UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, DC
20549
FORM 10-Q
[X] Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2015
[ ] Transition Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _______________ to
______________
Commission File
Number: 0-18105
VASOMEDICAL, INC.
(Exact name of
registrant as specified in its charter)
Delaware 11-2871434
(State or other
jurisdiction of . (IRS
Employer Identification Number)
incorporation or organization)
137 Commercial
St., Suite 200, Plainview, New York 11803
(Address of
principal executive offices)
RegistrantŐs
Telephone Number (516)
997-4600
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
[X] No [ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (¤232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes
[X] No [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.
Large
Accelerated Filer [ ] Accelerated
Filer [ ] Non-Accelerated Filer
[ ] Smaller Reporting Company [X]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
[ ] No [X]
Number of Shares
Outstanding of Common Stock, $.001 Par Value,
at November 8, 2015 – 158,412,283
Vasomedical,
Inc. and Subsidiaries
INDEX
PART I – FINANCIAL
INFORMATION
CONDENSED
CONSOLIDATED BALANCE SHEETS as of September 30, 2015 (unaudited) and December
31, 2014
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
ITEM 2 - MANAGEMENTŐS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ITEM 4 - CONTROLS AND PROCEDURES
Vasomedical,
Inc. and Subsidiaries
(in thousands, except share and per share data)
The accompanying
notes are an integral part of these unaudited condensed consolidated financial
statements.
Vasomedical, Inc. and
Subsidiaries
(Unaudited)
(in thousands, except per
share data)
The accompanying notes are an integral part of these unaudited condensed consolidated financial
statements.
Vasomedical, Inc. and
Subsidiaries
(in thousands)
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
Vasomedical, Inc. and
Subsidiaries
(Unaudited)
(in thousands)
Vasomedical, Inc. was incorporated in Delaware in July
1987. Unless the context requires
otherwise, all references to ŇweÓ, ŇourÓ, ŇusÓ, ŇCompanyÓ, ŇregistrantÓ, ŇVasomedicalÓ
or ŇmanagementÓ refer to Vasomedical, Inc. and its subsidiaries. Until 2010, we were primarily engaged in
designing, manufacturing, marketing and supporting Enhanced External
Counterpulsation (EECP¨) systems, based on our proprietary technology,
to physicians and hospitals throughout the United States and in select
international markets. Beginning in July 2010 the Company, through its
wholly-owned subsidiary Vaso Diagnostics, Inc. (Vaso Diagnostics), began its
sales representation business via its agreement (the ŇGEHC AgreementÓ) with GE
Healthcare (ŇGEHCÓ), the healthcare business unit of General Electric Company
(NYSE: GE), to be GEHCŐs exclusive sales representative for the sale of select
GEHC diagnostic imaging products in specific market segments in the 48
contiguous states of the United States and the District of
Columbia. In June 2012, the GEHC Agreement was amended and extended
through June 30, 2015 and again, in December 2014, the GEHC Agreement was
further amended and extended through December 31, 2018, subject to earlier
termination under certain circumstances and termination without cause on
or after July 1, 2017.
In September 2011, the Company acquired Fast Growth
Enterprises Limited (FGE), a British Virgin Islands company, which owns or
controls two Chinese operating companies - Life Enhancement Technology Ltd. and
Biox Instruments Co. Ltd. (Biox), respectively - to expand its technical and
manufacturing capabilities and to enhance its distribution network, technology,
and product portfolio. Also in
September 2011, the Company restructured to further align its business
management structure and long-term growth strategy, and started to operate
through three wholly-owned subsidiaries.
Vaso Diagnostics continues as the operating subsidiary for the sales
representation of GE diagnostic imaging products; Vasomedical Global Corp.
operates the CompanyŐs Chinese companies; and Vasomedical Solutions, Inc. was
formed to manage and coordinate our EECP¨ therapy business as well
as other medical equipment operations.
In April 2014, the Company entered into an agreement with
Chongqing PSK-Health Sci-Tech Development Co., Ltd. (PSK) of Chongqing, China, the
leading manufacturer of ECP therapy systems in China, to form a joint venture
company, VSK Medical Limited (VSK), for the global marketing, sale and advancement
of ECP therapy technology. The
Company owns 49.9% of the joint venture, which began operations in January
2015.
In June 2014, the Company entered into a Value Added
Reseller Agreement (VAR Agreement) with GEHC to become a national value added
reseller of GE Healthcare IT's Radiology PACS (Picture Archiving and
Communication System) software solutions and related services, including
implementation, management and support.
This multiyear VAR Agreement focuses primarily on existing customer
segments currently served by Vaso Diagnostics on behalf of GEHC. A new wholly owned subsidiary,
VasoHealthcare IT Corp., was formed to conduct the healthcare IT business.
In August 2014, the Company, through its wholly owned
subsidiary Wuxi Gentone Instruments Co. Ltd. (Gentone), acquired all of the
outstanding shares of Genwell Instruments Co. Ltd. (Genwell), located in Wuxi,
China. Genwell was formed in China
in 2010 with the assistance of a government grant to develop the MobiCareTM
wireless multi-parameter patient monitoring system and holds the patents and
intellectual property rights for this system.
In May 2015, the Company entered into an agreement for, and completed its purchase of, all of the assets of NetWolves, LLC and its affiliates, including the membership interests in NetWolves Network Services LLC (collectively, ŇNetWolvesÓ). The purchase of NetWolves was accomplished pursuant to an Asset Purchase Agreement. As a result, the Company effectively purchased all rights, titles and ownership of all assets held by NetWolves. NetWolves designs and delivers efficient and cost-effective multi-network and multi-technology solutions as a managed network provider, and provides a complete single-source solution that includes design, network redundancy, application device management, real-time network monitoring, reporting and support systems as a comprehensive solution. The Company believes there are significant operational synergies between NetWolvesŐ capabilities and VasoHealthcare ITŐs requirements under its VAR Agreement with GEHC, as well as the opportunity to expand NetWolvesŐ existing services to the healthcare IT market.
We report the operations of Vasomedical Global Corp. and
Vasomedical Solutions, Inc. under our Equipment segment. Vaso Diagnostics activities are included
under our Sales Representation segment.
VasoHealthcare IT and NetWolves operations report under the IT
segment.
NOTE B - BASIS OF PRESENTATION AND
CRITICAL ACCOUNTING POLICIES
Basis of Presentation and Use of
Estimates
The accompanying
condensed consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
("U.S. GAAP") and pursuant to the accounting and disclosure rules and
regulations of the Securities and Exchange Commission (the "SEC").
Certain information and disclosures normally included in the unaudited condensed
consolidated financial statements prepared in accordance with U.S. GAAP have
been condensed or omitted pursuant to such rules and regulations. Accordingly,
these condensed consolidated financial statements should be read in connection
with:
1)
The audited
consolidated financial statements and related notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2014, as
filed with the SEC on March 30, 2015.
2)
The audited
consolidated financial statements of NetWolves, LLC and related notes thereto
included in the Form 8-K/A filed with the SEC on August 12, 2015. The operating results of NetWolves from
May 29, 2015 to September 30, 2015 are included in the accompanying condensed
consolidated statements of operations and comprehensive income (loss) for the
three and nine month periods ended September 30, 2015.
These unaudited condensed
consolidated financial statements include the accounts of the companies over
which we exercise control. In the opinion of management, the accompanying condensed
consolidated financial statements reflect all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation of interim
results for the Company. The results of operations for any interim period are
not necessarily indicative of results to be expected for any other interim
period or the full year.
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 as of the date of the condensed
consolidated
financial statements, the disclosure of contingent assets and liabilities in
the unaudited condensed consolidated financial statements and the accompanying
notes, and the reported amounts of revenues, expenses and cash flows during the
periods presented. Actual amounts and results could differ from those
estimates. The estimates and assumptions the Company makes are based on
historical factors, current circumstances and the experience and judgment of
the Company's management. The Company evaluates its estimates and assumptions
on an ongoing basis.
Significant Accounting Policies
Note B of the Notes to
Consolidated Financial Statements, included in the Annual Report on Form 10-K
for the year ended December 31, 2014, and Note B of the Notes to Consolidated
Financial Statements for the year ended December 31, 2014, included on Form 8-K/A,
include a summary of the significant accounting policies used in the
preparation of the condensed consolidated financial statements.
Revenue Recognition
The
Company recognizes revenue when persuasive evidence of an arrangement exists,
delivery has occurred or service has been rendered, the price is fixed or
determinable and collectability is reasonably assured.
Revenue and Expense Recognition for the Sales
Representation Segment
The Company recognizes commission revenue in its Sales Representation segment (see Note C) when persuasive evidence of an arrangement exists, service has been rendered, the price is fixed or determinable and collectability is reasonably assured. These conditions are deemed to be met when the underlying equipment has been accepted at the customer site in accordance with the specific terms of the sales agreement. Consequently, amounts billable under the agreement with GE Healthcare in advance of the customer acceptance of the equipment are recorded as accounts receivable and deferred revenue in the condensed consolidated balance sheets. Similarly, commissions payable to our sales force related to such billings are recorded as deferred commission expense when the associated deferred revenue is recorded. Commission expense is recognized when the corresponding commission revenue is recognized.
Variable Interest
Entities
The Company follows the guidance of accounting for variable interest entities, which requires certain variable interest entities to be consolidated by the primary beneficiary of the entities. Biox is a Variable Interest Entity (VIE).
Liabilities recognized as a result of consolidating this VIE do not represent additional claims on the CompanyŐs general assets. The financial information of Biox, which is included in the accompanying condensed consolidated financial statements, is presented as follows:
(in thousands)
(in thousands)
Reclassifications
Certain reclassifications have
been made to prior period amounts to conform with the current period presentation.
NOTE C – SEGMENT REPORTING
AND CONCENTRATIONS
The Company views its business in three segments –
the Sales Representation segment, the Equipment segment, and the IT segment. The Sales Representation segment
operates through the Vaso Diagnostics subsidiary and is currently engaged
solely in the fulfillment of the CompanyŐs responsibilities under our agreement
with GEHC. The IT segment includes
the operations of NetWolves and VasoHealthcare IT Corp. Operations in the IT segment began in the
third quarter of 2014. The
Equipment segment is engaged in designing, manufacturing, marketing and
supporting EECP¨ enhanced external counterpulsation systems both
domestically and internationally, as well as the development, production, marketing
and supporting of other medical devices.
The chief operating decision maker is the CompanyŐs Chief
Executive Officer, who, in conjunction with upper management, evaluates segment
performance based on operating income.
Administrative functions such as finance, human resources, and
information technology are centralized and related expenses allocated to each
segment. Other costs not directly
attributable to operating segments, such as audit, legal, director fees,
investor relations, and others, as well as certain assets – primarily
cash balances – are reported in the Corporate entity below. There are no intersegment revenues. Summary financial information for the
segments is set forth below:
(in
thousands)
For the three months ended September 30, 2015 and 2014, GE
Healthcare accounted for 44% and 84% of revenue, respectively. For the nine months ended September 30,
2015 and 2014, GE Healthcare accounted for 59% and 86% of revenue, respectively,
and $5.5 million or 63%, and $14.2 million or 93%, of accounts and other
receivables at September 30, 2015 and December 31, 2014, respectively.
Basic earnings (loss) per common share is
computed as earnings applicable to common stockholders divided by the
weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per common share
reflects the potential dilution that could occur if securities or other
contracts to issue common shares were exercised or converted to common stock.
Diluted earnings (loss) per share were computed based on the weighted average number of shares outstanding plus all potentially dilutive common shares. A reconciliation of basic to diluted shares used in the earnings per share calculation is as follows:
(in thousands)
The following table represents
common stock equivalents that were excluded from the computation of diluted
earnings per share for the three and nine months ended September 30, 2015 and 2014,
because the effect of their inclusion would be anti-dilutive.
(in thousands)
NOTE
E – ACCOUNTS AND OTHER RECEIVABLES, NET
The following table presents information regarding the
CompanyŐs accounts and other receivables as of September 30, 2015 and December
31, 2014:
(in thousands)
Trade receivables include amounts due for shipped products
and services rendered. Amounts
currently due under the GEHC Agreement are subject to adjustment in subsequent
periods should the underlying sales order amount, upon which the receivable is
based, change.
Allowance for doubtful accounts and commission adjustments
include estimated losses resulting from the inability of our customers to make
required payments, and adjustments arising from subsequent changes in sales
order amounts that may reduce the amount the Company will ultimately receive
under the GEHC Agreement. Due from
employees is primarily commission advances made to sales personnel.
Inventories,
net of reserves, consist of the following:
(in thousands)
At September 30, 2015 and December
31, 2014, the Company maintained reserves for excess and obsolete inventory of $673,000
and $815,000, respectively.
NOTE G – GOODWILL AND OTHER
INTANGIBLES
Goodwill aggregating $22,582,000 and
$3,288,000 was recorded on the CompanyŐs condensed consolidated balance sheets
at September 30, 2015 and December 31, 2014, respectively, of which $19,406,000, allocated to
the IT segment, resulted from the acquisition of NetWolves in May 2015. The remaining $3,176,000 of goodwill is
allocated to the CompanyŐs Equipment segment. The components of the change in goodwill
are as follows:
(in
thousands)
The CompanyŐs other
intangible assets consist of capitalized patent costs, customer lists and software
costs, as follows:
(in
thousands)
Patents, customer lists, and
software are included in other assets in the accompanying condensed consolidated
balance sheets and are amortized on a straight line basis over their estimated
useful lives of ten, seven, and five years, respectively. Amortization expense amounted to $167,000
and $502,000 for the three and nine months ended September 30, 2015, respectively,
and $50,000 and $146,000 for the three and nine months ended September 30,
2014, respectively.
NOTE H – OTHER ASSETS
Other assets consist of the following at September
30, 2015 and December 31, 2014:
(in thousands)
NOTE I – ACCRUED EXPENSES
AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the
following at September 30, 2015 and December 31, 2014:
(in thousands)
NOTE J - DEFERRED REVENUE
The changes in the CompanyŐs deferred revenues are as follows:
(in thousands)
NOTE K –
DEBT
On May 29, 2015, the Company entered into a Note Purchase Agreement with MedTechnology Investments, LLC (ŇMedTechÓ) pursuant to which it issued MedTech a secured subordinated promissory note (ŇNoteÓ) for $3,800,000 for the purchase of NetWolves. MedTech was formed to acquire the Note, and $1,950,000 of the aggregate funds used to acquire the Note was provided by six of our directors. In June 2015, a second Note for $750,000 was issued to MedTech for working capital purposes, $250,000 of which was provided by a director and a directorŐs relative. In July 2015, an additional $250,000 was borrowed under the Note Purchase Agreement.
The Notes bear interest at an annual rate of 9%, mature on May 29, 2019, may be prepaid without penalty, and are subordinated to any current or future Senior Debt as defined in the Subordinated Security Agreement. The Subordinated Security Agreement secures payment and performance of the CompanyŐs obligations under the Notes and as a result, MedTech was granted a subordinated security interest in the CompanyŐs assets.
In July 2015, NetWolvesŐ lending institution extended its $2.0 million line of credit and increased the maximum borrowings to $3.0 million. Advances under the line, which expires on August 26, 2016, bear interest at a rate of LIBOR plus 2.25% and are secured by substantially all of the assets of NetWolves Network Services, LLC and guaranteed by Vasomedical, Inc. At September 30, 2015, the Company had drawn approximately $1.2 million against the line.
NOTE L –
BUSINESS COMBINATION
On May 29, 2015, the Company entered into an agreement for, and completed its purchase of, all of the assets of NetWolves, LLC and its affiliates, including the membership interests in NetWolves Network Services LLC (collectively, ŇNetWolvesÓ) for $18,000,000 (the ŇPurchase PriceÓ). The purchase of NetWolves was accomplished pursuant to an Asset Purchase Agreement (the "Purchase Agreement"). As a result, the Company effectively purchased all rights, titles and ownership of all assets held by NetWolves. The Purchase Price was paid using $14,200,000 in cash on hand and $3,800,000 raised through the issuance of the Note to MedTech (See Note K). The Company believes there are significant operational synergies between NetWolvesŐ capabilities and VasoHealthcare ITŐs requirements under its VAR contract with GEHC, as well as the opportunity to expand NetWolvesŐ existing services to the healthcare IT market.
The operating results of NetWolves from May 29, 2015 to September
30, 2015 are included in the accompanying condensed consolidated statements of
operations and comprehensive income (loss) for the three and nine month periods
ended September 30, 2015. The
accompanying condensed consolidated balance sheet at September 30, 2015
reflects the acquisition of NetWolves effective May 29, 2015.
In accordance with Accounting Standards Codification 805,
Business Combinations, the total purchase consideration is allocated to the net
tangible and intangible assets acquired and liabilities assumed based on their
estimated fair values at May 29, 2015 (the acquisition date). The purchase price was initially allocated
based on the information then available, and certain amounts were adjusted
after revisions of certain preliminary estimates. The Company expects additional
measurement period adjustments will be recorded after obtaining more
information regarding, among other things, asset valuations, liabilities
assumed, and revisions of preliminary estimates. The following table summarizes the current
allocation of the assets acquired and liabilities assumed based on their
preliminary estimated fair values and current measurement period adjustments as
follows:
(in thousands)
During
the nine months ended September 30, 2015, the Company expensed $100,000 of
acquisition-related legal costs and incurred $60,000 in debt issue costs. The legal costs are included in the line
item Selling, General & Administrative costs in the accompanying condensed
consolidated statements of operations and comprehensive income (loss). The debt issue costs are recorded as a
reduction to long term notes payable in the accompanying condensed consolidated
balance sheet at September 30, 2015.
The amounts of revenue and net income of NetWolves included in the
CompanyŐs condensed consolidated statements of operations and comprehensive
income (loss) was $8,707,000 and $227,000, respectively, for the three months
ended September 30, 2015, and $11,470,000 and $377,000, respectively, for the
nine months ended September 30, 2015.
The goodwill is expected to be deductible for tax purposes.
The
following unaudited supplemental pro forma information presents the financial
results as if the acquisitions of Genwell and NetWolves had occurred January 1,
2013, and January 1, 2014, respectively.
(in thousands)
NOTE M – RELATED-PARTY TRANSACTIONS
One of the CompanyŐs directors, Peter Castle, was the Chief Executive Officer and President of NetWolves, LLC. Another of the CompanyŐs directors, David Lieberman, was a director of NetWolves Network Services, LLC. Mr. Castle and Mr. Lieberman owned of record approximately 10.4% and 5.7%, respectively of the membership interests of NetWolves LLC. Mr. Lieberman may also be deemed to have owned beneficially up to an additional 13.5% of such membership interests. The CompanyŐs board of directors negotiated the Purchase Price on an armŐs length basis, and both Mr. Castle and Mr. Lieberman abstained from the vote approving the Purchase Agreement.
The Company obtained an opinion regarding the fairness of the Purchase Price for the NetWolves entities from a reputable, independent third-party investment banking firm. $14,200,000 of the Purchase Price was paid for by cash on hand, and the remaining $3,800,000 was raised from the sale of a Subordinated Secured Note sold to MedTech. Of the $4,800,000 borrowed from MedTech at September 30, 2015, $2,200,000 was provided by six of our directors or members of their families.
David Lieberman,
the Vice Chairman of the CompanyŐs Board of Directors, is a practicing attorney
in the State of New York and a senior partner at the law firm of Beckman,
Lieberman & Barandes, LLP, which performs certain legal services for the
Company. Fees
of approximately $85,000 and $213,000 were billed by the firm for the three and
nine month periods ended September 30, 2015, respectively, at which date no
amounts were outstanding. Fees of
approximately $60,000 and $180,000 were billed by the firm for the three and
nine month periods ended September 30, 2014, respectively, at which date no
amounts were outstanding.
In January 2015, operations began under the VSK joint
venture. The Company accounts for
its investment in VSK using the equity method. At September 30, 2015, the Company had
contributed $100,000 to VSK, and $86,000 was due from VSK for equipment and
services the Company billed to it. VSK earned approximately $97,000 and $143,000
for the three and nine months ended September 30, 2015, respectively. Under the terms of the agreement, the
CompanyŐs accrues no interest in VSKŐs income in the years ending December 31,
2015, 2016 and 2017 unless certain performance targets are achieved. For the nine months ended September 30,
2015 such targets had not been achieved.
NOTE N –
COMMITMENTS AND CONTINGENCIES
Sales representation agreement
In June 2012, the Company concluded an
amendment of the GEHC Agreement with GEHC, originally signed on May 19,
2010. The amendment, effective July
1, 2012, extended the initial term of three years commencing July 1, 2010 to
five years through June 30, 2015. In
December 2014, the Company concluded an additional amendment, effective January
1, 2015, extending the term through December 31, 2018, subject to earlier
termination under certain circumstances and termination without cause on or
after July 1, 2017. These
circumstances include not materially achieving certain sales goals, not
maintaining a minimum number of sales representatives, and various legal and
GEHC policy requirements. Under the
terms of the agreement, the Company is required to lease dedicated computer
equipment from GEHC for connectivity to their network.
NOTE O - RECENTLY ISSUED ACCOUNTING
PRONOUNCEMENTS
In May 2014, the FASB issued ASU 2014-09
ŇRevenue from Contracts with CustomersÓ, a comprehensive new revenue
recognition standard which will supersede previous existing revenue recognition
guidance. The standard creates a five-step model for revenue recognition that
requires companies to exercise judgment when considering contract terms and
relevant facts and circumstances. The five-step model includes (1) identifying
the contract, (2) identifying the separate performance obligations in the
contract, (3) determining the transaction price, (4) allocating the transaction
price to the separate performance obligations and (5) recognizing revenue when
each performance obligation has been satisfied. The standard also requires
expanded disclosures surrounding revenue recognition. The standard is effective
for fiscal periods beginning after December 15, 2016 and allows for either full
retrospective or modified retrospective adoption. In August 2015, FASB issued ASU 2015-14,
ŇRevenue from Contracts with Customers – Deferral of the Effective DateÓ
(Topic 606). The amendments in this
ASU defer the effective date of ASU 2014-09, ŇRevenue from Contracts with Customers,Ó
for all entities by one year.
Public business entities should apply the guidance in ASU 2014-09 to
annual reporting periods beginning after December 15, 2017, including interim
reporting periods within that reporting period. Earlier application is permitted only as
of annual reporting periods beginning after December 15, 2016, including
interim reporting periods within that reporting period. The Company is
currently evaluating the impact of the adoption of this standard on its
Consolidated Financial Statements.
In April 2015, the FASB issued ASU
2015-03 ŇSimplifying the Presentation of Debt Issuance CostsÓ, which changes
the presentation of debt issuance costs in financial statements. An entity
presents such costs in the balance sheet as a direct deduction from the related
debt liability rather than as an asset. Amortization of the costs is reported
as interest expense. The standard
is effective for fiscal periods beginning after December 31, 2015 and allows
for early adoption. The Company has
early adopted this statement for the nine months ended September 30, 2015,
resulting in $60,000 in debt issue costs initially deducted from the MedTech debt
and $5,000 amortized to interest expense.
In September 2015, the FASB issued ASU
2015-16 ŇSimplifying the Accounting for Measurement-period AdjustmentsÓ, which
require that an acquirer recognize adjustments to provisional amounts that are
identified during the measurement period in the reporting period in which the
adjustment amounts are determined.
The standard is effective for fiscal periods beginning after December
15, 2015 and allows for early adoption.
The
Company is currently evaluating the impact of the adoption of this standard on
its Consolidated Financial Statements.
Except for
historical information contained in this report, the matters discussed are
forward-looking statements that involve risks and uncertainties. When used in
this report, words such as ŇanticipatesÓ, ŇbelievesÓ, ŇcouldÓ, ŇestimatesÓ,
ŇexpectsÓ, ŇmayÓ, ŇplansÓ, ŇpotentialÓ and ŇintendsÓ and similar expressions,
as they relate to the Company or its management, identify forward-looking
statements. Such forward-looking statements are based on the beliefs of the
CompanyŐs management, as well as assumptions made by and information currently
available to the CompanyŐs management. Among the factors that could cause
actual results to differ materially are the following: the effect of business and economic conditions; the effect of the dramatic changes taking place in the
healthcare environment; the impact of competitive procedures and products and
their pricing; medical insurance reimbursement policies; unexpected
manufacturing or supplier problems; unforeseen difficulties and delays in the
conduct of clinical trials and other product development programs; the actions
of regulatory authorities and third-party payers in the United States and
overseas; uncertainties about the acceptance of a novel therapeutic modality by
the medical community; continuation of the GEHC agreements and the risk factors
reported from time to time in the CompanyŐs SEC reports, including its recent
report on Form 10-K. The Company
undertakes no obligation to update forward-looking statements as a result of
future events or developments.
General Overview
Vasomedical, Inc. was incorporated in Delaware in July
1987. Unless the context requires
otherwise, all references to ŇweÓ, ŇourÓ, ŇusÓ, ŇCompanyÓ, ŇregistrantÓ,
ŇVasomedicalÓ or ŇmanagementÓ refer to Vasomedical, Inc. and its
subsidiaries. Until 2010, we were
primarily engaged in designing, manufacturing, marketing and supporting
Enhanced External Counterpulsation (EECP¨) systems, based on our
proprietary technology, to physicians and hospitals throughout the United
States and in select international markets. Beginning in July 2010 the Company,
through its wholly-owned subsidiary Vaso Diagnostics, Inc. d/b/a
VasoHealthcare, began its sales representation business via its agreement (GEHC
Agreement) with GE Healthcare (GEHC), the healthcare business unit of General
Electric Company (NYSE: GE), to be GEHCŐs exclusive sales representative for
the sale of select GEHC diagnostic imaging products in specific market segments
in the 48 contiguous states of the United States and the District of
Columbia. In June 2012, the GEHC Agreement was amended and extended
through June 30, 2015 and again, in December 2014, the GEHC Agreement was
further amended and extended through December 31, 2018, subject to earlier
termination under certain circumstances and termination without cause on or
after July 1, 2017.
In September 2011, the Company acquired Fast Growth
Enterprises Limited (FGE), a British Virgin Islands company, which owns or
controls two Chinese operating companies - Life Enhancement Technology Ltd. and
Biox Instruments Co. Ltd., respectively - to expand its technical and
manufacturing capabilities and to enhance its distribution network, technology,
and product portfolio. Also in
September 2011, the Company restructured to further align its business
management structure and long-term growth strategy, and started to operate
through three wholly-owned subsidiaries.
Vaso Diagnostics d/b/a VasoHealthcare continues as the operating
subsidiary for the sales representation of GE diagnostic imaging products;
Vasomedical Global Corp. operates the CompanyŐs Chinese companies; and
Vasomedical Solutions, Inc. was formed to manage and coordinate our EECP¨ therapy
business as well as other medical equipment operations.
In April 2014, the Company entered into an agreement with
Chongqing PSK-Health Sci-Tech Development Co., Ltd. (PSK) of Chongqing, China, the
leading manufacturer of ECP therapy systems in China, to form a joint venture
company, VSK Medical Limited (VSK), for the global marketing, sale and advancement
of ECP therapy technology. The Company
owns 49.9% of the shares of VSK.
VSK began operations in January 2015. The Company contributed $100,000 in cash
to VSK during the nine months ended September 30, 2015.
In June 2014, the Company entered into a Value Added
Reseller Agreement (VAR Agreement) with GEHC to become a national value added
reseller of GE Healthcare IT's Radiology PACS (Picture Archiving and
Communication System) software solutions and related services, including
implementation, management and support.
This multiyear VAR Agreement focuses primarily on existing customer
segments currently served by Vaso Diagnostics on behalf of GEHC. A new wholly owned subsidiary,
VasoHealthcare IT Corp., was formed to conduct the healthcare IT business.
In August 2014, the Company, through its wholly owned
subsidiary Wuxi Gentone Instruments Co. Ltd. (Gentone), acquired all of the
outstanding shares of Genwell Instruments Co. Ltd. (Genwell), located in Wuxi,
China. Genwell was formed in China
in 2010 with the assistance of a government grant to develop the MobiCareTM
wireless multi-parameter patient monitoring system and holds the patents and
intellectual property rights for this system.
In May 2015, the Company entered into an agreement for, and
completed its purchase of, all of the assets of NetWolves, LLC and its
affiliates, including the membership interests in NetWolves Network Services
LLC (collectively, ŇNetWolvesÓ).
The purchase of NetWolves was accomplished pursuant to an Asset Purchase
Agreement. As a result, the Company
effectively purchased all rights, titles and ownership of all assets held by NetWolves. NetWolves designs and delivers efficient
and cost-effective multi-network and multi-technology solutions as a managed
network provider, and provides a complete single-source solution that includes
design, network redundancy, application device management, real-time network
monitoring, reporting and support systems as a comprehensive solution. The Company believes there are
significant operational synergies between NetWolvesŐ capabilities and
VasoHealthcare ITŐs requirements under its VAR Agreement with GEHC, as well as
the opportunity to expand NetWolvesŐ existing services to the healthcare IT
market. The
operating results of NetWolves from May 29, 2015 to September 30, 2015 are
included in the accompanying condensed consolidated statements of operations
and comprehensive income (loss) for the three and nine month periods ended September
30, 2015.
We report the operations of Vasomedical Global Corp. and
Vasomedical Solutions, Inc. under our Equipment segment. Vaso Diagnostics activities are included
under our Sales Representation segment.
VasoHealthcare IT and NetWolves operations report under the IT
segment.
The Company continues to pursue acquisitions or partnership opportunities in the international and domestic markets and to seek expansion of its sales representation business.
Critical Accounting Policies and Estimates
Our discussion and analysis of
our financial condition and results of operations are based upon the
accompanying unaudited condensed consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in
the United States (ŇU.S. GAAPÓ). The preparation of financial statements in
conformity with U.S. GAAP requires management to make judgments, estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
expenses, and the related disclosures at the date of the financial statements
and during the reporting period. Although these estimates are based on our
knowledge of current events, our actual amounts and results could differ from
those estimates. The estimates made are based on historical factors, current
circumstances, and the experience and judgment of our management, who
continually evaluate the judgments, estimates and assumptions and may employ
outside experts to assist in the evaluations.
Certain of our accounting
policies are deemed ŇcriticalÓ, as they are both most important to the
financial statement presentation and require managementŐs most difficult,
subjective or complex judgments as a result of the need to make estimates about
the effect of matters that are inherently uncertain. For a discussion of our
critical accounting policies, see ŇManagementŐs Discussion and Analysis of
Financial Condition and Results of OperationsÓ in our Annual Report on Form 10-K
for the year ended December 31, 2014 as filed with the SEC on March 30, 2015.
Results of Operations – For the Three Months Ended September
30, 2015 and 2014
Total revenue for the three months ended September 30, 2015
and 2014 was $17,401,000 and $7,643,000, respectively, representing an increase
of $9,758,000, or 128% year-over-year. The revenue increase was primarily due to
$8,800,000 in revenue in the IT segment, of which $8,707,000 resulted from the operations
of NetWolves. Net income for the three
months ended September 30, 2015 was $1,230,000, compared to a net loss of
$123,000 for the three months ended September 30, 2014, representing an
improvement of $1,353,000. Our
total net income (loss) was $0.01 and $(0.00) per basic and diluted common
share for the three months ended September 30, 2015 and 2014, respectively.
Revenues
Commission revenues in the Sales
Representation segment were $7,584,000 in the third quarter of 2015, an
increase of 18%, as compared to $6,409,000 in the third quarter of 2014. The increase in commission revenues in
the third quarter of 2015 was due primarily to higher commission rates on
equipment delivered by GEHC during the quarter, as well as a 9% increase in
such deliveries. The Company
recognizes commission revenue when the underlying equipment has been accepted
at the customer site in accordance with the specific terms of the sales
agreement. Consequently, amounts
billable under the agreement with GE Healthcare prior to customer acceptance of
the equipment are recorded as deferred revenue in the condensed consolidated
balance sheet. As of September 30, 2015,
$18,595,000 in deferred commission revenue was recorded in the CompanyŐs
condensed consolidated balance sheet, of which $8,068,000 was long-term. At September 30, 2014, $16,760,000 in
deferred commission revenue was recorded in the CompanyŐs condensed
consolidated balance sheet, of which $8,359,000 was long-term.
Revenue in the IT segment for
the three months ended September 30, 2015 was $8,800,000 compared to $0 revenue
for the three months ended September 30, 2014, virtually all the increase resulting
from the acquisition of NetWolves.
Revenue in our Equipment segment
decreased by $217,000, or 18%, to $1,017,000 for the three-month period ended September
30, 2015 compared to the same period of the prior year. The decrease was principally due to a
decrease in EECP¨ revenues and international sales by our China operations
as a result of lower sales volume, offset by a small increase in field service
and service contract revenue.
Gross Profit
The Company had a gross profit
of $9,850,000, or 57% of revenue, in the third quarter of 2015 compared to $5,375,000,
or 70% of revenue, in the third quarter of the prior year, an increase of $4,475,000,
or 83%. The increase is principally
due to $3,492,000 in gross profit in the IT segment, of which $3,483,000
resulted from the acquisition of NetWolves, and higher revenues and gross
profit margin in the Sales Representation segment.
Sales Representation segment
gross profit was $5,883,000, or 78% of the segment revenue, for the three
months ended September 30, 2015 as compared to $4,581,000, or 71% of the
segment revenue, for the three months ended September 30, 2014. The increase in absolute dollars and
margin percentage was due to higher delivery volume and commission rates
during the third quarter of 2015 than in the same period last year, as well as lower commission expense in the third quarter
of 2015. Cost of commissions of $1,701,000
and $1,828,000, for the three months ended September 30, 2015 and 2014,
respectively, reflected commission expense associated with recognized
commission revenues. The decrease
was due to lower commission expenses in the third quarter 2015 compared to the
same period in 2014. Commission
expense associated with deferred revenue is recorded as deferred commission
expense until the related commission revenue is recognized.
IT segment gross profit for the
three months ended September 30, 2015 was $3,492,000 compared to $0 gross
profit for the three months ended September 30, 2014, virtually all the
increase resulting from the acquisition of NetWolves.
Equipment segment gross profit decreased
to $475,000, or 47% of Equipment segment revenues, for the third quarter of 2015
compared to $794,000, or 64% of Equipment segment revenues, for the same
quarter of 2014. Gross profit margin
in the Equipment segment decreased due mainly to lower average selling prices and
higher inventory obsolescence costs.
Operating Income (Loss)
Operating income was $1,337,000
for the three months ended September 30, 2015, compared to an operating loss of
$149,000 for the three months ended September 30, 2014, an improvement of $1,486,000.
During the third quarter of 2015, there was a $4,475,000 increase in gross
profit and a $3,011,000 increase in selling, general, and administrative costs. Operating income in the Sales
Representation segment increased by $1,863,000 to $2,586,000, compared to $723,000
in the third quarter of the prior year, due mainly to a higher gross margin
combined with lower SG&A costs. In addition, operating loss in the
Equipment segment increased by $177,000, or 44%, to $582,000 compared to $405,000
in the same quarter of the prior year, due primarily to $319,000 lower gross
profit, partially offset by $120,000 lower SG&A costs in the current year
quarter. Our IT segment had an
operating loss of $187,000 in the third quarter of 2015. This loss was reduced by a $237,000 operating
profit from NetWolves operations.
We anticipate that the operating profit in this segment will improve
with the NetWolves operations and increases in revenue in our GEHC VAR
business.
SG&A expenses for the third quarter
of 2015 and 2014 were $8,355,000, or 48% of revenues, and $5,344,000, or 70% of
revenues, respectively, reflecting an increase of $3,011,000 or approximately 56%.
The increase in SG&A expenditures in the third quarter of 2015 resulted
primarily from $3,679,000 in costs attributable to the IT segment in 2015
mainly due to the inclusion of NetWolves operations during the quarter, and
higher corporate expenses, primarily accounting fees, partially offset by lower
costs in the Sales Representation and Equipment segments.
Research
and development (ŇR&DÓ) expenses were $158,000, or 1% of revenues (16% of
Equipment segment revenues), for the third quarter of 2015, a decrease of $22,000,
or 12%, from $180,000, or 2% of revenues (15% of Equipment segment revenues),
for the third quarter of 2014. The decrease is primarily attributable to lower
clinical grants in the third quarter of 2015.
Interest and Other Income (Expense)
Interest and other income
(expense) for the third quarter of 2015 was $(69,000) as compared to $52,000
for the third quarter of 2014. The change from income to expense was due primarily
to higher interest expense from debt associated with the Genwell and NetWolves
acquisitions.
Income Tax Expense
During
the third quarter of 2015 we recorded income tax expense of $38,000 as compared
to income tax expense of $26,000 for the third quarter of 2014. The increase arose from higher Federal
income tax expense partially offset by lower tax expense at our Chinese
subsidiaries.
Results of Operations – For the Nine Months Ended September
30, 2015 and 2014
Total revenue for the nine months ended September 30, 2015
and 2014 was $35,698,000 and $22,599,000, respectively, representing an increase
of $13,099,000, or 58% year-over-year. The revenue increase was primarily due to
$11,611,000 in revenue in the IT segment, of which $11,470,000 resulted from
the operations of NetWolves. Net income
(loss) for the nine months ended September 30, 2015 and 2014 was $1,166,000 and
$(1,343,000), respectively, representing an improvement of $2,509,000. Our total net income (loss) was $0.01
and $(0.01) per basic and diluted common share for the nine months ended September
30, 2015 and 2014, respectively.
Revenues
Commission revenues in the Sales
Representation segment were $21,010,000 in the first nine months of 2015, an increase
of 9% from $19,335,000 in the first nine months of 2014. The increase in commission revenue in
the first nine months of 2015 is due to increases in both commission rate
earned and volume of equipment delivered by GEHC during the period. The Company recognizes commission
revenue when the underlying equipment has been accepted at the customer site in
accordance with the specific terms of the sales agreement. Consequently, amounts billable under the
agreement with GE Healthcare prior to customer acceptance of the equipment are
recorded as deferred revenue in the condensed consolidated balance sheet.
Revenue in the IT segment for
the nine months ended September 30, 2015 was $11,161,000 compared to $0 revenue
for the nine months ended September 30, 2014, virtually all the increase
resulting from the inclusion of four months of NetWolves results.
Revenue in our Equipment segment
decreased by $187,000, or 6%, to $3,077,000 for the nine-month period ended September
30, 2015 from $3,264,000 for the same period of the prior year. The decrease was due to decreases in EECP¨
revenues as a result of lower average selling prices, partially offset both by
higher EECP¨ sales volume, and by increases in international sales
by our China operations, and a decrease in service and accessory part revenue.
Gross Profit
The Company had a gross profit
of $22,746,000, or 64% of revenue, in the first three quarters of 2015 compared
to $16,023,000, or 71% of revenue, in the first three quarters of the prior
year, an increase of $6,723,000, or 42%.
The increase is principally due to $4,690,000 in gross profit in the IT
segment, of which $4,669,000 resulted from the inclusion of NetWolves
operations for the four months after the acquisition, and higher gross profit
margin in our Sales Representation segment.
Sales Representation segment
gross profit was $16,262,000, or 77% of the segment revenue, for the nine
months ended September 30, 2015 as compared to $14,053,000, or 73% of the
segment revenue, for the nine months ended September 30, 2014. The increase in absolute dollars and
margin percentage was due to higher commission rates, and higher
equipment deliveries by GEHC during the first nine months of 2015 than in
the same period last year, coupled with lower
commission expense in the first nine months of 2015. Cost of commissions of $4,748,000 and $5,282,000,
for the nine months ended September 30, 2015 and 2014, respectively, reflected commission
expense associated with recognized commission revenues. The decrease was due to lower commission
expenses in the nine-month period ended September 30, 2015 compared to the same
period in 2014. Commission expense associated with deferred revenue is recorded
as deferred commission expense until the related commission revenue is recognized.
IT segment gross profit for the
nine months ended September 30, 2015 was $4,690,000 compared to $0 gross profit
for the nine months ended September 30, 2014, virtually all the increase
resulting from the inclusion of four months of NetWolves results.
Equipment segment gross profit decreased
to $1,794,000, or 58% of Equipment segment revenues, for the first three quarters
of 2015 compared to $1,970,000, or 60% of Equipment segment revenues, for the
same period of 2014. Gross profit
margin in the Equipment segment decreased due mainly to lower average selling
prices and higher inventory obsolescence costs.
Operating Income (Loss)
Operating income was $1,257,000
for the nine months ended September 30, 2015 as compared to a loss of $1,443,000
for the nine months ended September 30, 2014, an improvement of $2,700,000. Partially offsetting the operating
income in the nine months ended September 30, 2015 was an operating loss of $908,000
in our IT segment, as compared to a $82,000 operating loss for this segment in
the same period of 2014. The IT segment began operations in the third quarter
of 2014. During the nine months
ended September 30, 2015, there was a $6,723,000 increase in gross profit partially
offset by a $4,192,000 increase in selling, general, and administrative
costs. Operating income in the
Sales Representation segment increased by $3,199,000 to $5,466,000 as compared
to $2,267,000 in the first nine months of the prior year, due mainly to higher
gross margin combined with lower SG&A costs. In addition, operating loss in the
Equipment segment decreased by $468,000, or 20%, to $1,893,000 compared to $2,361,000
in the same period of the prior year, due primarily to $476,000 lower SG&A
costs and $169,000 lower R&D costs in the current year period.
SG&A expenses for the first three
quarters of 2015 and 2014 were $21,059,000, or 59% of revenues, and $16,867,000,
or 75% of revenues, respectively, reflecting an increase of $4,192,000 or
approximately 25%. The increase in SG&A expenditures in the first three quarters
of 2015 resulted primarily from $5,597,000 in costs attributable to the IT
segment in 2015, primarily resulting from the NetWolves operations, and higher
corporate expenses, primarily legal and accounting fees, partially offset by
lower costs in the Sales Representation and Equipment segments.
Research
and development (ŇR&DÓ) expenses were $430,000, or 1% of revenues (14% of
Equipment segment revenues), for the first nine months of 2015, a decrease of $169,000,
or 28%, from $599,000, or 3% of revenues (18% of Equipment segment revenues),
for the first nine months of 2014. The decrease is primarily attributable to
non-recurring costs in the first nine months of 2014, not incurred in 2015,
associated with the reclassification by FDA of our EECP¨ therapy
system, as well as lower clinical grants in the first nine months of 2015.
Interest and Other Income (Expense)
Interest and other income
(expense) for the first three quarters of 2015 was $(40,000) as compared to $150,000
for the first three quarters of 2014. The change from income to expense was due
primarily to higher interest expense from debt associated with the Genwell and NetWolves
acquisitions.
Income Tax Expense
Cash and Cash Flow
We have financed our operations
from working capital and the proceeds from notes issued to MedTech. At September 30, 2015, we had cash and
cash equivalents of $1,928,000, short-term investments of $109,000 and negative
working capital of $8,235,000 compared to cash and cash equivalents of $9,128,000,
short-term investments of $111,000 and working capital of $9,215,000 at
December 31, 2014. $8,591,000 in
negative working capital at September 30, 2015 is attributable to the net
balance of deferred commission expense and deferred revenue. These are non-cash expense and revenue
items and have no impact on future cash flows.
Cash provided by operating
activities was $5,879,000 during the first nine months of 2015, compared to
$2,586,000 for the same period in 2014, which consisted of net income after
adjustments to reconcile net income to net cash of $2,356,000 and cash provided
by operating assets and liabilities of $3,520,000. The changes in the account
balances primarily reflect a decrease in accounts and other receivables of $7,860,000,
partially offset by decreases in deferred revenue of $2,782,000, accrued expenses
of $2,129,000, and accrued commissions of $548,000. Significantly higher commission billings
and recognized revenue were generated in the fourth quarter of 2014, resulting in
significant cash inflows early in 2015.
Cash used in investing activities during the nine-month
period ended September 30, 2015 was
$17,984,000, of which $17,267,000, net of cash acquired, was used for the
acquisition of NetWolves, $100,000 was invested in the VSK joint venture, and $619,000
was used for the purchase of equipment and software.
Cash provided by financing activities during the nine-month
period ended September 30, 2015 was $4,800,000 through the issuance of notes to
MedTech and $136,000 in borrowings on our line of credit, partially offset by $83,000
in repayments of notes issued for equipment purchases.
Liquidity
The Company expects to be profitable
for the year ending December 31, 2015 and to continue to generate positive cash
flow through its existing sales representation operations, from the operation
of NetWolves, and improved operating efficiency and growth in its China
operations and by expanding its market presence and product portfolio. The Company has reorganized its EECP¨ business
model, both domestically and internationally, including the start of operations
of the joint venture VSK Medical, intended to reduce costs and achieve
profitability in this business. The
Company will continue to pursue acquisitions and partnership opportunities in
the international and domestic markets and will look to expand its sales
representation business.
Evaluation of Disclosure Controls and Procedures
Disclosure
controls and procedures reporting as promulgated under the Exchange Act is
defined as controls and procedures that are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act are recorded, processed, summarized and reported within the time
periods specified in the SEC rules and forms. Disclosure controls and procedures
include without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is accumulated and communicated to our
management, including our Chief Executive Officer (ŇCEOÓ) and Chief Financial
Officer (ŇCFOÓ), or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
Our CEO and our CFO have
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as of September 30, 2015 and have concluded that the
CompanyŐs disclosure controls and procedures were effective as of September 30,
2015.
Changes in Internal Control Over Financial Reporting
There
was no change in the CompanyŐs internal control over financial reporting during
the CompanyŐs last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the CompanyŐs internal control over
financial reporting.
Exhibits
31 Certifications of the Chief
Executive Officer and the Chief Financial Officer pursuant to Rules 13a-14(a)
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certifications of
the Chief Executive Officer and the Chief Financial Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
In accordance with the
requirements of the Exchange Act, the Registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
VASOMEDICAL,
INC.
By: /s/ Jun Ma
Jun Ma
President
and Chief Executive Officer
(Principal
Executive Officer)
/s/ Michael J. Beecher .
Michael
J. Beecher
Chief
Financial Officer and Principal Accounting Officer
Date: November 13, 2015
EXHIBIT 31.1
CERTIFICATION
PURSUANT TO RULE 13a/15d OF THE SECURITIES EXCHANGE ACT OF 1934,
AS
ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jun Ma, certify that:
/s/ Jun
Ma
.
Jun Ma
President and Chief Executive Officer
Date: November 13, 2015
EXHIBIT 31.2
CERTIFICATION
PURSUANT TO RULE 13a/15d OF THE SECURITIES EXCHANGE ACT OF 1934,
AS
ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael J. Beecher, certify
that:
/s/ Michael
J. Beecher
.
Michael J.
Beecher
Chief Financial Officer
Date: November 13, 2015
EXHIBIT
32.1
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly
report of Vasomedical, Inc. and subsidiaries (the ŇCompanyÓ) on Form 10-Q for
the period ending September 30, 2015, as filed with the Securities and Exchange
Commission on the date hereof (the ŇReportÓ), I, Jun Ma, as President and Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. ¤ 1350, as
adopted pursuant to ¤ 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully
complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and
(2) The information
contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
/s/ Jun Ma
.
Jun
Ma
President
and Chief Executive Officer
Dated: November 13, 2015
EXHIBIT
32.2
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the
quarterly report of Vasomedical, Inc. and subsidiaries (the ŇCompanyÓ) on Form
10-Q for the period ending September 30, 2015, as filed with the Securities and
Exchange Commission on the date hereof (the ŇReportÓ), I, Michael J. Beecher,
as Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ¤
1350, as adopted pursuant to ¤ 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully
complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and
(2) The information
contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
/s/ Michael J. Beecher
.
Michael J. Beecher
Chief Financial Officer
Dated: November 13, 2015