x
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the Fiscal Year Ended December 31, 2007
|
|
o
|
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: 001-33094
AMERICAN
CARESOURCE HOLDINGS, INC.
|
|
(Exact
Name of Registrant as Specified in Its Charter)
|
||
Delaware
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20-0428568
|
|
(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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5429
Lyndon B. Johnson Freeway, Suite 700, Dallas, Texas
|
75240
|
||||||||
(Address
of principal executive offices)
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(Zip
Code)
|
||||||||
(972)
308-6830
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|||||||||
(Registrant’s
telephone number, including area code)
|
|||||||||
Securities
registered pursuant to Section 12(b) of the Exchange
Act:
|
Title
of Each Class
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Name
of Each Exchange on Which Registered
|
|
Common
Stock, par value $.01 per share
|
American
Stock Exchange
|
|
Securities
registered pursuant to Section 12(g) of the Exchange Act:
None
|
|||||||||
Indicate
by checkmark if the Registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act of 1933 (the “Securities
Act”).
|
Yes o No
x
|
||||||||
Indicate
by checkmark if the Registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange
Act”).
|
Yes o No
x
|
||||||||
Indicate
by checkmark whether the Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act 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
x No o
|
||||||||
Indicate
by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained in this form, and will not be contained,
to the best of Registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
|
o
|
Indicate
by checkmark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
|
|||||||||
o Large
Accelerated Filer o Accelerated
Filer o Non-Accelerated
Filer x Smaller Reporting
Company
|
Indicate
by checkmark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
|
Yes o No
x
|
||||||||
The
aggregate market value of the voting and nonvoting Common Stock held by
nonaffiliates of the Registrant was $12,556,145, computed by reference to
the price at which the Common Stock was last sold on the American Stock
Exchange on the last business day (June 29, 2007) of the Registrant’s most
recently completed second fiscal quarter (June 30,
2007).
|
|||||||||
The
number of shares of the Registrant’s Common Stock, par value $.01 per
share, outstanding as of March 26, 2008 was 15,067,423.
|
|||||||||
DOCUMENTS
INCORPORATED BY REFERENCE
|
|||||||||
Portions
of the definitive proxy statement for the annual meeting of stockholders
of American CareSource Holdings, Inc. to be held on May 20, 2008 and filed
with the Securities and Exchange Commission pursuant to Regulation 14A not
later than April 29, 2008, are incorporated by reference into Part III of
this Form 10-K.
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5
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||
5
|
||
10
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||
15
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||
16
|
||
16
|
||
16
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||
16
|
||
16
|
||
17
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||
25
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||
25
|
||
25
|
||
26
|
||
27
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||
27
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||
27
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||
28
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||
29
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||
29
|
||
30
|
||
30
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||
Index
to Financial Statements
|
||
F-1
|
||
F-2
|
||
F-3
|
||
F-4
|
||
F-5
|
||
F-6
|
·
Outpatient Therapy/Rehab
|
·
Orthotics and Prosthetics
|
·
Home Health Services
|
·
Pain Management
|
·
Surgical Centers
|
·
Pharmacy ( Infusion)
|
·
Laboratory Services
|
·
Physical Therapy
|
·
Home Infusion Therapy
|
·
Respiratory Services
|
·
Chiropractic Services
|
·
Sleep Studies
|
·
Diagnostic Imaging/Radiology
|
·
Sub-Acute and Skilled Nursing Facilities
|
·
Dialysis Services
|
·
Hospice Services
|
·
Durable Medical Equipment
|
·
Bone Growth Stimulators
|
|
·
|
Provider
network management
|
|
·
|
Credentialing
|
|
·
|
Data
transfer management/electronic data
interface
|
|
·
|
Multi-level
reimbursement management
|
|
·
|
Posting,
Explanation of Benefits, check, and e-funds
processes
|
|
·
|
Client
service management
|
|
·
|
Claim
re-pricing
|
|
·
|
Advanced
data reporting
|
|
·
|
healthcare
fraud and abuse laws and regulations, which prohibit illegal referral and
other payments;
|
|
·
|
the
Employee Retirement Income Security Act of 1974 and related regulations,
which regulate many healthcare
plans;
|
|
·
|
mail
pharmacy laws and regulations;
|
|
·
|
privacy
and confidentiality laws and
regulations;
|
|
·
|
consumer
protection laws and regulations;
|
|
·
|
legislation
imposing benefit plan design
restrictions;
|
|
·
|
various
licensure laws, such as managed care and third party administrator
licensure laws;
|
|
·
|
drug
pricing legislation; and
|
|
·
|
Medicare
and Medicaid reimbursement
regulations.
|
High
|
Low
|
|||
2007
|
||||
Fourth
Quarter Ended December 31(Amex)
|
$4.30
|
$2.32
|
||
Third
Quarter Ended September 30 (Amex)
|
$2.60
|
$1.40
|
||
Second
Quarter Ended June 30 (Amex)
|
$2.10
|
$1.56
|
||
First
Quarter Ended March 31 (Amex)
|
$2.53
|
$1.45
|
||
2006
|
||||
Fourth
Quarter Ended December 31 (Amex)
|
$2.75
|
$1.47
|
||
Third
Quarter Ended September 30 (OTC)
|
$4.15
|
$2.46
|
||
Second
Quarter Ended June 30 (OTC)
|
$6.10
|
$3.16
|
||
First
Quarter Ended March 31 (OTC)
|
$7.01
|
$5.10
|
Three
months ended
|
2007
|
|||||||||||||||||||
03/31/07
|
06/30/07
|
09/30/07
|
12/31/07
|
Total
|
||||||||||||||||
Net
Revenue
|
$ | 2,267 | $ | 4,008 | $ | 7,088 | $ | 10,125 | $ | 23,488 | ||||||||||
Cost
of Revenues
|
2,102 | 3,478 | 6,092 | 8,930 | 20,602 | |||||||||||||||
Contribution
Margin
|
165 | 530 | 996 | 1,195 | 2,886 | |||||||||||||||
Selling,
general and administrative
|
702 | 1,209 | 767 | 1,076 | 3,754 | |||||||||||||||
Depreciation
and amortization
|
78 | 84 | 86 | 81 | 329 | |||||||||||||||
Operating
Income (Loss)
|
(615 | ) | (763 | ) | 143 | 38 | (1,197 | ) | ||||||||||||
Financing
(income)
|
(4 | ) | (47 | ) | (45 | ) | (48 | ) | (144 | ) | ||||||||||
Income
tax benefit
|
- | - | - | (233 | ) | (233 | ) | |||||||||||||
Net
Income (Loss)
|
$ | (611 | ) | $ | (716 | ) | $ | 188 | $ | 319 | $ | (820 | ) | |||||||
EPS,
basic
|
$ | (0.04 | ) | $ | (0.05 | ) | $ | 0.01 | $ | 0.02 | $ | (0.06 | ) | |||||||
EPS,
diluted
|
$ | (0.04 | ) | $ | (0.05 | ) | $ | 0.01 | $ | 0.02 | $ | (0.06 | ) |
2007
|
2006
|
|||||||
Net
Revenue
|
$ | 23,487,911 | $ | 11,418,554 | ||||
Cost
of Revenue
|
20,601,600 | 9,346,927 | ||||||
Contribution
Margin
|
2,886,311 | 2,071,627 | ||||||
Selling,
general and administrative
|
3,754,175 | 3,005,241 | ||||||
Depreciation
and amortization
|
328,839 | 316,304 | ||||||
Operating
loss
|
(1,196,703 | ) | (1,249,918 | ) | ||||
Financing
(income) expense
|
(143,719 | ) | 63,909 | |||||
Income
tax benefit
|
(232,754 | ) | - | |||||
Net
(loss)
|
$ | (820,230 | ) | $ | (1,313,827 | ) |
December
31, 2007
|
December
31, 2006
|
|||||||
Interest
(income)
|
$ | (200,719 | ) | $ | (194,097 | ) | ||
Interest
expense
|
10,700 | 72,806 | ||||||
Debt
issuance cost
|
46,300 | 185,200 | ||||||
Total
other (income) expense
|
$ | (143,719 | ) | $ | 63,909 |
|
·
|
The
Company negotiates a contract with the service provider and also
negotiates separate contracts with client payors. Neither the service
provider nor the payor can look through the Company and claim directly
against the other party. Each service provider contracts with
the Company only, and not with the payor. Likewise, each payor
contracts with the Company only and not with the service
provider. Each party deals directly with the Company and does
not deal with each other directly.
|
|
·
|
The
Company determines through negotiations which service provider will be
included or excluded in the network to be offered to the client payor,
based on price, access, etc.
|
|
·
|
The
Company does not earn a fixed dollar amount per client transaction
regardless of the amount billed to clients or earn a stated percentage of
the amount billed to its clients.
|
|
·
|
The
Company is responsible to its service providers for processing the claims
and managing the claims its adjustor
processes.
|
|
·
|
The
Company sets prices to be settled with payors and separately negotiates
the prices to be settled with its service
providers.
|
|
·
|
The
Company may realize a positive or negative margin represented by the
difference between the negotiated fees received from a payor and the
negotiated amount paid to a service
provider.
|
|
·
|
Pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
Company;
|
|
·
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditure of the issuer are
being made only in accordance with authorizations of management and
directors of the Company; and
|
|
·
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that
could have a material effect on the financial
statements.
|
Equity Compensation
Plan Information at December 31, 2007
|
|||||||||
Number
of securities to be issued upon the exercise of outstanding options,
warrants and rights, (a)
|
Weighted-average
exercise price of outstanding options, warrants and rights
(b)
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
|||||||
Equity
compensation plans approved by security holders
|
2,000,563
|
$1.41
|
948,559
|
||||||
Equity
compensation plans not approved by security holders
|
0
|
0
|
0
|
||||||
Total
|
2,000,563
|
$1.41
|
948,559
|
Shares
of Common Stock issuable under outstanding warrants
|
Weighted-average
exercise price of outstanding warrants
|
|||||||
Series A
(1)
|
1,096,491 | $ | 0.40 | |||||
Series B
(2)
|
641,059 | $ | 0.49 | |||||
Series C
(3)
|
159,952 | $ | 5.50 | |||||
Series
D (4)
|
225,000 | $ | 1.84 | |||||
Total
Warrants Outstanding
|
2,122,502 | $ | 0.96 | |||||
(1)
|
Series
A warrants were granted on January 20, 2005 to John Pappajohn and Derace
L. Schaffer in conjunction with the personal guarantees associated with
the Company’s $3,000,000 line of credit with Wells Fargo Bank,
NA.
|
(2)
|
Series
B warrants were granted on August 9, 2005 to John Pappajohn, Derace L.
Schaffer and Matthew P. Kinley in conjunction with increasing the
Company’s line of credit with Wells Fargo Bank, NA from $3,000,000 to
$4,000,000 and the associated increase in the personal
guarantees.
|
(3)
|
Service warrants were granted as part of the compensation to
Laidlaw and Company in connection with the Company’s March 2006 private
placement.
|
(4)
|
These
warrants were granted on May 21, 2007 to Corporate Health Plans of
America, Inc., an affiliate of the Company’s client, Texas True Choice,
Inc. (“Texas True Choice”), as partial compensation to Texas True Choice
for services to be performed by it pursuant to an ancillary care services
network access agreement between the Company and Texas True
Choice.
|
Document
|
Pages
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
Consolidated
Balance Sheets as of December 31, 2007 and 2006
|
F-2
|
Consolidated
Statements of Operations for the Years Ended December 31, 2007 and
2006
|
F-3
|
Consolidated
Statements of Stockholders’ Equity for the Years Ended December 31, 2007
and 2006
|
F-4
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2007 and
2006
|
F-5
|
Notes
to Consolidated Financial Statements
|
F-6
|
December 31, 2007
|
December 31, 2006
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 4,272,498 | $ | 5,025,380 | ||||
Accounts
receivable
|
3,651,203 | 1,334,950 | ||||||
Prepaid
and other current assets
|
409,445 | 33,515 | ||||||
Total
current assets
|
8,333,146 | 6,393,845 | ||||||
NET
PROPERTY AND EQUIPMENT
|
332,450 | 266,555 | ||||||
OTHER
ASSETS
|
||||||||
Certificate
of deposit restricted
|
145,000 | 145,000 | ||||||
Deferred
taxes
|
255,731 | - | ||||||
Other
non-current assets
|
237,246 | - | ||||||
Net
intangible assets
|
1,494,238 | 1,707,819 | ||||||
Goodwill
|
4,361,299 | 4,361,299 | ||||||
Total
other assets
|
6,493,514 | 6,214,118 | ||||||
Total
assets
|
$ | 15,159,110 | $ | 12,874,518 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Due
to service providers
|
$ | 3,344,278 | $ | 1,077,174 | ||||
Accounts
payable and other accrued liabilities
|
1,320,036 | 761,926 | ||||||
Current
maturities of long-term debt
|
55,697 | 352,718 | ||||||
Total
current liabilities
|
4,720,011 | 2,191,818 | ||||||
LONG-TERM
DEBT
|
50,348 | 101,541 | ||||||
Total
liabilities
|
4,770,359 | 2,293,359 | ||||||
STOCKHOLDERS’
EQUITY
|
||||||||
Common
stock, par value $0.01, 40,000,000 shares authorized and 14,668,416 and
14,484,115 issued and outstanding as of December 31, 2007 and
December 31, 2006, respectively
|
146,684 | 144,841 | ||||||
Preferred
stock, par value .01, 10,000,000 shares authorized and none outstanding as
of December 31, 2007 and 2006
|
- | - | ||||||
Additional
paid-in-capital
|
17,613,880 | 17,034,201 | ||||||
Deferred
debt issuance cost
|
- | (46,300 | ) | |||||
Accumulated
(deficit)
|
(7,371,813 | ) | (6,551,583 | ) | ||||
Total
stockholders’ equity
|
10,388,751 | 10,581,159 | ||||||
Total
liabilities and stockholder’s equity
|
$ | 15,159,110 | $ | 12,874,518 | ||||
AMERICAN
CARESOURCE HOLDINGS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR
THE YEARS ENDED DECEMBER 31, 2007 AND
2006
|
2007
|
2006
|
|||||||
Revenues:
|
||||||||
Ancillary
health
|
$ | 23,487,911 | $ | 11,323,217 | ||||
Patient
claims processing
|
- | 95,337 | ||||||
Total
revenues
|
23,487,911 | 11,418,554 | ||||||
Total
costs of revenues
|
20,601,600 | 9,346,927 | ||||||
Contribution
margin
|
2,886,311 | 2,071,627 | ||||||
Selling,
general and administrative expense
|
3,754,175 | 3,005,241 | ||||||
Depreciation
and amortization
|
328,839 | 316,304 | ||||||
Total
operating expenses
|
4,083,014 | 3,321,545 | ||||||
Operating
(loss)
|
(1,196,703 | ) | (1,249,918 | ) | ||||
Financing
(income) expenses:
|
||||||||
Interest
(income)
|
(200,719 | ) | (194,097 | ) | ||||
Interest
expense
|
10,700 | 72,806 | ||||||
Debt
issuance cost
|
46,300 | 185,200 | ||||||
Total
financing (income)/expenses
|
(143,719 | ) | 63,909 | |||||
Net
(loss) before income taxes
|
(1,052,984 | ) | (1,313,827 | ) | ||||
Income
tax benefit
|
(232,754 | ) | - | |||||
Net
(Loss)
|
$ | (820,230 | ) | $ | (1,313,827 | ) | ||
Net
(Loss) per share – basic and diluted
|
$ | (0.06 | ) | $ | (0.09 | ) | ||
Weighted
Average Shares Outstanding – basic and diluted
|
14,546,796 | 14,129,762 |
AMERICAN
CARESOURCE HOLDINGS, INC.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR
THE YEARS ENDED DECEMBER 31, 2007 AND
2006
|
Shares
|
Amount
|
Additional
Paid-In
Capital
|
Deferred
Debt
Issuance Cost
|
Accumulated
(Deficit)
|
Total
|
|||||||||||||||||||
Balance,
December 31, 2005
|
12,368,809 | $ | 123,688 | $ | 7,734,825 | $ | (231,500 | ) | $ | (5,237,756 | ) | $ | 2,389,257 | |||||||||||
Issue
of 1,999,400 common stock shares
|
1,999,400 | 19,994 | 8,585,993 | - | - | 8,605,987 | ||||||||||||||||||
Issue
of common stock warrants
|
- | - | 463,861 | - | - | 463,861 | ||||||||||||||||||
Exercise
of stock options
|
115,906 | 1,159 | 35,943 | - | - | 37,102 | ||||||||||||||||||
Option
compensation expense
|
- | - | 213,579 | - | - | 213,579 | ||||||||||||||||||
Amortization
of warrants associated with deferred debt
|
- | - | - | 185,200 | - | 185,200 | ||||||||||||||||||
Net
(loss)
|
- | - | - | - | (1,313,827 | ) | (1,313,827 | ) | ||||||||||||||||
Balance,
December 31, 2006
|
14,484,115 | 144,841 | 17,034,201 | (46,300 | ) | (6,551,583 | ) | $ | 10,581,159 | |||||||||||||||
Issuance
of 225,000 common stock warrants for payment of client management
fees
|
- | - | 105,825 | - | - | 105,825 | ||||||||||||||||||
Exercise
of stock options
|
184,301 | 1,843 | 55,796 | - | - | 57,639 | ||||||||||||||||||
Option
compensation expense
|
- | - | 418,058 | - | - | 418,058 | ||||||||||||||||||
Amortization
of warrants associated with debt
|
- | - | - | 46,300 | - | 46,300 | ||||||||||||||||||
Net
(loss)
|
- | - | - | - | (820,230 | ) | (820,230 | ) | ||||||||||||||||
Balance,
December 31, 2007
|
14,668,416 | $ | 146,684 | $ | 17,613,880 | $ | - | $ | (7,371,813 | ) | $ | 10,388,751 |
AMERICAN
CARESOURCE HOLDINGS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE YEARS ENDED DECEMBER 31, 2007 AND
2006
|
2007
|
2006
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net
(loss)
|
$ | (820,230 | ) | $ | (1,313,827 | ) | ||
Adjustments
to reconcile net loss to net cash
|
||||||||
(used
in) operating activities
|
||||||||
Depreciation
and amortization
|
328,839 | 316,304 | ||||||
Compensation
expense related to warrants
|
46,300 | 185,200 | ||||||
Stock
option compensation
|
418,058 | 213,579 | ||||||
Client
management fee expense related to warrants
|
35,276 | - | ||||||
Deferred
taxes
|
(255,731 | ) | - | |||||
Gain
on disposal of assets
|
- | (32,755 | ) | |||||
Changes
in operating assets and liabilities
|
||||||||
Accounts
receivable
|
(2,316,253 | ) | (852,791 | ) | ||||
Prepaid
and other assets
|
(542,626 | ) | (3,364 | ) | ||||
Due
to service providers
|
2,267,104 | 690,957 | ||||||
Accounts
payable and other accrued liabilities
|
558,110 | 409,543 | ||||||
Net
cash used in operating activities
|
(281,153 | ) | (387,154 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchase
of property and equipment
|
(181,153 | ) | (234,376 | ) | ||||
Proceeds
from sales of equipment
|
- | 73,462 | ||||||
Purchase
of Certificate of Deposit
|
- | (145,000 | ) | |||||
Net
cash used in investing activities
|
(181,153 | ) | (305,914 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Payments
on line of credit, net
|
- | (3,450,000 | ) | |||||
Proceeds
from long term debt
|
- | 135,000 | ||||||
Payments
on long term debt
|
(348,215 | ) | (96,901 | ) | ||||
Net
proceeds from the sale of capital stock
|
- | 9,069,848 | ||||||
Net
proceeds from the exercise of stock options
|
57,639 | 37,102 | ||||||
Net
cash provided by (used in) financing activities
|
(290,576 | ) | 5,695,049 | |||||
Net
increase (decrease) in cash and cash equivalents
|
(752,882 | ) | 5,001,981 | |||||
Cash
and cash equivalents at beginning of year
|
5,025,380 | 23,399 | ||||||
Cash
and cash equivalents at end of year
|
$ | 4,272,498 | $ | 5,025,380 | ||||
SUPPLEMENTAL
CASH FLOW INFORMATION, cash paid for interest
|
$ | 30,101 | $ | 52,532 | ||||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH OPERATING AND FINANCIAL ACTIVITIES
|
||||||||
Warrants
issued in payment of client management fees
|
105,825 | - | ||||||
Warrants
issued for stock issuance
|
- | 463,861 | ||||||
AMERICAN
CARESOURCE HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
AMERICAN
CARESOURCE HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Leasehold
improvements
|
5
years
|
Computer
equipment
|
3
years
|
Furniture
and fixtures
|
7
years
|
Software
|
3
- 5 years
|
AMERICAN
CARESOURCE HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Twelve Months Ended December 31,
2007
|
Twelve Months Ended December 31,
2006
|
|||||||||||||||||||||||
Accounts
Receivable
|
Revenue
|
%
of Total
Revenue
|
Accounts
Receivable
|
Revenue
|
%
of Total
Revenue
|
|||||||||||||||||||
Customer
A
|
$ | 1,964,000 | $ | 15,195,000 | 65 | % | $ | 826,000 | $ | 8,183,000 | 72 | % | ||||||||||||
Customer
B
|
1,473,000 | 6,633,000 | 28 | % | - | - | 0 | % | ||||||||||||||||
Customer
C
|
42,000 | 684,000 | 3 | % | 287,000 | 2,442,000 | 21 | % | ||||||||||||||||
All
Others
|
172,000 | 976,000 | 4 | % | 222,000 | 794,000 | 7 | % | ||||||||||||||||
$ | 3,651,000 | $ | 23,488,000 | 100 | % | $ | 1,335,000 | $ | 11,419,000 | 100 | % |
AMERICAN
CARESOURCE HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
2007
|
2006
|
|||||||||||
Gross
Carrying Amount
|
Accumulated
Amortization
|
Accumulated
Amortization
|
||||||||||
Software
|
$ | 427,581 | $ | 342,065 | $ | 256,549 | ||||||
Provider
Contracts
|
1,920,984 | 512,262 | 384,197 | |||||||||
$ | 2,348,565 | $ | 854,327 | $ | 640,746 |
Estimated
Amortization
Expense
|
||||
Year
ending December 31:
|
||||
2008
|
$ | 214,000 | ||
2009
|
128,000 | |||
2010
|
128,000 | |||
2011
|
128,000 | |||
2012
|
128,000 | |||
$ | 726,000 |
AMERICAN
CARESOURCE HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
AMERICAN
CARESOURCE HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
2007
|
2006
|
|||||||
Computer
equipment
|
$ | 257,938 | $ | 184,071 | ||||
Software
|
231,948 | 132,051 | ||||||
Furniture
and fixtures
|
122,382 | 116,275 | ||||||
Leasehold
improvements
|
33,149 | 31,867 | ||||||
645,417 | 464,264 | |||||||
Less
accumulated depreciation and amortization
|
(312,967 | ) | (197,709 | ) | ||||
$ | 332,450 | $ | 266,555 |
2007
|
2006
|
|||||||
Computer
Equipment
|
$ | 47,179 | $ | 47,179 | ||||
Less
accumulated amortization
|
(43,248 | ) | (27,521 | ) | ||||
$ | 3,931 | $ | 19,658 |
AMERICAN
CARESOURCE HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
2007
|
2006
|
|||||||
Note
payable to CareGuide, Inc. (formerly Patient Infosystems,
Inc.)
|
$ | 0 | $ | 300,505 | ||||
Note
payable due in monthly installments of approximately $4,200 including
interest at 6.5%, maturing in September 2009. Debt is secured by a CD held
with lender
|
81,939 | 121,263 | ||||||
Capital
lease obligations
|
24,106 | 32,491 | ||||||
106,045 | 454,259 | |||||||
Less
current maturities
|
(55,697 | ) | (352,718 | ) | ||||
Long-term
debt, less current maturities
|
$ | 50,348 | $ | 101,541 | ||||
Year
ending December 31:
|
||||
2008
|
$ | 56,000 | ||
2009
|
47,000 | |||
2010
|
3,000 | |||
$ | 106,000 |
2007
|
2006
|
|||||||
Computed
“expected” tax benefit
|
$ | (365,000 | ) | $ | (447,000 | ) | ||
Change
in the valuation allowance for deferred tax assets
|
456,000 | 588,000 | ||||||
Tax
benefit of stock options exercised
|
(85,000 | ) | (187,000 | ) | ||||
Texas
margin tax credit carryforward
|
(262,000 | ) | - | |||||
State
taxes
|
29,000 | - | ||||||
Other
|
(6,000 | ) | 46,000 | |||||
Total
income tax (benefit)
|
$ | (233,000 | ) | $ | - |
AMERICAN
CARESOURCE HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
2007
|
2006
|
|||||||
Deferred
tax assets:
|
||||||||
Operating
loss carryforward
|
$ | 2,107,000 | $ | 1,904,000 | ||||
Accounts
receivable allowance
|
64,000 | - | ||||||
Fixed
assets
|
4,000 | - | ||||||
Warrants
|
143,000 | 115,000 | ||||||
Texas
tax credit carryforward
|
256,000 | - | ||||||
Stock
option compensation
|
205,000 | 73,000 | ||||||
Accrued
expenses
|
194,000 | 39,000 | ||||||
Total
deferred tax assets
|
2,973,000 | 2,131,000 | ||||||
Deferred
tax liabilities:
|
||||||||
Goodwill
|
(195,000 | ) | (78,000 | ) | ||||
Fixed
assets
|
- | (4,000 | ) | |||||
Prepaid
expense
|
(21,000 | ) | (4,000 | ) | ||||
Total
deferred tax liabilities
|
(216,000 | ) | (86,000 | ) | ||||
Net
deferred tax assets
|
2,757,000 | 2,045,000 | ||||||
Valuation
allowance
|
(2,501,000 | ) | (2,045,000 | ) | ||||
Deferred
tax assets, net of valuation allowance
|
$ | 256,000 | $ | - |
2007
|
2006
|
|||||||
Current
|
$ | 22,977 | $ | - | ||||
Deferred
|
(255,731 | ) | - | |||||
$ | (232,754 | ) | $ | - | ||||
AMERICAN
CARESOURCE HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Capital Leases
|
Operating Leases
|
Total
|
||||||||||
2008
|
$ | 12,000 | $ | 169,000 | $ | 181,000 | ||||||
2009
|
12,000 | 200,000 | 212,000 | |||||||||
2010
|
3,000 | 202,000 | 205,000 | |||||||||
2011
|
-- | 197,000 | 197,000 | |||||||||
2012
|
-- | 196,000 | 196,000 | |||||||||
Thereafter
|
-- | 49,000 | 49,000 | |||||||||
Total
minimum lease payments
|
27,000 | 1,013,000 | 1,040,000 | |||||||||
Less
amount representing interest at 9.5%
|
(3,000 | ) | --- | (3,000 | ) | |||||||
$ | 24,000 | $ | 1,013,000 | $ | 1,037,000 |
AMERICAN
CARESOURCE HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
2007
|
2006
|
|||||||
Weighted
average grant date fair value
|
$1.17
|
$2.53
|
||||||
Weighted
average assumptions used
|
||||||||
Expected
volatility
|
66.0%
|
111.0%
|
||||||
Expected
lives
|
3.2
years
|
5
years
|
||||||
Risk
free interest rate
|
5.7%
|
6.5%
|
||||||
Forfeiture
rate
|
24.3%
|
3.8%
|
AMERICAN
CARESOURCE HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Outstanding
|
Weighted-Average
|
|||||||
Options
|
Exercise Price
|
|||||||
Options
outstanding at December 31, 2005
|
1,608,738
|
$0.33
|
||||||
Options
granted during the year ended December 31, 2006
|
408,000
|
$3.22
|
||||||
Options
forfeited by holders during the year
|
||||||||
ended
December 31, 2006
|
(52,640)
|
$2.56
|
||||||
Options
exercised during the year ended December 31, 2006
|
(115,906)
|
$0.32
|
||||||
Options
outstanding at December 31, 2006
|
1,848,192
|
$0.90
|
||||||
Options
granted during the year ended December 31, 2007
|
779,488
|
$2.38
|
||||||
Options
forfeited by holders during the year
|
||||||||
ended
December 31, 2007
|
(442,816)
|
$1.45
|
||||||
Options
exercised during the year ended December 31, 2007
|
(184,301)
|
$0.31
|
||||||
Options
outstanding at December 31, 2007
|
2,000,563
|
$1.41
|
||||||
Options
exercisable at December 31, 2007
|
1,290,298
|
$0.93
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||||||
Weighted
|
||||||||||||||||||||
Average
|
Weighted
|
Weighted
|
||||||||||||||||||
Outstanding
|
Average
|
Average
|
||||||||||||||||||
Range
of
|
Number
|
Contractual
|
Exercise
|
Number
|
Exercise
|
|||||||||||||||
Exercise Price
|
Outstanding
|
Life
|
Price
|
Exercisable
|
Price
|
|||||||||||||||
Under
$1.00
|
1,029,146 |
7.4
|
$0.33
|
904,734 |
$0.33
|
|||||||||||||||
$1.00
- $2.00
|
492,000 |
9.2
|
$1.86
|
297,912 |
$1.87
|
|||||||||||||||
$2.01
- $3.00
|
235,750 |
9.3
|
$2.54
|
30,708 |
$2.55
|
|||||||||||||||
$3.01
- $4.00
|
193,667 |
9.7
|
$3.53
|
26,389 |
$3.72
|
|||||||||||||||
Greater
than $4.01
|
50,000 |
8.2
|
$5.60
|
30,555 |
$5.60
|
AMERICAN
CARESOURCE HOLDINGS, INC.
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
AMERICAN
CARESOURCE HOLDINGS, INC.
|
||
By:
/s/ David S. Boone
|
March
31, 2008
|
|
David S. Boone
Chief Executive
Officer
(Principal Executive
Officer)
|
Date
|
|
Pursuant
to the requirements the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
|
||
By:
/s/ Edward B. Berger
|
March
31, 2008
|
|
Edward B. Berger
Executive Chairman and
Director
|
Date
|
|
By:
/s/ David S. Boone
|
March
31, 2008
|
|
David S. Boone
Chief Executive
Officer
(Principal Executive
Officer)
|
Date
|
|
By:
/s/ Steven J. Armond
|
March
31, 2008
|
|
Steven J. Armond
Chief Financial
Officer
(Principal Financial
Officer)
|
Date
|
|
By:
/s/ Steven M. Phillips
|
March
31, 2008
|
|
Steven M. Phillips
Controller, Principal Accounting
Officer
(Principal Accounting
Officer)
|
Date
|
|
By:
/s/ Kenneth S. George
|
March
31, 2008
|
|
Kenneth S. George
Director
|
Date
|
|
By:
/s/ John N. Hatsopoulos
|
March
31, 2008
|
|
John N. Hatsopoulos
Director
|
Date
|
|
By:
/s/ Derace L. Schaffer
|
March
31, 2008
|
|
Derace L. Schaffer
Director
|
Date
|
|
By:
/s/ John Pappajohn
|
March
31, 2008
|
|
John Pappajohn
Director
|
Date
|
|
By:
/s/ John W. Colloton
|
March
31, 2008
|
|
John W. Colloton
Director
|
Date
|
Exhibit
#
|
Description
of Exhibits
|
3.1(1)
|
Certificate
of Incorporation of American CareSource Holdings, Inc.
|
3.2(1)
|
By-Laws
|
3.3(2)
|
Amendment
to the Certificate of Incorporation of American CareSource Holdings, Inc.,
dated May 25, 2005
|
3.4(2)
|
Amendment
to the Certificate of Incorporation of American CareSource Holdings, Inc.,
dated June 2, 2005
|
3.5(3)
|
Amendment
to the Certificate of Incorporation of American CareSource Holdings, Inc.,
dated November 14, 2005
|
3.6(4)
|
Certificate
of Incorporation of Ancillary Care Services – Group Health,
Inc.
|
3.7(4)
|
Certificate
of Incorporation of Ancillary Care Services – Medicare,
Inc.
|
3.8(4)
|
Certificate
of Incorporation of Ancillary Care Services – Worker’s Compensation,
Inc.
|
3.9(4)
|
Certificate
of Incorporation of Ancillary Care Services, Inc.
|
4.1(6)
|
Amended
and Restated 2005 Stock Option Plan
|
4.2(2)
|
Specimen
Stock Certificate
|
10.01(2)*
|
Employment
Agreement dated October 11, 2004 between American CareSource Holdings,
Inc. and Wayne A. Schellhammer
|
10.02(2)*
|
Employment
Agreement dated May 1, 2005, between American CareSource Holdings, Inc.
and David Boone
|
10.03(7)*
|
Employment
Agreement dated September 1, 2006 between American CareSource Holdings,
Inc. and Kurt Fullmer
|
10.04(7)*
|
Employment
Agreement dated February 19, 2007 between American CareSource Holdings,
Inc. and Maria Baker
|
10.05(7)*
|
Employment
Agreement dated February 19, 2007 between American CareSource Holdings,
Inc. and Jennifer Boone
|
10.06(9)*
|
Employment
Agreement dated October 12, 2007 between American CareSource Holdings,
Inc. and Steven J. Armond
|
10.07(8)*
|
Separation
Agreement and General Release dated July 12, 2007 between American
CareSource Holdings, Inc. and Wayne Schellhammer
|
10.08*
|
Employment
Letter dated January 29, 2008 between American CareSource Holdings, Inc.
and Cornelia Outten
|
10.09*
|
Employment
Letter dated March 6, 2008 between American CareSource Holdings, Inc. and
Rost Ginevich
|
10.10(4)
|
Form
of Registration Rights Agreement used in March 2006 private
placement
|
10.11(4)
|
Form
of Subscription Agreement used in March 2006 private
placement
|
10.12(4)
|
Amended
and Restated Stock Purchase Warrant dated March 30, 2006 by and among
American CareSource Holdings, Inc. and John Pappajohn (amends Stock
Purchase Warrant dated January 27, 2005).
|
10.13(4)
|
Amended
and Restated Stock Purchase Warrant dated March 29, 2006 by and among
American CareSource Holdings, Inc. and Derace L. Schaffer (amends Stock
Purchase Warrant dated January 27, 2005).
|
10.14(4)
|
Amended
and Restated Stock Purchase Warrant dated March 29, 2006 by and among
American CareSource Holdings, Inc. and John Pappajohn (amends Stock
Purchase Warrant dated August 15, 2005).
|
10.15(4)
|
Amended
and Restated Stock Purchase Warrant dated March 29, 2006 by and among
American CareSource Holdings, Inc. and Derace L. Schaffer (amends Stock
Purchase Warrant dated August 15, 2005).
|
10.16(4)
|
Amended
and Restated Stock Purchase Warrant dated March 30, 2006 by and among
American CareSource Holdings, Inc. and Matthew P. Kinley (amends Stock
Purchase Warrant dated August 15, 2005).
|
10.17(5)
|
Lease
dated June 14, 2006, between American CareSource Holdings, Inc. and TR LBJ
Campus Partners, L.P.
|
14.1
|
Code
of Ethics
|
20.1(5)
|
Governance
and Nominating Committee Charter
|
20.2(5)
|
Audit
Committee Charter
|
20.3(5)
|
Compensation
Committee Charter
|
21.1
|
Subsidiaries
|
23.1
|
Consent
of McGladrey & Pullen LLP
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification
of the Chief Financial Officer and Chief Operating Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.3
|
Certification
of the Principal Accounting Officer and Controller pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
(1)
|
Previously
filed with the Securities and Exchange Commission as an exhibit
toAmendment No. 1 to the Form SB-2 filed May 13, 2005 and incorporated
herein byreference.
|
(2)
|
Previously
filed with the Securities and Exchange Commission as an exhibit to
Amendment No. 5 to the Form SB-2 filed August 12, 2005 and incorporated
herein by reference.
|
(3)
|
Previously
filed with the Securities and Exchange Commission as an exhibit to
Amendment No. 8 to the Form SB-2 filed November 18, 2005 and
incorporated herein by reference.
|
(4)
|
Previously
filed with the Securities and Exchange Commission as an exhibit to the
Form 10-KSB filed March 31, 2006 and incorporated herein by
reference.
|
(5)
|
Previously
filed with the Securities and Exchange Commission as an exhibit to the
Form 10-QSB filed August 11, 2006 and incorporated herein by
reference.
|
(6)
|
Previously
filed with the Securities and Exchange Commission as Exhibit A to
Amendment No. 1 to the Proxy Statement for the 2007 Annual Meeting of
Stockholders filed May 1, 2007 and incorporated herein by
reference.
|
(7)
|
Previously
filed with the Securities and Exchange Commission as an exhibit to the
Form 10-QSB filed May 15, 2007 and incorporated herein by
reference.
|
(8)
|
Previously
filed with the Securities and Exchange Commission as an exhibit to the
Form 8-K filed July 17, 2007 and incorporated herein by
reference.
|
(9)
|
Previously
filed with the Securities and Exchange Commission as an exhibit to the
Form 10-QSB filed November 13, 2007 and incorporated herein by
reference.
|