|9 Months Ended|
Sep. 30, 2018
|Subsequent Events [Abstract]|
Note 16 - Subsequent Events
On October 3, 2018, the Board approved the issuance of shares of common stock in lieu of cash payments due to certain directors and officers of the Company. This issuance was conditioned upon the Company signing a definitive agreement with Regenerative Medical Solutions, LLC (“RMS”). That agreement was signed on October 15, 2018, and a total of 1,168,956 shares were subsequently issued as follows: All non-employee directors were issued 35,578 shares each, for a total of 320,202 shares being issued. Executives were issued a total of 524,945 shares in lieu of cash due for 2017 bonus awards and 323,810 shares were issued to Jarrett Gorlin, former Chief Executive Officer, as severance in lieu of six months of cash salary. The 2017 bonus awards were not previously accrued as management determined it was not probable they would be paid. The board’s approval to issue shares to settle the 2017 bonus awards changed management’s probability assessment and the Company recorded the fair value of the shares issued ($210,000) as a liability at September 30, 2018.
On October 9, 2018, the Company entered into an employment agreement with William E. Horne pursuant to which Mr. Horne will serve as the Company’s President and Chief Executive Officer. The employment agreement is for a term of five years subject to additional one year renewals. The employment agreement provides for an annual base salary of $650,000 provided that if he is receiving his full salary from Laser Spine Institute, his annual base salary shall be reduced to $500,000. Mr. Horne is also eligible to participate in any discretionary or incentive bonus program approved by the Company’s Compensation Committee. Mr. Horne shall also be entitled to receive incentive stock options and restricted stock awards equal to 7% of the Company’s issued and outstanding common stock, as of the closing date of the consummation of the Asset Purchase Agreement (“APA”), as discussed below, between the Company and RMS. In the event that the APA is not consummated, the employment agreement shall terminate. Mr. Jarrett Gorlin resigned as President and Chief Executive Officer upon the effectiveness of the employment agreement.
On October 15, 2018, Directors Jarrett Gorlin, James R. Lawson, Randal R. Betz, John C. Thomas, Jr., James R. Andrews, Clyde A. Hennies, Jon Mogford, Scott Haufe and Jesse W. Crowne, this being all Board members except for Larry W. Papasan, tendered their resignations to Mr. Papasan, Co-Chairman of the Board. Mr. Papasan then invited newly appointed President and Chief Executive Officer, William E. Horne, to join the Board as Chairman. Mr. Horne accepted, and Mr. Papasan tendered his resignation to Mr. Horne, leaving Mr. Horne as the sole director of the Company.
On October 18, 2018, the Company entered into an APA with RMS, Lung Institute LLC, RMS Lung Institute Management LLC, Cognitive Health Institute Tampa, LLC, RMS Shareholder, LLC and RMS Acquisition Corp. (“Buyer”) (collectively, the “Parties”). Pursuant to the terms of the APA, buyer shall purchase all of the assets of RMS, Cognitive Health Institute Tampa, LLC, Lung Institute LLC and RMS Lung Institute Management LLC (collectively the “Sellers”). As consideration, Buyer shall (i) deliver to Sellers (a) 583,333 shares of common stock of the Company (“Common Stock”), (b) 33,632 shares of Series C Preferred Stock of the Company (“Series C Preferred Stock”), where each share of Series C Preferred Stock will convert into 1,000 shares of Common Stock and shall combine to represent the right to convert into and acquire an aggregate of fifty-five percent (55%) of the outstanding common stock of the Company and (c) “Additional Exchange Shares” as defined in the APA; and (ii) assume certain liabilities as provided in the APA. As further consideration, the Company shall pay RMS the sum of $350,000. The close of the APA is subject to certain closing conditions as set forth in the APA.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef