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ACCELERA INNOVATIONS, INC. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(Edgar Glimpses Via Acquire Media NewsEdge) Accelera Innovations, Inc. ("we", "our", "us" "Accelera" or the "Company"), a Delaware corporation, is a healthcare service company which will initially focus on its technology assets that were licensed to the Company by our majority shareholder Synergistic Holdings, LLC ("Licensor"), a privately-held company organized under the laws of Illinois to further develop, pursuant to which the Company was granted a thirty (30) year exclusive, non-transferrable worldwide license for proprietary Internet-based, software ("Accelera Technology") that is intended to provide interoperable technology improving the quality of care while reducing the cost . Results of Operations For the three months ending March 31, 2013, the Company had no revenues and incurred general and administrative expenses of $1,750,090. For the period from inception (April 29, 2008) through March 31 2013, the Company had no activities that produced revenues from operations and had a net loss of $(7,039,755), mostly due to employee stock based compensation expenses, due to legal, accounting, audit and other professional service fees incurred in relation to the formation of the Company and the filing of the Company's Registration Statement on Form 10 filed in August 2008, filling Form S-1 with the SEC in May of 2012 and other related compliance matters. During the three months ended March 31, 2013, which was the first quarter of our fiscal year ending December 31, 2013, we had no revenue and incurred general and administrative expenses of $1,750,090. Our net loss was $1,750,090, due to the general and administrative expenses. General and administrative expenses for the first quarter of fiscal 2013 consisted of $1,750,000 for the estimated value of stock-based compensation to our Chief Executive Officer, Chief Operations Officer, Chief Strategic Officer and Chief Acquisitions Officer and $90 administrative support, which mostly consisted of bank fees. The estimated value of stock based compensation for our executive officers was based on the employment agreements with John F. Wallen, our Chief Executive Officer, James R. Millikan, our Chief Financial Officer, Cynthia Boerum, our Chief Strategic Officer and Patrick Custardo, our Chief Acquisitions Officer which provide for 1,750,000, 1,000,000, 1,000,000 and 1,000,0,00 stock options, respectively. The stock option shall vest with respect to 20% of the total number of shares which are the subject of the option immediately after the effective date of the agreement April 26, 2012 and January 3, 2013 for Mr. Custardo, thereafter the remaining shares granted under the option shall vest ratably on a monthly basis at the end of each month over a 48-month period. Notwithstanding the foregoing, in the event of a closing of a Change of Control transaction, all options from this agreement and others shall immediately vest and become fully exercisable. Options have been valued using the Black-Scholes Model, which was not materially different than the shares current valuation, for a total compensation value to be recognized over the vesting term of the agreement, in the amount of $19,000,000. The stock based compensation expense is an estimate and significant judgment was involved in attempting to determine the value of the company, Accelera Innovations, Inc., for which the options are exercisable. The actual value of our common stock may turn out to be much higher or lower than estimated amount, due to the lack of any reliable data on the Company's current valuation. Our common stock has never traded publicly, and no stock has traded in private markets either, except for privately negotiated sales to current investor, the founder of the company and the founder of the technology from which the company subsequently licensed rights. The Company does not have any offers for purchase of its common stock in any stage, and no stock is registered with the Securities and Exchange Commission; therefore if any stock were to be sold the Company would need to do so under an effective registration statement or under an applicable exemption from registration. With the limited data points available to the Company and its board of directors regarding the Company's valuation, we have estimated the value of common stock at $4 per share for financial reporting purposes. This amount was determined based on the minimum stock price required for listing on any Nasdaq market, and it closely approximates a $85 million valuation for the entire Company (considered "micro-cap" by most equity analysts), which we do not believe unreasonable for a development stage company with product ready for market. Each $1 change in estimated per-share value of our common stock would change the estimated stock-based compensation expense as reported for the three months ending March 31, 2013 by approximately $437,500, so that a $3 estimated value for Company's common stock ($1 less per share) would result in lower general and administrative expenses and a higher estimated value for the Company's common stock would higher general and administrative expenses. Due to the lower exercise price offered to our executive offers in their employment contracts ($0.0001 per share, since they are currently not receiving any cash compensation) as compared to the estimated value for financial reporting purposes, the stock price volatility, stock option term and interest rate assumptions do not have a significant impact on the estimated value of the options as they would if the options were granted at market price. As noted above, the actual value of our common stock may turn out to be much higher or lower than the amount estimated for financial reporting purposes, due to the current lack of any reliable data on the Company's current valuation. 12 -------------------------------------------------------------------------------- To date, our general and administrative expenditures, which in most other cases are paid in cash include legal fees, accounting fees, costs associated with SEC filings and preparation of documents. We expect that, if we are successful in securing additional capital, future general and administrative expenses will increase significantly as compared to the periods ended March 31, 2013. In addition, we expect to incur research and development expenses as we seek to advance our products. Liquidity and Capital Resources As of March 31, 2013 and December 31, 2012, the Company had a total of $10 and $0 in assets, respectively and the Company has no liabilities as of March 31, 2013 and December 31, 2012, respectively. The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the years ended March 31, 2013 and 2012: March 31, 2013 March 31, 2012 Net Cash Used In Operating Activities $ (90 ) $ (33,391 ) Net Cash Used In Investing Activities - - Net Cash Provided By Financing Activities 100 27,677 Net Increase (Decrease) In Cash $ 10 $ (5,714) Our principal sources of liquidity are our cash and the cash flow provided by the shareholder advances and equity financing. We believe that further equity financing is needed to satisfy our anticipated cash requirements through the next 12 months. As of March 31, 2013, we had a cash balance of only $10 and no other assets. We have an accumulated deficit during our development stage and no means to pay liabilities in excess of our assets. Accelerated Venture Partners LLC ("AVP") has agreed to fund certain administrative operating expenses of Accelera until the Company succeeds in raising additional funds, at which point the administrative operating expenses will be due. However, AVP may seek to force earlier payment of the amounts which we owe, or AVP may decide in the future not to continue funding costs on behalf of Accelera, although we are not aware of any plans for them to do so. If we are not successful in raising additional capital, we may not be able to pay our liabilities that arise and may have to cease operations. We have a consulting agreement with AVP under which AVP has agreed to provide us with certain advisory services that include reviewing our business plan, identifying and introducing prospective financial and business partners, and providing general business advice regarding our operations and business strategy. Under the consulting agreement, cash compensation of $400,000 is due to AVP upon our securing $5 million in available cash from funding, and an additional $800,000 is due upon our securing $15 million in available cash from funding (inclusive of the first $5 million). The cash compensation is to be paid to AVP at the rate of $50,000 per month. The total cash compensation to be received by AVP under the consulting agreement is not to exceed $1,200,000 unless we receive an amount of funding in excess of $15 million. If we receive equity or debt financing that is an amount less than $5 million, in between $5 million and $15 million, or greater than $15 million, the cash compensation earned by the AVP under its consulting services agreement will be prorated. We have the option to make a lump sum payment to AVP in lieu of the monthly cash payments. The Company will not be able to commercialize its technology without additional capital, if we do not raise additional funds of at least $30 million for the advancement of its technology over the next three years it will lose its rights to the technology. The Company will require significant additional financing in order to meet the milestones and requirements of its Business Plan and avoid discontinuation of the License. Funding would be required for staffing, marketing, public relations and the necessary distribution to expanding the scope of its offering to include the global market. The Company intends to seek an aggregate of $35,000,000 in 2013 and 2014 through the sale of equity or convertible debt securities, the issuance of these securities could dilute existing shareholders. The Company's funding plans include selling additional capital stock and/or borrowing to fund the aforementioned expenses. The Company intends to approach Hedge Funds, Venture Capital Groups, Private Investment Groups and other Institutional Investment Groups in its efforts to achieve future funding. We plan to measure our future liquidity primarily by the cash and working capital available to fund our operations, if we are ever able to raise capital. To date we have not raised any capital and, accordingly, do not have any capital available to fund our operations, as stated above. We will not be able to commercialize our products and services without additional capital. We are evaluating various means of raising our initial capital, including through the sale of equity securities, licensing agreements or other means. We expect to incur losses for at least several years into the future as we develop and deploy our products and services and we are unable to estimate when, if ever, we will receive revenue or have a positive cash flow. The Company's auditor has expressed in his report conditions that raise substantial doubt about the Company's ability to continue as a going concern. In support of the Company's efforts and cash requirements, it has relied on advances from the majority shareholder and related parties until such time that the Company can support its operations through the generation of revenue or attains adequate financing through sales of its equity and/or traditional debt financing. The majority shareholder has expressed continued support; however there is no formal written commitment for continued support by the shareholder or any other source. Funds that have been advanced or paid in satisfaction of liabilities has been contributed to equity in exchange for common shares. There is no written or oral commitment to continue such funding. 13 -------------------------------------------------------------------------------- Plan of Operations Accelera Innovations, Inc. ("Accelera"), a Delaware corporation, is a healthcare service company which will initially focus on its technology assets that were licensed to the Company by our majority shareholder Synergistic Holdings, LLC ("Licensor"), a privately-held company organized under the laws of Illinois, pursuant to which the Company was granted a thirty (30) year exclusive, non-transferrable worldwide license for proprietary Internet-based, software platform that is fully functional in its current state ("Accelera Technology") that is designed to provide interoperable technology that is intended to improve the quality of care while reducing the cost as described below. LICENSED TECHNOLOGY OVERVIEW 1. Data Forms - Topical Network Data Warehouse Architecture 2. Axiom - Healthcare Specific Business Rules Engine. 3. Kinetic Forms - A Dynamic Web Page Generator. 4. VT Secure - Enterprise Security Framework 5. Patient Portal 6. Self-Management Disease Modules 7. Provider Portal 8. Private Label Applications SOFTWARE DESCRIPTION The Accelera Health Care Framework / Multi Vertical Health Care (MVHC) Technology comprises a suite of eight separate technologies described below; Health Care Framework, Security, Business Rules, Data Integration, Patient Assessment, Medical Alerts, Biometric integration, Secure communication and networking, Data Mining on Large Data Sets (Mega Data). Security Framework, Integrated into the Accelera's Healthcare Framework is designed to provide enterprise level application and data security. Assessment Engine: For clinical and self-health care and Wellness management. Parallel Processing Data Mining Engine: Patient Identification, Medical Informatics, Content Personalization. Suite of Products: Data Forms -Topical Network, a data forming technology and framework that is designed to organize and efficiently deliver relevant information for large data sets (Mega Data) and which can ingest any data format into well-organized data structure designed specifically to communicate the other components of the Accelera Framework. Axiom - Business Rules Engine is designed specifically for Healthcare which is data mining engine. Axiom is a parallel or simultaneous processing rules engine designed to apply complex rule-sets on very large dimensional data input to produce multiple result outputs. Kinetic Forms - Dynamic Webpage Generator, a dynamic web based assessment engine that is intended to interfaces with data forms and Axiom. VT Secure - Integrated into the Accelra Healthcare Framework, is designed to provide enterprise level security and is intended to protect applications and data and is designed to provide performance and scalability for secure medical data mining. Patient Portal - Consumer-facing internet-based technology that is designed to encompass the following: · Connect between patient and provider through a fully secure two-way Patient Portal, including After Visit Summaries, patient messaging and care plan adherence alerts based on relevant health care protocols · Display relevant patient and care plan information in easy-to-understand onscreen and printable displays for patients and triaged formatting for caregivers. · Provide patient behavior modifications self-management modules · Allow third party access into the patient portal · Create Personal Health Records (PHR) that are personalized based on patient condition for patient care and messaging 14-------------------------------------------------------------------------------- Self-Management Disease Modules - Provider and Consumer-facing internet-based technology that is designed to encompass the following: · Interactive disease management tools that focus on chronic health conditions. It is designed to include content indexed to specific triggers within a disease state · Personalized based on National Drug Code (NDC), and Current Procedural Terminology (CPT4) codes · Proprietary messaging based on CMS Medicare/Medicaid established triggers · Valid and reliable behavioral health triggers that facilitate care plan adherence and compliance Provider Portal - Provider-facing internet-based technology that is designed to encompass the following: · Dashboard access to Patient Portal inputs at the patient level · Summary access to disease management adherence & compliance messaging alerts · Direct input into patient health records · Direct recommendations to the patient Private Label Applications Accelera EMR- A certified Electronic Medical Record application designed to be used primarily in physician offices to automate the patient's clinical chart and meet the ARRA (Federal Mandated Meaningful Use) criteria. Accelera PM -The Practice Management application designed to be used primarily in physician offices to automate the physician's revenue cycle management system. Accelera Patient Portal - The Patient Portal application designed to be used as a communication tool between patient and physician office staff. This application is intended to allow the patient to access their medical record information in a secure environment. Accelera HIE - The Health Information Exchange application is intended to allow providers and payors of healthcare to exchange secure data by creating the continuum of care for the patient, and decreasing healthcare cost. Accelera ACO - The Accountable Care Organization application needed to operate an ACO environment. This application is designed to offers the ACO business the ability to report to CMS the usage of Medicare benefits and is intended to provide tools to lower the cost of patient care. Accelera HIS - The Hospital Information System application is designed to includes all applications to manage most hospital information systems. The department applications included in the HIS are as follows: Patient Master; Appointments, Outpatient Management; Inpatient Management; Emergency Department; Patient Billing; Claims Management; Provider Fee Management; Accounts Receivable; Duplicate Registration; Medical Records; System Master; System Configuration, Resource Scheduler; CPOE; Clinical Decision Support System; Clinical Documentation; Barcode Medication Administration; Laboratory Management System; Radiology System; PACS; Pharmacy Management System; Materials/Supply Management System; Operating Room Management System; Nursing Management; Blood Bank System; Dietary Management System; Hospital Patient Portal. Accelera, intends to provide its cloud based healthcare services through monthly or yearly subscription agreements ("software-as-a-service" also known as "SaaS") to the healthcare industry. The Company intends on positioning itself as a technology and service solution for providers and payers such as the hospitals, medical offices, medical insurance companies, Accountable Care Organizations, Patient Centered Medical Homes, and Provider Service Networks who are seeking to create an interoperable technology platform that is patient-centric. The coordinated care would begin with the office visit using the Accelera Practice Management and Electronic Medical Record applications. The provider may also access disparate patient consults and share the patient's record using the Accelera Health Information Exchange and Portal. When the patient is admitted to the hospital setting, all of the functions are intended tobe automated using the Accelera Hospital Information System. The physician would continue to have full access to the patient's information to receive accurate and efficient information. If the primary care physician is part of an Accountable Care Organization, then those reports required by Center for Medicare and Medicaid will be created and distributed using the Accelera Accountable Care Organization application. The Accelera Patient Management Record is designed to identify patients with preventable, yet escalating associated costs, then directs intense online self-management services to improve the quality-of-life for the patient and deliver more effective health information. Patients would be electronically triaged using the Center for Medicare and Medicaid (CMS) rule-set for disease management, as well as proprietary evidence-based disease management rules. These rules are based on clinical standards from major health organizations.. This is intended to allow providers, as well as patients, to monitor care through targeted interventions. The technology platform is intended to allow healthcare providers to anticipate patient care needs, motivate patient compliance, activate evidence-based standards of care, and improve efficiency. 15 -------------------------------------------------------------------------------- The Accelera Analytic product is designed for potential customers that include healthcare payers, provider organizations, government entities worldwide, and employer groups. Accelera products are designed to identify, analyze, and minimize healthcare risk by data mining and predictive analysis while containing costs and improving the quality of care. Accelera also intends to develop modeling software to predict medical costs and help improve the financing, organization, and delivery of health services. The Accelera Security solution is designed to reduce or stop the security breach at the point of care, by auditing the user and encasing the applications in a discrete shell. Without proper access, the application will separate the data elements from each other, patient name will not be associated with demographic or clinical information. Patient data is split into two parts, the patient identifier is separated from the clinic/medical data and both are encrypted. An encrypted data key unlocks the dual encryption bringing the information together and is intended to increase patients' confidence in the information technology utilized. The Accelera Solution is designed to improve patient care, reduce costs, eliminate redundant data entry, improve operational efficiency, but most importantly, bring together long term needs of the caregivers and is intended to satisfy the business requirements of the healthcare enterprise. The intended benefits of our solutions for potential customers include: · Lowers administration costs through a less invasive call-back system - email alerts, text messages, online alerts · A benefit of batch health care analytics is the use of "predictive modeling across multiple clinical conditions. This process is designed to identify undiagnosed conditions for patients within an insurer's patient population, or suggest interventions to prevent conditions from developing. · Reducing occurrences and cost related to a healthcare data breaches. · Reducing the hardware environment and cost by using our cloud technology. · Increased Mobility. · Improving patient care and safety. · Helping healthcare organizations maintain their market positions and meet their financial commitments. Our current plans, predicated on raising $35,000,000 from the sale of 5,000,000 shares of common stock in this offering and will allow the Company to meet the milestones and requirements of its Business Plan and avoid discontinuation of the license. Funding would be required for staffing, marketing, public relations and the necessary research precedent to expanding the scope of its offering to include the global market. The Company intends to approach Hedge Funds, Venture Capital Groups, Private Investment Groups and other Institutional Investment Groups in its efforts to achieve future funding. It is estimated that $9,874,940 will be used for management, sales and marketing, $17,680,122 will be used for infrastructure and software fees and an estimated $4,417,978 will be spent on legal, accounting, rent and other payables leaving $3,026,960 in reserve for increased working capital. (b) Management's Discussion, Analysis of Financial Condition and Results of Operations The Company has conducted minimal operations since inception. No revenue has been generated by the Company from April 29, 2008 (Inception) to March 31, 2013. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management's plan includes obtaining additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might arise as a result of this uncertainty. In order to meet our need for cash we are attempting to raise money from the primary offering. There is no assurance that we will be able to raise enough money through the primary offering to stay in business. Whatever money we do raise, will be applied first to costs of this offering and then to deploy the Company's licensed technology. If we do not raise all of the money we need from the primary offering, we will have to find alternative sources, such as a second public offering, a private placement of securities, or loans from our officer or director or others. Our director is unwilling to make any commitment to loan us any money at this time. At the present time, we have not made any arrangements to raise additional cash, other than through the primary offering. If we need additional cash and can't raise it we will either have to suspend operations until we do raise the cash, or cease business entirely. 16 -------------------------------------------------------------------------------- Our current plans, predicated on raising $35,000,000 from the sale of 5,000,000 shares of common stock in this offering and will allow the Company to meet the milestones and requirements of its Business Plan and avoid discontinuation of the license. Funding would be required for staffing, marketing, public relations and the necessary research precedent to expanding the scope of its offering to include the global market. The Company intends to approach Hedge Funds, Venture Capital Groups, Private Investment Groups and other Institutional Investment Groups in its efforts to achieve future funding. It is estimated that $9,874,940 will be used for management, sales and marketing, $17,680,122 will be used for infrastructure and software fees and an estimated $4,417,978 will be spent on legal, accounting, rent and other payables leaving $3,026,960 in reserve for increased working capital. We expect to use the proceeds from our offering for infrastructure and software, sales and marketing, employee compensation, legal fees, accounting fees, rent and other payables to deploy our technology. The Company's technology platform is fully functional in its current state and is anticipated to be marketed into metropolitan markets with an estimated expenditure of approximately $16 million through December 31, 2013, and approximately $19 million through December 31, 2014 for general corporate purposes, for which proceeds we have an estimated plan. In detail, over the first twelve months after financing it is estimated that the Company will utilize an estimated $24 million of the offering for the following milestones: Infrastructure; Transfer our licensed software technology from internal Company servers to a data center facility with redundant backup systems, it is estimated this will take three months at an estimated cost of $3 million and an estimated $250,000 per month thereafter for expansion and service fees totaling $5.2 million over the first twelve months from financing. Software Fees: Under our Licensing Agreement with Synergistic Holdings LLC, the Company is to pay $5 million on July 13, 2012 that was verbally extended by Licensor to July 13, 2013 and $7.5 million on April 13 2014 for a total of $12.5 million in licensing fees over the next twelve months. Sales and Marketing: The Company intends to provide its cloud based healthcare services through monthly or yearly subscription agreements ("Software-as-a-Service" also known as "SaaS") to the healthcare industry. It is estimated that the Company will grow from the current three full time employees marketing the product to twenty-three within the next six months including management, advertising, tradeshows and travel expenses at an estimated cost of 2.2 million and growing to fifty-seven people including management and all sales and marketing activity within the next twelve months totaling an estimated cost of $5.3 million. Legal fees, Accounting fees, Rent and other payables: The Company estimates these fees to be an estimated $950,000 over the next twelve months. The above mentioned expenditures meet the Company's requirement under the Licensing Agreement to advance the licensed technology as agreed. It's estimated that if the Company cannot accomplish the milestones described above due to lack of financing the Company's product offering will be delayed. The minimum amount of capital the Company needs to raise over the next twelve months is $1 million to continue operations. There is no guarantee that the Company will be able to raise this or any amount of additional capital and a failure to do so would have a significant adverse effect on the Company's ability, or would cause significant delays in its ability to address the market for content delivery and achieve its Business Plan. Neither the Company nor any of its advisors or consultants has significant experience in raising funds similar to the $35,000,000 estimated to be required. Our business may not materialize in the event we are unable to execute on our plan described in our prospectus. The events or circumstances that may prevent the accomplishment of our business objectives, include, without limitation, (i) the fact that, if we do not raise a minimum of US $5,000,000 of additional funding by July 13, 2013, an additional $7,500,000 by April 13, 2014, an additional $10,000,000 April 13, 2015 and an additional $7,500,000 by April 13, 2016 equaling the minimum funding requirement of $30,000,000 for the deployment of its licensed technology over the next three years we will lose the rights to the licensed technology, (ii) If physicians and hospitals do not accept our products and services, or delay in deciding whether to purchase our products and services. (iii) If we are forced to reduce our prices, our business, financial condition and results of operations could suffer, (iv) we are subject to a number of existing laws, regulations and industry initiatives, non-compliance with certain of which could materially adversely affect our operations, (v) the Company's need for and ability to obtain additional financing, (vii) the possibility that the Company may not be able to secure approvals and other governmental clearances necessary to carry out the Company's deployment and development plans, and (viii) the exercise of voting control the Company's officers and directors collectively hold of the Company's voting securities. We had $10 in cash reserves as of March 31, 2013,. Until we actually commence our deployment program, our monthly cash requirements are minimal. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the three months ended March 31, 2013, the Company has had no revenue and had a net loss of $1,750,090. As of March 31, 2013, the Company has an accumulated deficit of $7,039,755 during the development stage. And the Company has not emerged from the development stage. In view of these matters, the Company's ability to continue as a going concern is dependent upon the Company's ability to begin operations and to achieve a level of profitability. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. 17 -------------------------------------------------------------------------------- Off-Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. |