☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended
|
September 30, 2018
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
|
to |
|
BIRNER DENTAL MANAGEMENT SERVICES, INC.
|
(Exact name of registrant as specified in its charter)
|
COLORADO
|
84-1307044
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
1777 S. HARRISON STREET, SUITE 1400
DENVER, COLORADO
|
80210
|
|
(Address of principal executive offices)
|
(Zip Code)
|
(303) 691-0680
|
(Registrant’s telephone number, including area code)
|
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☐ | Smaller reporting company ☒ |
Emerging growth company ☐
|
Class
|
Shares Outstanding as of November 2, 2018
|
|
Common Stock, no par value
|
1,881,761
|
Item 1. | Financial Statements |
Page
|
3
|
||
4
|
||
5
|
||
6
|
||
8
|
||
Item 2.
|
20
|
|
Item 4.
|
32
|
|
PART II - OTHER INFORMATION
|
||
Item 2.
|
33
|
|
Item 6.
|
34
|
|
36
|
ASSETS
|
December 31,
2017 |
September 30,
2018 |
||||||
CURRENT ASSETS:
|
||||||||
Cash
|
$
|
1,888,828
|
$
|
196,288
|
||||
Accounts receivable, net of allowance for doubtful accounts of approximately $500,000 and $500,000, respectively
|
3,772,514
|
4,407,808
|
||||||
Note receivable
|
33,768
|
8,892
|
||||||
Prepaid expenses and other assets
|
655,310
|
991,012
|
||||||
Total current assets
|
6,350,420
|
5,604,000
|
||||||
PROPERTY AND EQUIPMENT, net
|
5,016,141
|
4,335,266
|
||||||
OTHER NONCURRENT ASSETS:
|
||||||||
Intangible assets, net
|
5,876,053
|
5,242,629
|
||||||
Deferred charges and other assets
|
163,991
|
163,991
|
||||||
Total assets
|
$
|
17,406,605
|
$
|
15,345,886
|
||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Accounts payable
|
$
|
4,210,521
|
$
|
3,405,300
|
||||
Accrued expenses
|
777,863
|
733,728
|
||||||
Accrued payroll and related expenses
|
2,009,720
|
2,447,485
|
||||||
Current maturities of long-term debt
|
750,000
|
6,253,767
|
||||||
Total current liabilities
|
7,748,104
|
12,840,280
|
||||||
LONG-TERM LIABILITIES:
|
||||||||
Deferred tax liability, net
|
101,482
|
-
|
||||||
Bank credit facilities, net
|
5,684,085
|
-
|
||||||
Convertible senior subordinated secured notes, net
|
4,445,862
|
5,303,970
|
||||||
Other long-term obligations
|
1,190,811
|
1,010,654
|
||||||
Total liabilities
|
19,170,344
|
19,154,904
|
||||||
SERIES A PREFERRED STOCK, no par value, 100 shares authorized, 11 shares outstanding
|
10,000
|
11,000
|
||||||
SERIES B PREFERRED STOCK, no par value, 2,000,000 shares authorized, none outstanding
|
-
|
-
|
||||||
SHAREHOLDERS’ EQUITY / (DEFICIT):
|
||||||||
Preferred Stock, no par value, 7,999,900 shares authorized; none outstanding
|
-
|
-
|
||||||
Common Stock, no par value, 20,000,000 shares authorized; 1,872,761 and 1,881,761 shares issued and outstanding, respectively
|
2,060,208
|
2,279,084
|
||||||
Accumulated deficit
|
(3,833,947
|
)
|
(6,099,102
|
)
|
||||
Total shareholders’ deficit
|
(1,773,739
|
)
|
(3,820,018
|
)
|
||||
Total liabilities and shareholders’ deficit
|
$
|
17,406,605
|
$
|
15,345,886
|
Quarters Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2017
|
2018
|
2017
|
2018
|
|||||||||||||
REVENUE:
|
||||||||||||||||
Dental practice revenue
|
$
|
14,496,485
|
$
|
14,203,888
|
$
|
42,720,674
|
$
|
43,352,291
|
||||||||
Capitation revenue
|
985,797
|
916,805
|
3,016,251
|
2,790,844
|
||||||||||||
15,482,282
|
15,120,693
|
45,736,925
|
46,143,135
|
|||||||||||||
DIRECT EXPENSES:
|
||||||||||||||||
Clinical salaries and benefits
|
9,593,128
|
9,310,110
|
28,167,507
|
28,547,003
|
||||||||||||
Dental supplies
|
669,846
|
720,237
|
1,961,324
|
2,099,192
|
||||||||||||
Laboratory fees
|
870,415
|
928,062
|
2,671,694
|
2,739,825
|
||||||||||||
Occupancy
|
1,589,417
|
1,618,516
|
4,700,705
|
4,770,269
|
||||||||||||
Advertising and marketing
|
144,004
|
153,750
|
471,275
|
416,955
|
||||||||||||
Depreciation and amortization
|
840,893
|
709,612
|
2,661,939
|
2,188,471
|
||||||||||||
General and administrative
|
1,448,614
|
1,224,558
|
3,966,372
|
3,828,790
|
||||||||||||
15,156,317
|
14,664,845
|
44,600,816
|
44,590,505
|
|||||||||||||
Contribution from dental offices
|
325,965
|
455,848
|
1,136,109
|
1,552,630
|
||||||||||||
CORPORATE EXPENSES:
|
||||||||||||||||
General and administrative
|
908,267
|
(1)
|
1,066,810
|
(1)
|
2,879,641
|
(2)
|
3,156,672
|
(2)
|
||||||||
Stock grant
|
-
|
-
|
175,000
|
(3)
|
-
|
|||||||||||
Depreciation and amortization
|
38,518
|
31,013
|
123,466
|
95,087
|
||||||||||||
OPERATING LOSS
|
(620,820
|
)
|
(641,975
|
)
|
(2,041,998
|
)
|
(1,699,129
|
)
|
||||||||
OTHER EXPENSE:
|
||||||||||||||||
Decrease in fair value of embedded derivatives
|
-
|
377,000
|
-
|
127,000
|
||||||||||||
Interest expense, net
|
(110,075
|
)
|
(300,946
|
)
|
(276,987
|
)
|
(635,149
|
)
|
||||||||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
(730,895
|
)
|
(565,921
|
)
|
(2,318,985
|
)
|
(2,207,278
|
)
|
||||||||
Income tax benefit
|
258,083
|
4,956
|
831,513
|
151,044
|
||||||||||||
NET LOSS FROM CONTINUING OPERATIONS
|
(472,812
|
)
|
(560,965
|
)
|
(1,487,472
|
)
|
(2,056,234
|
)
|
||||||||
DISCONTINUED OPERATIONS (Note 11)
|
||||||||||||||||
Operating (Loss) attributable to assets disposed of
|
(130,390
|
)
|
(102,636
|
)
|
(302,193
|
)
|
(387,315
|
)
|
||||||||
(Loss) recognized on dispositions
|
-
|
(78,061
|
)
|
-
|
(78,061
|
)
|
||||||||||
Income tax benefit
|
45,637
|
1,582
|
105,768
|
31,846
|
||||||||||||
LOSS ON DISCONTINUED OPERATIONS
|
(84,753
|
)
|
(179,115
|
)
|
(196,425
|
)
|
(433,530
|
)
|
||||||||
NET LOSS
|
$
|
(557,565
|
)
|
$
|
(740,080
|
)
|
$
|
(1,683,897
|
)
|
$
|
(2,489,764
|
)
|
||||
Net loss per share of Common Stock - Basic and Diluted Continuing Operations
|
$
|
(0.25
|
)
|
$
|
(0.30
|
)
|
$
|
(0.80
|
)
|
$
|
(1.10
|
)
|
||||
Discontinued Operations
|
$
|
(0.05
|
)
|
$
|
(0.09
|
)
|
$
|
(0.10
|
)
|
$
|
(0.23
|
)
|
||||
Net income per share of Common Stock - Basic and Diluted
|
$
|
(0.30
|
)
|
$
|
(0.39
|
)
|
$
|
(0.90
|
)
|
$
|
(1.33
|
)
|
||||
Weighted average number of shares of Common Stock and dilutive securities
|
||||||||||||||||
Basic and Diluted
|
1,872,761
|
1,881,141
|
1,866,580
|
1,877,050
|
(1) |
Corporate expenses - general and administrative includes $74,031 and $109,232 of stock-based compensation expense pursuant to ASC Topic 718 for the quarters ended
September 30, 2017 and 2018, respectively.
|
(2) |
Corporate expenses - general and administrative includes $160,286 and $218,876 of stock-based compensation expense pursuant to ASC Topic 718 for the nine months ended
September 30, 2017 and 2018, respectively.
|
(3) |
The Company issued 12,500 shares of Common Stock under a settlement agreement with an activist shareholder group. The shares were values at $175,000 based on the
closing price of the Common Stock on the date of the grant.
|
Common Stock
|
||||||||||||||||
Shares
|
Amount
|
Accumulated
Deficit
|
Shareholders’
Deficit
|
|||||||||||||
BALANCES, December 31, 2017
|
1,872,761
|
$
|
2,060,208
|
$
|
(3,833,947
|
)
|
$
|
(1,773,739
|
)
|
|||||||
Adoption of ASU No. 2014-09 (Topic 606) - see Note 4
|
-
|
-
|
224,609
|
224,609
|
||||||||||||
Stock-based compensation expense
|
9,000
|
218,876
|
-
|
218,876
|
||||||||||||
Net loss
|
-
|
-
|
(2,489,764
|
)
|
(2,489,764
|
)
|
||||||||||
BALANCES, September 30, 2018
|
1,881,761
|
$
|
2,279,084
|
$
|
(6,099,102
|
)
|
$
|
(3,820,018
|
)
|
Nine Months Ended September 30,
|
||||||||
2017
|
2018
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(1,683,897
|
)
|
$
|
(2,489,764
|
)
|
||
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
|
||||||||
Depreciation and amortization
|
2,871,549
|
2,283,558
|
||||||
Amortization of debt issuance costs
|
25,878
|
204,226
|
||||||
Stock-based compensation expense
|
160,286
|
218,876
|
||||||
Provision for doubtful accounts
|
652,086
|
566,144
|
||||||
Deferred income taxes
|
(890,288
|
)
|
(176,352
|
)
|
||||
Stock grant
|
175,000
|
-
|
||||||
Discontinued operation costs
|
-
|
188,429
|
||||||
Decrease in fair value of embedded derivatives
|
-
|
(127,000
|
)
|
|||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
(1,451,807
|
)
|
(757,145
|
)
|
||||
Prepaid expenses and other assets
|
(15,871
|
)
|
(335,702
|
)
|
||||
Deferred charges and other assets
|
(8,250
|
)
|
-
|
|||||
Accounts payable
|
1,625,900
|
(805,221
|
)
|
|||||
Accrued expenses
|
(122,263
|
)
|
(31,310
|
)
|
||||
Accrued payroll and related expenses
|
357,596
|
280,125
|
||||||
Other long-term obligations
|
(23,339
|
)
|
(53,157
|
)
|
||||
Net cash provided (used) by operating activities
|
1,672,580
|
(1,034,293
|
)
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Note receivable
|
23,431
|
24,876
|
||||||
Capital expenditures
|
(520,852
|
)
|
(1,157,687
|
)
|
||||
Net cash used in investing activities
|
(497,421
|
)
|
(1,132,811
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Advances - line of credit
|
20,329,290
|
1,677,445
|
||||||
Repayments - line of credit
|
(20,368,477
|
)
|
(1,491,076
|
)
|
||||
Repayments - reducing revolving loan
|
(1,054,350
|
)
|
(375,000
|
)
|
||||
Proceeds - subordinated secured notes and series A preferred stock
|
-
|
468,000
|
||||||
Accrued interest - senior subordinated secured notes
|
-
|
195,195
|
||||||
Net cash used in financing activities
|
(1,093,537
|
)
|
474,564
|
|||||
NET CHANGE IN CASH
|
81,622
|
(1,692,540
|
)
|
|||||
CASH, beginning of period
|
157,923
|
1,888,828
|
||||||
CASH, end of period
|
$
|
239,545
|
$
|
196,288
|
Nine Months Ended September 30,
|
||||||||
2017
|
2018
|
|||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash paid for interest
|
$
|
302,589
|
$
|
274,219
|
||||
Cash received for income taxes
|
$
|
46,992
|
$
|
6,506
|
(1) |
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(2) |
LIQUIDITY, GOING CONCERN, AND FINANCIAL RESOURCES UPDATE
|
(3) |
SIGNIFICANT ACCOUNTING POLICIES
|
(4) |
REVENUE
|
(5) |
LOSS PER SHARE
|
Quarters Ended September 30,
|
||||||||||||||||||||||||
2017
|
2018
|
|||||||||||||||||||||||
Net Loss
|
Shares
|
Per Share
Amount
|
Net Loss
|
Shares
|
Per Share
Amount
|
|||||||||||||||||||
Basic EPS
|
$
|
(557,565
|
)
|
1,872,761
|
$
|
(0.30
|
)
|
$
|
(740,080
|
)
|
1,881,141
|
$
|
(0.39
|
)
|
||||||||||
Effect of Dilutive Stock Options
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Diluted EPS
|
$
|
(557,565
|
)
|
1,872,761
|
$
|
(0.30
|
)
|
$
|
(740,080
|
)
|
1,881,141
|
$
|
(0.39
|
)
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
2017
|
2018
|
|||||||||||||||||||||||
Net Loss
|
Shares
|
Per Share
Amount
|
Net Loss
|
Shares
|
Per Share
Amount
|
|||||||||||||||||||
Basic EPS
|
$
|
(1,683,897
|
)
|
1,866,580
|
$
|
(0.90
|
)
|
$
|
(2,489,764
|
)
|
1,877,050
|
$
|
(1.33
|
)
|
||||||||||
Effect of Dilutive Stock Options
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Diluted EPS
|
$
|
(1,683,897
|
)
|
1,866,580
|
$
|
(0.90
|
)
|
$
|
(2,489,764
|
)
|
1,877,050
|
$
|
(1.33
|
)
|
(6) |
STOCK-BASED COMPENSATION PLANS
|
Quarters Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
Valuation Assumptions
|
2017
|
2018
|
2017
|
2018
|
||||||||||||
Expected life (1)
|
4.00
|
3.75
|
4.56
|
4.04
|
||||||||||||
Risk-free interest rate (2)
|
1.81
|
%
|
2.84
|
%
|
1.79
|
%
|
2.75
|
%
|
||||||||
Expected volatility (3)
|
55
|
%
|
92
|
%
|
50
|
%
|
87
|
%
|
||||||||
Expected dividend yield
|
-
|
-
|
-
|
-
|
||||||||||||
Expected forfeiture (4)
|
30.00
|
%
|
26.32
|
%
|
11.70
|
%
|
28.57
|
%
|
(1)
|
The expected life, in years, of stock options is estimated based on historical experience.
|
(2)
|
The risk-free interest rate is based on U.S. Treasury bills whose term is consistent with the expected life of the stock options.
|
(3)
|
The expected volatility is estimated based on historical and current stock price data for the Company.
|
(4)
|
Forfeitures are estimated based on historical experience.
|
Number of
Options
|
Weighted-
Average
Exercise
Price
|
Range of
Exercise Prices
|
Weighted-
Average
Remaining
Contractual
Term (years)
|
Aggregate
Intrinsic
Value
(thousands)
|
||||||||||||||||
Outstanding at January 1, 2018
|
560,666
|
$
|
14.99
|
$
|
4.30 - $19.75
|
3.4
|
$
|
55
|
||||||||||||
Granted
|
73,500
|
$
|
6.86
|
$
|
5.30 - $8.00
|
|||||||||||||||
Cancelled
|
(91,666
|
)
|
$
|
9.60
|
$
|
4.30 - $19.75
|
||||||||||||||
Outstanding at September 30, 2018
|
542,500
|
$
|
13.36
|
$
|
4.30 - $18.95
|
3.6
|
$
|
17
|
||||||||||||
Exercisable at September 30, 2018
|
351,584
|
$
|
15.56
|
$
|
10.04 - $18.95
|
2.4
|
$
|
-
|
Shares
|
Weighted-
Average
Grant-Date
Fair-Value
|
|||||||
Balance at January 1, 2018
|
8,000
|
$
|
13.50
|
|||||
Granted
|
18,000
|
$
|
5.50
|
|||||
Vested
|
(7,000
|
)
|
$
|
11.21
|
||||
Balance at September 30, 2018
|
19,000
|
$
|
6.77
|
(7)
|
DEBT
|
Funded Debt / EBITDA (each as defined in the Fifth
Amendment) |
|
LIBOR SPREAD
|
|
|
|
Greater than 3.0
|
|
LIBOR + 3.75%
|
|
|
|
Less than or equal to 3.0 but greater than 2.5
|
|
LIBOR + 3.25%
|
|
|
|
Less than or equal to 2.5 but greater than 2.0
|
|
LIBOR + 2.90%
|
|
|
|
Less than or equal to 2.0
|
|
LIBOR + 2.50%
|
(8) |
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
|
(9) |
FAIR VALUE MEASUREMENTS AND DISCLOSURES
|
Level 1: |
Quoted prices are available in active markets for identical assets or liabilities.
|
Level 2: |
Quoted prices in active markets for similar assets and liabilities that are observable for the asset or liability; or
|
Level 3: |
Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash flow models or valuations.
|
December 31, 2017
Fair Value Measurement Using |
September 30, 2018
Fair Value Measurement Using |
|||||||||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||||||
Contingent Liabilities
|
$
|
-
|
$
|
-
|
$
|
321,000
|
$
|
-
|
$
|
-
|
$
|
321,000
|
||||||||||||
Embedded Derivatives derived from the Notes
|
$
|
-
|
$
|
-
|
$
|
170,000
|
$
|
-
|
$
|
-
|
$
|
43,000
|
(10) |
COMMON STOCK ISSUANCES
|
(11) |
DISCONTINUED OPERATIONS
|
(12) |
SUBSEQUENT EVENTS
|
Quarters
Ended September 30, |
Nine Months
Ended September 30, |
|||||||||||||||
2017
|
2018
|
2017
|
2018
|
|||||||||||||
RECONCILIATION OF ADJUSTED EBITDA:
|
||||||||||||||||
Net loss
|
$
|
(557,565
|
)
|
$
|
(740,080
|
)
|
$
|
(1,683,897
|
)
|
$
|
(2,489,764
|
)
|
||||
Add back:
|
||||||||||||||||
Discontinued operations - before income taxes
|
130,390
|
180,697
|
302,193
|
465,376
|
||||||||||||
Depreciation and amortization - Offices
|
840,893
|
709,612
|
2,661,939
|
2,188,471
|
||||||||||||
Depreciation and amortization - Corporate
|
38,518
|
31,013
|
123,466
|
95,087
|
||||||||||||
Stock-based compensation expense
|
74,031
|
109,232
|
160,286
|
218,876
|
||||||||||||
Interest expense, net
|
110,075
|
300,946
|
276,987
|
635,149
|
||||||||||||
Stock grant
|
-
|
-
|
175,000
|
-
|
||||||||||||
Decrease in valuation of embedded derivatives
|
-
|
(377,000
|
)
|
-
|
(127,000
|
)
|
||||||||||
Income tax benefit
|
(303,720
|
)
|
(6,538
|
)
|
(937,281
|
)
|
(182,890
|
)
|
||||||||
Adjusted EBITDA
|
$
|
332,622
|
$
|
207,882
|
$
|
1,078,693
|
$
|
803,305
|
Quarters Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||||||
2017
|
2018
|
2017
|
2018
|
||||||||||||||
REVENUE:
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||||||||
DIRECT EXPENSES:
|
|||||||||||||||||
Clinical salaries and benefits
|
62.0
|
%
|
61.6
|
%
|
61.6
|
%
|
61.9
|
%
|
|||||||||
Dental supplies
|
4.3
|
%
|
4.8
|
%
|
4.3
|
%
|
4.5
|
%
|
|||||||||
Laboratory fees
|
5.6
|
%
|
6.1
|
%
|
5.8
|
%
|
5.9
|
%
|
|||||||||
Occupancy
|
10.3
|
%
|
10.7
|
%
|
10.3
|
%
|
10.3
|
%
|
|||||||||
Advertising and marketing
|
0.9
|
%
|
1.0
|
%
|
1.0
|
%
|
0.9
|
%
|
|||||||||
Depreciation and amortization
|
5.4
|
%
|
4.7
|
%
|
5.8
|
%
|
4.7
|
%
|
|||||||||
General and administrative
|
9.4
|
%
|
8.1
|
%
|
8.7
|
%
|
8.3
|
%
|
|||||||||
97.9
|
%
|
97.0
|
%
|
97.5
|
%
|
96.6
|
%
|
||||||||||
Contribution from dental offices
|
2.1
|
%
|
3.0
|
%
|
2.5
|
%
|
3.4
|
%
|
|||||||||
CORPORATE EXPENSES:
|
|||||||||||||||||
General and administrative
|
5.9
|
%
|
(1)
|
7.1
|
%
|
(1)
|
6.3
|
%
|
(2)
|
6.8
|
%
|
(2)
|
|||||
Stock grant
|
0.0
|
%
|
-
|
0.4
|
%
|
(3)
|
-
|
||||||||||
Depreciation and amortization
|
0.2
|
%
|
0.2
|
%
|
0.3
|
%
|
0.2
|
%
|
|||||||||
OPERATING LOSS
|
( 4.0
|
)%
|
( 4.2
|
)%
|
( 4.5
|
)%
|
( 3.7
|
)%
|
|||||||||
OTHER EXPENSES:
|
|||||||||||||||||
Decrease in fair value of embedded derivatives
|
-
|
2.5
|
%
|
-
|
0.3
|
%
|
|||||||||||
Interest expense, net
|
( 0.7
|
)%
|
( 2.0
|
)%
|
( 0.6
|
)%
|
( 1.4
|
)%
|
|||||||||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
( 4.7
|
)%
|
( 3.7
|
)%
|
( 5.1
|
)%
|
( 4.8
|
)%
|
|||||||||
Income tax benefit
|
1.7
|
%
|
0.0
|
%
|
1.8
|
%
|
0.3
|
%
|
|||||||||
NET LOSS FROM CONTINUING OPERATIONS
|
( 3.1
|
)%
|
( 3.7
|
)%
|
( 3.3
|
)%
|
4.5
|
%
|
|||||||||
DISCONTINUED OPERATIONS (NOTE 11)
|
|||||||||||||||||
Operating (Loss) attributable to assets disposed of
|
( 0.8
|
)%
|
( 0.7
|
)%
|
( 0.7
|
)%
|
( 0.8
|
)%
|
|||||||||
(Loss) recognized on dispositions
|
-
|
( 0.5
|
)%
|
-
|
( 0.2
|
)%
|
|||||||||||
Income tax benefit
|
0.3
|
%
|
0.0
|
%
|
0.2
|
%
|
0.1
|
%
|
|||||||||
LOSS ON DISCONTINUED OPERATIONS
|
( 0.5
|
)%
|
( 1.2
|
)%
|
( 0.4
|
)%
|
( 0.9
|
)%
|
|||||||||
NET LOSS
|
( 3.6
|
)%
|
( 4.9
|
)%
|
( 3.7
|
)%
|
( 5.4
|
)%
|
(1)
|
Corporate expense - general and administrative includes $74,031 and $109,232
of stock-based compensation expense pursuant to ASC Topic 718 for the quarters ended September 30, 2017 and 2018, respectively.
|
(2)
|
Corporate expense - general and administrative includes $160,286 and $218,876 of stock-based compensation expense pursuant to ASC Topic 718 for
the nine months ended September 30, 2017 and 2018, respectively.
|
(3)
|
The Company issued 12,500 shares of Common Stock under a settlement agreement with an activist shareholder group. The shares were valued at
$175,000 based on the closing price of the Common Stock on the date of the grant.
|
Payments due by Period
|
||||||||||||||||||||
Total
|
1 year
|
2-3 years
|
4-5 years
|
More than 5
years
|
||||||||||||||||
Debt obligations
|
$
|
11,963,564
|
$
|
6,311,369
|
$
|
-
|
$
|
5,652,195
|
$
|
-
|
||||||||||
Operating lease obligations
|
13,934,992
|
4,217,053
|
5,811,073
|
2,402,604
|
1,504,262
|
|||||||||||||||
Total
|
$
|
25,898,556
|
$
|
10,528,422
|
$
|
5,811,073
|
$
|
8,054,799
|
$
|
1,504,262
|
Exhibit
Number
|
Description of Document
|
Agreement and Plan of Merger, dated October 3, 2018, by and among the Company, Mid- Atlantic Dental Services Holdings, LLC, and Bronco
Acquisition, Inc., incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on October 3, 2018
|
3.1P
|
Amended and Restated Articles of Incorporation, incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form
S-1 (SEC File No. 333-36391), as filed with the Securities and Exchange Commission on September 25, 1997.
|
Second Amended and Restated Bylaws, incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (SEC File No.
000-23367), as filed with the Securities and Exchange Commission on July 15, 2016.
|
|
|
Articles of Amendment to the Articles of Incorporation, relating to the Series A Convertible Preferred Stock, incorporated herein by reference
to Exhibit 3.1 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 2, 2018.
|
|
Articles of Amendment to the Articles of Incorporation, relating to the Series B Convertible Preferred Stock, incorporated herein by reference
to Exhibit 3.2 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 2, 2018.
|
4.1P
|
Specimen Stock Certificate, incorporated herein by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 (SEC File No.
333-36391), as filed with the Securities and Exchange Commission on November 25, 1997.
|
Form of Convertible Senior Subordinated Secured Loan Note, incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on
Form 8-K, as filed with the Securities and Exchange Commission on January 2, 2018.
|
|
10.1P*
|
Form of Indemnification Agreement entered into between the Company and its Directors and Executive Officers, incorporated herein by reference
to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (SEC File No. 333-36391), as filed with the Securities and Exchange Commission on September 25, 1997.
|
Form of Restricted Stock Agreement and Grant Notice under 2005 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.2 to the
Company’s Current Report on Form 8-K (SEC File No. 000-23367), as filed with the Securities and Exchange Commission on July 19, 2005.
|
|
Birner Dental Management Services, Inc. 2005 Equity Incentive Plan, incorporated herein by reference to Exhibit 99 of the Company’s Definitive
Proxy Statement, as filed with the Securities and Exchange Commission on April 27, 2005.
|
|
Birner Dental Management Services, Inc. 2005 Equity Incentive Plan, as amended as of June 5, 2014, incorporated herein by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on June 10, 2014.
|
|
Birner Dental Management Services, Inc. 2015 Equity Incentive Plan, incorporated herein by reference to Appendix A to the Company’s Amendment
No. 1 to Definitive Proxy Statement on Schedule 14A, as filed with the Securities and Exchange Commission on May 7, 2015.
|
|
10.20P
|
Form of Stock Transfer and Pledge Agreement, incorporated herein by reference to Exhibit 10.20 to the Company’s Registration Statement on Form
S-1 (SEC File No. 333-36391), as filed with the Securities and Exchange Commission on September 25, 1997.
|
10.25P*
|
Profit Sharing 401(k)/Stock Bonus Plan of the Company, incorporated herein by reference to Exhibit 10.25 to the Company’s Registration
Statement on Form S-1 (SEC File No. 333-36391), as filed with the Securities and Exchange Commission on September 25, 1997.
|
10.26P
|
Form of Stock Transfer and Pledge Agreement, incorporated herein by reference to Exhibit 10.26 of Pre-Effective Amendment No. 1 to the
Company’s Registration Statement on Form S-1 (SEC File No. 333-36391), as filed with the Securities and Exchange Commission on November 7, 1997.
|
Loan and Security Agreement, dated March 29, 2016, between the Company and Guaranty Bank and Trust Company, incorporated herein by reference to
Exhibit 10.47 to the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 30, 2016.
|
|
Amendment to Loan and Security Agreement, dated July 29, 2016, by and between the Company and Guaranty Bank and Trust Company, incorporated
herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on August 4, 2016.
|
|
Second Amendment to Loan and Security Agreement, dated November 14, 2016, between the Company and Guaranty Bank and Trust Company, incorporated
herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission on November 14, 2016.
|
|
Third Amendment to Loan and Security Agreement, dated December 9, 2016, between the Company and Guaranty Bank and Trust Company, incorporated
herein by reference to Exhibit 10.48 to the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 31, 2017.
|
Exhibit
Number
|
Description of Document
|
Fourth Amendment to Loan and Security Agreement and Forbearance Agreement, dated March 30, 2017, between the Company and Guaranty Bank and
Trust Company, incorporated herein by reference to Exhibit 10.49 to the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 31, 2017.
|
|
Nomination and Standstill Agreement, dated May 11, 2017, among the Company, Digirad Corporation, the other members of the Digirad Group,
Frederic W.J. Birner and Dennis N. Genty, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on May 12, 2017 .
|
|
Fifth Amendment to Loan and Security Agreement, dated December 28, 2017, between the Company and Guaranty Bank and Trust Company, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 2, 2018.
|
|
Subordination Agreement, dated December 28, 2017, among the Company, Palm Global Small Cap Master Fund LP, Palm Active Dental, LLC and Guaranty Bank and Trust Company, incorporated herein by reference to Exhibit 10.2 to the
Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 2, 2018.
|
|
Securities Purchase Agreement, dated December 28, 2017, among the Company, Palm Global Small Cap Master Fund LP and Palm Active Dental, LLC, incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 2, 2018.
|
|
Security Agreement, dated December 28, 2017, by the Company in favor of Palm Global Small Cap Master Fund LP and Palm Active Dental, LLC,
incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 2, 2018.
|
|
|
Registration Rights Agreement, dated December 28, 2017, among the Company, Palm Global Small Cap Master Fund LP and Palm Active Dental, LLC,
incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 2, 2018.
|
|
First Follow-On Securities Purchase Agreement, dated August 15, 2018, between the Company and Palm Active Dental II, LP, incorporated herein by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on August 16, 2018.
|
Sixth Amendment to Loan and Security Agreement, dated October 3, 2017, between the Company and Guaranty Bank and Trust Company, incorporated
herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on October 3, 2018.
|
|
Rule 13a-14(a) Certification of the Chief Executive Officer.
|
|
Rule 13a-14(a) Certification of the Chief Financial Officer.
|
|
Section 1350 Certifications of the Chief Executive Officer and the Chief Financial Officer.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Furnished herewith.
|
P
|
Filed on paper
|
BIRNER DENTAL MANAGEMENT SERVICES, INC.
|
|||||
Date:
|
November 14, 2018
|
By:
|
/s/ Frederic W.J. Birner
|
||
Name:
|
Frederic W.J. Birner
|
||||
Title:
|
Chairman of the Board and Chief Executive Officer
|
||||
(Principal Executive Officer)
|
|||||
Date:
|
November 14, 2018
|
By:
|
/s/ Dennis N. Genty
|
||
Name:
|
Dennis N. Genty | ||||
Title:
|
Chief Financial Officer and Secretary
|
||||
(Principal Financial and Accounting Officer)
|