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Document And Entity Information

v2.4.0.6
Document And Entity Information
6 Months Ended
Jun. 30, 2013
Aug. 14, 2013
Document Information [Line Items]    
Entity Registrant Name Targeted Medical Pharma, Inc.  
Entity Central Index Key 0001420030  
Document Period End Date Jun. 30, 2013  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2013  
Current Fiscal Year End Date --12-31  
Document Type 10-Q  
Amendment Flag false  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   23,933,245

CONSOLIDATED BALANCE SHEETS

v2.4.0.6
CONSOLIDATED BALANCE SHEETS (USD $)
Jun. 30, 2013
Dec. 31, 2012
Current Assets:    
Cash and Cash Equivalents $ 25,949 $ 326,603
Inventory 703,864 478,499
Accounts Receivable (Net of Allowance for Doubtful Accounts) 312,034 353,993
Prepaid Income Taxes 900,863 900,863
Deferred Income Tax Asset (Net of Allowance) 0 251,436
Other Current Assets 421,067 217,771
Total Current Assets 2,363,777 2,529,165
Property and Equipment - Net of Accumulated Depreciation 293,552 340,096
Intangible Assets - Net of Accumulated Amortization 2,286,403 2,318,619
Deferred Income Tax Asset (Net of Allowance) 0 5,414,188
Escrow Receivable-Cambridge Medical Funding Group 123,047 0
Other Assets 0 26,679
Total Assets 5,066,779 10,628,747
Liabilities:    
Accounts Payable 1,851,193 2,161,021
Accrued Expenses 6,797,209 4,862,636
Notes Payable-Related Parties: Short-term 3,822,193 5,032,942
Derivative Liability 67,101 188,475
Total Current Liabilities 12,537,696 12,245,074
Notes Payable-Related Parties: Long-term (Net of discounts of $0 and $149,739 respectively) 200,000 385,709
Note Payable-Cambridge Medical Funding Group 750,000 0
Discount on Note Payable-Cambridge Medical Funding Group (750,000) 0
Total Liabilities 12,737,696 12,630,783
Shareholders' Deficit:    
Preferred stock, $0.001 par value; 20,000,000 shares authorized, no shares issued and outstanding 0 0
Common stock, $0.001 par value; 100,000,000 shares authorized, 23,884,225 and 23,008,782 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively 23,884 23,009
Additional Paid-In Capital 14,102,229 11,659,744
Accumulated Deficit (21,797,030) (13,684,789)
Total Shareholders' Deficit (7,670,917) (2,002,036)
Total Liabilities and Shareholders' Deficit $ 5,066,779 $ 10,628,747

CONSOLIDATED BALANCE SHEETS (Parenthetical)

v2.4.0.6
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Jun. 30, 2013
Dec. 31, 2012
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 20,000,000 20,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 23,884,225 23,884,225
Common stock, shares outstanding 23,008,782 23,008,782
Notes Payable-Related Parties Long-term (Net of discounts) $ 0 $ 149,739

CONDENSED CONSOLIDATED STATEMENTS OF LOSS and COMPREHENSIVE LOSS

v2.4.0.6
CONDENSED CONSOLIDATED STATEMENTS OF LOSS and COMPREHENSIVE LOSS (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Revenues:        
Product Revenue $ 1,646,824 $ 1,331,005 $ 4,126,375 $ 2,603,815
Service Revenue 270,564 117,221 602,144 219,596
Total Revenue 1,917,388 1,448,226 4,728,519 2,823,411
Cost of Product Sold 297,452 179,678 648,931 369,671
Cost of Services Sold 438,018 441,582 985,213 886,324
Total Cost of Sales 735,470 621,260 1,634,144 1,255,995
Total Gross Profit 1,181,918 826,966 3,094,375 1,567,416
Operating Expenses:        
Research and Development 34,033 30,009 66,113 57,273
Selling, General and Administrative 2,965,944 2,494,018 5,354,582 4,778,372
Total Operating Expenses 2,999,977 2,524,027 5,420,695 4,835,645
Loss from Operations (1,818,059) (1,697,061) (2,326,320) (3,268,229)
Other Income and Expense:        
Interest Expense (152,154) (1,866,818) (241,672) (1,942,657)
Derivative Revaluation 33,395 0 121,374 0
Total Other Expense (118,759) (1,866,818) (120,298) (1,942,657)
Loss before Income Taxes (1,936,818) (3,563,879) (2,446,618) (5,210,886)
Income Tax Expense (Benefit) 5,905,147 (739,056) 5,665,624 (1,410,146)
Net Loss (7,841,965) (2,824,823) (8,112,242) (3,800,740)
Comprehensive Loss $ (7,841,965) $ (2,824,823) $ (8,112,242) $ (3,800,740)
Basic and Diluted Loss Per Share $ (0.34) $ (0.13) $ (0.35) $ (0.17)
Basic and Diluted Weighted Average Number of Common Shares Outstanding 23,396,973 21,949,576 23,204,563 21,949,576

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

v2.4.0.6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (USD $)
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Cash Flows from Operating Activities:    
Net Income $ (8,112,242) $ (3,800,740)
Adjustments:    
Depreciation and Amortization 204,984 223,291
Stock Option Compensation 405,712 389,032
Stock Issued for Services 6,540 0
Deferred Income Tax Benefit (985,202) (1,410,146)
Allowance against Deferred Tax Assets 6,650,826 0
Interest Expense 0 0
Expensing of Note Discount 149,739 1,942,657
Derivative Liability (121,374) 0
Changes:    
Accounts Receivable 41,959 331,191
Inventory (225,365) (644,814)
Deferred Tax Asset 251,436 (130,947)
Prepaid Taxes 0 (102,000)
Other Assets (203,296) (474,693)
Accounts Payable (309,828) 861,902
Accrued Expenses 2,207,414 0
Deferred Tax Liability (251,436) 56,184
Net Cash Flows used by Operating Activities (290,133) (2,759,083)
Cash Flows from Investing Activities:    
Acquisition of Intangible Assets (102,743) (102,255)
Purchases of Property and Equipment (23,481) (108,923)
Net Cash Flows used by Investing Activities (126,224) (211,178)
Cash Flows from Financing Activities    
Notes Payable-Related Parties 0 2,885,000
Repayment of Related Party Notes (470,000) 0
Due to Related Parties 0 (17,500)
Net Cash Flows from Financing Activities 115,703 2,867,500
Net Change in Cash and Cash Equivalents (300,654) (102,761)
Cash and Cash Equivalents - Beginning of Year 326,603 147,364
Cash and Cash Equivalents - June 30,2013 25,949 44,603
Supplemental Disclosure of Cash Flow Information    
Interest Paid 211,451 0
Income Taxes Paid 0 102,000
Non-cash Financing Activities:    
Escrow Receivable 123,047  
Note Discount (750,000)  
Related Party Member [Member]
   
Non-cash Financing Activities:    
Conversion of Notes Payable-Related Parties 1,287,648 0
Cambridge [Member]
   
Cash Flows from Financing Activities    
Repayment of Related Party Notes 585,703 0
Non-cash Financing Activities:    
Escrow Receivable 123,047 0
Deferred Loan Fees 41,250 0
Note Discount $ 750,000 $ 0

Business Activity

v2.4.0.6
Business Activity
6 Months Ended
Jun. 30, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business Activity
Note 1: Business Activity
 
TARGETED MEDICAL PHARMA, INC. (“Company”), also doing business as Physician Therapeutics (“PTL”), is a specialty pharmaceutical company that develops and commercializes nutrient- and pharmaceutical-based therapeutic systems. The Company also does business as Laboratory Industry Services (“LIS”), which is a facility for the performance of diagnostic testing. On July 30, 2007, the Company formed the wholly owned subsidiary, Complete Claims Processing, Inc. ("CCPI"), which provides billing and collection services on behalf of physicians for claims to insurance companies, governmental agencies and other medical payers.
 
Segment Information :
 
The Company had no revenue outside of the United States for the six months ended June 30, 2013 and 2012, respectively. The Company’s operations are organized into two reportable segments: TMP and CCPI.
 
 
·
TMP : This segment includes PTL and LIS as described above. This segment develops and distributes nutrient based therapeutic products and distributes pharmaceutical products from other manufacturers through employed sales representatives and distributors. TMP also performs the administrative, regulatory compliance, sales and marketing functions of the corporation, owns the corporation’s intellectual property and is responsible for research and development relating to medical food products and the development of software used for the dispensation and billing of medical foods, generic and branded products. The TMP segment also manages contracts and chargebacks.
 
 
·
CCPI  : This segment provides point-of-care dispensing solutions and billing and collections services.
 
Segment Information for the three and six months ended June 30, 2013 and 2012
 
2013 (unaudited)
 
Total
 
TMP
 
CCPI
 
Gross Sales
 
$
1,917,388
 
$
1,646,824
 
$
270,564
 
Gross Profit
 
$
1,181,918
 
$
1,349,372
 
$
(167,454)
 
Comprehensive Loss
 
$
(7,841,965)
 
$
(7,674,511)
 
$
(167,454)
 
Total Assets
 
$
5,066,779
 
$
5,304,515
 
 
(237,736)
 
less Eliminations
 
$
-
 
$
(222,147)
 
$
222,147
 
Net Total Assets
 
$
5,066,779
 
$
5,082,368
 
$
(15,589)
 
 
 
2012 (unaudited)
 
Total
 
TMP
 
CCPI
 
Gross Sales
 
$
1,448,226
 
$
1,331,005
 
$
117,221
 
Gross Profit
 
$
826,966
 
$
1,151,327
 
$
(324,361)
 
Comprehensive Loss
 
$
(2,824,823)
 
$
(2,500,462)
 
$
(324,361)
 
Total Assets
 
$
11,219,550
 
$
11,459,574
 
$
(240,024)
 
less Eliminations
 
$
-
 
$
(210,231)
 
$
210,231
 
Net Total Assets
 
$
11,219,550
 
$
11,249,343
 
$
(29,793)
 
 
Segment Information for the Six Months ended June 30,
 
2013 (unaudited)
 
Total
 
TMP
 
CCPI
 
Gross Sales
 
$
4,728,519
 
$
4,126,375
 
$
602,144
 
Gross Profit
 
$
3,094,375
 
$
3,477,444
 
$
(383,069)
 
Comprehensive Loss
 
$
(8,112,242)
 
$
(7,729,173)
 
$
(383,069)
 
Total Assets
 
$
5,066,779
 
$
5,304,515
 
 
(237,736)
 
less Eliminations
 
$
-
 
$
(222,147)
 
$
222,147
 
Net Total Assets
 
$
5,066,779
 
$
5,082,368
 
$
(15,589)
 
 
2012 (unaudited)
 
Total
 
TMP
 
CCPI
 
Gross Sales
 
$
2,823,411
 
$
2,603,815
 
$
219,596
 
Gross Profit
 
$
1,567,416
 
$
2,234,144
 
$
(666,728)
 
Comprehensive Loss
 
$
(3,800,740)
 
$
(3,134,012)
 
$
(666,728)
 
Total Assets
 
$
11,219,550
 
$
11,459,574
 
$
(240,024)
 
less Eliminations
 
$
-
 
$
(210,231)
 
$
210,231
 
Net Total Assets
 
$
11,219,550
 
$
11,249,343
 
$
(29,793)
 

Summary of Significant Accounting Policies

v2.4.0.6
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2013
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Note 2: Summary of Significant Accounting Policies
 
General: The accompanying unaudited condensed consolidated financial statements include all adjustments of a normal and recurring nature which, in the opinion of Company’s management, are necessary to present fairly the Company’s financial position as of June 30, 2013, the results of its operations for the six months ended June 30, 2013 and 2012, and cash flows for the six months ended June 30, 2013 and 2012. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles (‘U.S. GAAP”) have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These condensed financial statements should be read in conjunction with the audited financial statements and related notes for the fiscal year ended December 31, 2012 contained in the Company’s Current Report on Form 10-K dated April 1, 2013.
 
The results of operations and cash flows for the six months ended June 30, 2013 are not necessarily indicative of the results to be expected for the full year’s operation.
 
Going concern : The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern. The Company has losses for the six months ended June 30, 2013 totaling $8,112,242 as well as accumulated deficit as of June 30, 2013 amounting to $21,797,030. Contributing to this loss was the Company's decision to fully reseve the net deferred tax assets of $6,650,826. Further, the Company does not have adequate cash and cash equivalents as of June 30, 2013 to cover projected operating costs for the next 12 months. As of June 30, 2013, the Company also owes $237,000 to the Internal Revenue Service (“IRS”) and the California Franchise Tax Board (“FTB”) for unpaid payroll taxes.  Additionally, as detailed at Note 7, the Company has an open audit with the IRS related to the 2010 amended tax returns.  Based on such and until such matter is resolved with the IRS, the IRS has issued a customary general lien on the assets of the Company. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. As a result, the Company is dependent upon further financing including receipt of the balance of $2.53 million (less escrowed amounts and fees) to be funded by Cambridge Medical Funding Group and at this time not yet funded, related party loans, development of revenue streams with shorter collection times and accelerating collections on our physician managed and hybrid revenue streams. If we are unable to do so, our liquidity would be adversely affected and we would consider taking a variety of actions, including attempting to reduce fixed costs (for example, further reducing the size of our administrative work force), curtailing or reducing planned capital additions, raising additional equity capital, borrowing additional funds, or refinancing existing indebtedness.
 
Principles of consolidation : The condensed consolidated financial statements include accounts of TMP and its wholly owned subsidiary, CCPI, collectively referred to as "the Company". All significant intercompany accounts and transactions have been eliminated in consolidation. In addition, TMP and CCPI share the common operating facility, certain employees and various costs. Such expenses are principally paid by TMP. Due to the nature of the parent and subsidiary relationship, the individual financial position and operating results of TMP and CCPI may be different from those that would have been obtained if they were autonomous.
 
Accounting estimates : The preparation of financial statements, in conformity with U.S GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s critical accounting policies that involve significant judgment and estimates which include revenue recognition, share based compensation, recoverability of intangibles, valuation of derivatives, and valuation of deferred income taxes. Actual results could differ from those estimates.
 
Cash Equivalents : The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less when purchased to be cash equivalents. The recorded carrying amounts of the Company’s cash and cash equivalents approximate their fair market value. As of June 30, 2013 and 2012 the Company had no cash equivalents.
 
Considerations of credit risk : Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade accounts receivable.
 
Revenue Recognition :
 
TMP markets medical foods and generic and branded pharmaceuticals through employed sales representatives, independent distributors and pharmacies. Product sales are invoiced upon shipment at Average Wholesale Price (“AWP”), which is a commonly used term in the industry, with varying rapid pay discounts, under six models: Physician Direct Sales, Distributor Direct Sales, Physician Managed, Hybrid Models and the two Cambridge Medical Funding Group Models.
 
Under the following revenue models product sales are invoiced upon shipment:
 
 
·
Physician Direct Sales Model (1% of product revenues for the six months ended June 30, 2013): Under this model, a physician purchases products from TMP but does not retain CCPI’s services. TMP invoices the physician upon shipment under terms which allow a significant rapid pay discount off Average Wholesale Price (“AWP”) for payment within discount terms in accordance with the product purchase agreement. The physicians dispense the product and perform their own claims processing and collections. TMP recognizes revenue under this model on the date of shipment at the gross invoice amount less the anticipated rapid pay discount offered in the product purchase agreement. In the event payment is not received within the term of the agreement, the amount payable for the purchased TMP products reverts to the AWP. In addition, if payment is not received within the agreed-upon term, a late payment fee of up to 20% may be applied to the outstanding balance. The physician is responsible for payment directly to TMP.
 
 
·
Distributor Direct Sales Model (28% of product revenues for the six months ended June 30, 2013): Under this model, a distributor purchases products from TMP and sells those products to a physician and the physician does not retain CCPI’s services. TMP invoices distributors upon shipment under terms which include a significant discount off AWP. TMP recognizes revenue under this model on the date of shipment at the net invoice amount. In the event payment is not received within the term of the agreement, the amount payable for the purchased TMP products reverts to the AWP. In addition, if payment is not received within the agreed-upon term, a late payment fee of up to 20% may be applied to the outstanding balance.
 
Due to substantial uncertainties as to the timing and collectability of revenues derived from our Physician Managed and Hybrid models described below, which can take in excess of five years to collect, we have determined that these revenues do not meet the criteria for recognition in accordance with The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. ASC 605, Revenue Recognition upon shipment. These revenues are recorded when collectability is reasonably assured, which the Company has determined is when the payment is received, which is upon collection of the claim.
 
·
Physician Managed Model (38% of product revenues for the six months ended June 30, 2013): Under this model, a physician purchases products from TMP and retains CCPI’s services. TMP invoices the physician upon shipment to the physician under terms which allow a significant rapid pay discount for payment received within terms in accordance with the product purchase agreement which includes a security interest for TMP in the products and receivables generated by the dispensing of the products. The physician also executes a billing and claims processing services agreement with CCPI for billing and collection services relating to our products (discussed below). CCPI submits a claim for reimbursement on behalf of the physician client. The CCPI fee and product invoice amount are deducted from the reimbursement received by CCPI on behalf of the physician client before the reimbursement is forwarded to the physician client. In the event the physician fails to pay the product invoice within the agreed term, we can deduct the payment due from any of the reimbursements received by us on behalf of the physician client as a result of the security interest we obtained in the products we sold to the physician client and the receivables generated by selling the products in accordance with our agreement. In the event payment is not received within the term of the agreement, the amount payable for the purchased TMP products reverts to the AWP. In addition, if payment is not received within the agreed-upon term, a late payment fee of up to 20% is applied to the outstanding balance. However, since we are in the early stage of our business, as a courtesy to our physician clients, our general practice has been to extend the rapid pay discount beyond the initial term of the invoice until the invoice is paid and not to apply a late payment fee to the outstanding balance. TMP recognizes revenue under this model on the date payment is received, which is upon collection of the claim.
  
·
Hybrid Model (20% of product revenues for the six months ended June 30, 2013): Under this model, a distributor purchases products from TMP and sells those products to a physician and the physician retains CCPI’s services. TMP invoices distributors upon shipment under terms which allow a significant rapid pay discount for payment received within terms in accordance with the product purchase agreements. The physician client of the distributor executes a billing and claims processing services agreement with CCPI for billing and collection services (discussed below). The distributor product invoice and the CCPI fee are deducted from the reimbursement received by CCPI on behalf of the physician client before the reimbursement is forwarded to the distributor for further delivery to their physician clients. In the event payment is not received within the term of the agreement, the amount payable for the purchased TMP products reverts to the AWP. In addition, if payment is not received within the agreed-upon term, a late payment fee of up to 20% is applied to the outstanding balance. However, since we are in the early stage of our business, as a courtesy to our physician clients, our general practice has been to extend the rapid pay discount beyond the initial term of the invoice until the invoice is paid and not to apply a late payment fee to the outstanding balance. TMP recognizes revenue under this model on the date payment is received, which is upon collection of the claim.
 
As further detailed at Note 6, the Company has entered into two separate agreements with Cambridge Medical Funding Group, LLC (“CMFG”) related to California Workers’ Compensation (“WC”) benefit claims. Under each arrangement, we have determined per FASB ASC Topic No. 860, Transfers of Financial Assets and FASB ASC Topic No. 605 we have met the criteria for revenue recognition when payment is received, which is upon collection of the claim as described below.
 
·
CMFG #1 – WC Receivable Purchase Assignment Model (13% of product revenues for the six months ended June 30, 2013): Under this model, physicians who purchase products from TMP, per the Company’s Physician Managed Model will have the option to assign their accounts receivables (primarily those accounts receivables with dates of service starting with the year 2013) from California WC benefit claims to CMFG at a discounted rate. Each agreement is executed among CMFG, TMP and each individual physician and serves as a master agreement for all assigned receivables by the physician to CMFG. Due to the origination of these accounts receivable being per the Company’s Physician Managed Model, CCPI services are also retained. Per the agreement the physician will satisfy its fees and financial obligations to TMP for purchase of TMP product and use of CCPI’s services by CMFG remitting funds to TMP equal to 23% of for each eligible assigned accounts receivable. CMFG has agreed to pay an amount equal to 23% of the eligible claims receivable. CMFG makes this payment directly to TMP, on behalf of the physician for the physician’s use of the Company’s medical billing and claims processing by CCPI and the physician’s financial obligation due TMP. The Company recognizes revenue on the date payment is received from CMFG. Under this arrangement the Company will receive no more than the 23% advance payment, where such payment is without recourse or future obligation for TMP to repay the 23% advanced amount back to CMFG or the physician. Actual amounts collected on the claims receivable is shared between CMFG and the physician, where the first 41% of amounts collected are disbursed to CMFG and additional amounts collected are shared at a ratio of 75:25, where 75% is disbursed to CMFG and 25% disbursed to the physician.
 
·
CMFG #2 – WC Receivables Funding Assignment Model (0% of product revenues for the six months ended June 30, 2013): Under this model, the Company has assigned the future proceeds of accounts receivable of WC benefit claims with dates of service between the year 2007 and December 31, 2012 to CMFG. These accounts receivables were originally generated per either the Company’s Physician Managed Model or the Hybrid Model. Due to the origination of these accounts receivable being per the Company’s Physician Managed Model or the Hybrid Model, CCPI services are also retained. As further detailed at Note 6, Cambridge agreed to pay the Company $3.28 million ($525,000 of the $3.28 million was placed into escrow until certain performance requirements are achieved) for such assignment, which is considered a loan to the Company from CMFG secured by the future proceeds of these receivables. The balance of $2.53 million (less escrowed amounts and fees) due from Cambridge has not funded at this time. The parties continue to work toward completion but there can be no assurance of funding at this time. Failure to complete this funding could have significant negative consequences to the company. Per the arrangement, actual amounts collected on the claims receivable is shared between CMFG and the Company at a ratio of 50:50, until the $3.28 million secured loan is paid back to CMFG. Further collections after which are shared at a ratio of 55:45, where 55% is retained by the Company and 45% disbursed to CMFG. The Company recognizes their portion of retained revenue when payment is received from insurance carriers or the California State Compensation Insurance Fund which is upon collection of the claim.
 
In the six months ended June 30, 2013 and 2012, the Company issued billings to Physician Managed, Hybrid, and Cambridge 1 model customers aggregating $5.0 million and $3.1 million, respectively, which were not recognized as revenues or accounts receivable in the accompanying consolidated financial statements at the time of such billings. Direct costs associated with the above billings are expensed as incurred. Direct costs associated with these billings aggregating $297,452 and $179,678, respectively, were expensed in the accompanying consolidated financial statements at the time of such billings. In accordance with the revenue recognition policy described above, the Company recognized revenues from certain of these customers when cash was collected aggregating $2,914,571 and $1,561,699 in the six months ended June 30, 2013 and 2012, respectively. The $1,160,227 of Physician Managed and Hybrid model revenue recognized in the six months ended June 30, 2013 includes $216,140 of revenue realized under the CMFG #1 – WC Receivable Purchase Assignment Model (“CMFG #1 model”) and includes $0 of revenue realized under the CMFG #2 – WC Receivables Funding Assignment Model (“CMFG #2 model”) as the agreement was finalized at the end of the quarter ended June 30, 2013. As of June 30, 2013 and December 31, 2012 we had $16.3 million and $34.4 million respectively in unrecorded accounts receivable and revenues that potentially will be recorded as revenue in the future as our CCPI subsidiary secures claims payments on behalf of our PMM and Hybrid Customers. All unpaid invoices underlying claims assigned to CMFG are excluded from unrecorded accounts receivable and revenues. The current balance of $16.3 million in unrecorded accounts receivable is net of estimated amounts of future proceeds belonging to Cambridge per the second Cambridge Agreement noted above.
 
CCPI receives no revenue in the physician direct or distributor direct models because it does not provide collection and billing services to these customers. In the Physician Managed and Hybrid models including CMFG #2 model, CCPI has a billing and claims processing service agreement with the physician. That agreement includes a service fee defined as a percentage of collections on all claims. Because fees are only earned by CCPI upon collection of the claim and the fee is not determinable until the amount of the collection of the claim is known, CCPI recognizes revenue at the time that collections are received. Except with respect to the CMFG #1 model, where the Company recognizes revenue related to CCPI services upon receiving the 23% advance payment from CMFG. This differing treatment is due to the Company’s position that the 23% advance payment received by the Company under the CMFG #1 model does not include performance requirements by the Company and therefore the earnings process is complete to recognize such revenue. In the opinion of the Company, such CCPI revenue recognized for CMFG #1 model was not material for the three months or six months ended June 30, 2013.
 
No returns of products are allowed except products damaged in shipment, which historically have been insignificant.
 
The rapid pay discounts to the AWP offered to the physician or distributor, under the models described above, vary based upon the expected payment term from the physician or distributor. The discounts are derived from the Company’s historical experience of the collection rates from internal sources and updated for facts and circumstances and known trends and conditions in the industry, as appropriate. As described in the models above, we recognize provisions for rapid pay discounts in the same period in which the related revenue is recorded. We believe that our current provisions appropriately reflect our exposure for rapid pay discounts. These rapid pay discounts, have typically ranged from 40% to 88% of Average Wholesale Price and we have monitored our experience ratio periodically over the prior twelve months and have made adjustments as appropriate.
 
Allowance for doubtful accounts : Trade accounts receivable are stated at the amount management expects to collect from outstanding balances.  Currently accounts receivable are comprised totally of amounts due from our distributor customers and receivables for our PDRx equipment. The carrying amounts of accounts receivable are reduced by an allowance for doubtful accounts that reflects management's best estimate of the amounts that will not be collected.  We individually review all accounts receivable balances and based on an assessment of current creditworthiness, estimate the portion, if any, of the balance that will not be collected.  We provide for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on our assessment of the current status of individual accounts.  Balances that are still outstanding after we have used reasonable collection efforts will be written off. Based on an assessment as of December 31, 2012 of the collectability of invoices 120 days or more past their due dates we established an allowance for doubtful accounts of $215,346. There was no change to this allowance in the six months ended June 30, 2013.
 
Under the Company’s physician managed model and hybrid model, CCPI performs billing and collection services on behalf of the physician client and deducts the CCPI fee and product invoice amount from the reimbursement received by CCPI on behalf of the physician client before the reimbursement is forwarded to the physician client . Extended collection periods are typical in the workers compensation industry with payment terms extending from 45 days to in excess of five years. The physician remains personally liable for purchases of product from TMP and, during this long collection cycle, TMP retains a security interest in all products sold to the physician along with the claims receivable that result from sales of the products. CCPI maintains an accounting of all managed accounts receivable on behalf of the physician and regularly reports to the physician. As described above, due to uncertainties as to the timing and collectability of revenues derived from these models, revenue is recorded when payment is received, there is no related accounts receivable and therefore no allowance for doubtful accounts is necessary.
  
Inventory valuation : Inventory is valued at the lower of cost (first in, first out) or market and consists primarily of finished goods.
 
Property and equipment : Property and equipment are stated at cost. Depreciation is calculated using the straight line method over the estimated useful lives of the related assets. Computer equipment is depreciated over three to five years. Furniture and fixtures are depreciated over five to seven years. Leasehold improvements are amortized over the shorter of fifteen years or term of the applicable property lease. Maintenance and repairs are expensed as incurred; major renewals and betterments that extend the useful lives of property and equipment are capitalized. When property and equipment is sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized. Amenities are capitalized as leasehold improvements.
 
Impairment of long-lived assets : The long-lived assets held and used by the Company are reviewed for impairment no less frequently than annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability is performed. No impairment indicators existed at December 31, 2012 or June 30, 2013 so no long-lived asset impairment was recorded for the year ended December 31, 2012 or the six months ended June 30, 2013.
 
Intangible assets : Intangible assets with finite lives, including patents and internally developed software (primarily the Company’s PDRx Software), are stated at cost and are amortized over their useful lives. Patents are amortized on a straight line basis over their statutory lives, usually fifteen to twenty years. Internally developed software is amortized over three to five years. Intangible assets with indefinite lives are tested annually for impairment, during the fiscal fourth quarter and between annual periods, and more often when events indicate that an impairment may exist. If impairment indicators exist the intangible assets are written down to fair value as required. The Company has one intangible asset with an indefinite life which is a domain name for medical foods. No impairment indicators existed at December 31, 2012 or June 30, 2013 so no intangible asset impairment was recorded for the year ended December 31, 2012 or the six months ended June 30, 2013.
 
Fair value of financial instruments : The Company’s financial instruments are accounts receivable, accounts payable, notes payable, and warrant derivative liability. The recorded values of accounts receivable and accounts payable approximate their values based on their short term nature. Notes payable are recorded at their issue value or if warrants are attached at their issue value less the value of the warrant. Warrants issued with ratcheting provisions are revalued using the Black-Scholes model each quarter based on changes in the market value of our common stock and unobservable level 3 inputs.
 
The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last is considered unobservable:
 
Level 1: Quoted prices in active markets for identical assets or liabilities.
 
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
Level 3 assumptions: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities including liabilities resulting from imbedded derivatives associated with certain warrants to purchase common stock.
 
Derivative Financial Instruments :
Derivative liabilities are recognized in the consolidated balance sheets at fair value based on the criteria specified in FASB ASC Topic 815-40 Derivatives and Hedging – Contracts in Entity’s own Equity. The Company uses the Black Scholes Merton model to calculate the fair value of the warrants recognized as derivative liabilities. The model utilizes level 3 unobservable inputs to calculate the fair value of the warrants at each reporting period. The Company determined that using an alternative valuation model such as a Binomial-Lattice model would result in diminimus differences. Changes in value are recorded as other income or expense in the consolidated statement of operations. As of June 30, 2013, 95,000 warrants were classified as derivative liabilities as they contained ratcheting provisions. At each reporting period the warrants are re-valued and adjusted through the caption “derivative revaluation” on the consolidated statements of operations. The rest of the Company’s warrants are recorded to additional paid in capital as equity instruments.
 
Income taxes : The Company determines its income taxes under the asset and liability method. Under the asset and liability approach, deferred income tax assets and liabilities are calculated and recorded based upon the future tax consequences of temporary differences by applying enacted statutory tax rates applicable to future periods for differences between the financial statements carrying amounts and the tax basis of existing assets and liabilities. Generally, deferred income taxes are classified as current or non-current in accordance with the classification of the related asset or liability. Those not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. Valuation allowances are provided for significant deferred income tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized.
 
For the period ended June 30, 2013 the Company performed its regular analysis of outstanding invoices comprising unrecognized accounts receivables. This analysis takes into account the outstanding insurance claims for each physician customer which is the source of future payment of these outstanding invoices. The analysis takes into account the value of claims outstanding, the age of these claims and historical claims settlement and payment patterns. The analysis as of June 30, 2013 also took into account the impact on future collections of the agreements with Cambridge Medical Funding Group (“CMFG”), particularly the agreement of June 28, 2013. In exchange for loans of $3,280,000 the Company assigned its interest in certain pre-2013 workers compensation claims and agreed to share approximately 50% of future collections proceeds from settlement of such claims as further discussed in note 6. The unrecognized accounts receivable of $16.3 million was the result of this updated and expanded analysis. The June 28, 2013 CMFG agreement comprises 67% of the decrease in unrecognized accounts receivables in the six months ended June 30, 2013. The $16.3 million in unrecognized accounts receivable is net of estimated amounts of future proceeds belonging to Cambridge per the second Cambridge Agreement noted above.
 
As a result of this analysis and taking into account other information that could delay the Company’s ability to utilize its net deferred tax assets the Company decided to fully reserve the net deferred income tax assets by taking a 100% valuation allowance against these assets. The table below shows the balances for the deferred income tax assets and liabilities as of the dates indicated.
 
 
 
June 30, 2013
 
December 31, 2012
 
Deferred Income Tax Asset-Short-term
 
$
587,550
 
$
321,084
 
Deferred Income Tax Liability-Short-term
 
 
(34,824)
 
 
(69,648)
 
Deferred Income Tax Asset-Short-term
 
 
552,726
 
 
251,436
 
Allowance
 
 
(552,726)
 
 
-
 
Deferred Income Tax Asset (Net of Allowance of $552,726 as of June 30, 2013)
 
 
-
 
 
251,436
 
 
 
 
 
 
 
 
 
Deferred Income Tax Asset-Long-term
 
 
7,266,196
 
 
6,491,153
 
Deferred Income Tax Liability-Long-term
 
 
(1,168,096)
 
 
(1,076,965)
 
Deferred Income Tax Asset-Long-term
 
 
6,098,100
 
 
5,414,188
 
Allowance
 
 
(6,098,100)
 
 
-
 
Deferred Income Tax Asset (Net of Allowance of $6,098,100 as of June 30, 2013)
 
 
-
 
 
5,414,188
 
 
 
 
 
 
 
 
 
Total Deferred Tax Asset (Net of Allowances)
 
$
-
 
$
5,665,624
 
 
The total valuation allowance of $6,650,826 resulted in income tax expense of $5,905,147 and $5,665,264 for the three and six month periods ended June 30, 2013 comprised of the allowance of $6,650,826 and an income tax benefit of $745,679 and $985,202, for these periods, respectively.
 
The Company recognizes tax liabilities by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized, and also provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. To the extent that the final tax outcome of these matters is different than the amount recorded, such differences impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. U.S. GAAP also requires management to evaluate tax positions taken by the Company and recognize a liability if the Company has taken uncertain tax positions that more-likely-than-not would not be sustained upon examination by applicable taxing authorities. Management of the Company has evaluated tax positions taken by the Company and has concluded that, as of June 30, 2013, there are no uncertain tax positions taken, or expected to be taken, that would require recognition of a liability that would require disclosure in the financial statements.
 
Stock-Based Compensation : The Company accounts for stock option awards in accordance with FASB ASC Topic No. 718, Compensation-Stock Compensation. Under FASB ASC Topic No. 718, compensation expense related to stock-based payments is recorded over the requisite service period based on the grant date fair value of the awards. Compensation previously recorded for unvested stock options that are forfeited is reversed upon forfeiture. The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock-based awards. The Black-Scholes model requires the use of assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock.
 
The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of FASB ASC Topic No. 505-50, Equity Based Payments to Non-Employees. Accordingly, the measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
 
Income Per Share : The Company utilizes FASB ASC Topic No. 260, Earnings per Share. Basic income (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares outstanding. Diluted income (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.
 
The following potential common shares have been excluded from the computation of diluted net loss per share for the periods presented where the effect would have been anti-dilutive:
 
 
 
June 30, 2013
 
June 30, 2012
 
Option and Warrant shares excluded
 
 
4,017,205
 
 
1,893,444
 
 
Research and Development : Research and development costs are expensed as incurred. In instances where we enter into agreements with third parties for research and development activities we may prepay fees for services at the initiation of the contract. We record the prepayment as a prepaid asset and amortize the asset into research and development expense over the period of time the contracted research and development services are performed. Most contract research agreements include a ten year records retention and maintenance requirement. Typically, we expense 50% of the contract amount within the first two years of the contract and 50% over the remainder of the record retention requirements under the contract based on our experience on how long the clinical trial service is provided.
 
Recently Issued Accounting Pronouncements
 
In July 2012, the FASB issued ASU 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which allows an entity to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset, other than goodwill, is impaired. If an entity concludes, based on an evaluation of all relevant qualitative factors, that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, it will not be required to perform a quantitative impairment test for that asset. Entities are required to test indefinite-lived assets for impairment at least annually, and more frequently if indicators of impairment exist. The Company adopted this ASU on February 3, 2013, as early adoption is permitted. The adoption of this ASU did not have a significant effect on our results of operations or financial position.  

Stock Based Compensation

v2.4.0.6
Stock Based Compensation
6 Months Ended
Jun. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Based Compensation
Note 3: Stock Based Compensation
 
For the six months ended June 30, 2013 and 2012, the Company recorded compensation costs for stock option grants and warrants for services amounting to $405,712 and $389,032 respectively and stock grants of $6,540 and $0, respectively. As of June 30, 2013 the Company has future compensation expense related to unvested stock option grants of $131,838 which will be recognized over an average period of 444 days. A deduction is not allowed for income tax purposes until nonqualified options are exercised. The amount of this deduction will be the difference between the fair value of the Company’s common stock and the exercise price at the date of exercise. Accordingly, there is a deferred tax asset recorded for the tax effect of the financial statement expense recorded. The tax effect of the income tax deduction in excess of the financial statement expense, if any, will be recorded as an increase to additional paid-in capital. No tax deduction is allowed for incentive stock options (ISO). Accordingly no deferred tax asset is recorded for GAAP expense related to these options.
 
Management has valued the options at their date of grant utilizing the Black Scholes option pricing model. As of the issuance of these financial statements, there was not an active public market for the Company shares. Accordingly, the fair value of the underlying shares was determined based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options as calculated using the Simplified Method. The expected life of the options used was based on the contractual life of the option granted. Stock-based compensation is a non-cash expense because we settle these obligations by issuing shares of our common stock from our authorized shares instead of settling such obligations with cash payments.
 
The fair value of options granted in the six months ended June 30, 2013 was determined using the Black Scholes Option Pricing Model with the following assumptions:
 
 
·
Stock Price of $1.20-$1.50
·
Exercise Price of $1.20-$1.50
·
Volatility factors of 86.37% to 86.55% based on similar companies;
 
·
Expected terms of 5 years based on one-half of the average of the vesting term and the ten year term of the option grant;
·
A dividend rate of zero; and
·
The risk free rate was the treasury rate with a maturity of the expected term (0.75% to 1.41%).
 
During the six months ended June 30, 2013 the Company issued a total of 610,800 options to purchase its common stock. There were forfeitures of 85,496 option and no options were exercised. As of June 30, 2013, 2,118,276 options were exerisable with an intrinsic value of $2,181,824.
 
The fair value of warrants issued in the three months ended June 30, 2013 was determined using the Black Scholes Option Pricing Model with the following assumptions:
 
 
·
Stock price of $1.00 to $2.60
 
·
Exercise price of $2.00 to $2.60
 
·
Volatility factor of 86.35% to 86.55% based on similar companies;
 
·
Expected term of 10 years based on the term of the warrant;
 
·
A dividend rate of zero; and
·
The risk free rate of 0.75% to 1.41%
 
The fair value of warrants issued in connection with certain loans made by related parties during the six months ended June 30, 2012 was determined using the Black Scholes Option Pricing Model with the following assumptions:
 
 
·
Stock price of $2.55
 
·
Exercise price of $3.38
 
·
Volatility factor of 96.66% based on similar companies;
 
·
Expected term of 5 years based on the term of the warrant;
 
·
A dividend rate of zero; and
 
·
The risk free rate of 0.90%
 
As of June 30, 2013 the Company had outstanding warrants to purchase 3,856,464 shares of the Company’s common stock. Of these, 2,423,964 warrants were issued to a related party over a period from August 2011 through July 2012 at exercise prices ranging from $1.00 to $3.38. One of the remaining related party warrants contains provisions that require it to be accounted for as a derivative security. As of June 30, 2013 and 2012 the value of the related liability was $67,101 and $188,475 , respectively. Changes in these values are recorded as income or expense in each reporting period.
 
During the three months ended June 30,2013 the following warrants were issued:
 
On May 7, 2013 20,000 warrants were issued to ProActive Capital for services rendered in connection with capital markets advisory services of which 10,000 were vested as of June 30, 2013 with the remainder vesting in equal installments of 5,000 shares on September 30 and December 31, 2013. These warrants have an exercise price of $2.60.
 
On June 28, 2013 1,412,500 warrants were issued to James Giordano in connection with the Cambridge Medical Funding Group loan to the Company in the amount of $3.28 million for the assignment of certain outstanding workers’ compensation insurance claims as described elsewhere in this 10-Q. These warrants have an exercise price of $2.00. The exercisable amount is the average trading volume for the ten days prior to the exercise date but cumulatively no more than 1,412,500 warrants of common stock.
 
As of June 30, 2013 2,433,964 warrants collectively were exercisable. There were no warrant exercises in the three- or six-month periods ended June 30, 2013.

Accrued Expenses

v2.4.0.6
Accrued Expenses
6 Months Ended
Jun. 30, 2013
Accounts Payable and Accrued Liabilities [Abstract]  
Accrued Expenses
Note 4: Accrued Expenses
 
The following table summarizes the major components of the Company’s accrued expenses.
 
 
 
June 30,
2013
 
December 31,
2012
 
 
 
 
 
 
 
 
 
Due to Physicians
 
$
3,258,816
 
$
1,800,525
 
Accrued Salary, Wages, Commissions and Benefits
 
 
1,791,392
 
 
957,215
 
Accrued Income Tax Penalties and Interest-2010
 
 
752,281
 
 
752,281
 
Accrued Board Fees
 
 
436,049
 
 
473,750
 
Acrrued-Other
 
 
558,671
 
 
878,864
 
Total Accrued Expense
 
$
6,797,209
 
$
4,862,636
 

Notes Payable - Related Parties

v2.4.0.6
Notes Payable - Related Parties
6 Months Ended
Jun. 30, 2013
Related Party Transactions [Abstract]  
Notes Payable - Related Parties
Note 5:  Notes Payable – Related Parties
 
The following table summarizes the status of the Company’s outstanding notes as of June 30, 2013:
 
Issued To
 
Outstanding
Note Amount
 
Maturities
 
Interest
Rates
 
William Shell Survivor's Trust A
 
$
3,300,093
 
Demand Notes
 
3.25-12.00%
(a)
Giffoni Family Trust
 
 
222,100
 
December 2012-June 2016
 
3.25-6.00%
(b)
Lisa Liebman
 
 
500,000
 
Demand Notes
 
3.25-3.95%
(c)
Total Notes Outstanding
 
$
4,022,193
 
 
 
 
 
 
During the three months ended June 30, 2013, the William E. Shell Survivor’s Trust converted $1,000,000 of its notes into 584,795 shares of the Company’s common stock. Also during the three months ended June 30, 2013, AFH Holdings and Advisory LLC converted $287,648 (all of its outstanding notes) into 287,648 shares of the Company’s common stock.
 
Annual maturities of the above debt are as follows:
  
2013
 
$
3,822,193
 
2014
 
$
0
 
2015
 
$
0
 
2016
 
$
200,000
 
2017
 
$
0
 
  
 
(a)
On December 21, 2012, the Elizabeth Charuvastra and William Shell Family Trust Dated July 27, 2006 and Amended September 29, 2006 assigned its interest in its notes listed above to the William Shell Survivor’s Trust. The William Shell Survivor's Trust then assigned its interest in certain of the notes to Lisa Liebman.
 
 
(b)
Or on the consummation of the Company’s initial public offering.
 
 
(c)
Lisa Liebman is married to William E. Shell. M.D., Chief Executive Officer of the Company.

Cambridge Medical Funding Group, LLC – California Workers’ Compensation Funding Arrangements

v2.4.0.6
Cambridge Medical Funding Group, LLC – California Workers’ Compensation Funding Arrangements
6 Months Ended
Jun. 30, 2013
Notes Payable, Noncurrent [Abstract]  
Cambridge Medical Funding Group, LLC - California Workers’ Compensation Funding Arrangements
Note 6: Cambridge Medical Funding Group, LLC – California Workers’ Compensation Funding Arrangements
 
The Company has entered into two separate agreements with Cambridge Medical Funding Group, LLC (“CMFG”) related to California Workers’ Compensation (“WC”) benefit claims. The Company entered into the first Cambridge agreement in order to accelerate cash flow and revenue resulting from collection of certain workers’ compensation claims which can otherwise take four or more years to be settled by the insurance companies. The Company entered into the second Cambridge agreement in order to borrow up to $3.28 million to fund current liabilities and operating expenses. The first agreement with CMFG was executed on November 20, 2012. Per this agreement, physician customers of the Company will have the option to assign their accounts receivables (primarily those accounts receivables with dates of service starting with the year 2013) from California WC benefit claims to CMFG at a discounted rate. Each agreement is executed among CMFG, TMP and each individual physician, and serves as a master agreement for all assigned receivables by the physician to CMFG. Per the agreement the physician will satisfy its fees and financial obligations to TMP for purchase of TMP product and use of CCPI’s services by CMFG remitting funds to TMP for each assigned accounts receivable. CMFG has agreed to pay an amount equal to 23% of the eligible claims receivable. CMFG makes this payment directly to TMP, on behalf of the physician for the physician’s use of the Company’s medical billing and claims processing by CCPI and the physician’s financial obligation due TMP. Actual amounts collected on the claims receivable is shared between CMFG and the physician, as agreed to by both parties in the master agreement. Under this arrangement the Company does not receive any amounts collected on the claims receivable and will receive no more than the 23% advance payment, where such payment is without recourse or future obligation for TMP to repay the 23% advanced amount back to CMFG or the physician.
 
The second agreement with CMFG was executed on June 28, 2013. The Company and CMFG entered into four contemporaneous agreements on June 28, 2013 and, thus, are considered one arrangement. The components of the arrangement are detailed as follows:
 
-Assignment of Future Proceeds - The Company has assigned the future proceeds of accounts receivable of WC benefit claims with dates of service between the year 2007 and December 31, 2012 to CMFG. Per this arrangement, the Company receives a loan of $3.28 million. The arrangement also calls for $525,000 of the $3.28 million to be held in escrow until certain performance metrics are met by the Company, specifically until the $3.28 million is paid back to CMFG. Per the arrangement, actual amounts collected on the claims receivable is shared between CMFG and the Company at a ratio of 50:50, until the $3.28 million secured loan is paid. Further collections, are shared at a ratio of 55:45, where 55% is retained by the Company and 45% disbursed to CMFG. The term of the agreement is ten years from the date of execution, expiring on June 28, 2023.
 
-Warrants Issued to James Giordano, CEO of CMFG – The Company issued 1,412,500 common stock purchase warrants to James Giordano. The warrants can be exercised at a per share exercisable price of $2.00. The warrants are exercisable as follows:
 
Exercise Period: Commencing on the  latter of six months from the June 28, 2013 and the date on which the advance of $3.28 million is fully funded.
Exercisable Amount: The average trading volume for the ten days prior to date of exercise but cumulatively no more than 1,412,500 warrants of common stock.
 
-Consulting Arrangement with James Giordano, CEO of CMFG - The Company entered into a consulting arrangement with James Giordano. In consideration for this arrangement, the agreement calls for Mr. Giordano to return 1,000,000 of the warrants in the event the $3.28 million advance is not delivered to the Company by CMFG per the terms of the arrangement. The term of the agreement is ten years from the date of execution, expiring on June 28, 2023.
 
-Consulting Agreement with CMFG – The Company entered into a consulting arrangement with CMFG. The agreement calls for the Company to pay a one-time fee of $64,000 upon execution of the agreement. In the event the $3.28 million advance is not delivered to the Company by CMFG per the terms of the arrangement, the $64,000 will be reduced to $15,000.
 
On June 28, 2013, of the $3.28 million, CMFG funded $750,000, net of the pro-rata share of $123,047 of the total escrow amount of $525,000, and the pro-rata share of origination fees in the amount of $41,250 CMFG has agreed to fund the remaining balance to the Company before July 31, 2013, net of the remaining escrow amount and remaining origination fees. The balance of $2.53 million (less escrowed amounts and fees) due from Cambridge has not funded at this time. The parties continue to work toward completion but there can be no assurance of funding at this time. Failure to complete this funding could have significant negative consequences to the company. The following table shows the allocation of the first $750,000 loan under the CMFG 2 agreement:
 
June 28, 2013
 
 
 
 
 
 
 
 
 
Cash Advanced
 
$
585,703
 
Escrow Receivable
 
 
123,047
 
Deferred Loan Fees
 
 
41,250
 
Notes Payable
 
$
750,000
 
Discount
 
 
(787,200)
 
Unapplied Discount
 
$
(37,200)
 
Discount Applied to Initial Note
 
 
(750,000)
 
Notes Payable (net)
 
$
-
 
  
The value of the warrant issued to James Giordano in connection with the CMFG 2 agreement was estimated to be $1,000,000 using the Black-Scholes method with varying assumptions based on the term of the warrant and the estimated annual amounts to be exercised. These assumptions included an exercise price of $2.00 per share, the TMP (OTCBB:TRGM) stock price of $1.10 on date of issue, ten year term of the warrant, risk free rate of 1.41% and a volatility factor of 86.50%. $750,000 of the associated discount of $787,200 was applied as a discount to the initial advance of $750,000 and recorded as additional paid in capital in the equity section of our balance sheet. The remainder of $37,200 will be deducted as an additional discount against the expected future advance of $2,530,000 and also recorded as additional paid in capital. These discounts will be expensed using the effective interest method over the expected repayment period of the total advances of $3,280,000.

Contingencies

v2.4.0.6
Contingencies
6 Months Ended
Jun. 30, 2013
Commitments and Contingencies Disclosure [Abstract]  
Contingencies
Note 7: Contingencies
 
Income Taxes
 
The Company filed its 2010 federal and state tax returns in April 2011 and June 2011, respectively, without including payment for amounts due.
As a result of our assessment that for certain sales’ collectability at the time of the sale could not be reasonably assured, these sales did not meet the criteria of a sale for tax purposes. The Company recalculated its 2010 and 2011 tax liabilities and determined that no income taxes were owed for either year. We filed amended tax returns for 2010 in June of 2012. We believed that filing such returns would suspend collection and enforcement efforts by both the IRS and the FTB. We further understood that filing such returns would likely result in tax audits on the part of both agencies. The IRS commenced its audit in November 2012 and meanwhile has suspended collection and enforcement efforts. The FTB notified the Company by letter dated February 4, 2013 that it will take no action on our amended 2010 California return until the IRS has completed its examination. The FTB has not formally suspended collection and enforcement efforts but has continued to extend its Notice of Suspension deadlines on a quarterly basis pending the outcome of its eventual audit. There can be no assurances that the agencies will accept our amended returns and will not pursue collection and enforcement efforts.  While we do not expect an initial adverse ruling, if that were to occur, we would pursue the arbitration and appeal processes available to us under U.S. and California tax regulations. If the ultimate disposition is unfavorable to the Company we would likely not be in a position to pay the outstanding liabilities and could incur additional income tax liabilities for tax years subsequent to 2010.
 
We believe we have presented a compelling case in support of our amended 2010 tax returns and do not expect an initial adverse ruling, but we cannot predict the outcome of the IRS examination or any examination by the FTB. If our position is rejected we would owe $4.6 million plus additional interest and penalties and would likely incur liabilities for income taxes in subsequent years. As of June 30, 2013 we are showing $900,863 in prepaid taxes on our balance sheet which we expect to receive as refunds if the outcome of the examination is favorable to the Company. If not, then this asset would be removed from our balance sheet.
 
Legal Proceedings
 
On or about January 31, 2011, Steven B. Warnecke (“Warnecke”) was hired as the Company’s Chief Financial Officer (CFO) and resigned less than five (5) months later. At the time he resigned, he cited personal reasons for his resignation. He subsequently claimed that the Company breached its Employment Agreement with him. Warnecke has commenced an arbitration proceeding before JAMS, which is currently pending.  (“Arbitration”)  
 
The Company disputes these allegations, given that Warnecke resigned from his position.  The Company contends that Warnecke has been paid all undisputed wages and benefits owed as of the date of termination and is owed nothing further by Company. The Arbitration is currently pending before JAMS. The parties have exchanged written discovery. Discovery is ongoing. The Company intends to vigorously dispute the claims made by Warnecke, while pursuing reasonable efforts to achieve a resolution of this matter.  At this time it is not possible for the Company to predict the ultimate outcome or any definitive estimate of the amount of loss, if any.
  
Legal costs to date of approximately $137,000 related to the above claim have been expensed as incurred.

Subsequent Events

v2.4.0.6
Subsequent Events
6 Months Ended
Jun. 30, 2013
Subsequent Events [Abstract]  
Subsequent Events
Note 8: Subsequent Events  
 
On July 22, 2013 shareholders of the Company approved an amendment to its articles of incorporation allowing it to effect a reverse stock split at a ratio between one to two and one to ten. If the Board determines to effect the Reverse Split, the intent is to increase the stock price of our Common Stock, which is currently trading on the Over-the-Counter Bulletin Board (“OTCBB”), to a level sufficiently above the minimum bid price requirement that is required for initial listing on both The Nasdaq Capital Market and the NYSE MKT LLC.

Summary of Significant Accounting Policies (Policies)

v2.4.0.6
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2013
Accounting Policies [Abstract]  
General
General: The accompanying unaudited condensed consolidated financial statements include all adjustments of a normal and recurring nature which, in the opinion of Company’s management, are necessary to present fairly the Company’s financial position as of June 30, 2013, the results of its operations for the six months ended June 30, 2013 and 2012, and cash flows for the six months ended June 30, 2013 and 2012. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles (‘U.S. GAAP”) have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These condensed financial statements should be read in conjunction with the audited financial statements and related notes for the fiscal year ended December 31, 2012 contained in the Company’s Current Report on Form 10-K dated April 1, 2013.
 
The results of operations and cash flows for the six months ended June 30, 2013 are not necessarily indicative of the results to be expected for the full year’s operation.
Going Concern
Going concern : The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern. The Company has losses for the six months ended June 30, 2013 totaling $8,112,242 as well as accumulated deficit as of June 30, 2013 amounting to $21,797,030. Contributing to this loss was the Company's decision to fully reseve the net deferred tax assets of $6,650,826. Further, the Company does not have adequate cash and cash equivalents as of June 30, 2013 to cover projected operating costs for the next 12 months. As of June 30, 2013, the Company also owes $237,000 to the Internal Revenue Service (“IRS”) and the California Franchise Tax Board (“FTB”) for unpaid payroll taxes.  Additionally, as detailed at Note 7, the Company has an open audit with the IRS related to the 2010 amended tax returns.  Based on such and until such matter is resolved with the IRS, the IRS has issued a customary general lien on the assets of the Company. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. As a result, the Company is dependent upon further financing including receipt of the balance of $2.53 million (less escrowed amounts and fees) to be funded by Cambridge Medical Funding Group and at this time not yet funded, related party loans, development of revenue streams with shorter collection times and accelerating collections on our physician managed and hybrid revenue streams. If we are unable to do so, our liquidity would be adversely affected and we would consider taking a variety of actions, including attempting to reduce fixed costs (for example, further reducing the size of our administrative work force), curtailing or reducing planned capital additions, raising additional equity capital, borrowing additional funds, or refinancing existing indebtedness.
Principles of Consolidation
Principles of consolidation : The condensed consolidated financial statements include accounts of TMP and its wholly owned subsidiary, CCPI, collectively referred to as "the Company". All significant intercompany accounts and transactions have been eliminated in consolidation. In addition, TMP and CCPI share the common operating facility, certain employees and various costs. Such expenses are principally paid by TMP. Due to the nature of the parent and subsidiary relationship, the individual financial position and operating results of TMP and CCPI may be different from those that would have been obtained if they were autonomous.
Accounting Estimates
Accounting estimates : The preparation of financial statements, in conformity with U.S GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s critical accounting policies that involve significant judgment and estimates which include revenue recognition, share based compensation, recoverability of intangibles, valuation of derivatives, and valuation of deferred income taxes. Actual results could differ from those estimates.
Cash Equivalents
Cash Equivalents : The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less when purchased to be cash equivalents. The recorded carrying amounts of the Company’s cash and cash equivalents approximate their fair market value. As of June 30, 2013 and 2012 the Company had no cash equivalents.
Considerations of Credit Risk
Considerations of credit risk : Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade accounts receivable.
Revenue Recognition
Revenue Recognition :
 
TMP markets medical foods and generic and branded pharmaceuticals through employed sales representatives, independent distributors and pharmacies. Product sales are invoiced upon shipment at Average Wholesale Price (“AWP”), which is a commonly used term in the industry, with varying rapid pay discounts, under six models: Physician Direct Sales, Distributor Direct Sales, Physician Managed, Hybrid Models and the two Cambridge Medical Funding Group Models.
 
Under the following revenue models product sales are invoiced upon shipment:
 
 
·
Physician Direct Sales Model (1% of product revenues for the six months ended June 30, 2013): Under this model, a physician purchases products from TMP but does not retain CCPI’s services. TMP invoices the physician upon shipment under terms which allow a significant rapid pay discount off Average Wholesale Price (“AWP”) for payment within discount terms in accordance with the product purchase agreement. The physicians dispense the product and perform their own claims processing and collections. TMP recognizes revenue under this model on the date of shipment at the gross invoice amount less the anticipated rapid pay discount offered in the product purchase agreement. In the event payment is not received within the term of the agreement, the amount payable for the purchased TMP products reverts to the AWP. In addition, if payment is not received within the agreed-upon term, a late payment fee of up to 20% may be applied to the outstanding balance. The physician is responsible for payment directly to TMP.
 
 
·
Distributor Direct Sales Model (28% of product revenues for the six months ended June 30, 2013): Under this model, a distributor purchases products from TMP and sells those products to a physician and the physician does not retain CCPI’s services. TMP invoices distributors upon shipment under terms which include a significant discount off AWP. TMP recognizes revenue under this model on the date of shipment at the net invoice amount. In the event payment is not received within the term of the agreement, the amount payable for the purchased TMP products reverts to the AWP. In addition, if payment is not received within the agreed-upon term, a late payment fee of up to 20% may be applied to the outstanding balance.
 
Due to substantial uncertainties as to the timing and collectability of revenues derived from our Physician Managed and Hybrid models described below, which can take in excess of five years to collect, we have determined that these revenues do not meet the criteria for recognition in accordance with The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. ASC 605, Revenue Recognition upon shipment. These revenues are recorded when collectability is reasonably assured, which the Company has determined is when the payment is received, which is upon collection of the claim.
 
·
Physician Managed Model (38% of product revenues for the six months ended June 30, 2013): Under this model, a physician purchases products from TMP and retains CCPI’s services. TMP invoices the physician upon shipment to the physician under terms which allow a significant rapid pay discount for payment received within terms in accordance with the product purchase agreement which includes a security interest for TMP in the products and receivables generated by the dispensing of the products. The physician also executes a billing and claims processing services agreement with CCPI for billing and collection services relating to our products (discussed below). CCPI submits a claim for reimbursement on behalf of the physician client. The CCPI fee and product invoice amount are deducted from the reimbursement received by CCPI on behalf of the physician client before the reimbursement is forwarded to the physician client. In the event the physician fails to pay the product invoice within the agreed term, we can deduct the payment due from any of the reimbursements received by us on behalf of the physician client as a result of the security interest we obtained in the products we sold to the physician client and the receivables generated by selling the products in accordance with our agreement. In the event payment is not received within the term of the agreement, the amount payable for the purchased TMP products reverts to the AWP. In addition, if payment is not received within the agreed-upon term, a late payment fee of up to 20% is applied to the outstanding balance. However, since we are in the early stage of our business, as a courtesy to our physician clients, our general practice has been to extend the rapid pay discount beyond the initial term of the invoice until the invoice is paid and not to apply a late payment fee to the outstanding balance. TMP recognizes revenue under this model on the date payment is received, which is upon collection of the claim.
  
·
Hybrid Model (20% of product revenues for the six months ended June 30, 2013): Under this model, a distributor purchases products from TMP and sells those products to a physician and the physician retains CCPI’s services. TMP invoices distributors upon shipment under terms which allow a significant rapid pay discount for payment received within terms in accordance with the product purchase agreements. The physician client of the distributor executes a billing and claims processing services agreement with CCPI for billing and collection services (discussed below). The distributor product invoice and the CCPI fee are deducted from the reimbursement received by CCPI on behalf of the physician client before the reimbursement is forwarded to the distributor for further delivery to their physician clients. In the event payment is not received within the term of the agreement, the amount payable for the purchased TMP products reverts to the AWP. In addition, if payment is not received within the agreed-upon term, a late payment fee of up to 20% is applied to the outstanding balance. However, since we are in the early stage of our business, as a courtesy to our physician clients, our general practice has been to extend the rapid pay discount beyond the initial term of the invoice until the invoice is paid and not to apply a late payment fee to the outstanding balance. TMP recognizes revenue under this model on the date payment is received, which is upon collection of the claim.
 
As further detailed at Note 6, the Company has entered into two separate agreements with Cambridge Medical Funding Group, LLC (“CMFG”) related to California Workers’ Compensation (“WC”) benefit claims. Under each arrangement, we have determined per FASB ASC Topic No. 860, Transfers of Financial Assets and FASB ASC Topic No. 605 we have met the criteria for revenue recognition when payment is received, which is upon collection of the claim as described below.
 
·
CMFG #1 – WC Receivable Purchase Assignment Model (13% of product revenues for the six months ended June 30, 2013): Under this model, physicians who purchase products from TMP, per the Company’s Physician Managed Model will have the option to assign their accounts receivables (primarily those accounts receivables with dates of service starting with the year 2013) from California WC benefit claims to CMFG at a discounted rate. Each agreement is executed among CMFG, TMP and each individual physician and serves as a master agreement for all assigned receivables by the physician to CMFG. Due to the origination of these accounts receivable being per the Company’s Physician Managed Model, CCPI services are also retained. Per the agreement the physician will satisfy its fees and financial obligations to TMP for purchase of TMP product and use of CCPI’s services by CMFG remitting funds to TMP equal to 23% of for each eligible assigned accounts receivable. CMFG has agreed to pay an amount equal to 23% of the eligible claims receivable. CMFG makes this payment directly to TMP, on behalf of the physician for the physician’s use of the Company’s medical billing and claims processing by CCPI and the physician’s financial obligation due TMP. The Company recognizes revenue on the date payment is received from CMFG. Under this arrangement the Company will receive no more than the 23% advance payment, where such payment is without recourse or future obligation for TMP to repay the 23% advanced amount back to CMFG or the physician. Actual amounts collected on the claims receivable is shared between CMFG and the physician, where the first 41% of amounts collected are disbursed to CMFG and additional amounts collected are shared at a ratio of 75:25, where 75% is disbursed to CMFG and 25% disbursed to the physician.
 
·
CMFG #2 – WC Receivables Funding Assignment Model (0% of product revenues for the six months ended June 30, 2013): Under this model, the Company has assigned the future proceeds of accounts receivable of WC benefit claims with dates of service between the year 2007 and December 31, 2012 to CMFG. These accounts receivables were originally generated per either the Company’s Physician Managed Model or the Hybrid Model. Due to the origination of these accounts receivable being per the Company’s Physician Managed Model or the Hybrid Model, CCPI services are also retained. As further detailed at Note 6, Cambridge agreed to pay the Company $3.28 million ($525,000 of the $3.28 million was placed into escrow until certain performance requirements are achieved) for such assignment, which is considered a loan to the Company from CMFG secured by the future proceeds of these receivables. The balance of $2.53 million (less escrowed amounts and fees) due from Cambridge has not funded at this time. The parties continue to work toward completion but there can be no assurance of funding at this time. Failure to complete this funding could have significant negative consequences to the company. Per the arrangement, actual amounts collected on the claims receivable is shared between CMFG and the Company at a ratio of 50:50, until the $3.28 million secured loan is paid back to CMFG. Further collections after which are shared at a ratio of 55:45, where 55% is retained by the Company and 45% disbursed to CMFG. The Company recognizes their portion of retained revenue when payment is received from insurance carriers or the California State Compensation Insurance Fund which is upon collection of the claim.
 
In the six months ended June 30, 2013 and 2012, the Company issued billings to Physician Managed, Hybrid, and Cambridge 1 model customers aggregating $5.0 million and $3.1 million, respectively, which were not recognized as revenues or accounts receivable in the accompanying consolidated financial statements at the time of such billings. Direct costs associated with the above billings are expensed as incurred. Direct costs associated with these billings aggregating $297,452 and $179,678, respectively, were expensed in the accompanying consolidated financial statements at the time of such billings. In accordance with the revenue recognition policy described above, the Company recognized revenues from certain of these customers when cash was collected aggregating $2,914,571 and $1,561,699 in the six months ended June 30, 2013 and 2012, respectively. The $1,160,227 of Physician Managed and Hybrid model revenue recognized in the six months ended June 30, 2013 includes $216,140 of revenue realized under the CMFG #1 – WC Receivable Purchase Assignment Model (“CMFG #1 model”) and includes $0 of revenue realized under the CMFG #2 – WC Receivables Funding Assignment Model (“CMFG #2 model”) as the agreement was finalized at the end of the quarter ended June 30, 2013. As of June 30, 2013 and December 31, 2012 we had $16.3 million and $34.4 million respectively in unrecorded accounts receivable and revenues that potentially will be recorded as revenue in the future as our CCPI subsidiary secures claims payments on behalf of our PMM and Hybrid Customers. All unpaid invoices underlying claims assigned to CMFG are excluded from unrecorded accounts receivable and revenues. The current balance of $16.3 million in unrecorded accounts receivable is net of estimated amounts of future proceeds belonging to Cambridge per the second Cambridge Agreement noted above.
 
CCPI receives no revenue in the physician direct or distributor direct models because it does not provide collection and billing services to these customers. In the Physician Managed and Hybrid models including CMFG #2 model, CCPI has a billing and claims processing service agreement with the physician. That agreement includes a service fee defined as a percentage of collections on all claims. Because fees are only earned by CCPI upon collection of the claim and the fee is not determinable until the amount of the collection of the claim is known, CCPI recognizes revenue at the time that collections are received. Except with respect to the CMFG #1 model, where the Company recognizes revenue related to CCPI services upon receiving the 23% advance payment from CMFG. This differing treatment is due to the Company’s position that the 23% advance payment received by the Company under the CMFG #1 model does not include performance requirements by the Company and therefore the earnings process is complete to recognize such revenue. In the opinion of the Company, such CCPI revenue recognized for CMFG #1 model was not material for the three months or six months ended June 30, 2013.
 
No returns of products are allowed except products damaged in shipment, which historically have been insignificant.
 
The rapid pay discounts to the AWP offered to the physician or distributor, under the models described above, vary based upon the expected payment term from the physician or distributor. The discounts are derived from the Company’s historical experience of the collection rates from internal sources and updated for facts and circumstances and known trends and conditions in the industry, as appropriate. As described in the models above, we recognize provisions for rapid pay discounts in the same period in which the related revenue is recorded. We believe that our current provisions appropriately reflect our exposure for rapid pay discounts. These rapid pay discounts, have typically ranged from 40% to 88% of Average Wholesale Price and we have monitored our experience ratio periodically over the prior twelve months and have made adjustments as appropriate.
Allowance for Doubtful Accounts
Allowance for doubtful accounts : Trade accounts receivable are stated at the amount management expects to collect from outstanding balances.  Currently accounts receivable are comprised totally of amounts due from our distributor customers and receivables for our PDRx equipment. The carrying amounts of accounts receivable are reduced by an allowance for doubtful accounts that reflects management's best estimate of the amounts that will not be collected.  We individually review all accounts receivable balances and based on an assessment of current creditworthiness, estimate the portion, if any, of the balance that will not be collected.  We provide for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on our assessment of the current status of individual accounts.  Balances that are still outstanding after we have used reasonable collection efforts will be written off. Based on an assessment as of December 31, 2012 of the collectability of invoices 120 days or more past their due dates we established an allowance for doubtful accounts of $215,346. There was no change to this allowance in the six months ended June 30, 2013.
 
Under the Company’s physician managed model and hybrid model, CCPI performs billing and collection services on behalf of the physician client and deducts the CCPI fee and product invoice amount from the reimbursement received by CCPI on behalf of the physician client before the reimbursement is forwarded to the physician client . Extended collection periods are typical in the workers compensation industry with payment terms extending from 45 days to in excess of five years. The physician remains personally liable for purchases of product from TMP and, during this long collection cycle, TMP retains a security interest in all products sold to the physician along with the claims receivable that result from sales of the products. CCPI maintains an accounting of all managed accounts receivable on behalf of the physician and regularly reports to the physician. As described above, due to uncertainties as to the timing and collectability of revenues derived from these models, revenue is recorded when payment is received, there is no related accounts receivable and therefore no allowance for doubtful accounts is necessary.
Inventory Valuation
Inventory valuation : Inventory is valued at the lower of cost (first in, first out) or market and consists primarily of finished goods.
Property and Equipment
Property and equipment : Property and equipment are stated at cost. Depreciation is calculated using the straight line method over the estimated useful lives of the related assets. Computer equipment is depreciated over three to five years. Furniture and fixtures are depreciated over five to seven years. Leasehold improvements are amortized over the shorter of fifteen years or term of the applicable property lease. Maintenance and repairs are expensed as incurred; major renewals and betterments that extend the useful lives of property and equipment are capitalized. When property and equipment is sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized. Amenities are capitalized as leasehold improvements.
Impairment of Long-Lived Assets
Impairment of long-lived assets : The long-lived assets held and used by the Company are reviewed for impairment no less frequently than annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability is performed. No impairment indicators existed at December 31, 2012 or June 30, 2013 so no long-lived asset impairment was recorded for the year ended December 31, 2012 or the six months ended June 30, 2013.
Intangible Assets
Intangible assets : Intangible assets with finite lives, including patents and internally developed software (primarily the Company’s PDRx Software), are stated at cost and are amortized over their useful lives. Patents are amortized on a straight line basis over their statutory lives, usually fifteen to twenty years. Internally developed software is amortized over three to five years. Intangible assets with indefinite lives are tested annually for impairment, during the fiscal fourth quarter and between annual periods, and more often when events indicate that an impairment may exist. If impairment indicators exist the intangible assets are written down to fair value as required. The Company has one intangible asset with an indefinite life which is a domain name for medical foods. No impairment indicators existed at December 31, 2012 or June 30, 2013 so no intangible asset impairment was recorded for the year ended December 31, 2012 or the six months ended June 30, 2013.
Fair Value of Financial Instruments
Fair value of financial instruments : The Company’s financial instruments are accounts receivable, accounts payable, notes payable, and warrant derivative liability. The recorded values of accounts receivable and accounts payable approximate their values based on their short term nature. Notes payable are recorded at their issue value or if warrants are attached at their issue value less the value of the warrant. Warrants issued with ratcheting provisions are revalued using the Black-Scholes model each quarter based on changes in the market value of our common stock and unobservable level 3 inputs.
 
The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last is considered unobservable:
 
Level 1: Quoted prices in active markets for identical assets or liabilities.
 
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
Level 3 assumptions: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities including liabilities resulting from imbedded derivatives associated with certain warrants to purchase common stock.
Derivative Financial Instruments
Derivative Financial Instruments :
Derivative liabilities are recognized in the consolidated balance sheets at fair value based on the criteria specified in FASB ASC Topic 815-40 Derivatives and Hedging – Contracts in Entity’s own Equity. The Company uses the Black Scholes Merton model to calculate the fair value of the warrants recognized as derivative liabilities. The model utilizes level 3 unobservable inputs to calculate the fair value of the warrants at each reporting period. The Company determined that using an alternative valuation model such as a Binomial-Lattice model would result in diminimus differences. Changes in value are recorded as other income or expense in the consolidated statement of operations. As of June 30, 2013, 95,000 warrants were classified as derivative liabilities as they contained ratcheting provisions. At each reporting period the warrants are re-valued and adjusted through the caption “derivative revaluation” on the consolidated statements of operations. The rest of the Company’s warrants are recorded to additional paid in capital as equity instruments.
Income Taxes
Income taxes : The Company determines its income taxes under the asset and liability method. Under the asset and liability approach, deferred income tax assets and liabilities are calculated and recorded based upon the future tax consequences of temporary differences by applying enacted statutory tax rates applicable to future periods for differences between the financial statements carrying amounts and the tax basis of existing assets and liabilities. Generally, deferred income taxes are classified as current or non-current in accordance with the classification of the related asset or liability. Those not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. Valuation allowances are provided for significant deferred income tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized.
 
For the period ended June 30, 2013 the Company performed its regular analysis of outstanding invoices comprising unrecognized accounts receivables. This analysis takes into account the outstanding insurance claims for each physician customer which is the source of future payment of these outstanding invoices. The analysis takes into account the value of claims outstanding, the age of these claims and historical claims settlement and payment patterns. The analysis as of June 30, 2013 also took into account the impact on future collections of the agreements with Cambridge Medical Funding Group (“CMFG”), particularly the agreement of June 28, 2013. In exchange for loans of $3,280,000 the Company assigned its interest in certain pre-2013 workers compensation claims and agreed to share approximately 50% of future collections proceeds from settlement of such claims as further discussed in note 6. The unrecognized accounts receivable of $16.3 million was the result of this updated and expanded analysis. The June 28, 2013 CMFG agreement comprises 67% of the decrease in unrecognized accounts receivables in the six months ended June 30, 2013. The $16.3 million in unrecognized accounts receivable is net of estimated amounts of future proceeds belonging to Cambridge per the second Cambridge Agreement noted above.
 
As a result of this analysis and taking into account other information that could delay the Company’s ability to utilize its net deferred tax assets the Company decided to fully reserve the net deferred income tax assets by taking a 100% valuation allowance against these assets. The table below shows the balances for the deferred income tax assets and liabilities as of the dates indicated.
 
 
 
June 30, 2013
 
December 31, 2012
 
Deferred Income Tax Asset-Short-term
 
$
587,550
 
$
321,084
 
Deferred Income Tax Liability-Short-term
 
 
(34,824)
 
 
(69,648)
 
Deferred Income Tax Asset-Short-term
 
 
552,726
 
 
251,436
 
Allowance
 
 
(552,726)
 
 
-
 
Deferred Income Tax Asset (Net of Allowance of $552,726 as of June 30, 2013)
 
 
-
 
 
251,436
 
 
 
 
 
 
 
 
 
Deferred Income Tax Asset-Long-term
 
 
7,266,196
 
 
6,491,153
 
Deferred Income Tax Liability-Long-term
 
 
(1,168,096)
 
 
(1,076,965)
 
Deferred Income Tax Asset-Long-term
 
 
6,098,100
 
 
5,414,188
 
Allowance
 
 
(6,098,100)
 
 
-
 
Deferred Income Tax Asset (Net of Allowance of $6,098,100 as of June 30, 2013)
 
 
-
 
 
5,414,188
 
 
 
 
 
 
 
 
 
Total Deferred Tax Asset (Net of Allowances)
 
$
-
 
$
5,665,624
 
 
The total valuation allowance of $6,650,826 resulted in income tax expense of $5,905,147 and $5,665,264 for the three and six month periods ended June 30, 2013 comprised of the allowance of $6,650,826 and an income tax benefit of $745,679 and $985,202, for these periods, respectively.
 
The Company recognizes tax liabilities by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized, and also provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. To the extent that the final tax outcome of these matters is different than the amount recorded, such differences impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. U.S. GAAP also requires management to evaluate tax positions taken by the Company and recognize a liability if the Company has taken uncertain tax positions that more-likely-than-not would not be sustained upon examination by applicable taxing authorities. Management of the Company has evaluated tax positions taken by the Company and has concluded that, as of June 30, 2013, there are no uncertain tax positions taken, or expected to be taken, that would require recognition of a liability that would require disclosure in the financial statements.
Stock-Based Compensation
Stock-Based Compensation : The Company accounts for stock option awards in accordance with FASB ASC Topic No. 718, Compensation-Stock Compensation. Under FASB ASC Topic No. 718, compensation expense related to stock-based payments is recorded over the requisite service period based on the grant date fair value of the awards. Compensation previously recorded for unvested stock options that are forfeited is reversed upon forfeiture. The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock-based awards. The Black-Scholes model requires the use of assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock.
 
The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of FASB ASC Topic No. 505-50, Equity Based Payments to Non-Employees. Accordingly, the measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
Income Per Share
Income Per Share : The Company utilizes FASB ASC Topic No. 260, Earnings per Share. Basic income (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares outstanding. Diluted income (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.
 
The following potential common shares have been excluded from the computation of diluted net loss per share for the periods presented where the effect would have been anti-dilutive:
 
 
 
June 30, 2013
 
June 30, 2012
 
Option and Warrant shares excluded
 
 
4,017,205
 
 
1,893,444
 
Research and Development
Research and Development : Research and development costs are expensed as incurred. In instances where we enter into agreements with third parties for research and development activities we may prepay fees for services at the initiation of the contract. We record the prepayment as a prepaid asset and amortize the asset into research and development expense over the period of time the contracted research and development services are performed. Most contract research agreements include a ten year records retention and maintenance requirement. Typically, we expense 50% of the contract amount within the first two years of the contract and 50% over the remainder of the record retention requirements under the contract based on our experience on how long the clinical trial service is provided.
Recently Issued Accounting Pronouncements
Recently Issued Accounting Pronouncements
 
In July 2012, the FASB issued ASU 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which allows an entity to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset, other than goodwill, is impaired. If an entity concludes, based on an evaluation of all relevant qualitative factors, that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, it will not be required to perform a quantitative impairment test for that asset. Entities are required to test indefinite-lived assets for impairment at least annually, and more frequently if indicators of impairment exist. The Company adopted this ASU on February 3, 2013, as early adoption is permitted. The adoption of this ASU did not have a significant effect on our results of operations or financial position.  

Business Activity (Tables)

v2.4.0.6
Business Activity (Tables)
6 Months Ended
Jun. 30, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Segment Information
Segment Information for the three and six months ended June 30, 2013 and 2012
 
2013 (unaudited)
 
Total
 
TMP
 
CCPI
 
Gross Sales
 
$
1,917,388
 
$
1,646,824
 
$
270,564
 
Gross Profit
 
$
1,181,918
 
$
1,349,372
 
$
(167,454)
 
Comprehensive Loss
 
$
(7,841,965)
 
$
(7,674,511)
 
$
(167,454)
 
Total Assets
 
$
5,066,779
 
$
5,304,515
 
 
(237,736)
 
less Eliminations
 
$
-
 
$
(222,147)
 
$
222,147
 
Net Total Assets
 
$
5,066,779
 
$
5,082,368
 
$
(15,589)
 
 
 
2012 (unaudited)
 
Total
 
TMP
 
CCPI
 
Gross Sales
 
$
1,448,226
 
$
1,331,005
 
$
117,221
 
Gross Profit
 
$
826,966
 
$
1,151,327
 
$
(324,361)
 
Comprehensive Loss
 
$
(2,824,823)
 
$
(2,500,462)
 
$
(324,361)
 
Total Assets
 
$
11,219,550
 
$
11,459,574
 
$
(240,024)
 
less Eliminations
 
$
-
 
$
(210,231)
 
$
210,231
 
Net Total Assets
 
$
11,219,550
 
$
11,249,343
 
$
(29,793)
 
 
Segment Information for the Six Months ended June 30,
 
2013 (unaudited)
 
Total
 
TMP
 
CCPI
 
Gross Sales
 
$
4,728,519
 
$
4,126,375
 
$
602,144
 
Gross Profit
 
$
3,094,375
 
$
3,477,444
 
$
(383,069)
 
Comprehensive Loss
 
$
(8,112,242)
 
$
(7,729,173)
 
$
(383,069)
 
Total Assets
 
$
5,066,779
 
$
5,304,515
 
 
(237,736)
 
less Eliminations
 
$
-
 
$
(222,147)
 
$
222,147
 
Net Total Assets
 
$
5,066,779
 
$
5,082,368
 
$
(15,589)
 
 
2012 (unaudited)
 
Total
 
TMP
 
CCPI
 
Gross Sales
 
$
2,823,411
 
$
2,603,815
 
$
219,596
 
Gross Profit
 
$
1,567,416
 
$
2,234,144
 
$
(666,728)
 
Comprehensive Loss
 
$
(3,800,740)
 
$
(3,134,012)
 
$
(666,728)
 
Total Assets
 
$
11,219,550
 
$
11,459,574
 
$
(240,024)
 
less Eliminations
 
$
-
 
$
(210,231)
 
$
210,231
 
Net Total Assets
 
$
11,219,550
 
$
11,249,343
 
$
(29,793)
 

Summary of Significant Accounting Policies (Tables)

v2.4.0.6
Summary of Significant Accounting Policies (Tables)
6 Months Ended
Jun. 30, 2013
Accounting Policies [Abstract]  
Balances for the deferred income tax assets and liabilities
The table below shows the balances for the deferred income tax assets and liabilities as of the dates indicated.
 
 
 
June 30, 2013
 
December 31, 2012
 
Deferred Income Tax Asset-Short-term
 
$
587,550
 
$
321,084
 
Deferred Income Tax Liability-Short-term
 
 
(34,824)
 
 
(69,648)
 
Deferred Income Tax Asset-Short-term
 
 
552,726
 
 
251,436
 
Allowance
 
 
(552,726)
 
 
-
 
Deferred Income Tax Asset (Net of Allowance of $552,726 as of June 30, 2013)
 
 
-
 
 
251,436
 
 
 
 
 
 
 
 
 
Deferred Income Tax Asset-Long-term
 
 
7,266,196
 
 
6,491,153
 
Deferred Income Tax Liability-Long-term
 
 
(1,168,096)
 
 
(1,076,965)
 
Deferred Income Tax Asset-Long-term
 
 
6,098,100
 
 
5,414,188
 
Allowance
 
 
(6,098,100)
 
 
-
 
Deferred Income Tax Asset (Net of Allowance of $6,098,100 as of June 30, 2013)
 
 
-
 
 
5,414,188
 
 
 
 
 
 
 
 
 
Total Deferred Tax Asset (Net of Allowances)
 
$
-
 
$
5,665,624
 
Potential Common Shares Excluded from Computation of Diluted Net Income (Loss) per Share
The following potential common shares have been excluded from the computation of diluted net loss per share for the periods presented where the effect would have been anti-dilutive:
 
 
 
June 30, 2013
 
June 30, 2012
 
Option and Warrant shares excluded
 
 
4,017,205
 
 
1,893,444
 

Accrued Expenses (Tables)

v2.4.0.6
Accrued Expenses (Tables)
6 Months Ended
Jun. 30, 2013
Accounts Payable and Accrued Liabilities [Abstract]  
Accounts Payable and Accrued Liabilities Current and Noncurrent
The following table summarizes the major components of the Company’s accrued expenses.
 
 
 
June 30,
2013
 
December 31,
2012
 
 
 
 
 
 
 
 
 
Due to Physicians
 
$
3,258,816
 
$
1,800,525
 
Accrued Salary, Wages, Commissions and Benefits
 
 
1,791,392
 
 
957,215
 
Accrued Income Tax Penalties and Interest-2010
 
 
752,281
 
 
752,281
 
Accrued Board Fees
 
 
436,049
 
 
473,750
 
Acrrued-Other
 
 
558,671
 
 
878,864
 
Total Accrued Expense
 
$
6,797,209
 
$
4,862,636
 

Notes Payable - Related Parties (Tables)

v2.4.0.6
Notes Payable - Related Parties (Tables)
6 Months Ended
Jun. 30, 2013
Related Party Transactions [Abstract]  
Summary of status of the company's outstanding notes
The following table summarizes the status of the Company’s outstanding notes as of June 30, 2013:
 
Issued To
 
Outstanding
Note Amount
 
 
Maturities
 
Interest
Rates
 
 
William Shell Survivor's Trust A
 
$
3,300,093
 
 
Demand Notes
 
3.25-12.00%
 
(a)
Giffoni Family Trust
 
 
222,100
 
 
December 2012-June 2016
 
3.25-6.00%
 
(b)
Lisa Liebman
 
 
500,000
 
 
Demand Notes
 
3.25-3.95%
 
(c)
Total Notes Outstanding
 
$
4,022,193
 
 
 
 
 
 
 
 
  
 
(a)
On December 21, 2012, the Elizabeth Charuvastra and William Shell Family Trust Dated July 27, 2006 and Amended September 29, 2006 assigned its interest in its notes listed above to the William Shell Survivor’s Trust. The William Shell Survivor's Trust then assigned its interest in certain of the notes to Lisa Liebman.
 
 
(b)
Or on the consummation of the Company’s initial public offering.
 
 
(c)
Lisa Liebman is married to William E. Shell. M.D., Chief Executive Officer of the Company.
Summary of annual maturities of debt
Annual maturities of the above debt are as follows:
  
2013
 
$
3,822,193
 
2014
 
$
0
 
2015
 
$
0
 
2016
 
$
200,000
 
2017
 
$
0
 

Cambridge Medical Funding Group, LLC – California Workers’ Compensation Funding Arrangements (Tables)

v2.4.0.6
Cambridge Medical Funding Group, LLC – California Workers’ Compensation Funding Arrangements (Tables)
6 Months Ended
Jun. 30, 2013
Notes Payable, Noncurrent [Abstract]  
Schedule Of Allocation Of Advance Fund Amount Table [Table Text Block]
The following table shows the allocation of the first $750,000 loan under the CMFG 2 agreement:
 
June 28, 2013
 
 
 
 
 
 
 
 
 
Cash Advanced
 
$
585,703
 
Escrow Receivable
 
 
123,047
 
Deferred Loan Fees
 
 
41,250
 
Notes Payable
 
$
750,000
 
Discount
 
 
(787,200)
 
Unapplied Discount
 
$
(37,200)
 
Discount Applied to Initial Note
 
 
(750,000)
 
Notes Payable (net)
 
$
-
 

Business Activity (Segment Information) (Detail)

v2.4.0.6
Business Activity (Segment Information) (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Dec. 31, 2012
Segment Reporting Information [Line Items]          
Gross Sales $ 1,917,388 $ 1,448,226 $ 4,728,519 $ 2,823,411  
Gross Profit 1,181,918 826,966 3,094,375 1,567,416  
Comprehensive Loss (7,841,965) (2,824,823) (8,112,242) (3,800,740)  
Total Assets 5,066,779 11,219,550 5,066,779 11,219,550 10,628,747
less Eliminations 0 0 0 0  
Net Total Assets 5,066,779 11,219,550 5,066,779 11,219,550  
TMP
         
Segment Reporting Information [Line Items]          
Gross Sales 1,646,824 1,331,005 4,126,375 2,603,815  
Gross Profit 1,349,372 1,151,327 3,477,444 2,234,144  
Comprehensive Loss (7,674,511) (2,500,462) (7,729,173) (3,134,012)  
Total Assets 5,304,515 11,459,574 5,304,515 11,459,574  
less Eliminations (222,147) (210,231) (222,147) (210,231)  
Net Total Assets 5,082,368 11,249,343 5,082,368 11,249,343  
CCPI
         
Segment Reporting Information [Line Items]          
Gross Sales 270,564 117,221 602,144 219,596  
Gross Profit (167,454) (324,361) (383,069) (666,728)  
Comprehensive Loss (167,454) (324,361) (383,069) (666,728)  
Total Assets (237,736) (240,024) (237,736) (240,024)  
less Eliminations 222,147 210,231 222,147 210,231  
Net Total Assets $ (15,589) $ (29,793) $ (15,589) $ (29,793)  

Summary of Significant Accounting Policies (Deferred Income Tax assets And Liabilities) (Detail)

v2.4.0.6
Summary of Significant Accounting Policies (Deferred Income Tax assets And Liabilities) (Detail) (USD $)
Jun. 30, 2013
Dec. 31, 2012
Balances for the deferred income tax assets and liabilities    
Deferred Income Tax Asset-Short-term $ 587,550 $ 321,084
Deferred Income Tax Liability-Short-term (34,824) (69,648)
Deferred Income Tax Asset-Short-term 552,726 251,436
Allowance (552,726) 0
Deferred Income Tax Asset (Net of Allowance of $552,726 as of June 30, 2013)) 0 251,436
Deferred Income Tax Asset-Long-term 7,266,196 6,491,153
Deferred Income Tax Liability-Long-term (1,168,096) (1,076,965)
Deferred Income Tax Asset-Long-term 6,098,100 5,414,188
Allowance (6,098,100) 0
Deferred Income Tax Asset (Net of Allowance of $6,098,100 as of June 30, 2013) 0 5,414,188
Total Deferred Tax Asset (Net of Allowances) $ 0 $ 5,665,624

Summary of Significant Accounting Policies (Potential Common Shares) (Detail)

v2.4.0.6
Summary of Significant Accounting Policies (Potential Common Shares) (Detail)
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Option and Warrant shares excluded 4,017,205 1,893,444

Summary of Significant Accounting Policies - Additional Information (Detail)

v2.4.0.6
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended 1 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended 1 Months Ended 6 Months Ended 1 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Dec. 31, 2012
Jun. 28, 2013
CMFG [Member]
Jun. 30, 2013
CMFG [Member]
Jan. 31, 2011
CMFG [Member]
Jun. 30, 2013
Derivative Liabilities
Jun. 30, 2013
Maximum
Jun. 30, 2013
Minimum
Jun. 30, 2013
Physician Direct Sales Model
Maximum
Jun. 30, 2013
Physician Direct Sales Model
Minimum
Jun. 30, 2013
Distributor Direct Sales Model
Maximum
Jun. 30, 2013
Distributor Direct Sales Model
Minimum
Jun. 30, 2013
Physician Managed Model
Maximum
Jun. 30, 2013
Physician Managed Model
Minimum
Jun. 30, 2013
Hybrid Model
Maximum
Jun. 30, 2013
Hybrid Model
Minimum
Jun. 30, 2013
Physician Managed and Hybrid model
Jun. 30, 2012
Physician Managed and Hybrid model
Jun. 30, 2013
Cambridge Agreement
Jun. 30, 2013
WC Purchase Model [Member]
Jun. 30, 2013
WC Funding Model [Member]
Jun. 30, 2013
Computer Equipment
Maximum
Jun. 30, 2013
Computer Equipment
Minimum
Jun. 30, 2013
Furniture and Fixtures
Maximum
Jun. 30, 2013
Furniture and Fixtures
Minimum
Jun. 30, 2013
Internally Developed Software
Maximum
Jun. 30, 2013
Internally Developed Software
Minimum
Nov. 20, 2012
First Cambridge Agreement [Member]
Jun. 30, 2013
First Cambridge Agreement [Member]
Jun. 30, 2013
First Cambridge Agreement [Member]
Physician [Member]
Jun. 30, 2013
First Cambridge Agreement [Member]
CMFG [Member]
Jun. 28, 2013
Second Cambridge Agreement [Member]
Jun. 28, 2013
Second Cambridge Agreement [Member]
CMFG [Member]
Jun. 28, 2013
Second Cambridge Agreement [Member]
Maximum
Summary Of Significant Accounting Policies [Line Items]                                                                          
Net Income (Loss) $ (7,841,965) $ (2,824,823) $ (8,112,242) $ (3,800,740)                                                                  
Accumulated Deficit (21,797,030)   (21,797,030)   (13,684,789)                                                                
Percentage of revenue generated from sales mode                         1.00%   28.00%   38.00%   20.00%       13.00% 0.00%                          
Late payment fee percentage applied to outstanding balance                       20.00%   20.00%   20.00%   20.00%                                      
Amount of invoice issued but not recognized as revenue or accounts receivable                                       5,000,000 3,100,000                                
Direct costs 297,452 179,678 648,931 369,671                               297,452 179,678                                
Revenues 1,917,388 1,448,226 4,728,519 2,823,411     0                         2,914,571 1,561,699 216,140                              
Rapid pay discount rate                   88.00% 40.00%                                                    
Extended collection periods                   5 years 45 days                                                    
Property and equipment, useful lives                                                 5 years 3 years 7 years 5 years                  
Intangible assets, useful lives                                                         5 years 3 years              
Warrants classified as derivative liabilities                 95,000                                                        
Research and development, expense recognition within first two years                 50.00%                                                        
Research and development, expense recognition after two years                 50.00%                                                        
Provision for Doubtful Accounts     215,346                                                                    
Unbilled Contracts Receivable 0   0   34,400,000                                                                
Share in Claims receivable percentage                                                             23.00% 23.00%          
Total Share in Actual Amount Collected on Claims receivable Percentage                                                                   41.00%      
Share in Actual Amount Collected on Claims receivable Additional Amounts Percentage                                                                 25.00% 75.00%      
Secured Debt               2,530,000                                                         3,280,000
Escrow Deposit                                                                     525,000   525,000
Share In Claims receivable Till Settlement Of Secured Loan percentage           50.00%                                                         50.00% 50.00%  
Share In Claims receivable On Further Collections percentage                                                                     55.00% 45.00%  
Unrecognized Accounts Receivable 16,300,000   16,300,000                                                                    
Employer Contribution On Claim settlement Percentage     50.00%                                                                    
Percentage Decrease In Unrecognized Accounts Receivable     67.00%                                                                    
Percentage Of Valuation Allowance Utilized     100.00%                                                                    
Allowance against Deferred Tax Assets 6,650,826   6,650,826                                                                    
Income Tax Expense (Benefit) Total 5,905,147 (739,056) 5,665,624 (1,410,146)                                                                  
Deferred Income Tax Expense (Benefit) Total 745,679   (985,202) (1,410,146)                                                                  
Deferred Tax Assets, Net of Valuation Allowance, Current 0   0   251,436                                                                
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent 0   0   5,414,188                                                                
Accrued Payroll Taxes $ 237,000   $ 237,000