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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Vaso Corporation (QX) | USOTC:VASO | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.01 | -3.81% | 0.2524 | 0.2521 | 0.27 | 0.265 | 0.2521 | 0.258 | 60,461 | 21:04:43 |
[X] |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
11-2871434
|
(State or other jurisdiction of
|
(IRS Employer
|
incorporation or organization)
|
Identification No.)
|
137 Commercial Street, Plainview, New York
|
11803
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Large Accelerated Filer ☐
|
Accelerated Filer ☐
|
Non-Accelerated Filer ☐
|
Smaller Reporting Company ☒
|
Emerging Growth Company ☐ |
Page | ||
|
|
|
|
||
|
||
|
|
|
|
|
|
|
|
|
|
|
•
|
IT segment, operating through a wholly-owned subsidiary VasoTechnology, Inc., primarily focuses on healthcare IT and managed network technology services;
|
•
|
Professional sales service segment, operating throug•h a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, primarily focuses on the sale of healthcare capital equipment for General Electric Healthcare ("GEHC") into the health provider middle market; and
|
•
|
Equipment segment, primarily focuses on the design, manufacture, sale and service of proprietary medical devices, operating through a wholly-owned subsidiary VasoMedical, Inc., which in turn operates through Vasomedical Solutions, Inc. for domestic business and Vasomedical Global Corp. for international business, respectively.
|
•
|
Managed diagnostic imaging applications (national channel partner of GEHC IT).
|
•
|
Managed network infrastructure (routers, switches and other core equipment).
|
•
|
Managed network transport (FCC licensed carrier reselling 175+ facility partners).
|
•
|
Managed security services (partner with major cybersecurity technologies firms including
IBM and Palo Alto).
|
•
|
GEHC diagnostic imaging capital equipment.
|
•
|
GEHC service agreements for the above equipment.
|
•
|
GEHC and third party financial services for the above equipment.
|
•
|
Biox™ series Holter monitors and ambulatory blood pressure recorders.
|
•
|
ARCS™ series analysis, reporting and communication software for physiological signals such as ECG and blood pressure.
|
•
|
MobiCare™ multi-parameter wireless vital-sign monitoring system.
|
•
|
EECP
®
therapy systems, used for non-invasive, outpatient treatment of ischemic heart disease.
|
· |
medical reimbursement;
|
· |
actual or anticipated fluctuations in our operating results;
|
· |
announcements of technological innovations, new products or pricing by our competitors;
|
· |
the timing of patent and regulatory approvals;
|
· |
the timing and extent of technological advancements;
|
· |
the sales of our common stock by affiliates or other shareholders with large holdings;
|
· |
overall market fluctuations and domestic and worldwide economic conditions; and
|
· |
other factors described in the "Risk Factors" and elsewhere in this Report.
|
ITEM 5 – |
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Year ended December 31, 2017
|
Year ended December 31, 2016
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
First quarter
|
$
|
0.14
|
$
|
0.09
|
$
|
0.19
|
$
|
0.16
|
||||||||
Second quarter
|
$
|
0.11
|
$
|
0.09
|
$
|
0.18
|
$
|
0.15
|
||||||||
Third quarter
|
$
|
0.09
|
$
|
0.07
|
$
|
0.17
|
$
|
0.13
|
||||||||
Fourth quarter
|
$
|
0.08
|
$
|
0.05
|
$
|
0.16
|
$
|
0.11
|
||||||||
•
|
IT segment, operating through a wholly-owned subsidiary VasoTechnology, Inc., primarily focuses on healthcare IT and managed network technology services;
|
•
|
Professional sales service segment, operating through a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, primarily focuses on the sale of healthcare capital equipment for General Electric Healthcare (GEHC) into the health provider middle market; and
|
•
|
Equipment segment, primarily focuses on the design, manufacture, sale and service of proprietary medical devices, operating through a wholly-owned subsidiary VasoMedical, Inc., which in turn operates through Vasomedical Solutions, Inc. for domestic business and Vasomedical Global Corp. for international business, respectively.
|
•
|
Managed diagnostic imaging applications (national channel partner of GEHC IT).
|
•
|
Managed network infrastructure (routers, switches and other core equipment).
|
•
|
Managed network transport (FCC licensed carrier reselling 175+ facility partners).
|
•
|
Managed security services (partner with major cybersecurity technologies firms including
IBM and Palo Alto). |
•
|
GEHC diagnostic imaging capital equipment.
|
•
|
GEHC service agreements for the above equipment.
|
•
|
GEHC and third party financial services for the above equipment.
|
•
|
Biox™ series Holter monitors and ambulatory blood pressure recorders.
|
•
|
ARCS™ series analysis, reporting and communication software for physiological signals such as ECG and blood pressure.
|
•
|
MobiCare™ multi-parameter wireless vital-sign monitoring system.
|
•
|
EECP
®
therapy systems, used for non-invasive, outpatient treatment of ischemic heart disease.
|
· |
Continue to expand our product and service offerings as well as market penetration in our healthcare IT business.
|
· |
Continue to expand our managed network services business in the healthcare market through our healthcare IT business and through the introduction of additional functionality to our existing capabilities.
|
· |
Build our brand name in the healthcare provision middle market with the goal of establishing our technology platform and managed services methodology as the standard for secure, efficient use of equipment
and applications ecosystems.
|
· |
Maintain and improve business performance in our professional sales service segment by increasing market penetration of the GE Healthcare product modalities we represent, and possibly building new teams to represent other vendors.
|
· |
Maintain and grow our equipment business by aligning the cost structure with revenue growth.
|
· |
Continue to seek accretive partnership and acquisition opportunities.
|
(in thousands) | ||||||||
|
Year ended December 31,
|
|||||||
2017
|
2016
|
|||||||
|
||||||||
Net (loss) income
|
$
|
(4,539
|
)
|
$
|
820
|
|||
Interest expense (income), net
|
651
|
634
|
||||||
Income tax expense
|
134
|
281
|
||||||
Depreciation and amortization
|
2,426
|
2,191
|
||||||
Share-based compensation
|
514
|
428
|
||||||
Adjusted EBITDA
|
$
|
(814
|
)
|
$
|
4,354
|
1.
|
The election of two directors in Class III – David Lieberman and Jun Ma - to hold office until the 2020 Annual Meeting of Stockholders; and,
|
2.
|
The appointment of Marcum LLP as our independent registered public accountants for the year ending December 31, 2017.
|
Approved Proposals
|
Shareholder votes cast
|
|||||||||||||||
For
|
Withheld
|
Against
|
Abstain
|
|||||||||||||
Election of Directors
|
||||||||||||||||
David Lieberman
|
89,396,401
|
10,428,637
|
-
|
-
|
||||||||||||
Jun Ma
|
89,746,676
|
10,078,362
|
-
|
-
|
||||||||||||
Appointment of public accountants
|
123,306,576
|
-
|
16,555,724
|
1,443,041
|
||||||||||||
Name of Director
|
Age
|
Principal Occupation
|
Director Since
|
Joshua Markowitz (2)
|
62
|
Chairman of the Board and Director
|
June, 2015
|
David Lieberman
|
73
|
Vice Chairman of the Board and Director
|
February, 2011
|
Jun Ma
|
54
|
President, Chief Executive Officer and Director
|
June, 2007
|
Peter C. Castle
|
49
|
Chief Operating Officer and Director
|
August, 2010
|
Randy Hill
|
71
|
Director
|
April, 2013
|
Behnam Movaseghi (1) (2)
|
64
|
Director
|
July, 2007
|
Edgar Rios (1)
|
65
|
Director
|
February, 2011
|
(1) Member of the Audit Committee
|
|||
(2) Member of Compensation Committee
|
•
|
4 meetings of the Board of Directors
|
•
|
4 meetings of the Audit Committee
|
•
|
2 meetings of the Compensation Committee
|
Name of Officer
|
Age
|
Position held with the Company
|
||
Jun Ma, PhD
|
54
|
President, Chief Executive Officer
|
||
Peter C. Castle
|
49
|
Chief Operating Officer
|
||
Michael J. Beecher
|
73
|
Chief Financial Officer and Secretary
|
||
Jonathan P. Newton
|
57
|
Vice President of Finance and Treasurer
|
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock Awards
($) (1)
|
Option Awards ($)
|
Non-Equity Incentive Plan Compensation ($)
|
Nonqualified Deferred Compensation Earnings ($)
|
All Other Compensation ($) (2)
|
Total ($)
|
||||||||||
Jun Ma, PhD
|
2017
|
375,000
|
45,000 | 18,000 |
61,870
|
499,870
|
|||||||||||||
Chief Executive Officer
|
2016
|
375,000
|
30,000
|
216,000
|
67,831
|
688,831
|
|||||||||||||
Peter C. Castle
|
2017
|
350,000
|
20,000
|
18,000 |
45,341
|
433,341
|
|||||||||||||
Chief Operating Officer
|
2016
|
350,000
|
-
|
144,000
|
59,352
|
553,352
|
|||||||||||||
Shawl Lobree
|
2017
|
300,000
|
100,000 | - |
23,597
|
423,597
|
|||||||||||||
President of VasoHealthcare
|
2016
|
300,000
|
100,000
|
149,000
|
12,506
|
561,506
|
|||||||||||||
Michael J. Beecher
|
2017
|
215,000
|
15,000 | 4,500 |
14,564
|
249,064
|
|||||||||||||
Chief Financial Officer and Secretary
|
2016
|
215,000
|
15,000
|
81,000
|
16,512
|
327,512
|
|||||||||||||
Jonathan P. Newton
|
2017
|
175,000
|
10,000 | 3,000 |
15,652
|
203,652
|
|||||||||||||
Vice President of Finance and Treasurer
|
2016
|
175,000
|
10,000
|
54,000
|
17,280
|
256,280
|
|||||||||||||
1.
|
Represents fair value on the date of grant. See Note B to the Consolidated Financial Statements included in our Form 10–K for the year ended December 31, 2017 for a discussion of the relevant assumptions used in calculating grant date fair value.
|
2.
|
Represents tax gross-ups, vehicle allowances, Company-paid life insurance, and amounts matched in the Company's 401(k) Plan.
|
Option Awards
|
Stock Awards
|
||||||||||||||||||||||
Name
|
Number of Securities Underlying Unexercised Options - Exercisable
|
Number of Securities Underlying Unexercised Options - Unexercisable
|
Equity Incentive Plan Awards: Number of Underlying Unexercised Unearned Options
|
Option Exercise Price
|
Option Expiration Date
|
Number of Shares or Units of Stock That Have Not Vested
|
Market Value of Shares or Units of Stock That Have Not Vested
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
|
||||||||||||||
Jun Ma, PhD
|
350,000
|
17,500
|
-
|
-
|
|||||||||||||||||||
Peter C. Castle | 700,000 | 35,000 | - | - | |||||||||||||||||||
Michael J. Beecher
|
150,000
|
7,500
|
-
|
-
|
|||||||||||||||||||
Jonathan P. Newton
|
100,000
|
5,000
|
-
|
-
|
|||||||||||||||||||
Name
|
Number of Shares or Units of Stock That Have Not Vested
|
Vesting Date
|
|||
Jun Ma, PhD
|
350,000
|
7/5/2018
|
|||
Peter C. Castle
|
250,000
|
6/15/2018
|
|||
200,000
|
7/5/2018
|
||||
250,000
|
6/15/2019
|
||||
Michael J. Beecher
|
150,000
|
7/5/2018
|
|||
Jonathan P. Newton
|
100,000
|
7/5/2018
|
|||
Fees Earned
or Paid
in Cash
|
Stock
Awards
|
Option
Awards
|
Non-equity
Incentive Plan Compensation
|
Nonqualified Deferred Compensation Earnings
|
All Other
Compensation (1)
|
Total
|
||||||||||||||||
Name
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||||||||||
David Lieberman
|
40,000
|
-
|
-
|
-
|
-
|
18,711
|
58,711
|
|||||||||||||||
Jun Ma, PhD
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Randy Hill
|
30,000
|
-
|
-
|
-
|
-
|
101,500
|
131,500
|
|||||||||||||||
Peter Castle
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Joshua Markowitz
|
50,000
|
-
|
-
|
-
|
-
|
1,500
|
51,500
|
|||||||||||||||
Behnam Movaseghi
|
55,000
|
-
|
-
|
-
|
-
|
1,500
|
56,500
|
|||||||||||||||
Edgar Rios
|
55,000
|
-
|
-
|
-
|
-
|
1,500
|
56,500
|
Name of Beneficial Owner
|
Common Stock Beneficially Owned (1)
|
% of Common Stock (2)
|
||||||
Simon Srybnik (3) (4)
|
55,738,318
|
33.66
|
%
|
|||||
Estate of Louis Srybnik (3) (4)
|
45,165,993
|
27.27
|
%
|
|||||
Jun Ma, PhD**
|
4,879,841
|
2.95
|
%
|
|||||
Peter Castle **
|
2,825,000
|
1.71
|
%
|
|||||
Edgar Rios**
|
1,625,000
|
*
|
||||||
David Lieberman **
|
1,599,200
|
*
|
||||||
Behnam Movaseghi **
|
1,189,404
|
*
|
||||||
Michael J. Beecher **
|
1,165,400
|
*
|
||||||
Randy Hill**
|
950,000
|
*
|
||||||
Jonathan Newton **
|
725,000
|
*
|
||||||
Joshua Markowitz **
|
350,000
|
*
|
||||||
** Directors and executive officers as a group (9 persons)
|
15,308,845
|
9.24
|
% | |||||
|
|
|
|
1.
|
No officer or director owns more than one percent of the issued and outstanding common stock of the Company unless otherwise indicated.
|
2.
|
Applicable percentages are based on 165,600,550 shares of common stock outstanding as of March 23, 2018, adjusted as required by rules promulgated by the SEC.
|
3.
|
Simon Srybnik and the estate of his brother Louis Srybnik are the sole shareholders of Kerns, which is the record holder of 25,714,286 shares. The reporting persons, accordingly, share voting and dispositive powers over the 25,714,286 shares held by Kerns. As a result, they may be deemed to be the co-beneficial owners of an aggregate of 25,714,286 shares. Mr. Simon Srybnik also holds sole dispositive power over 748,125 shares of common stock awarded him as of December 31, 2017, as well as 11,460,900 additional shares of common stock. The estate of Louis Srybnik holds sole dispositive power over 1,636,700 shares of common stock.
|
4.
|
Simon Srybnik and the estate of Louis Srybnik also each own 35% of the outstanding shares of Living Data Technology Corporation ("Living Data"). The reporting persons, accordingly, share voting and dispositive powers over the 17,815,007 shares of our common stock owned by Living Data and, as a result, may be deemed to be the co-beneficial owners thereof.
|
Principal
|
Interest
|
|||||||
Outstanding
|
Paid
|
|||||||
Peter C. Castle
|
$
|
750,000
|
$
|
68,438
|
||||
David Lieberman
|
$
|
700,000
|
$
|
63,875
|
||||
Jun Ma, PhD
|
$
|
300,000
|
$
|
27,375
|
•
|
a director who is, or at any time during the past three years was, employed by us;
|
•
|
a director who accepted or who has a family member who accepted any compensation from us in excess of $100,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than the following:
|
o
|
compensation for service on the Board of Directors or any committee thereof;
|
o
|
compensation paid to a family member who is one of our employees (other than an executive officer); or
|
o
|
under a tax-qualified retirement plan, or non-discretionary compensation;
|
•
|
a director who is a family member of an individual who is, or at any time during the past three years was, employed by us as an executive officer;
|
•
|
a director who is, or has a family member who is, a partner in, or a controlling stockholder or an executive officer of, any organization to which we made, or from which we received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient's consolidated gross revenues for that year, or $200,000, whichever is more, other than the following:
|
o
|
payments arising solely from investments in our securities; or
|
o
|
payments under non-discretionary charitable contribution matching programs;
|
•
|
a director who is, or has a family member who is, employed as an executive officer of another entity where at any time during the past three years any of our executive officers served on the compensation committee of such other entity; or
|
•
|
a director who is, or has a family member who is, a current partner of our outside auditor, or was a partner or employee of our outside auditor who worked on our audit at any time during any of the past three years.
|
2017
|
2016
|
|||||||
Audit fees
|
$
|
261,445
|
$
|
252,925
|
||||
Tax fees
|
-
|
-
|
||||||
All other fees
|
-
|
-
|
||||||
Total
|
$
|
99,986
|
$
|
252,925
|
||||
(1) See Index to Consolidated Financial Statements on page F-1 at beginning of attached financial statements.
|
(a)
|
Exhibits
|
(3)(i)
|
(a)
|
Restated Certificate of Incorporation (2)
|
(b) | Certificate of Designations of Preferences and Rights of Series E Convertible Preferred Stock (8) | |
(c) | Certificate of Amendment to Certificate of Incorporation (16) | |
(3)(ii) |
|
By-Laws (1)
|
(4)
|
(a)
|
Specimen Certificate for Common Stock (1)
|
(b)
|
Specimen Certificate for Series E Convertible Preferred Stock
(10)
|
|
(c) |
Secured Subordinated Note, dated as of May 29, 2015, between Vasomedical, Inc. and MedTechnology
Investments LLC
(14)
|
|
(10)
|
(a)
|
1995 Stock Option Plan (3)
|
(b)
|
Outside Director Stock Option Plan (3)
|
|
(c)
|
1997 Stock Option Plan
(4)
|
|
(d)
|
1999 Stock Option Plan, as amended
(5)
|
|
(e)
|
2004 Stock Option/Stock Issuance Plan
(6)
|
|
(f)
|
Securities Purchase Agreement dated June 21, 2007 between Registrant and Kerns Manufacturing Corp.
(7)
|
|
(g)
|
Form of Common Stock Purchase Warrant to dated June 21, 2007
(7)
|
|
(h)
|
Registration Rights Agreement dated June 21, 2007 between Registrant, Kerns Manufacturing Corp.
and Living Data Technology Corporation.
(7)
|
|
(i)
|
Form of Stock Purchase Agreement
(8)
|
|
(j)
|
Redacted Sales Representative Agreement between GE Healthcare Division of General Electric
Company and Vaso Diagnostics, Inc. d/b/a VasoHealthcare, a subsidiary of Vasomedical, Inc.
dated as of May 19, 2010
(9)
.
|
|
(k)
|
2010 Stock Plan
(10)
.
|
|
(l)
|
Employment Agreement entered into as of March 21, 2011 between Vasomedical, Inc. and Jun Ma,
as amended.
(13)
|
|
(m)
|
Stock Purchase Agreement dated as of August 19, 2011 among Vasomedical, Inc.,
Fast Growth Enterprises Limited (FGE) and the FGE Shareholders
(11)
|
|
(n)
|
Amendment to Sales Representative Agreement between GE Healthcare Division of General Electric
Company and Vaso Diagnostics, Inc. d/b/a VasoHealthcare, a subsidiary of Vasomedical, Inc. dated as of
June 20, 2012
(12)
|
|
(o) | 2013 Stock Plan (17) | |
(p) |
Asset Purchase and Sale Agreement, dated as of May 29, 2015, by and among Vasomedical, Inc.,
VasoTechnology, Inc., NetWolves LLC and NetWolves Corporation
(14)
|
|
(q) |
Subordinated Security Agreement dated as of May 29, 2015 by and between Vasomedical, Inc.
and MedTechnology Investments LLC
(14)
|
|
(r) | Employment Agreement dated as of June 1, 2015 between Vasomedical, Inc. and Peter C. Castle (15) | |
(s) | 2016 Stock Plan (18) |
(31)
|
Certification Reports pursuant to Securities Exchange Act Rule 13a - 14 | ||
(32)
|
Certification Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
(1)
|
Incorporated by reference to Registration Statement on Form S-18, No. 33-24095.
|
(2)
|
Incorporated by reference to Registration Statement on Form S-1, No. 33-46377 (effective 7/12/94).
|
(3)
|
Incorporated by reference to Report on Form 8-K dated January 24, 1995.
|
(4)
|
Incorporated by reference to Proxy Statement dated December 4, 1997.
|
(5)
|
Incorporated by reference to Report on Form 10-K for the fiscal year ended May 31, 2000.
|
(6)
|
Incorporated by reference to Notice of Annual Meeting of Stockholders dated October 28, 2004.
|
(7)
|
Incorporated by reference to Report on Form 8-K dated June 21, 2007.
|
(8)
|
Incorporated by reference to Report on Form 8-K dated June 21, 2010.
|
(9)
|
Incorporated by reference to Report on Form 8-K/A dated May 19, 2010 and filed November 9, 2010.
|
(10)
|
Incorporated by reference to Report on Form 10-K for the fiscal year ended May 31, 2010.
|
(11)
|
Incorporated by reference to Report on Form 10-K for the fiscal year ended May 31, 2011.
|
(12)
|
Incorporated by reference to Report on Form 8-K dated June 20, 2012.
|
(13)
|
Incorporated by reference to Report on Form 8-K dated March 21, 2011.
|
(14)
|
Incorporated by reference to Report on Form 8-K dated May 29, 2015.
|
(15)
|
Incorporated by reference to Report on Form 8-K dated October 8, 2015.
|
(16)
|
Incorporated by reference to Report on Form 10-Q for the quarter ended September 30, 2016.
|
(17)
|
Incorporated by reference to Report on Form 10-Q for the quarter ended September 30, 2013.
|
(18)
|
Incorporated by reference to Report on Form 10-Q for the quarter ended June 30, 2016.
|
VASO CORPORATION
|
||
By:
/s/ Jun Ma
|
||
Jun Ma
|
||
President, Chief Executive Officer,
|
||
and Director (Principal Executive Officer)
|
/
s/ Jun Ma
|
President, Chief Executive Officer and Director
|
|
Jun Ma
|
(Principal Executive Officer)
|
|
/s/ Michael Beecher
|
Chief Financial Officer (Principal Financial Officer)
|
|
Michael Beecher
|
||
/s/ Peter C. Castle | Chief Operating Officer and Director | |
Peter C. Castle | ||
/s/ Joshua Markowitz
|
Chairman of the Board
|
|
Joshua Markowitz
|
||
/s/ David Lieberman
|
Vice Chairman of the Board
|
|
David Lieberman
|
||
/s/ Randy Hill | Director | |
Randy Hill | ||
/s/ Edgar Rios
|
Director
|
|
Edgar Rios
|
||
/s/ Behnam Movaseghi
|
Director
|
|
Behnam Movaseghi
|
||
Page
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Financial Statements
|
|
Consolidated Balance Sheets as of December 31, 2017 and 2016
|
F-3
|
Consolidated Statements of Operations and Comprehensive (Loss) Income
|
|
for the years ended December 31, 2017 and 2016
|
F-4
|
Consolidated Statements of Changes in Stockholders' Equity
|
|
for the years ended December 31, 2017 and 2016
|
F-5
|
Consolidated Statements of Cash Flows
|
|
for the years ended December 31, 2017 and 2016
|
F-6
|
Notes to Consolidated Financial Statements
|
F-7 – F-35
|
Year ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Revenues
|
||||||||
Managed IT systems and services
|
$
|
42,581
|
$
|
39,448
|
||||
Professional sales services
|
26,443
|
28,524
|
||||||
Equipment sales and services
|
3,764
|
4,617
|
||||||
Total revenues
|
72,788
|
72,589
|
||||||
Cost of revenues
|
||||||||
Cost of managed IT systems and services
|
24,958
|
23,145
|
||||||
Cost of professional sales services
|
5,813
|
6,173
|
||||||
Cost of equipment sales and services
|
1,286
|
1,769
|
||||||
Total cost of revenues
|
32,057
|
31,087
|
||||||
Gross profit
|
40,731
|
41,502
|
||||||
Operating expenses
|
||||||||
Selling, general and administrative
|
43,618
|
39,408
|
||||||
Research and development
|
945
|
530
|
||||||
Total operating expenses
|
44,563
|
39,938
|
||||||
Operating (loss) income
|
(3,832
|
)
|
1,564
|
|||||
Other income (expense)
|
||||||||
Interest and financing costs
|
(674
|
)
|
(650
|
)
|
||||
Interest and other income, net
|
101
|
187
|
||||||
Total other expense, net
|
(573
|
)
|
(463
|
)
|
||||
(Loss) income before income taxes
|
(4,405
|
)
|
1,101
|
|||||
Income tax expense
|
(134
|
)
|
(281
|
)
|
||||
Net (loss) income
|
(4,539
|
)
|
820
|
|||||
Other comprehensive (loss) income
|
||||||||
Foreign currency translation gain (loss)
|
271
|
(249
|
)
|
|||||
Comprehensive (loss) income
|
$
|
(4,268
|
)
|
$
|
571
|
|||
(Loss) income per common share
|
||||||||
- basic and diluted
|
$
|
(0.03
|
)
|
$
|
0.01
|
|||
Weighted average common shares outstanding
|
||||||||
- basic
|
162,213
|
159,138
|
||||||
- diluted
|
162,213
|
159,396
|
Accumulated | ||||||||||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Paid-in- | Accumulated | Comprehensive | Stockholders' | |||||||||||||||||||||||||||
Shar
es
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Income (Loss)
|
Equity
|
|||||||||||||||||||||||||
Balance at December 31, 2015
|
168,750
|
$
|
168
|
(10,308
|
)
|
$
|
(2,000
|
)
|
$
|
62,263
|
$
|
(48,610
|
)
|
$
|
(80
|
)
|
$
|
11,741
|
||||||||||||||
Share-based compensation
|
3,949
|
4
|
-
|
-
|
424
|
-
|
-
|
428
|
||||||||||||||||||||||||
Shares issued to settle liability
|
1,113
|
2
|
-
|
-
|
176
|
-
|
-
|
178
|
||||||||||||||||||||||||
Shares not issued for employee tax liability
|
-
|
-
|
-
|
-
|
(7
|
)
|
-
|
-
|
(7
|
)
|
||||||||||||||||||||||
Foreign currency translation loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(249
|
)
|
(249
|
)
|
||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
820
|
-
|
820
|
||||||||||||||||||||||||
Balance at December 31, 2016
|
173,812
|
$
|
174
|
(10,308
|
)
|
$
|
(2,000
|
)
|
$
|
62,856
|
$
|
(47,790
|
)
|
$
|
(329
|
)
|
$
|
12,911
|
||||||||||||||
Share-based compensation
|
1,930
|
2
|
-
|
-
|
512
|
-
|
-
|
514
|
||||||||||||||||||||||||
Shares not issued for employee tax liability
|
-
|
-
|
-
|
-
|
(5
|
)
|
-
|
-
|
(5
|
)
|
||||||||||||||||||||||
Foreign currency
translation gain
|
-
|
-
|
-
|
-
|
-
|
-
|
271
|
271
|
||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(4,539
|
)
|
-
|
(4,539
|
)
|
||||||||||||||||||||||
Balance at December 31, 2017
|
175,742
|
$
|
176
|
(10,308
|
)
|
$
|
(2,000
|
)
|
$
|
63,363
|
$
|
(52,329
|
)
|
$
|
(58
|
)
|
$
|
9,152
|
||||||||||||||
.
|
•
|
IT segment, operating through a wholly-owned subsidiary VasoTechnology, Inc., primarily focuses on healthcare IT and managed network technology services;
|
•
|
Professional sales service segment, operating through a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, primarily focuses on the sale of healthcare capital equipment for General Electric Healthcare ("GEHC") into the health provider middle market; and
|
•
|
Equipment segment, primarily focuses on the design, manufacture, sale and service of proprietary medical devices, operating through a wholly-owned subsidiary VasoMedical, Inc., which in turn operates through Vasomedical Solutions, Inc. for domestic business and Vasomedical Global Corp. for international business, respectively.
|
•
|
exercise effective control over the VIE;
|
•
|
receive substantially all of the economic benefits and residual returns, and absorb substantially all the risks of the VIE as if they were their sole shareholders; and
|
•
|
have an exclusive option to purchase all of the equity interests in the VIE.
|
•
|
the Exclusive Technical Consulting Services Agreement between Biox and Gentone;
|
•
|
the Option Agreement on Purchase of the Equity Interest executed by and among the shareholders of Biox and Gentone;
|
•
|
the Equity Pledge Agreement executed by and among the shareholders of Biox and Gentone; and
|
•
|
the Powers of Attorney issued by the shareholders of Biox.
|
(in thousands) | ||||||||
|
As of
December 31, 2017
|
As of
December 31, 2016
|
||||||
Cash and cash equivalents
|
$
|
41
|
$
|
13
|
||||
Total assets
|
$
|
1,599
|
$
|
1,451
|
||||
Total liabilities
|
$
|
1,745
|
$
|
1,133
|
(in thousands) | ||||||||
|
Year ended December 31,
|
|||||||
2017
|
2016
|
|||||||
Total net revenue
|
$
|
1,597
|
$
|
1,850
|
||||
Net (loss) income
|
$
|
(524
|
)
|
$
|
185
|
|||
(in thousands) | ||||||||
For the year ended
|
For the year ended
|
|||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Beginning Balance
|
$
|
4,159
|
$
|
3,863
|
||||
Provision for losses on accounts receivable
|
157
|
140
|
||||||
Direct write-offs, net of recoveries
|
(212
|
)
|
(85
|
)
|
||||
Commission adjustments
|
768
|
241
|
||||||
Ending Balance
|
$
|
4,872
|
$
|
4,159
|
||||
(in thousands) | ||||||||
For the year ended
|
||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Basic weighted average shares outstanding
|
162,213
|
159,138
|
||||||
Dilutive effect of options and unvested restricted shares
|
-
|
258
|
||||||
Diluted weighted average shares outstanding
|
162,213
|
159,396
|
||||||
(in thousands) | ||||||||
For the year ended
|
||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Restricted common stock grants
|
4,204
|
2,763
|
||||||
•
|
In our professional sales service segment, our commission revenue rate and related cash receipts are a function of targets achieved. In 2017 and before, we recorded revenue during the year at the rate we achieved and were paid on until it was known that a higher rate was achieved. In 2018, we will record revenue at the estimated final rate throughout the year and record an unbilled receivable for the difference between the current billing rate and the estimated final rate expected to be achieved.
|
•
|
In our IT and equipment segments, we have determined the only significant incremental costs incurred to obtain contracts with customers within ASC 606 are certain sales commissions paid to associates. Under current U.S. GAAP, we recognize sales commissions as incurred. Under ASC 606, we expect to record sales commissions as an asset, and amortize to expense over the related contract performance period. At the date of adoption of this new guidance, we expect to record an asset in our consolidated balance sheets for the amount of unamortized sales commissions for prior periods, as calculated under the new guidance. Such amount will subsequently be amortized to expense over the remaining performance periods of the related contracts with remaining performance obligations. We currently estimate that upon adoption we will record a cumulative effect adjustment related to such commission expense increasing both deferred commission expense and retained earnings within our consolidated balance sheets by approximately $152,000. We expect to use the practical expedient available to expense sales commissions for contracts having an original duration of one year or less.
|
(in thousands)
|
||||||||
Year ended
December 31,
|
||||||||
2017
|
2016
|
|||||||
Revenues from external customers
|
||||||||
IT
|
$
|
42,581
|
$
|
39,448
|
||||
Professional sales service
|
26,443
|
28,524
|
||||||
Equipment
|
3,764
|
4,617
|
||||||
Total revenues
|
$
|
72,788
|
$
|
72,589
|
||||
Gross Profit
|
||||||||
IT
|
$
|
17,623
|
$
|
16,303
|
||||
Professional sales service
|
20,630
|
22,351
|
||||||
Equipment
|
2,478
|
2,848
|
||||||
Total gross profit
|
$
|
40,731
|
$
|
41,502
|
||||
Operating (loss) income
|
||||||||
IT
|
$
|
(3,375
|
)
|
$
|
(3,227
|
)
|
||
Professional sales service
|
1,954
|
7,217
|
||||||
Equipment
|
(1,066
|
)
|
(1,064
|
)
|
||||
Corporate
|
(1,345
|
)
|
(1,362
|
)
|
||||
Total operating (loss) income
|
$
|
(3,832
|
)
|
$
|
1,564
|
|||
Capital expenditures
|
||||||||
IT
|
$
|
2,185
|
$
|
1,567
|
||||
Professional sales service
|
127
|
238
|
||||||
Equipment
|
43
|
59
|
||||||
Corporate
|
19
|
2
|
||||||
Total cash capital expenditures
|
$
|
2,374
|
$
|
1,866
|
||||
(in thousands)
|
||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Identifiable Assets
|
||||||||
IT
|
$
|
28,320
|
$
|
27,724
|
||||
Professional sales service
|
15,658
|
14,611
|
||||||
Equipment
|
7,830
|
7,446
|
||||||
Corporate
|
4,970
|
7,600
|
||||||
Total assets
|
$
|
56,778
|
$
|
57,381
|
||||
(in thousands) | ||||||||
For the year ended
|
||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Domestic (United States)
|
$
|
70,719
|
$
|
70,075
|
||||
Non-domestic (foreign)
|
2,069
|
2,514
|
||||||
$
|
72,788
|
$
|
72,589
|
(in thousands) | ||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Trade receivables
|
$
|
18,056
|
$
|
16,470
|
||||
Due from employees
|
41
|
430
|
||||||
Allowance for doubtful accounts and
|
||||||||
commission adjustments
|
(4,872
|
)
|
(4,159
|
)
|
||||
Accounts and other receivables, net
|
$
|
13,225
|
$
|
12,741
|
||||
(in thousands) | ||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Raw materials
|
$
|
530
|
$
|
501
|
||||
Work in process
|
449
|
727
|
||||||
Finished goods
|
1,376
|
1,167
|
||||||
$
|
2,355
|
$
|
2,395
|
|||||
(in thousands) | ||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Office, laboratory and other equipment
|
$
|
2,953
|
$
|
2,756
|
||||
Equipment furnished for customer
|
||||||||
or clinical uses
|
6,615
|
4,981
|
||||||
Furniture and fixtures
|
131
|
119
|
||||||
9,699
|
7,856
|
|||||||
Less: accumulated depreciation
|
(4,980
|
)
|
(3,835
|
)
|
||||
Property and equipment, net
|
$
|
4,719
|
$
|
4,021
|
||||
(in thousands)
|
||||||||
Carrying amount for the year ended
|
||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Beginning of year
|
$
|
17,280
|
$
|
17,484
|
||||
Foreign currency translation adjustment
|
191
|
(204
|
)
|
|||||
End of year
|
$
|
17,471
|
$
|
17,280
|
||||
(in thousands) | ||||||||
|
December 31, 2017
|
December 31, 2016
|
||||||
Customer-related
|
||||||||
Costs
|
$
|
5,831
|
$
|
5,831
|
||||
Accumulated amortization
|
(2,501
|
)
|
(1,768
|
)
|
||||
3,330
|
4,063
|
|||||||
|
||||||||
Patents and Technology
|
||||||||
Costs
|
2,331
|
2,363
|
||||||
Accumulated amortization
|
(1,260
|
)
|
(1,061
|
)
|
||||
1,071
|
1,302
|
|||||||
Software
|
||||||||
Costs
|
1,819
|
1,394
|
||||||
Accumulated amortization
|
(966
|
)
|
(763
|
)
|
||||
853
|
631
|
|||||||
|
||||||||
$
|
5,254
|
$
|
5,996
|
( in thousands) | ||||
Years ending December 31,
|
||||
2018
|
$
|
1,035
|
||
2019
|
913
|
|||
2020
|
829
|
|||
2021
|
751
|
|||
2022
|
452
|
|||
Total
|
$
|
3,980
|
(in thousands) | ||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Deferred commission expense - noncurrent
|
$
|
1,867
|
$
|
2,967
|
||||
Trade receivables - noncurrent
|
968
|
1,064
|
||||||
Other, net of allowance for loss on loan receivable of
|
||||||||
$412 at December 31, 2017 and 2016
|
1,012
|
970
|
||||||
$
|
3,847
|
$
|
5,001
|
(in thousands) | ||||||||
For the year ended
|
||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Deferred revenue at beginning of year
|
$
|
19,404
|
$
|
18,516
|
||||
Additions:
|
||||||||
Deferred extended service contracts
|
705
|
502
|
||||||
Deferred in-service and training
|
20
|
23
|
||||||
Deferred service arrangements
|
43
|
55
|
||||||
Deferred commission revenues
|
14,779
|
13,120
|
||||||
Recognized as revenue:
|
||||||||
Deferred extended service contracts
|
(661
|
)
|
(753
|
)
|
||||
Deferred in-service and training
|
(20
|
)
|
(28
|
)
|
||||
Deferred service arrangements
|
(45
|
)
|
(47
|
)
|
||||
Deferred commission revenues
|
(11,159
|
)
|
(11,984
|
)
|
||||
Deferred revenue at end of year
|
23,066
|
19,404
|
||||||
Less: current portion
|
15,540
|
7,628
|
||||||
Long-term deferred revenue at end of year
|
$
|
7,526
|
$
|
11,776
|
||||
(in thousands) | ||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Accrued compensation
|
$
|
1,181
|
$
|
1,133
|
||||
Accrued expenses - other
|
2,207
|
1,140
|
||||||
Other liabilities
|
1,884
|
3,002
|
||||||
$
|
5,272
|
$
|
5,275
|
|||||
(in thousands) | ||||||||
|
December 31, 2017
|
December 31, 2016
|
||||||
Line of credit
|
$
|
3,393
|
$
|
3,780
|
||||
Unsecured term loan
|
153
|
144
|
||||||
Notes payable - DFS
|
-
|
198
|
||||||
Notes payable - MedTech (net of $46 and $79 in debt issue costs
|
||||||||
at December 31, 2017 and 2016, respectively)
|
4,754
|
4,721
|
||||||
Notes payable - related parties
|
345
|
648
|
||||||
Capital lease obligations
|
208
|
337
|
||||||
Total debt and lease obligations
|
8,853
|
9,828
|
||||||
Less: current portion (including related parties)
|
(3,760
|
)
|
(4,245
|
)
|
||||
|
$
|
5,093
|
$
|
5,583
|
(in thousands) | ||||
Years ending December 31,
|
||||
2018
|
$
|
143
|
||
2019
|
85
|
|||
228
|
||||
Portion representing interest
|
(13
|
)
|
||
Portion representing executory costs
|
(7
|
)
|
||
Total capital lease obligations
|
$
|
208
|
(in thousands) | ||||||||||||
Years ending December 31,
|
Debt
|
Capital leases
|
Total
|
|||||||||
2018
|
3,632
|
$
|
128
|
$
|
3,760
|
|||||||
2019
|
5,059
|
80
|
5,139
|
|||||||||
Total
|
$
|
8,691
|
$
|
208
|
$
|
8,899
|
||||||
|
Outstanding Options
|
||||||||||||||||
Shares Available for Future Issuance
|
Number of Shares
|
Range of Exercise Price per Share
|
Weighted Average Exercise Price
|
|||||||||||||
Balance at December 31, 2016
|
-
|
600,000
|
$
|
0.12
|
$
|
0.12
|
||||||||||
Options canceled under 2004 Plan
|
-
|
(600,000
|
)
|
$ | 0.12 |
$
|
0.12
|
|||||||||
Balance at December 31, 2017
|
-
|
-
|
-
|
-
|
||||||||||||
Shares Available for Future Issuance
|
Unvested shares
|
Weighted Average Grant Date Fair Value
|
||||||||||
Balance at December 31, 2015
|
3,504,215
|
2,827,500
|
$
|
0.18
|
||||||||
Authorized
|
7,500,000
|
-
|
$
|
-
|
||||||||
Granted
|
(7,276,307
|
)
|
7,276,307
|
$
|
0.15
|
|||||||
Vested
|
-
|
(3,036,644
|
)
|
$
|
0.17
|
|||||||
Forfeited
|
304,038
|
(304,038
|
)
|
$
|
0.17
|
|||||||
Balance at December 31, 2016
|
4,031,946
|
6,763,125
|
$
|
0.16
|
||||||||
Authorized
|
-
|
-
|
$
|
-
|
||||||||
Granted
|
(975,000
|
)
|
975,000
|
$
|
0.12
|
|||||||
Vested
|
- |
(3,380,437
|
)
|
$
|
0.15
|
|||||||
Forfeited
|
153,730
|
(153,730
|
)
|
$
|
0.16
|
|||||||
Balance at December 31, 2017
|
3,210,676
|
4,203,958
|
$
|
0.16
|
(in thousands) | ||||||||
|
Year ended December 31,
|
|||||||
2017
|
2016
|
|||||||
Domestic
|
$
|
(4,161
|
)
|
$
|
1,121
|
|||
Foreign
|
(244
|
)
|
(20
|
)
|
||||
(Loss) income before provision for income taxes
|
$
|
(4,405
|
)
|
$
|
1,101
|
|||
(in thousands) | ||||||||
|
Year ended December 31,
|
|||||||
2017
|
2016
|
|||||||
Current (benefit) provision
|
||||||||
Federal
|
$
|
(154
|
) |
$
|
8
|
|||
State
|
59
|
47
|
||||||
Foreign
|
13
|
-
|
||||||
Total current (benefit) provision
|
(82
|
) |
55
|
|||||
Deferred provision
|
||||||||
Federal
|
168
|
169
|
||||||
State
|
48
|
57
|
||||||
Foreign
|
-
|
-
|
||||||
Total deferred provision
|
216
|
226
|
||||||
Total provision for income taxes
|
$
|
134
|
$
|
281
|
||||
Effective income tax rate
|
-3.04
|
%
|
25.52
|
%
|
||||
For the year ended
|
||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
%
|
%
|
|||||||
Federal statutory rate
|
34.00
|
34.00
|
||||||
State income taxes
|
(1.34
|
)
|
4.94
|
|||||
Change in valuation allowance
|
||||||||
relating to operations
|
(42.38
|
)
|
(22.34
|
)
|
||||
Impact of federal statutory rate change
|
(6.44
|
) | - | |||||
Impact of federal statutory rate change on valuation allowance | 13.74 | - | ||||||
Foreign tax rate differential
|
(2.20
|
)
|
-
|
|||||
Nondeductible expenses
|
(1.93
|
)
|
8.92
|
|||||
Minimum tax credit refundable
|
3.51
|
-
|
||||||
(3.04
|
)
|
25.52
|
||||||
(in thousands) | ||||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Deferred Tax Assets:
|
||||||||
Net operating loss carryforwards
|
$
|
10,623
|
$
|
14,106
|
||||
Amortization
|
262
|
282
|
||||||
Stock-based compensation
|
49
|
73
|
||||||
Allowance for doubtful accounts
|
36
|
76
|
||||||
Reserve for obsolete inventory
|
235
|
351
|
||||||
Tax credits
|
438
|
557
|
||||||
Expense accruals
|
579
|
392
|
||||||
Deferred revenue
|
893
|
1,523
|
||||||
Total gross deferred taxes
|
13,115
|
17,360
|
||||||
Valuation allowance
|
(11,758
|
)
|
(15,695
|
)
|
||||
Net deferred tax assets
|
1,357
|
1,665
|
||||||
Deferred Tax Liabilities:
|
||||||||
Deferred commissions
|
(224
|
)
|
(337
|
)
|
||||
Goodwill
|
(668
|
)
|
(607
|
)
|
||||
Differences in timing of revenue recognition
|
(112
|
)
|
(112
|
)
|
||||
Depreciation
|
(573
|
)
|
(613
|
)
|
||||
Total deferred tax liabilities
|
(1,577
|
)
|
(1,669
|
)
|
||||
Total deferred tax assets (liabilities)
|
(220
|
)
|
(4
|
)
|
||||
Recorded as:
|
||||||||
Non-current deferred tax assets (in other assets)
|
-
|
108
|
||||||
Non-current deferred tax liabilities
|
(220
|
)
|
(112
|
)
|
||||
Total deferred tax assets (liabilities)
|
$
|
(220
|
)
|
$
|
(4
|
)
|
||
(in thousands) | ||||||||
2017
|
2016
|
|||||||
Valuation allowance, January 1,
|
$
|
15,695
|
$
|
16,170
|
||||
Partial release of allowance
|
-
|
-
|
||||||
Change in valuation allowance
|
(3,937
|
)
|
(475
|
)
|
||||
Valuation allowance, December 31,
|
$
|
11,758
|
$
|
15,695
|
||||
(in thousands) | ||||||||||||||||
Vehicles
|
Facilities
|
Equipment
|
Total
|
|||||||||||||
2018
|
$
|
232
|
$
|
292
|
$
|
23
|
$
|
547
|
||||||||
2019
|
124
|
206
|
3
|
333
|
||||||||||||
2020
|
21
|
158
|
-
|
179
|
||||||||||||
2021
|
-
|
76
|
-
|
76
|
||||||||||||
2022
|
-
|
55
|
-
|
55
|
||||||||||||
Total
|
$
|
377
|
$
|
787
|
$
|
26
|
$
|
1,190
|
||||||||
1 Year Vaso (QX) Chart |
1 Month Vaso (QX) Chart |
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