed on

October 4, 2017

in the United States District Court for the Central District of California Case

No.

5:17

-CV-

02046

-DSF-SP. Service of the Summons and Complaint was made on

January 3, 2018

and an Answer denying liability has been timely filed with the Court Clerk. The plaintiff is a principal of an independent contractor which provided marketing services to the Company pursuant to a services agreement. The lawsuit was preceded by a Dismissal and Notice of Rights by the U.S. Equal Employment Opportunity Commission in

July 2017

on the basis that the plaintiff has been identified as an independent contractor, notwithstanding that the plaintiff alleged that the Company was the employer of the plaintiff. Nonetheless, the plaintiff has initiated suit alleging wrongful termination, retaliation, harassment, and other claims. The lawsuit seeks an injunction enjoining the Company from classifying its sales and marketing personnel as independent contractors and unspecified compensatory damages for plaintiff's alleged loss of earnings, emotional distress, punitive damages, and attorneys' fees and costs. The Company believes that it has strong defenses to plaintiff's allegations and intends to vigorously defend the claim. Management is unable to determine at this time whether this claim will have a material adverse impact on the Company’s financial condition, results of operations or cash flow.

            The Company has a lease for its offices in New Jersey, which has a term of

six

years following the occupancy date and annual rentals ranging from approximately

$135,000

in the

first

year to

$148,000

in the final year. The lease also provides AGHC with a

one

-time option to renew the lease for a term of

five

years at the then-current market rate and, provided AGHC pays an early termination fee, allows AGHC an early termination option on each of the

18

-month,

27

-month and

36

-month anniversary dates of the effective date of the amendment. As part of the lease agreement, AGHC reduced its letter of credit securing its lease payments to approximately

$121,000,

which was collected by the landlord in the

first

quarter of fiscal year

2018.

The Company is currently in negotiations to terminate this lease obligation and although

not

guaranteed, expects to be successful during fiscal year

2018.

The Company is also subject to claims and litigation arising in the ordinary course of business. Management considers that any liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the aggregate, would

not

have a material adverse effect on the consolidated financial position, results of operations or cash flows. 

The Company has entered into various agreements by which it

may

be obligated to indemnify the other party with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business under which we customarily agree to hold the indemnified party harmless against losses arising from a breach of representations related to such matters as intellectual property rights. Payments by the Company under such indemnification clauses are generally conditioned on the other party making a claim. Such claims are generally subject to challenge by the Company and to dispute resolution procedures specified in the particular contract. Further, obligations under these arrangements

may

be limited in terms of time and/or amount and, the Company

may

have recourse against

third

parties for certain payments made by the Company. It is

not

possible to predict the maximum potential amount of future payments under these indemnification agreements due to their conditional nature and the unique facts of each particular agreement. Historically, the Company has

not

made any payments under these agreements that have been material individually or in the aggregate. As of 

March 31, 2018,

the Company is

not

aware of any obligations under such indemnification agreements that would require material payments.

XML

Note 11 - Related Party Transactions

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

11. Related Party Transactions

Except as disclosed herein, the Company has

not

entered into any material transactions or series of similar transactions with any director, executive officer or any security holder owning

5%

or more of common stock since

July 1, 2017.

AEON leases its facilities from Centennial Properties of Georgia, LLC under a lease agreement commencing

April 2014,

as amended

January 20, 2016.

The lease provides for a term of

12

years expiring

March 2026.

The lease payments range from

$46,500

to a maximum of

$60,000.

In connection with the lease agreement, as security for its rent and other obligations under the lease, AEON has provided to the landlord a

first

priority lien and security interest in substantially all its assets. The landlord under the lease is Centennial Properties of Georgia, LLC a Georgia limited liability company. Centennial is owned by Sonny Roshan, Shawn Desai, Pyarali Roy and Sohail Ali, all of whom were AEON members and received common stock in AGHC as a result of the Acquisition. Mr. Roshan serves as the Chairman and CEO of AGHC. Mr. Desai is the Chief Technology Officer of AEON. Mr. Roy is the Chief Strategy Officer of AEON. Related party rent expense for the

three

and

nine

months ending

March 31, 2018

and

2017

was approximately

$144,000

and

$432,000,

and

$140,000

and

$419,000,

respectively.

The Company holds certain related party notes payable to certain shareholders, its Chief Executive Officer and affiliates of board members of the Company, as detailed in Note

6.

Interest expense relating to these notes amounted to approximately

$37,000

and

$106,000,

and

$87,000

and

$286,000

for the

three

and

nine

months ended

March 31, 2018

and

2017,

respectively.  In the Note Amendment Transaction, the holders (the "Senior Holders") of the outstanding principal amount of

$2,545,199

of New Senior Notes entered into a consent and amendment agreement with the Company (the "Consent Agreement"), pursuant to which the New Senior Notes were amended to extend the maturity date for a period of

twelve

months to March

20,

2019

and in consideration thereof, the conversion rate of the New Senior Notes was reduced to

$1.20

per share.  Based on the adjusted conversion price, the principal amount of the New Senior Notes will be convertible into up to

2,120,999

shares of common stock.  The other material terms and conditions of the New Senior Notes were

not

amended.  Certain holders of the New Senior Notes are affiliated with the Company as follows: (

1

) an aggregate principal amount of

$255,417

of New Senior Notes are held by Hanif A. Roshan, the Chairman and Chief Executive Officer of the Company and (ii) an aggregate principal amount of

$591,613

of New Senior Notes are held by Optimum Ventures, LLC, a party affiliated by ownership with the former owners of Peachstate Health Management, LLC, our subsidiary.  Due to the adjustment of the conversion price of the New senior Notes, the exercise price of outstanding warrants to purchase an aggregate of

825,144

shares of common stock has been adjusted from

$2.07

to

$1.22

per share.  Unpaid interest on the New Senior Notes as of March

31,

2018

was approximately

$122,000,

which is

not

incorporated into the principal balance.  Accrued interest on the New Senior  Notes is Due on March

20,

2019

or any earlier payment of the New Senior Notes.

    Effective

January 23, 2018,

the Company entered into a note exchange agreement with its Chief Executive Officer and Chairman of the Board.  To evidence the loan, the Company issued Mr. Roshan a promissory note (the "Note") in the aggregate principal amount of

$500,000.

  The Note was an unsecured obligation of the Company, and was

not

convertible into equity securities of the Company.  The Note was due and payable on

April 23, 2018

and interest accrued on the Note at the rate of

5%

per annum.  The Note was exchanged for a new secured convertible note in the exchange transaction described above in Note

6

under the caption "Current Year Exchange Transaction".

AGHC entered into a lease agreement with Hanif A. ("Sonny") Roshan (the "landlord") for a residential premises at

5455

Golf View Drive, Braselton, Georgia

30517

for a term of

one

year beginning on

January 1, 2018

and ending on

December 31, 2018

for a fixed rent in monthly installments of

$7,500

due and payable by the

first

day of each month. The lease is renewable with a

3%

increase in rent for each renewal. The tenant is responsible for utilities and insurance with the landlord responsible for maintenance and taxes on the premises. Rent expense was

$22,500

and

$67,500

for the

three

and

nine

months ended

March 31, 2018.

On

January 4, 2018,

the Company entered into a Consulting Agreement with Dr. Armando Moncada, M.D. ("Moncada" or the "Consultant") pursuant to which the Company engaged Moncada to act as its Chief Medical Officer - Pathology and to provide certain consulting services in connection with the operation of the Company's pathology laboratory, as specified in the Consulting Agreement.  The Company paid Moncada

$40,000

at the execution of the agreement and

$25,000

for

February 2018,

which was Moncada's monthly pay according to the Consulting Agreement.  In addition, pursuant to the Consulting Agreement, Moncada had agreed to transfer and assign to the Company, in his personal capacity as well as in his capacity as a controlling member and/or officer of PCG Molecular, LLC and Pathology Consultants of Georgia, Inc., all right to the intellectual property of such entities.  The completion of the transaction to acquire the foregoing intellectual property rights was subject to the negotiation and execution of definitive assignment agreement and other customary closing conditions.  The Company and Moncada were

not

able to reach a final agreement on the acquisition terms of intellectual property rights and the Consulting Agreement was therefore terminated on 

February 21, 2018. 

XML

Note 12 - Segment Information

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

  12. Segment Information

The Company is operated as

two

segments: laboratory testing services, and web-based software.  Laboratory testing services includes the testing of an individual's blood, urine or saliva for the presence of drugs or chemicals and the patient's DNA profile. Web-based software provides secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to increase revenues, improve productivity, reduce costs, coordinate care for patients and enhance related administrative and clinical workflows and compliance with regulatory requirements. Management currently runs each segment separately and measures profitability and operational performance based on the financial statements, which are independently maintained.

Selected financial information related to the Company's segments is presented below:

				Laboratory
	Web-Based Software			Testing Services			Total
Three Months ended March 31, 2018
Net revenues	$	244,135		$	3,811,444		$	4,055,579
Cost of revenues		44,297			913,816			958,113
Operating expenses		436,359			3,948,343			4,384,702
Operating loss		(192,223	)		(110,629	)		(329,123	)
Nine Months ended March 31, 2018
Net revenues	$	744,985		$	12,199,868		$	12,944,853
Cost of revenues		164,403			2,810,828			2,975,231
Operating expenses		1,644,812			11,385,524			13,030,336
Operating income (loss)		(899,827	)		840,614			(85,483)
Three Months Ended March 31, 2017
Net revenues	$	319,176		$	5,212,634		$	5,531,810
Cost of revenues		52,438			845,152			897,590
Operating expenses		393,510			4,645,993			5,039,503
Operating income (loss)		(74,334	)		566,641			492,307
Nine Months ended March 31, 2017
Net revenues	$	999,333		$	15,469,366		$	16,468,699
Cost of revenues		203,691			2,652,063			2,855,754
Operating expenses		1,558,364			14,355,766			15,914,130
Operating income (loss)		(559,031	)		1,113,600			554,569
March 31, 2018
Total assets	$	7,520,405		$	5,073,608		$	12,594,013
June 30, 2017
Total assets	$	11,772,874		$	4,958,804		$	16,731,678

XML

Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The Company's condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and following the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim financial statements have been prepared on the same basis as the Company's annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company's financial information. These interim results are

not

necessarily indicative of the results to be expected for the year ending

June 30, 2018

or any other interim period or for any other future year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto for the year ended

June 30, 2017,

included in the Company's

2017

Annual Report on Form

10

-K filed with the SEC.

The balance sheet as of

June 30, 2017

has been derived from audited financial statements at that date but does

not

include all of the information required by U.S. GAAP for complete financial statements.

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 The most sensitive accounting estimates affecting the financial statements are revenue recognition, the allowance for doubtful accounts, depreciation of long-lived assets, fair value of intangible assets and goodwill, amortization of intangible assets, income taxes and associated deferrals and valuation allowances, commitments and contingencies and measurement of derivative liabilities.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

Accounts Receivable, Net

Accounts receivable represent customer obligations due under normal trade terms, net of allowance for doubtful accounts. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience and other currently available evidence. The allowance for doubtful accounts was approximately

$1,090,000

and

$923,000

as of

March 31, 2018

and

June 30, 2017,

respectively.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

The Company follows ASC

820

-

10,

"Fair Value Measurements and Disclosures"

, of the FASB to measure the fair value of its financial statements and disclosures about fair value of its financial instruments. ASC

820

-

10

establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC

820

-

10

establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into

three

broad levels. The

three

levels of fair value hierarchy defined by ASC

820

-

10

are described below:

Level  1	-	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	-	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	-	Pricing inputs that are generally unobservable input and not corroborated by market data.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lower priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than

one

level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The Company's warrant liabilities and certain conversion features underlying the convertible debt are categorized as Level

3.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company provides laboratory testing services, web-based hosted software services, telehealth products and post contract customer support services.

In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC-

605

"Revenue Recognition"

, the Company recognizes revenues when there is a persuasive evidence of an arrangement, title and risk of loss have passed, product is shipped or services have been rendered, sales price is fixed or determinable and collection of the related receivable is reasonably assured. Billings for laboratory testing services are reimbursed by

third

-party payors net of allowances for differences between amounts billed and the cash receipts.

Revenue from laboratory testing services are recognized at the time test results are delivered, net of estimated contractual allowances. Third-party reimbursement revenue is estimated based on cash received over a

12

-month period.

Revenue for hosted software services, telehealth products, and customer support services are recognized when persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed and collectability is reasonably assured. Multiple-element arrangements are assessed to determine whether they can be separated into more than

one

unit of accounting. A multiple-element arrangement is separated into more than

one

unit of accounting if all the following criteria are met: (i) the delivered item has value to the customer on a standalone basis; (ii) there is objective and reliable evidence of the fair value of the undelivered items in the arrangement; (iii) if the arrangement includes a general right of return relative to the delivered items; (iv) and delivery or performance of the undelivered item is considered probable and substantially in the Company's control. If these criteria are

not

met, then revenue is deferred until such criteria are met or until the period over which the last undelivered element is delivered, which is typically the life of the contract agreement. If these criteria are met, we allocate total revenue among the elements based on the sales price of each element when sold separately which is referred to as vendor specific objective evidence or VSOE.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts which, at times,

may

exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to certain limits. At

March 31, 2018

and

June 30, 2017,

the Company had approximately

$223,000

and

$871,000

in excess of FDIC-insured limits. The Company has

not

experienced any losses in such accounts.

At

March 31, 2018,

one

customer had an accounts receivable balance of approximately

$1,491,000.

This customer had a minimal balance at

June 30, 2017.

This customer’s accounts receivable balance comprises

39%

of gross accounts receivable at

March 31, 2018.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in tax laws or rates. The effect on deferred tax assets and liabilities of a change in tax rates will be recognized as income or expense in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Management considers the likelihood of changes by taxing authorities in its filed income tax returns and recognizes a liability for or discloses potential changes that management believes are more likely than

not

to occur upon examination by tax authorities. Management has

not

identified any uncertain tax positions that require recognition or disclosure in the accompanying consolidated financial statements.

Reclassification, Policy [Policy Text Block]

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

May 2014,

the FASB issued Accounting Standards Update ("ASU")

2014

-

09,

"Revenue from Contracts with Customers"

(Topic

606

) ("ASU

2014

-

09"

). This new accounting standard outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. This standard supersedes existing revenue recognition requirements and eliminates most industry specific guidance from GAAP. The core principle of the revenue recognition standard is to require an entity to recognize as revenue the amount that reflects the consideration to which it expects to be entitled in exchange for goods or services as it transfers control to its customers. As a result of this standard, the amounts

not

reimbursed will now be considered an implicit price concession in determining net revenue as opposed to recording as bad debt expense or another selling, general or administrative expense. Accordingly, the Company will report uncollectible balances associated with customer responsibility as a reduction of the transaction price and a reduction in net revenues. In addition, the adoption of this new accounting standard will result in increased disclosure, including qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company expects to adopt this ASU effective

July 1, 2018.

In

August 2014,

the FASB issued ASU

No.

2014

-

15,

"Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern".

The amendments in this update state that regarding preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or within

one

year after the date that the financial statements are available to be issued, when applicable). The amendments in this update are effective for the annual reporting period beginning after

December 15, 2016

and for annual periods and interim periods thereafter. Early application is permitted. The Company has adopted ASU

2014

-

15

and has made the necessary disclosures in the "Going Concern" sections of this Quarterly Report on Form

10

-Q.

In

July 2015,

the FASB issued ASU

2015

-

11,

"Inventory

(

Topic

330

):

Simplifying the Measurement of Inventory"

. ASU

2015

-

11

requires inventory measured using any method other than last-in,

first

-out ("LIFO") or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Under this ASU, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASU

2015

-

11

is effective prospectively for fiscal years, and for interim periods within those years, beginning after

December 15, 2016.

Early application is permitted. The Company has determined that the ASU has

no

material impact on its consolidated financial statements and related disclosures since it does

not

sell inventory on a stand-alone basis at net realizable value.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

"Leases"

, which establish a right-of-use (ROU) model that requires a lessee to record an ROU asset and lease liability on the balance sheet for all leases with terms longer than

12

months. Leases will be classified as either finance or operating, with classifications affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early adoption is permitted. ASU

2016

-

02

requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the effect of adoption of this ASU on

July 1, 2019.

In

March 2016,

the FASB issued ASU

No.

2016

-

09,

"Compensation-Stock Compensation (Topic

718

): Improvements to Employee Share-Based Payment Accounting"

, which makes several modifications to the accounting for employee share-based payment transactions, including the requirement to recognize the income tax effects of awards that vest or settle as income tax expense. This guidance also clarifies the presentation of certain components of share-based awards in the statement of cash flows. This guidance is effective for annual reporting periods beginning after

December 15, 2016,

and interim periods within those annual periods, and early adoption is permitted. The Company has adopted this standard with

no

material impact on the financial statements.

In

August 2016,

the FASB issued ASU

No.

2016

-

15,

"Statement of Cash Flows

(Topic

230

): Classification of Certain Cash Receipts and Cash Payments,"

which clarifies how certain cash receipts and payments are to be presented in the statement of cash flows. The guidance is effective for the Company on

July 1, 2018

and early adoption is permitted. The Company is currently evaluating the effect of adoption of this ASU on

July 1, 2018.

In

November 2016,

the FASB issued an ASU

2016

-

18,

"Restricted Cash"

, which clarifies the presentation and classification of restricted cash in the statement of cash flows. The ASU requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU is effective for the Company in the

first

quarter of fiscal

2019

(July

1,

2018

) with early adoption permitted and must be applied retrospectively to all periods presented. The Company is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures with the fiscal year beginning

July 1, 2018.

In

May 2017,

the FASB issued ASU

2017

-

09,

"Compensation-Stock Compensation (Topic

718

): Scope of Modification Accounting",

which amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after

December 15, 2017.

The Company is evaluating the impact of this ASU and expects to adopt this ASU effective

July 1, 2018.

In

July 2017,

the FASB issued ASU

2017

-

11,

"Earnings Per Share (Topic

260

), Distinguishing Liabilities from Equity (Topic

480

) and Derivatives and Hedging (Topic

815

); Part I. Accounting for Certain Financial Instruments with Down Round Features and Part II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception",

which states that when determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature

no

longer precludes equity classification when assessing whether the instrument is indexed to the Company's own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option)

no

longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic

260

to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. The Company is evaluating the provisions of this ASU and plans to adopt this ASU effective

July 1, 2019.

In

December 2017,

the Securities and Exchange Commission issued Staff Accounting Bulletin

No.

118,

which is an application of ASC Topic

740,

Income Taxes

, in the reporting period that includes

December 22, 2017,

the date on which the Tax Cuts and Jobs Act (the "Act") was signed into law. The Act changes existing United States tax law and includes numerous provisions that will affect business. Staff Accounting Bulletin

No.

118

implies that if a reasonable estimate can be made of the Act's effects on the Company's financial statements, the reasonable estimate should be reported in the period ending after

December 22, 2017.

The Company has implemented Staff Accounting Bulletin

No.

118

is this Form

10

-Q ended

March 31, 2018 

by revaluing its deferred tax asset for the lower tax rates.

XML

Note 3 - Restatement and Correction of Error (Tables)

9 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
	As Originally									As Originally
	Reported						As Restated			Reported						As Restated
	Three Months						Three Months			Nine Months						Nine Months
	Ended						Ended			Ended						Ended
	Mar 31,						Mar 31,			Mar 31,						Mar 31,
	2017			Adj			2017			2017			Adj			2017
Net revenues
Fees for services	$	5,212,634		$	-		$	5,212,634		$	15,469,366		$	-		$	15,469,366
Hosted software services		314,812			-			314,812			973,417			-			973,417
Telehealth services		4,364			-			4,364			25,916			-			25,916
Total net revenues		5,531,810			-			5,531,810			16,468,699			-			16,468,699
Cost of revenues		908,290			(10,700	)		897,590			3,203,504			(347,750	)		2,855,754
Write-down of inventory		-			-			-			237,674						237,674
Selling, general and administrative		3,388,403			360,000			3,748,403			11,264,267			360,000			11,624,267
Depreciation and amortization		393,510			-			393,510			1,196,435			-			1,196,435
Total operating expenses		4,690,203			349,300			5,039,503			15,901,880			12,250			15,914,130
Operating income		841,607			(349,300	)		492,307			566,819			(12,250	)		554,569
Other (expense), net		(74,248	)		-			(74,248	)		(309,415	)		-			(309,415	)
		767,359			(349,300	)		418,059			257,404			(12,250	)		245,154
Income tax provision		-			-			-			-			-			-
Net income	$	767,359		$	(349,300	)	$	418,059		$	257,404		$	(12,250	)	$	245,154
less: preferred dividends	$	(74,863	)	$	-		$	(74,863	)	$	(276,111	)	$	-		$	(276,111	)
Net income (loss) available to common shareholders	$	692,496		$	(349,300	)	$	343,196		$	(18,707	)	$	(12,250	)	$	(30,957	)
Basic loss per common share	$	0.10		$	(0.05	)	$	0.05		$	0.00		$	0.00		$	(0.00	)
Diluted loss per common share	$	0.08		$	(0.04	)	$	0.04		$	0.00		$	0.00		$	(0.00	)

	As Originally
	Reported						As Restated
	Nine Months						Nine Months
	Ended						Ended
	March 31,						March 31,
	2017			Adj			2017
Cash Flows from Operating Activities
Net Income	$	257,404		$	(12,250	)	$	245,154
Adjustments to reconcile net loss to cash provided by operating activities
Write off of inventory		237,674			-			237,674
Loss on debt extinguishment		258,037			-			258,037
Change in fair value of derivative liabilities		(392,407	)		-			(392,407	)
Deferred taxes		-			-			-
Depreciation and amortization		1,196,435			-			1,196,435
Share based compensation		186,753			-			186,753
Deferred rent		-			-			-
Changes in assets and liabilities
Accounts receivable		410,655			-			410,655
Inventory		53,372			(347,750	)		(294,378	)
Prepaid expenses and other current assets		46,011			-			46,011
Accounts payable		(1,454,907	)		-			(1,454,907	)
Accrued expenses		(419,229	)		360,000			(59,229	)
Accrued commissions		182,054			-			182,054
Deferred rent		8,629			-			8,629
Net cash provided by operating activities		570,481			-			570,481
Cash flows from investing activities
Purchases of property and equipment		(22,103	)		-			(22,103	)
Net cash used in investing activities		(22,103	)		-			(22,103	)
Cash flows from financing activities
Proceeds from note payable - related party		250,000			-			-
Repayment of notes payable		(1,057,811	)		-			(1,057,811	)
Net cash used in financing activities		(807,811	)		-			(1,057,811	)
Net decrease in cash and cash equivalents		(259,433	)		-			(259,433	)
Cash and cash equivalents beginning of year		1,414,706			-			1,414,706
Cash and cash equivalents end of year	$	1,155,273		$	-		$	1,155,273

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Note 4 - Inventory (Tables)

9 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	March 31,		June 30,
	2018		2017
Laboratory testing supplies	$	396,477	$	347,750
Total inventory	$	396,477	$	347,750

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Note 6 - Related Party Notes Payable (Tables)

9 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Debt [Table Text Block]

	March 31, 2018								June 30, 2017
			Accrued		Total		Interest rate		Note		Interest rate
	Principal		Interest		Outstanding		per annum		Payable		per annum
Secured								Secured
	$	1,056,875	$	1,593	$	1,058,468	5% interest paid annually		$	1,056,875	5% interest paid annually
		641,294		966		642,260	5% interest paid annually			641,294	5% interest paid annually
		255,417		385		255,802	5% interest paid annually			255,417	5% interest paid annually
		591,613		891		592,504	5% interest paid annually			591,613	5% interest paid annually
		504,452		760		505,212	5% interest paid annually
Total	$	3,049,651	$	4,595	$	3,054,246		Total	$	2,545,199

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Note 7 - Equity (Tables)

9 Months Ended

Mar. 31, 2018

Notes Tables

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

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2018			2017			2018			2017
Basic earnings (loss) per share
Net (loss) earnings	$	(1,686,242	)	$	418,059		$	(5,796,633	)	$	245,154
Preferred stock dividends		(85,699	)		(74,863	)		(255,948	)		(276,111	)
Net (loss) earnings available to common shareholders after preferred stock dividends	$	(1,771,941	)	$	343,196		$	(6,052,581	)	$	(30,957	)
Weighted average shares used in the computation of basic earning per share		7,249,370			7,168,329			7,249,370			6,312,344
(Loss) earnings per share - basic	$	(0.25	)	$	0.05		$	(0.83	)	$	(0.00	)
Dilutive earnings (loss) per share
(Loss) earnings available to common shareholders	$	(1,771,941	)	$	343,196		$	(6,052,581	)	$	(30,957	)
Weighted average shares used in the computation of diluted (loss) earnings per share		7,249,370			7,168,329			7,249,370			6,312,344
Dilutive effect of options, warrants, convertible debt and convertible preferred stock		-			1,597,328			-			-
Shares used in the computation of diluted (loss) earnings per share		7,249,370			8,765,657			7,249,370			6,312,344
(Loss) earnings per share - diluted	$	(0.25	)	$	0.04		$	(0.83	)	$	(0.00	)
Anti-Dilutive Options Excluded		6,611,355			3,545,077			6,611,355			6,919,034

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

Warrant Activity	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding June 30, 2017		4,150,535		$	4.67		3.87	$	42,582
Issued		-
Expired		(25,000	)	$	12.06		-
Outstanding March 31, 2018		4,125,535		$	4.44		3.11	$	-
Exercisable, March 31, 2018		4,069,979		$	4.05		3.35	$	-

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Note 8 - Share-based Compensation (Tables)

9 Months Ended

Mar. 31, 2018

Notes Tables

Share-based Compensation, Stock Options, Activity [Table Text Block]

Employee Option Activity	Number of Options			Weighted Average Exercise Price		Average Remaining Contractual Life (Years)
Outstanding June 30, 2017		226,902			9.04		6.34
Granted		50,000			2.00		9.45
Expired/Forfeited		(11,556	)		23.40		-
Outstanding March 31, 2018		265,346			7.08		6.80
Exercisable March 31, 2018		143,917			11.50		4.69

				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Non-Executive Option Activity	Options			Price		Life (Years)		Value
Outstanding June 30, 2017		602,311			3.57		6.11	$	-
Granted		45,555			1.59		9.50		-
Expired/forfeited		(102,807	)		5.33		-		-
Outstanding and exercisable March 31, 2018		545,059			3.07		7.99	$	-

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

	Number of RSUs			Weighted Average Grant Date Fair Value
Outstanding June 30, 2017		411,429		$	1.75
Granted		201,448			0.78
Expired/Forfeited		(57,429	)		0.48
Outstanding March 31, 2018		555,448		$	1.42

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Note 9 - Fair Value Measurements and Other Financial Instruments (Tables)

9 Months Ended

Mar. 31, 2018

Notes Tables

Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]

Exercise Price	$	1.20		-	$	1.22
Risk free interest rate		2.07	%	-		2.55	%
Expected volatility		115	%	-		150	%
Remaining Term (years)		0.97		-		5.32

Schedule of Derivative Liabilities at Fair Value [Table Text Block]

			Convertible
	Warrants		Notes		Total
Balance - June 30, 2017	$	435,036	$	116,004	$	551,040
Change in fair value of derivative liabilities		127,254		792,724		919,978
Balance - March 31, 2018	$	562,290	$	908,728	$	1,471,018

Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis [Table Text Block]

	Fair
	Value		Level 1		Level 2		Level 3
June 30, 2017 derivative liabilities	$	551,040	$	-	$	-	$	551,040
March 31, 2018 derivative liabilities	$	1,471,018	$	-	$	-	$	1,471,018

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Note 12 - Segment Information (Tables)

9 Months Ended

Mar. 31, 2018

Notes Tables

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

				Laboratory
	Web-Based Software			Testing Services			Total
Three Months ended March 31, 2018
Net revenues	$	244,135		$	3,811,444		$	4,055,579
Cost of revenues		44,297			913,816			958,113
Operating expenses		436,359			3,948,343			4,384,702
Operating loss		(192,223	)		(110,629	)		(329,123	)
Nine Months ended March 31, 2018
Net revenues	$	744,985		$	12,199,868		$	12,944,853
Cost of revenues		164,403			2,810,828			2,975,231
Operating expenses		1,644,812			11,385,524			13,030,336
Operating income (loss)		(899,827	)		840,614			(85,483)
Three Months Ended March 31, 2017
Net revenues	$	319,176		$	5,212,634		$	5,531,810
Cost of revenues		52,438			845,152			897,590
Operating expenses		393,510			4,645,993			5,039,503
Operating income (loss)		(74,334	)		566,641			492,307
Nine Months ended March 31, 2017
Net revenues	$	999,333		$	15,469,366		$	16,468,699
Cost of revenues		203,691			2,652,063			2,855,754
Operating expenses		1,558,364			14,355,766			15,914,130
Operating income (loss)		(559,031	)		1,113,600			554,569
March 31, 2018
Total assets	$	7,520,405		$	5,073,608		$	12,594,013
June 30, 2017
Total assets	$	11,772,874		$	4,958,804		$	16,731,678

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Note 1 - Description of Business, Reverse Merger and Liquidity (Details Textual) - USD ($)	May 04, 2018	Mar. 31, 2018	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2016
Short-term Debt, Total		$ 3,171,660	$ 2,545,199
Cash and Cash Equivalents, at Carrying Value, Ending Balance		469,727	1,121,763	$ 1,155,273	$ 1,414,706
Working Capital (Deficit)		6,217,000
Subsequent Event [Member]
Cash and Cash Equivalents, at Carrying Value, Ending Balance	$ 1,011,000
Estimated Monthly Operational Requirement	1,200,000
Subsequent Event [Member] | Subordinated Secured Note Payable [Member] | Former Chief Financial Officer [Member] | Accrued Expenses [Member]
Due to Related Parties, Total	180,000
Secured Convertible Note Payable [Member]
Short-term Debt, Total		$ 3,054,246	$ 2,545,199
Secured Convertible Note Payable [Member] | Subsequent Event [Member]
Short-term Debt, Total	$ 3,049,651

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Note 2 - Summary of Significant Accounting Policies (Details Textual)	9 Months Ended
	Mar. 31, 2018 USD ($)	Jun. 30, 2017 USD ($)
Allowance for Doubtful Accounts Receivable, Current, Ending Balance	$ 1,090,000	$ 923,000
Cash, Uninsured Amount	223,000	$ 871,000
One Customer [Member]
Accounts Receivable, Net, Total	$ 1,491,000
Customer Concentration Risk [Member] | Accounts Receivable [Member]
Number of Major Customers	1
Customer Concentration Risk [Member] | Accounts Receivable [Member] | One Customer [Member]
Concentration Risk, Percentage	39.00%

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Note 3 - Restatement and Correction of Error - Restated Statements of Income and Cash Flows (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Jun. 30, 2017
Net revenues	$ 4,055,579	$ 5,531,810	$ 12,944,853	$ 16,468,699
Cost of revenues	958,113	897,590	2,975,231	2,855,754
Inventory Write-down			0	237,674
Selling, general and administrative	3,221,658	3,748,403	9,426,754	11,624,267
Depreciation and amortization	204,931	393,510	628,351	1,196,435
Operating expenses	4,384,702	5,039,503	13,030,336	15,914,130
Operating income	(329,123)	492,307	(85,483)	554,569
Other (expense), net	(1,380,287)	(74,248)	(1,241,079)	(309,415)
	(1,709,410)	418,059	(1,326,562)	245,154
Income tax provision	(3,102)		(4,496,341)
Net (loss) earnings	(1,686,242)	418,059	(5,796,633)	245,154
Less: preferred dividends	(85,699)	(74,863)	(257,095)	(276,111)
Net income (loss) available to common shareholders	$ (1,771,941)	$ 343,196	$ (6,052,581)	$ (30,957)
Basic income (loss) per common share (in dollars per share)	$ (0.25)	$ 0.05	$ (0.83)	$ 0
Diluted income (loss) per common share (in dollars per share)	$ (0.25)	$ 0.04	$ (0.83)	$ 0
Cash flows from operating activities
Net (loss) earnings	$ (1,686,242)	$ 418,059	$ (5,796,633)	$ 245,154
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Inventory Write-down			0	237,674
Loss on debt extinguishment	247,539	258,037		258,037
Change in fair value of derivative liabilities			919,978	(392,407)
Deferred taxes
Depreciation and amortization	204,931	393,510	628,351	1,196,435
Share based compensation			650,948	186,753
Deferred rent
Changes in assets and liabilities
Accounts receivable			(1,644,919)	410,655
Inventory			(48,727)	(294,378)
Prepaid expenses and other current assets			(34,083)	46,011
Accounts payable			(559,992)	(1,454,907)
Accrued expenses			(25,170)	(59,229)
Accrued commissions			175,230	182,054
Deferred rent			(2,025)	8,629
Net cash provided by operating activities			(1,152,036)	570,481
Cash flows from investing activities
Purchases of property and equipment				(22,103)
Net cash used in investing activities				(22,103)
Cash flows from financing activities
Proceeds from note payable - related party
Repayment of notes payable				(1,057,811)
Net cash used in financing activities			500,000	(807,811)
Net decrease in cash and cash equivalents			(652,036)	(259,433)
Cash beginning of period			1,121,763	1,414,706	$ 1,414,706
Cash end of period	469,727	1,155,273	469,727	1,155,273	1,121,763
Fees for Service [Member]
Net revenues	3,811,444	5,212,634	12,199,868	15,469,366
Hosted Software Service [Member]
Net revenues	239,535	314,812	731,085	973,417
Telehealth Product and Service [Member]
Net revenues	$ 4,600	4,364	$ 13,900	25,916
Previously Reported [Member]
Net revenues		5,531,810		16,468,699
Cost of revenues		908,290		3,203,504
Inventory Write-down				237,674
Selling, general and administrative		3,388,403		11,264,267
Depreciation and amortization		393,510		1,196,435
Operating expenses		4,690,203		15,901,880
Operating income		841,607		566,819
Other (expense), net		(74,248)		(309,415)
		767,359		257,404
Income tax provision
Net (loss) earnings		767,359		257,404
Less: preferred dividends		(74,863)		(276,111)
Net income (loss) available to common shareholders		$ 692,496		$ (18,707)
Basic income (loss) per common share (in dollars per share)		$ 0.10		$ 0
Diluted income (loss) per common share (in dollars per share)		$ 0.08		$ 0
Cash flows from operating activities
Net (loss) earnings		$ 767,359		$ 257,404
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Inventory Write-down				237,674
Loss on debt extinguishment				258,037
Change in fair value of derivative liabilities				(392,407)
Deferred taxes
Depreciation and amortization		393,510		1,196,435
Share based compensation				186,753
Deferred rent
Changes in assets and liabilities
Accounts receivable				410,655
Inventory				53,372
Prepaid expenses and other current assets				46,011
Accounts payable				(1,454,907)
Accrued expenses				(419,229)
Accrued commissions				182,054
Deferred rent				8,629
Net cash provided by operating activities				570,481
Cash flows from investing activities
Purchases of property and equipment				(22,103)
Net cash used in investing activities				(22,103)
Cash flows from financing activities
Proceeds from note payable - related party				250,000
Repayment of notes payable				(1,057,811)
Net cash used in financing activities				(807,811)
Net decrease in cash and cash equivalents				(259,433)
Cash beginning of period				1,414,706	1,414,706
Cash end of period		1,155,273		1,155,273
Previously Reported [Member] | Fees for Service [Member]
Net revenues		5,212,634		15,469,366
Previously Reported [Member] | Hosted Software Service [Member]
Net revenues		314,812		973,417
Previously Reported [Member] | Telehealth Product and Service [Member]
Net revenues		4,364		25,916
Restatement Adjustment [Member]
Net revenues
Cost of revenues		(10,700)		(347,750)
Inventory Write-down
Selling, general and administrative		360,000		360,000
Depreciation and amortization
Operating expenses		349,300		12,250
Operating income		(349,300)		(12,250)
Other (expense), net
		(349,300)		(12,250)
Income tax provision
Net (loss) earnings		(349,300)		(12,250)
Less: preferred dividends
Net income (loss) available to common shareholders		$ (349,300)		$ (12,250)
Basic income (loss) per common share (in dollars per share)		$ (0.05)		$ 0
Diluted income (loss) per common share (in dollars per share)		$ (0.04)		$ 0
Cash flows from operating activities
Net (loss) earnings		$ (349,300)		$ (12,250)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Inventory Write-down
Loss on debt extinguishment
Change in fair value of derivative liabilities
Deferred taxes
Depreciation and amortization
Share based compensation
Deferred rent
Changes in assets and liabilities
Accounts receivable
Inventory				(347,750)
Prepaid expenses and other current assets
Accounts payable
Accrued expenses				360,000
Accrued commissions
Deferred rent
Net cash provided by operating activities
Cash flows from investing activities
Purchases of property and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from note payable - related party
Repayment of notes payable
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash beginning of period
Cash end of period
Restatement Adjustment [Member] | Fees for Service [Member]
Net revenues
Restatement Adjustment [Member] | Hosted Software Service [Member]
Net revenues
Restatement Adjustment [Member] | Telehealth Product and Service [Member]
Net revenues

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Note 4 - Inventory (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Inventory Write-down			$ 0	$ 237,674
Purchased Components [Member]
Inventory Write-down				31,000
Finished Goods [Member]
Inventory Write-down				$ 207,000

XML

Note 4 - Inventory - Inventory (Details) - USD ($)	Mar. 31, 2018	Jun. 30, 2017
Laboratory testing supplies	$ 396,477	$ 347,750
Total inventory	$ 396,477	$ 347,750

XML

Note 5 - Income Taxes (Details Textual) - USD ($)	3 Months Ended	9 Months Ended
	Mar. 31, 2018	Mar. 31, 2018	Mar. 31, 2017
Effective Income Tax Rate Reconciliation, Percent, Total	(0.20%)	(371.10%)
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability		$ 4,490,581
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent		21.00%
Deferred Tax Assets, Net, Total	$ 7,357,000	$ 7,357,000
Deferred Tax Assets, Valuation Allowance, Total	$ 31,291,000	$ 31,291,000

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Note 6 - Related Party Notes Payable (Details Textual)			3 Months Ended			9 Months Ended		12 Months Ended
	Mar. 27, 2018 USD ($) $ / shares shares	Mar. 20, 2017 USD ($) $ / shares	Mar. 31, 2018 USD ($) $ / shares shares	Jun. 30, 2017 USD ($) $ / shares shares	Mar. 31, 2017 USD ($)	Mar. 31, 2018 USD ($) $ / shares shares	Mar. 31, 2017 USD ($)	Jun. 30, 2017 USD ($) $ / shares shares	Mar. 26, 2018 $ / shares	Jan. 23, 2018 USD ($)
Preferred Stock, Par or Stated Value Per Share | $ / shares			$ 0.10	$ 0.10		$ 0.10		$ 0.10
Gain (Loss) on Extinguishment of Debt, Total			$ (247,539)		$ (258,037)		$ (258,037)
New Notes Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares	825,144
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 1.22								$ 2.07
Series E Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, Exchange of Convertible Securities | shares				25,000
Preferred Stock, Par or Stated Value Per Share | $ / shares			$ 30	$ 30		$ 30		$ 30
Convertible Preferred Stock, Aggregate Shares Issued upon Conversion | shares			187,500	187,500		187,500		187,500
Convertible Preferred Stock, Conversion Price | $ / shares			$ 4	$ 4		$ 4		$ 4
Convertible Preferred Stock, Beneficial Ownership Limitation for Conversion Rights without Issuer Consent				4.99%				4.99%
Convertible Preferred Stock, Beneficial Ownership Limitation for Conversion Rights with Issuer Consent				9.99%				9.99%
Stock Issued During Period, Excess Value, Exchange of Convertible Securities								$ 50,000
Series B Preferred Stock [Member]
Preferred Stock, Preferred Dividends in Arrears Waived During Period								120,385
Secured Convertible Note Payable [Member]
Debt Instrument, Face Amount			$ 3,049,651			$ 3,049,651
Interest Payable, Current			4,595			4,595
Chief Executive Officer [Member] | Promissory Notes [Member]
Debt Instrument, Face Amount	$ 500,000									$ 500,000
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 1.20
Debt Instrument, Interest Rate, Stated Percentage										5.00%
Original Notes [Member]
Debt Instrument, Face Amount		$ 2,170,000
Embedded Derivative, Fair Value of Embedded Derivative Liability				$ 328,422				328,422
Gain (Loss) on Extinguishment of Debt, Total								$ (258,037)
Original Notes [Member] | Secured Convertible Note Payable [Member]
Interest Payable, Current			122,000			$ 122,000
Original Notes [Member] | Lender One [Member] | Secured Convertible Note Payable [Member]
Debt Instrument, Face Amount		$ 950,000
Debt Instrument, Convertible, Conversion Price | $ / shares		$ 2.25
Original Notes [Member] | J. David Luce [Member] | Convertible Notes Payable [Member]
Debt Instrument, Face Amount		$ 520,000
Debt Instrument, Convertible, Conversion Price | $ / shares		$ 3
Original Notes [Member] | Unsecured Promissory Note [Member] | Optimum Ventures, LLC and Hanif A. Roshan [Member]
Debt Instrument, Face Amount		$ 700,000
New Notes [Member]
Debt Instrument, Face Amount		$ 2,545,199
Debt Instrument, Convertible, Conversion Price | $ / shares		$ 2.03
Debt Instrument, Convertible, Number of Equity Instruments		1,253,792
Debt Instrument, Percentage of Conversion Price to Price per Share if Lower than Original Conversion Price		85.00%
Embedded Derivative, Fair Value of Embedded Derivative Liability		$ 328,422
Debt Instrument, Term		1 year
Debt Instrument, Interest Rate, Stated Percentage		5.00%
Debt Instrument, Period Following National Securities Exchange Listing of Common Stock to Commence Redemption Right by Debtor		1 year
Debt Instrument, Redemption Price, Percentage		110.00%
Debt Instrument, Event of Default, Outstanding Principal and Interest Payable at Lenders' Option, Percent		110.00%
New Notes [Member] | Secured Convertible Note Payable [Member]
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 1.20
Debt Instrument, Convertible, Number of Equity Instruments	2,120,999
Embedded Derivative, Loss on Embedded Derivative			$ 908,728
New Notes [Member] | Chief Executive Officer [Member] | Secured Convertible Note Payable [Member]
Debt Instrument, Face Amount	$ 255,417
New Notes [Member] | Optimum Ventures, LLC [Member] | Secured Convertible Note Payable [Member]
Debt Instrument, Face Amount	591,613
Additional Senior Note [Member] | Secured Convertible Note Payable [Member]
Debt Instrument, Face Amount	$ 504,452
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 1.20
Debt Instrument, Convertible, Number of Equity Instruments	420,376

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Note 6 - Related Party Notes Payable - Related Party Notes Payable (Details) - USD ($)	Mar. 31, 2018	Jun. 30, 2017
Related party notes payable and related party accrued interest	$ 3,171,660	$ 2,545,199
Secured Convertible Note Payable [Member]
Related party notes payable, principal	3,049,651
Accrued interest	4,595
Related party notes payable and related party accrued interest	3,054,246	2,545,199
Secured Convertible Note Payable [Member] | Lender One [Member]
Related party notes payable, principal	1,056,875
Accrued interest	1,593
Related party notes payable and related party accrued interest	$ 1,058,468	$ 1,056,875
Debt instrument, stated percentage	5.00%	5.00%
Secured Convertible Note Payable [Member] | Lender Two [Member]
Related party notes payable, principal	$ 641,294
Accrued interest	966
Related party notes payable and related party accrued interest	$ 642,260	$ 641,294
Debt instrument, stated percentage	5.00%	5.00%
Secured Convertible Note Payable [Member] | Lender Three [Member]
Related party notes payable, principal	$ 255,417
Accrued interest	385
Related party notes payable and related party accrued interest	$ 255,802	$ 255,417
Debt instrument, stated percentage	5.00%	5.00%
Secured Convertible Note Payable [Member] | Lender Four [Member]
Related party notes payable, principal	$ 591,613
Accrued interest	891
Related party notes payable and related party accrued interest	$ 592,504	$ 591,613
Debt instrument, stated percentage	5.00%	5.00%
Secured Convertible Note Payable [Member] | Lender Five [Member]
Related party notes payable, principal	$ 504,452
Accrued interest	760
Related party notes payable and related party accrued interest	$ 505,212
Debt instrument, stated percentage	5.00%

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Note 7 - Equity (Details Textual) - USD ($)	9 Months Ended
	Mar. 31, 2018	Mar. 27, 2018	Mar. 26, 2018	Jun. 30, 2017
Preferred Stock, Par or Stated Value Per Share	$ 0.10			$ 0.10
New Notes Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		825,144
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 1.22	$ 2.07
Series E Convertible Preferred Stock [Member]
Preferred Stock, Shares Outstanding, Ending Balance	25,000			25,000
Convertible Preferred Stock, Aggregate Shares Issued upon Conversion	187,500			187,500
Convertible Preferred Stock, Conversion Price	$ 4			$ 4
Preferred Stock, Par or Stated Value Per Share	$ 30			$ 30
Preferred Stock, Period Following Issuance Date to Initiate Redemption	1 year
Preferred Stock, Dividend Rate, Percentage	5.00%
Dividends Payable	$ 39,000
Series D Convertible Preferred Stock [Member]
Preferred Stock, Shares Outstanding, Ending Balance	605,000			605,000
Convertible Preferred Stock, Aggregate Shares Issued upon Conversion	619,154
Convertible Preferred Stock, Conversion Price	$ 9.77139
Preferred Stock, Dividend Rate, Percentage	5.00%
Dividends Payable	$ 863,000
Preferred Stock, Redemption Price Per Share	$ 10

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Note 7 - Equity - Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Basic earnings (loss) per share
Net (loss) earnings	$ (1,686,242)	$ 418,059	$ (5,796,633)	$ 245,154
Preferred stock dividends	(85,699)	(74,863)	(255,948)	(276,111)
Net (loss) earnings available to common shareholders after preferred stock dividends	$ (1,771,941)	$ 343,196	$ (6,052,581)	$ (30,957)
Weighted average shares used in the computation of basic earning per share (in shares)	7,249,370	7,168,329	7,249,370	6,312,344
(Loss) earnings per share - basic (in dollars per share)	$ (0.25)	$ 0.05	$ (0.83)	$ 0
Dilutive earnings (loss) per share
(Loss) earnings available to common shareholders	$ (1,771,941)	$ 343,196	$ (6,052,581)	$ (30,957)
Weighted average shares used in the computation of diluted (loss) earnings per share (in shares)	7,249,370	7,168,329	7,249,370	6,312,344
Dilutive effect of options, warrants, convertible debt and convertible preferred stock (in shares)		1,597,328
Shares used in the computation of diluted (loss) earnings per share (in shares)	7,249,370	8,765,657	7,249,370	6,312,344
(Loss) earnings per share - diluted (in dollars per share)	$ (0.25)	$ 0.04	$ (0.83)	$ 0
Employee Stock Option [Member]
Dilutive earnings (loss) per share
Anti-Dilutive Options Excluded (in shares)	6,611,355	3,545,077	6,611,355	6,919,034

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Note 7 - Equity - Warrant Activity (Details) - Warrant [Member] - USD ($)	9 Months Ended	12 Months Ended
	Mar. 31, 2018	Jun. 30, 2017
Warrants outstanding (in shares)	4,150,535
Warrants outstanding, weighted average exercise price per share (in dollars per share)	$ 4.67
Warrants outstanding, weighted average remaining contractual life (Year)	3 years 40 days	3 years 317 days
Warrants outstanding, aggregate intrinsic value		$ 42,582
Warrants issued (in shares)
Warrants issued, weighted average exercise price per share (in dollars per share)
Warrants expired (in shares)	(25,000)
Warrants expired, weighted average exercise price per share (in dollars per share)	$ 12.06
Warrants outstanding (in shares)	4,125,535	4,150,535
Warrants outstanding, weighted average exercise price per share (in dollars per share)	$ 4.44	$ 4.67
Warrants exercisable (in shares)	4,069,979
Warrants exercisable, weighted average exercise price per share (in dollars per share)	$ 4.05
Warrants exercisable, weighted average remaining contractual life (Year)	3 years 127 days
Warrants exercisable, aggregate intrinsic value

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Note 8 - Share-based Compensation (Details Textual) - USD ($)		3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Allocated Share-based Compensation Expense, Total		$ 117,000	$ 38,000	$ 562,000	$ 186,000
Non-employee Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross				0
Chief Executive Officer [Member] | Omnibus Equity Incentive Plan 2011 [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	40,724
Non-Executives [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross				45,555
Non-Executives [Member] | Omnibus Equity Incentive Plan 2011 [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	40,724

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Note 8 - Share-based Compensation - Stock Option Activity (Details) - USD ($)	9 Months Ended	12 Months Ended
	Mar. 31, 2018	Jun. 30, 2017
Employees [Member]
Outstanding, beginning of period (in shares)	226,902
Outstanding, weighted average exercise price (in dollars per share)	$ 9.04
Outstanding, average remaining contractual life (Year)	6 years 292 days	6 years 124 days
Number of options granted (in shares)	50,000
Granted, weighted average exercise price (in dollars per share)	$ 2
Granted, average remaining contractual life (Year)	9 years 164 days
Number of options expired/forfeited (in shares)	(11,556)
Expired/forfeited, weighted average exercise price (in dollars per share)	$ 23.40
Expired/forfeited, average remaining contractual life (Year)
Outstanding, end of period (in shares)	265,346	226,902
Outstanding, weighted average exercise price (in dollars per share)	$ 7.08	$ 9.04
Exercisable (in shares)	143,917
Exercisable, weighted average exercise price (in dollars per share)	$ 11.50
Exercisable, average remaining contractual life (Year)	4 years 251 days
Non-Executives [Member]
Outstanding, beginning of period (in shares)	602,311
Outstanding, weighted average exercise price (in dollars per share)	$ 3.57
Outstanding, average remaining contractual life (Year)	7 years 361 days	6 years 40 days
Number of options granted (in shares)	45,555
Granted, weighted average exercise price (in dollars per share)	$ 1.59
Granted, average remaining contractual life (Year)	9 years 182 days
Number of options expired/forfeited (in shares)	(102,807)
Expired/forfeited, weighted average exercise price (in dollars per share)	$ 5.33
Expired/forfeited, average remaining contractual life (Year)
Outstanding, end of period (in shares)	545,059	602,311
Outstanding, weighted average exercise price (in dollars per share)	$ 3.07	$ 3.57
Outstanding, aggregate intrinsic value
Granted, aggregate intrinsic value
Expired/forfeited, aggregate intrinsic value

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Note 8 - Share-based Compensation - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member]	9 Months Ended
	Mar. 31, 2018 $ / shares shares
Number of RSUs outstanding (in shares) | shares	411,429
RSUs outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 1.75
Number of RSUs granted (in shares) | shares	201,448
RSUs granted, weighted average grant date fair value (in dollars per share) | $ / shares	$ 0.78
Number of RSUs expired/forfeited (in shares) | shares	(57,429)
RSUs expired/forfeited, weighted average grant date fair value (in dollars per share) | $ / shares	$ 0.48
Number of RSUs outstanding (in shares) | shares	555,448
RSUs outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 1.42

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Note 9 - Fair Value Measurements and Other Financial Instruments (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Gain (Loss) on Derivative Instruments, Net, Pretax, Total	$ (1,285,842)	$ 256,806	$ (919,978)	$ 392,407

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Note 9 - Fair Value Measurements and Other Financial Instruments - Valuation Techniques (Details)	Mar. 31, 2018
Minimum [Member] | Measurement Input, Exercise Price [Member]
Derivative valuation assumption	1.2
Minimum [Member] | Measurement Input, Risk Free Interest Rate [Member]
Derivative valuation assumption	2.07
Minimum [Member] | Measurement Input, Price Volatility [Member]
Derivative valuation assumption	115
Minimum [Member] | Measurement Input, Expected Term [Member]
Derivative valuation assumption	0.97
Maximum [Member] | Measurement Input, Exercise Price [Member]
Derivative valuation assumption	1.22
Maximum [Member] | Measurement Input, Risk Free Interest Rate [Member]
Derivative valuation assumption	2.55
Maximum [Member] | Measurement Input, Price Volatility [Member]
Derivative valuation assumption	150
Maximum [Member] | Measurement Input, Expected Term [Member]
Derivative valuation assumption	5.32

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Note 9 - Fair Value Measurements and Other Financial Instruments - Summary in Changes in Fair Value (Details)	9 Months Ended
	Mar. 31, 2018 USD ($)
Balance, beginning of period	$ 551,040
Change in fair value of derivative liabilities	919,978
Balance, end of period	1,471,018
Warrant [Member]
Balance, beginning of period	435,036
Change in fair value of derivative liabilities	127,254
Balance, end of period	562,290
Convertible Notes [Member]
Balance, beginning of period	116,004
Change in fair value of derivative liabilities	792,724
Balance, end of period	$ 908,728

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Note 9 - Fair Value Measurements and Other Financial Instruments - Derivative Liabilities (Details) - USD ($)	Mar. 31, 2018	Jun. 30, 2017
Derivative liabilities	$ 1,471,018	$ 551,040
Fair Value, Inputs, Level 1 [Member]
Derivative liabilities
Fair Value, Inputs, Level 2 [Member]
Derivative liabilities
Fair Value, Inputs, Level 3 [Member]
Derivative liabilities	$ 1,471,018	$ 551,040

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Note 10 - Commitments and Contingencies (Details Textual) - USD ($)						3 Months Ended
	Mar. 29, 2018	Mar. 12, 2018	Feb. 15, 2018	Sep. 06, 2016	Jun. 22, 2016	Mar. 31, 2018
Offices in New Jersey [Member]
Lessee, Operating Lease, Term of Contract						6 years
Lessee, Operating Lease, Renewal Term						5 years
Offices in New Jersey [Member] | Letter of Credit [Member]
Repayments of Debt						$ 121,000
Offices in New Jersey [Member] | Minimum [Member]
Operating Leases, Yearly Rent Expense						135,000
Offices in New Jersey [Member] | Maximum [Member]
Operating Leases, Yearly Rent Expense						$ 148,000
Severance Compensation Arbitration Filed by Former CEO [Member]
Loss Contingency, Damages Sought, Value					$ 341,620
Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Radius Foundation, Inc. and William Bramlett, Ph.D. [Member]
Litigation Settlement, Amount Awarded from Other Party	$ 116,865
Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Trimana, LLC d/b/a Via Medical Center [Member]
Litigation Settlement, Amount Awarded from Other Party		$ 104,652
Cogmedix, Inc. v. Authentidate Holding Corp [Member]
Loss Contingency, Damages Sought, Value				$ 227,061
Litigation Settlement, Amount Awarded to Other Party			$ 320,638

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Note 11 - Related Party Transactions (Details Textual)					1 Months Ended	3 Months Ended		9 Months Ended
	Mar. 27, 2018 USD ($) $ / shares shares	Mar. 20, 2017 USD ($) $ / shares	Jan. 01, 2017 USD ($)	Jan. 20, 2016 USD ($)	Feb. 28, 2018 USD ($)	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Mar. 26, 2018 $ / shares	Jan. 23, 2018 USD ($)	Jan. 04, 2018 USD ($)	Jan. 31, 2017 USD ($)
Interest Expense, Related Party						$ 37,000	$ 87,000	$ 106,000	$ 286,000
Moncada [Member]
Consulting Agreement, Fee Amount upon Execution												$ 40,000
Consulting Agreement, Fee Amount Per Month					$ 25,000
New Notes Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares	825,144
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 1.22									$ 2.07
New Notes [Member]
Debt Instrument, Face Amount		$ 2,545,199
Debt Instrument, Convertible, Number of Equity Instruments		1,253,792
Debt Instrument, Interest Rate, Stated Percentage		5.00%
Debt Instrument, Convertible, Conversion Price | $ / shares		$ 2.03
Original Notes [Member]
Debt Instrument, Face Amount		$ 2,170,000
Secured Convertible Note Payable [Member]
Debt Instrument, Face Amount						3,049,651		3,049,651
Interest Payable, Current						4,595		4,595
Secured Convertible Note Payable [Member] | New Notes [Member]
Debt Instrument, Convertible, Number of Equity Instruments	2,120,999
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 1.20
Secured Convertible Note Payable [Member] | Original Notes [Member]
Interest Payable, Current						122,000		122,000
Hanif A. Roshan [Member] | Unsecured Promissory Note [Member]
Debt Instrument, Face Amount													$ 2,545,199
Chief Executive Officer [Member] | Secured Convertible Note Payable [Member] | New Notes [Member]
Debt Instrument, Face Amount	$ 255,417
Chief Executive Officer [Member] | Promissory Notes [Member]
Debt Instrument, Face Amount	$ 500,000										$ 500,000
Debt Instrument, Interest Rate, Stated Percentage											5.00%
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 1.20
Optimum Ventures, LLC [Member] | Secured Convertible Note Payable [Member] | New Notes [Member]
Debt Instrument, Face Amount	$ 591,613
Facilities Leased [Member] | Centennial Properties of Georgia, LLC [Member]
Lessee, Operating Lease, Term of Contract				12 years
Operating Leases, Rent Expense, Net, Total						144,000	$ 140,000	432,000	$ 419,000
Facilities Leased [Member] | Centennial Properties of Georgia, LLC [Member] | Minimum [Member]
Operating Leases, Monthly Rent Expense				$ 46,500
Facilities Leased [Member] | Centennial Properties of Georgia, LLC [Member] | Maximum [Member]
Operating Leases, Monthly Rent Expense				$ 60,000
Residential Premises Leased [Member] | Hanif A. Roshan [Member]
Lessee, Operating Lease, Term of Contract			1 year
Operating Leases, Monthly Rent Expense			$ 7,500
Operating Leases, Rent Expense, Net, Total						$ 22,500		$ 67,500
Operating Leases, Increase in Rent Expense Upon Each Renewal			3.00%

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Note 12 - Segment Information (Details Textual)	9 Months Ended
	Mar. 31, 2018
Number of Operating Segments	2

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Note 12 - Segment Information - Selected Financial Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Jun. 30, 2017
Net revenues	$ 4,055,579	$ 5,531,810	$ 12,944,853	$ 16,468,699
Cost of revenues	958,113	897,590	2,975,231	2,855,754
Operating expenses	4,384,702	5,039,503	13,030,336	15,914,130
Operating income (loss)	(329,123)	492,307	(85,483)	554,569
Total assets	12,567,744		12,567,744		$ 16,731,678
Web-based Software [Member]
Net revenues	244,135	319,176	744,985	999,333
Cost of revenues	44,297	52,438	164,403	203,691
Operating expenses	436,359	393,510	1,644,812	1,558,364
Operating income (loss)	(192,223)	(74,334)	(899,827)	(559,031)
Total assets	7,520,405		7,520,405		11,772,874
Laboratory Testing Services [Member]
Net revenues	3,811,444	5,212,634	12,199,868	15,469,366
Cost of revenues	913,816	845,152	2,810,828	2,652,063
Operating expenses	3,948,343	4,645,993	11,385,524	14,355,766
Operating income (loss)	(110,629)	$ 566,641	840,614	$ 1,113,600
Total assets	$ 5,073,608		$ 5,073,608		$ 4,958,804