Cover
Cover - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 24, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Entity Registrant Name | VASO CORPORATION | ||
Entity Central Index Key | 0000839087 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Entity Common Stock Shares Outstanding | 175,127,878 | ||
Entity Public Float | $ 8.7 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 0-18105 | ||
Entity Incorporation State Country Code | DE | ||
Entity Tax Identification Number | 11-2871434 | ||
Entity Address Address Line 1 | 137 Commercial Street | ||
Entity Address City Or Town | Plainview | ||
Entity Address State Or Province | NY | ||
Entity Address Postal Zip Code | 11803 | ||
City Area Code | 516 | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Name | UHY LLP | ||
Auditor Location | Sterling Heights, Michigan | ||
Local Phone Number | 997-4600 | ||
Security 12g Title | Common Stock, $.001 par value | ||
Entity Interactive Data Current | Yes | ||
Auditor Firm Id | 1195 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 11,821 | $ 6,025 |
Short-term investments | 8,504 | 629 |
Accounts and other receivables, net of an allowance for doubtful accounts and commission adjustments of $6,947 at December 31, 2022 and $5,804 at December 31, 2021 | 15,524 | 15,393 |
Receivables due from related parties | 421 | 66 |
Inventories, net | 1,473 | 1,147 |
Deferred commission expense | 3,249 | 3,549 |
Prepaid expenses and other current assets | 1,008 | 994 |
Total current assets | 42,000 | 27,803 |
Property and equipment, net of accumulated depreciation of $9,787 at December 31, 2022 and $10,512 at December 31, 2021 | 1,340 | 2,172 |
Operating lease right of use assets | 1,568 | 915 |
Goodwill | 15,614 | 15,722 |
Intangibles, net | 1,511 | 2,041 |
Other assets, net | 4,726 | 2,446 |
Investment in EECP Global | 889 | 1,043 |
Deferred tax assets, net | 5,007 | 219 |
Total assets | 72,655 | 52,361 |
CURRENT LIABILITIES | ||
Accounts payable | 2,270 | 2,797 |
Accrued commissions | 3,720 | 2,705 |
Accrued expenses and other liabilities | 8,891 | 7,489 |
Finance lease liabilities - current | 122 | 222 |
Operating lease liabilities - current | 745 | 562 |
Sales tax payable | 809 | 719 |
Deferred revenue - current portion | 15,139 | 16,495 |
Notes payable - current portion | 9 | 8 |
Due to related party | 3 | 3 |
Total current liabilities | 31,708 | 31,000 |
LONG-TERM LIABILITIES | ||
Notes payable, net of current portion | 15 | 23 |
Finance lease liabilities, net of current portion | 96 | 218 |
Operating lease liabilities, net of current portion | 823 | 352 |
Deferred revenue, net of current portion | 15,664 | 8,470 |
Other long-term liabilities | 1,474 | 988 |
Total long-term liabilities | 18,072 | 10,051 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.01 par value; 1,000,000 shares authorized; nil shares issued and outstanding at December 31, 2022 and 2021 | 0 | 0 |
Common stock, $0.001 par value; 250,000,000 shares authorized; 185,435,965 shares issued at December 31, 2022 and 2021; 175,127,878 shares outstanding at December 31, 2022 and 2021 | 185 | 185 |
Additional paid-in capital | 63,952 | 63,917 |
Accumulated deficit | (39,029) | (50,902) |
Accumulated other comprehensive income (loss) | (233) | 110 |
Treasury stock, at cost, 10,308,087 shares at December 31, 2022 and 2021 | (2,000) | (2,000) |
Total stockholders' equity | 22,875 | 11,310 |
Total liabilities and stockholders' equity | $ 72,655 | $ 52,361 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS | ||
Accounts and other receivables, allowance for doubtful accounts and commission adjustments | $ 6,947 | $ 5,804 |
Property and equipment, accumulated depreciation | $ 9,787 | $ 10,512 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 185,435,965 | 185,435,965 |
Common stock, shares outstanding | 175,127,878 | 175,127,878 |
Treasury stock, at cost | 10,308,087 | 10,308,087 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | ||
Managed IT systems and services | $ 40,100 | $ 42,916 |
Professional sales services | 37,344 | 29,441 |
Equipment sales and services | 2,573 | 3,222 |
Total revenues | 80,017 | 75,579 |
Cost of revenues | ||
Cost of managed IT systems and services | 23,871 | 26,242 |
Cost of professional sales services | 7,056 | 5,535 |
Cost of equipment sales and services | 609 | 669 |
Total cost of revenues | 31,536 | 32,446 |
Gross profit | 48,481 | 43,133 |
Operating expenses | ||
Selling, general and administrative | 40,843 | 38,593 |
Research and development | 605 | 1,721 |
Total operating expenses | 41,448 | 40,314 |
Operating income | 7,033 | 2,819 |
Other (expense) income | ||
Interest and financing costs | (44) | (312) |
Interest and other income, net | 143 | 98 |
Gain on forgiveness of PPP loan | 0 | 3,646 |
Loss on disposal of fixed assets | (2) | 0 |
Total other income, net | 97 | 3,432 |
Income before income taxes | 7,130 | 6,251 |
Income tax benefit (expense) | 4,743 | (151) |
Net income | 11,873 | 6,100 |
Other comprehensive income | ||
Foreign currency translation (loss) gain | (343) | 94 |
Comprehensive income | $ 11,530 | $ 6,194 |
Income per common share | ||
- basic and diluted | $ 0.07 | $ 0.04 |
Weighted average common shares outstanding | ||
- basic | 173,065 | 171,688 |
- diluted | 174,656 | 173,771 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Treasury Stock | Accumulated Other Comprehensive Income (Loss) [Member] |
Balance, shares at Dec. 31, 2020 | 185,244 | 10,308 | ||||
Balance, amount at Dec. 31, 2020 | $ 5,085 | $ 185 | $ 63,886 | $ (57,002) | $ (2,000) | $ 16 |
Share-based compensation, shares | 192 | |||||
Share-based compensation, amount | 31 | $ 0 | 31 | 0 | 0 | 0 |
Foreign currency translation gain | 94 | 0 | 0 | 0 | 0 | 94 |
Net income | 6,100 | $ 0 | 0 | 6,100 | $ 0 | 0 |
Balance, shares at Dec. 31, 2021 | 185,436 | 10,308 | ||||
Balance, amount at Dec. 31, 2021 | 11,310 | $ 185 | 63,917 | (50,902) | $ (2,000) | 110 |
Share-based compensation, amount | 35 | 0 | 35 | 0 | 0 | 0 |
Foreign currency translation gain | (343) | 0 | 0 | 0 | 0 | (343) |
Net income | 11,873 | $ 0 | 0 | 11,873 | $ 0 | 0 |
Balance, shares at Dec. 31, 2022 | 185,436 | 10,308 | ||||
Balance, amount at Dec. 31, 2022 | $ 22,875 | $ 185 | $ 63,952 | $ (39,029) | $ (2,000) | $ (233) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities | ||
Net income | $ 11,873 | $ 6,100 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 1,923 | 3,840 |
Deferred income taxes | (4,788) | 52 |
Loss from investment in EECP Global | 154 | 73 |
Gain on forgiveness of PPP loan | 0 | (3,646) |
Provision for doubtful accounts and commission adjustments | 63 | 448 |
Write-down of inventory | 0 | 385 |
Share-based compensation | 35 | 31 |
Changes in operating assets and liabilities: | ||
Accounts and other receivables | (243) | (6,052) |
Due from related parties | (343) | (46) |
Inventories | (416) | 299 |
Deferred commission expense | 300 | (1,195) |
Prepaid expenses and other current assets | (103) | 162 |
Other assets, net | (2,422) | (212) |
Accounts payable | (521) | (3,492) |
Accrued commissions | 1,094 | 1,497 |
Accrued expenses and other liabilities | 1,392 | 2,372 |
Sales tax payable | 108 | 94 |
Deferred revenue | 5,838 | 7,260 |
Due to related party | (14) | (233) |
Other long-term liabilities | 486 | 78 |
Net cash provided by operating activities | 14,416 | 7,815 |
Cash flows from investing activities | ||
Purchases of equipment and software | (566) | (415) |
Purchases of short-term investments | (8,000) | 0 |
Redemption of short-term investments | 149 | 155 |
Net cash used in investing activities | (8,417) | (260) |
Cash flows from financing activities | ||
Repayment on revolving lines of credit | 0 | (5,448) |
Repayment of notes payable and finance lease obligations | (230) | (2,881) |
Net cash used in financing activities | (230) | (8,329) |
Effect of exchange rate differences on cash and cash equivalents | 27 | (20) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 5,796 | (794) |
Cash and cash equivalents - beginning of period | 6,025 | 6,819 |
Cash and cash equivalents - end of period | 11,821 | 6,025 |
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION | ||
Interest paid | 44 | 347 |
Income taxes paid | 48 | 113 |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Initial recognition of operating lease right of use asset and liability | $ 1,396 | $ 783 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2022 | |
DESCRIPTION OF BUSINESS | |
DESCRIPTION OF BUSINESS | NOTE A – DESCRIPTION OF BUSINESS Vaso Corporation was incorporated in Delaware in July 1987. For most of its history, the Company was a single-product company designing, manufacturing, marketing and servicing its proprietary Enhanced External Counterpulsation, or EECP ® Overview Vaso Corporation principally operates in three distinct business segments in the healthcare equipment and information technology industries. We manage and evaluate our operations, and report our financial results, through these three business segments. · 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 GE HealthCare (“GEHC”) into the health provider middle market; and · Equipment segment, primarily focuses on the design, manufacture, sale and service of proprietary medical devices and software, 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. VasoTechnology VasoTechnology, Inc. In June 2014, the Company began its IT segment business by executing the Value Added Reseller Agreement (“VAR Agreement”) with GEHC to become a national value added reseller of GEHC Digital’s software solutions such as Picture Archiving and Communication System (“PACS”), Radiology Information System (“RIS”), and related services, including implementation, training, management and support. This business focuses primarily on customer segments currently served by VasoHealthcare on behalf of GEHC. A new wholly owned subsidiary, VasoHealthcare IT Corp. (“VHC IT”), was formed to conduct the healthcare IT business. The VAR Agreement with GEHC was terminated in 2021. In May 2015, the Company further expanded its IT segment business by acquiring NetWolves. NetWolves designs and delivers multi-network and multi-technology solutions as a managed network provider, and provides a complete single-source solution that includes design, network redundancy, application device management, real-time network monitoring, reporting and support systems as a comprehensive solution. VasoHealthcare In May 2010, the Company launched its Professional Sales Service business through a wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a VasoHealthcare, which was appointed by GEHC as its exclusive representative for the sale of select GEHC diagnostic imaging equipment to specific market segments in the 48 contiguous states of the United States and the District of Columbia. The original agreement (“GEHC Agreement”) has been extended several times and currently expires December 31, 2026, subject to earlier termination under certain conditions. VasoMedical The proprietary medical equipment business under VasoMedical traces back to 1995 when the Company began the proprietary Enhanced External Counterpulsation (EECP ® Over the last decade the Company’s Equipment business has been significantly expanded from the original EECP ® ® ® ® In April 2014, the Company entered into a cooperation agreement with Chongqing PSK-Health Sci-Tech Development Co., Ltd. (“PSK”) of Chongqing, China, the leading manufacturer of external counter pulsation, or ECP, therapy systems in China, to form a joint venture company, VSK Medical Limited (“VSK”), a Cayman Islands company, for the global marketing, sale and advancement of ECP therapy technology. The Company owned 49.9% of VSK, which commenced operations in January 2015. In March 2018, the Company terminated the cooperation agreement with PSK and sold its shares in VSK to PSK. On May 20, 2020, the Company closed on the sale of 51% of the capital stock of its wholly-owned subsidiary EECP Global Corporation (“EECP Global”) to PSK. EECP Global was formed in September 2019 to hold all the assets and liabilities of its EECP business. Concurrently with the closing of the transaction, the Company signed a Management Service Agreement with EECP Global to provide management service for the business and operation of EECP Global in the United States. The agreement provides an initial term of three years starting April 1, 2020, the effective date of the sale, which is automatically renewable for additional one-year terms. Pursuant to the agreement, EECP Global reimburses the Company all direct expenses and pays a monthly management fee during the term of the agreement. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies consistently applied in the preparation of the consolidated financial statements are as follows: Principles of Consolidation The consolidated financial statements include the accounts of Vaso Corporation, its wholly-owned subsidiaries, and the accounts of the companies over which we exercise control. Significant intercompany balances and transactions have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions relate to estimates of commission adjustments due to order cancellations, collectability of accounts receivable, the realizability of deferred tax assets, stock-based compensation, values and lives assigned to acquired intangible assets, fair value of reporting units in connection with goodwill impairment test, the adequacy of inventory reserves, variable consideration, and allocation of contract transaction price to performance obligations. Actual results could differ from those estimates. Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under the standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. ASU 2014-09 replaced most existing revenue recognition guidance in U.S. GAAP. The new standard introduces a five-step process to be followed in determining the amount and timing of revenue recognition. It also provides guidance on accounting for costs incurred to obtain or fulfill contracts with customers, and establishes disclosure requirements which are more extensive than those required under prior U.S. GAAP. Generally, we recognize revenue under Topic 606 for each of our performance obligations either over time (generally, the transfer of a service) or at a point in time (generally, the transfer of a good) as follows: · VasoTechnology Revenue relating to recurring managed network and voice services provided by NetWolves are recognized as provided on a monthly basis (“over time”). Non-recurring charges related to the provision of such services are recognized in the period provided (“point in time”). In the IT VAR business, software system installations are recognized upon verification of installation and expiration of an acceptance period (“point in time”). Monthly post-implementation customer support provided under such installations as well as software solutions offered under a monthly Software as a Service (“SaaS”) fee basis are recognized monthly over the contract term (“over time”). · VasoHealthcare Commission revenue is recognized when the underlying equipment has been delivered by GEHC and accepted at the customer site in accordance with the terms of the specific sales agreement (“point in time”). · VasoMedical In the United States, we recognized revenue from the sale of our medical equipment in the period in which we deliver the product to the customer (“point in time”). Revenue from the sale of our medical equipment to international markets is recognized upon shipment of the product to a common carrier, as are supplies, accessories and spare parts delivered in both domestic and international markets (“point in time”). The Company also recognizes revenue from the maintenance of its medical products either on a time and material as-billed basis (“point in time”) or through the sale of a service contract, where revenue is recognized ratably over the contract term (“over time”). Disaggregation of Revenue The following tables present revenues disaggregated by our business operations and timing of revenue recognition: Year Ended December 31, 2022 Year Ended December 31, 2021 Professional Professional sales sales service Equipment service Equipment IT segment segment segment Total IT segment segment segment Total Network services $ 35,833 $ - $ - $ 35,833 $ 37,861 $ - $ - $ 37,861 Software sales and support 4,267 - - 4,267 5,055 - - 5,055 Commissions - 37,344 - 37,344 - 29,441 - 29,441 Medical equipment sales - - 2,450 2,450 - - 3,093 3,093 Medical equipment service - - 123 123 - - 129 129 $ 40,100 $ 37,344 $ 2,573 $ 80,017 $ 42,916 $ 29,441 $ 3,222 $ 75,579 Year Ended December 31, 2022 Year Ended December 31, 2021 Professional Professional sales sales service Equipment service Equipment IT segment segment segment Total IT segment segment segment Total Revenue recognized over time $ 37,089 $ - $ 325 $ 37,414 $ 38,172 $ - $ 199 $ 38,371 Revenue recognized at a point in time 3,011 37,344 2,248 42,603 4,744 29,441 3,023 37,208 $ 40,100 $ 37,344 $ 2,573 $ 80,017 $ 42,916 $ 29,441 $ 3,222 $ 75,579 Transaction Price Allocated to Remaining Performance Obligations As of December 31, 2022, the aggregate amount of transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) for executed contracts approximates $91 million, of which we expect to recognize revenue as follows: Fiscal years of revenue recognition 2023 2024 2025 Thereafter Unfulfilled performance obligations $ 41,882 $ 14,496 $ 4,464 $ 29,697 As of December 31, 2021, the aggregate amount of transaction price allocated to performance obligations that were unsatisfied (or partially unsatisfied) for executed contracts approximated $86 million. Contract Balances Contract receivables include trade receivables, net and long-term receivables (recorded in Other assets in the consolidated balance sheets). Contract liabilities arise in our IT, VasoHealthcare, and VasoMedical businesses. In our VHC IT business, payment arrangements with clients typically include an initial payment due upon contract signing and milestone-based payments based upon product delivery and go-live, as well as post go-live monthly payments for subscription and support fees. Customer payments received, or receivables recorded, in advance of go-live and customer acceptance, where applicable, are deferred as contract liabilities. Such amounts aggregated approximately $481,000 and $407,000 at December 31, 2022 and 2021, respectively, and are included in accrued expenses and other liabilities in our consolidated balance sheets. In our VasoHealthcare business, we bill a portion of commissions on the orders we booked in advance of delivery of the underlying equipment. Such amounts aggregated approximately $30,794,000 and $24,955,000 at December 31, 2022 and 2021, respectively, and are classified in our consolidated balance sheets into current or long-term deferred revenue net of estimated commission adjustments. In addition, we record a contract liability for amounts expected to be credited back to GEHC due to customer order reductions. Such amounts aggregated approximately $2,577,000 and $1,518,000 at December 31, 2022 and 2021, respectively, and are included in accrued expenses and other liabilities in our consolidated balance sheets. In our VasoMedical business, we bill amounts for post-delivery services and varying duration service contracts in advance of performance. Such amounts aggregated approximately $9,000 at December 31, 2022 and 2021, and are classified in our consolidated balance sheets as either current or long-term deferred revenue. The following table summarizes the Company’s contract receivable and contract liability balances: 2022 2021 Contract receivables - January 1 15,761 10,200 Contract receivables - December 31 16,316 15,761 Increase (decrease) 555 5,561 Contract liabilities - January 1 26,890 19,375 Contract liabilities - December 31 33,861 26,890 Increase (decrease) 6,971 7,515 The increase in contract liabilities is due primarily to order bookings exceeding deliveries in our VasoHealthcare business. During the years ended December 31, 2022 and 2021, we recognized approximately $9.1 million and $5.8 million, respectively, of revenues that were included in our contract liability balance at the beginning of such periods. Costs to Obtain or Fulfill a Contract Topic 606 requires that incremental costs of obtaining a contract are recognized as an asset and amortized to expense in a pattern that matches the timing of the revenue recognition of the related contract. We have determined the only significant incremental costs incurred to obtain contracts with customers within the scope of Topic 606 are certain sales commissions paid to associates. In addition, the Company elected the practical expedient to recognize the incremental costs of obtaining a contract when incurred for contracts where the amortization period for the asset the Company would otherwise have recognized is one year or less. Under Topic 606, sales commissions applicable to service contracts exceeding one year have been capitalized and amortized ratably over the term of the contract. In our VHC IT business, commissions allocable to multi-year subscription contracts or multi-year post-contract support performance obligations are amortized to expense ratably over the terms of the multi-year periods. VHC IT commissions allocable to other elements are charged to expense at go-live or customer acceptance. In our professional sales services segment, commissions paid to our sales force are deferred until the underlying equipment is accepted by the customer. We recognized approximately $2,732,000 and $1,928,000 of amortization related to these sales commission assets in “Cost of professional sales services” in 2022 and 2021, respectively, and approximately $79,000 and $120,000 of amortization in “Selling, general and administrative” expense in 2022 and 2021, respectively, in our consolidated statements of operations and comprehensive income. At December 31, 2022 and 2021, our consolidated balance sheets include approximately $7,113,000 and $5,567,000, respectively, in capitalized sales commissions - primarily in our professional sales services segment - to be expensed in future periods, of which $3,249,000 and $3,549,000, respectively, is recorded in deferred commission expense and $3,864,000 and $2,018,000, respectively, representing the long-term portion, is included in other assets. Significant Judgments when Applying Topic 606 Contract transaction price is allocated to performance obligations using estimated stand-alone selling price. Judgment is required in estimating stand-alone selling price for each distinct performance obligation. We determine stand-alone selling price maximizing observable inputs such as stand-alone sales when they exist or substantive renewal price charged to clients. In instances where stand-alone selling price is not observable, we utilize an estimate of stand-alone selling price based on historical pricing and industry practices. Certain revenue we record in our professional sales service segment contains an estimate for variable consideration. Due to the tiered structure of our commission rate, which increases as annual targets are achieved, under Topic 606 we record revenue and deferred revenue at the rate we expect to be achieved by year end. We base our estimate of variable consideration on historical results of previous years’ achievement under the GEHC agreement. Such estimate is reviewed each quarter and adjusted as necessary. In addition, the Company records commissions for arranging financing at an estimated rate which is subject to later revision based on certain factors. The Company recognized (decreases) increases in revenue associated with revisions to variable consideration for previously completed performance obligations of $(5,000) and $40,000 for the years ended December 31, 2022 and 2021 respectively. The Company also records commission adjustments to contract liabilities in its professional sales service segment based on estimates of future order cancellations. Such cancellations also result in adjustments to the related capitalized cost to obtain or fulfill a contract. Shipping and Handling Costs All shipping and handling expenses are charged to cost of sales. Amounts billed to customers related to shipping and handling costs are included as a component of sales. Research and Development Research and development costs attributable to development are expensed as incurred. Share-Based Compensation The Company complies with ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”), which requires all companies to recognize the cost of services received in exchange for equity instruments to be recognized in the financial statements based on their grant date fair values. The Company applies an estimated forfeiture rate to the grant date fair value to determine the annual compensation cost of share-based payment arrangements with employees. The forfeiture rate is estimated based primarily on job title and prior forfeiture experience. The Company did not grant any awards to non-employees during the years ended December 31, 2022 and 2021. During the year ended December 31, 2022, the Company granted 1,050,000 restricted shares of common stock valued at $115,000 to employees. The shares vest over three and five years from the grant date. The total fair value of shares vested during the year ended December 31, 2022 was $23,000 for officers and $4,000 for employees. The weighted average grant date fair value of shares granted during the year ended December 31, 2022 was $0.11 per share, based on the closing price as of the grant date. During the year ended December 31, 2021, the Company granted 90,000 restricted shares of common stock valued at $4,500 to an employee. The shares vest over three years from the grant date. The total fair value of shares vested during the year ended December 31, 2021 was $23,000 for officers and $14,000 for employees. The weighted average grant date fair value of shares granted during the year ended December 31, 2021 was $0.05 per share. The Company did not grant any stock options during the years ended December 31, 2022 or 2021, nor were any options exercised during such periods. No options were outstanding at December 31, 2022 or 2021. Share-based compensation expense recognized for the years ended December 31, 2022 and 2021 was $35,000 and $31,000, respectively, and is recorded in selling, general, and administrative expense in the consolidated statements of operations and comprehensive income. Unrecognized expense related to existing share-based compensation and arrangements is approximately $125,000 at December 31, 2022 and will be recognized over a weighted-average period of approximately 54 months. Cash and Cash Equivalents Cash and cash equivalents represent cash and short-term, highly liquid investments either in certificates of deposit, treasury bills, money market funds, or investment grade commercial paper issued by major corporations and financial institutions that generally have maturities of three months or less from the date of acquisition. Short term investments The Company’s short-term investments consist of six-month U.S. Treasury bills and bank deposits with yields based on underlying debt and equity securities. The U.S. Treasury bills are classified as held-to-maturity and are carried at amortized cost of approximately $8,071,000 at December 31, 2022. Their fair value at December 31, 2022 is approximately $8,064,000 and the unrecognized holding loss is $7,000 for the year ended December 31, 2022. The bank deposits are carried at fair value of approximately $433,000 at December 31, 2022 and are classified as available-for-sale. Realized gains or losses on the bank deposits are included in net income. The Company does not expect a credit loss for its short-term investments. Financial Instruments The Company complies with the provisions of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”). Under ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The carrying amount of assets and liabilities including cash and cash equivalents, short-term investments, accounts receivable, prepaids, accounts payable, accrued expenses and other current liabilities approximated their fair value as of December 31, 2022 and 2021, due to the relative short maturity of these instruments. Property and equipment, intangible assets, capital lease obligations, and goodwill are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the respective asset is written down to its fair value. The following table presents information about the Company’s assets measured at fair value as of December 31, 2022 and 2021: Quoted Prices Significant in Active Other Significant Balance Markets for Observable Unobservable as of Identical Assets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2022 Assets Cash equivalents invested in money market funds $ 7,934 $ - $ - $ 7,934 Bank deposits (included in short term investments) 433 433 $ 8,367 $ - $ - $ 8,367 Quoted Prices Significant in Active Other Significant Balance Markets for Observable Unobservable as of Identical Assets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2021 Assets Cash equivalents invested in money market funds $ 802 $ - $ - $ 802 Bank deposits (included in short term investments) 629 629 $ 1,431 $ - $ - $ 1,431 Accounts Receivable, net The Company’s accounts receivable are due from customers to whom we sell our products and services, distributors engaged in the distribution of our products and from GEHC. Credit is extended based on evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are generally due 30 to 90 days from shipment and services provided and are stated at amounts due from customers net of allowances for doubtful accounts, returns, term discounts and other allowances. Accounts that are outstanding longer than the contractual payment terms are considered past due. Estimates are used in determining the allowance for doubtful accounts based on the Company’s historical collections experience, current trends, credit policy and a percentage of its accounts receivable by aging category. In determining these percentages, the Company reviews historical write-offs of their receivables. The Company also looks at the credit quality of their customer base as well as changes in their credit policies. The Company continuously monitors collections and payments from our customers, and writes off receivables when all efforts at collection have been exhausted. While credit losses have historically been within expectations and the provisions established, the Company cannot guarantee that it will continue to experience the same credit loss rates that they have in the past. The changes in the Company’s allowance for doubtful accounts and commission adjustments are as follows: (in thousands) Year ended December 31, 2022 2021 Beginning Balance $ 5,804 $ 4,208 Provision for losses on accounts receivable 63 132 Direct write-offs, net of recoveries (159 ) (77 ) Commission adjustments 1,239 1,541 Ending Balance $ 6,947 $ 5,804 Concentrations of Credit Risk We market our equipment and IT software solutions principally to hospitals, diagnostic imaging centers and physician private practices. We perform credit evaluations of our customers’ financial condition and, as a result, believe that our receivable credit risk exposure is limited. For the years ended December 31, 2022 and 2021, no customer in our equipment or IT segment accounted for 10% or more of revenues or accounts receivable. In our professional sales service segment, 100% of our revenues and accounts receivable are with GEHC; however, we believe this risk is acceptable based on GEHC’s financial position and our long history of doing business with GEHC. The Company maintains cash balances in certain U.S. financial institutions, which, at times, may exceed the Federal Depository Insurance Corporation (“FDIC”) coverage of $250,000. The Company has not experienced any losses on these accounts and believes it is not subject to any significant credit risk on these accounts. In addition, the FDIC does not insure the Company’s foreign bank balances, which aggregated approximately $1,234,000 and $903,000 at December 31, 2022 and 2021, respectively. Inventories The Company values inventories in the equipment segment at the lower of cost or net realizable value, with cost being determined on a first-in, first-out basis. The Company regularly reviews inventory quantities on hand, particularly raw materials and components, and records a provision for excess and slow moving inventory based primarily on existing and anticipated design and engineering changes to its products as well as forecasts of future product demand. In our IT Segment, we purchase computer hardware and software for specific customer requirements and value such inventories using the specific identification method. Property and Equipment Property and equipment, including assets under finance leases, are stated at cost less accumulated depreciation and amortization. Major improvements are capitalized and minor replacements, maintenance and repairs are charged to expense as incurred. Upon retirement or disposal of assets, the cost and related accumulated depreciation are removed from the consolidated balance sheets. Depreciation is expensed over the estimated useful lives of the assets, which range from two to eight years, on a straight-line basis. Accelerated methods of depreciation are used for tax purposes. We amortize leasehold improvements over the useful life of the related leasehold improvement or the life of the related lease, whichever is less. Impairment of Long-lived Assets The Company reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable. If required, the Company compares the estimated fair value determined by either the undiscounted future net cash flows or appraised value to the related asset’s carrying value to determine whether there has been an impairment. If an asset is considered impaired, the asset is written down to fair value, which is based either on discounted cash flows or appraised values in the period the impairment becomes known. In December 2021, the Company deemed $324,000 in long-lived assets to be impaired. The impairment loss is reflected in cost of managed IT systems and services in the Company’s consolidated statement of operations. No assets were determined to be impaired as of December 31, 2022. Goodwill and Intangible Assets Goodwill represents the excess of cost over the fair value of net assets of businesses acquired. The Company accounts for goodwill under the guidance of the ASC Topic 350, “Intangibles: Goodwill and Other”. Goodwill acquired in a purchase business combination is not amortized, but instead tested for impairment, at least annually, in accordance with this guidance. The recoverability of goodwill is subject to an annual impairment test or whenever an event occurs or circumstances change that would more likely than not result in an impairment. The Company tests goodwill for impairment at the reporting unit level on an annual basis as of December 31 and between annual tests when an event occurs or circumstances change that could indicate that the asset might be impaired. In any year, the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If the Company cannot determine qualitatively that the fair value is in excess of the carrying value, or the Company decides to bypass the qualitative assessment, the Company proceeds to the quantitative goodwill impairment test, which compares the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. No goodwill was determined to be impaired as of December 31, 2022 and 2021. Intangible assets consist of the value of customer contracts and relationships, patent and technology costs, and software. The cost of significant customer-related intangibles is amortized in proportion to estimated total related revenue; cost of other intangible assets is generally amortized on a straight-line basis over the asset’s estimated economic life, which range from five to ten years. The Company capitalizes internal use software development costs incurred during the application development stage. Costs related to preliminary project activities, training, data conversion, and post implementation activities are expensed as incurred. The Company did not capitalize any software development costs for the years ended December 31, 2022 and 2021. In December 2021, the Company deemed $1.1 million in capitalized software costs to be impaired. The impairment loss is reflected in R&D expenses in the Company’s consolidated statement of operations. No intangible assets were determined to be impaired as of December 31, 2022. Deferred Revenue Amounts billable under the agreement with GEHC in advance of delivery of the underlying equipment are recorded initially as deferred revenue, and commission revenue is subsequently recognized as customer acceptance of such equipment is reported to us by GEHC. Similarly, commissions payable to our sales force related to such billings are recorded as deferred commission expense when the associated deferred revenue is recorded. Commission expense is recognized when the corresponding commission revenue is recognized. In our equipment segment, we record revenue on extended service contracts ratably over the term of the related service contracts. Income Taxes Deferred income taxes are recognized for temporary differences between financial statement and income tax bases of assets and liabilities and loss carry-forwards for which income tax benefits are expected to be realized in future years. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount expected to be realized. In estimating future tax consequences, we generally consider all expected future events other than an enactment of changes in the tax laws or rates. Deferred tax assets are continually evaluated for the expected realization. To the extent our judgment regarding the realization of the deferred tax assets changes, an adjustment to the allowance is recorded, with an offsetting increase or decrease, as appropriate, in income tax expense. Such adjustments are recorded in the period in which our estimate as to the realization of the assets changed that it is “more likely than not” that all of the deferred tax assets will be realized. The “realization” standard is subjective and is based upon our estimate of a greater than 50% probability that the deferred tax asset can be realized. The Company also complies with the provisions of ASC Topic 740, “Income Taxes”, which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by the relevant taxing authority based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. Derecognition of a tax benefit previously recognized results in the Company recording a tax liability that reduces ending retained earnings. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of December 31, 2022 and 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at December 31, 2022 and 2021. Generally, the Company is no longer subject to income tax examinations by major domestic taxing authorities for years before 2019. According to the China tax regulatory framework, there is no statute of limitations on examination of tax filings by tax authorities. However, the general practice is going back five years. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. Foreign Currency Translation Gain (Loss) and Comprehensive Income In the country in which the Company operates, and the functional currency is other than the U.S. dollar, assets and liabilities are translated using published exchange rates in effect at the consolidated balance sheet date. Equity accounts are translated at historical rates except for the changes in accumulated deficit during the year as the result of the income statement translation process. Revenues and expenses and cash flows are translated using a weighted average exchange rate for the period. Resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) on the accompanying consolidated balance sheets. For the years ended December 31, 2022 and 2021, other comprehensive income (loss) includes (losses) gains of $(343,000) and $94,000, respectively, which were entirely from foreign currency translation. Net Income Per Common Share Basic income per common share is based on the weighted average number of common shares outstanding, including vested restricted shares, without consideration of potential common stock. Diluted earnings per common share is based on the weighted average number of common and potential dilutive common shares outstanding. Diluted earnings per share were computed based on the weighted average number of shares outstanding plus all potentially dilutive common shares. A reconciliation of basic to diluted shares used in the earnings per share calculation is as follows: (in thousands) Year ended December 31, 2022 2021 Basic weighted average shares outstanding 173,065 171,688 Dilutive effect of unvested restricted shares 1,591 2,083 Diluted weighted average shares outstanding 174,656 173,771 No common stock equivalents were excluded from the computati |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | NOTE C – SEGMENT REPORTING The Company views its business in three segments – the IT segment, the professional sales service segment, and the equipment segment. The IT segment includes the operations of NetWolves and VasoHealthcare IT Corp. The professional sales service segment operates through the VasoHealthcare subsidiary and is currently engaged solely in the fulfillment of the Company’s responsibilities under our agreement with GEHC. The equipment segment is engaged in designing, manufacturing, marketing and supporting of proprietary medical devices and software, as well as managing the domestic business of EECP ® The chief operating decision maker is the Company’s Chief Executive Officer, who, in conjunction with upper management, evaluates segment performance based on operating income and Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization – defined as net (loss) income, plus net interest expense (income), tax expense, depreciation and amortization, and non-cash expenses for share-based compensation). Administrative functions such as finance and human resources are centralized and related expenses allocated to each segment. Other costs not directly attributable to operating segments, such as audit, legal, director fees, investor relations, and others, as well as certain assets – primarily cash balances – are reported in the Corporate entity below. There are no intersegment revenues. Summary financial information for the segments is set forth below: (in thousands) Year ended December 31, 2022 2021 Revenues from external customers IT $ 40,100 $ 42,916 Professional sales service 37,344 29,441 Equipment 2,573 3,222 Total revenues $ 80,017 $ 75,579 Gross Profit IT $ 16,229 $ 16,674 Professional sales service 30,288 23,906 Equipment 1,964 2,553 Total gross profit $ 48,481 $ 43,133 Operating income (loss) IT $ (1,620 ) $ (2,062 ) Professional sales service 10,099 5,918 Equipment (180 ) 32 Corporate (1,266 ) (1,069 ) Total operating income $ 7,033 $ 2,819 Depreciation and amortization IT $ 1,692 $ 3,394 Professional sales service 33 153 Equipment 198 293 Corporate - - Total depreciation and amortization $ 1,923 $ 3,840 Capital expenditures IT $ 406 $ 334 Professional sales service 125 41 Equipment 34 37 Corporate 1 3 Total cash capital expenditures $ 566 $ 415 December 31, 2022 December 31, 2021 Identifiable Assets IT $ 22,201 $ 23,144 Professional sales service 21,684 18,718 Equipment 6,957 7,144 Corporate 21,813 3,355 Total assets $ 72,655 $ 52,361 For the years ended December 31, 2022 and 2021, GEHC accounted for 47% and 39% of revenue, respectively. Also, GEHC accounted for $12.8 million, or 83%, and $12.3 million, or 80%, of accounts and other receivables at December 31, 2022 and 2021, respectively. Our revenues were derived from the following geographic areas: (in thousands) Year ended December 31, 2022 2021 Domestic (United States) $ 77,785 $ 72,681 Non-domestic (foreign) 2,232 2,898 $ 80,017 $ 75,579 |
ACCOUNTS AND OTHER RECEIVABLES
ACCOUNTS AND OTHER RECEIVABLES | 12 Months Ended |
Dec. 31, 2022 | |
ACCOUNTS AND OTHER RECEIVABLES | |
ACCOUNTS AND OTHER RECEIVABLES | NOTE D – ACCOUNTS AND OTHER RECEIVABLES The following table presents information regarding the Company’s accounts and other receivables as of December 31, 2022 and 2021: (in thousands) December 31, 2022 December 31, 2021 Trade receivables $ 22,471 $ 21,197 Allowance for doubtful accounts and commission adjustments (6,947 ) (5,804 ) Accounts and other receivables, net $ 15,524 $ 15,393 Trade receivables include amounts due for shipped products and services rendered. Amounts currently due under the GEHC Agreement are subject to adjustment in subsequent periods should the underlying sales order amount, upon which the receivable is based, change. Allowance for doubtful accounts and commission adjustments include estimated losses resulting from the inability of our customers to make required payments, and adjustments arising from estimated future changes in sales order amounts that may reduce the amount the Company will ultimately receive under the GEHC Agreement. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2022 | |
INVENTORIES | |
INVENTORIES | NOTE E – INVENTORIES Inventories, net of reserves, consisted of the following: (in thousands) December 31, 2022 December 31, 2021 Raw materials $ 751 $ 744 Work in process 6 4 Finished goods 716 399 $ 1,473 $ 1,147 At December 31, 2022 and 2021, the Company maintained reserves for slow moving inventories of $163,000 and $165,000, respectively. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE F – PROPERTY AND EQUIPMENT Property and equipment is summarized as follows: (in thousands) December 31, 2022 December 31, 2021 Office, laboratory and other equipment $ 1,928 $ 1,940 Equipment furnished for customer or clinical uses 7,981 9,359 Right of use assets - finance leases 1,119 1,286 Furniture and fixtures 99 99 11,127 12,684 Less: accumulated depreciation and amortization (9,787 ) (10,512 ) Property and equipment, net $ 1,340 $ 2,172 Accumulated amortization of right of use (“ROU”) assets under finance leases aggregated approximately $858,000 and $833,000 at December 31, 2022 and 2021, respectively. Depreciation expense amounted to approximately $1,372,000 and $1,868,000 for the years ended December 31, 2022 and 2021, respectively. Amortization of ROU assets under finance leases is included in depreciation expense. |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL AND OTHER INTANGIBLES | |
GOODWILL AND OTHER INTANGIBLES | NOTE G – GOODWILL AND OTHER INTANGIBLES Goodwill of $14,375,000 is attributable to the NetWolves reporting unit within the IT segment. The remaining $1,239,000 of goodwill is attributable to the FGE reporting unit within the Equipment segment. The NetWolves and FGE reporting units had negative net asset carrying amounts at December 31, 2022 and 2021. The changes in the carrying amount of goodwill are as follows: (in thousands) Year ended Year ended December 31, 2022 December 31, 2021 Beginning of period $ 15,722 $ 15,688 Foreign currency translation adjustment (108 ) 34 End of period $ 15,614 $ 15,722 The Company’s other intangible assets consist of capitalized customer-related intangibles, patent and technology costs, and software costs, as set forth in the following table: (in thousands) December 31, 2022 December 31, 2021 Customer-related Costs $ 5,831 $ 5,831 Accumulated amortization (4,557 ) (4,279 ) 1,274 1,552 Patents and Technology Costs 1,894 1,894 Accumulated amortization (1,894 ) (1,754 ) - 140 Software Costs 2,362 3,459 Accumulated amortization (2,125 ) (3,110 ) 237 349 $ 1,511 $ 2,041 The Company owns, through our Chinese subsidiaries, thirty-seven invention and utility patents that expire at various times through 2041, as well as sixteen software copyright certificates in China related to proprietary technologies in physiological data acquisition, analysis and reporting. The Company also holds one patent for secure and remote monitoring management through its NetWolves subsidiary. Costs incurred for submitting the applications to the United States Patent and Trademark Office and other foreign authorities for these patents have been capitalized. Patent and technology costs are being amortized using the straight-line method over 10-year and 8-year lives, respectively. The Company begins amortizing patent costs once a filing receipt is received stating the patent serial number and filing date from the Patent Office or other foreign authority. The cost of significant customer-related intangibles is amortized in proportion to estimated total related revenue; cost of other customer-related intangible assets is amortized on a straight-line basis over the asset’s estimated economic life of seven years. Software costs are amortized on a straight-line basis over its expected useful life of five years. In 2022, the Company disposed of approximately $1,117,000 in fully amortized software costs. Amortization expense amounted to approximately $551,000 and $1,972,000 for the years ended December 31, 2022 and 2021, respectively. Amortization of intangibles for the next five years is: (in thousands) Years ending December 31, 2023 343 2024 274 2025 203 2026 148 2027 543 $ 1,511 |
OTHER ASSETS
OTHER ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
OTHER ASSETS | |
OTHER ASSETS | NOTE H – OTHER ASSETS Other assets consist of the following: (in thousands) December 31, 2022 December 31, 2021 Deferred commission expense - noncurrent $ 3,864 $ 2,018 Trade receivables - noncurrent 792 368 Other, net of allowance for loss on loan receivable of $412 at December 31, 2022 and 2021 70 60 $ 4,726 $ 2,446 |
DEFERRED REVENUE
DEFERRED REVENUE | 12 Months Ended |
Dec. 31, 2022 | |
DEFERRED REVENUE | |
DEFERRED REVENUE | NOTE I – DEFERRED REVENUE The changes in the Company’s deferred revenues are as follows: (in thousands) Year ended December 31, 2022 2021 Deferred revenue at beginning of period $ 24,965 $ 17,704 Net additions: Deferred extended service contracts 3 (1 ) Deferred commission revenues 19,666 17,080 Recognized as revenue: Deferred extended service contracts (4 ) (5 ) Deferred commission revenues (13,827 ) (9,813 ) Deferred revenue at end of period 30,803 24,965 Less: current portion 15,139 16,495 Long-term deferred revenue at end of period $ 15,664 $ 8,470 |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES AND OTHER LIABILITIES | |
ACCRUED EXPENSES AND OTHER LIABILITIES | NOTE J – ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consist of the following: (in thousands) December 31, 2022 December 31, 2021 Accrued compensation $ 2,652 $ 2,397 Accrued expenses - other 2,012 1,799 Order reduction liability 2,577 1,518 Other liabilities 1,650 1,775 $ 8,891 $ 7,489 |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
RELATED-PARTY TRANSACTIONS | |
RELATED-PARTY TRANSACTIONS | NOTE K – RELATED-PARTY TRANSACTIONS The Company recorded interest charges aggregating $0 and approximately $131,000 for the years ended December 31, 2022 and 2021, respectively, payable to MedTechnology Investments, LLC (“MedTech”) pursuant to its promissory notes (“Notes”). The MedTech Notes were used in 2015 to partially fund the purchase of NetWolves. $2,300,000 of the $4,800,000 provided by MedTech was provided by directors of the Company, or by family members. The Notes were fully repaid in December 2021. David Lieberman, a practicing attorney in the State of New York, serves as Vice Chairman of the Board of Directors. Until July 2022, he was a senior partner at the law firm of Beckman Lieberman and Associates, LLP, which performed certain legal services for the Company. Fees of approximately $95,000 and $190,000 were billed by the firm for the years ended December 31, 2022 and 2021, respectively, at which dates no amounts were outstanding. |
NOTES PAYABLE AND REVOLVING CRE
NOTES PAYABLE AND REVOLVING CREDIT AGREEMENT | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE AND REVOLVING CREDIT AGREEMENT | |
NOTES PAYABLE AND REVOLVING CREDIT AGREEMENT | NOTE L – NOTES PAYABLE AND REVOLVING CREDIT AGREEMENT Notes payable consist of the following: (in thousands) December 31, 2022 December 31, 2021 Notes payable 24 31 Less: current portion (9 ) (8 ) $ 15 $ 23 Notes payable consists of a vehicle loan. The note is secured by the vehicle, bears interest at 1.9% per annum and matures in August 2025. On December 30, 2022, the Company executed a $3.0 million revolving credit agreement with a lending institution. Advances under the agreement bear interest at Wall Street Journal Prime Rate and are secured by substantially all of the assets of the Company. The agreement expires August 31, 2023 and includes certain financial covenants. The Company was in compliance with such covenants at December 31, 2022, at which time no amounts had been drawn. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
LEASES | NOTE M – LEASES The Company enters into finance leases, typically with terms of 3 to 5 years, to acquire equipment for its data center. The Company enters into operating leases for its facilities in New York, Florida, and China, as well as for vehicles and equipment provided to certain employees in the professional sales services segment. The operating lease terms range from 2 to 7 years. The Company excluded the renewal option on its applicable facility leases from the calculation of its right-of-use assets and lease liabilities. The Company made the accounting policy decision not to recognize lease assets and liabilities for leases with a term of 12 months or less. Finance and operating lease liabilities consist of the following: (in thousands) December 31, 2022 December 31, 2021 Lease liabilities - current Finance leases $ 122 $ 222 Operating leases 745 562 $ 867 $ 784 Lease liabilities - net of current portion Finance leases $ 96 $ 218 Operating leases 823 352 $ 919 $ 570 A reconciliation of undiscounted cash flows to finance and operating lease liabilities recognized in the consolidated balance sheet at December 31, 2022 is set forth below: (in thousands) Years ending December 31, Finance leases Operating leases Total 2023 144 782 926 2024 83 554 637 2025 25 324 349 2026 - 71 71 Undiscounted lease payments 252 1,731 1,983 Amount representing interest (34 ) (163 ) (197 ) Discounted lease liabilities 218 1,568 1,786 Additional disclosures of lease data are set forth below: (in thousands) Year ended December 31, 2022 Year ended December 31, 2021 Lease costs: Finance lease costs: Amortization of right-of-use assets $ 154 $ 193 Interest on lease liabilities 44 45 198 238 Operating lease costs 878 792 Short-term lease costs 52 78 Total lease cost $ 1,128 $ 1,108 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 44 $ 45 Operating cash flows from operating leases 878 792 Financing cash flows from finance leases 222 199 $ 1,144 $ 1,036 December 31, 2022 December 31, 2021 Weighted-average remaining lease term - finance leases (months) 23 28 Weighted-average remaining lease term - operating leases (months) 30 25 Weighted-average discount rate - finance leases 14.2 % 13.1 % Weighted-average discount rate - operating leases 9.1 % 8.8 % The Company used the rate implicit in the lease, where known, or its incremental borrowing rate as the rate used to discount the future lease payments. |
EQUITY IN THE EECP BUSINESS
EQUITY IN THE EECP BUSINESS | 12 Months Ended |
Dec. 31, 2022 | |
EQUITY IN THE EECP BUSINESS | |
SALE OF EQUITY IN THE EECP BUSINESS | NOTE N – EQUITY IN THE EECP BUSINESS On May 20, 2020, the Company closed on the sale of 51% of the capital stock of its wholly-owned subsidiary EECP Global Corporation (“EECP Global”) to Chongqing PSK-Health Sci-Tech Development Co. Ltd, a China-based company, for $1,150,000. EECP Global was formed in September 2019 to hold all the assets and liabilities of its EECP business. Concurrently with the closing of the transaction, the Company signed a Management Service Agreement with EECP Global to provide management service for the business and operation of EECP Global in the United States. The agreement provides an initial term of three years starting April 1, 2020, the effective date of the sale, which is automatically renewable for additional one-year terms. Pursuant to the agreement, EECP Global reimburses the Company all direct expenses and pays a monthly management fee during the term of the agreement. The Company uses the equity method to account for its interest in EECP Global, as it has the ability to exercise significant influence over the entity, and reports its share of EECP Global operations in Other Income (Expense) on its consolidated statements of operations and comprehensive income. For the years ended December 31, 2022 and 2021, the Company’s share of EECP Global’s loss was approximately $154,000 and $73,000, respectively. At December 31, 2022 and 2021, the Company recorded Receivables due from related parties, net of approximately $403,000 and $46,000, respectively, on its consolidated balance sheets for amounts due from EECP Global for fees and cost reimbursements, net of receivables collected on its behalf due to EECP Global. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE O – STOCKHOLDERS’ EQUITY Chinese subsidiaries dividends and statutory reserves The payment of dividends by entities organized in China is subject to limitations. In particular, regulations in China currently permit payment of dividends only out of accumulated profits as determined in accordance with People’s Republic of China (“PRC”) accounting standards and regulations. Based on PRC accounting standards, our Chinese subsidiaries are also required to set aside at least 10% of after-tax profit each year to their general reserves until the accumulative amount of such reserves reaches 50% of the registered capital. As of December 31, 2022 and 2021, statutory reserves aggregating approximately $35,000 were recorded in the Company’s consolidated balance sheets. These reserves are not distributable as cash dividends. In addition, they are required to allocate a portion of their after-tax profit to their staff welfare and bonus fund at the discretion of their respective boards of directors. Moreover, if any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. Distribution of dividends from the Chinese operating companies to foreign shareholders is also subject to a withholding tax. |
OPTION AND STOCK ISSUANCE PLANS
OPTION AND STOCK ISSUANCE PLANS | 12 Months Ended |
Dec. 31, 2022 | |
OPTION AND STOCK ISSUANCE PLANS | |
OPTION AND STOCK ISSUANCE PLANS | NOTE P - OPTION AND STOCK ISSUANCE PLANS 2013 Stock Option and Stock Issuance Plan On October 30, 2013, the Board of Directors approved the 2013 Stock Plan (the “2013 Plan”) for officers, directors, employees and consultants of the Company. The stock issuable under the 2013 Plan shall be shares of the Company’s authorized but unissued or reacquired common stock. The maximum number of shares of common stock which may be issued under the 2013 Plan is 7,500,000 shares. The 2013 Plan is comprised of two separate equity programs, the Options Grant Program, under which eligible persons may be granted options to purchase shares of common stock, and the Stock Issuance Program, under which eligible persons may be issued shares of common stock directly, either through the immediate purchase of such shares or as a bonus for services rendered to the Company. The 2013 Plan provides that the Board of Directors, or a committee of the Board of Directors, will administer it with full authority to determine the identity of the recipients of the options or shares and the number of options or shares. During the year ended December 31, 2022, 50,000 shares of common stock were granted, and 90,000 shares were forfeited, under the 2013 Plan. No shares were withheld for withholding taxes. 2016 Stock Option and Stock Issuance Plan On June 15, 2016, the Board of Directors (“Board”) approved the 2016 Stock Plan (the “2016 Plan”) for officers, directors, and senior employees of the Corporation or any subsidiary of the Corporation. The stock issuable under the 2016 Plan shall be shares of the Company’s authorized but unissued or reacquired common stock. The maximum number of shares of common stock that may be issued under the 2016 Plan is 7,500,000 shares. The 2016 Plan consists of a Stock Issuance Program, under which eligible persons may, at the discretion of the Board, be issued shares of common stock directly, as a bonus for services rendered or to be rendered to the Corporation or any subsidiary of the Corporation. 1,000,000 shares of common stock were granted under the 2016 Plan during the year ended December 31, 2022. 2019 Stock Option and Stock Issuance Plan In May 2019, the Board of Directors (“Board”) approved the 2019 Stock Plan (the “2019 Plan”) for officers, directors, and senior employees of the Corporation or any subsidiary of the Corporation. The stock issuable under the 2019 Plan shall be shares of the Company’s authorized but unissued or reacquired common stock. The maximum number of shares of common stock that may be issued under the 2019 Plan is 15,000,000 shares. The 2019 Plan consists of a Stock Issuance Program, under which eligible persons may, at the discretion of the Board, be issued shares of common stock directly, as a bonus for services rendered or to be rendered to the Corporation or any subsidiary of the Corporation. During the year ended December 31, 2022, no shares or options were granted under the 2019 Plan. The following table summarizes non-vested restricted shares under all plans for the year ended December 31, 2022: Shares Available for Future Issuance Unvested shares Weighted Average Grant Date Fair Value Balance at December 31, 2020 11,005,580 4,391,666 $ 0.02 Authorized - - $ - Granted (90,000 ) 90,000 $ 0.05 Vested - (1,491,666 ) $ 0.02 Forfeited - - $ - Expired - - $ - Balance at December 31, 2021 10,915,580 2,990,000 $ 0.02 Authorized - - $ - Granted (1,050,000 ) 1,050,000 $ 0.11 Vested - (1,300,000 ) $ 0.02 Forfeited 90,000 (90,000 ) $ 0.05 Expired - - $ - Balance at December 31, 2022 9,955,580 2,650,000 $ 0.06 There were 53,558,455 remaining authorized shares of common stock after reserves for all stock option plans. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE Q - INCOME TAXES The following is a geographical breakdown of income before the provision for income taxes: (in thousands) Year ended December 31, 2022 2021 Domestic $ 6,823 $ 5,720 Foreign 307 531 Income before provision for income taxes $ 7,130 $ 6,251 The provision for income taxes consisted of the following: (in thousands) Year ended December 31, 2022 2021 Current provision Federal $ - $ - State 36 47 Foreign 9 52 Total current provision 45 99 Deferred provision (benefit) Federal (3,724 ) 41 State (1,064 ) 11 Foreign - - Total deferred provision (benefit) (4,788 ) 52 Total income tax provision (benefit) $ (4,743 ) $ 151 Effective income tax rate 66.52 % 2.42 % The income tax benefit of $4,743,000 for the year ended December 31, 2022 was due to the partial release of deferred tax asset valuation allowance, offset by $36,000 in state income taxes and $9,000 in foreign taxes. The income tax provision of $151,000 for the year ended December 31, 2021 was due to $52,000 in foreign taxes, $47,000 in state income taxes and a $52,000 reduction in deferred tax assets. The following is a reconciliation of the effective income tax rate to the federal statutory rate: For the year ended December 31, 2022 December 31, 2021 % % Federal statutory rate 21.00 21.00 State income taxes 6.13 2.70 Change in valuation allowance relating to operations (87.30 ) (21.32 ) Foreign tax rate differential (0.78 ) (0.84 ) R&D credit 0.54 (0.08 ) PPP Loan forgiveness - (11.87 ) Nondeductible expenses 0.20 0.06 Other (6.31 ) 12.77 (66.52 ) 2.42 The effective tax rate decreased mainly due to the impact of the partial release of the deferred tax asset valuation allowance and partially offset by impact of PPP loan forgiveness in 2021. As of December 31, 2022, the recorded deferred tax assets were $12,006,000, reflecting a decrease of $1,099,000 during the year ended December 31, 2022, which was offset by a valuation allowance of $4,543,000, reflecting a decrease of $6,226,000. The components of our deferred tax assets and liabilities are summarized as follows: (in thousands) December 31, 2022 December 31, 2021 Deferred Tax Assets: Net operating loss carryforwards $ 8,367 $ 10,015 Amortization 328 343 Stock-based compensation 7 5 Allowance for doubtful accounts 99 125 Reserve for slow moving inventory 46 47 Tax credits 416 454 Expense accruals 908 786 Deferred revenue 1,835 1,330 Total gross deferred taxes 12,006 13,105 Valuation allowance (4,543 ) (10,769 ) Net deferred tax assets 7,463 2,336 Deferred Tax Liabilities: Deferred commissions (464 ) (325 ) Goodwill (1,962 ) (1,703 ) Depreciation (30 ) (89 ) Total deferred tax liabilities (2,456 ) (2,117 ) Total deferred tax assets (liabilities) 5,007 219 Recorded as: Non-current deferred tax assets 5,007 219 Non-current deferred tax liabilities - - Total deferred tax assets (liabilities) $ 5,007 $ 219 The activity in the valuation allowance is set forth below: (in thousands) 2022 2021 Valuation allowance, January 1, $ 10,769 $ 12,145 Partial release of allowance (4,840 ) - Change in valuation allowance (1,386 ) (1,376 ) Valuation allowance, December 31, $ 4,543 $ 10,769 At December 31, 2022, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $24 million expiring at various dates from 2022 through 2037 and approximately $7 million with no expiration date. Under current tax law, the utilization of tax attributes will be restricted if an ownership change, as defined, were to occur. Section 382 of the Internal Revenue Code provides, in general, that if an “ownership change” occurs with respect to a corporation with net operating and other loss carryforwards, such carryforwards will be available to offset taxable income in each taxable year after the ownership change only up to the “Section 382 Limitation” for each year (generally, the product of the fair market value of the corporation’s stock at the time of the ownership change, with certain adjustments, and a specified long-term tax-exempt bond rate at such time). The Company’s ability to use its loss carryforwards will be limited in the event of an ownership change. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES (NOTE R) | |
COMMITMENTS AND CONTINGENCIES | NOTE R - COMMITMENTS AND CONTINGENCIES Sales representation agreement In October 2021, the Company concluded an amendment of the GEHC Agreement with GEHC, originally signed on May 19, 2010 and previously extended in 2012, 2015 and 2017. The amendment extended the term of the original agreement, which began on July 1, 2010, through December 31, 2026, subject to early termination by GEHC without cause with certain conditions. Under the agreement, VasoHealthcare is the exclusive representative for the sale of select GEHC diagnostic imaging products to specific market accounts in the 48 contiguous states of the United States and the District of Columbia. The circumstances under which early termination of the agreement may occur with cause include: not materially achieving certain sales goals, not maintaining a minimum number of sales representatives, and not meeting various legal and GEHC policy requirements. The Company met all the contractual conditions in 2022. Employment Agreements On May 10, 2019, the Company modified its Employment Agreement with its President and Chief Executive Officer, Dr. Jun Ma, to provide for a five-year term with extensions, unless earlier terminated by the Company, but in no event can it extend beyond May 31, 2026. The Employment Agreement provides for annual compensation of $500,000. Dr. Ma shall be eligible to receive a bonus for each fiscal year during the employment term. The amount and the occasion for payment of such bonus, if any, shall be at the discretion of the Board of Directors. Dr. Ma shall also be eligible for an award under any long-term incentive compensation plan and grants of options and awards of shares of the Company’s stock, as determined at the Board of Directors’ discretion. The Employment Agreement further provides for reimbursement of certain expenses, and certain severance benefits in the event of termination prior to the expiration date of the Employment Agreement. On December 31, 2022, the Company executed an Employment Agreement with the President of its VasoHealthcare subsidiary, Ms. Jane Moen, to provide for a twenty-seven month initial term with extensions, unless earlier terminated by the Company, but in no event can it extend beyond December 31, 2026 or the earlier termination of the GEHC Agreement. The Employment Agreement provides for annual base compensation of $350,000. Ms. Moen shall be eligible to receive bonuses for each fiscal year during the employment term. The amount and the occasion for payment of such bonuses, if any, shall be based on employment status as well as achieving certain operating targets. Ms. Moen shall also be eligible for an award under any long-term incentive compensation plan and grants of options and awards of shares of the Company’s stock, as determined at the Board of Directors’ discretion. The Employment Agreement further provides for reimbursement of certain expenses, and certain severance benefits in the event of termination prior to the expiration date of the Employment Agreement. Licensing and Support Service Agreement In December 2020, NetWolves extended the licensing and support service agreement of its billing system for an additional three years, to expire December 2023. The agreement provides for monthly recurring charges based on a percentage of billed revenues using these services, which charges aggregated approximately $339,000 and $343,000 for the years ended December 31, 2022 and 2021, respectively . Litigation The Company is currently, and has been in the past, a party to various routine legal proceedings, primarily employee related matters, incident to the ordinary course of business. The Company believes that the outcome of all such pending legal proceedings in the aggregate is unlikely to have a material adverse effect on the business or consolidated financial condition of the Company. Foreign operations During the years ended December 31, 2022 and 2021, the Company had and continues to have operations in China. Operating transactions in China are denominated in the Chinese currency called RMB or CNY, which is not freely convertible into foreign currencies. Operating internationally involves additional risks relating to such things as currency exchange rates, different legal and regulatory environments, political, economic risks relating to the stability or predictability of foreign governments, differences in the manner in which different cultures do business, difficulties in staffing and managing foreign operations, differences in financial reporting, operating difficulties, and other factors. Commercial law is still developing in China and there are limited legal precedents to follow in commercial transactions. There are many tax jurisdictions, each of which may have changing tax laws. Applicable taxes include value added taxes (“VAT”), Enterprise Income Tax, and social (payroll) taxes. Regulations are often unclear. Tax declarations (reports) are subject to review and taxing authorities may impose fines, penalties and interest. These facts create risks in China. |
401(k) PLANS
401(k) PLANS | 12 Months Ended |
Dec. 31, 2022 | |
401(k) PLANS | |
401(k) PLANS | NOTE S - 401(k) PLANS The Company maintains a defined contribution plan to provide retirement benefits for its employees - the Vaso Corporation 401(k) Plan adopted in April 1997. As allowed under Section 401(k) of the Internal Revenue Code, the plan provides tax-deferred salary deductions for eligible employees. Employees are eligible to participate in the next quarter enrollment period after employment and participants may make voluntary contributions to the plan up to 80% of their compensation, subject to applicable IRS annual limitations. In the years ended December 31, 2022 and 2021 the Company made discretionary contributions, to match a percentage of employee contributions, of approximately $112,000 and $129,000, respectively. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | The consolidated financial statements include the accounts of Vaso Corporation, its wholly-owned subsidiaries, and the accounts of the companies over which we exercise control. Significant intercompany balances and transactions have been eliminated. |
Use of Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions relate to estimates of commission adjustments due to order cancellations, collectability of accounts receivable, the realizability of deferred tax assets, stock-based compensation, values and lives assigned to acquired intangible assets, fair value of reporting units in connection with goodwill impairment test, the adequacy of inventory reserves, variable consideration, and allocation of contract transaction price to performance obligations. Actual results could differ from those estimates. |
Revenue Recognition | In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under the standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. ASU 2014-09 replaced most existing revenue recognition guidance in U.S. GAAP. The new standard introduces a five-step process to be followed in determining the amount and timing of revenue recognition. It also provides guidance on accounting for costs incurred to obtain or fulfill contracts with customers, and establishes disclosure requirements which are more extensive than those required under prior U.S. GAAP. Generally, we recognize revenue under Topic 606 for each of our performance obligations either over time (generally, the transfer of a service) or at a point in time (generally, the transfer of a good) as follows: · VasoTechnology Revenue relating to recurring managed network and voice services provided by NetWolves are recognized as provided on a monthly basis (“over time”). Non-recurring charges related to the provision of such services are recognized in the period provided (“point in time”). In the IT VAR business, software system installations are recognized upon verification of installation and expiration of an acceptance period (“point in time”). Monthly post-implementation customer support provided under such installations as well as software solutions offered under a monthly Software as a Service (“SaaS”) fee basis are recognized monthly over the contract term (“over time”). · VasoHealthcare Commission revenue is recognized when the underlying equipment has been delivered by GEHC and accepted at the customer site in accordance with the terms of the specific sales agreement (“point in time”). · VasoMedical In the United States, we recognized revenue from the sale of our medical equipment in the period in which we deliver the product to the customer (“point in time”). Revenue from the sale of our medical equipment to international markets is recognized upon shipment of the product to a common carrier, as are supplies, accessories and spare parts delivered in both domestic and international markets (“point in time”). The Company also recognizes revenue from the maintenance of its medical products either on a time and material as-billed basis (“point in time”) or through the sale of a service contract, where revenue is recognized ratably over the contract term (“over time”). |
Disaggregation of Revenue | The following tables present revenues disaggregated by our business operations and timing of revenue recognition: Year Ended December 31, 2022 Year Ended December 31, 2021 Professional Professional sales sales service Equipment service Equipment IT segment segment segment Total IT segment segment segment Total Network services $ 35,833 $ - $ - $ 35,833 $ 37,861 $ - $ - $ 37,861 Software sales and support 4,267 - - 4,267 5,055 - - 5,055 Commissions - 37,344 - 37,344 - 29,441 - 29,441 Medical equipment sales - - 2,450 2,450 - - 3,093 3,093 Medical equipment service - - 123 123 - - 129 129 $ 40,100 $ 37,344 $ 2,573 $ 80,017 $ 42,916 $ 29,441 $ 3,222 $ 75,579 Year Ended December 31, 2022 Year Ended December 31, 2021 Professional Professional sales sales service Equipment service Equipment IT segment segment segment Total IT segment segment segment Total Revenue recognized over time $ 37,089 $ - $ 325 $ 37,414 $ 38,172 $ - $ 199 $ 38,371 Revenue recognized at a point in time 3,011 37,344 2,248 42,603 4,744 29,441 3,023 37,208 $ 40,100 $ 37,344 $ 2,573 $ 80,017 $ 42,916 $ 29,441 $ 3,222 $ 75,579 |
Transaction Price Allocated to Remaining Performance Obligations | As of December 31, 2022, the aggregate amount of transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) for executed contracts approximates $91 million, of which we expect to recognize revenue as follows: Fiscal years of revenue recognition 2023 2024 2025 Thereafter Unfulfilled performance obligations $ 41,882 $ 14,496 $ 4,464 $ 29,697 |
Contract Liabilities | Contract receivables include trade receivables, net and long-term receivables (recorded in Other assets in the consolidated balance sheets). Contract liabilities arise in our IT, VasoHealthcare, and VasoMedical businesses. In our VHC IT business, payment arrangements with clients typically include an initial payment due upon contract signing and milestone-based payments based upon product delivery and go-live, as well as post go-live monthly payments for subscription and support fees. Customer payments received, or receivables recorded, in advance of go-live and customer acceptance, where applicable, are deferred as contract liabilities. Such amounts aggregated approximately $481,000 and $407,000 at December 31, 2022 and 2021, respectively, and are included in accrued expenses and other liabilities in our consolidated balance sheets. In our VasoHealthcare business, we bill a portion of commissions on the orders we booked in advance of delivery of the underlying equipment. Such amounts aggregated approximately $30,794,000 and $24,955,000 at December 31, 2022 and 2021, respectively, and are classified in our consolidated balance sheets into current or long-term deferred revenue net of estimated commission adjustments. In addition, we record a contract liability for amounts expected to be credited back to GEHC due to customer order reductions. Such amounts aggregated approximately $2,577,000 and $1,518,000 at December 31, 2022 and 2021, respectively, and are included in accrued expenses and other liabilities in our consolidated balance sheets. In our VasoMedical business, we bill amounts for post-delivery services and varying duration service contracts in advance of performance. Such amounts aggregated approximately $9,000 at December 31, 2022 and 2021, and are classified in our consolidated balance sheets as either current or long-term deferred revenue. The following table summarizes the Company’s contract receivable and contract liability balances: 2022 2021 Contract receivables - January 1 15,761 10,200 Contract receivables - December 31 16,316 15,761 Increase (decrease) 555 5,561 Contract liabilities - January 1 26,890 19,375 Contract liabilities - December 31 33,861 26,890 Increase (decrease) 6,971 7,515 The increase in contract liabilities is due primarily to order bookings exceeding deliveries in our VasoHealthcare business. During the years ended December 31, 2022 and 2021, we recognized approximately $9.1 million and $5.8 million, respectively, of revenues that were included in our contract liability balance at the beginning of such periods. |
Costs to Obtain or Fulfill a Contract | Topic 606 requires that incremental costs of obtaining a contract are recognized as an asset and amortized to expense in a pattern that matches the timing of the revenue recognition of the related contract. We have determined the only significant incremental costs incurred to obtain contracts with customers within the scope of Topic 606 are certain sales commissions paid to associates. In addition, the Company elected the practical expedient to recognize the incremental costs of obtaining a contract when incurred for contracts where the amortization period for the asset the Company would otherwise have recognized is one year or less. Under Topic 606, sales commissions applicable to service contracts exceeding one year have been capitalized and amortized ratably over the term of the contract. In our VHC IT business, commissions allocable to multi-year subscription contracts or multi-year post-contract support performance obligations are amortized to expense ratably over the terms of the multi-year periods. VHC IT commissions allocable to other elements are charged to expense at go-live or customer acceptance. In our professional sales services segment, commissions paid to our sales force are deferred until the underlying equipment is accepted by the customer. We recognized approximately $2,732,000 and $1,928,000 of amortization related to these sales commission assets in “Cost of professional sales services” in 2022 and 2021, respectively, and approximately $79,000 and $120,000 of amortization in “Selling, general and administrative” expense in 2022 and 2021, respectively, in our consolidated statements of operations and comprehensive income. At December 31, 2022 and 2021, our consolidated balance sheets include approximately $7,113,000 and $5,567,000, respectively, in capitalized sales commissions - primarily in our professional sales services segment - to be expensed in future periods, of which $3,249,000 and $3,549,000, respectively, is recorded in deferred commission expense and $3,864,000 and $2,018,000, respectively, representing the long-term portion, is included in other assets. |
Significant Judgments when Applying Topic 606 | Contract transaction price is allocated to performance obligations using estimated stand-alone selling price. Judgment is required in estimating stand-alone selling price for each distinct performance obligation. We determine stand-alone selling price maximizing observable inputs such as stand-alone sales when they exist or substantive renewal price charged to clients. In instances where stand-alone selling price is not observable, we utilize an estimate of stand-alone selling price based on historical pricing and industry practices. Certain revenue we record in our professional sales service segment contains an estimate for variable consideration. Due to the tiered structure of our commission rate, which increases as annual targets are achieved, under Topic 606 we record revenue and deferred revenue at the rate we expect to be achieved by year end. We base our estimate of variable consideration on historical results of previous years’ achievement under the GEHC agreement. Such estimate is reviewed each quarter and adjusted as necessary. In addition, the Company records commissions for arranging financing at an estimated rate which is subject to later revision based on certain factors. The Company recognized (decreases) increases in revenue associated with revisions to variable consideration for previously completed performance obligations of $(5,000) and $40,000 for the years ended December 31, 2022 and 2021 respectively. The Company also records commission adjustments to contract liabilities in its professional sales service segment based on estimates of future order cancellations. Such cancellations also result in adjustments to the related capitalized cost to obtain or fulfill a contract. |
Shipping and Handling Costs | All shipping and handling expenses are charged to cost of sales. Amounts billed to customers related to shipping and handling costs are included as a component of sales. |
Research and Development | Research and development costs attributable to development are expensed as incurred. |
Share-Based Compensation | The Company complies with ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”), which requires all companies to recognize the cost of services received in exchange for equity instruments to be recognized in the financial statements based on their grant date fair values. The Company applies an estimated forfeiture rate to the grant date fair value to determine the annual compensation cost of share-based payment arrangements with employees. The forfeiture rate is estimated based primarily on job title and prior forfeiture experience. The Company did not grant any awards to non-employees during the years ended December 31, 2022 and 2021. During the year ended December 31, 2022, the Company granted 1,050,000 restricted shares of common stock valued at $115,000 to employees. The shares vest over three and five years from the grant date. The total fair value of shares vested during the year ended December 31, 2022 was $23,000 for officers and $4,000 for employees. The weighted average grant date fair value of shares granted during the year ended December 31, 2022 was $0.11 per share, based on the closing price as of the grant date. During the year ended December 31, 2021, the Company granted 90,000 restricted shares of common stock valued at $4,500 to an employee. The shares vest over three years from the grant date. The total fair value of shares vested during the year ended December 31, 2021 was $23,000 for officers and $14,000 for employees. The weighted average grant date fair value of shares granted during the year ended December 31, 2021 was $0.05 per share. The Company did not grant any stock options during the years ended December 31, 2022 or 2021, nor were any options exercised during such periods. No options were outstanding at December 31, 2022 or 2021. Share-based compensation expense recognized for the years ended December 31, 2022 and 2021 was $35,000 and $31,000, respectively, and is recorded in selling, general, and administrative expense in the consolidated statements of operations and comprehensive income. Unrecognized expense related to existing share-based compensation and arrangements is approximately $125,000 at December 31, 2022 and will be recognized over a weighted-average period of approximately 54 months. |
Cash and Cash Equivalents | Cash and cash equivalents represent cash and short-term, highly liquid investments either in certificates of deposit, treasury bills, money market funds, or investment grade commercial paper issued by major corporations and financial institutions that generally have maturities of three months or less from the date of acquisition. |
Short Term Investments | The Company’s short-term investments consist of six-month U.S. Treasury bills and bank deposits with yields based on underlying debt and equity securities. The U.S. Treasury bills are classified as held-to-maturity and are carried at amortized cost of approximately $8,071,000 at December 31, 2022. Their fair value at December 31, 2022 is approximately $8,064,000 and the unrecognized holding loss is $7,000 for the year ended December 31, 2022. The bank deposits are carried at fair value of approximately $433,000 at December 31, 2022 and are classified as available-for-sale. Realized gains or losses on the bank deposits are included in net income. The Company does not expect a credit loss for its short-term investments. |
Financial Instrumemts | The Company complies with the provisions of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”). Under ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The carrying amount of assets and liabilities including cash and cash equivalents, short-term investments, accounts receivable, prepaids, accounts payable, accrued expenses and other current liabilities approximated their fair value as of December 31, 2022 and 2021, due to the relative short maturity of these instruments. Property and equipment, intangible assets, capital lease obligations, and goodwill are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the respective asset is written down to its fair value. The following table presents information about the Company’s assets measured at fair value as of December 31, 2022 and 2021: Quoted Prices Significant in Active Other Significant Balance Markets for Observable Unobservable as of Identical Assets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2022 Assets Cash equivalents invested in money market funds $ 7,934 $ - $ - $ 7,934 Bank deposits (included in short term investments) 433 433 $ 8,367 $ - $ - $ 8,367 Quoted Prices Significant in Active Other Significant Balance Markets for Observable Unobservable as of Identical Assets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2021 Assets Cash equivalents invested in money market funds $ 802 $ - $ - $ 802 Bank deposits (included in short term investments) 629 629 $ 1,431 $ - $ - $ 1,431 |
Accounts Receivable, Net | The Company’s accounts receivable are due from customers to whom we sell our products and services, distributors engaged in the distribution of our products and from GEHC. Credit is extended based on evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are generally due 30 to 90 days from shipment and services provided and are stated at amounts due from customers net of allowances for doubtful accounts, returns, term discounts and other allowances. Accounts that are outstanding longer than the contractual payment terms are considered past due. Estimates are used in determining the allowance for doubtful accounts based on the Company’s historical collections experience, current trends, credit policy and a percentage of its accounts receivable by aging category. In determining these percentages, the Company reviews historical write-offs of their receivables. The Company also looks at the credit quality of their customer base as well as changes in their credit policies. The Company continuously monitors collections and payments from our customers, and writes off receivables when all efforts at collection have been exhausted. While credit losses have historically been within expectations and the provisions established, the Company cannot guarantee that it will continue to experience the same credit loss rates that they have in the past. The changes in the Company’s allowance for doubtful accounts and commission adjustments are as follows: (in thousands) Year ended December 31, 2022 2021 Beginning Balance $ 5,804 $ 4,208 Provision for losses on accounts receivable 63 132 Direct write-offs, net of recoveries (159 ) (77 ) Commission adjustments 1,239 1,541 Ending Balance $ 6,947 $ 5,804 |
Concentrations of Credit Risk | We market our equipment and IT software solutions principally to hospitals, diagnostic imaging centers and physician private practices. We perform credit evaluations of our customers’ financial condition and, as a result, believe that our receivable credit risk exposure is limited. For the years ended December 31, 2022 and 2021, no customer in our equipment or IT segment accounted for 10% or more of revenues or accounts receivable. In our professional sales service segment, 100% of our revenues and accounts receivable are with GEHC; however, we believe this risk is acceptable based on GEHC’s financial position and our long history of doing business with GEHC. The Company maintains cash balances in certain U.S. financial institutions, which, at times, may exceed the Federal Depository Insurance Corporation (“FDIC”) coverage of $250,000. The Company has not experienced any losses on these accounts and believes it is not subject to any significant credit risk on these accounts. In addition, the FDIC does not insure the Company’s foreign bank balances, which aggregated approximately $1,234,000 and $903,000 at December 31, 2022 and 2021, respectively. |
Inventories | The Company values inventories in the equipment segment at the lower of cost or net realizable value, with cost being determined on a first-in, first-out basis. The Company regularly reviews inventory quantities on hand, particularly raw materials and components, and records a provision for excess and slow moving inventory based primarily on existing and anticipated design and engineering changes to its products as well as forecasts of future product demand. In our IT Segment, we purchase computer hardware and software for specific customer requirements and value such inventories using the specific identification method. |
Property and Equipment | Property and equipment, including assets under finance leases, are stated at cost less accumulated depreciation and amortization. Major improvements are capitalized and minor replacements, maintenance and repairs are charged to expense as incurred. Upon retirement or disposal of assets, the cost and related accumulated depreciation are removed from the consolidated balance sheets. Depreciation is expensed over the estimated useful lives of the assets, which range from two to eight years, on a straight-line basis. Accelerated methods of depreciation are used for tax purposes. We amortize leasehold improvements over the useful life of the related leasehold improvement or the life of the related lease, whichever is less. |
Impairment of Long-Lived Assets | The Company reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable. If required, the Company compares the estimated fair value determined by either the undiscounted future net cash flows or appraised value to the related asset’s carrying value to determine whether there has been an impairment. If an asset is considered impaired, the asset is written down to fair value, which is based either on discounted cash flows or appraised values in the period the impairment becomes known. In December 2021, the Company deemed $324,000 in long-lived assets to be impaired. The impairment loss is reflected in cost of managed IT systems and services in the Company’s consolidated statement of operations. No assets were determined to be impaired as of December 31, 2022. |
Goodwill and Intangible Assets | Goodwill represents the excess of cost over the fair value of net assets of businesses acquired. The Company accounts for goodwill under the guidance of the ASC Topic 350, “Intangibles: Goodwill and Other”. Goodwill acquired in a purchase business combination is not amortized, but instead tested for impairment, at least annually, in accordance with this guidance. The recoverability of goodwill is subject to an annual impairment test or whenever an event occurs or circumstances change that would more likely than not result in an impairment. The Company tests goodwill for impairment at the reporting unit level on an annual basis as of December 31 and between annual tests when an event occurs or circumstances change that could indicate that the asset might be impaired. In any year, the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If the Company cannot determine qualitatively that the fair value is in excess of the carrying value, or the Company decides to bypass the qualitative assessment, the Company proceeds to the quantitative goodwill impairment test, which compares the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. No goodwill was determined to be impaired as of December 31, 2022 and 2021. Intangible assets consist of the value of customer contracts and relationships, patent and technology costs, and software. The cost of significant customer-related intangibles is amortized in proportion to estimated total related revenue; cost of other intangible assets is generally amortized on a straight-line basis over the asset’s estimated economic life, which range from five to ten years. The Company capitalizes internal use software development costs incurred during the application development stage. Costs related to preliminary project activities, training, data conversion, and post implementation activities are expensed as incurred. The Company did not capitalize any software development costs for the years ended December 31, 2022 and 2021. In December 2021, the Company deemed $1.1 million in capitalized software costs to be impaired. The impairment loss is reflected in R&D expenses in the Company’s consolidated statement of operations. No intangible assets were determined to be impaired as of December 31, 2022. |
Deferred Revenue | Amounts billable under the agreement with GEHC in advance of delivery of the underlying equipment are recorded initially as deferred revenue, and commission revenue is subsequently recognized as customer acceptance of such equipment is reported to us by GEHC. Similarly, commissions payable to our sales force related to such billings are recorded as deferred commission expense when the associated deferred revenue is recorded. Commission expense is recognized when the corresponding commission revenue is recognized. In our equipment segment, we record revenue on extended service contracts ratably over the term of the related service contracts. |
Income Taxes | Deferred income taxes are recognized for temporary differences between financial statement and income tax bases of assets and liabilities and loss carry-forwards for which income tax benefits are expected to be realized in future years. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount expected to be realized. In estimating future tax consequences, we generally consider all expected future events other than an enactment of changes in the tax laws or rates. Deferred tax assets are continually evaluated for the expected realization. To the extent our judgment regarding the realization of the deferred tax assets changes, an adjustment to the allowance is recorded, with an offsetting increase or decrease, as appropriate, in income tax expense. Such adjustments are recorded in the period in which our estimate as to the realization of the assets changed that it is “more likely than not” that all of the deferred tax assets will be realized. The “realization” standard is subjective and is based upon our estimate of a greater than 50% probability that the deferred tax asset can be realized. The Company also complies with the provisions of ASC Topic 740, “Income Taxes”, which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by the relevant taxing authority based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. Derecognition of a tax benefit previously recognized results in the Company recording a tax liability that reduces ending retained earnings. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of December 31, 2022 and 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at December 31, 2022 and 2021. Generally, the Company is no longer subject to income tax examinations by major domestic taxing authorities for years before 2019. According to the China tax regulatory framework, there is no statute of limitations on examination of tax filings by tax authorities. However, the general practice is going back five years. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. |
Foreign Currency Translation Gain (Loss) and Comprehensive Income (Loss) | In the country in which the Company operates, and the functional currency is other than the U.S. dollar, assets and liabilities are translated using published exchange rates in effect at the consolidated balance sheet date. Equity accounts are translated at historical rates except for the changes in accumulated deficit during the year as the result of the income statement translation process. Revenues and expenses and cash flows are translated using a weighted average exchange rate for the period. Resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) on the accompanying consolidated balance sheets. For the years ended December 31, 2022 and 2021, other comprehensive income (loss) includes (losses) gains of $(343,000) and $94,000, respectively, which were entirely from foreign currency translation. |
Net Income Per Common Share | Basic income per common share is based on the weighted average number of common shares outstanding, including vested restricted shares, without consideration of potential common stock. Diluted earnings per common share is based on the weighted average number of common and potential dilutive common shares outstanding. Diluted earnings per share were computed based on the weighted average number of shares outstanding plus all potentially dilutive common shares. A reconciliation of basic to diluted shares used in the earnings per share calculation is as follows: (in thousands) Year ended December 31, 2022 2021 Basic weighted average shares outstanding 173,065 171,688 Dilutive effect of unvested restricted shares 1,591 2,083 Diluted weighted average shares outstanding 174,656 173,771 No common stock equivalents were excluded from the computation of diluted earnings per share for the years ended December 31, 2022 and 2021. |
Recent Accounting Pronouncements | New pronouncements adopted by the Company recently are discussed below: |
Credit Losses on Financial instruments | In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which provides new guidance regarding the measurement and recognition of credit impairment for certain financial assets. Such guidance will impact how we determine our allowance for estimated uncollectible receivables. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 825, Derivatives and Hedging, and Topic 825, Financial Instruments, which provided various amendments to these Topics. In November 2019, the FASB issued ASU 2019-10, which changed the effective date of ASU 2016-13 and ASU 2019-04 for smaller reporting companies as defined by the SEC from first quarter of 2020 to the first quarter of 2023, with early adoption permitted. The Company early adopted ASU 2016-13 and ASU 2019-04 effective October 1, 2022. ASU 2016-13 added a current expected credit loss impairment model to U.S. GAAP based on expected losses rather than incurred losses. The adoption of this standard did not result in any material impact to our allowance for doubtful accounts balance as of October 1, 2022. As a result of adoption, the Corporation will utilize current and historical collection data as well as assess current economic conditions in order to determine expected trade credit losses on a prospective basis. ASU 2019-04 provided additional guidance on disclosure of credit losses on accrued interest receivables on held-to-maturity debt securities and additional disclosure requirements for such securities to include fair value and unrecognized gains and losses. Because the Company’s sole investments of held-to-maturity debt securities are six-month U.S. Treasury bills, no provision for credit losses on such securities was deemed necessary, and the applicable fair value and unrecognized gains and losses were included in the above Short Term Investment section of Note B. |
Recently Issued Accounting Pronouncements | The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change. New pronouncements assessed by the Company recently are discussed below: In September 2022, the FASB issued ASU No. 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. This ASU requires that a buyer in a supplier finance program disclose the key terms of supplier finance programs, the amount of obligations outstanding at the end of the reporting period that the entity has confirmed as valid to the finance provider, where these obligations are recorded in the balance sheet, and a roll forward of the obligations. The new standard is effective for fiscal years beginning after December 15, 2022, on a retrospective basis, including interim periods within those fiscal years. The Company is currently evaluating the impact that adopting this standard will have on the consolidated financial statements. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU amends ASC 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. While primarily related to contract assets and contract liabilities that were accounted for by the acquiree in accordance with ASC 606, the amendments also apply to contract assets and contract liabilities from other contracts to which the provisions of Topic 606 apply, such as contract liabilities from the sale of nonfinancial assets within the scope of Subtopic 610-20. The ASU should be applied prospectively and is effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that adopting this standard will have on the consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Disaggregation of Revenue | Year Ended December 31, 2022 Year Ended December 31, 2021 Professional Professional sales sales service Equipment service Equipment IT segment segment segment Total IT segment segment segment Total Network services $ 35,833 $ - $ - $ 35,833 $ 37,861 $ - $ - $ 37,861 Software sales and support 4,267 - - 4,267 5,055 - - 5,055 Commissions - 37,344 - 37,344 - 29,441 - 29,441 Medical equipment sales - - 2,450 2,450 - - 3,093 3,093 Medical equipment service - - 123 123 - - 129 129 $ 40,100 $ 37,344 $ 2,573 $ 80,017 $ 42,916 $ 29,441 $ 3,222 $ 75,579 Year Ended December 31, 2022 Year Ended December 31, 2021 Professional Professional sales sales service Equipment service Equipment IT segment segment segment Total IT segment segment segment Total Revenue recognized over time $ 37,089 $ - $ 325 $ 37,414 $ 38,172 $ - $ 199 $ 38,371 Revenue recognized at a point in time 3,011 37,344 2,248 42,603 4,744 29,441 3,023 37,208 $ 40,100 $ 37,344 $ 2,573 $ 80,017 $ 42,916 $ 29,441 $ 3,222 $ 75,579 |
Transaction price allocated to remaining performance obligations | Fiscal years of revenue recognition 2023 2024 2025 Thereafter Unfulfilled performance obligations $ 41,882 $ 14,496 $ 4,464 $ 29,697 |
Schedule of Fair Value Measured Assets | Quoted Prices Significant in Active Other Significant Balance Markets for Observable Unobservable as of Identical Assets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2022 Assets Cash equivalents invested in money market funds $ 7,934 $ - $ - $ 7,934 Bank deposits (included in short term investments) 433 433 $ 8,367 $ - $ - $ 8,367 Quoted Prices Significant in Active Other Significant Balance Markets for Observable Unobservable as of Identical Assets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2021 Assets Cash equivalents invested in money market funds $ 802 $ - $ - $ 802 Bank deposits (included in short term investments) 629 629 $ 1,431 $ - $ - $ 1,431 |
Changes in allowance for doubtful accounts and commission adjustments | (in thousands) Year ended December 31, 2022 2021 Beginning Balance $ 5,804 $ 4,208 Provision for losses on accounts receivable 63 132 Direct write-offs, net of recoveries (159 ) (77 ) Commission adjustments 1,239 1,541 Ending Balance $ 6,947 $ 5,804 |
Weighted average shares outstanding | (in thousands) Year ended December 31, 2022 2021 Basic weighted average shares outstanding 173,065 171,688 Dilutive effect of unvested restricted shares 1,591 2,083 Diluted weighted average shares outstanding 174,656 173,771 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT REPORTING | |
Summary financial information | (in thousands) Year ended December 31, 2022 2021 Revenues from external customers IT $ 40,100 $ 42,916 Professional sales service 37,344 29,441 Equipment 2,573 3,222 Total revenues $ 80,017 $ 75,579 Gross Profit IT $ 16,229 $ 16,674 Professional sales service 30,288 23,906 Equipment 1,964 2,553 Total gross profit $ 48,481 $ 43,133 Operating income (loss) IT $ (1,620 ) $ (2,062 ) Professional sales service 10,099 5,918 Equipment (180 ) 32 Corporate (1,266 ) (1,069 ) Total operating income $ 7,033 $ 2,819 Depreciation and amortization IT $ 1,692 $ 3,394 Professional sales service 33 153 Equipment 198 293 Corporate - - Total depreciation and amortization $ 1,923 $ 3,840 Capital expenditures IT $ 406 $ 334 Professional sales service 125 41 Equipment 34 37 Corporate 1 3 Total cash capital expenditures $ 566 $ 415 December 31, 2022 December 31, 2021 Identifiable Assets IT $ 22,201 $ 23,144 Professional sales service 21,684 18,718 Equipment 6,957 7,144 Corporate 21,813 3,355 Total assets $ 72,655 $ 52,361 |
Geographic revenues | (in thousands) Year ended December 31, 2022 2021 Domestic (United States) $ 77,785 $ 72,681 Non-domestic (foreign) 2,232 2,898 $ 80,017 $ 75,579 |
ACCOUNTS AND OTHER RECEIVABLES
ACCOUNTS AND OTHER RECEIVABLES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCOUNTS AND OTHER RECEIVABLES | |
Accounts and other receivables | (in thousands) December 31, 2022 December 31, 2021 Trade receivables $ 22,471 $ 21,197 Allowance for doubtful accounts and commission adjustments (6,947 ) (5,804 ) Accounts and other receivables, net $ 15,524 $ 15,393 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INVENTORIES | |
Inventories | (in thousands) December 31, 2022 December 31, 2021 Raw materials $ 751 $ 744 Work in process 6 4 Finished goods 716 399 $ 1,473 $ 1,147 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT | |
Property and equipment | (in thousands) December 31, 2022 December 31, 2021 Office, laboratory and other equipment $ 1,928 $ 1,940 Equipment furnished for customer or clinical uses 7,981 9,359 Right of use assets - finance leases 1,119 1,286 Furniture and fixtures 99 99 11,127 12,684 Less: accumulated depreciation and amortization (9,787 ) (10,512 ) Property and equipment, net $ 1,340 $ 2,172 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL AND OTHER INTANGIBLES | |
Goodwill | (in thousands) Year ended Year ended December 31, 2022 December 31, 2021 Beginning of period $ 15,722 $ 15,688 Foreign currency translation adjustment (108 ) 34 End of period $ 15,614 $ 15,722 |
Other intangible assets | (in thousands) December 31, 2022 December 31, 2021 Customer-related Costs $ 5,831 $ 5,831 Accumulated amortization (4,557 ) (4,279 ) 1,274 1,552 Patents and Technology Costs 1,894 1,894 Accumulated amortization (1,894 ) (1,754 ) - 140 Software Costs 2,362 3,459 Accumulated amortization (2,125 ) (3,110 ) 237 349 $ 1,511 $ 2,041 |
Amortization expense | (in thousands) Years ending December 31, 2023 343 2024 274 2025 203 2026 148 2027 543 $ 1,511 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
OTHER ASSETS | |
Other assets | (in thousands) December 31, 2022 December 31, 2021 Deferred commission expense - noncurrent $ 3,864 $ 2,018 Trade receivables - noncurrent 792 368 Other, net of allowance for loss on loan receivable of $412 at December 31, 2022 and 2021 70 60 $ 4,726 $ 2,446 |
DEFERRED REVENUE (Tables)
DEFERRED REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
DEFERRED REVENUE | |
Deferred revenues | (in thousands) Year ended December 31, 2022 2021 Deferred revenue at beginning of period $ 24,965 $ 17,704 Net additions: Deferred extended service contracts 3 (1 ) Deferred commission revenues 19,666 17,080 Recognized as revenue: Deferred extended service contracts (4 ) (5 ) Deferred commission revenues (13,827 ) (9,813 ) Deferred revenue at end of period 30,803 24,965 Less: current portion 15,139 16,495 Long-term deferred revenue at end of period $ 15,664 $ 8,470 |
ACCRUED EXPENSES AND OTHER LI_2
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES AND OTHER LIABILITIES | |
Accrued expenses and other liabilities | (in thousands) December 31, 2022 December 31, 2021 Accrued compensation $ 2,652 $ 2,397 Accrued expenses - other 2,012 1,799 Order reduction liability 2,577 1,518 Other liabilities 1,650 1,775 $ 8,891 $ 7,489 |
NOTES PAYABLE AND REVOLVING C_2
NOTES PAYABLE AND REVOLVING CREDIT AGREEMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE AND REVOLVING CREDIT AGREEMENT | |
Notes payable | (in thousands) December 31, 2022 December 31, 2021 Notes payable 24 31 Less: current portion (9 ) (8 ) $ 15 $ 23 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Lease liabilities | (in thousands) December 31, 2022 December 31, 2021 Lease liabilities - current Finance leases $ 122 $ 222 Operating leases 745 562 $ 867 $ 784 Lease liabilities - net of current portion Finance leases $ 96 $ 218 Operating leases 823 352 $ 919 $ 570 |
Discounted lease liabilities | (in thousands) Years ending December 31, Finance leases Operating leases Total 2023 144 782 926 2024 83 554 637 2025 25 324 349 2026 - 71 71 Undiscounted lease payments 252 1,731 1,983 Amount representing interest (34 ) (163 ) (197 ) Discounted lease liabilities 218 1,568 1,786 |
Additional disclosures | (in thousands) Year ended December 31, 2022 Year ended December 31, 2021 Lease costs: Finance lease costs: Amortization of right-of-use assets $ 154 $ 193 Interest on lease liabilities 44 45 198 238 Operating lease costs 878 792 Short-term lease costs 52 78 Total lease cost $ 1,128 $ 1,108 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 44 $ 45 Operating cash flows from operating leases 878 792 Financing cash flows from finance leases 222 199 $ 1,144 $ 1,036 December 31, 2022 December 31, 2021 Weighted-average remaining lease term - finance leases (months) 23 28 Weighted-average remaining lease term - operating leases (months) 30 25 Weighted-average discount rate - finance leases 14.2 % 13.1 % Weighted-average discount rate - operating leases 9.1 % 8.8 % |
OPTION AND STOCK ISSUANCE PLA_2
OPTION AND STOCK ISSUANCE PLANS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
OPTION AND STOCK ISSUANCE PLANS | |
Non-vested restricted shares activity | Shares Available for Future Issuance Unvested shares Weighted Average Grant Date Fair Value Balance at December 31, 2020 11,005,580 4,391,666 $ 0.02 Authorized - - $ - Granted (90,000 ) 90,000 $ 0.05 Vested - (1,491,666 ) $ 0.02 Forfeited - - $ - Expired - - $ - Balance at December 31, 2021 10,915,580 2,990,000 $ 0.02 Authorized - - $ - Granted (1,050,000 ) 1,050,000 $ 0.11 Vested - (1,300,000 ) $ 0.02 Forfeited 90,000 (90,000 ) $ 0.05 Expired - - $ - Balance at December 31, 2022 9,955,580 2,650,000 $ 0.06 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Geographical breakdown of income (loss) before provision for income taxes | (in thousands) Year ended December 31, 2022 2021 Domestic $ 6,823 $ 5,720 Foreign 307 531 Income before provision for income taxes $ 7,130 $ 6,251 |
Provision for income taxes | (in thousands) Year ended December 31, 2022 2021 Current provision Federal $ - $ - State 36 47 Foreign 9 52 Total current provision 45 99 Deferred provision (benefit) Federal (3,724 ) 41 State (1,064 ) 11 Foreign - - Total deferred provision (benefit) (4,788 ) 52 Total income tax provision (benefit) $ (4,743 ) $ 151 Effective income tax rate 66.52 % 2.42 % |
Reconciliation of effective income tax rate | For the year ended December 31, 2022 December 31, 2021 % % Federal statutory rate 21.00 21.00 State income taxes 6.13 2.70 Change in valuation allowance relating to operations (87.30 ) (21.32 ) Foreign tax rate differential (0.78 ) (0.84 ) R&D credit 0.54 (0.08 ) PPP Loan forgiveness - (11.87 ) Nondeductible expenses 0.20 0.06 Other (6.31 ) 12.77 (66.52 ) 2.42 |
Deferred tax assets and liabilities | (in thousands) December 31, 2022 December 31, 2021 Deferred Tax Assets: Net operating loss carryforwards $ 8,367 $ 10,015 Amortization 328 343 Stock-based compensation 7 5 Allowance for doubtful accounts 99 125 Reserve for slow moving inventory 46 47 Tax credits 416 454 Expense accruals 908 786 Deferred revenue 1,835 1,330 Total gross deferred taxes 12,006 13,105 Valuation allowance (4,543 ) (10,769 ) Net deferred tax assets 7,463 2,336 Deferred Tax Liabilities: Deferred commissions (464 ) (325 ) Goodwill (1,962 ) (1,703 ) Depreciation (30 ) (89 ) Total deferred tax liabilities (2,456 ) (2,117 ) Total deferred tax assets (liabilities) 5,007 219 Recorded as: Non-current deferred tax assets 5,007 219 Non-current deferred tax liabilities - - Total deferred tax assets (liabilities) $ 5,007 $ 219 |
Valuation allowance activity | (in thousands) 2022 2021 Valuation allowance, January 1, $ 10,769 $ 12,145 Partial release of allowance (4,840 ) - Change in valuation allowance (1,386 ) (1,376 ) Valuation allowance, December 31, $ 4,543 $ 10,769 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details Narrative) | 1 Months Ended | |
May 31, 2020 | Jan. 31, 2015 | |
DESCRIPTION OF BUSINESS | ||
stock sale of its wholly-owned subsidiary | 51% | |
Company owned of VSK | 49.90% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue | $ 80,017,000 | $ 75,579,000 |
Network Services | ||
Revenue | 35,833 | 37,861 |
Software Sales and Support | ||
Revenue | 4,267 | 5,055 |
Commissions | ||
Revenue | 37,344 | 29,441 |
Medical Equipment Sales | ||
Revenue | 2,450 | 3,093 |
Medical Equipment Service | ||
Revenue | 123 | 129 |
Equipment Sales and Services | ||
Revenue | 2,573 | 3,222 |
Equipment Sales and Services | Revenue Recognized over Time | ||
Revenue | 325 | 199 |
Equipment Sales and Services | Revenue Recognized at a Point in Time | ||
Revenue | 2,248 | 3,023 |
Equipment Sales and Services | Network Services | ||
Revenue | 0 | 0 |
Equipment Sales and Services | Software Sales and Support | ||
Revenue | 0 | 0 |
Equipment Sales and Services | Commissions | ||
Revenue | 0 | 0 |
Equipment Sales and Services | Medical Equipment Sales | ||
Revenue | 2,450 | 3,093 |
Equipment Sales and Services | Medical Equipment Service | ||
Revenue | 123 | 129 |
Professional Sales Services | ||
Revenue | 37,344 | 29,441 |
Professional Sales Services | Revenue Recognized over Time | ||
Revenue | 0 | 0 |
Professional Sales Services | Revenue Recognized at a Point in Time | ||
Revenue | 37,344 | 29,441 |
Professional Sales Services | Network Services | ||
Revenue | 0 | 0 |
Professional Sales Services | Software Sales and Support | ||
Revenue | 0 | 0 |
Professional Sales Services | Commissions | ||
Revenue | 37,344 | 29,441 |
Professional Sales Services | Medical Equipment Sales | ||
Revenue | 0 | 0 |
Professional Sales Services | Medical Equipment Service | ||
Revenue | 0 | 0 |
Managed IT Systems and Services | ||
Revenue | 40,100 | 42,916 |
Managed IT Systems and Services | As Reported | ||
Revenue | 37,414 | 38,371 |
Managed IT Systems and Services | Adjustment | ||
Revenue | 42,603 | 37,208 |
Managed IT Systems and Services | Revenue Recognized over Time | ||
Revenue | 37,089 | 38,172 |
Managed IT Systems and Services | Revenue Recognized at a Point in Time | ||
Revenue | 3,011 | 4,744 |
Managed IT Systems and Services | Network Services | ||
Revenue | 35,833 | 37,861 |
Managed IT Systems and Services | Software Sales and Support | ||
Revenue | 4,267 | 5,055 |
Managed IT Systems and Services | Commissions | ||
Revenue | 0 | 0 |
Managed IT Systems and Services | Medical Equipment Sales | ||
Revenue | 0 | 0 |
Managed IT Systems and Services | Medical Equipment Service | ||
Revenue | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | Dec. 31, 2022 USD ($) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
2023 | $ 41,882 |
2024 | 14,496 |
2025 | 4,464 |
Thereafter | $ 29,697 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value of Assets | $ 8,367 | $ 1,431 |
Cash equivalents invested in money market funds | 7,934 | 802 |
Bank deposits (included in short term investments) | 433 | 629 |
Level 3 | ||
Fair Value of Assets | 0 | 0 |
Cash equivalents invested in money market funds | 0 | 0 |
Bank deposits (included in short term investments) | 0 | 0 |
Level 1 | ||
Fair Value of Assets | 8,367 | 1,431 |
Cash equivalents invested in money market funds | 7,934 | 802 |
Bank deposits (included in short term investments) | 433 | 629 |
Level 2 | ||
Fair Value of Assets | 0 | 0 |
Cash equivalents invested in money market funds | 0 | 0 |
Bank deposits (included in short term investments) | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Allowance for doubtful accounts and commission adjustments, beginning balance | $ 5,804 | $ 4,208 |
Provision for losses on accounts receivable | 63 | 132 |
Direct write-offs, net of recoveries | (159) | 77 |
Commission adjustments | 1,239 | 1,541 |
Allowance for doubtful accounts and commission adjustments, ending balance | $ 6,947 | $ 5,804 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Basic weighted average shares outstanding (in thousands) | 173,065 | 171,688 |
Dilutive effect of unvested restricted shares (in thousands) | 1,591 | 2,083 |
Diluted weighted average shares outstanding (in thousands) | 174,656 | 173,771 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Amount expensed of asset | $ 2,732,000 | $ 1,928,000 |
Selling, general and administrative expense | 79,000,000 | 120,000,000 |
Contract liabilities | 481,000,000 | 407,000,000 |
Held-to-maturity investment | 8,071,000 | |
Fair value short term investment | 8,064,000 | |
Unrecongnized holding loss | 7,000 | |
Bank deposit fair value | 433,000 | |
Advance of customer acceptance of equipment | 30,794,000,000 | 24,955,000,000 |
Customer order reductions | 2,577,000,000 | 1,518,000,000 |
Post-delivery services and varying duration service contracts | 9,000,000 | 9,000,000 |
Revenues recognized | 9,100,000 | 5,800,000 |
Capitalized sales commissions | 7,113,000,000 | 5,567,000,000 |
Deferred commission expense | 3,249,000,000 | 3,549,000,000 |
Deferred long-term portion | 3,864,000,000 | 2,018,000,000 |
Increases in revenue consideration for previously completed performance obligations | (5,000,000) | $ 40,000,000 |
Transaction price | $ 86,000,000 | |
Restricted shares of common stock granted | 1,050,000 | 90,000 |
Common stock value | $ 115,000 | $ 4,500 |
Fair value of shares vested for officers | 23,000,000 | 23,000,000 |
Fair value of shares vested for employees | $ 4,000,000 | $ 14,000,000 |
Weighted average grant date fair value | $ 0.11 | $ 0.05 |
Share-based compensation | $ 35,000 | $ 31,000 |
FDIC uninsured amount | $ 1,234,000,000 | 903,000,000 |
Deferred tax asset can be realized | 50% | |
FDIC coverage | $ 250,000,000 | |
No customer equipment or IT segment accounted for Revenues or accounts receivable | 10% | |
Revenues and accounts receivable are with GEHC | 100% | |
Capitalized software development impaired | 1,100,000 | |
Long-lived assets to be impaired | 324,000,000 | |
Other comprehensive income | $ (343,000,000) | $ 94,000,000 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | $ 80,017 | $ 75,579 |
Gross profit | 48,481 | 43,133 |
Operating income | 7,033 | 2,819 |
Total Operating income (loss) | 7,033 | 2,819 |
Depreciation and amortization | 1,923 | 3,840 |
Purchases of equipment and software | 566 | 415 |
Total assets | 72,655 | 52,361 |
Corporate | ||
Operating income | (1,266) | (1,069) |
Total Operating income (loss) | (1,266) | (1,069) |
Depreciation and amortization | 0 | 0 |
Purchases of equipment and software | 1 | 3 |
Total assets | 21,813 | 3,355 |
Information Technology Segment | ||
Revenues | 40,100 | 42,916 |
Gross profit | 16,229 | 16,674 |
Operating income | (1,620) | (2,062) |
Total Operating income (loss) | (1,620) | (2,062) |
Depreciation and amortization | 1,692 | 3,394 |
Purchases of equipment and software | 406 | 334 |
Total assets | 22,201 | 23,144 |
Professional Sales Service Segment | ||
Revenues | 37,344 | 29,441 |
Gross profit | 30,288 | 23,906 |
Operating income | 10,099 | 5,918 |
Total Operating income (loss) | 10,099 | 5,918 |
Depreciation and amortization | 33 | 153 |
Purchases of equipment and software | 125 | 41 |
Total assets | 21,684 | 18,718 |
Equipment Segment | ||
Revenues | 2,573 | 3,222 |
Gross profit | 1,964 | 2,553 |
Operating income | (180) | 32 |
Total Operating income (loss) | (180) | 32 |
Depreciation and amortization | 198 | 293 |
Purchases of equipment and software | 34 | 37 |
Total assets | $ 6,957 | $ 7,144 |
SEGMENT REPORTING (Details 1)
SEGMENT REPORTING (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | $ 80,017 | $ 75,579 |
Domestic (United States) | ||
Revenues | 77,785 | 72,681 |
Non-Domestic (Foreign) | ||
Revenues | $ 2,232 | $ 2,898 |
SEGMENT REPORTING (Details Narr
SEGMENT REPORTING (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accounts and other receivables | $ 15,524 | $ 15,393 |
GE Healthcare | Sales Revenue, Net | ||
Concentration risk percentage | 47% | 39% |
GE Healthcare | Accounts and Other Receivables | ||
Concentration risk percentage | 83% | 80% |
Accounts and other receivables | $ 1,280 | $ 1,230 |
ACCOUNTS AND OTHER RECEIVABLE_2
ACCOUNTS AND OTHER RECEIVABLES (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
ACCOUNTS AND OTHER RECEIVABLES | ||
Trade receivables | $ 22,471 | $ 21,197 |
Allowance for doubtful accounts and commission adjustments | (6,947) | (5,804) |
Accounts and other receivables | $ 15,524 | $ 15,393 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
INVENTORIES | ||
Raw materials | $ 751 | $ 744 |
Work in process | 6 | 4 |
Finished goods | 716 | 399 |
Inventories, net | $ 1,473 | $ 1,147 |
INVENTORIES (Details Narrative)
INVENTORIES (Details Narrative) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
INVENTORIES | ||
Reserve For Slow Moving Inventory | $ 163,000 | $ 165,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property and equipment, gross | $ 11,127 | $ 12,684 |
Less: accumulated depreciation | (9,787) | (10,512) |
Property and equipment, net | 1,340 | 2,172 |
Office, Laboratory and Other Equipment | ||
Property and equipment, gross | 1,928 | 1,940 |
Equipment Furnished for Customer or Clinical Uses | ||
Property and equipment, gross | 7,981 | 9,359 |
Right of Use Assets - Finance Leases | ||
Property and equipment, gross | 1,119 | 1,286 |
Furniture and Fixtures | ||
Property and equipment, gross | $ 99 | $ 99 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
PROPERTY AND EQUIPMENT | ||
Accumulated amortization of ROU assets | $ 858,000 | $ 833,000 |
Depreciation expense | $ 1,372,000 | $ 1,868,000 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
GOODWILL AND OTHER INTANGIBLES | ||
Goodwill, beginning balance | $ 15,722 | $ 15,688 |
Foreign currency translation adjustment | (108) | 34 |
Goodwill, Ending balance | $ 15,614 | $ 15,722 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLES (Details 1) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Intangible assets, net | $ 1,511 | $ 2,041 |
Patents and Technology | ||
Intangible assets, net | 0 | 140 |
Costs | 1,894 | 1,894 |
Accumulated amortization | 1,894 | 1,754 |
Software [Member] | ||
Intangible assets, net | 237 | 349 |
Costs | 2,362 | 3,459 |
Accumulated amortization | (2,125) | 3,110 |
Information Technology Segment | ||
Intangible assets, net | 1,274 | 1,552 |
Costs | 5,831 | 5,831 |
Accumulated amortization | $ 4,557 | $ 4,279 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLES (Details 2) $ in Thousands | Dec. 31, 2021 USD ($) |
GOODWILL AND OTHER INTANGIBLES | |
2023 | $ 343 |
2024 | 274 |
2025 | 203 |
2026 | 148 |
2027 | 543 |
Total | $ 1,511 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
GOODWILL AND OTHER INTANGIBLES | ||
Goodwill | $ 14,375,000 | $ 1,239,000 |
Disposal of asset and accumulated amount | 1,117,000 | |
Amortization Expense | $ 551,000 | $ 1,972,000 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
OTHER ASSETS | ||
Deferred commission expense - noncurrent | $ 3,864 | $ 2,018 |
Trade receivables - noncurrent | 792 | 368 |
Accrued expenses - other, net of allowance | 70 | 60 |
Total | $ 4,726 | $ 2,446 |
DEFERRED REVENUE (Details)
DEFERRED REVENUE (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Deferred revenue, beginning balance | $ 24,965 | $ 17,704 |
Less: current portion | 15,139 | 16,495 |
Long-term deferred revenue at end of year | 15,664 | 8,470 |
Deferred Revenue, Ending Balance | 30,803 | 24,965 |
Extended Service Contracts | ||
Additions | 3 | 1 |
Recognized as revenue | (4) | (5) |
Commission Revenues | ||
Additions | 19,666 | 17,080 |
Recognized as revenue | $ (13,827) | $ (9,813) |
ACCRUED EXPENSES AND OTHER LI_3
ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
ACCRUED EXPENSES AND OTHER LIABILITIES | ||
Accrued Compensation | $ 2,652,000 | $ 2,397,000 |
Accrued Expenses - Other | 2,012,000 | 1,799,000 |
Order reduction liability | 2,577 | 1,518 |
Other Liabilities | 1,650,000 | 1,775,000 |
Accrued Expenses And Other Liabilities | $ 8,891,000 | $ 7,489,000 |
RELATEDPARTY TRANSACTIONS (Deta
RELATEDPARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2015 | |
Fee for legal services | $ 95,000 | $ 190,000 | |
Interest charges | $ 0 | $ 131,000,000 | |
Director [Member] | |||
Fund for the purchase of business | $ 4,800,000 | ||
MedTech Note [Member] | |||
Fund for the purchase of business | $ 2,300,000 |
NOTES PAYABLE AND REVOLVING C_3
NOTES PAYABLE AND REVOLVING CREDIT AGREEMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
NOTES PAYABLE AND REVOLVING CREDIT AGREEMENT | ||
Total debt | $ 24 | $ 31 |
Less: current portion | (9) | (8) |
Noncurrent | $ 15 | $ 23 |
NOTES PAYABLE AND REVOLVING C_4
NOTES PAYABLE AND REVOLVING CREDIT AGREEMENT (Details Narrative) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Dec. 30, 2022 | Dec. 31, 2022 | |
NOTES PAYABLE AND REVOLVING CREDIT AGREEMENT | ||
Note interest rate | 1.90% | 1.90% |
Line of credit | $ 3 | |
Line of credit expiration date | Aug. 31, 2023 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
LEASES | ||
Finance leases | $ 122 | $ 222 |
Operating leases | 745 | 562 |
Lease liabilities - current | 867 | 784 |
Finance leases | 96 | 218 |
Operating leases | 823 | 352 |
Lease liabilities - net of current portion | $ 919 | $ 570 |
LEASES (Details 1)
LEASES (Details 1) $ in Thousands | Dec. 31, 2022 USD ($) |
LEASES | |
2023 | $ 144 |
2024 | 83 |
2025 | 25 |
2026 | 0 |
Undiscounted lease payments | 252 |
Amount representing interest | (34) |
Discounted lease liabilities | 218 |
2023 | 782 |
2024 | 554 |
2025 | 324 |
2026 | 71 |
Undiscounted lease payments | 1,731 |
Amount representing interest | (163) |
Discounted lease liabilities | 1,568 |
2023 | 926 |
2024 | 637 |
2025 | 349 |
2026 | 71 |
Undiscounted lease payments | 1,983 |
Amount representing interest | 197 |
Discounted lease liabilities | $ 1,786 |
LEASES (Details 2)
LEASES (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
LEASES | ||
Weighted-average remaining lease term - operating leases | 30 years | 25 years |
Weighted-average remaining lease term - finance leases | 23 years | 28 years |
Weighted-average discount rate - finance leases | 14.20% | 13.10% |
Weighted-average discount rate - operating leases | 9.10% | 8.80% |
Lease costs: | ||
Amortization of right-of-use assets | $ 154 | $ 193 |
Interest on lease liabilities | 44 | 45 |
Finance lease costs | 198 | 238 |
Operating lease costs | 878 | 792 |
Short-term lease costs | 52 | 78 |
Total lease cost | 1,128 | 1,108 |
Other information: | ||
Operating cash flows from finance leases | 44 | 45 |
Operating cash flows from operating leases | 878 | 792 |
Financing cash flows from finance leases | 222 | 199 |
Cash paid for amounts included in the measurement of lease liabilities | $ 1,144 | $ 1,036 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 12 Months Ended |
Dec. 31, 2022 | |
Lease assets and liabilities for leases term | 12 years |
Maximum | |
Operating lease terms | 7 years |
Finance leases term | 5 years |
Minimum | |
Operating lease terms | 2 years |
Finance leases term | 3 years |
EQUITY IN THE EECP BUSINESS (De
EQUITY IN THE EECP BUSINESS (Details Narrative) - EECP Global Corporation - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
May 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
EECP Global income (loss) | $ 154,000 | $ (73,000) | |
Receivable from related parties | $ 403,000 | $ 46,000 | |
Company closed on the sale | $ 1,150,000 |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
STOCKHOLDERS EQUITY (Details Narrative) | ||
Statutory reserves | $ 35,000 | $ 35,000,000 |
Reserves reaches | 50% | |
Withholding tax | 10% |
OPTION AND STOCK ISSUANCE PLA_3
OPTION AND STOCK ISSUANCE PLANS (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
OPTION AND STOCK ISSUANCE PLANS | ||
Balance, beginning of period | 10,915,580 | 11,005,580 |
Authorized | 0 | 0 |
Granted | (1,050,000) | (90,000) |
Vested | 0 | 0 |
Forfeited | 90,000 | 0 |
Expired | 0 | 0 |
Balance, end of period | 9,955,580 | 10,915,580 |
Balance, beginning of period | 2,990,000 | 4,391,666 |
Authorized | 0 | 0 |
Granted | 1,050,000 | 90,000 |
Vested | (1,300,000) | (1,491,666) |
Forfeited | (90,000) | 0 |
Expired | 0 | 0 |
Balance, end of period | 2,650,000 | 2,990,000 |
Weighted average grant date fair value | ||
Balance, beginning of period | $ 0.02 | $ 0.02 |
Authorized | 0 | 0 |
Granted | 0.11 | 0.05 |
Vested | 0.02 | 0.02 |
Forfeited | 0.05 | 0 |
Expired | 0 | 0 |
Balance, end of period | $ 0.06 | $ 0.02 |
OPTION AND STOCK ISSUANCE PLA_4
OPTION AND STOCK ISSUANCE PLANS (Details Narrative) - shares | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | May 31, 2019 | Jun. 15, 2016 | Oct. 30, 2013 | |
Shares of common stock issued | 185,435,965 | 185,435,965 | |||
Share of common stock granted | 1,050,000 | 90,000 | |||
Remaining authorized shares of common stock | 53,558,455 | ||||
2013 Plan [Member] | |||||
Shares of common stock issued | 7,500,000 | ||||
Share of common stock granted | 50,000 | ||||
Share of common stock forfeited | 90,000 | ||||
2016 Plan [Member] | |||||
Shares of common stock issued | 7,500,000 | ||||
Share of common stock granted | 1,000,000 | ||||
2019 Plan [Member] | |||||
Shares of common stock issued | 15,000,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Domestic | $ 6,823 | $ 5,720 |
Foreign | 307 | 531 |
Income (loss) before income taxes | $ 7,130 | $ 6,251 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Federal | $ 0 | $ 0 |
Current provision (benefit) | ||
State | 36 | 47 |
Foreign | 9 | 52 |
Total current (benefit) provision | 45 | 99 |
Deferred provision (benefit) | ||
Federal | (3,724) | 41 |
State | (1,064) | 11 |
Foreign | 0 | 0 |
Total deferred provision | (4,788) | 52 |
Total provision for income taxes | $ (4,743) | $ 151 |
Effective income tax rate | (66.52%) | 2.42% |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Federal statutory rate | 21% | 21% |
State income taxes | 6.13% | 2.70% |
Change in valuation allowance relating to operations | (87.30%) | (21.32%) |
Foreign tax rate differential | (0.78%) | (0.84%) |
R&D credit | 0.54% | 0.08% |
PPP Loan forgiveness | 0% | (11.87%) |
Nondeductible expenses | 0.20% | 0.06% |
Other | (6.31%) | 12.77% |
Total | (66.52%) | 2.42% |
INCOME TAXES (Details 3)
INCOME TAXES (Details 3) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred Tax Assets | |||
Net operating loss carryforwards | $ 8,367 | $ 10,015 | |
Amortization | 328 | 343 | |
Stock-based compensation | 7 | 5 | |
Allowance for doubtful accounts | 99 | 125 | |
Reserve for slow moving inventory | 46 | 47 | |
Tax credits | 416 | 454 | |
Expense accruals | 908 | 786 | |
Deferred revenue | 1,835 | 1,330 | |
Total gross deferred taxes | 12,006 | 13,105 | |
Valuation allowance | (4,543) | (10,769) | $ (12,145) |
Net deferred tax assets | 7,463 | 2,336 | |
Deferred Tax Liabilities | |||
Deferred commissions | 464 | 325 | |
Goodwill | (1,962) | (1,703) | |
Depreciation | (30) | (89) | |
Total deferred tax liabilities | (2,456) | (2,117) | |
Total deferred tax assets (liabilities) | 5,007 | 219 | |
Recorded as | |||
Non-current deferred tax assets | 5,007 | 219 | |
Non-current deferred tax liabilities | 0 | 0 | |
Total deferred tax assets (liabilities) | $ 5,007 | $ 219 |
INCOME TAXES (Details 4)
INCOME TAXES (Details 4) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Valuation allowance, beginning of period | $ 10,769 | $ 12,145 |
Change in valuation allowance | (1,386) | (1,376) |
Partial release allowances | (4,840) | 0 |
Valuation allowance, end of period | $ 4,543 | $ 10,769 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income tax benefit (expense) | $ (9,000,000) | $ (151,000,000) |
Total gross deferred taxes | 12,006,000,000 | |
Reduction in deferred tax | (1,099,000,000) | (52,000,000) |
Valuation allowance decrease | 6,226,000 | |
Valuation allowance | 4,543,000,000 | |
Net operating loss carryforwards | $ 24,000,000 | 7,000,000 |
Maximum | ||
Net operating loss carryforwards expiration date | expiring at various dates from 2022 through 2037 | |
State [Member] | ||
Unrelated to valuation allowance | $ 36,000 | 47,000 |
Foreign [Member] | ||
Valuation allowance | $ 9,000 | $ 52,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 1 Months Ended | 12 Months Ended | 24 Months Ended | |
May 10, 2019 USD ($) | Dec. 31, 2017 integer | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
COMMITMENTS AND CONTINGENCIES (NOTE R) | ||||
Number of states for market segments and accounts | integer | 48 | |||
Employment agreement term | 5 years | |||
Employment agreement for annual compensation | $ 500,000 | $ 350,000 | ||
Licensing and support service agreement Chrges | $ 339,000 | $ 343,000 |
401(k) PLANS (Details Narrative
401(k) PLANS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
401(k) PLANS | ||
Company's discretionary annual contributions | $ 112,000 | $ 129,000 |