The following discussion and analysis of the results of operations and financial condition of
Health Revenue Assurance Holdings, Inc.for the three months ended March 31, 2014and 2013, should be read in conjunction with the, Health Revenue Assurance Holdings'financial statements, and the notes to those financial statements that are included elsewhere in this Quarterly Report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Cautionary Notice Regarding Forward-Looking Statements in this Quarterly Report. We use words such as "anticipate," "estimate," "plan," "project," "continuing," "on going," "expect," "believe," "intend," "may," "will," "should," "could," and similar expressions to identify forward-looking statements.
Health Revenue is a provider of revenue cycle services to a broad range of healthcare providers. We offer our customers integrated solutions designed around their specific business needs, including revenue cycle data analysis, contract and outsourced coding, billing, coding and compliance audits, coding education, coding consulting, physician coding services and ICD-10 education and transition services. With this approach, our customers benefit from integrated service offerings that we believe enhances their revenue integrity. As a result, we believe we help our customers achieve their business objectives and patient care objectives. Recent Developments Certain significant items or events must be considered to better understand differences in our results of operations from period to period. We believe that the following item has had a material impact on our results of operations for the periods discussed below or may have a material impact on our results of operations in future periods.
In the short term, the main focus of our business will be with respect to the ICD-10 coding transition. In that regard, our potential clients are all hospitals and medical providers, which currently maintain coding personnel in some form that are primarily responsible for seeking reimbursement for patients' procedures. The current system in place that drives the appropriate medical codes from hospitals/medical facilities to insurance companies is called ICD-9, which was implemented over 30 years ago. Presently, ICD-10 is scheduled to take effect on
October 1, 2015as a result of April 2014legislation, although that date could be extended by further legislation or by the HHS. We believe the impacts to the ICD-10 delay will have minimal impacts on our near term coding staffing and consulting services and do not affect our ability to acquire long term coding outsourcing service contracts. However, our customers may anticipate further delays and thereby delay their engaging us for consulting services. Our Services
We provide the following categories of services to our customers either on a standalone basis or bundled within a comprehensive solution. Depending on a customer's needs, we offer a mix of the following services as part of our solutions:
? Coding services ? Coding consulting services ? Education services Coding Services Coding services can be performed under short term or multi-year contracts in which we assume operational responsibility for various aspects of our customers' coding operations, including departmental or physician specialty coding, staff augmentation, or full outsource of a hospital or physician group coding operation. In the outsource contracts we typically hire part or the entire customer's coding staff that supported these functions prior to the transition of services. We then apply our coding expertise and operating methodologies and utilize technology to increase the efficiency of the operations, which usually results in increased coding quality at a lower cost. 19 --------------------------------------------------------------------------------
Coding Consulting Services
Coding consulting services are typically performed under short term contracts in which we conduct billing and coding audits. In connection with such audits, we collect and analyze the clients' clinical documentation, the coding applied, and reimbursements and provide recommendations for improvement.
· Billing and Coding Audits - We apply proven audit techniques to the review
of medical records and revenue cycle operations. We assess all components of
the medical record to include operative reports, nurses' & doctors' notes,
records, and other ancillary tests and orders. Our methodology enhances our
ability to identify procedures and diagnoses that may not be documented by
the medical staff. The information derived these reviews enables our customers to analyze medical staff documentation and review the coding accuracy that drives reimbursements and contributes to resource utilization. In addition, the results provide a baseline for follow-on assessments enabling continuous improvement and customized coding and compliance training for departmental staff.
· Consulting - Our consultants assist our customers keep pace with industry
and regulatory changes, including consulting in health information management and revenue integrity.
We offer various training and educational solutions to our customers including on-site training, coding boot camps, workshops, video training, and on demand webinars. Our Contracts Our contracts include services priced using a variety of pricing mechanisms. In determining how to price our services, we consider the delivery, credit and pricing risk of a business relationship. Depending on a customer's business requirements and the pricing structure of the contract, the amount of profit generated from a contract can vary significantly during a contract's term. Fixed- or unit-priced contracts, or an outsourcing services contract will typically produce less profit at the beginning of the contract with significantly more profit being generated as efficiencies are realized later in the term. Time and materials contracts are where our billings are based on measurements such as hours, days or months and an agreed upon rate. In some cases, the rate the customer pays for a unit of time can vary over the term of contract, which may result in the customer realizing immediate savings at the beginning of a contract. 20
Change in Officers and Directors
April 15, 2014, the Company notified Joseph Brophy, its senior vice president of operations that the Company was terminating his employment with the Company as well as that certain letter agreement, dated December 5, 2012, both effective April 25, 2014. On April 16, 2014, Tim Lankesresigned as the Chief Executive Officer and as a member of the board of directors. Mr. Lankesdid not serve on any committees or hold any other positions in the Company.
April 22, 2014, the board of directors of Health Revenue Assurance Holdings, Inc.appointed Mr. Todd Willisas its interim Chief Executive Officer. Since October 2013, Mr. Willishas served as the Senior Vice President of the Company's Coding Business Unit.
Three months ended
March 31, 2014compared to March 31, 2013Results of Operations
The following table presents a summary of operating information for the three months ended
For the three months ended March 31, March 31, Increase/ Increase/ 2014 2013 (Decrease) $ (Decrease) % Revenue
$ 1,877,398 $ 2,156,597 $ (279,199 )(12.95 )% Costs of Revenues 1,139,717 985,321 154,396 15.67 % Gross profit 737,681 1,171,276 (433,595 ) (37.02 )% Selling and administrative expenses 1,966,612 1,444,696 521,916 36.12 % Depreciation and amortization 19,821 25,429 (5,608 ) (22.05 )% Total operating expenses 1,986,433 1,470,125 516,308 35.12 % Operating income (loss) (1,248,752 ) (298,849 ) 949,903 317.85 % Other expense, net 1,112,684 (135,979 ) 1,248,663 918 % Net loss $ (136,068 ) $ (434,828 ) $ 298,76068.70 % Revenue: Revenue decreased by approximately $279,200or 13.0%, from approximately $2,156,600for the three months ended March 31, 2013to approximately $1,877,400for the three months ended March 31, 2014. The decrease in revenue was due primarily to reductions in education and coding consulting services partially attributable the deceleration in the service demand due to the delay in the implementation of ICD-10 and lower utilization rates for coding services.
Cost of Revenues:
Cost of revenues increased by approximately
$154,400or 16.0%, from approximately $985,300for the three months ended March 31, 2013to approximately $1,139,700for the three months ended March 31, 2014. The increase in cost was due primarily to the salaries, training and related employee costs for hiring of additional experienced coding and audit/consulting service personnel to service the anticipated growth in contracts from the ICD-10 implementation.
Gross profit decreased by approximately
$433,600, or 37.0%, from approximately $1,171,300for the three months ended March 31, 2013to approximately $737,700for the three months ended March 31, 2014. The decrease in gross profit is primarily attributable to declines in education, consulting services, and coding revenues and increased employee costs.
Selling and Administrative Expenses:
Selling and administrative expenses were approximately
$1,966,600for the three months ended March 31, 2014, an increase of approximately $521,900or 36.0%, from approximately $1,444,700for the three months ended March 31, 2013. The change in the 2014 period compared to the 2013 period was primarily due to: ? Personnel costs have increased by approximately $120,500or 15.0%, from approximately $827,600for the three months ended March 31, 2013to approximately $948,100for the three months ended March 31, 2014. Increased personnel costs represents 23% of the total increase is due primarily to higher compensation and related expenses associated with the build-up of the Company's executive management, sales and administrative staff in anticipation of accelerated business volume. ? Consulting and professional fees have increased from approximately $134,400for the three months ended March 31, 2013to approximately $591,300for the three months ended March 31, 2014, an increase of approximately $456,900, representing 87% of the total increase. Consulting fees increased approximately $347,000due to the amortization of stock compensation for investor relations and business developments services. Other professional fees increased approximately $59,000are primarily attributable to increased accounting, including an evaluation of the Company's internal control review services and tax related services. Legal fees increased approximately $51,000are primarily attributable to increased legal services. ? The increase in selling and administrative expenses is partially offset by decreases in travel, stock compensation expense, and marketing expenses.
The Company is currently conducting a cost reduction initiative to improve efficiencies, reduce costs, and streamline and focus its efforts on its profitable business services including strategic workforce reductions and consolidating its real estate facilities.
Depreciation and Amortization Expenses:
Depreciation and amortization expenses were approximately
$19,800for the three months ended March 31, 2014, a decrease of approximately $5,600, or 22.0%, from approximately $25,400for the three months ended March 31, 2013. The decrease was primarily due to amortization for the Visualizer software product that was fully impaired in September 2013.
Interest Expense (included in other expenses, net):
Interest Expense was approximately
$189,200for the three months ended March 31, 2014, an increase of approximately $53,200, from approximately $136,000for the three months ended March 31, 2013. The increase in interest expense is primarily due to increase in interest paid on notes and finance charges related to the amortization of debt issue costs.
Change in Fair Value of Warrant Liability:
The warrants are subject to re-measurement at each balance sheet date, with any change in fair value recognized as a component of other income (expense), net in the statements of operations. We estimate the fair value of these warrants at the respective balance sheet dates, based on the estimated market value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrant, risk-free interest rates and expected dividends and expected volatility of the price of the underlying common stock. For the three months ended
March 31, 2014approximately $1,301,900gain in fair value of warrant liability was recorded attributable to re-measurement. The resulting decrease in the warrant liability is primarily due to the decrease in the market value of the Company's common stock from a closing price of $0.25per share at December 31, 2013to a closing price of $0.20per share at March 31, 2014. If the Company's common stock closing price at June 30, 2014is higher than the closing price at March 31, 2014, the Company may record a non-cash loss from change in fair value of warrant liability which may be material. Conversely, if the Company's common stock closing price at June 30, 2014is lower than the closing price at March 31, 2014, the Company may record a non-cash gain from change in fair value of warrant liability which may be material.
Net Income (loss):
As a result of the above factors, a net loss of approximately
$136,100was recognized for the three months ended March 31, 2014as compared to net loss of approximately $434,800for the three months ended March 31, 2013, a decrease of approximately $298,800or approximately 69.0%. The decrease in net loss is primarily attributable to the gain in fair value of warrant liability.
Liquidity and Capital Resources
For the Three Months-Ended March 31, March 31, 2014 2013 Net Cash used in operating activities (856,673 ) (148,613 ) Net Cash used in investing activities (4,084 ) (334,101 ) Net Cash (used in) provided by financing activities (225,587 ) 652,166 (1,086,344 ) 169,452 Net cash used in operating activities was approximately
$856,700for the three months ended March 31, 2014compared to $148,600for the same period in 2013. For the three months ended March 31, 2014, net cash used by operating activities consisted primarily of net loss available to common stockholders of approximately $574,600increased by non-cash adjustments of approximately $1,301,900for the gain from change in fair market value of warrants offset by $358,800of amortization of prepaid shares issued for services, $330,600of accretion of series A redeemable convertible preferred stock redemption value differential, $108,000of cumulative series a redeemable convertible preferred stock dividend, $101,600of amortization of debt discount, $19,800of depreciation and amortization, and $3,900of net stock compensation expense. Additionally, changes in working capital approximately $97,100decreased the net cash used in operating activities. For the three months ended March 31, 2013, net cash used by operating activities consisted primarily of net loss available to common stockholders of approximately $434,800offset by non-cash adjustments of approximately $91,900of amortization of debt discount, $25,400depreciation, $28,000of stock compensation expense, and $6,450of bad debt expense. Additionally, changes in working capital approximately $134,500decreased the net cash used in operating activities. Net cash used in investing activities was approximately $4,100for the three months ended March 31, 2014compared to $334,100for the same period in 2013. Net cash used in investing activities for three months ended March 31, 2014of approximately $4,100was used for the purchase of computer equipment. Net cash used in investing activities for the three months ended March 31, 2013of approximately $334,100represent the cost of internally developed software. Net cash used in financing activities was approximately $225,600for the three months ended March 31, 2014compared to cash provided by financing activities of $652,200for the same period in 2013. Net cash used by financing activities amounted to approximately $225,600for the three months ended March 31, 2014, and relates to the repayment of debt obligations. Net cash provided by financing activities in the three months ended March 31, 2013, of approximately $652,200, and represented the proceeds from notes payable net of debt repayments. 23 --------------------------------------------------------------------------------
March 31, December 31, 2014 2013 Cash
$ 1,967,141 $ 3,053,485Total Assets $ 3,835,609 $ 5,428,951Percentage of total assets 51 % 56 % As of May 15, 2014, the Company had a cash balance of approximately $1,100,000. The Company expects to pay approximately $392,000in severances to its former President and Chief Technology Officer through the remainder of 2014 and first quarter of 2015. As of May 15, 2014, the Company owes approximately $553,500of notes payable due through February 2015and capital lease debt of approximately $48,000due through 2016. As of May 15, 2014, the Company's term loan balance is approximately $129,000, requires monthly principal and interest payments of approximately $4,000, and contains restrictive covenants prohibiting the granting any security interests or liens on the Company's assets. Under the Company's automatically renewing factoring agreement it assigns the collection rights of its receivables to a finance company in exchange for an advance rate of 85% of face value. (See Note 8 to our unaudited interim consolidated financial statements for the quarter ended March 31, 2014for factoring activity and related balances.) As of May 15, 2014, the Company is current in its financial obligations under the factoring agreement, but the Company's management believes it may be violating one or more agreement covenants. The Company has not been notified of any default by the factor company.
Trends and Uncertainties
In 2014, we have encountered a series of resignations and other events, which may affect our future results of operations. In addition to the resignations in April of our former chief executive officer and chief financial officer, other employees resigned. Claims have been made for severance, which in at least two instances seem unwarranted. As of the date of this report, it is not feasible to quantify our exposure. Going Concern
The Company's ability to continue as a going concern is dependent upon its ability to generate cash from operating activities and obtain additional financing to fund its business plan and to support working capital requirements.
However, as of
March 31, 2014, the Company has a working capital deficiency, stockholders' deficit and accumulated deficit of approximately $2,461,400, $4,724,900, and $11,327,000, respectively, for the three months ended March 31, 2014, incurred net losses available to common stockholders of approximately $574,600, and has used net cash in operations of approximately $856,700. The Company has not been able to generate sufficient cash from operating activities to fund its on-going operations. To meet our working capital needs, the Company will be required to raise capital through the sale of equity and/or debt. The Company has also moved its focus of its business away from non-revenue generating business services which will improve efficiencies and reduce our operating expenses. There is no guarantee that the Company will be able to generate enough revenue and/or raise capital to support its operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. On November 12, 2013, the Company entered into a Securities Purchase Agreement for the equity sale of $5.4 millionin Series A Preferred Stock and Warrants to purchase shares of the Company's common stock. The net proceeds to the Company after commissions and professional fees were $4,903,652. The net raise as well as revenues generated from current operations are sufficient to fund on-going operations for approximately 4 months. However, the funding and our current level of revenues are not sufficient to alleviate the going concern issue.
Off-Balance Sheet Arrangements
Critical Accounting Policies
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in
the United Statesrequires our management to make assumptions, estimates, and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our consolidated financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management's difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our consolidated financial statements. Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, HRAA and Dream Reachers. All significant inter-company transactions and balances are eliminated in consolidation.
Allowance for doubtful accounts
Accounts receivable balances are subject to credit risk. Management has reserved for expected credit losses, sales returns and allowances, and discounts based upon past experience, as well as knowledge of current customer information. The Company believes that its reserves are adequate. It is possible, however, that the accuracy of our estimation process could be impacted by unforeseen circumstances. The Company continuously reviews its reserve balance and refines the estimates to reflect any changes in circumstances. 24 --------------------------------------------------------------------------------
Costs incurred in connection with the development of software products are accounted for in accordance with the
Financial Accounting Standards BoardAccounting Standards Codification ("ASC") 985 Costs of Software to Be Sold, Leased or Marketed." Costs incurred prior to the establishment of technological feasibility are charged to research and development expense. Software development costs are capitalized after a product is determined to be technologically feasible and is in the process of being developed for market and capitalization ceases after the general release of the software. Amortization of capitalized software development costs begins upon initial product shipment after general release. Capitalized software development costs are amortized over the estimated life of the related product (generally thirty-six months) using the straight-line method. The Company evaluates its software assets for impairment whenever events or change in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of software assets to be held and used is measured by a comparison of the carrying amount of the asset to the future net undiscounted cash flows expected to be generated by the asset. If such software assets are considered to be impaired, the impairment to be recognized is the excess of the carrying amount over the fair value of the software asset. Software maintenance costs are charged to expense as incurred. Expenditures for enhanced functionality are capitalized. The cost of the software and the related accumulated amortization are removed from the accounts upon retirement of the software with any resulting loss being recorded in operations.
At the end of
September 2013, the Company re-evaluated the capitalized research and development costs for the Visualizer software suite of multiple offerings and the OMC Initiator after an evaluation based in part on the lack of cash flow and customer demand in ICD Visualizer after the general acceptance release date of July 15, 2013. In addition, the Company also considered its going concern opinion and cash liquidity concerns that restrain the ability to make capital investments in research and development to complete existing products in the pipeline as the available cash is needed to fund normal operating expenses. As a result of this evaluation, the Company recorded a loss of $946,931that is presented as a line item entitled "asset impairment" on the consolidated statement of operations. The Company will continue to use the Visualizer suite of functionality as internally developed software to generate customized reports for revenue integrity auditing and compliance services but the Company no longer intends to market or sell internally developed software on a stand-alone basis.
Use of Estimates
Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company's consolidated financial statements include valuation of accounts receivable, valuation of property and equipment, valuation and amortization period of software, valuation of beneficial conversion features in convertible debt, valuation of equity based instruments issued for other than cash, revenue recognition, and the valuation allowance on deferred tax assets.
The Company recognizes medical coding audit services revenue based on the proportional performance method of recognizing revenue.
A portion of the Company's revenue is generated from medical coding audit services. Auditing revenue is invoiced in accordance with the contract, generally at three benchmark time periods which coincide with when specific, obligatory field work services have been rendered and completed, the value of this portion of the contract price has been predetermined and agreed upon, and the client has received benefit or value in the form of the independent identification of system weaknesses and risk analysis. Further, collectability is reasonably assured due to the existence of a fixed fee contract and the size and financial health of the Company's clients. Below is a description of the general benchmarks and work phases associated with the Company's audit services:
? Planning Phase - work commences prior to and as soon as the contract is
signed and includes setting the audit scope, scheduling of the job,
assignment of audit staff, understanding the client and their systems,
determination of sample size and sampling methods to be employed, and other
specific items as outlined in the contract. The planning phase includes the
determination of deliverables as defined in the contract, generally
consisting of a listing of errors, training and a final report. The Company
generally invoices and recognizes 50% of the contract value at the
completion of the Planning Phase. Although all of the contracts contain a
clause making the first 50% of the engagement fee due and non-refundable at
this point, the Company does not deem this initial fee to be recognized as deferred revenue under SAB 104 due to the extensive amount of work to be done prior to accepting the contract.
? Field Work Phase - is performed at the client location and generally lasts
one week and encompasses actual testing of sample claims preselected in the
Planning Phase. The auditor generally preloads the selected claims into the
Company's proprietary software and audits the claim records by reviewing
actual medical records. The software assists the auditor in determining
proper classifications and allows the auditor to compare the proper
classification against what was filed in the submission made by the client
generated. The Company generally invoices and recognizes 40% of the contract
value at the completion of the Field Work Phase.
? Reporting Phase - includes a summary of audit findings, exit conference with
clients, and any other specific deliverables as determined by the contract.
The Company generally invoices and recognizes the remaining 10% of the contract value at the completion of the Reporting Phase. 25
A portion of the Company's revenue is derived from consulting and coding services provided. Revenue from these revenue streams is recognized after services are performed based on the quoted and agreed upon fee contained in its contracts.
Arrangements with customers may involve multiple elements including software products, education products, training, software product maintenance, coding services, coding audit services and other consulting services. Training and maintenance on software products will generally occur after the software product sale. Other services may occur before or after the product sales and may not relate to the products. Revenue recognition for multiple element arrangements is as follows: Each element is accounted for separately when each element has value to the customer on a standalone basis and there is Company specific objective evidence of selling price of each deliverable. For revenue arrangements with multiple deliverables, the Company allocates the total customer arrangement to the separate units of accounting based on their relative selling prices as determined by the price of the items when sold separately. Once the selling price is allocated, the revenue for each element is recognized using the general and specific criteria under GAAP as discussed above for elements sold in non-multiple element arrangements. A delivered item or items that do not qualify as a separate unit of accounting within the arrangement are combined with the other applicable undelivered items within the arrangement. The allocation of arrangement consideration and the recognition of revenue is then determined for those combined deliverables as a single unit of accounting. The Company has historically sold its services with established rates, which it believes is Company specific objective evidence of selling price. For the new software products, management has established selling prices, which qualifies as Company specific objective evidence of selling price. For our education products sold we have determined to account for the course materials and training components as one unit of accounting. Accordingly, revenue is recognized for the single unit upon delivery of the training through our online webinars. On
July 15, 2013, the Company issued a general release for one of its products Visualizer. Software sales on a standalone basis will be recognized upon delivery of the software when evidence of the purchase arrangement exists and the price is determinable, and when collectability is reasonably assured. The Company will continue to use the Visualizer suite of functionality as internally developed software to generate customized reports for revenue integrity auditing and compliance services but the Company no longer intends to market or sell internally developed software on a stand-alone basis.
Share Based Compensation
Compensation expense for all stock-based employee and director compensation awards granted is based on the grant date fair value estimated in accordance with the provisions of ASC Topic 718, Stock Compensation. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is generally the option vesting term. Vesting terms vary based on the individual grant terms. The Company estimates the fair value of stock-based compensation awards on the date of grant using the Black-Scholes-Merton ("BSM") option pricing model, which was developed for use in estimating the value of traded options that have no vesting restrictions and are freely transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. The BSM option-pricing model considers, among other factors, the expected term of the award and the expected volatility of the Company's stock price. Expected terms are calculated using the Simplified Method, volatility is determined based on the Company's historical stock price trends and the discount rate is based upon treasury rates with instruments of similar expected terms. Warrants granted to non-employees are accounted for in accordance with the measurement and recognition criteria of ASC Topic 505-50, Equity Based Payments to Non-Employees.
Financial Accounting Standards Board ASC Topic 280, Segment Reporting ("ASC 280"), establishes standards for the way public business enterprises report information about operating segments. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company has determined that based on these criteria it only operates one segment, consulting services, as all other services do not meet the minimum threshold for separate reporting of a segment.
Recent Accounting Pronouncements
See Note 2 to our unaudited interim consolidated financial statements regarding recent accounting pronouncements.
Cautionary Note Regarding Forward-Looking Statements
This report includes forward-looking statements including statements regarding liquidity, anticipated revenues, and cash flows.
The words "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "could," "target," "potential," "is likely," "will," "expect" and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. The results anticipated by any or all of these forward-looking statements might not occur. Important factors that could cause actual results to differ from those in the forward-looking statements include our inability to generate revenues to support our business, raising sufficient capital, legal proceedings distracting our management and draining our cash. Further information on our risk factors is contained in our filings with the
SEC, including our Annual Report on Form 10-K filed on April 15, 2014and the Prospectus dated May 16, 2014. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. 26