Parallax Health Sciences Reports Second Quarter 2019 Financial Results
Company Reduces Net Loss by 40% Over Prior Year Six Months Period
SANTA MONICA, Calif., Aug. 20, 2019 (GLOBE NEWSWIRE) -- Parallax Health Sciences, Inc. (OTCQB: PRLX) (“Parallax”), an outcome-driven connected healthcare company, reports financial results for June 30, 2019, and for the three and six months then ended.
On August 19, 2019, the management of Parallax Health Sciences, Inc., a Nevada corporation (the “Company”), discussed with the Company’s Audit Committee possible errors identified within the Company’s financial statements that may affect the interim financial statements for the period ended June 30, 2019, and for the three and six months then ended. The possible errors are all non-cash and primarily related to the valuation of certain warrants issued by the Company in 2018 in connection with certain promissory notes and debentures, and the characterization of debt versus equity, in accordance with FASB Topic 480, “Distinguishing Liabilities from Equity.” The accounts affected by a possible bifurcation of debt and equity, and possible resulting beneficial conversion features, include convertible promissory notes, convertible debentures, paid in capital and accumulated deficit on the consolidated balance sheets; and discount amortization and interest expense on the consolidated statements of income.
The Company’s Audit Committee and management continue to believe that the Company’s financial statements covering the referenced periods, notwithstanding the possible corrections discussed above, fairly present, in all material respects, the financial condition and results of operations of the Company as of the end of and for the referenced periods and may continue to be relied upon and that the Company’s internal control over financial reporting was effective during these periods.
As a result of the possible corrections, Marcum LLP (“Marcum”), the Company’s independent accounting firm, has not completed its review of the interim financial information for the period ended June 30, 2019, and for the three and six months then ended (the “Quarterly Report”), as required by the rules of the Securities and Exchange Commission, or the SEC. As a result, the filing of the Quarterly Report on Form 10-Q has been delayed.
Upon completion of the analysis to determine if corrections are necessary, Marcum will be able to complete their SAS 100 review of the interim financial information, and the Company will file its Quarterly Report on Form 10-Q for the period ended June 30, 2019, as soon as practicable thereafter.
Second Quarter Financial Highlights
Total revenues for the three months ended June 30, 2019, were $900, compared with total revenues of $4,869 for the second quarter of 2018.
Cost of sales for the second quarter of 2019 were $3,861, compared with cost of sales of $4,739 for the same period last year, with the decrease due to lower expenses related to the human capital necessary to facilitate the effective delivery of the Company's remote patient monitoring and related services to its customers. The gross margin for the second quarter of 2019 was a loss $2,961, a decrease from the gross profit of $130 in the quarter ended June 30, 2018.
Net operating loss for the second quarter of 2019 was $1.7 million, or $0.01 per share, compared with a net operating loss for the second quarter of 2018 of $1.2 million, or $0.01 per share. The $497,533 increase in operating loss from continuing operations is primarily due to an increase in general and administrative expenses.
General and administrative (G&A) expenses for the second quarter of 2019 were $1.7 million, a 40% increase from G&A expenses of $1.2 million for the same period last year. The increase was primarily due to increases in non-cash stock option expense, as well as higher expenses related to payroll, accounting, consulting fees and marketing. Professional fees of $477,992 represented a major component of G&A expenses in the second quarter of 2019.
Net loss from continuing operations for the three months ended June 30, 2019, was $2.1 million, or $0.01 per common share, compared with a net loss of $3.6 million, or $0.02 per share, for the same period last year.
Year-to-date Financial Results
Total revenues for the six months ended June 30, 2019, were $51,890, compared to total revenues of $9,759 for the same period last year. Gross margin improved to a profit of $42,918 for the first six months of 2019, compared with a loss of $518 in gross margin for the six months ended June 30, 2018. Total operating expenses remained $3.1 million in the first six months of 2019, similar to operating expenses from continuing operations of $3.1 million in the first six months of 2018.
The Company recorded a net operating loss of $3.1 million, or $0.02 per share, for the six months ended June 30, 2019, compared with a net operating loss of $3.1 million or $0.02 per share, for the same period last year.
Net loss from continuing operations for the six months ended June 30, 2019, was $3.8 million, or $0.01 per common share, compared with a net loss of $6.4 million, or $0.04 per share, for the same period last year.
About Parallax Health Sciences
Parallax Health Sciences is an advanced technology, outcome-driven telehealth company that allows for cost-effective remote diagnosis, treatment and monitoring of patients through proprietary platforms of integrated products and services. The Company's interoperable novel applications provide patients point-of-care testing and monitoring with information communicated via internet-based mobile phone applications that are agnostic as to operating system and are built on highly sophisticated data analytics. Information is retrieved real-time by physicians who are monitoring patients with chronic diseases or through biometric feedback for health-related behavior modification, and is automated for integration into electronic health records. The Company's products and offerings capitalize on the digital transformation in healthcare for improved patient compliance, diagnosis and treatment, and support healthcare system cost savings and efficiencies. For more information, please visit www.parallaxhealthsciences.com or www.parallaxcare.com.
Forward-Looking Statements
This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding our expected future financial position, results of operations, cash flows, financing plans, business strategy, products and services, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include words such as "anticipate," "if," "believe," "plan," "estimate," "expect," "intend," "may," "could," "should," "will," and other similar expressions are forward-looking statements. All forward-looking statements involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. Factors that may cause actual results to differ materially from those in the forward-looking statements include those set forth in our Form 10-K and other reports filed with the SEC. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.
Investor Contact:
Paul Arena
paul@parallaxcare.com
cell 404-915-8449
SOURCE: Parallax Health Sciences, Inc.
PARALLAX HEALTH SCIENCES, INC. |
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| CONSOLIDATED BALANCE SHEETS | ||||||
| June 30, 2019 | December 31, 2018 |
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| (Unaudited and Unreviewed) |
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| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 15,598 | $ | 262 | ||
| Prepaid expenses | 8,900 | –– | ||||
| Operating lease right of use asset | 102,313 | –– | ||||
| Total current assets | 126,811 | 262 | ||||
| Property and equipment, net | 2,540 | –– | ||||
| Intangible assets, net | 518,725 | 579,035 | ||||
| Deposits | 7,800 | –– | ||||
| Goodwill | 785,060 | 785,060 | ||||
| TOTAL ASSETS | $ | 1,440,936 | $ | 1,364,357 | ||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||
| Current liabilities | ||||||
| Accounts payable and accrued expenses | $ | 2,796,712 | $ | 2,655,138 | ||
| Operating lease liability | 102,313 | –– | ||||
| Debentures, convertible | 24,500 | 755,627 | ||||
| Debentures, convertible, related party | 685,806 | 428,132 | ||||
| Notes payable | 220,000 | –– | ||||
| Notes payable, convertible, net of unamortized discount | 780,177 | 296,000 | ||||
| Notes payable, convertible, related party | 20,000 | –– | ||||
| Related party payables | 1,396,628 | 1,004,720 | ||||
| Total current liabilities | 6,026,136 | 5,139,617 | ||||
| Long-term liabilities | ||||||
| License fees payable | 422,000 | 430,000 | ||||
| Royalties payable | 295,598 | 310,000 | ||||
| Debentures, convertible, net of unamortized discount | –– | 226,050 | ||||
| Notes payable, convertible | 720,154 | 720,154 | ||||
| Notes payable, convertible, related party | 491,100 | 491,100 | ||||
| Notes payable, bank | 23,950 | 28,995 | ||||
| Total long-term liabilities | 1,952,802 | 2,206,299 | ||||
| Total liabilities | 7,978,938 | 7,345,916 | ||||
| Stockholders' deficit | ||||||
| Preferred stock, $.001 par, 10,000,000 shares authorized, | 978 | 1,014 | ||||
| 977,352 and 1,013,691 issued and outstanding | ||||||
| at June 30, 2019, and December 31, 2018, respectively | ||||||
| Common stock, $.001 par, 500,000,000 and 250,000,000 shares | 204,808 | 158,113 | ||||
| authorized, 204,807,879 and 158,113,141 issued and outstanding | ||||||
| at June 30, 2019, and December 31, 2018, respectively | ||||||
| Additional paid in capital-preferred | 1,315,689 | 1,415,653 | ||||
| Additional paid in capital-common | 13,555,777 | 9,715,921 | ||||
| Subscriptions receivable | (500,000 | ) | –– | |||
| Accumulated deficit | (21,115,254 | ) | (17,272,260 | ) | ||
| Total stockholders' deficit | (6,538,002 | ) | (5,981,559 | ) | ||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 1,440,936 | $ | 1,364,357 | ||
The notes are an integral part of these interim unaudited consolidated financial statements
PARALLAX HEALTH SCIENCES, INC. |
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| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| (Unaudited and Unreviewed) | ||||||||||||
| For the three months ended | For the six months ended | |||||||||||
| June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | |||||||||
| Revenue | $ | 900 | $ | 4,869 | $ | 51,890 | $ | 9,759 | ||||
| Cost of sales | 3,861 | 4,739 | 8,972 | 10,277 | ||||||||
| Gross profit (loss) | (2,961 | ) | 130 | 42,918 | (518 | ) | ||||||
| General and administrative expenses | 1,722,848 | 1,228,406 | 3,179,136 | 3,100,232 | ||||||||
| Operating loss | (1,725,809 | ) | (1,228,276 | ) | (3,136,218 | ) | (3,100,750 | ) | ||||
| Other expenses | ||||||||||||
| Loss on settlements | –– | –– | (33,272 | ) | –– | |||||||
| Discount amortization | (308,366 | ) | (1,335,000 | ) | (438,786 | ) | (2,620,000 | ) | ||||
| Interest expense | (134,704 | ) | (395,776 | ) | (234,718 | ) | (718,925 | ) | ||||
| Total other expenses | (443,070 | ) | (1,730,776 | ) | (706,776 | ) | (3,338,925 | ) | ||||
| Net loss – continuing operations | (2,168,879 | ) | (2,959,052 | ) | (3,842,994 | ) | (6,439,675 | ) | ||||
| Net loss – discontinued operations | –– | (671,660 | ) | –– | (918,171 | ) | ||||||
| Net loss | $ | (2,168,879 | ) | $ | (3,630,712 | ) | $ | (3,842,994 | ) | $ | (7,357,846 | ) |
| Net loss per common share – basic and diluted | ||||||||||||
| Continuing operations | $ | (0.012 | ) | $ | (0.020 | ) | $ | (0.022 | ) | $ | (0.045 | ) |
| Discontinued operations | $ | –– | $ | (0.005 | ) | $ | –– | $ | (0.006 | ) | ||
| Weighted average common shares outstanding - basic and diluted | 187,592,006 | 146,211,165 | 175,845,013 | 144,700,905 | ||||||||
The accompanying notes are an integral part of these consolidated financial statements
PARALLAX HEALTH SCIENCES, INC. |
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| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (Unaudited and Unreviewed) | ||||||
| For the six months ended | ||||||
| June 30, 2019 | June 30, 2018 | |||||
| Cash flows from operating activities: | ||||||
| Net loss | $ | (3,842,994 | ) | $ | (6,439,675 | ) |
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||
| Depreciation and amortization | 60,398 | 60,644 | ||||
| Stock compensation/stock option amortization | 1,334,277 | 2,033,829 | ||||
| Discount amortization | 438,786 | 2,620,000 | ||||
| Allowance for bad debt | –– | 236 | ||||
| Loss on settlement | 33,272 | |||||
| Changes in operating assets and liabilities: | ||||||
| Decrease in trade and other receivables | –– | 2,859 | ||||
| (Increase) in prepaid expenses | (8,900 | ) | (5,780 | ) | ||
| (Increase) in deposits | (7,800 | ) | –– | |||
| Increase in accounts payable and accrued expenses | 31,302 | 757,050 | ||||
| Increase in royalties payable | 6,598 | –– | ||||
| Increase in related party payables | 411,908 | 376,892 | ||||
| Net cash used by operating activities | (1,543,153 | ) | (593,945 | ) | ||
| Cash flows from investing activities: | ||||||
| Purchase of professional equipment | (2,628 | ) | –– | |||
| Net cash used by investing activities | (2,628 | ) | –– | |||
| Cash flows from financing activities: | ||||||
| Proceeds from notes payable | 220,000 | –– | ||||
| Repayment of notes payable | (5,045 | ) | (5,451 | ) | ||
| Proceeds from convertible notes payable | 556,780 | 782,000 | ||||
| Repayment of convertible notes payable | (65,000 | ) | (50,000 | ) | ||
| Repayment of debentures | (685,750 | ) | –– | |||
| Proceeds from issuance of preferred treasury shares | 69,000 | –– | ||||
| Proceeds from issuance of common shares | 1,471,132 | 41,000 | ||||
| Net cash provided by financing activities | 1,561,117 | 767,549 | ||||
| Net cash provided by continuing operations | 15,336 | 173,604 | ||||
| Cash flows from discontinued operations: | ||||||
| Net cash used by operating activities | –– | (134,510 | ) | |||
| Net cash used by discontinued operations | –– | (134,510 | ) | |||
| Net increase (decrease) in cash | 15,336 | 39,094 | ||||
| Cash - beginning of period | 262 | 183 | ||||
| Cash - end of period | $ | 15,598 | $ | 39,277 | ||
| NON-CASH ACTIVITIES | ||||||
| Dividends paid in kind on preferred stock returned to treasury | $ | 58,232 | $ | –– | ||
| Preferred stock returned to treasury for debt settlement | $ | 100,000 | $ | –– | ||
| Conversion of accounts payable to convertible note payable | $ | 20,000 | $ | 37,500 | ||
| Conversion of accounts payable to related party convertible note payable | $ | 20,000 | $ | –– | ||
| Conversion of convertible notes payable to common stock | $ | 512,142 | $ | 48,114 | ||
| Conversion of related party convertible notes payable to non-related party convertible notes payable | $ | –– | $ | 576,154 | ||
| Conversion of related party payables to non-related party payables | $ | –– | $ | 42,356 | ||
| Subscriptions receivable | $ | (500,000 | ) | $ | (342 | ) |
| SUPPLEMENTAL INFORMATION | ||||||
| Interest paid | ||||||
| Continuing operations | $ | 44,375 | $ | 798 | ||
| Discontinued operations | $ | –– | $ | 106 | ||
| Income taxes paid | $ | –– | $ | –– | ||
The accompanying notes are an integral part of these consolidated financial statements