0001575705-16-000130.txt : 20160516 0001575705-16-000130.hdr.sgml : 20160516 20160516170354 ACCESSION NUMBER: 0001575705-16-000130 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 82 CONFORMED PERIOD OF REPORT: 20160331 FILED AS OF DATE: 20160516 DATE AS OF CHANGE: 20160516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: First Choice Healthcare Solutions, Inc. CENTRAL INDEX KEY: 0001416876 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071] IRS NUMBER: 900687379 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-53012 FILM NUMBER: 161654931 BUSINESS ADDRESS: STREET 1: 709 S. HARBOR CITY BLVD. STREET 2: SUITE 250 CITY: MELBOURNE STATE: FL ZIP: 32901 BUSINESS PHONE: (321) 725-0090 MAIL ADDRESS: STREET 1: 709 S. HARBOR CITY BLVD. STREET 2: SUITE 250 CITY: MELBOURNE STATE: FL ZIP: 32901 FORMER COMPANY: FORMER CONFORMED NAME: Medical Billing Assistance, Inc. DATE OF NAME CHANGE: 20110107 FORMER COMPANY: FORMER CONFORMED NAME: Medical Billing Assistance Inc DATE OF NAME CHANGE: 20071030 10-Q 1 fchs_1q16.htm FORM 10-Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: March 31, 2016

 

or

 

 ☐ 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: 000-53012

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   90-0687379
(State or other jurisdiction of incorporation)   (IRS Employer Identification No.)

 

709 S. Harbor City Boulevard, Suite 250, Melbourne, Florida 32901

(Address of principal executive offices)

 

(321) 725-0090

(Registrant’s telephone number, including area code)

 

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 past 12 months, and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒   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  ☒   No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer   Accelerated filer
Non-accelerated filer   Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 

As of May 12, 2016, there were 23,908,983 shares outstanding of the registrant’s Common Stock.

 

 

 

 

PART I. FINANCIAL INFORMATION   3
         
  ITEM 1 Financial Statements   3
         
    Condensed consolidated balance sheets as of March 31, 2016 (unaudited) and December 31, 2015   3
         
    Condensed consolidated statements of operations for the three months ended March 31, 2016 and 2015 (unaudited)   4
         
    Condensed consolidated statement of stockholders’ equity for the three months ended March 31, 2016 (unaudited)   5
         
    Condensed consolidated statements of cash flows for the three months ended March 31, 2016 and 2015 (unaudited)   6
         
    Notes to condensed consolidated financial statements (unaudited)   7
         
  ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   26
         
  ITEM 3. Quantitative and Qualitative Disclosures about Market Risk   31
         
  ITEM 4. Controls and Procedures   31
         
PART II. OTHER INFORMATION   32
         
  ITEM 1. Legal Proceedings   32
  ITEM 1A. Risk Factors   32
  ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds   32
  ITEM 3. Defaults Upon Senior Securities   32
  ITEM 4. Mine Safety Disclosures   32
  ITEM 5. Other Information   32
  ITEM 6. Exhibits   32
         
  SIGNATURES   33

 

 2

 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS 

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   March 31,  December 31,
   2016  2015
   (unaudited)   
ASSETS          
Current assets          
Cash (amounts related to VIE of $1,624,203 and $1,556,303)  $10,051,999   $1,594,998 
Cash-restricted       359,414 
Accounts receivable, net (amounts related to VIE of $4,806,623 and $4,544,308)   7,448,429    6,623,894 
Employee loans (amounts related to VIE of $882,226 and $636,293)   918,226    672,293 
Prepaid and other current assets (amounts related to VIE of $151,931 and $183,465)   225,150    316,773 
Capitalized financing costs, current portion (amounts related to VIE of $329 and $1,317)   329    39,533 
 Total current assets   18,644,133    9,606,905 
           
Property, plant and equipment, net of accumulated depreciation of $989,481 and $3,075,648 (amounts related to VIE of $724,859 and $773,808)   2,689,335    8,613,502 
           
Other assets          
Goodwill (amount relating to VIE of $899,465)   899,465    899,465 
Deferred costs, net of amortization of $295,757 and $215,096   2,930,670    3,011,331 
Patient list, net of accumulated amortization of $80,000 and $75,000   220,000    225,000 
Patents, net of accumulated amortization of $42,975 and $38,200   243,525    248,300 
Investments (amounts related to VIE of $22,005 and $16,914)   22,005    16,914 
Deferred Tax Asset   181,029     
Deposits   17,003    2,571 
 Total other assets   4,513,697    4,403,581 
           
Total assets  $25,847,165   $22,623,988 
           
LIABILITIES AND EQUITY          
Current liabilities          
Accounts payable and accrued expenses (amounts related to VIE of $2,321,972 and $2,319,056)  $4,078,887   $3,937,244 
Accounts payable, related party (amount related to VIE of $251,588)   251,588    251,588 
Stock based payable   1,280,200    1,198,900 
Advances, related party   133,796    43,082 
AMT Tax Payable   181,029     
Settlement payable   450,000    600,000 
Line of credit, short term (amount related to VIE of $439,524 and $416,888)   2,939,524    2,566,888 
Note payable, related party, current portion (amount related to VIE of $437,372 and $428,645)   437,372    428,645 
Notes payable, current portion (amount related to VIE of $7,235 and $10,341)   507,209    7,652,941 
Unearned revenue   42,704    42,704 
Deferred rent, short term portion (amount related to VIE of $118,810)   118,810    118,810 
 Total current liabilities   10,421,119    16,840,802 
           
Long term debt:          
Deposits held   67,432    67,432 
Notes payable, long term portion   406,830    535,822 
Deferred rent, long term portion (amount related to VIE of $2,200,603 and $2,141,199)   2,200,603    2,141,199 
 Total long term debt   2,674,865    2,744,453 
           
Total liabilities   13,095,984    19,585,255 
           
Equity          
Preferred stock, $0.01 par value; 1,000,000 shares authorized, Nil issued and outstanding        
Common stock, $0.001 par value; 100,000,000 shares authorized, 22,967,626 and 22,867,626 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively   22,968    22,868 
Common stock subscription   175,000    175,000 
Additional paid in capital   21,288,692    21,196,792 
Accumulated deficit   (9,707,976)   (19,274,917)
Total stockholders’ equity attributable to First Choice Healthcare Solutions, Inc.   11,778,684    2,119,743 
Non-controlling interest   972,497    918,990 
 Total equity   12,751,181    3,038,733 
           
Total liabilities and equity  $25,847,165   $22,623,988 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

 3

 

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

   Three months ended March 31,
   2016  2015
Revenues:          
Patient Service Revenue  $6,877,665   $2,285,288 
Provision for bad debts   (262,524)   (45,224)
Net patient service revenue less provision for bad debts   6,615,141    2,240,064 
Rental Revenue   626,612    265,103 
 Total Revenue   7,241,753    2,505,167 
           
Operating expenses:          
Salaries and benefits   2,780,569    946,120 
Other operating expenses   1,187,274    451,485 
General and administrative   2,405,877    553,284 
Depreciation and amortization   298,950    140,509 
 Total operating expenses   6,672,670    2,091,398 
           
Net income from operations   569,083    413,769 
           
Other income (expense):          
Gain on sale of property and improvements   9,188,968     
Miscellaneous income (expense)   58,857    750 
Amortization financing costs   (15,325)   (20,686)
Interest expense, net   (181,135)   (363,144)
 Total other expense   9,051,365    (383,080)
           
Net income before provision for income taxes   9,620,448    30,689 
           
Income taxes (benefit)        
           
Net income   9,620,448    30,689 
           
Non-controlling interest (note 15)   (53,507)    
           
NET INCOME ATTRIBUTABLE TO FIRST CHOICE HEALTHCARE SOLUTIONS, INC.  $9,566,941   $30,689 
           
Net income per common share, basic  $0.42   $0.00 
           
Net income per common share, diluted  $0.36   $0.00 
           
Weighted average number of common shares outstanding, basic   22,886,307    18,062,046 
           
Weighted average number of common shares outstanding, diluted   26,219,641    22,090,565 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

 4

 

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

STATEMENT OF STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2016

(unaudited)

 

   Common stock  Additional
Paid in
  Common Stock  Accumulated  Non-controlling   
   Shares  Amount  Capital  Subscriptions  Deficit  Interest  Total
Balance, December 31, 2015   22,867,626   $22,868   $21,196,792   $175,000   $(19,274,917)  $918,990   $3,038,733 
Common stock issued in connection with loan extension   100,000    100    91,900                92,000 
Net income                   9,566,941    53,507    9,620,448 
 Balance, March 31, 2016   22,967,626   $22,968   $21,288,692   $175,000   $(9,707,976)  $972,497   $12,751,181 

  

 5

 

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

   Three months ended March 31,
   2016  2015
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net Income  $9,620,448   $30,689 
Adjustments to reconcile net loss to cash provided by operating activities:          
Depreciation and amortization   298,950    140,509 
Amortization of financing costs   15,325    20,686 
Bad debt expense   262,524    45,224 
Gain on sale of property   (9,188,968)    
Common stock issued in connection with loan extension   92,000    99,000 
Stock based compensation   81,300    48,250 
Changes in operating assets and liabilities:          
Accounts receivable   (1,087,059)   (492,641)
Prepaid expenses and other   91,623    26,075 
Restricted funds   359,414    (66,478)
Employee loans   (245,933)    
Accounts payable and accrued expenses   122,628    (38,121)
Settlement payable   (150,000)    
Deposits   (14,432)    
Deferred rent   59,404     
Unearned income       12,876 
 Net cash provided by (used in) operating activities   317,224    (173,931)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Proceeds from sale of property   15,068,497      
Purchase of equipment   (126,073)   (8,284)
 Net cash provided by (used in) investing activities   14,942,424    (8,284)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from advances   90,714    74,000 
Proceeds from lines of credit   372,636    140,000 
Net payments on notes payable   (7,265,997)   (198,078)
 Net cash (used in) provided by financing activities   (6,802,647)   15,922 
           
Net increase (decrease) in cash and cash equivalents   8,457,001    (166,293)
Cash and cash equivalents, beginning of period   1,594,998    279,087 
           
Cash and cash equivalents, end of period  $10,051,999   $112,794 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Cash paid during the period for interest  $181,135   $264,144 
Cash paid during the period for taxes  $   $ 
           
Supplemental Disclosure on non-cash investing and financing activities:          
Common stock issued in settlement of accrued expenses  $   $15,000 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

 6

 

 

NOTE 1 —BASIS OF PRESENTATION

 

A summary of the significant accounting policies applied in the presentation of the accompanying unaudited condensed consolidated financial statements follows:

 

General

 

The (a) condensed consolidated balance sheet as of December 31, 2015, which has been derived from the audited financial statements of First Choice Healthcare Solutions, Inc. (“FCHS” and including, where appropriate, its consolidated subsidiaries and entities in which we have a controlling financial interest, the “Company”), and (b) the unaudited condensed consolidated interim financial statements as of March 31, 2016 of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. To determine if we hold a controlling financial interest in an entity, we first evaluate if we are required to apply the variable interest entity (“VIE”) model to the entity, otherwise the entity is evaluated under the voting interest model.

 

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of results that may be expected for the year ending December 31, 2015. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on April 14, 2016.

 

Basis of Presentation

 

Effective April 4, 2012, Medical Billing Assistance, Inc., a Colorado corporation (“Medical Billing”), merged with and into the Company. The effect of the merger was that Medical Billing reincorporated from Colorado to Delaware (the “Reincorporation”). The Company is deemed to be the successor issuer of Medical Billing under Rule 12g-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

As a result of the Reincorporation, the Company changed its name to First Choice Healthcare Solutions, Inc. and its shares underwent an effective four-for-one reverse split. Other than the foregoing, the Reincorporation did not result in any change in the business, management, fiscal year, accounting, and location of the principal executive offices, assets or liabilities of the Company.

 

On April 2, 2012, the Company, through its wholly owned subsidiary FCID Medical, Inc., completed its acquisition of First Choice Medical Group of Brevard, LLC (“First Choice – Brevard”), pursuant to the Membership Interest Purchase Closing Agreement (the “Purchase Agreement”). The Company has been managing the practice of First Choice – Brevard since November 1, 2011, pursuant to a Management Services Agreement.

 

Brevard Orthopaedic Spine & Pain Clinic, Inc.

 

Effective May 1, 2015, the Company, through its recently formed wholly owned subsidiary, TBC Holdings of Melbourne, Inc., entered into an Operation and Control Agreement (the Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), whereby the Company will have sole and exclusive management and control of The B.A.C.K. Center, including, but not limited to, administrative, financial, facility and business operations, including the requirement to absorb losses or right to receive economic benefits. The initial term of the Agreement expires on December 31, 2016 with an option by the Company to extend the term until December 31, 2023.

 

The Agreement allows the Company to hold the current or potential rights that give it the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, combined with a variable interest that gives the Company the right to receive potentially significant benefits or the obligation to absorb potentially significant losses. The Company has a controlling financial interest in the VIE. Rights held by others to remove the party with power over the VIE are not considered unless one party can exercise those rights unilaterally. When changes occur to the structure of the entity, the Company will reconsider whether it is subject to the VIE model. The Company continuously evaluates whether it has a controlling financial interest in the VIE.

 

 7

 

 

Crane Creek Surgery Center

 

Effective October 1, 2015, the Company, through its recently formed wholly owned subsidiary, CCSC Holdings, Inc., acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”) in exchange for an investment of $560,000 comprised of $140,000 cash and a promissory note for $420,000 which bears 8% interest per annum, matures April 15, 2016 and is personally guaranteed by the Company’s Chief Executive Officer. In connection with the investment, the Company is entitled 51% voting rights for all decisions that most significantly affect the economic performance of Crane Creek. The 40% equity interest acquired entitles the Company to 40% of the profit or loss of Crank Creek. This note was paid in full on April 15, 2016.

 

The unaudited condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries FCID Holdings, Inc., MTMC of Melbourne, Inc., Marina Towers, LLC, FCID Medical Inc., TBC Holdings of Melbourne, Inc., First Choice – Brevard, Surgical Partners of Melbourne, Inc. and CCSC Holdings, Inc., along with two VIE, The B.A.C.K. Center and Crane Creek. All significant intercompany balances and transactions, including those involving the VIE, have been eliminated in consolidation.

 

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

 

Use of estimates

 

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant estimates include the recoverability and useful lives of long-lived assets, the fair value of the Company’s stock, and stock-based compensation. Actual results may differ from these estimates.

 

Revenue recognition

 

The Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, “Revenue Recognition” (“ASC 605-10”), which requires that four basic criteria be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

 

ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, “Multiple-Element Arrangements” (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing ASC 605-25 on the Company’s financial position and results of operations was not significant.

 

The Company recognizes in accordance with Accounting Standards Codification subtopic 954-310, “Health Care Entities” (“ASC 954-310”), significant patient service revenue at the time the services are rendered, even though it does not assess the patient’s ability to pay. Therefore, The Company’s interim and annual periods reports disclose both, its policy for assessing and disclosing the timing and amount of uncollectable patient service revenue recognized as doubtful. Qualitative and quantitative information about significant changes in the allowance for doubtful accounts related to patient accounts receivable are disclosed in the Company’s reports. These estimates are based upon the past history and identified trends for each of our payers.

 

 8

 

 

Patient service revenue

 

The Company recognizes patient service revenue associated with services provided to patients who have third-party payer coverage on the basis of contractual rates for the services provided. For uninsured or self-pay patients that do not qualify for charity care, the Company recognizes revenue on the basis of its standard rates for services provided (or on the basis of discounted rates, if negotiated or provided by policy). On the basis of historical experience, a portion of the Company’s patient service revenue may be potentially uncollectible due to patients who are unable or unwilling to pay for the services provided or the portion of their bill for which they are responsible. Thus, the Company records a provision for bad debts related to potentially uncollectible patient service revenue in the period the services are provided.

 

Rental revenue

 

FCID Holdings had one real estate holding, Marina Towers, a Class A 78,000 square foot, six-story building located on the Indian River in Melbourne, Florida. The address is 709 South Harbor City Boulevard, Melbourne, Florida 32901. In addition to housing our corporate headquarters and First Choice Medical Group, the building, which averages 95% annual occupancy, also leases commercial office space to tenants. Our corporate headquarters currently utilize 2,521 square feet on the fifth floor of Marina Towers; and First Choice Medical Group, including its MRI center and Physical Therapy center, currently occupies 26,838 square feet on the ground, first and second floors. Until March 2016, Marina Towers was owned by Marina Towers, LLC, a subsidiary owned by FCID Holdings (99%) and MTMC of Melbourne, Inc. (1%), both wholly owned subsidiaries of the Company.

 

On March 31, 2016, we completed the sale of Marina Towers to Global Medical REIT Inc. for a purchase price of $15.45 million. In addition, our wholly owned subsidiary, Marina Towers, LLC, leased back the entire facility via a 10-year absolute triple-net master lease agreement that will expire in 2026 and be renewable for two five-year periods on the same terms and conditions as the primary lease term with the exception of rent, which will be adjusted to the prevailing market rent at renewal and will escalate in successive years during the extended lease period.

 

Until Marina Towers’ sale on March 31, 2016, the Company recognized rental revenue associated with the period of time the facility is leased at the contractual lease rates (or on the basis of discounted rates, if negotiated).

 

In addition, beginning May 1, 2015, TBC Holdings of Melbourne, Inc., through The B.A.C.K. Center, subleases approximately 34,480 square feet of commercial office space to third party tenants.

 

Cash

 

Cash consists of cash held in bank demand deposits. The Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. As of March 31, 2016, the Company had $10,051,999 cash, of which $1,624,203 held by VIE. As of December 31, 2015, the Company had $1,594,998 cash, of which $1,556,303 held by VIE.

 

Concentrations of credit risk

 

The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. Occasionally, the Company’s cash and cash equivalents in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed by senior management.

 

Accounts receivables

 

Accounts receivables are carried at their estimated collectible amounts net of doubtful accounts. The Company analyzes its past history and identifies trends for each major payer sources of revenue to estimate the appropriate allowance for doubtful accounts and provision for bad debts. Management regularly reviews data about these major payer sources of revenue in evaluating the sufficiency of the allowance for doubtful accounts.

 

 9

 

 

  Rental receivables. Accounts receivables from rental activities are periodically evaluated for collectability in determining the appropriate allowance for doubtful account provision for bad debts and provision of bad debts.
     
  Patient receivables. Accounts receivables from services provided to patients who have third-party coverage, the Company analyzes contractually due amounts and provides a provision for bad debts, if necessary. The Company records a provision for bad debts in the period of service on the basis of past experience or when indications are the patients are unable or unwilling to pay the portion of their bill for which they are responsible. The difference between the standard rates (or the discounted rates if negotiated) and the amounts actually collected after all reasonable collection efforts have been exhausted, is charged off against the allowance for doubtful accounts.

 

As of March 31, 2016 and December 31, 2015, the Company’s provision for bad debts was $2,917,884 and $2,498,398, respectively.

 

Segment information

 

Accounting Standards Codification subtopic “Segment Reporting” 280-10 (“ASC 280-10”) establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. ASC 280-10 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The information disclosed herein represents all of the material financial information related to the Company’s principal operating segments (see Note 17 – Segment Information).

 

Patents

 

Intangible assets with finite lives are amortized over their estimated useful lives. Intangible assets with indefinite lives are not amortized, but are tested for impairment annually. The Company’s intangible assets with finite lives are patent costs, which are amortized over their economic or legal life, whichever is shorter. These patent costs were acquired on September 7, 2013 by the issuance of 636,666 shares of the Company’s common stock to a related party. The shares of common stock were valued at $286,500, which was estimated to be approximately the fair value of the patent acquired and did not materially differ from the fair value of the common stock. The amortization for the three months ended March 31, 2016 and 2015 was $4,775 and $4,775, respectively. Accumulated amortization of patent costs was $42,975 and $38,200 at March 31, 2016 and December 31, 2015, respectively.

 

Patient list

 

Patient list is comprised of acquired patients in connection with the acquisition of First Choice - Brevard and is amortized ratably over the estimated useful life of 15 years. The amortization expenses for the three months ended March 31, 2016 and 2015 was $5,000 and $5,000, respectively. Accumulated amortization of patient list costs was $80,000 and $75,000 at March 31, 2016 and December 31, 2015, respectively.

 

Net income per share

 

The Company computes basic net income per share by dividing net income per share available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of basic and diluted income per share for the three months ended March 31, 2016 and 2015 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.

 

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Potentially dilutive securities excluded from the computation of basic and diluted net income per share are as follows:

 

   March 31,
2016
  March 31,
2015
Warrants to purchase common stock   4,324,630    4,195,000 
Options to purchase common stock   3,000,000     
Totals   7,324,630    4,195,000 

 

Stock-based compensation

 

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the consolidated statements of operations, as if such amounts were paid in cash.

 

Deferred costs

 

On May 1, 2015, in connection with the Operation and Control Agreement with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), the Company reserved 3,000,000 options to purchase the Company’s common stock at $1.35 per share, expiring on December 31, 2023 and vesting contingent on The B.A.C.K. Center employees executing employment agreements with TBC Holding and the acquisition of the variable interest entity. The determined fair value of $3,226,427, determined using the Black Scholes option pricing model with the following assumptions: Dividend yield: 0%; Volatility: 134.09% and Risk free rate: 2.12%, is amortized ratably to operations over an estimated 8.67-year life. The amortization for the three months ended March 31, 2016 was $80,661. Accumulated amortization of the deferred costs was $295,757 at March 31, 2016.

 

Investments

 

The Company has adopted Accounting Standards Codification subtopic 323-10, Investments-Equity Methods and Joint Ventures (“ASC 323-10), which requires the accounting for investments where the Company can exert significant influence, but not control of a joint venture or equity investment. The Company owned a 0.6660% interest in a non-consolidated affiliate, Doctor’s Surgical Partnership, LTD. In accordance with the equity method of accounting, investments in non-consolidated affiliates are carried at cost and adjusted for the Company’s proportionate share of their undistributed earnings or losses.

 

Income Taxes

 

The Company accounts for income taxes pursuant to Accounting Standards Codified 740 (“ASC 740”). Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Fair value

 

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:

 

 11

 

 

  Level 1 - Quoted prices in active markets for identical assets or liabilities.
     
  Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
     
  Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

 

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

 

The carrying value of the Company’s cash, accounts receivable, accounts payable, short-term borrowings (including lines of credit and notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

 

As of March 31, 2016 and December 31, 2015, the Company did not have any items that would be classified as level 1, 2 or 3 disclosures.

 

Recent accounting pronouncements

 

There are other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.

 

Subsequent events

 

The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements, except as disclosed.

 

NOTE 3 – LIQUIDITY

 

The Company incurred various non-recurring expenses in 2015 in connection with the planned development of its Healthcare Services Business. Management believes the continuing trend of positive growth before interest, taxes, depreciation and amortization in 2016 will support improved liquidity. In 2015, the Company converted to equity a total of $2,892,314 in outstanding debt, advances and accrued interest. Currently, the Company has four main sources of liquidity, its line of credit with CT Capital, LP; patient service revenue received from FCID Medical, Inc., TBC Holdings of Melbourne, Inc. and CCSC Holdings, Inc.; and rental revenue received from its real estate interests, FCID Holdings, Inc. and TBC Holdings of Melbourne, Inc.

 

On June 13, 2013, the Company’s subsidiary, First Choice – Brevard entered into a loan and security agreement with CT Capital, Ltd., d/b/a CT Capital, LP, a Florida limited liability partnership for an accounts receivable line of credit in the maximum aggregate amount of $1,500,000. Under the line of credit with CT Capital, the Company reduced the annual interest rate from 12% per annum to 6% per annum in exchange for the issuance to CT Capital of 100,000 restricted shares of the Company’s common stock. On June 9, 2015, First Choice – Brevard entered into a modification agreement amending the loan and security agreement, increasing the maximum aggregate amount available from $1,500,000 to $2,000,000 and on December 14, 2015, increasing the maximum aggregate available from $2,000,000 to $2,500,000 and extending the maturity date to July 30, 2017 in exchange for 100,000 restricted shares of the Company’s common stock. The $500,000 increase may be repaid at any time, and is not subject to the conversion provision set forth in the loan agreement. All other terms and conditions of the loan agreement remain in full force and effect. As of March 31, 2016, the Company had used $2,500,000 of the amount available under the line of credit. (See Note 6 – Lines of Credit)

 

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FCID Holdings had one real estate holding, Marina Towers, a Class A 78,000 square foot, six-story building located on the Indian River in Melbourne, Florida. The address is 709 South Harbor City Boulevard, Melbourne, Florida 32901. In addition to housing our corporate headquarters and First Choice Medical Group, the building, which averages 95% annual occupancy, also leases commercial office space to tenants. Our corporate headquarters currently utilizes 2,521 square feet on the fifth floor of Marina Towers; and First Choice Medical Group, including its MRI center and Physical Therapy center, currently occupies 26,838 square feet on the ground, first and second floors. Until March 2016, Marina Towers was owned by Marina Towers, LLC, a subsidiary owned by FCID Holdings (99%) and MTMC of Melbourne, Inc. (1%), both wholly owned subsidiaries of the Company.

 

On March 31, 2016, we completed the sale of Marina Towers to Global Medical REIT Inc. for a purchase price of $15.45 million. In addition, our wholly owned subsidiary, Marina Towers, LLC, leased back the entire facility via a 10-year absolute triple-net master lease agreement that will expire in 2026 and be renewable for two five-year periods on the same terms and conditions as the primary lease term with the exception of rent, which will be adjusted to the prevailing market rent at renewal and will escalate in successive years during the extended lease period. Until Marina Towers’ sale on March 31, 2016, the Company recognized rental revenue associated with the period of time the facility is leased at the contractual lease rates (or on the basis of discounted rates, if negotiated).

 

In addition, beginning May 1, 2015, TBC Holdings of Melbourne, Inc., through The B.A.C.K. Center, subleases 31,835 square feet of commercial office space to third party tenants as of March 31, 2016.

 

The Company believes that the current positive cash balance, along with continued execution of its business development plan and the sale and leaseback of Marina Towers, will allow the Company to further improve its working capital and currently anticipates that it will have sufficient capital resources to meet projected cash flow requirements through the date that is one year and one day from the filing of this report.

 

However, in order to execute the Company’s business development plan, which there can be no assurance it will do, the Company may need to raise additional funds through public or private equity offerings, debt financings, corporate collaborations or other means and potentially reduce operating expenditures. If the Company is unable to secure additional capital, it may be required to curtail its business development initiatives and take additional measures to reduce costs in order to conserve its cash.

 

NOTE 4 — PROPERTY, PLANT, AND EQUIPMENT

 

Property, plant and equipment at March 31, 2016 and December 31, 2015 are as follows:

 

   March 31,
2016
  December 31,
2015
Land  $   $1,000,000 
Building       3,055,168 
Building improvements   182,246    4,211,749 
Computer equipment   348,180    340,065 
Medical equipment   2,888,249    2,822,027 
Office equipment   260,141    260,141 
    3,678,816    11,689,150 
Less: accumulated depreciation   (989,481)   (3,075,648)
   $2,689,335   $8,613,502 

 

During the three months ended March 31, 2016 and 2015, depreciation expense charged to operations was $208,514 and $130,734, respectively.

 

Sale/Leaseback

 

On March 31, 2016, the Company sold Marina Towers, a 78,000 square-foot medical office building for a purchase price of $15.45 million to Global Medical REIT Inc. The acquisition includes the site and building, an easement on the adjacent property to the north for surface parking, all tenant leases, and above and below ground garages (the “Property”).

 

 13

 

 

The entire facility was leased back to Marina Towers, LLC, a wholly owned subsidiary of the Company, via a 10-year absolute triple-net master lease agreement that expires in 2026. The Company has two successive options to renew the lease for five-year periods on the same terms and conditions as the primary non-revocable lease term with the exception of rent, which will be adjusted to the prevailing fair market rent at renewal and will escalate in successive years during the extended lease period. The Company does not have any residual interest nor the option to repurchase the facility at the end of the lease term.

 

The lease is classified as an operating lease and as such recorded a gain on sale of property of $9,188,968 during the three months ended March 31, 2016.

 

The following is a schedule of future minimum lease payments for the non-cancelable operating lease for each of the next five years ending December 31 and thereafter:

 

Nine months ended December 31, 2016   $828,506 
Year ended December 31, 2017    1,104,675 
Year ended December 31, 2018    1,104,675 
Year ended December 31, 2019    1,121,246 
Year ended December 31, 2020    1,143,670 
Year ended December 31, 2021 and thereafter    6,387,969 
    $11,690,741 

 

For the three months ended March 31, 2016, the Company collected $268,513 in net rental revenue from third party tenants of Marina Towers.

 

NOTE 5 — ADVANCES

 

At March 31, 2016 and December 31, 2015, the Company received an aggregate of $133,796 and $43,082, respectively, as cash advances from non-related parties. The advances are due upon demand with an interest rate of 12% per annum.

 

NOTE 6 — LINES OF CREDIT

 

Line of credit, CT Capital

 

On June 13, 2013, the Company’s subsidiary, First Choice – Brevard entered into a loan and security agreement (the “Loan Agreement”) with CT Capital, Ltd., d/b/a CT Capital, LP, a Florida limited liability partnership (the “Lender”). Under the Loan Agreement, the Lender committed to make an accounts receivable line of credit in the maximum aggregate amount of $1,500,000 to First Choice - Brevard with an interest rate of 12% per annum (the “Loan”). The maturity date of the Loan is December 31, 2016. Interest is due and payable monthly. Upon default, the interest may be adjusted to the highest rate permissible by law. The Loan is secured by the accounts receivable and assets of the Company’s subsidiary, First Choice – Brevard, which constitute the collateral for the repayment of the Loan. The Loan Agreement also includes covenants, representations, warranties, indemnities and events of default that are customary for facilities of this type. The advance rate is defined as: 80% of all receivables to be 120 days or less at the net collection rate of approximately 27% of total billings, excluding patient billings and collections. Additionally, allowable accounts receivable will also include 50% of all accounts receivable protected by legal letters of protection. At any time up until December 31, 2016, the Lender may convert all or any portion of the outstanding principal amount or interest on the Loan into common stock of the Company at a conversion price of $0.75 per share. The Company did not record an embedded beneficial conversion feature in the note since the fair value of the common stock did not exceed the conversion rate at the date of commitment.

 

On November 8, 2013, in consideration for the issuance of 100,000 restricted shares of the Company’s common stock, the Lender agreed to modify its Loan. Under the Loan Agreement, as amended, the annual rate of interest of the Loan was reduced from 12% per annum to 6% per annum and will remain at 6% until November 1, 2015. All other terms under the Loan Agreement remain the same.

 

On June 9, 2015, First Choice – Brevard and the Lender entered into a Modification Agreement (“Modification”) further amending the Loan Agreement dated June 13, 2013, thereby increasing the Company’s accounts receivable line of credit from $1,500,000 to $2,000,000. All of the other terms and conditions of the Loan Agreement, as amended, remain in full force and effect.

 

 14

 

 

On December 14, 2015, First Choice-Brevard entered into a Modification Agreement (“Modification”) amending the Loan and Security Agreement dated June 13, 2013. The Modification Agreement increased the Company’s accounts receivable line of credit from $2,000,000 to $2,500,000 and extended the maturity date of the Loan Agreement to June 30, 2017 (“Maturity Date”). In addition, the Company agreed to maintain an outstanding balance of not less than $1,000,000 until the Maturity Date (“Minimum Borrowing”) and provide sixty (60) days prior written notice to prepay up to $1,000,000 of the outstanding indebtedness in excess of the Minimum Borrowing. All of the other terms and conditions of the Loan Agreement remain in full force and effect.

 

In consideration of the $500,000 increase in the accounts receivable line of credit, the Company issued the Lender 100,000 shares of its common stock, valued at $92,000. The $500,000 increase may be repaid by the Company at any time, and is not subject to the conversion provisions set forth in the Loan Agreement. The shares were accrued for as of December 31, 2015 and issued in the current quarter.

 

The obligations of the Company under the Loan Agreement, as amended, are guaranteed by certain affiliates of the Company, including a personal guarantee issued by the Company’s Chief Executive Officer.

 

As of March 31, 2016 and December 31, 2015, the outstanding balance was $2,500,000 and $2,150,000, respectively.

 

Line of credit, Florida Business Bank

 

On June 27, 2012, The B.A.C.K. Center entered into a Promissory Note (the “Loan Agreement”) with Florida Business Bank, a Florida banking corporation (the “Lender”). Under the Loan Agreement, the Lender committed to make an accounts receivable line of credit in the maximum aggregate amount of $1,000,000, with an interest rate of Prime floating plus 1.0%, as published in The Wall Street Journal, with a floor of 4.50% per annum (the “Loan”).

 

The Loan was modified on April 9, 2013, allowing a temporary increase to $1,383,000 and allowing for a one-time draw of up to $995,000 to be distributed to the shareholders for the purposes of financing the capitalization of TBC Equipment Leasing, LLC. The one-time draw was repaid within 45 days and the availability under the Loan returned to $1,000,000. The modification allows for an interest rate of one month Libor floating plus 2.75%, as published in The Wall Street Journal, with a floor of 2.96% per annum.

 

Interest shall be due and payable monthly and principal is due on demand. The outstanding principal balance plus all accrued but unpaid interest shall be due on demand (the “Maturity Date”). Upon default, the interest may be adjusted to the highest rate permissible by law.

 

The Loan is secured by all assets of The B.A.C.K. Center now owned or hereafter acquired. The assets constitute the collateral for the repayment of the Loan.

 

The Loan Agreement also includes covenants, representations, warranties, indemnities and events of default that are customary for facilities of this type. The advance rate is defined as: 60% of eligible accounts receivables. Eligible receivables include all Medicare and Medicaid receivables less than 90 days old multiplied by a factor of 0.25, plus all other receivables less than 90 days old multiplied by a factor of 0.50. As of March 31, 2016, The B.A.C.K. Center had not violated the loan covenants.

 

The obligations of The B.A.C.K Center under the Loan Agreement are guaranteed by the shareholders of The B.A.C.K. Center. The Loan Agreement is also guaranteed in the amount of $950,000 by related parties of The B.A.C.K. Center. As of March 31, 2016 and December 31, 2015, the outstanding balance on the Loan was $439,524 and $416,888, respectively.

 

NOTE 7 — SETTLEMENT PAYABLE

 

On November 2, 2015, the Company and MedTRX Collection Services, Inc. signed a settlement and mutual release agreement, whereby the parties have agreed to settle all disputes and the pending arbitration actions and release each other from all claims, counterclaims, liabilities and obligations, except for obligations stipulated in the settlement or as otherwise reserved.

 

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In connection with the settlement, on November 6, 2015, the Company issued two non-interest bearing promissory notes in aggregate of $650,000, due the earlier of a) April 2, 2016, b) the date real estate (as identified) is sold, financed or transferred or c) date the stock payment (as described above) is redeemed. As of March 31, 2016 and December 31, 2015, the balance due on outstanding settlement promissory notes was $450,000 and $600,000, respectively. However, the Company paid the notes in full on April 1, 2016.

 

NOTE 8 — NOTE PAYABLE, RELATED PARTY

 

Effective October 1, 2016, the Company acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”) in exchange for an investment of $560,000 comprised of $140,000 cash and a promissory note for $420,000 which bears 8% interest per annum, matures April 15, 2016 and is personally guaranteed by the Company’s Chief Executive Officer. The promissory note was issued to certain equity owners of The B.A.C.K. Center, an entity consolidated with the Company under VIE accounting. The outstanding principal and interest at March 31, 2015 and December 31, 2015 was $437,372 and $428,645, respectively. This note was paid in full on April 15, 2016.

 

NOTE 9— NOTES PAYABLE

 

Notes payable as of March 31, 2016 and December 31, 2015 are comprised of the following:

 

   March 31,
2016
  December 31,
2015
Mortgage Payable  $   $7,153,262 
Note Payable, GE Capital (MRI)   746,390    844,098 
Note Payable, GE Capital (X-ray)   85,457    97,232 
Note Payable, GE Arm   61,080    67,455 
Capital Lease Equipment   21,112    26,716 
    914,039    8,188,763 
Less current portion   (507,209)   (7,652,941)
   $406,830   $535,822 

 

Mortgage payable

 

On August 12, 2011, the Company refinanced its existing mortgage note payable providing additional working capital funds. The aggregate amount of the note of $7,550,000 with 6.10% interest per annum with monthly payments of $45,753 beginning in October 2011 based on a 30-year amortization schedule with all remaining principal and interest due in full on September 16, 2016. The note is secured by land and the building along with first priority assignment of leases and rents. In connection with the sale/leaseback transaction (See Note 4), the Company paid off the outstanding balance as of March 31, 2016.

 

Note payable — equipment financing

 

On May 21, 2012, the Company entered into a note payable with GE Healthcare Financial Services (“GE Capital”) in the amount of approximately $2.4 million for equipment financing.

 

On September 27, 2012, the Company accepted the delivery of MRI equipment under the equipment finance lease. As such, the component price accepted of $1,771,390 is due over 60 months and the associated monthly payment is $0 for the first three months and $38,152 per month for the remaining 57 months including interest at 7.9375% per annum. On March 8, 2013, the Company amended the equipment finance lease to interest only payments of $11,779 for the first three months and $38,152 per month for the remaining monthly payments.

 

On August 22, 2012, the Company accepted the delivery of X-ray equipment under the equipment finance lease. As such, the component price accepted of $212,389 is due over 60 months and the associated monthly payment is $0 for the first three months and $4,300 per month for the remaining 57 months including interest at 7.9375% per annum. On March 8, 2013, the Company amended the equipment finance lease to interest only payments of $1,384 for the first three months and $4,575 per month for the remaining monthly payments.

 

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On February 25, 2013, the Company accepted the delivery of C-arm equipment under the equipment finance lease. As such, the component price accepted of $124,797 is due over 63 months and the associated monthly payment is $0 for the first three months and $2,388 for the remaining 60 months, including interest at 7.39% per annum.

 

Capital leases — equipment

 

On June 11, 2013, the Company entered into a lease agreement to acquire equipment with 48 monthly payments of $956 payable through June 1, 2017 with an effective interest rate of 14.002% per annum. The Company may elect to acquire the leased equipment at a nominal amount at the end of the lease.

 

On October 25, 2011, The B.A.C.K. Center entered into a lease agreement to acquire equipment with 60 monthly payments of $1,036 payable through October 26, 2016, with no stated interest rate. The B.A.C.K. Center may elect to acquire the leased equipment at a nominal amount at the end of the lease.

 

Aggregate principal maturities of long-term debt as of March 31, 2016

 

   Amount
Nine months ended December 31, 2016   $378,217 
Year ended December 31, 2017    519,226 
Year ended December 31, 2018    16,596 
Total   $914,039 

 

NOTE 10 — RELATED PARTY TRANSACTIONS

 

Effective October 1, 2015, the Company acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”) in exchange for an investment of $560,000 comprised of $140,000 cash and a promissory note for $420,000 which bears 8% interest per annum, matures April 15, 2016 and is personally guaranteed by the Company’s Chief Executive Officer. The promissory note was issued to certain equity owners of The B.A.C.K. Center, an entity consolidated with the Company under VIE accounting. This note was paid in full on April 15, 2016.

 

As of March 31, 2016, the Company received an aggregate of $133,796 as cash advances from related parties. The advances are due upon demand with an interest rate of 12% per annum. On April 6, 2016, the Company paid the advances in full. (See Note 20 – Subsequent Events.)

 

NOTE 11 — CAPITAL STOCK

 

During the three months ended March 31, 2016, the Company issued an aggregate of 100,000 shares of its common stock in connection with an increase in credit line, valued at $92,000. (see Note 6 – Lines of Credit.)

 

Stock-based payable

 

The Company was obligated to issue its common stock to officers and consultants for past and future services as of March 31, 2016. The estimated liability as of March 31, 2016 of $1,280,200 ($0.78 per share) was determined based on services rendered. The shares were issued in reliance upon the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

 

NOTE 12 — STOCK OPTIONS AND WARRANTS

 

Warrants

 

The following table summarizes the warrants outstanding and the related exercise prices for the underlying shares of the Company’s common stock as of March 31, 2016: 

 

Warrants Outstanding        Warrants Exercisable
Price  Outstanding  Expiration Date  Weighted
Price
  Exercisable  Weighted
Price
                
$1.35    2,449,630   November 2018 ~ November 2020  $1.35    2,449,630   $1.35 
$3.60    1,875,000   December 23, 2018  $3.60    1,875,000   $3.60 
      4,324,630      $2.32    4,324,630   $2.32 

 

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The warrant to purchase up to 2,449,630 shares of the Company’s common stock may be exercised on a cashless basis. The warrant to purchase up to 1,875,000 shares of the Company’s common stock may not be exercised on a cashless basis.

 

Transactions involving stock warrants issued are summarized as follows:

 

   Number of
Shares
  Weighted
Average Price
Per Share
Outstanding at December 31, 2015:    4,324,630   $2.32 
Granted         
Exercised         
Expired         
Outstanding at March 31, 2016    4,324,630   $2.32 

 

Options

 

The following table presents information related to stock options at March 31, 2016:

 

Options Outstanding   
Exercise
Price
  Number of
Options
  Weighted Average
Remaining Life in Years
  Exercisable Number of Options
$1.35    3,000,000    7.75     

 

Transactions involving stock options issued are summarized as follows:

 

   Number of
Shares
  Weighted
Average Price
Per Share
Outstanding at December 31, 2015:    3,000,000   $1.35 
Granted         
Exercised         
Expired         
Outstanding at March 31, 2016    3,000,000   $1.35 

 

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NOTE 15 — VARIABLE INTEREST ENTITY

 

Brevard Orthopaedic Spine & Pain Clinic, Inc.

 

Effective May 1, 2015, the Company, through its recently formed wholly owned subsidiary, TBC Holdings of Melbourne, Inc., entered into an Operation and Control Agreement (the Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), whereby the Company will have sole and exclusive management and control of The B.A.C.K. Center, including, but not limited to, administrative, financial, facility and business operations including the requirement to absorb losses or right to receive economic benefits The initial term of the Agreement expires on December 31, 2016, with an option by the Company to extend the term until December 31, 2023. The Company issued 3,000,000 options to purchase the Company’s common stock, vesting contingent on The B.A.C.K. Center employees signing employment contracts with First Choice – Brevard.

 

The Company has determined that The B.A.C.K. Center is a Variable Interest Entity (“VIE”) in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation”. In evaluating whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, the Company considers the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and the Company’s decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders.

 

This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important.

 

In determining whether the Company has the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, the Company evaluates all of its economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s structure, including: the entity’s capital structure, contractual rights to earnings (losses), subordination of our interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of the Company’s economic interests is a matter that requires the exercise of professional judgment. The assets of The B.A.C.K. Center can only be used to settle obligations of the VIE, additionally, creditors of The B.A.C.K. Center do not have recourse against the general credit of the primary beneficiary.

 

The table below summarizes the assets and liabilities associated with The B.A.C.K. Center as of March 31, 2016 and as of December 31, 2015: 

 

   March 31, 
2016
  December 31,
 2015
Current assets:          
Cash  $1,120,942   $996,986 
Accounts receivable   3,915,553    3,727,419 
Other current assets   1,034,157    819,757 
Total current assets   6,070,652    5,544,162 
Property and equipment, net   57,579    60,978 
Other assets   22,334    18,231 
Total assets  $6,150,565   $5,623,371 
           
Current liabilities:          
Accounts payable and accrued liabilities  $1,997,207   $1,877,690 
Due to First Choice Healthcare Solutions, Inc.   2,058,624    1,729,882 
Other current liabilities   446,759    427,229 
Total current liabilities   4,502,590    4,034,801 
Long term debt   1,786,661    1,727,256 
Total liabilities   6,289,251    5,762,057 
Non-controlling interest   (138,686)   (138,686)
Total liabilities and deficit  $6,150,565   $5,623,371 

 

 19

 

 

Total revenues from The B.A.C.K. Center were $3,449,722 for the three months ended March 31, 2016. Related expenses consisted primarily of salaries and benefits of $1,457,911, general and administrative expenses of $1,654,107, depreciation of $5,515 and interest and financing costs of $3,447. (See Note 17 – Segment Reporting)

 

Crane Creek Surgery Center

 

Effective October 1, 2015, the Company, through its recently formed wholly owned subsidiary, CCSC Holdings, Inc., acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”) in exchange for an investment of $560,000 comprised of $140,000 cash and a promissory note for $420,000 which bears 8% interest per annum, matures April 15, 2016 and is personally guaranteed by the Company’s Chief Executive Officer. In connection with the investment, the Company is entitled 51% voting rights for all decisions that most significantly affect the economic performance of Crane Creek. The 40% equity interest acquired entitles the Company to 40% of the profit or loss of Crank Creek.

 

The Company has determined that Crane Creek is a Variable Interest Entity (“VIE”) in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation”. In evaluating whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, the Company considers the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and the Company’s decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders.

 

This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important.

 

In determining whether the Company has the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, the Company evaluates all of its economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s structure, including: the entity’s capital structure, contractual rights to earnings (losses), subordination of our interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of the Company’s economic interests is a matter that requires the exercise of professional judgment.

 

The assets of Crane Creek can only be used to settle obligations of the VIE, additionally, creditors of the Crane Creek do not have recourse against the general credit of the primary beneficiary.

 

 20

 

 

The table below summarizes the assets and liabilities associated with the Crane Creek as of March 31, 2016 and December 31, 2015:

 

   March 31,
2016
  December 31, 
2015
Current assets:          
Cash  $503,262   $559,318 
Accounts receivable   891,070    816,889 
Total current assets   1,394,332    1,376,207 
Property and equipment, net   667,280    712,830 
Goodwill   899,465    899,465 
Total assets  $2,961,077   $2,988,502 
           
Current liabilities:          
Accounts payable and accrued liabilities  $324,764   $441,368 
Other current liabilities   251,588    251,588 
Total current liabilities   576,352    692,956 
Deferred rent   532,754    532,752 
Total liabilities   1,109,106    1,225,708 
           
Equity-First Choice Healthcare Solutions, Inc   740,788    705,118 
Non-controlling interest   1,111,183    1,057,676 
Total liabilities and deficit  $2,961,077   $2,988,502 

 

Total revenues from the Crane Creek were $1,271,308 for the three months ended March 31, 2016. Related expenses consisted primarily of salaries and benefits of $293,337, practice supplies and operating of $709,646, general and administrative expenses of $109,275, depreciation of $71,256 and miscellaneous income of $1,382. (See Note 17 – Segment Reporting)

 

NOTE 16 — NON-CONTROLLING INTEREST

 

Effective May 1, 2015, the Company, through its recently formed wholly owned subsidiary, TBC Holdings of Melbourne, Inc. entered into an Operation and Control Agreement (the Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), whereby the Company will have sole and exclusive management and control of The B.A.C.K. Center, including, but not limited to, administrative, financial, facility and business operations, including the requirement to absorb losses or right to receive economic benefits. The initial term of the Agreement expires on December 31, 2016 with an option by the Company to extend the term until December 31, 2023.

 

A reconciliation of the non-controlling income attributable to the Company:

 

Net loss attributable to non-controlling interest for the three months ended March 31, 2016:

 

Net income  $328,741 
Average Non-controlling interest percentage of profit/losses   -0-%
Net income attributable to the non-controlling interest  $-0- 

 

The following table summarizes the changes in non-controlling interest for the three months ended March 31, 2016:

 

Balance, December 31, 2015  $(138,686)
Transfer (to) from the non-controlling interest as a result of change in ownership    
Net income attributable to the non-controlling interest    
Balance, March 31, 2016  $(138,686)

 

Effective October 1, 2015, the Company, through its recently formed wholly owned subsidiary, CCSC Holdings, Inc., acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”) in exchange for an investment of $560,000 comprised of $140,000 cash and a promissory note for $420,000 which bears 8% interest per annum, matures April 15, 2016 and is personally guaranteed by the Company’s Chief Executive Officer. In connection with the investment, the Company is entitled 51% voting rights for all decisions that most significantly affect the economic performance of Crane Creek. The 40% equity interest acquired entitles the Company to 40% of the profit or loss of Crank Creek. This note was paid in full on April 15, 2016.

 

 21

 

 

A reconciliation of the non-controlling income attributable to the Company:

 

Net income attributable to non-controlling interest for the three months ended March 31, 2016:

 

Net income  $89,177 
Average Non-controlling interest percentage of profit/losses   60%
Net income/loss attributable to the non-controlling interest  $53,507 

 

The following table summarizes the changes in non-controlling interest from October 1, 2015 to December 31, 2015:

 

Balance, December 31, 2015  $1,057,676 
Transfer (to) from the non-controlling interest as a result of change in ownership    
Net income attributable to the non-controlling interest   53,507 
Balance, March 31, 2016  $1,111,183 

 

NOTE 17 — SEGMENT REPORTING

 

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. The Company has four reportable segments: Marina Towers, LLC, FCID Medical, Inc., CCSC Holdings, Inc. and The B.A.C.K Center.

  

The Marina Towers, LLC segment derives revenue from the operating leases of its owned building; FCID Medical and the CCSC Holdings segments derives revenue for medical services provided to patients; and The B.A.C.K Center derives revenue for subleasing space within its building and medical services provided to patients.

 

Information concerning the operations of the Company’s reportable segments is as follows:

 

Summary Statement of Operations for the three months ended March 31, 2016:

 

   Marina  FCID  Brevard  The Crane     Intercompany   
   Towers  Medical  Orthopaedic  Center  Corporate  Eliminations  Total
Revenue:                                   
Net Patient Service Revenue  $   $2,308,935   $3,034,898   $1,271,308   $   $   $6,615,141 
Rental revenue   428,246        358,099             (159,733)   626,612 
 Total Revenue   428,246    2,308,935    3,392,997    1,271,308        (159,733)   7,241,753 
                                    
Operating expenses:                                   
Salaries & benefits   3,000    829,220    1,457,911    293,337    197,101        2,780,569 
Other operating expenses   105,954    531,407         709,646        (159,733)   1,187,274 
General and administrative   23,907    361,803    1,581,793    109,275    329,099        2,405,877 
Depreciation and amortization   69,951    66,792    5,515    71,256    85,436        298,950 
 Total operating expenses   202,812    1,789,222    3,045,219    1,183,514    611,636    (159,733)   6,672,670 
                                    
Net income (loss) from operations:   225,434    519,713    347,778    87,794    (611,636)       569,083 
                                    
Interest expense   (110,156)   (56,818)   (2,459)   (8,726)   (2,976)       (181,135)
Amortization of financing costs   (14,337)       (988)               (15,325)
Gain on sale of property   9,188,968                        9,188,968 
Other income (expense)   750        56,725    1,382            58,857 
                                    
Net income (loss) before income taxes:   9,290,659    462,895    401,056    80,450    (614,612)       9,620,448 
                                    
Income taxes                              
                                    
Net income (loss)   9,290,659    462,895    401,056    80,450    (614,612)       9,620,448 
                                    
Non-controlling interest               (53,507)           (53,507)
                                    
Net income (loss) attributable to First Choice Healthcare Solutions  $9,290,659   $462,895   $401,056   $26,943   $(614,612)  $   $9,566,941 

 

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Summary Statement of Operations for the three months ended March 31, 2015:

 

   Marina  FCID     Intercompany   
   Towers  Medical  Corporate  Eliminations  Total
Revenue:                         
Net Patient Service Revenue  $   $2,240,064   $   $   $2,240,064 
Rental revenue   375,321            (110,218)   265,103 
 Total Revenue   375,321    2,240,064        (110,218)   2,505,167 
                          
Operating expenses:                         
Salaries & benefits   3,000    836,987    106,133        946,120 
Other operating expenses   103,331    458,372        (110,218)   451,485 
General and administrative   22,642    291,159    239,483        553,284 
Depreciation and amortization   69,219    66,515    4,775        140,509 
 Total operating expenses   198,192    1,653,033    350,391    (110,218)   2,091,398 
                          
Net income (loss) from operations:   177,129    587,031    (350,391)       413,769 
                          
Interest expense   (110,496)   (51,784)   (200,864)       (363,144)
Amortization of financing costs   (14,337)   (6,349)           (20,686)
Other income (expense)   750                750 
                          
Net Income (loss):   53,046    528,898    (551,255)       30,689 
                          
Income taxes                    
                          
Net income (loss)  $53,046   $528,898   $(551,255)  $   $30,689 

 

Selected financial data:

 

   Marina  FCID  Brevard  The Crane      
   Towers  Medical  Orthopaedic  Center  Corporate  Total
Assets:                              
At March 31, 2016:  $8,642,412   $4,872,351   $6,176,738   $2,961,076   $3,194,588   $25,847,165 
At December 31, 2015:  $6,309,955   $4,391,192   $5,623,370   $3,013,011   $3,286,460   $22,623,988 
                               
Assets acquired                              
Three months ended March 31, 2016  $49,824   $49,893   $2,116   $24,240   $   $126,073 
Three months ended March 31, 2015  $6,628   $1,656   $   $   $   $8,284 

  

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NOTE 18 - COMMITMENTS AND CONTINGENCIES

 

Litigation – Health First Management

 

The B.A.C.K. Center has a claim filed in Brevard County, Florida Circuit Court against Health First Management, Inc. due to a contract dispute. A counterclaim was filed against the Company. The case has been litigated for a substantial amount of time and a trial is anticipated to take place within the next 12 months. The Company has vigorously defended against the counterclaim. The Company has accrued a possible loss contingency of approximately $118,000 during the year ended December 31, 2015.

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

Operating leases

 

The B.A.C.K. Center leases office space under various non-cancelable operating leases that expire at various dates through June 2026. Terms of the lease agreements provide for rental payments ranging from approximately $4,200 to $200,000 per month. Certain leases include charges for sales and real estate taxes and a proration of common area maintenance expenses. Under generally accepted accounting principles (GAAP), all rental payments, including fixed rent increases, are recognized on a straight-line basis over the life of the lease. The GAAP rent expense and the actual lease payments are reflected as deferred rent on the accompanying balance sheet. From the date of the Operation and Control Agreement through December 31, 2015, lease expense amounted to $2,360,986.

 

The following is a schedule of future minimum lease payments for all non-cancelable operating leases for each of the next five years ending December 31 and thereafter:

 

Nine months ended December 31, 2016    2,620,910 
Year ended December 31, 2017    3,444,197 
Year ended December 31, 2018    3,444,209 
Year ended December 31, 2019    3,444,221 
    $12,953,537 

 

Sale/Leaseback

 

Effective March 31, 2016, the Company leased Marina Towers under a sale/leaseback transaction (See Note 4), via a 10-year absolute triple-net master lease agreement that expires in 2026. The Company has two successive options to renew the lease for five-year periods on the same terms and conditions as the primary non-revocable lease term with the exception of rent, which will be adjusted to the prevailing fair market rent at renewal and will escalate in successive years during the extended lease period. The Company does not have any residual interest nor the option to repurchase the facility at the end of the lease term.

 

The following is a schedule of future minimum lease payments for the non-cancelable operating lease for each of the next five years ending December 31 and thereafter:

 

Nine months ended December 31, 2016   $828,506 
Year ended December 31, 2017    1,104,675 
Year ended December 31, 2018    1,104,675 
Year ended December 31, 2019    1,121,246 
Year ended December 31, 2020    1,143,670 
Year ended December 31, 2021 and thereafter    6,387,969 
    $11,690,741 

 

For the three months ended March 31, 2016, the Company collected $268,513 in net rental revenue from third party tenants of Marina Towers.

 

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Guarantees

 

The B.A.C.K. Center’s shareholders and a related party have guaranteed the full and prompt payment of the base rent, the additional rent and any all other sums and charges payable by a tenant, its successors and assigns under the lease, and the full performance and observance of all the covenants, terms, conditions and agreements for one of the above mentioned operating leases.

 

NOTE 19 – INCOME TAXES

 

In the first quarter of 2016, effective March 31, 2016, we sold and leased back Marina Towers under a sale/leaseback transaction (See “Gain on Sale of Property and Improvements”). In connection with the sale, the Company reported a gain on sale of the property of $9,188,968 (GAAP Basis) for the three months ended March 31, 2016. There was a Tax Basis gain of approximate $9,051,430. The difference between the GAPP Basis and Tax Basis gain was mainly attributable to depreciation. The gain was offset by Net Operation Losses the Company has generated in prior periods, so no income tax was recorded, but an estimated Alternative Minimum Tax liability of $181,089 was recorded. Offsetting the Alternative Minimum tax recorded is a Deferred Tax Asset of the same amount related to the Alternative Minimum Tax Liability (Alternative Minimum Tax Credit Carryforward). Management believes the Company will utilize the Alternative Minimum Tax Carryforward in future periods, as of the March 31, 2016 reporting period.

 

The Company’s effective tax rate in the first quarter of 2016 is approximately 38.6% See Note 20, Income Taxes, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 for additional information.

 

 

NOTE 20 – SUBSEQUENT EVENTS

 

On April 1, 2016, the Company paid the following notes in full. In connection with the MedTRX Collection Services, Inc. settlement, on November 6, 2015, the Company issued two non-interest bearing promissory notes in aggregate of $650,000, due the earlier of a) April 2, 2016, b) the date real estate (as identified) is sold, financed or transferred or c) date the stock payment (as described above) is redeemed. As of March 31, 2016, the balance due on outstanding settlement promissory notes was $450,000.

 

On April 6, 2016, the Company paid the following advances in full. As of March 31, 2016, the Company received an aggregate of $133,796 as cash advances from related parties. The advances are due upon demand with an interest rate of 12% per annum.

 

On April 15, 2016, the Company paid the following note in full. The promissory note was issued to certain equity owners of The B.A.C.K. Center, an entity consolidated with the Company under VIE accounting. Effective October 1, 2015, the Company acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”) in exchange for an investment of $560,000 comprised of $140,000 cash and a promissory note for $420,000 which bears 8% interest per annum, matures April 15, 2016 and is personally guaranteed by the Company’s Chief Executive Officer.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934 (“Exchange Act”). Forward-looking statements reflect the current view about future events. When used in this quarterly report on Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Such statements, include, but are not limited to, statements contained in this quarterly report on Form 10-Q relating to our business strategy, our future operating results, and our liquidity and capital resources outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward–looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assurance of future performance. We caution you therefore against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, the execution of our strategy to grow our business by hiring additional physicians to create Medical Centers of Excellence that fit our defined criteria; evolving healthcare laws and regulations; changes in the rates or methods of third-party reimbursements for medical services; accelerated pace of consolidation in the hospital industry; changes in our medical technology as it relates to our services and procedures; any failures in our information technology systems to protect the privacy and security of protected information and other similar cyber security risks; our ability to raise capital to fund continuing operations; and other factors relating to our industry, our operations and results of operations and any new Medical Centers of Excellence that we may open. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

 

Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Overview

 

First Choice Healthcare Solutions, Inc. (“FCHS,” “the Company,” “we,” “our” or “us”) is implementing the second phase of a defined growth strategy aimed at building a network of localized, integrated healthcare delivery platforms comprised of non-physician-owned medical centers of excellence, which concentrate on treating patients in the following specialties: Orthopaedics, Spine Surgery, Neurology, Interventional Pain Management and related diagnostic and ancillary services in key expansion markets throughout the Southeastern U.S.

 

Successful implementation of our first phase allowed us to confirm that by integrating the synergistic mix of Orthopaedic, Spine Surgery, Neurology and Interventional Pain specialties with related diagnostic and ancillary services and state-of-the-art equipment and technologies across legacy brick-and-mortar boundaries, we are able to effectively:

 

  provide patients with direct and convenient access to musculoskeletal and rehabilitative care via our best-in-class team of surgeons, physicians and care specialists, and wide array of ancillary and diagnostic services, which includes, but is not limited to, magnetic resonance imaging (“MRI”), X-ray (“X-ray”), durable medical equipment (“DME”) and rehabilitative care, including physical therapy (“PT”) and occupational therapy (“OT”).
     
  empower physicians to collaborate as a unified care team, optimizing care coordination and improving outcomes;
     
  advance the quality and cost effectiveness of our patients’ healthcare, thereby achieving faster recoveries at materially reduced costs; and
     
  achieve strong, sustainable financial performance that serves to create long-term value for our stockholders.

 

 26

 

 

Our goal is to build a network of non-physician-owned and operated Medical Centers of Excellence in diverse locations, primarily throughout the southeastern region of the United States. By centralizing current and future Centers’ business management functions, including call center operations, scheduling, billing, compliance, accounting, marketing, advertising, legal, information technology and record-keeping, at our corporate headquarters, we will maintain efficiencies and scales of economies. We believe our structure will enable our staff physicians to focus on the practice of medicine and the delivery of quality care to the patients we serve, as opposed to having their time and attention focused on business administration responsibilities. We currently have 116 employees, including physicians and physician assistants.

 

Our Healthcare Services Business

 

We currently own and operate First Choice Medical Group of Brevard, LLC (“First Choice – Brevard”), our multi-specialty Medical Center of Excellence. Located in Melbourne, Florida, First Choice – Brevard specializes in the delivery of musculoskeletal medicine, via our strategically aligned sub-specialties in orthopaedics, neurology and interventional pain medicine, coupled with on-site diagnostic and ancillary services, including MRI, X-ray, DME, PT and OT with multiple quality-focused goals centered on enriching our patients’ care experiences.

 

On May 1, 2015, through our wholly-owned subsidiary, TBC Holdings of Melbourne, Inc., we entered into an Operation and Control Agreement (the “Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), a premier spine, orthopaedic and pain practice in Brevard County, Florida. The B.A.C.K. Center operates two medical offices located in Melbourne and Merritt Island, Florida. 

 

On October 1, 2015, through our newly formed wholly-owned subsidiary, CCSC Holdings, Inc., we acquired a 40% interest in Melbourne, Florida-based Crane Creek Surgery Center (“Crane Creek”). Established in 2009, Crane Creek is an AAAHC accredited facility dedicated to delivering excellent, ambulatory surgical care in a convenient, comfortable outpatient environment. The modern 18,000+ square foot facility is located in Melbourne, Florida within the Crane Creek Medical Center building, which is also home to Osler Medical and The B.A.C.K. Center. Crane Creek’s facility houses four state-of-the-art operating rooms and a procedure room; with capacity and capability to host 4,000-5,000 orthopaedic, spine, interventional pain and general surgical procedures each year. The other owners of Crane Creek are CCSC TBC Group, LLC (“TBC Group”), owned by Richard Hynes, M.D., FASC and Devin Datta, M.D.; and Blue Chip Surgical Center Partners, which develops and manages 17 world class ambulatory surgery centers across the United States. Drs. Hynes and Datta are both affiliated with The B.A.C.K. Center. Together, CCSC Holdings and TBC Group own 75% interest in Crane Creek. In accordance with the Crane Creek Restated and Amended Operating Agreement, CCSC Holdings will exercise sufficient control over the business of Crane Creek that will allow First Choice to treat it as a variable interest entity, effective October 1, 2015. As a result, First Choice will include the financial results of Crane Creek in its consolidated financial statements in accordance with generally accepted accounting principles as if it were a wholly-owned subsidiary. Dr. Hynes has been appointed as Crane Creek’s Medical Board president and as Medical Director.

 

Our Real Estate Business

 

FCID Holdings, Inc. (“FCID Holdings”) is our wholly owned subsidiary, which operates our real estate interests. FCID Holdings had one real estate holding, Marina Towers, LLC, a 78,000 square foot, Class A, six-story building located on the Indian River in Melbourne, Florida. In addition to housing our corporate headquarters and FCMG, the building, which averages 95% annual occupancy, also leases approximately 48,698 square feet of commercial office space to third party tenants. In addition, beginning May 1, 2015, TBC Holdings of Melbourne, Inc., through The B.A.C.K. Center, subleases approximately 34,480 square feet of commercial office space to third party tenants.

 

On March 31, 2016, we completed the sale of Marina Towers to Global Medical REIT Inc. for a purchase price of $15.45 million. In addition, our wholly owned subsidiary, Marina Towers, LLC, leased back the entire facility via a 10-year absolute triple-net master lease agreement that will expire in 2026 and be renewable for two five-year periods on the same terms and conditions as the primary lease term with the exception of rent, which will be adjusted to the prevailing market rent at renewal and will escalate in successive years during the extended lease period.

 

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New Accounting Pronouncements

 

There are various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.

 

Results of Operations for the Three Months Ended March 31, 2016 and 2015

 

Revenues

 

Total revenues increased 189% to $7,241,753 for the three months ended March 31, 2016 as compared to revenues of $2,505,167 for the same period in the prior year. The increase is primarily attributed to the addition on May 1, 2015 of Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”) and on October 1, 2015 of Crane Creek Surgical Center (“Crane Creek), which contributed revenues of $3,392,997 and $1,271,308, respectively, for the quarter comprised of additional patient services revenue of $4,306,206 and rental revenue of $358,099. Patient services revenue generated by First Choice Medical Group (“FCMG”) increased by $68,871, or 3%, after factoring provision for doubtful accounts. Rental revenue increased by $361,509, totaling $626,612 and $265,103 for the three months ended March 31, 2016 and 2015, respectively, primarily due to the addition of rental revenue from The B.A.C.K. Center.

 

The provision for doubtful accounts during the first quarter of 2016 totaled $626,612. We adopted the provisions of ASU 2011-07 in 2014, which requires that healthcare entities change the presentation of the statement of operations by reclassifying the provision for doubtful accounts from an operating expense to a deduction from patient service revenues. All periods presented have been reclassified in accordance with ASU 2011-07.

 

Operating Expenses

 

Operating expenses include the following:

 

   Three Months Ended
March 31, 2016
  Three Months Ended
March 31, 2015
Salaries and Benefits  $2,780,569   $946,120 
Other operating expenses   1,187,274    451,485 
General and administrative   2,405,877    553,284 
Depreciation and amortization   298,950    140,509 
Total operating expenses  $6,672,670   $2,091,398 

 

The major components of operating expenses include practice salaries and benefits, practice supplies and other operating costs, depreciation and general and administrative expenses, which included legal, accounting and professional fees associated with being a public entity.

 

Salaries and benefits increased 194% to $2,780,569 for the three months ended March 31, 2016, compared to $946,120 for the three months ended March 31, 2015. The increase was primarily due to the addition on May 1, 2015 of The B.A.C.K. Center and October 1, 2015 of Crane Creek, which represented an additional $1,751,248 in the reporting period. The existing segments netted an increase of $83,201 as compared to 2015. Other operating expenses increased 163% to $1,187,274 from $451,485 due to the increase in patient service volume from 2015 to 2016 with the added facilities.

 

General and administrative expenses for the three months ended March 31, 2016 increased 335% to $2,405,877, up from $553,284. The increase was largely attributable adding The B.A.C.K. Center and Crane Creek, adding $1,691,067 in costs. We believe that each additional sale or service and corresponding gross profit of such sale or service has minimal incremental offsetting operating expenses. Thus, additional sales could contribute to profit at a higher rate of return on sales as a result of not needing to expand operating expenses at the same pace as sales.

 

Depreciation and amortization increased 112% from $140,509 for the three months ended March 31, 2016 to $298,950 for the three months ended March 31, 2015. The increase is primarily from our two additional operating segments.

 

 28

 

 

Net Income from Operations

 

The income from operations for the three months ended March 31, 2016 increased 38% to $569,083, which compared to income from operations of $413,769 for the same period in the prior year. Notwithstanding non-cash expenses totaling $658,099 for the three months ended March 31, 2016, which included stock-based compensation, depreciation and amortization, income from operations totaled $1,227,182. This compared to income from operations of $668,438 after factoring $254,669 in non-cash stock-based compensation, depreciation and amortization recorded for the three months ended March 31, 2015.

 

Gain on Sale of Property and Improvements

 

Effective March 31, 2016, we sold and leased back Marina Towers under a sale/leaseback transaction via a 10-year absolute triple-net master lease agreement that expires in 2026. The Company has two successive options to renew the lease for five-year periods on the same terms and conditions as the primary non-revocable lease term with the exception of rent, which will be adjusted to the prevailing fair market rent at renewal and will escalate in successive years during the extended lease period. In connection with the sale, we reported a gain on sale of property of $9,188,968 for the three months ended March 31, 2016.

 

Interest Expense

 

Interest expense decreased 50% to $181,135 for the three months ended March 31, 2016, which compared to $363,144 for the three months ended March 31, 2015. The decrease primarily is due to payoff conversions of our convertible notes payable with Hillair in 2015 as compared to the same period last year, net with increase from The B.A.C.K. Center in 2015 of $2,459.

 

Net Income

 

As a result of all the above, we reported net income of $9,566,941 for the three months ended March 31, 2016, representing a significant improvement over net income of $30,689 reported for the same three-month period in the prior year.

 

Segment Results

 

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.

 

The following are the revenues, operating expenses and net loss by segment for the three months ended March 31, 2016 and 2015, respectively. The significant fluctuations in the line items are described above.

 

For the Three Months Ended March 31, 2016:

 

   Marina  FCID  Brevard  The Crane     Intercompany   
   Towers  Medical  Orthopaedic  Center  Corporate  Eliminations  Total
Revenue:                                   
Net Patient Service Revenue  $   $2,308,935   $3,034,898   $1,271,308   $   $   $6,615,141 
Rental revenue   428,246        358,099             (159,733)   626,612 
 Total Revenue   428,246    2,308,935    3,392,997    1,271,308        (159,733)   7,241,753 
 Total operating expenses   202,812    1,789,222    3,045,219    1,183,514    611,636    (159,733)   6,672,670 
                                    
Net income (loss) from operations:   225,434    519,713    347,778    87,794    (611,636)       569,083 

 

 29

 

 

For the Three Months Ended March 31, 2015:

 

   Marina  FCID     Intercompany   
   Towers  Medical  Corporate  Eliminations  Total
Revenue:                         
Net Patient Service Revenue  $   $2,240,064   $   $   $2,240,064 
Rental revenue   375,321            (110,218)   265,103 
 Total Revenue   375,321    2,240,064        (110,218)   2,505,167 
 Total operating expenses   198,192    1,653,033    350,391    (110,218)   2,091,398 
                          
Net income (loss) from operations:   177,129    587,031    (350,391)       413,769 

 

Liquidity and Capital Resources

 

As of March 31, 2016, we had cash of $10,051,999 and accounts receivables totaling $7,448,429. This compared to cash of $1,594,998, restricted cash of $359,414 and accounts receivable of $6,623,894 as of the end of 2015.

 

The Marina Towers building is 95% occupied. We believe that ongoing operations of Marina Towers, LLC, the current positive cash balance, along with continued execution of Marina Tower’s business development plan, will allow us to further improve our working capital; and that we will have sufficient capital resources to meet projected cash flow requirements through the date that is one year plus a day from the filing date of this report. However, there can be no assurance that we will be successful in fully executing our business development plan.

 

Net cash provided by our operating activities for the three months ended March 31, 2016 totaled $317,224, which compared to net cash used in our operations for the three months ended March 31, 2015 of $173,931. The increase in cash provided was due primarily to net income of $9,620,448 for the current period as compared to net income of $30,689 for the three months ended March 31, 2015. This was offset by stock-based compensation of $81,300, payment of the non-cash loan extension of $92,000, bad debt expense of $262,524 and depreciation and amortization of 314,275, net with gain on sale of property of $9,188,968 for the three months ended March 31, 2016 as compared to $353,669 for the same period last year. In addition, our operating assets increased by $881,955 and $533,044 for the three months ended March 31, 2016 and 2015, respectively; and our operating liabilities increased in 2016 by $17,600 as compared to decreasing by $25,245 for the three months ended March 31, 2015.

 

Net cash flows provided by investing activities was $14,942,424 for the three months ended March 31, 2016, compared to $8,284 used in investing activities for the three months ended March 31, 2015. In 2016, we received $15,068,497 net proceeds from the sale of Marina Towers. Purchases of equipment were $126,073 and $8,284 for the three months ended March 31, 2016 and 2015, respectively, due to less cash spent on the purchase of equipment in 2015 compared to the current year.

 

Cash flows used in financing activities was $6,802,647 for three months ended March 31, 2016, compared to net cash provided by financing activities of $15,922 for the three months ended March 31, 2015. The cash flows provided by (used in) financing activities were the result of:

 

   Three Months ended March 31, 2016  Three Months ended March 31, 2015
Proceeds from advances  $90,714   $74,000 
Proceeds from lines of credit   372,636)   140,000 
Net payments on notes payable   (7,265,997)   (198,078)
Net cash provided by (used in) financing activities  $(6,802,647)  $15,922 

 

On March 31, 2016, in connection with the sale/leaseback transaction of Marina Towers, we paid off the outstanding mortgage balance due of $7,223,771.

 

Currently, we are actively engaged in identifying and pursuing discussions with prospective acquisitions and/or implementation of operation and management agreements that qualify as variable interest entities in accordance with generally accepted accounting practices in key target markets — with those being largely in the southeastern U.S. Over the next 12 months, we expect to incur significant capital costs to further develop and expand our medical operations. We plan to add another medical center of excellence and purchase additional diagnostic equipment for our operations. We expect to need additional capital of approximately $4-6 million to fund the development and expansion of our operations over the next 12 months. However, there can be no assurance that we will be able to negotiate acceptable terms for, or find suitable candidates for, such acquisition.

 

 30

 

 

There can be no assurance that our cash flow will increase in the near future from anticipated new business activities, or that revenues generated from our existing operations will be sufficient to allow us to continue to pursue new customer programs or profitable ventures.

 

Off Balance Sheet Arrangements

 

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Critical Accounting Policies and Estimates

 

Our unaudited condensed consolidated financial statements have been prepared by management in accordance with U.S. GAAP.

 

Recently Issued Accounting Pronouncements

 

There were various updated recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

 

Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

 

Inflation

 

The effect of inflation on our revenue and operating results was not significant.

 

Climate Change

 

We believe that neither climate change, nor government regulations related to climate change, have had, or are expected to have, any material effect on our operations.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

As a smaller reporting company, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

 31

 

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II

 

Item 1. Legal Proceedings

 

The B.A.C.K. Center has a claim filed in Brevard County, Florida Circuit Court against Health First Management, Inc. due to a contract dispute. A counterclaim was filed against the Company. The case has been litigated for a substantial amount of time and a trial is anticipated to take place within the next 12 months. The Company has vigorously defended against the counterclaim. The Company has accrued a possible loss contingency of approximately $118,000 during the year ended December 31, 2015.

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

Item 1A. Risk Factors

 

There have been no material changes to the Risk Factors reported in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None

 

Item 3. Defaults upon Senior Securities

 

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of our Company.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

31.1   Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*
31.2   Certification by the Principal Accounting Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*
32.1   Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2   Certification by the Principal Accounting Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

 

* Filed herewith.

 

 32

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

 

  FIRST CHOICE HEALTHCARE SOLUTIONS, INC.
     
Dated: May 16, 2016 By: /s/ Christian C. Romandetti
    Christian C. Romandetti
    Chief Executive Officer (Principal Executive Officer)
     
Dated: May 16, 2016 By: /s/ Donald A. Bittar
    Donald A. Bittar
    Interim Chief Financial Officer (Principal Accounting Officer)

 

33

 

  

EX-31.1 2 ex31_1.htm EXHIBIT 31.1

 

 

 EXHIBIT 31.1

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

 

I, Christian C. Romandetti, certify that:

 

1) I have reviewed this Quarterly Report on Form 10-Q of First Choice Healthcare Solutions, Inc. (the “registrant”);
   
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;
   
3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
   
4) The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
     
  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5) I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
       
  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and  
       
  b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.  

 

  By:  /s/ Christian c. romandetti
    Christian C. Romandetti
    Chief Executive Officer
     
    May 16, 2016

 

 

  

EX-31.2 3 ex31_2.htm EXHIBIT 31.2

 

 

EXHIBIT 31.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

 

I, Donald A. Bittar, certify that:

 

1) I have reviewed this Quarterly Report on Form 10-Q of First Choice Healthcare Solutions, Inc. (the “registrant”);
   
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;
   
3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
     
  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5) I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):
       
  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and  
       
  b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.  

 

  By:  /s/ DONALD A. BITTAR
    Donald A. Bittar
    Interim Chief Financial Officer
     
    May 16, 2016

 

 

 

EX-32.1 4 ex32_1.htm EXHIBIT 32.1

 

 

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 on Form 10-Q of First Choice Healthcare Solutions, Inc. (the “Company”), as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Christian C. Romandetti, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 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; and

 

(2) The information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

  By:  /s/ CHRISTIAN C. ROMANDETTI
    Christian C. Romandetti
    Chief Executive Officer
     
Dated: May 16, 2016    

 

 

 

EX-32.2 5 ex32_2.htm EXHIBIT 32.2

 

 

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 on Form 10-Q of First Choice Healthcare Solutions, Inc. (the “Company”), as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Donald A. Bittar, the Interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 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; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: May 16, 2016 By:  /s/ DONALD A. BITTAR
    Donald A. Bittar
    Interim Chief Financial Officer

 

 

 

 

 

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Document and Entity Information - shares
3 Months Ended
Mar. 31, 2016
May. 12, 2016
Document And Entity Information    
Entity Registrant Name First Choice Healthcare Solutions, Inc.  
Entity Central Index Key 0001416876  
Document Type 10-Q  
Document Period End Date Mar. 31, 2016  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   23,908,983
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2016  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.4.0.3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Current assets    
Cash (amounts related to VIE of $1,624,203 and $1,556,303) $ 10,051,999 $ 1,594,998
Cash-restricted 0 359,414
Accounts receivable, net (amounts related to VIE of $4,806,623 and $4,544,308) 7,448,429 6,623,894
Employee loans (amounts related to VIE of $882,226 and $636,293) 918,226 672,293
Prepaid and other current assets (amounts related to VIE of $151,931 and $183,465) 225,150 316,773
Capitalized financing costs, current portion (amounts related to VIE of $329 and $1,317) 329 39,533
Total current assets 18,644,133 9,606,905
Property, plant and equipment, net of accumulated depreciation of $989,481 and $3,075,648 (amounts related to VIE of $724,859 and $773,808) 2,689,335 8,613,502
Other assets    
Goodwill (amount relating to VIE of $899,465) 899,465 899,465
Deferred costs, net of amortization of $295,757 and $215,096 2,930,670 3,011,331
Patient list, net of accumulated amortization of $80,000 and $75,000 220,000 225,000
Patents, net of accumulated amortization of $42,975 and $38,200 243,525 248,300
Investments (amounts related to VIE of $22,005 and $16,914) 22,005 16,914
Deferred Tax Asset 181,029 0
Deposits 17,003 2,571
Total other assets 4,513,697 4,403,581
Total assets 25,847,165 22,623,988
Current liabilities    
Accounts payable and accrued expenses (amounts related to VIE of $2,321,972 and $2,319,056) 4,078,887 3,937,244
Accounts payable, related party (amount related to VIE of $251,588) 251,588 251,588
Stock based payable 1,280,200 1,198,900
Advances, related party 133,796 $ 43,082
AMT Tax Payable 181,029
Settlement payable 450,000 $ 600,000
Line of credit, short term (amount related to VIE of $439,524 and $416,888) 2,939,524 2,566,888
Note payable, related party, current portion (amount related to VIE of $437,372 and $428,645) 437,372 428,645
Notes payable, current portion (amount related to VIE of $7,235 and $10,341) 507,209 7,652,941
Unearned revenue 42,704 42,704
Deferred rent, short term portion (amount related to VIE of $118,810) 118,810 118,810
Total current liabilities 10,421,119 16,840,802
Long term debt:    
Deposits held 67,432 67,432
Notes payable, long term portion 406,830 535,822
Deferred rent, long term portion (amount related to VIE of $2,200,603 and $2,141,199) 2,200,603 2,141,199
Total long term debt 2,674,865 2,744,453
Total liabilities 13,095,984 19,585,255
Equity    
Preferred stock, $0.01 par value; 1,000,000 shares authorized, Nil issued and outstanding 0 0
Common stock, $0.001 par value; 100,000,000 shares authorized, 22,967,626 and 22,867,626 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively 22,968 22,868
Common stock subscription 175,000 175,000
Additional paid in capital 21,288,692 21,196,792
Accumulated deficit (9,707,976) (19,274,917)
Total stockholders' equity attributable to First Choice Healthcare Solutions, Inc. 11,778,684 2,119,743
Non-controlling interest 972,497 918,990
Total equity 12,751,181 3,038,733
Total liabilities and equity $ 25,847,165 $ 22,623,988
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.4.0.3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Prepaid and other current assets $ 225,150 $ 316,773
Accumulated depreciation of property plant and equipment (in dollars) 989,481 3,075,648
Goodwill 899,465 899,465
Amortization of Deferred Charges, Total 295,757 215,096
Patient list, net of accumulated amortization 80,000 75,000
Accounts payable and accrued expenses 4,078,887 3,937,244
Accounts payable, related party 251,588 251,588
Line of credit, short term 2,939,524 2,566,888
Note payable, related party 437,372 428,645
Notes payable, current portion 507,209 7,652,941
Deferred rent, short term portion 118,810 118,810
Deferred rent, long term portion $ 2,200,603 $ 2,141,199
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 1,000,000 1,000,000
Preferred stock, issued 0 0
Preferred stock, outstanding 0 0
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 22,967,626 22,867,626
Common stock, shares outstanding 22,967,626 22,867,626
Patents [Member]    
Patient list, net of accumulated amortization $ 42,975 $ 38,200
VIE [Member]    
Cash Related to VIE 1,624,203 1,556,303
Accounts receivable 4,806,623 4,544,308
Employee loans 882,226 636,293
Prepaid and other current assets 151,931 183,465
Accumulated Capitalized Interest Costs 329 1,317
Accumulated depreciation of property plant and equipment (in dollars) 724,859 773,808
Goodwill 899,465 899,465
Investments 22,005 16,914
Accounts payable and accrued expenses 2,321,972 2,319,056
Accounts payable, related party 251,588 251,588
Line of credit, short term 439,524 416,888
Note payable, related party 437,372 428,645
Notes payable, current portion 7,235 10,341
Deferred rent, short term portion 118,810 118,810
Deferred rent, long term portion $ 2,200,603 $ 2,141,199
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Revenues:    
Patient service revenue $ 6,877,665 $ 2,285,288
Provision for bad debts (262,524) (45,224)
Net patient service revenue less provision for bad debts 6,615,141 2,240,064
Rental revenue 626,612 265,103
Total revenue 7,241,753 2,505,167
Operating expenses:    
Salaries and benefits 2,780,569 946,120
Other operating expenses 1,187,274 451,485
General and administrative 2,405,877 553,284
Depreciation and amortization 298,950 140,509
Total operating expenses 6,672,670 2,091,398
Net income from operations 569,083 413,769
Other income (expense):    
Gain on sale of property and improvements 9,188,968 0
Miscellaneous income (expense) 58,857 750
Amortization financing costs (15,325) (20,686)
Interest expense, net (181,135) (363,144)
Total other expense 9,051,365 (383,080)
Net income before provision for income taxes 9,620,448 30,689
Income taxes (benefit) 0 0
Net income 9,620,448 30,689
Non-controlling interest (note 15) (53,507)  
NET INCOME ATTRIBUTABLE TO FIRST CHOICE HEALTHCARE SOLUTIONS, INC. $ 9,566,941 $ 30,689
Net income per common share, basic $ 0.42 $ 0.00
Net income per common share, diluted $ 0.36 $ 0.00
Weighted average number of common shares outstanding, basic 22,886,307 18,062,046
Weighted average number of common shares outstanding, diluted 26,219,641 22,090,565
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.4.0.3
STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($)
Common Stock [Member]
Additional Paid in Capital
Common Stock Subscriptions
Accumulated Deficit
Non-controlling Interest
Total
Balance at Dec. 31, 2015 $ 22,868 $ 21,196,792 $ 175,000 $ (19,274,917) $ 918,990 $ 3,038,733
Balance (in shares) at Dec. 31, 2015 22,867,626          
Common stock issued in connection with loan extension $ 100 $ 91,900 92,000
Common stock issued in connection with loan extension (in shares) 100,000          
Net income $ 9,566,941 $ 53,507 9,566,941
Balance at Mar. 31, 2016 $ 22,968 $ 21,288,692 $ 175,000 $ (9,707,976) $ 972,497 $ 12,751,181
Balance (in shares) at Mar. 31, 2016 22,967,626          
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net Income $ 9,620,448 $ 30,689
Adjustments to reconcile net loss to cash provided by operating activities:    
Depreciation and amortization 298,950 140,509
Amortization of financing costs 15,325 20,686
Bad debt expense 262,524 45,224
Gain on sale of property (9,188,968) 0
Common stock issued in connection with loan extension 92,000 99,000
Stock based compensation 81,300 48,250
Changes in operating assets and liabilities:    
Accounts receivable (1,087,059) (492,641)
Prepaid expenses and other 91,623 26,075
Restricted funds 359,414 (66,478)
Employee loans (245,933) 0
Accounts payable and accrued expenses 122,628 (38,121)
Settlement payable (150,000) 0
Deposits (14,432) 0
Deferred rent 59,404 0
Unearned income 0 12,876
Net cash provided by (used in) operating activities 317,224 (173,931)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Proceeds from sale of property 15,068,497  
Purchase of equipment (126,073) (8,284)
Net cash provided by (used in) investing activities 14,942,424 (8,284)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from advances 90,714 74,000
Proceeds from lines of credit 372,636 140,000
Net payments on notes payable (7,265,997) (198,078)
Net cash (used in) provided by financing activities (6,802,647) 15,922
Net increase (decrease) in cash and cash equivalents 8,457,001 (166,293)
Cash and cash equivalents, beginning of period 1,594,998 279,087
Cash and cash equivalents, end of period 10,051,999 112,794
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Cash paid during the period for interest 181,135 264,144
Cash paid during the period for taxes 0 0
Supplemental disclosure on non-cash investing and financing activities:    
Common stock issued in settlement of accrued expenses $ 0 $ 15,000
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.4.0.3
BASIS OF PRESENTATION
3 Months Ended
Mar. 31, 2016
Basis Of Presentation  
BASIS OF PRESENTATION

NOTE 1 —BASIS OF PRESENTATION

 

A summary of the significant accounting policies applied in the presentation of the accompanying unaudited condensed consolidated financial statements follows:

 

General

 

The (a) condensed consolidated balance sheet as of December 31, 2015, which has been derived from the audited financial statements of First Choice Healthcare Solutions, Inc. (“FCHS” and including, where appropriate, its consolidated subsidiaries and entities in which we have a controlling financial interest, the “Company”), and (b) the unaudited condensed consolidated interim financial statements as of March 31, 2016 of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. To determine if we hold a controlling financial interest in an entity, we first evaluate if we are required to apply the variable interest entity (“VIE”) model to the entity, otherwise the entity is evaluated under the voting interest model.

 

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of results that may be expected for the year ending December 31, 2015. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on April 14, 2016.

 

Basis of Presentation

 

Effective April 4, 2012, Medical Billing Assistance, Inc., a Colorado corporation (“Medical Billing”), merged with and into the Company. The effect of the merger was that Medical Billing reincorporated from Colorado to Delaware (the “Reincorporation”). The Company is deemed to be the successor issuer of Medical Billing under Rule 12g-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

As a result of the Reincorporation, the Company changed its name to First Choice Healthcare Solutions, Inc. and its shares underwent an effective four-for-one reverse split. Other than the foregoing, the Reincorporation did not result in any change in the business, management, fiscal year, accounting, and location of the principal executive offices, assets or liabilities of the Company.

 

On April 2, 2012, the Company, through its wholly owned subsidiary FCID Medical, Inc., completed its acquisition of First Choice Medical Group of Brevard, LLC (“First Choice – Brevard”), pursuant to the Membership Interest Purchase Closing Agreement (the “Purchase Agreement”). The Company has been managing the practice of First Choice – Brevard since November 1, 2011, pursuant to a Management Services Agreement.

 

Brevard Orthopaedic Spine & Pain Clinic, Inc.

 

Effective May 1, 2015, the Company, through its recently formed wholly owned subsidiary, TBC Holdings of Melbourne, Inc., entered into an Operation and Control Agreement (the Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), whereby the Company will have sole and exclusive management and control of The B.A.C.K. Center, including, but not limited to, administrative, financial, facility and business operations, including the requirement to absorb losses or right to receive economic benefits. The initial term of the Agreement expires on December 31, 2016 with an option by the Company to extend the term until December 31, 2023.

 

The Agreement allows the Company to hold the current or potential rights that give it the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, combined with a variable interest that gives the Company the right to receive potentially significant benefits or the obligation to absorb potentially significant losses. The Company has a controlling financial interest in the VIE. Rights held by others to remove the party with power over the VIE are not considered unless one party can exercise those rights unilaterally. When changes occur to the structure of the entity, the Company will reconsider whether it is subject to the VIE model. The Company continuously evaluates whether it has a controlling financial interest in the VIE.

 

Crane Creek Surgery Center

 

Effective October 1, 2015, the Company, through its recently formed wholly owned subsidiary, CCSC Holdings, Inc., acquireda 40% interest in Crane Creek Surgery Center (“Crane Creek”) in exchange for an investment of $560,000 comprised of $140,000 cash and a promissory note for $420,000 which bears 8% interest per annum, matures April 15, 2016 and is personally guaranteed by the Company’s Chief Executive Officer. In connection with the investment, the Company is entitled 51% voting rights for all decisions that most significantly affect the economic performance of Crane Creek. The 40% equity interest acquired entitles the Company to 40% of the profit or loss of Crank Creek. This note was paid in full on April 15, 2016.

 

The unaudited condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries FCID Holdings, Inc., MTMC of Melbourne, Inc., Marina Towers, LLC, FCID Medical Inc., TBC Holdings of Melbourne, Inc., First Choice – Brevard, Surgical Partners of Melbourne, Inc. and CCSC Holdings, Inc., along with two VIE, The B.A.C.K. Center and Crane Creek. All significant intercompany balances and transactions, including those involving the VIE, have been eliminated in consolidation. 

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.4.0.3
SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2016
Significant Accounting Policies  
SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

 

Use of estimates

 

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant estimates include the recoverability and useful lives of long-lived assets, the fair value of the Company’s stock, and stock-based compensation. Actual results may differ from these estimates.

 

Revenue recognition

 

The Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, “Revenue Recognition” (“ASC 605-10”), which requires that four basic criteria be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

 

ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, “Multiple-Element Arrangements” (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing ASC 605-25 on the Company’s financial position and results of operations was not significant.

 

The Company recognizes in accordance with Accounting Standards Codification subtopic 954-310, “Health Care Entities” (“ASC 954-310”), significant patient service revenue at the time the services are rendered, even though it does not assess the patient’s ability to pay. Therefore, The Company’s interim and annual periods reports disclose both, its policy for assessing and disclosing the timing and amount of uncollectable patient service revenue recognized as doubtful. Qualitative and quantitative information about significant changes in the allowance for doubtful accounts related to patient accounts receivable are disclosed in the Company’s reports. These estimates are based upon the past history and identified trends for each of our payers.

 

Patient service revenue

 

The Company recognizes patient service revenue associated with services provided to patients who have third-party payer coverage on the basis of contractual rates for the services provided. For uninsured or self-pay patients that do not qualify for charity care, the Company recognizes revenue on the basis of its standard rates for services provided (or on the basis of discounted rates, if negotiated or provided by policy). On the basis of historical experience, a portion of the Company’s patient service revenue may be potentially uncollectible due to patients who are unable or unwilling to pay for the services provided or the portion of their bill for which they are responsible. Thus, the Company records a provision for bad debts related to potentially uncollectible patient service revenue in the period the services are provided.

 

Rental revenue

 

FCID Holdings had one real estate holding, Marina Towers, a Class A 78,000 square foot, six-story building located on the Indian River in Melbourne, Florida. The address is 709 South Harbor City Boulevard, Melbourne, Florida 32901. In addition to housing our corporate headquarters and First Choice Medical Group, the building, which averages 95% annual occupancy, also leases commercial office space to tenants. Our corporate headquarters currently utilize 2,521 square feet on the fifth floor of Marina Towers; and First Choice Medical Group, including its MRI center and Physical Therapy center, currently occupies 26,838 square feet on the ground, first and second floors. Until March 2016, Marina Towers was owned by Marina Towers, LLC, a subsidiary owned by FCID Holdings (99%) and MTMC of Melbourne, Inc. (1%), both wholly owned subsidiaries of the Company.

 

On March 31, 2016, we completed the sale of Marina Towers to Global Medical REIT Inc. for a purchase price of $15.45 million. In addition, our wholly owned subsidiary, Marina Towers, LLC, leased back the entire facility via a 10-year absolute triple-net master lease agreement that will expire in 2026 and be renewable for two five-year periods on the same terms and conditions as the primary lease term with the exception of rent, which will be adjusted to the prevailing market rent at renewal and will escalate in successive years during the extended lease period.

 

Until Marina Towers’ sale on March 31, 2016, the Company recognized rental revenue associated with the period of time the facility is leased at the contractual lease rates (or on the basis of discounted rates, if negotiated).

 

In addition, beginning May 1, 2015, TBC Holdings of Melbourne, Inc., through The B.A.C.K. Center, subleases approximately 34,480 square feet of commercial office space to third party tenants.

 

Cash

 

Cash consists of cash held in bank demand deposits. The Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. As of March 31, 2016, the Company had $10,051,999 cash, of which $1,624,203 held by VIE. As of December 31, 2015, the Company had $1,594,998 cash, of which $1,556,303 held by VIE.

 

Concentrations of credit risk

 

The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. Occasionally, the Company’s cash and cash equivalents in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed by senior management.

 

Accounts receivable

 

Accounts receivables are carried at their estimated collectible amounts net of doubtful accounts. The Company analyzes its past history and identifies trends for each major payer sources of revenue to estimate the appropriate allowance for doubtful accounts and provision for bad debts. Management regularly reviews data about these major payer sources of revenue in evaluating the sufficiency of the allowance for doubtful accounts.

 

  Rental receivables. Accounts receivables from rental activities are periodically evaluated for collectability in determining the appropriate allowance for doubtful account provision for bad debts and provision of bad debts.
     
  Patient receivables. Accounts receivables from services provided to patients who have third-party coverage, the Company analyzes contractually due amounts and provides a provision for bad debts, if necessary. The Company records a provision for bad debts in the period of service on the basis of past experience or when indications are the patients are unable or unwilling to pay the portion of their bill for which they are responsible. The difference between the standard rates (or the discounted rates if negotiated) and the amounts actually collected after all reasonable collection efforts have been exhausted, is charged off against the allowance for doubtful accounts.

 

As of March 31, 2016 and December 31, 2015, the Company’s provision for bad debts was $2,917,884 and $2,498,398, respectively.

 

Segment information

 

Accounting Standards Codification subtopic “Segment Reporting” 280-10 (“ASC 280-10”) establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. ASC 280-10 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The information disclosed herein represents all of the material financial information related to the Company’s principal operating segments (see Note 17 – Segment Information).

 

Patents

 

Intangible assets with finite lives are amortized over their estimated useful lives. Intangible assets with indefinite lives are not amortized, but are tested for impairment annually. The Company’s intangible assets with finite lives are patent costs, which are amortized over their economic or legal life, whichever is shorter. These patent costs were acquired on September 7, 2013 by the issuance of 636,666 shares of the Company’s common stock to a related party. The shares of common stock were valued at $286,500, which was estimated to be approximately the fair value of the patent acquired and did not materially differ from the fair value of the common stock. The amortization for the three months ended March 31, 2016 and 2015 was $4,775 and $4,775, respectively. Accumulated amortization of patent costs was $42,975 and $38,200 at March 31, 2016 and December 31, 2015, respectively.

 

Patient list

 

Patient list is comprised of acquired patients in connection with the acquisition of First Choice - Brevard and is amortized ratably over the estimated useful life of 15 years. The amortization expenses for the three months ended March 31, 2016 and 2015 was $5,000 and $5,000, respectively. Accumulated amortization of patient list costs was $80,000 and $75,000 at March 31, 2016 and December 31, 2015, respectively.

 

Net income per share

 

The Company computes basic net income per share by dividing net income per share available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of basic and diluted income per share for the three months ended March 31, 2016 and 2015 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.

 

Potentially dilutive securities excluded from the computation of basic and diluted net income per share are as follows:

 

   

March 31,
2016

 

March 31,
2015

Warrants to purchase common stock     4,324,630       4,195,000  
Options to purchase common stock     3,000,000        
Totals     7,324,630       4,195,000  

 

Stock-based compensation

 

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the consolidated statements of operations, as if such amounts were paid in cash.

 

Deferred costs

 

On May 1, 2015, in connection with the Operation and Control Agreement with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), the Company reserved 3,000,000 options to purchase the Company’s common stock at $1.35 per share, expiring on December 31, 2023 and vesting contingent on The B.A.C.K. Center employees executing employment agreements with TBC Holding and the acquisition of the variable interest entity. The determined fair value of $3,226,427, determined using the Black Scholes option pricing model with the following assumptions: Dividend yield: 0%; Volatility: 134.09% and Risk free rate: 2.12%, is amortized ratably to operations over an estimated 8.67-year life. The amortization for the three months ended March 31, 2016 was $80,661. Accumulated amortization of the deferred costs was $295,757 at March 31, 2016.

 

Investments

 

The Company has adopted Accounting Standards Codification subtopic 323-10, Investments-Equity Methods and Joint Ventures (“ASC 323-10), which requires the accounting for investments where the Company can exert significant influence, but not control of a joint venture or equity investment. The Company owned a 0.6660% interest in a non-consolidated affiliate, Doctor’s Surgical Partnership, LTD. In accordance with the equity method of accounting, investments in non-consolidated affiliates are carried at cost and adjusted for the Company’s proportionate share of their undistributed earnings or losses.

 

Income Taxes

 

The Company accounts for income taxes pursuant to Accounting Standards Codified 740 (“ASC 740”). Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Fair value

 

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:

 

  Level 1 - Quoted prices in active markets for identical assets or liabilities.
     
  Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
     
  Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

 

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

 

The carrying value of the Company’s cash, accounts receivable, accounts payable, short-term borrowings (including lines of credit and notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

 

As of March 31, 2016 and December 31, 2015, the Company did not have any items that would be classified as level 1, 2 or 3 disclosures.

 

Recent accounting pronouncements

 

There are other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.

 

Subsequent events

  

The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements, except as disclosed.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.4.0.3
LIQUIDITY
3 Months Ended
Mar. 31, 2016
Liquidity Disclosures [Abstract]  
LIQUIDITY

NOTE 3 – LIQUIDITY

 

The Company incurred various non-recurring expenses in 2015 in connection with the planned development of its Healthcare Services Business. Management believes the continuing trend of positive growth before interest, taxes, depreciation and amortization in 2016 will support improved liquidity. In 2015, the Company converted to equity a total of $2,892,314 in outstanding debt, advances and accrued interest. Currently, the Company has four main sources of liquidity, its line of credit with CT Capital, LP; patient service revenue received from FCID Medical, Inc., TBC Holdings of Melbourne, Inc. and CCSC Holdings, Inc.; and rental revenue received from its real estate interests, FCID Holdings, Inc. and TBC Holdings of Melbourne, Inc.

 

On June 13, 2013, the Company’s subsidiary, First Choice – Brevard entered into a loan and security agreement with CT Capital, Ltd., d/b/a CT Capital, LP, a Florida limited liability partnership for an accounts receivable line of credit in the maximum aggregate amount of $1,500,000. Under the line of credit with CT Capital, the Company reduced the annual interest rate from 12% per annum to 6% per annum in exchange for the issuance to CT Capital of 100,000 restricted shares of the Company’s common stock. On June 9, 2015, First Choice – Brevard entered into a modification agreement amending the loan and security agreement, increasing the maximum aggregate amount available from $1,500,000 to $2,000,000 and on December 14, 2015, increasing the maximum aggregate available from $2,000,000 to $2,500,000 and extending the maturity date to July 30, 2017 in exchange for 100,000 restricted shares of the Company’s common stock. The $500,000 increase may be repaid at any time, and is not subject to the conversion provision set forth in the loan agreement. All other terms and conditions of the loan agreement remain in full force and effect. As of March 31, 2016, the Company had used $2,500,000 of the amount available under the line of credit. (See Note 6 – Lines of Credit)

 

FCID Holdings had one real estate holding, Marina Towers, a Class A 78,000 square foot, six-story building located on the Indian River in Melbourne, Florida. The address is 709 South Harbor City Boulevard, Melbourne, Florida 32901. In addition to housing our corporate headquarters and First Choice Medical Group, the building, which averages 95% annual occupancy, also leases commercial office space to tenants. Our corporate headquarters currently utilizes 2,521 square feet on the fifth floor of Marina Towers; and First Choice Medical Group, including its MRI center and Physical Therapy center, currently occupies 26,838 square feet on the ground, first and second floors. Until March 2016, Marina Towers was owned by Marina Towers, LLC, a subsidiary owned by FCID Holdings (99%) and MTMC of Melbourne, Inc. (1%), both wholly owned subsidiaries of the Company.

 

On March 31, 2016, we completed the sale of Marina Towers to Global Medical REIT Inc. for a purchase price of $15.45 million. In addition, our wholly owned subsidiary, Marina Towers, LLC, leased back the entire facility via a 10-year absolute triple-net master lease agreement that will expire in 2026 and be renewable for two five-year periods on the same terms and conditions as the primary lease term with the exception of rent, which will be adjusted to the prevailing market rent at renewal and will escalate in successive years during the extended lease period. Until Marina Towers’ sale on March 31, 2016, the Company recognized rental revenue associated with the period of time the facility is leased at the contractual lease rates (or on the basis of discounted rates, if negotiated).

 

In addition, beginning May 1, 2015, TBC Holdings of Melbourne, Inc., through The B.A.C.K. Center, subleases 31,835 square feet of commercial office space to third party tenants as of March 31, 2016.

 

The Company believes that the current positive cash balance, along with continued execution of its business development plan and the sale and leaseback of Marina Towers, will allow the Company to further improve its working capital and currently anticipates that it will have sufficient capital resources to meet projected cash flow requirements through the date that is one year and one day from the filing of this report.

 

However, in order to execute the Company’s business development plan, which there can be no assurance it will do, the Company may need to raise additional funds through public or private equity offerings, debt financings, corporate collaborations or other means and potentially reduce operating expenditures. If the Company is unable to secure additional capital, it may be required to curtail its business development initiatives and take additional measures to reduce costs in order to conserve its cash.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROPERTY, PLANT, AND EQUIPMENT
3 Months Ended
Mar. 31, 2016
Property, Plant and Equipment [Abstract]  
PROPERTY, PLANT, AND EQUIPMENT

NOTE 4 — PROPERTY, PLANT, AND EQUIPMENT

 

Property, plant and equipment at March 31, 2016 and December 31, 2015 are as follows:

 

   

March 31,
2016

 

December 31,
2015

Land   $ -     $ 1,000,000  
Building     -       3,055,168  
Building improvements     182,246       4,211,749  
Computer equipment     348,180       340,065  
Medical equipment     2,888,249       2,822,027  
Office equipment     260,141       260,141  
      3,678,816       11,689,150  
Less: accumulated depreciation     (989,481 )     (3,075,648 )
    $ 2,689,335     $ 8,613,502  

 

During the three months ended March 31, 2016 and 2015, depreciation expense charged to operations was $208,514 and $130,734, respectively.

 

Sale/Leaseback

 

On March 31, 2016, the Company sold Marina Towers, a 78,000 square-foot medical office building for a purchase price of $15.45 million to Global Medical REIT Inc. The acquisition includes the site and building, an easement on the adjacent property to the north for surface parking, all tenant leases, and above and below ground garages (the “Property”).

 

The entire facility was leased back to Marina Towers, LLC, a wholly owned subsidiary of the Company, via a 10-year absolute triple-net master lease agreement that expires in 2026. The Company has two successive options to renew the lease for five-year periods on the same terms and conditions as the primary non-revocable lease term with the exception of rent, which will be adjusted to the prevailing fair market rent at renewal and will escalate in successive years during the extended lease period. The Company does not have any residual interest nor the option to repurchase the facility at the end of the lease term.

 

The lease is classified as an operating lease and as such recorded a gain on sale of property of $9,188,968 during the three months ended March 31, 2016.

 

The following is a schedule of future minimum lease payments for the non-cancelable operating lease for each of the next five years ending December 31 and thereafter:

 

Nine months ended December 31, 2016     $ 828,506
Year ended December 31, 2017       1,104,675
Year ended December 31, 2018       1,104,675
Year ended December 31, 2019       1,121,246
Year ended December 31, 2020       1,143,670
Year ended December 31, 2021 and thereafter       6,387,969
        $ 11,690,741

 

For the three months ended March 31, 2016, the Company collected $268,513 in net rental revenue from third party tenants of Marina Towers.

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ADVANCES
3 Months Ended
Mar. 31, 2016
Advances  
ADVANCES

NOTE 5 — ADVANCES

  

At March 31, 2016 and December 31, 2015, the Company received an aggregate of $133,796 and $43,082, respectively, as cash advances from non-related parties. The advances are due upon demand with an interest rate of 12% per annum.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.4.0.3
LINES OF CREDIT
3 Months Ended
Mar. 31, 2016
Line of Credit Facility [Abstract]  
LINES OF CREDIT

NOTE 6 — LINES OF CREDIT

  

Line of credit, CT Capital

  

On June 13, 2013, the Company’s subsidiary, First Choice – Brevard entered into a loan and security agreement (the “Loan Agreement”) with CT Capital, Ltd., d/b/a CT Capital, LP, a Florida limited liability partnership (the “Lender”). Under the Loan Agreement, the Lender committed to make an accounts receivable line of credit in the maximum aggregate amount of $1,500,000 to First Choice - Brevard with an interest rate of 12% per annum (the “Loan”). The maturity date of the Loan is December 31, 2016. Interest is due and payable monthly. Upon default, the interest may be adjusted to the highest rate permissible by law. The Loan is secured by the accounts receivable and assets of the Company’s subsidiary, First Choice – Brevard, which constitute the collateral for the repayment of the Loan. The Loan Agreement also includes covenants, representations, warranties, indemnities and events of default that are customary for facilities of this type. The advance rate is defined as: 80% of all receivables to be 120 days or less at the net collection rate of approximately 27% of total billings, excluding patient billings and collections. Additionally, allowable accounts receivable will also include 50% of all accounts receivable protected by legal letters of protection. At any time up until December 31, 2016, the Lender may convert all or any portion of the outstanding principal amount or interest on the Loan into common stock of the Company at a conversion price of $0.75 per share. The Company did not record an embedded beneficial conversion feature in the note since the fair value of the common stock did not exceed the conversion rate at the date of commitment.

 

On November 8, 2013, in consideration for the issuance of 100,000 restricted shares of the Company’s common stock, the Lender agreed to modify its Loan. Under the Loan Agreement, as amended, the annual rate of interest of the Loan was reduced from 12% per annum to 6% per annum and will remain at 6% until November 1, 2015. All other terms under the Loan Agreement remain the same.

  

On June 9, 2015, First Choice – Brevard and the Lender entered into a Modification Agreement (“Modification”) further amending the Loan Agreement dated June 13, 2013, thereby increasing the Company’s accounts receivable line of credit from $1,500,000 to $2,000,000. All of the other terms and conditions of the Loan Agreement, as amended, remain in full force and effect.

  

On December 14, 2015, First Choice-Brevard entered into a Modification Agreement (“Modification”) amending the Loan and Security Agreement dated June 13, 2013. The Modification Agreement increased the Company’s accounts receivable line of credit from $2,000,000 to $2,500,000 and extended the maturity date of the Loan Agreement to June 30, 2017 (“Maturity Date”). In addition, the Company agreed to maintain an outstanding balance of not less than $1,000,000 until the Maturity Date (“Minimum Borrowing”) and provide sixty (60) days prior written notice to prepay up to $1,000,000 of the outstanding indebtedness in excess of the Minimum Borrowing. All of the other terms and conditions of the Loan Agreement remain in full force and effect.

 

In consideration of the $500,000 increase in the accounts receivable line of credit, the Company issued the Lender 100,000 shares of its common stock, valued at $92,000. The $500,000 increase may be repaid by the Company at any time, and is not subject to the conversion provisions set forth in the Loan Agreement. The shares were accrued for as of December 31, 2015 and issued in the current quarter.

 

The obligations of the Company under the Loan Agreement, as amended, are guaranteed by certain affiliates of the Company, including a personal guarantee issued by the Company’s Chief Executive Officer.

 

As of March 31, 2016 and December 31, 2015, the outstanding balance was $2,500,000 and $2,150,000, respectively.

 

Line of credit, Florida Business Bank

  

On June 27, 2012, The B.A.C.K. Center entered into a Promissory Note (the “Loan Agreement”) with Florida Business Bank, a Florida banking corporation (the “Lender”). Under the Loan Agreement, the Lender committed to make an accounts receivable line of credit in the maximum aggregate amount of $1,000,000, with an interest rate of Prime floating plus 1.0%, as published in The Wall Street Journal, with a floor of 4.50% per annum (the “Loan”).

  

The Loan was modified on April 9, 2013, allowing a temporary increase to $1,383,000 and allowing for a one-time draw of up to $995,000 to be distributed to the shareholders for the purposes of financing the capitalization of TBC Equipment Leasing, LLC. The one-time draw was repaid within 45 days and the availability under the Loan returned to $1,000,000. The modification allows for an interest rate of one month Libor floating plus 2.75%, as published in The Wall Street Journal, with a floor of 2.96% per annum.

  

Interest shall be due and payable monthly and principal is due on demand. The outstanding principal balance plus all accrued but unpaid interest shall be due on demand (the “Maturity Date”). Upon default, the interest may be adjusted to the highest rate permissible by law.

  

The Loan is secured by all assets of The B.A.C.K. Center now owned or hereafter acquired. The assets constitute the collateral for the repayment of the Loan.

 

The Loan Agreement also includes covenants, representations, warranties, indemnities and events of default that are customary for facilities of this type. The advance rate is defined as: 60% of eligible accounts receivables. Eligible receivables include all Medicare and Medicaid receivables less than 90 days old multiplied by a factor of 0.25, plus all other receivables less than 90 days old multiplied by a factor of 0.50. As of March 31, 2016, The B.A.C.K. Center had not violated the loan covenants.

 

The obligations of The B.A.C.K Center under the Loan Agreement are guaranteed by the shareholders of The B.A.C.K. Center. The Loan Agreement is also guaranteed in the amount of $950,000 by related parties of The B.A.C.K. Center. As of March 31, 2016 and December 31, 2015, the outstanding balance on the Loan was $439,524 and $416,888, respectively.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.4.0.3
SETTLEMENT PAYABLE
3 Months Ended
Mar. 31, 2016
Settlement Payable  
SETTLEMENT PAYABLE

NOTE 7 — SETTLEMENT PAYABLE

 

On November 2, 2015, the Company and MedTRX Collection Services, Inc. signed a settlement and mutual release agreement, whereby the parties have agreed to settle all disputes and the pending arbitration actions and release each other from all claims, counterclaims, liabilities and obligations, except for obligations stipulated in the settlement or as otherwise reserved.

 

In connection with the settlement, on November 6, 2015, the Company issued two non-interest bearing promissory notes in aggregate of $650,000, due the earlier of a) April 2, 2016, b) the date real estate (as identified) is sold, financed or transferred or c) date the stock payment (as described above) is redeemed. As of March 31, 2016 and December 31, 2015, the balance due on outstanding settlement promissory notes was $450,000 and $600,000, respectively. However, the company paid the notes in full on April 1, 2016.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.4.0.3
NOTE PAYABLE, RELATED PARTY
3 Months Ended
Mar. 31, 2016
Note Payable Related Party  
NOTE PAYABLE, RELATED PARTY

NOTE 8 — NOTE PAYABLE, RELATED PARTY

 

Effective October 1, 2016, the Company acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”) in exchange for an investment of $560,000 comprised of $140,000 cash and a promissory note for $420,000 which bears 8% interest per annum, matures April 15, 2016 and is personally guaranteed by the Company’s Chief Executive Officer. The promissory note was issued to certain equity owners of The B.A.C.K. Center, an entity consolidated with the Company under VIE accounting. The outstanding principal and interest at March 31, 2015 and December 31, 2015 was $437,372 and $428,645, respectively. This note was paid in full on April 15, 2016.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.4.0.3
NOTES PAYABLE
3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
NOTES PAYABLE

NOTE 9— NOTES PAYABLE

 

Notes payable as of March 31, 2016 and December 31, 2015 are comprised of the following:

 

   

March 31,
2016

 

December 31,

2015

Mortgage Payable   $ -     $ 7,153,262  
Note Payable, GE Capital (MRI)     746,390       844,098  
Note Payable, GE Capital (X-ray)     85,457       97,232  
Note Payable, GE Arm     61,080       67,455  
Capital Lease Equipment     21,112       26,716  
      914,039       8,188,763  
Less current portion     (507,209 )     (7,652,941 )
    $ 406,830     $ 535,822  

 

Mortgage payable

 

On August 12, 2011, the Company refinanced its existing mortgage note payable providing additional working capital funds. The aggregate amount of the note of $7,550,000 with 6.10% interest per annum with monthly payments of $45,753 beginning in October 2011 based on a 30-year amortization schedule with all remaining principal and interest due in full on September 16, 2016. The note is secured by land and the building along with first priority assignment of leases and rents. In connection with the sale/leaseback transaction (See Note 4), the Company paid off the outstanding balance as of March 31, 2016.

 

Note payable — equipment financing

 

On May 21, 2012, the Company entered into a note payable with GE Healthcare Financial Services (“GE Capital”) in the amount of approximately $2.4 million for equipment financing.

 

On September 27, 2012, the Company accepted the delivery of MRI equipment under the equipment finance lease. As such, the component price accepted of $1,771,390 is due over 60 months and the associated monthly payment is $0 for the first three months and $38,152 per month for the remaining 57 months including interest at 7.9375% per annum. On March 8, 2013, the Company amended the equipment finance lease to interest only payments of $11,779 for the first three months and $38,152 per month for the remaining monthly payments.

 

On August 22, 2012, the Company accepted the delivery of X-ray equipment under the equipment finance lease. As such, the component price accepted of $212,389 is due over 60 months and the associated monthly payment is $0 for the first three months and $4,300 per month for the remaining 57 months including interest at 7.9375% per annum. On March 8, 2013, the Company amended the equipment finance lease to interest only payments of $1,384 for the first three months and $4,575 per month for the remaining monthly payments.

 

On February 25, 2013, the Company accepted the delivery of C-arm equipment under the equipment finance lease. As such, the component price accepted of $124,797 is due over 63 months and the associated monthly payment is $0 for the first three months and $2,388 for the remaining 60 months, including interest at 7.39% per annum.

 

Capital leases — equipment

 

On June 11, 2013, the Company entered into a lease agreement to acquire equipment with 48 monthly payments of $956 payable through June 1, 2017 with an effective interest rate of 14.002% per annum. The Company may elect to acquire the leased equipment at a nominal amount at the end of the lease.

 

On October 25, 2011, The B.A.C.K. Center entered into a lease agreement to acquire equipment with 60 monthly payments of $1,036 payable through October 26, 2016, with no stated interest rate. The B.A.C.K. Center may elect to acquire the leased equipment at a nominal amount at the end of the lease.

 

Aggregate principal maturities of long-term debt as of March 31, 2016

 

    Amount
Nine months ended December 31, 2016     $ 378,217  
Year ended December 31, 2017       519,226  
Year ended December 31, 2018       16,596  
Total     $ 914,039  
XML 27 R16.htm IDEA: XBRL DOCUMENT v3.4.0.3
RELATED PARTY TRANSACTIONS
3 Months Ended
Mar. 31, 2016
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 10 — RELATED PARTY TRANSACTIONS

  

Effective October 1, 2015, the Company acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”) in exchange for an investment of $560,000 comprised of $140,000 cash and a promissory note for $420,000 which bears 8% interest per annum, matures April 15, 2016 and is personally guaranteed by the Company’s Chief Executive Officer. The promissory note was issued to certain equity owners of The B.A.C.K. Center, an entity consolidated with the Company under VIE accounting. This note was paid in full on April 15, 2016.

 

As of March 31, 2016, the Company received an aggregate of $133,796 as cash advances from related parties. The advances are due upon demand with an interest rate of 12% per annum. On April 6, 2016, the Company paid the advances in full. (See Note 20 – Subsequent Events.)

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.4.0.3
CAPITAL STOCK
3 Months Ended
Mar. 31, 2016
Stockholders' Equity Note [Abstract]  
CAPITAL STOCK

NOTE 11 — CAPITAL STOCK

 

During the three months ended March 31, 2016, the Company issued an aggregate of 100,000 shares of its common stock in connection with an increase in credit line, valued at $92,000. (see Note 6 – Lines of Credit.)

 

Stock-based payable

 

The Company was obligated to issue its common stock to officers and consultants for past and future services as of March 31, 2016. The estimated liability as of March 31, 2016 of $1,280,200 ($0.78 per share) was determined based on services rendered. The shares were issued in reliance upon the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.4.0.3
STOCK OPTIONS AND WARRANTS
3 Months Ended
Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK OPTIONS AND WARRANTS

NOTE 12 — STOCK OPTIONS AND WARRANTS

  

Warrants

  

The following table summarizes the warrants outstanding and the related exercise prices for the underlying shares of the Company’s common stock as of March 31, 2016:

 

Warrants Outstanding           Warrants Exercisable
Price   Outstanding   Expiration Date   Weighted
Price
  Exercisable   Weighted
Price
                     
$ 1.35       2,449,630     November 2018 ~ November 2020   $ 1.35       2,449,630     $ 1.35  
$ 3.60       1,875,000     December 23, 2018   $ 3.60       1,875,000     $ 3.60  
          4,324,630         $ 2.32       4,324,630     $ 2.32  

 

The warrant to purchase up to 2,449,630 shares of the Company’s common stock may be exercised on a cashless basis. The warrant to purchase up to 1,875,000 shares of the Company’s common stock may not be exercised on a cashless basis.

 

Transactions involving stock warrants issued are summarized as follows:

 

    Number of
Shares
  Weighted
Average Price
Per Share
Outstanding at December 31, 2015:       4,324,630     $ 2.32  
Granted              
Exercised              
Expired              
Outstanding at March 31, 2016       4,324,630     $ 2.32  

 

Options

  

The following table presents information related to stock options at March 31, 2016:

 

Options Outstanding    
Exercise
Price
  Number of
Options
  Weighted Average
Remaining Life in Years
  Exercisable Number of Options
$ 1.35       3,000,000     7.75        

 

Transactions involving stock options issued are summarized as follows:

 

    Number of
Shares
  Weighted
Average Price
Per Share
Outstanding at December 31, 2015:       3,000,000     $ 1.35  
Granted              
Exercised              
Expired              
Outstanding at March 31, 2016       3,000,000     $ 1.35  
XML 30 R19.htm IDEA: XBRL DOCUMENT v3.4.0.3
VARIABLE INTEREST ENTITY
3 Months Ended
Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
VARIABLE INTEREST ENTITY

NOTE 15 — VARIABLE INTEREST ENTITY

 

Brevard Orthopaedic Spine & Pain Clinic, Inc.

 

Effective May 1, 2015, the Company, through its recently formed wholly owned subsidiary, TBC Holdings of Melbourne, Inc., entered into an Operation and Control Agreement (the Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), whereby the Company will have sole and exclusive management and control of The B.A.C.K. Center, including, but not limited to, administrative, financial, facility and business operations including the requirement to absorb losses or right to receive economic benefits The initial term of the Agreement expires on December 31, 2016, with an option by the Company to extend the term until December 31, 2023. The Company issued 3,000,000 options to purchase the Company’s common stock, vesting contingent on The B.A.C.K. Center employees signing employment contracts with First Choice – Brevard.

 

The Company has determined that The B.A.C.K. Center is a Variable Interest Entity (“VIE”) in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation”. In evaluating whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, the Company considers the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and the Company’s decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders.

 

This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important.

 

In determining whether the Company has the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, the Company evaluates all of its economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s structure, including: the entity’s capital structure, contractual rights to earnings (losses), subordination of our interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of the Company’s economic interests is a matter that requires the exercise of professional judgment. The assets of The B.A.C.K. Center can only be used to settle obligations of the VIE, additionally, creditors of The B.A.C.K. Center do not have recourse against the general credit of the primary beneficiary.

  

The table below summarizes the assets and liabilities associated with The B.A.C.K. Center as of March 31, 2016 and as of December 31, 2015: 

 

    March 31, 
2016
  December 31,
 2015
Current assets:                
Cash   $ 1,120,942     $ 996,986  
Accounts receivable     3,915,553       3,727,419  
Other current assets     1,034,157       819,757  
Total current assets     6,070,652       5,544,162  
Property and equipment, net     57,579       60,978  
Other assets     22,334       18,231  
Total assets   $ 6,150,565     $ 5,623,371  
                 
Current liabilities:                
Accounts payable and accrued liabilities   $ 1,997,207     $ 1,877,690  
Due to First Choice Healthcare Solutions, Inc.     2,058,624       1,729,882  
Other current liabilities     446,759       427,229  
Total current liabilities     4,502,590       4,034,801  
Long term debt     1,786,661       1,727,256  
Total liabilities     6,289,251       5,762,057  
Non-controlling interest     (138,686 )     (138,686 )
Total liabilities and deficit   $ 6,150,565     $ 5,623,371  

 

Total revenues from The B.A.C.K. Center were $3,449,722 for the three months ended March 31, 2016. Related expenses consisted primarily of salaries and benefits of $1,457,911, general and administrative expenses of $1,654,107, depreciation of $5,515 and interest and financing costs of $3,447. (See Note 17 – Segment Reporting)

 

Crane Creek Surgery Center

  

Effective October 1, 2015, the Company, through its recently formed wholly owned subsidiary, CCSC Holdings, Inc., acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”) in exchange for an investment of $560,000 comprised of $140,000 cash and a promissory note for $420,000 which bears 8% interest per annum, matures April 15, 2016 and is personally guaranteed by the Company’s Chief Executive Officer. In connection with the investment, the Company is entitled 51% voting rights for all decisions that most significantly affect the economic performance of Crane Creek. The 40% equity interest acquired entitles the Company to 40% of the profit or loss of Crank Creek.

 

The Company has determined that Crane Creek is a Variable Interest Entity (“VIE”) in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation”. In evaluating whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, the Company considers the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and the Company’s decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders.

  

This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important.

  

In determining whether the Company has the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, the Company evaluates all of its economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s structure, including: the entity’s capital structure, contractual rights to earnings (losses), subordination of our interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of the Company’s economic interests is a matter that requires the exercise of professional judgment.

  

The assets of Crane Creek can only be used to settle obligations of the VIE, additionally, creditors of the Crane Creek do not have recourse against the general credit of the primary beneficiary.

 

The table below summarizes the assets and liabilities associated with the Crane Creek as of March 31, 2016 and December 31, 2015:

 

    March 31,  
2016
  December 31, 
2015
Current assets:                
Cash   $ 503,262     $ 559,318  
Accounts receivable     891,070       816,889  
Total current assets     1,394,332       1,376,207  
Property and equipment, net     667,280       712,830  
Goodwill     899,465       899,465  
Total assets   $ 2,961,077     $ 2,988,502  
                 
Current liabilities:                
Accounts payable and accrued liabilities   $ 324,764     $ 441,368  
Other current liabilities     251,588       251,588  
Total current liabilities     576,352       692,956  
Deferred rent     532,754       532,752  
Total liabilities     1,109,106       1,225,708  
                 
Equity-First Choice Healthcare Solutions, Inc     740,788       705,118  
Non-controlling interest     1,111,183       1,057,676  
Total liabilities and deficit   $ 2,961,077     $ 2,988,502  

 

Total revenues from the Crane Creek were $1,271,308 for the three months ended March 31, 2016. Related expenses consisted primarily of salaries and benefits of $293,337, practice supplies and operating of $709,646, general and administrative expenses of $109,275, depreciation of $71,256 and miscellaneous income of $1,382. (See Note 17 – Segment Reporting)

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.4.0.3
NON-CONTROLLING INTEREST
3 Months Ended
Mar. 31, 2016
Noncontrolling Interest [Abstract]  
NON-CONTROLLING INTEREST

NOTE 16 — NON-CONTROLLING INTEREST

 

Effective May 1, 2015, the Company, through its recently formed wholly owned subsidiary, TBC Holdings of Melbourne, Inc. entered into an Operation and Control Agreement (the Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), whereby the Company will have sole and exclusive management and control of The B.A.C.K. Center, including, but not limited to, administrative, financial, facility and business operations, including the requirement to absorb losses or right to receive economic benefits. The initial term of the Agreement expires on December 31, 2016 with an option by the Company to extend the term until December 31, 2023.

 

A reconciliation of the non-controlling income attributable to the Company:

 

Net loss attributable to non-controlling interest for the three months ended March 31, 2016:

 

Net income   $ 328,741  
Average Non-controlling interest percentage of profit/losses     -0- %
Net income attributable to the non-controlling interest   $ -0-  

 

 The following table summarizes the changes in non-controlling interest for the three months ended March 31, 2016:

 

Balance, December 31, 2015   $ (138,686 )
Transfer (to) from the non-controlling interest as a result of change in ownership      
Net income attributable to the non-controlling interest      
Balance, March 31, 2016   $ (138,686 )

 

Effective October 1, 2015, the Company, through its recently formed wholly owned subsidiary, CCSC Holdings, Inc., acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”) in exchange for an investment of $560,000 comprised of $140,000 cash and a promissory note for $420,000 which bears 8% interest per annum, matures April 15, 2016 and is personally guaranteed by the Company’s Chief Executive Officer. In connection with the investment, the Company is entitled 51% voting rights for all decisions that most significantly affect the economic performance of Crane Creek. The 40% equity interest acquired entitles the Company to 40% of the profit or loss of Crank Creek. This note was paid in full on April 15, 2016.

 

A reconciliation of the non-controlling income attributable to the Company:

 

Net income attributable to non-controlling interest for the three months ended March 31, 2016:

 

Net income   $ 89,177  
Average Non-controlling interest percentage of profit/losses     60 %
Net incomeloss attributable to the non-controlling interest   $ 53,507  

 

The following table summarizes the changes in non-controlling interest from October 1, 2015 to December 31, 2015:

 

Balance, December 31, 2015   $ 1,057,676  
Transfer (to) from the non-controlling interest as a result of change in ownership      
Net income attributable to the non-controlling interest     53,507  
Balance, March 31, 2016   $ 1,111,183  
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.4.0.3
SEGMENT REPORTING
3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
SEGMENT REPORTING

NOTE 17 — SEGMENT REPORTING

  

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. The Company has four reportable segments: Marina Towers, LLC, FCID Medical, Inc., CCSC Holdings, Inc. and The B.A.C.K Center.

  

The Marina Towers, LLC segment derives revenue from the operating leases of its owned building; FCID Medical and the CCSC Holdings segments derives revenue for medical services provided to patients; and The B.A.C.K Center derives revenue for subleasing space within its building and medical services provided to patients.

  

Information concerning the operations of the Company’s reportable segments is as follows:

  

Summary Statement of Operations for the three months ended March 31, 2016:

 

  Marina FCID Brevard The Crane   Intercompany  
  Towers Medical Orthopaedic Center Corporate Eliminations Total
Revenue:              
Net Patient Service Revenue  $           -     $ 2,308,935  $ 3,034,898  $   1,271,308  $           -     $             -     $  6,615,141
Rental revenue       428,246               -          358,099                 -           (159,733)         626,612
  Total Revenue       428,246    2,308,935    3,392,997       1,271,308               -           (159,733)      7,241,753
               
Operating expenses:              
Salaries & benefits          3,000       829,220    1,457,911         293,337       197,101                 -         2,780,569
Other operating expenses       105,954       531,407           709,646               -           (159,733)      1,187,274
General and administrative         23,907       361,803    1,581,793         109,275       329,099                 -         2,405,877
Depreciation and amortization         69,951         66,792          5,515           71,256         85,436                 -            298,950
  Total operating expenses       202,812    1,789,222    3,045,219       1,183,514       611,636        (159,733)      6,672,670
               
Net income (loss) from operations:       225,434       519,713       347,778           87,794     (611,636)                 -            569,083
               
Interest expense     (110,156)       (56,818)         (2,459)           (8,726)         (2,976)                 -          (181,135)
Amortization of financing costs       (14,337)               -              (988)                 -                  -                    -            (15,325)
Gain on sale of property    9,188,968               -                  -                    -                  -                    -         9,188,968
Other income (expense)             750               -            56,725             1,382               -                    -             58,857
               
Net Income (loss) before income taxes:    9,290,659       462,895       401,056           80,450     (614,612)                 -         9,620,448
               
Income taxes               -                  -                      -                    -                    -   
               
Net income (loss)    9,290,659       462,895       401,056           80,450     (614,612)                 -         9,620,448
               
Non-controlling interest               -                  -                  -            (53,507)               -                    -            (53,507)
               
Net income (loss) attributable to First Choice Healthcare Solutions  $ 9,290,659  $   462,895  $   401,056  $       26,943  $  (614,612)  $             -     $  9,566,941

 

Summary Statement of Operations for the three months ended March 31, 2015:

 

  Marina FCID   Intercompany  
  Towers Medical Corporate Eliminations Total
Revenue:          
Net Patient Service Revenue  $           -     $ 2,240,064  $           -     $             -     $ 2,240,064
Rental revenue       375,321               -                  -           (110,218)       265,103
  Total Revenue       375,321    2,240,064               -           (110,218)    2,505,167
           
Operating expenses:          
Salaries & benefits          3,000       836,987       106,133                 -          946,120
Other operating expenses       103,331       458,372               -           (110,218)       451,485
General and administrative         22,642       291,159       239,483                 -          553,284
Depreciation and amortization         69,219         66,515          4,775                 -          140,509
  Total operating expenses       198,192    1,653,033       350,391        (110,218)    2,091,398
           
Net income (loss) from operations:       177,129       587,031     (350,391)                 -          413,769
           
Interest expense     (110,496)       (51,784)     (200,864)                 -        (363,144)
Amortization of financing costs       (14,337)         (6,349)               -                    -          (20,686)
Other income (expense)             750               -                  -                    -                750
           
Net Income (loss):         53,046       528,898     (551,255)                 -            30,689
           
Income taxes               -                  -                  -                    -                  -   
           
Net income (loss)  $     53,046  $   528,898  $  (551,255)  $             -     $     30,689

 

Selected financial data:

 

  Marina FCID Brevard The Crane    
  Towers Medical Orthopaedic Center Corporate Total
Assets:            
At March 31, 2016:  $ 8,642,412  $ 4,872,351  $ 6,176,738  $   2,961,076  $ 3,194,588  $ 25,847,165
At December 31, 2015:  $ 6,309,955  $ 4,391,192  $ 5,623,370  $   3,013,011  $ 3,286,460  $ 22,623,988
             
Assets acquired            
Three months ended March 31, 2016  $     49,824  $     49,893  $       2,116  $       24,240  $           -     $     126,073
Three months ended March 31, 2015  $       6,628  $       1,656  $           -     $             -     $           -     $        8,284

XML 33 R22.htm IDEA: XBRL DOCUMENT v3.4.0.3
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 18 - COMMITMENTS AND CONTINGENCIES

 

Litigation – Health First Management

  

The B.A.C.K. Center has a claim filed in Brevard County, Florida Circuit Court against Health First Management, Inc. due to a contract dispute. A counterclaim was filed against the Company. The case has been litigated for a substantial amount of time and a trial is anticipated to take place within the next 12 months. The Company has vigorously defended against the counterclaim. The Company has accrued a possible loss contingency of approximately $118,000 during the year ended December 31, 2015.

  

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

Operating leases

 .

The B.A.C.K. Center leases office space under various non-cancelable operating leases that expire at various dates through June 2026. Terms of the lease agreements provide for rental payments ranging from approximately $4,200 to $200,000 per month. Certain leases include charges for sales and real estate taxes and a proration of common area maintenance expenses. Under generally accepted accounting principles (GAAP), all rental payments, including fixed rent increases, are recognized on a straight-line basis over the life of the lease. The GAAP rent expense and the actual lease payments are reflected as deferred rent on the accompanying balance sheet. From the date of the Operation and Control Agreement through December 31, 2015, lease expense amounted to $2,360,986.

 

The following is a schedule of future minimum lease payments for all non-cancelable operating leases for each of the next five years ending December 31 and thereafter:

 

Nine months ended December 31, 2016       2,620,910  
Year ended December 31, 2017       3,444,197  
Year ended December 31, 2018       3,444,209  
Year ended December 31, 2019       3,444,221  
      $ 12,953,537  

 

Sale/Leaseback

 

Effective March 31, 2016, the Company leased Marina Towers under a sale/leaseback transaction (See Note 4), via a 10-year absolute triple-net master lease agreement that expires in 2026. The Company has two successive options to renew the lease for five-year periods on the same terms and conditions as the primary non-revocable lease term with the exception of rent, which will be adjusted to the prevailing fair market rent at renewal and will escalate in successive years during the extended lease period. The Company does not have any residual interest nor the option to repurchase the facility at the end of the lease term.

 

The following is a schedule of future minimum lease payments for the non-cancelable operating lease for each of the next five years ending December 31 and thereafter:

 

Nine months ended December 31, 2016     $ 828,506
Year ended December 31, 2017       1,104,675
Year ended December 31, 2018       1,104,675
Year ended December 31, 2019       1,121,246
Year ended December 31, 2020       1,143,670
Year ended December 31, 2021 and thereafter       6,387,969
        $ 11,690,741

 

For the three months ended March 31, 2016, the Company collected $268,513 in net rental revenue from third party tenants of Marina Towers.

 

Guarantees

 

The B.A.C.K. Center’s shareholders and a related party have guaranteed the full and prompt payment of the base rent, the additional rent and any all other sums and charges payable by a tenant, its successors and assigns under the lease, and the full performance and observance of all the covenants, terms, conditions and agreements for one of the above mentioned operating leases.

XML 34 R23.htm IDEA: XBRL DOCUMENT v3.4.0.3
INCOME TAXES
3 Months Ended
Mar. 31, 2016
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 19 – INCOME TAXES

 

In the first quarter of 2016, effective March 31, 2016, we sold and leased back Marina Towers under a sale/leaseback transaction (See “Gain on Sale of Property and Improvements”). In connection with the sale, the Company reported a gain on sale of the property of $9,188,968 (GAAP Basis) for the three months ended March 31, 2016. There was a Tax Basis gain of approximate $9,051,430. The difference between the GAPP Basis and Tax Basis gain was mainly attributable to depreciation. The gain was offset by Net Operation Losses the Company has generated in prior periods, so no income tax was recorded, but an estimated Alternative Minimum Tax liability of $181,089 was recorded. Offsetting the Alternative Minimum tax recorded is a Deferred Tax Asset of the same amount related to the Alternative Minimum Tax Liability (Alternative Minimum Tax Credit Carryforward). Management believes the Company will utilize the Alternative Minimum Tax Carryforward in future periods, as of the March 31, 2016 reporting period.

 

The Company’s effective tax rate in the first quarter of 2016 is approximately 38.6% See Note 20, Income Taxes, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015, for additional information.

XML 35 R24.htm IDEA: XBRL DOCUMENT v3.4.0.3
SUBSEQUENT EVENTS
3 Months Ended
Mar. 31, 2016
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 20 – SUBSEQUENT EVENTS

 

On April 1, 2016, the Company paid the following notes in full. In connection with the MedTRX Collection Services, Inc. settlement, on November 6, 2015, the Company issued two non-interest bearing promissory notes in aggregate of $650,000, due the earlier of a) April 2, 2016, b) the date real estate (as identified) is sold, financed or transferred or c) date the stock payment (as described above) is redeemed. As of March 31, 2016, the balance due on outstanding settlement promissory notes was $450,000.

 

On April 6, 2016, the Company paid the following advances in full. As of March 31, 2016, the Company received an aggregate of $133,796 as cash advances from related parties. The advances are due upon demand with an interest rate of 12% per annum.

 

On April 15, 2016, the Company paid the following note in full. The promissory note was issued to certain equity owners of The B.A.C.K. Center, an entity consolidated with the Company under VIE accounting. Effective October 1, 2015, the Company acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”) in exchange for an investment of $560,000 comprised of $140,000 cash and a promissory note for $420,000 which bears 8% interest per annum, matures April 15, 2016 and is personally guaranteed by the Company’s Chief Executive Officer.

XML 36 R25.htm IDEA: XBRL DOCUMENT v3.4.0.3
SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Mar. 31, 2016
Accounting Policies [Abstract]  
Use of estimates

Use of estimates

 

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant estimates include the recoverability and useful lives of long-lived assets, the fair value of the Company’s stock, and stock-based compensation. Actual results may differ from these estimates.

Revenue recognition

Revenue recognition

 

The Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, “Revenue Recognition” (“ASC 605-10”), which requires that four basic criteria be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

 

ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, “Multiple-Element Arrangements” (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing ASC 605-25 on the Company’s financial position and results of operations was not significant.

 

The Company recognizes in accordance with Accounting Standards Codification subtopic 954-310, “Health Care Entities” (“ASC 954-310”), significant patient service revenue at the time the services are rendered, even though it does not assess the patient’s ability to pay. Therefore, The Company’s interim and annual periods reports disclose both, its policy for assessing and disclosing the timing and amount of uncollectable patient service revenue recognized as doubtful. Qualitative and quantitative information about significant changes in the allowance for doubtful accounts related to patient accounts receivable are disclosed in the Company’s reports. These estimates are based upon the past history and identified trends for each of our payers.

 

Patient service revenue

 

The Company recognizes patient service revenue associated with services provided to patients who have third-party payer coverage on the basis of contractual rates for the services provided. For uninsured or self-pay patients that do not qualify for charity care, the Company recognizes revenue on the basis of its standard rates for services provided (or on the basis of discounted rates, if negotiated or provided by policy). On the basis of historical experience, a portion of the Company’s patient service revenue may be potentially uncollectible due to patients who are unable or unwilling to pay for the services provided or the portion of their bill for which they are responsible. Thus, the Company records a provision for bad debts related to potentially uncollectible patient service revenue in the period the services are provided.

 

Rental revenue

 

FCID Holdings had one real estate holding, Marina Towers, a Class A 78,000 square foot, six-story building located on the Indian River in Melbourne, Florida. The address is 709 South Harbor City Boulevard, Melbourne, Florida 32901. In addition to housing our corporate headquarters and First Choice Medical Group, the building, which averages 95% annual occupancy, also leases commercial office space to tenants. Our corporate headquarters currently utilize 2,521 square feet on the fifth floor of Marina Towers; and First Choice Medical Group, including its MRI center and Physical Therapy center, currently occupies 26,838 square feet on the ground, first and second floors. Until March 2016, Marina Towers was owned by Marina Towers, LLC, a subsidiary owned by FCID Holdings (99%) and MTMC of Melbourne, Inc. (1%), both wholly owned subsidiaries of the Company.

 

On March 31, 2016, we completed the sale of Marina Towers to Global Medical REIT Inc. for a purchase price of $15.45 million. In addition, our wholly owned subsidiary, Marina Towers, LLC, leased back the entire facility via a 10-year absolute triple-net master lease agreement that will expire in 2026 and be renewable for two five-year periods on the same terms and conditions as the primary lease term with the exception of rent, which will be adjusted to the prevailing market rent at renewal and will escalate in successive years during the extended lease period.

 

Until Marina Towers’ sale on March 31, 2016, the Company recognized rental revenue associated with the period of time the facility is leased at the contractual lease rates (or on the basis of discounted rates, if negotiated).

 

In addition, beginning May 1, 2015, TBC Holdings of Melbourne, Inc., through The B.A.C.K. Center, subleases approximately 34,480 square feet of commercial office space to third party tenants.

Cash

Cash

 

Cash consists of cash held in bank demand deposits. The Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. As of March 31, 2016, the Company had $10,051,999 cash, of which $1,624,203 held by VIE. As of December 31, 2015, the Company had $1,594,998 cash, of which $1,556,303 held by VIE.

Concentrations of credit risk

Concentrations of credit risk

 

The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. Occasionally, the Company’s cash and cash equivalents in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed by senior management.

Accounts receivable

Accounts receivable

 

Accounts receivables are carried at their estimated collectible amounts net of doubtful accounts. The Company analyzes its past history and identifies trends for each major payer sources of revenue to estimate the appropriate allowance for doubtful accounts and provision for bad debts. Management regularly reviews data about these major payer sources of revenue in evaluating the sufficiency of the allowance for doubtful accounts.

 

  Rental receivables. Accounts receivables from rental activities are periodically evaluated for collectability in determining the appropriate allowance for doubtful account provision for bad debts and provision of bad debts.
     
  Patient receivables. Accounts receivables from services provided to patients who have third-party coverage, the Company analyzes contractually due amounts and provides a provision for bad debts, if necessary. The Company records a provision for bad debts in the period of service on the basis of past experience or when indications are the patients are unable or unwilling to pay the portion of their bill for which they are responsible. The difference between the standard rates (or the discounted rates if negotiated) and the amounts actually collected after all reasonable collection efforts have been exhausted, is charged off against the allowance for doubtful accounts.

 

As of March 31, 2016 and December 31, 2015, the Company’s provision for bad debts was $2,917,884 and $2,498,398, respectively.

Segment information

Segment information

 

Accounting Standards Codification subtopic “Segment Reporting” 280-10 (“ASC 280-10”) establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. ASC 280-10 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The information disclosed herein represents all of the material financial information related to the Company’s principal operating segments (see Note 17 – Segment Information).

Patents

Patents

 

Intangible assets with finite lives are amortized over their estimated useful lives. Intangible assets with indefinite lives are not amortized, but are tested for impairment annually. The Company’s intangible assets with finite lives are patent costs, which are amortized over their economic or legal life, whichever is shorter. These patent costs were acquired on September 7, 2013 by the issuance of 636,666 shares of the Company’s common stock to a related party. The shares of common stock were valued at $286,500, which was estimated to be approximately the fair value of the patent acquired and did not materially differ from the fair value of the common stock. The amortization for the three months ended March 31, 2016 and 2015 was $4,775 and $4,775, respectively. Accumulated amortization of patent costs was $42,975 and $38,200 at March 31, 2016 and December 31, 2015, respectively.

Patient list

Patient list

 

Patient list is comprised of acquired patients in connection with the acquisition of First Choice - Brevard and is amortized ratably over the estimated useful life of 15 years. The amortization expenses for the three months ended March 31, 2016 and 2015 was $5,000 and $5,000, respectively. Accumulated amortization of patient list costs was $80,000 and $75,000 at March 31, 2016 and December 31, 2015, respectively.

Net income per share

Net income per share

 

The Company computes basic net income per share by dividing net income per share available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of basic and diluted income per share for the three months ended March 31, 2016 and 2015 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.

 

Potentially dilutive securities excluded from the computation of basic and diluted net income per share are as follows:

 

   

March 31,
2016

 

March 31,
2015

Warrants to purchase common stock     4,324,630       4,195,000  
Options to purchase common stock     3,000,000        
Totals     7,324,630       4,195,000  
Stock-based compensation

Stock-based compensation

 

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the consolidated statements of operations, as if such amounts were paid in cash.

Deferred costs

Deferred costs

 

On May 1, 2015, in connection with the Operation and Control Agreement with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), the Company reserved 3,000,000 options to purchase the Company’s common stock at $1.35 per share, expiring on December 31, 2023 and vesting contingent on The B.A.C.K. Center employees executing employment agreements with TBC Holding and the acquisition of the variable interest entity. The determined fair value of $3,226,427, determined using the Black Scholes option pricing model with the following assumptions: Dividend yield: 0%; Volatility: 134.09% and Risk free rate: 2.12%, is amortized ratably to operations over an estimated 8.67-year life. The amortization for the three months ended March 31, 2016 was $80,661. Accumulated amortization of the deferred costs was $295,757 at March 31, 2016.

Investments

Investments

 

The Company has adopted Accounting Standards Codification subtopic 323-10, Investments-Equity Methods and Joint Ventures (“ASC 323-10), which requires the accounting for investments where the Company can exert significant influence, but not control of a joint venture or equity investment. The Company owned a 0.6660% interest in a non-consolidated affiliate, Doctor’s Surgical Partnership, LTD. In accordance with the equity method of accounting, investments in non-consolidated affiliates are carried at cost and adjusted for the Company’s proportionate share of their undistributed earnings or losses.

Income Taxes

Income Taxes

 

The Company accounts for income taxes pursuant to Accounting Standards Codified 740 (“ASC 740”). Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Fair value

Fair value

 

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:

 

  Level 1 - Quoted prices in active markets for identical assets or liabilities.
     
  Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
     
  Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

 

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

 

The carrying value of the Company’s cash, accounts receivable, accounts payable, short-term borrowings (including lines of credit and notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

 

As of March 31, 2016 and December 31, 2015, the Company did not have any items that would be classified as level 1, 2 or 3 disclosures.

Recent accounting pronouncements

Recent accounting pronouncements

 

There are other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.

Subsequent events

Subsequent events

  

The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements, except as disclosed.

XML 37 R26.htm IDEA: XBRL DOCUMENT v3.4.0.3
SIGNIFICANT ACCOUNTING POLICIES (Tables)
3 Months Ended
Mar. 31, 2016
Significant Accounting Policies Tables  
Net Income per share

Potentially dilutive securities excluded from the computation of basic and diluted net income per share are as follows:

 

   

March 31,
2016

 

March 31,
2015

Warrants to purchase common stock     4,324,630       4,195,000  
Options to purchase common stock     3,000,000        
Totals     7,324,630       4,195,000  
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROPERTY, PLANT, AND EQUIPMENT (Tables)
3 Months Ended
Mar. 31, 2016
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment

Property, plant and equipment at March 31, 2016 and December 31, 2015 are as follows:

 

   

March 31,
2016

 

December 31,
2015

Land   $ -     $ 1,000,000  
Building     -       3,055,168  
Building improvements     182,246       4,211,749  
Computer equipment     348,180       340,065  
Medical equipment     2,888,249       2,822,027  
Office equipment     260,141       260,141  
      3,678,816       11,689,150  
Less: accumulated depreciation     (989,481 )     (3,075,648 )
    $ 2,689,335     $ 8,613,502  
Schedule Of Future Minimum Lease Payments Table

The following is a schedule of future minimum lease payments for the non-cancelable operating lease for each of the next five years ending December 31 and thereafter:

 

Nine months ended December 31, 2016     $ 828,506
Year ended December 31, 2017       1,104,675
Year ended December 31, 2018       1,104,675
Year ended December 31, 2019       1,121,246
Year ended December 31, 2020       1,143,670
Year ended December 31, 2021 and thereafter       6,387,969
        $ 11,690,741
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.4.0.3
NOTES PAYABLE (Tables)
3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Schedule of Long-term Debt Instruments

Notes payable as of March 31, 2016 and December 31, 2015 are comprised of the following:

 

   

March 31,
2016

 

December 31,

2015

Mortgage Payable   $ -     $ 7,153,262  
Note Payable, GE Capital (MRI)     746,390       844,098  
Note Payable, GE Capital (X-ray)     85,457       97,232  
Note Payable, GE Arm     61,080       67,455  
Capital Lease Equipment     21,112       26,716  
      914,039       8,188,763  
Less current portion     (507,209 )     (7,652,941 )
    $ 406,830     $ 535,822  
Schedule of Maturities of Long-term Debt

Aggregate principal maturities of long-term debt as of March 31, 2016

 

    Amount
Nine months ended December 31, 2016     $ 378,217  
Year ended December 31, 2017       519,226  
Year ended December 31, 2018       16,596  
Total     $ 914,039  
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.4.0.3
STOCK OPTIONS AND WARRANTS (Tables)
3 Months Ended
Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Schedule of Warrants Outstanding And Related Exercise Prices

The following table summarizes the warrants outstanding and the related exercise prices for the underlying shares of the Company’s common stock as of March 31, 2016:

 

Warrants Outstanding           Warrants Exercisable
Price   Outstanding   Expiration Date   Weighted
Price
  Exercisable   Weighted
Price
                     
$ 1.35       2,449,630     November 2018 ~ November 2020   $ 1.35       2,449,630     $ 1.35  
$ 3.60       1,875,000     December 23, 2018   $ 3.60       1,875,000     $ 3.60  
          4,324,630         $ 2.32       4,324,630     $ 2.32  
Schedule of Transactions Involving Stock Warrants Issued To Non-employees

Transactions involving stock warrants issued are summarized as follows:

 

    Number of
Shares
  Weighted
Average Price
Per Share
Outstanding at December 31, 2015:       4,324,630     $ 2.32  
Granted              
Exercised              
Expired              
Outstanding at March 31, 2016       4,324,630     $ 2.32  
Schedule of Share-based Compensation, Stock Options, Activity

The following table presents information related to stock options at March 31, 2016:

 

Options Outstanding    
Exercise
Price
  Number of
Options
  Weighted Average
Remaining Life in Years
  Exercisable Number of Options
$ 1.35       3,000,000     7.75        
Schedule of Stock Options Information

Transactions involving stock options issued are summarized as follows:

 

    Number of
Shares
  Weighted
Average Price
Per Share
Outstanding at December 31, 2015:       3,000,000     $ 1.35  
Granted              
Exercised              
Expired              
Outstanding at March 31, 2016       3,000,000     $ 1.35  
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.4.0.3
VARIABLE INTEREST ENTITY (Tables)
3 Months Ended
Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Variable Interest Entities [Table Text Block]

The table below summarizes the assets and liabilities associated with The B.A.C.K. Center as of March 31, 2016 and as of December 31, 2015: 

 

    March 31, 
2016
  December 31,
 2015
Current assets:                
Cash   $ 1,120,942     $ 996,986  
Accounts receivable     3,915,553       3,727,419  
Other current assets     1,034,157       819,757  
Total current assets     6,070,652       5,544,162  
Property and equipment, net     57,579       60,978  
Other assets     22,334       18,231  
Total assets   $ 6,150,565     $ 5,623,371  
                 
Current liabilities:                
Accounts payable and accrued liabilities   $ 1,997,207     $ 1,877,690  
Due to First Choice Healthcare Solutions, Inc.     2,058,624       1,729,882  
Other current liabilities     446,759       427,229  
Total current liabilities     4,502,590       4,034,801  
Long term debt     1,786,661       1,727,256  
Total liabilities     6,289,251       5,762,057  
Non-controlling interest     (138,686 )     (138,686 )
Total liabilities and deficit   $ 6,150,565     $ 5,623,371  

 

The table below summarizes the assets and liabilities associated with the Crane Creek as of March 31, 2016 and December 31, 2015:

 

    March 31,  
2016
  December 31, 
2015
Current assets:                
Cash   $ 503,262     $ 559,318  
Accounts receivable     891,070       816,889  
Total current assets     1,394,332       1,376,207  
Property and equipment, net     667,280       712,830  
Goodwill     899,465       899,465  
Total assets   $ 2,961,077     $ 2,988,502  
                 
Current liabilities:                
Accounts payable and accrued liabilities   $ 324,764     $ 441,368  
Other current liabilities     251,588       251,588  
Total current liabilities     576,352       692,956  
Deferred rent     532,754       532,752  
Total liabilities     1,109,106       1,225,708  
                 
Equity-First Choice Healthcare Solutions, Inc     740,788       705,118  
Non-controlling interest     1,111,183       1,057,676  
Total liabilities and deficit   $ 2,961,077     $ 2,988,502  
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.4.0.3
NON-CONTROLLING INTEREST (Tables)
3 Months Ended
Mar. 31, 2016
Non-controlling Interest Tables  
Schedule of Net loss attributable to non-controlling interest

Net loss attributable to non-controlling interest for the three months ended March 31, 2016:

 

Net income   $ 328,741  
Average Non-controlling interest percentage of profit/losses     -0- %
Net income attributable to the non-controlling interest   $ -0-  

 

The following table summarizes the changes in non-controlling interest for the three months ended March 31, 2016:

 

Balance, December 31, 2015   $ (138,686 )
Transfer (to) from the non-controlling interest as a result of change in ownership      
Net income attributable to the non-controlling interest      
Balance, March 31, 2016   $ (138,686 )

 

A reconciliation of the non-controlling income attributable to the Company:

 

Net income attributable to non-controlling interest for the three months ended March 31, 2016:

 

Net income   $ 89,177  
Average Non-controlling interest percentage of profit/losses     60 %
Net incomeloss attributable to the non-controlling interest   $ 53,507  

 

The following table summarizes the changes in non-controlling interest from October 1, 2015 to December 31, 2015:

 

Balance, December 31, 2015   $ 1,057,676  
Transfer (to) from the non-controlling interest as a result of change in ownership      
Net income attributable to the non-controlling interest     53,507  
Balance, March 31, 2016   $ 1,111,183  
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.4.0.3
SEGMENT REPORTING (Tables)
3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment

Summary Statement of Operations for the three months ended March 31, 2016:

 

  Marina FCID Brevard The Crane   Intercompany  
  Towers Medical Orthopaedic Center Corporate Eliminations Total
Revenue:              
Net Patient Service Revenue  $           -     $ 2,308,935  $ 3,034,898  $   1,271,308  $           -     $             -     $  6,615,141
Rental revenue       428,246               -          358,099                 -           (159,733)         626,612
  Total Revenue       428,246    2,308,935    3,392,997       1,271,308               -           (159,733)      7,241,753
               
Operating expenses:              
Salaries & benefits          3,000       829,220    1,457,911         293,337       197,101                 -         2,780,569
Other operating expenses       105,954       531,407           709,646               -           (159,733)      1,187,274
General and administrative         23,907       361,803    1,581,793         109,275       329,099                 -         2,405,877
Depreciation and amortization         69,951         66,792          5,515           71,256         85,436                 -            298,950
  Total operating expenses       202,812    1,789,222    3,045,219       1,183,514       611,636        (159,733)      6,672,670
               
Net income (loss) from operations:       225,434       519,713       347,778           87,794     (611,636)                 -            569,083
               
Interest expense     (110,156)       (56,818)         (2,459)           (8,726)         (2,976)                 -          (181,135)
Amortization of financing costs       (14,337)               -              (988)                 -                  -                    -            (15,325)
Gain on sale of property    9,188,968               -                  -                    -                  -                    -         9,188,968
Other income (expense)             750               -            56,725             1,382               -                    -             58,857
               
Net Income (loss) before income taxes:    9,290,659       462,895       401,056           80,450     (614,612)                 -         9,620,448
               
Income taxes               -                  -                      -                    -                    -   
               
Net income (loss)    9,290,659       462,895       401,056           80,450     (614,612)                 -         9,620,448
               
Non-controlling interest               -                  -                  -            (53,507)               -                    -            (53,507)
               
Net income (loss) attributable to First Choice Healthcare Solutions  $ 9,290,659  $   462,895  $   401,056  $       26,943  $  (614,612)  $             -     $  9,566,941

 

Summary Statement of Operations for the three months ended March 31, 2015:

 

  Marina FCID   Intercompany  
  Towers Medical Corporate Eliminations Total
Revenue:          
Net Patient Service Revenue  $           -     $ 2,240,064  $           -     $             -     $ 2,240,064
Rental revenue       375,321               -                  -           (110,218)       265,103
  Total Revenue       375,321    2,240,064               -           (110,218)    2,505,167
           
Operating expenses:          
Salaries & benefits          3,000       836,987       106,133                 -          946,120
Other operating expenses       103,331       458,372               -           (110,218)       451,485
General and administrative         22,642       291,159       239,483                 -          553,284
Depreciation and amortization         69,219         66,515          4,775                 -          140,509
  Total operating expenses       198,192    1,653,033       350,391        (110,218)    2,091,398
           
Net income (loss) from operations:       177,129       587,031     (350,391)                 -          413,769
           
Interest expense     (110,496)       (51,784)     (200,864)                 -        (363,144)
Amortization of financing costs       (14,337)         (6,349)               -                    -          (20,686)
Other income (expense)             750               -                  -                    -                750
           
Net Income (loss):         53,046       528,898     (551,255)                 -            30,689
           
Income taxes               -                  -                  -                    -                  -   
           
Net income (loss)  $     53,046  $   528,898  $  (551,255)  $             -     $     30,689

 

Selected financial data:

 

  Marina FCID Brevard The Crane    
  Towers Medical Orthopaedic Center Corporate Total
Assets:            
At March 31, 2016:  $ 8,642,412  $ 4,872,351  $ 6,176,738  $   2,961,076  $ 3,194,588  $ 25,847,165
At December 31, 2015:  $ 6,309,955  $ 4,391,192  $ 5,623,370  $   3,013,011  $ 3,286,460  $ 22,623,988
             
Assets acquired            
Three months ended March 31, 2016  $     49,824  $     49,893  $       2,116  $       24,240  $           -     $     126,073
Three months ended March 31, 2015  $       6,628  $       1,656  $           -     $             -     $           -     $        8,284
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.4.0.3
COMMITMENTS AND CONTINGENCIES (Tables)
3 Months Ended
Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Future Minimum Rental Payments for Operating Leases

The following is a schedule of future minimum lease payments for all non-cancelable operating leases for each of the next five years ending December 31 and thereafter:

 

Nine months ended December 31, 2016       2,620,910  
Year ended December 31, 2017       3,444,197  
Year ended December 31, 2018       3,444,209  
Year ended December 31, 2019       3,444,221  
      $ 12,953,537  

 

The following is a schedule of future minimum lease payments for the non-cancelable operating lease for each of the next five years ending December 31 and thereafter:

 

Nine months ended December 31, 2016     $ 828,506
Year ended December 31, 2017       1,104,675
Year ended December 31, 2018       1,104,675
Year ended December 31, 2019       1,121,246
Year ended December 31, 2020       1,143,670
Year ended December 31, 2021 and thereafter       6,387,969
        $ 11,690,741
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.4.0.3
BASIS OF PRESENTATION (Details Textual) - USD ($)
1 Months Ended 3 Months Ended
Dec. 14, 2015
Jun. 09, 2015
Oct. 31, 2015
Mar. 31, 2016
Matures date Jul. 30, 2017 Jul. 30, 2017   Apr. 01, 2016
Crane Creek Surgery Center [Member]        
Amount paid in exchange of investment       $ 560,000
Cash paid       140,000
Promissory note       $ 420,000
Bearing interest rate       8.00%
Matures date     Apr. 15, 2016 Apr. 15, 2016
Voting Rights, Description      

In connection with the investment, the Company is entitled 51% voting rights for all decisions that most significantly affect the economic performance of Crane Creek. The 40% equity interest acquired entitles the Company to 40% of the profit or loss of Crank Creek.

XML 46 R35.htm IDEA: XBRL DOCUMENT v3.4.0.3
SIGNIFICANT ACCOUNTING POLICIES (Details) - shares
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Potentially dilutive securities excluded from the computation of basic and diluted net income (loss) per share 7,324,630 4,195,000
Options to purchase common stock [Member]    
Potentially dilutive securities excluded from the computation of basic and diluted net income (loss) per share 3,000,000
Warrants to purchase common stock [Member]    
Potentially dilutive securities excluded from the computation of basic and diluted net income (loss) per share 4,324,630 4,195,000
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.4.0.3
SIGNIFICANT ACCOUNTING POLICIES (Details Textual)
1 Months Ended 3 Months Ended
Sep. 07, 2013
USD ($)
Sep. 07, 2013
shares
May. 31, 2015
USD ($)
ft²
$ / shares
shares
Mar. 31, 2016
USD ($)
ft²
shares
Mar. 31, 2015
USD ($)
shares
Dec. 31, 2015
USD ($)
shares
Dec. 31, 2014
USD ($)
Summary of Significant Accounting Policies [Line Items]              
Amortization Financing Costs       $ 15,325 $ 20,686    
Property, Plant and Equipment, Depreciation Methods         straight-line method    
Allowance for Doubtful Accounts Receivable       $ 2,917,884   $ 2,498,398  
Antidilutive Securities Excluded From Computation Of Earnings Per Share, Amount | shares       7,324,630 4,195,000    
Cash and Cash Equivalents, at Carrying Value, Total       $ 10,051,999 $ 112,794 1,594,998 $ 279,087
Health Care Organization, Other Revenue       626,612 265,103    
Finite-Lived Intangible Assets, Accumulated Amortization       80,000   $ 75,000  
Options to purchase common stock | shares           129,630  
Purchase price       15,450,000      
VIE [Member]              
Summary of Significant Accounting Policies [Line Items]              
Cash and Cash Equivalents, at Carrying Value, Total       1,624,203   $ 1,556,303  
Patient Lists [Member]              
Summary of Significant Accounting Policies [Line Items]              
Amortization of Intangible Assets       5,000 5,000    
Finite-Lived Intangible Assets, Accumulated Amortization       $ 80,000   75,000  
Finite-Lived Intangible Asset, Useful Life       15 years      
Patents [Member]              
Summary of Significant Accounting Policies [Line Items]              
Amortization of Intangible Assets       $ 4,775 4,775    
Finite-Lived Intangible Assets, Accumulated Amortization       $ 42,975   $ 38,200  
Donald Bittar [Member]              
Summary of Significant Accounting Policies [Line Items]              
Stock Issued During Period, Shares, Purchase of Assets | shares   636,666          
Donald Bittar [Member] | Patents [Member]              
Summary of Significant Accounting Policies [Line Items]              
Health Care Organization, Other Revenue $ 286,500            
Doctor's Surgical Partnership, LTD [Member]              
Summary of Significant Accounting Policies [Line Items]              
Equity Method Investment, Ownership Percentage       0.666%      
Brevard Orthopaedic Spine Pain Clinic, Inc. [Member]              
Summary of Significant Accounting Policies [Line Items]              
Amortization Financing Costs       $ 295,757      
Share Price | $ / shares     $ 1.35        
Options to purchase common stock | shares     3,000,000        
Adjustments to Additional Paid in Capital, Fair Value     $ 3,226,427        
Fair Value Assumptions, Expected Dividend Rate     0.00%        
Fair Value Assumptions, Expected Volatility Rate     134.09%        
Fair Value Assumptions, Risk Free Interest Rate     2.12%        
Fair Value Assumptions, Expected Term     8 years 8 months 1 day        
Amortization of Deferred Charges, Total     $ 215,096 80,661      
Options Expiration Date     Dec. 31, 2023        
TBC Holdings of Melbourne, Inc [Member]              
Summary of Significant Accounting Policies [Line Items]              
Area of Land | ft²     34,480        
Marina Towers [Member]              
Summary of Significant Accounting Policies [Line Items]              
Amortization Financing Costs       14,337 14,337    
Health Care Organization, Other Revenue       $ 428,246 375,321    
Area of Land, Percentage of Occupancy       95.00%      
Area of Land | ft²       78,000      
Fair Value Assumptions, Expected Term       5 years      
Options Expiration Date       Dec. 31, 2026      
Purchase price       $ 15,450,000      
Fifth Floor Marina Towers [Member]              
Summary of Significant Accounting Policies [Line Items]              
Area of Land | ft²       2,521      
First and Second Floors Marina Towers [Member]              
Summary of Significant Accounting Policies [Line Items]              
Area of Land | ft²       26,838      
FCID Medical [Member]              
Summary of Significant Accounting Policies [Line Items]              
Amortization Financing Costs       $ 6,349    
Health Care Organization, Other Revenue          
Equity Method Investment, Ownership Percentage       99.00%      
MTMC Melbourne, Inc. [Member]              
Summary of Significant Accounting Policies [Line Items]              
Equity Method Investment, Ownership Percentage       1.00%      
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.4.0.3
LIQUIDITY (Details Textual)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 14, 2015
USD ($)
Jun. 09, 2015
USD ($)
Nov. 08, 2013
shares
Jun. 13, 2013
USD ($)
shares
Mar. 31, 2016
USD ($)
ft²
Mar. 31, 2016
USD ($)
ft²
shares
Mar. 31, 2015
USD ($)
Dec. 31, 2015
USD ($)
May. 01, 2015
ft²
Liquidity Disclosures [Line Items]                  
Long-term Line of Credit $ 1,000,000 $ 500,000   $ 2,000,000          
Debt Instrument, Interest Rate, Effective Percentage         60.00% 60.00%      
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures, Total | shares           100,000      
Debt Conversion, Converted Instrument, Amount             $ 2,236,907    
Matures date Jul. 30, 2017 Jul. 30, 2017       Apr. 01, 2016      
Purchase price         $ 15,450,000 $ 15,450,000      
Lease agreement expireation date               Dec. 31, 2026  
B.A.C.K. Center [Member]                  
Liquidity Disclosures [Line Items]                  
Area of Land | ft²                 31,835
Maximum [Member]                  
Liquidity Disclosures [Line Items]                  
Increasing the maximum aggregate amount $ 2,500,000 $ 2,000,000              
Minimum [Member]                  
Liquidity Disclosures [Line Items]                  
Increasing the maximum aggregate amount $ 2,000,000 $ 1,500,000              
CT Capital LTD [Member]                  
Liquidity Disclosures [Line Items]                  
Long-term Line of Credit       $ 1,500,000 $ 2,500,000 $ 2,500,000   $ 2,150,000  
Debt Instrument, Interest Rate During Period     12.00% 12.00%          
Debt Instrument, Interest Rate, Effective Percentage     6.00% 6.00%       6.00%  
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures, Total | shares     100,000 100,000          
Debt Conversion, Converted Instrument, Amount               $ 2,892,314  
Marina Towers [Member]                  
Liquidity Disclosures [Line Items]                  
Area of Land, Percentage of Occupancy           95.00%      
Area of Land | ft²         78,000 78,000      
Purchase price         $ 15,450,000 $ 15,450,000      
Lease agreement expireation date         Dec. 31, 2026        
Lease agreement description         Our corporate headquarters currently utilizes 2,521 square feet on the fifth floor of Marina Towers; and First Choice Medical Group, including its MRI center and Physical Therapy center, currently occupies 26,838 square feet on the ground, first and second floors. Until March 2016, Marina Towers was owned by Marina Towers, LLC, a subsidiary owned by FCID Holdings (99%) and MTMC of Melbourne, Inc. (1%), both wholly owned subsidiaries of the Company.        
FCID Medical [Member]                  
Liquidity Disclosures [Line Items]                  
Equity Method Investment, Ownership Percentage         99.00% 99.00%      
MTMC Melbourne, Inc. [Member]                  
Liquidity Disclosures [Line Items]                  
Equity Method Investment, Ownership Percentage         1.00% 1.00%      
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROPERTY, PLANT, AND EQUIPMENT (Details) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Property, Plant and Equipment [Line Items]    
Property, Plant and Equipment, Gross $ 3,678,816 $ 11,689,150
Less: accumulated depreciation (989,481) (3,075,648)
Property, plant and equipment, net $ 2,689,335 8,613,502
Land [Member]    
Property, Plant and Equipment [Line Items]    
Property, Plant and Equipment, Gross 1,000,000
Building [Member]    
Property, Plant and Equipment [Line Items]    
Property, Plant and Equipment, Gross 3,055,168
Building improvements [Member]    
Property, Plant and Equipment [Line Items]    
Property, Plant and Equipment, Gross $ 182,246 4,211,749
Computer equipment [Member]    
Property, Plant and Equipment [Line Items]    
Property, Plant and Equipment, Gross 348,180 340,065
Medical equipment [Member]    
Property, Plant and Equipment [Line Items]    
Property, Plant and Equipment, Gross 2,888,249 2,822,027
Office equipment [Member]    
Property, Plant and Equipment [Line Items]    
Property, Plant and Equipment, Gross $ 260,141 $ 260,141
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROPERTY, PLANT, AND EQUIPMENT (Details 1) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Property Plant And Equipment Details 1    
Nine months ended December 31, 2016 $ 828,506  
Year ended December 31, 2017 1,104,675  
Year ended December 31, 2018 1,104,675  
Year ended December 31, 2019 1,121,246  
Year ended December 31, 2020 1,143,670  
Year ended December 31, 2021 and thereafter 6,387,969  
Total $ 11,690,741 $ 12,953,537
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.4.0.3
PROPERTY, PLANT, AND EQUIPMENT (Details Textual) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Property, Plant and Equipment [Abstract]    
Depreciation $ 208,514 $ 130,734
Gain on sale of property 9,188,968 $ 0
Purchase price 15,450,000  
Rental revenue from third party tenants of Marina Towers $ 268,513  
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.4.0.3
ADVANCES (Details Textual) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Debt Disclosure [Abstract]    
Debt Instrument, Face Amount $ 133,796 $ 43,082
Debt Instrument, Interest Rate, Stated Percentage 12.00% 12.00%
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.4.0.3
LINES OF CREDIT (Details Textual) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 14, 2015
Jun. 09, 2015
Nov. 08, 2013
Jun. 13, 2013
Apr. 09, 2013
Jun. 27, 2012
Mar. 31, 2016
Dec. 31, 2015
Line of Credit Facility [Line Items]                
Line Of Credit Facility, Expiration Date       Dec. 31, 2016        
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures, Total             100,000  
Debt Instrument, Interest Rate, Effective Percentage             60.00%  
Line of Credit Facility, Minimum Borrowing Capacity $ 1,000,000              
Line Of Credit Facility, Amount Outstanding $ 1,000,000 $ 500,000   $ 2,000,000        
Line of Credit Facility, Interest Rate Description             The advance rate is defined as: 60% of Medicare and Medicaid receivables less than 90 days old multiplied by a factor of 0.25, plus all other receivables less than 90 days old multiplied by a factor of 0.50.  
Debt Instrument, Term 60 days              
Matures date Jul. 30, 2017 Jul. 30, 2017         Apr. 01, 2016  
Increase in the accounts receivable line of credit             $ 500,000  
Agreed to issue shares of common stock             500,000  
Agreed to issue shares of common stock, amount             $ 92,000  
Minimum [Member]                
Line of Credit Facility [Line Items]                
Line of Credit Facility, Maximum Borrowing Capacity $ 2,000,000 $ 1,500,000            
Maximum [Member]                
Line of Credit Facility [Line Items]                
Line of Credit Facility, Maximum Borrowing Capacity $ 2,500,000 2,000,000            
Accounts Receivable [Member] | Minimum [Member]                
Line of Credit Facility [Line Items]                
Line Of Credit Facility, Amount Outstanding   1,500,000            
Accounts Receivable [Member] | Maximum [Member]                
Line of Credit Facility [Line Items]                
Line Of Credit Facility, Amount Outstanding   $ 2,000,000            
CT Capital LTD [Member]                
Line of Credit Facility [Line Items]                
Short-term Debt, Maximum Amount Outstanding During Period       $ 1,500,000        
Line of Credit Facility, Collateral       The advance rate is defined as: 80% of all receivables to be 120 days or less at the net collection rate of approximately 27% of total billings, excluding patient billings and collections. Additionally, allowable accounts receivable will also include 50% of all accounts receivable protected by legal letters of protection.        
Debt Instrument, Convertible, Terms of Conversion Feature       At any time up until December 31,2016, the Lender may convert all or any portion of the outstanding principal amount or interest on the Loan into common stock of the Company at a conversion price of $0.75 per share.        
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures, Total     100,000 100,000        
Debt Instrument, Interest Rate During Period     12.00% 12.00%        
Debt Instrument, Interest Rate, Effective Percentage     6.00% 6.00%       6.00%
Line Of Credit Facility, Amount Outstanding       $ 1,500,000     2,500,000 $ 2,150,000
TBC Equipment Leasing, LLC member [Member]                
Line of Credit Facility [Line Items]                
Line of Credit Facility, Interest Rate Description         interest rate of one month Libor floating plus 2.75%, as published in The Wall Street Journal, with a floor of 2.96% per annum (2.96% at December 31, 2014 and 2013, respectively).      
Line of Credit Facility, Increase (Decrease), Net, Total         $ 1,383,000      
Line of Credit Facility, Increase (Decrease), Other, Net         $ 995,000      
Debt Instrument, Term         45 days      
Line of Credit Facility, Average Outstanding Amount         $ 1,000,000      
Line of Credit, Florida Business Bank [Member]                
Line of Credit Facility [Line Items]                
Line of Credit Facility, Covenant Terms           The advance rate is defined as: 60% of Medicare and Medicaid receivables less than 90 days old multiplied by a factor of 0.25, plus all other receivables less than 90 days old multiplied by a factor of 0.50. As of June 30, 2015, The B.A.C.K. Center had not violated the loan covenants.    
Line Of Credit Guaranteed Amount             950,000  
Line of Credit Facility, Average Outstanding Amount             $ 439,524 $ 416,888
Line of Credit, Florida Business Bank [Member] | Accounts Receivable [Member]                
Line of Credit Facility [Line Items]                
Line of Credit Facility, Interest Rate Description           interest rate of Prime floating plus 1.0%, as published in The Wall Street Journal, with a floor of 4.50% per annum (the Loan).    
Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases           $ 1,000,000    
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.4.0.3
SETTLEMENT PAYABLE (Details Textual) - USD ($)
3 Months Ended
Dec. 14, 2015
Jun. 09, 2015
Mar. 31, 2016
Dec. 31, 2015
Nov. 06, 2015
Subsequent Event [Line Items]          
Debt Instrument, Maturity Date Jul. 30, 2017 Jul. 30, 2017 Apr. 01, 2016    
Outstanding settlement promissory notes     $ 450,000 $ 600,000  
MedTRX Collection Services [Member] | Two non-interest bearing promissory notes [Member]          
Subsequent Event [Line Items]          
Promissory note         $ 650,000
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.4.0.3
NOTE PAYABLE, RELATED PARTY (Details Textual) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 14, 2015
Jun. 09, 2015
Oct. 31, 2015
Mar. 31, 2016
Dec. 31, 2015
Oct. 01, 2015
Matures date Jul. 30, 2017 Jul. 30, 2017   Apr. 01, 2016    
Crane Creek Surgery Center [Member]            
Amount paid in exchange of investment       $ 560,000    
Cash paid       140,000    
Promissory note       $ 420,000    
Bearing interest rate       8.00%    
Matures date     Apr. 15, 2016 Apr. 15, 2016    
Promissory note principal and interest outstanding       $ 437,372 $ 428,645  
Crane Creek Surgery Center [Member]            
Interest acquire in subsidiary           40.00%
Amount paid in exchange of investment           $ 560,000
Cash paid           $ 140,000
Bearing interest rate           8.00%
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.4.0.3
NOTES PAYABLE (Details) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Debt Instrument [Line Items]    
Notes Payable $ 914,039 $ 8,188,763
Less: current portion (507,209) (7,652,941)
Notes payable, long term portion $ 406,830 535,822
Mortgage Payable [Member]    
Debt Instrument [Line Items]    
Notes Payable 7,153,262
Note Payable, GE Capital (MRI) [Member]    
Debt Instrument [Line Items]    
Notes Payable $ 746,390 844,098
Note Payable, GE Capital (X-ray) [Member]    
Debt Instrument [Line Items]    
Notes Payable 85,457 97,232
Note Payable GE Arm [Member]    
Debt Instrument [Line Items]    
Notes Payable 61,080 67,455
Capital lease, Equipment [Member]    
Debt Instrument [Line Items]    
Notes Payable $ 21,112 $ 26,716
XML 57 R46.htm IDEA: XBRL DOCUMENT v3.4.0.3
NOTES PAYABLE (Details 1)
Mar. 31, 2016
USD ($)
Aggregate maturities of long-term debt:  
Nine months ended December 31, 2016 $ 378,217
Year ended December 31, 2017 519,226
Year ended December 31, 2018 16,596
Total $ 914,039
XML 58 R47.htm IDEA: XBRL DOCUMENT v3.4.0.3
NOTES PAYABLE (Details Textual) - USD ($)
1 Months Ended 3 Months Ended
Dec. 14, 2015
Jun. 09, 2015
Jun. 11, 2013
Aug. 12, 2011
Sep. 27, 2012
Aug. 22, 2012
Oct. 25, 2011
Mar. 31, 2016
Dec. 31, 2015
Mar. 08, 2013
Feb. 25, 2013
May. 21, 2012
Debt Instrument [Line Items]                        
Debt Instrument, Maturity Date Jul. 30, 2017 Jul. 30, 2017           Apr. 01, 2016        
Debt Instrument, Interest Rate, Stated Percentage               12.00% 12.00%      
Debt Instrument, Interest Rate, Effective Percentage               60.00%        
Debt Instrument, Term 60 days                      
C-Arm Equipment [Member]                        
Debt Instrument [Line Items]                        
Capital Lease Obligations                     $ 124,797  
Debt Instrument, Interest Rate, Stated Percentage                     7.39%  
Capital Lease Obligations Due In First 3 Months                     $ 0  
Capital Lease Obligations Due For Remaining Months                     $ 2,388  
X Ray Equipment [Member]                        
Debt Instrument [Line Items]                        
Capital Lease Obligations           $ 212,389            
Debt Instrument, Interest Rate, Stated Percentage           7.9375%            
Capital Lease Obligations Due In First 3 Months           $ 0       $ 1,384    
Capital Lease Obligations Due For Remaining Months           $ 4,300       4,575    
Debt Instrument, Term           60 months            
Mri Equipment [Member]                        
Debt Instrument [Line Items]                        
Capital Lease Obligations         $ 1,771,390              
Debt Instrument, Interest Rate, Stated Percentage         7.9375%              
Capital Lease Obligations Due In First 3 Months         $ 0         11,779    
Capital Lease Obligations Due For Remaining Months         $ 38,152         $ 38,152    
Debt Instrument, Term         60 months              
GE Healthcare Financial Services [Member]                        
Debt Instrument [Line Items]                        
Debt Instrument, Face Amount                       $ 2,400,000
Mortgage Payable [Member]                        
Debt Instrument [Line Items]                        
Debt Instrument, Interest Rate During Period       6.10%                
Debt Instrument, Periodic Payment       $ 45,753                
Debt Instrument, Maturity Date       Sep. 16, 2016                
Debt Instrument, Term       30 years                
Debt Instrument, Face Amount       $ 7,550,000                
Equipment Capital Lease [Member]                        
Debt Instrument [Line Items]                        
Debt Instrument, Periodic Payment     $ 956                  
Debt Instrument, Maturity Date     Jun. 01, 2017                  
Debt Instrument, Interest Rate, Effective Percentage     14.002%                  
Capital Lease Equipment, Lease Term     48 months                  
Lease To Acquire Equipment             $ 1,036          
Lease agreement term             60 months          
XML 59 R48.htm IDEA: XBRL DOCUMENT v3.4.0.3
RELATED PARTY TRANSACTIONS (Details Textual) - USD ($)
1 Months Ended 3 Months Ended
Dec. 14, 2015
Jun. 09, 2015
Oct. 31, 2015
Mar. 31, 2016
Dec. 31, 2015
Oct. 01, 2015
Matures date Jul. 30, 2017 Jul. 30, 2017   Apr. 01, 2016    
Cash advances       $ 133,796 $ 43,082  
Interest rate       12.00%    
Crane Creek Surgery Center [Member]            
Amount paid in exchange of investment       $ 560,000    
Cash paid       140,000    
Promissory note       $ 420,000    
Bearing interest rate       8.00%    
Matures date     Apr. 15, 2016 Apr. 15, 2016    
Crane Creek Surgery Center [Member]            
Interest acquire in subsidiary           40.00%
Amount paid in exchange of investment           $ 560,000
Cash paid           $ 140,000
Bearing interest rate           8.00%
XML 60 R49.htm IDEA: XBRL DOCUMENT v3.4.0.3
CAPITAL STOCK (Details Textual) - USD ($)
3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Common Stock, Par Or Stated Value Per Share (in dollars per share) $ 0.001 $ 0.001
Line of Credit [Member] | Common Stock [Member]    
Common Stock , Shares, Issued for increase Credit Line 100,000  
Common Stock , Shares, Issued for increase Credit Line value $ 92,000  
Future Services [Member] | Common Stock [Member]    
Common Stock, Par Or Stated Value Per Share (in dollars per share) $ 0.78  
Common Stock, Shares, Issued for Services Amount $ 1,280,200  
XML 61 R50.htm IDEA: XBRL DOCUMENT v3.4.0.3
STOCK OPTIONS AND WARRANTS (Details) - $ / shares
3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Warrants Outstanding 3,000,000 3,000,000
Warrants Outstanding, Weighted Price $ 1.35 $ 1.35
Warrants Exercisable (0)  
Non Employees [Member] | Warrant One [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Warrants Outstanding, Prices $ 1.35  
Warrants Outstanding 2,449,630  
Warrants Outstanding, Weighted Price $ 1.35  
Warrants Exercisable 2,449,630  
Warrants Exercisable, Weighted Price $ 1.35  
Non Employees [Member] | Warrant One [Member] | Maximum [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Warrants Outstanding, Expiration Date Nov. 08, 2020  
Non Employees [Member] | Warrant One [Member] | Minimum [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Warrants Outstanding, Expiration Date Nov. 08, 2018  
Non Employees [Member] | Warrant Two [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Warrants Outstanding, Prices $ 3.60  
Warrants Outstanding 1,875,000  
Warrants Outstanding, Expiration Date Dec. 23, 2018  
Warrants Outstanding, Weighted Price $ 3.60  
Warrants Exercisable 1,875,000  
Warrants Exercisable, Weighted Price $ 3.60  
Non Employees [Member] | Warrant [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Warrants Outstanding 4,324,630 4,324,630
Warrants Outstanding, Weighted Price $ 2.32 $ 2.32
Warrants Exercisable 4,324,630  
Warrants Exercisable, Weighted Price $ 2.32  
XML 62 R51.htm IDEA: XBRL DOCUMENT v3.4.0.3
STOCK OPTIONS AND WARRANTS (Details 1)
3 Months Ended
Mar. 31, 2016
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Number of Shares, Outstanding | shares 3,000,000
Number of Shares, Granted | shares 0
Number of Shares, Exercised | shares 0
Number of Shares, Outstanding | shares 3,000,000
Weighted Average Price Per Share, Outstanding $ 1.35
Weighted Average Price Per Share, Granted 0.00
Weighted Average Price Per Share, Exercised 0.00
Weighted Average Price Per Share, Expired 0.00
Weighted Average Price Per Share, Outstanding $ 1.35
Non Employees [Member] | Warrant [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Number of Shares, Outstanding | shares 4,324,630
Number of Shares, Granted | shares 0
Number of Shares, Exercised | shares 0
Number of Shares, Expired | shares 0
Number of Shares, Outstanding | shares 4,324,630
Weighted Average Price Per Share, Outstanding $ 2.32
Weighted Average Price Per Share, Granted 0.00
Weighted Average Price Per Share, Exercised 0.00
Weighted Average Price Per Share, Expired 0.00
Weighted Average Price Per Share, Outstanding $ 2.32
XML 63 R52.htm IDEA: XBRL DOCUMENT v3.4.0.3
STOCK OPTIONS AND WARRANTS (Details 2) - $ / shares
3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]    
Options Outstanding Exercise Price $ 1.35 $ 1.35
Options Outstanding Number of Options 3,000,000 3,000,000
Options Outstanding Weighted Average Remaining Life in Years 7 years 9 months  
Exercisable Number of Options 0  
XML 64 R53.htm IDEA: XBRL DOCUMENT v3.4.0.3
STOCK OPTIONS AND WARRANTS (Details 3)
3 Months Ended
Mar. 31, 2016
$ / shares
shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Number of Shares, Outstanding | shares 3,000,000
Number of Shares, Granted | shares 0
Number of Shares, Exercised | shares 0
Number of Shares, Expired | shares 0
Number of Shares, Outstanding | shares 3,000,000
Weighted Average Price Per Share, Outstanding | $ / shares $ 1.35
Weighted Average Price Per Share, Granted | $ / shares 0.00
Weighted Average Price Per Share, Exercised | $ / shares 0.00
Weighted Average Price Per Share, Expired | $ / shares 0.00
Weighted Average Price Per Share, Outstanding | $ / shares $ 1.35
XML 65 R54.htm IDEA: XBRL DOCUMENT v3.4.0.3
STOCK OPTIONS AND WARRANTS (Details Textual) - shares
Mar. 31, 2016
Dec. 31, 2015
Warrant to purchase common stock   129,630
Warrants Settleable in Cash [Member]    
Warrant to purchase common stock 1,875,000  
Warrants Not Settleable in Cash [Member]    
Warrant to purchase common stock 2,449,630  
XML 66 R55.htm IDEA: XBRL DOCUMENT v3.4.0.3
VARIABLE INTEREST ENTITY (Details) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2015
Dec. 31, 2014
Current assets:        
Cash $ 10,051,999 $ 1,594,998 $ 112,794 $ 279,087
Accounts receivable 7,448,429 6,623,894    
Total current assets 18,644,133 9,606,905    
Property and equipment, net 2,689,335 8,613,502    
Total assets 25,847,165 22,623,988 $ 25,847,165  
Current liabilities:        
Accounts payable and accrued liabilities 4,078,887 3,937,244    
Total current liabilities 10,421,119 16,840,802    
Long term debt 914,039      
Total liabilities 13,095,984 19,585,255    
Non-controlling interest 972,497 918,990    
Total liabilities and deficit 25,847,165 22,623,988    
B.A.C.K. Center [Member]        
Current assets:        
Cash 1,120,942 996,986    
Accounts receivable 3,915,553 3,727,419    
Other current assets 1,034,157 819,757    
Total current assets 6,070,652 5,544,162    
Property and equipment, net 57,579 60,978    
Other assets 22,334 18,231    
Total assets 6,150,565 5,623,371    
Current liabilities:        
Accounts payable and accrued liabilities 1,997,207 1,877,690    
Due to First Choice Healthcare Solutions, Inc. 2,058,624 1,729,882    
Other current liabilities 446,759 427,229    
Total current liabilities 4,502,590 4,034,801    
Long term debt 1,786,661 1,727,256    
Total liabilities 6,289,251 5,762,057    
Non-controlling interest (138,686) (138,686)    
Total liabilities and deficit $ 6,150,565 $ 5,623,371    
XML 67 R56.htm IDEA: XBRL DOCUMENT v3.4.0.3
VARIABLE INTEREST ENTITY (Details 1) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2015
Dec. 31, 2014
Current assets:        
Cash $ 10,051,999 $ 1,594,998 $ 112,794 $ 279,087
Accounts receivable 7,448,429 6,623,894    
Total current assets 18,644,133 9,606,905    
Property and equipment, net 2,689,335 8,613,502    
Goodwill 899,465 899,465    
Total assets 25,847,165 22,623,988 $ 25,847,165  
Current liabilities:        
Accounts payable and accrued liabilities 4,078,887 3,937,244    
Total current liabilities 10,421,119 16,840,802    
Deferred rent 2,200,603 2,141,199    
Total liabilities 13,095,984 19,585,255    
Equity-First Choice Healthcare Solutions, Inc 22,968 22,868    
Non-controlling interest 972,497 918,990    
Total liabilities and deficit 25,847,165 22,623,988    
Crane Creek Surgery Center [Member]        
Current assets:        
Cash 503,262 559,318    
Accounts receivable 891,070 816,889    
Total current assets 1,394,332 1,376,207    
Property and equipment, net 667,280 712,830    
Goodwill 899,465 899,465    
Total assets 2,961,077 2,988,502    
Current liabilities:        
Accounts payable and accrued liabilities 324,764 441,368    
Other current liabilities 251,588 251,588    
Total current liabilities 576,352 692,956    
Deferred rent 532,754 532,752    
Total liabilities 1,109,106 1,225,708    
Equity-First Choice Healthcare Solutions, Inc 740,788 705,118    
Non-controlling interest 1,111,183 1,057,676    
Total liabilities and deficit $ 2,961,077 $ 2,988,502    
XML 68 R57.htm IDEA: XBRL DOCUMENT v3.4.0.3
VARIABLE INTEREST ENTITY (Details Textual) - USD ($)
1 Months Ended 3 Months Ended 8 Months Ended
Dec. 14, 2015
Jun. 09, 2015
Oct. 31, 2015
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Total revenues       $ 7,241,753 $ 2,505,167  
Salaries and benefits       2,780,569 946,120  
General and administrative expenses       2,405,877 553,284  
Interest and financing costs       $ (181,135) $ (363,144)  
Matures date Jul. 30, 2017 Jul. 30, 2017   Apr. 01, 2016    
Crane Creek Surgery Center [Member]            
Total revenues       $ 1,271,308    
Salaries and benefits       293,337    
General and administrative expenses       109,275    
Depreciation       71,256    
Miscellaneous income       1,382    
Supplies and operating practices       709,646    
Amount paid in exchange of investment       560,000    
Cash paid       140,000    
Promissory note       $ 420,000    
Bearing interest rate       8.00%    
Matures date     Apr. 15, 2016 Apr. 15, 2016    
Voting Rights, Description      

In connection with the investment, the Company is entitled 51% voting rights for all decisions that most significantly affect the economic performance of Crane Creek. The 40% equity interest acquired entitles the Company to 40% of the profit or loss of Crank Creek.

   
Acquisition voting rights, Description      

40% equity interest along with the 51% voting rights acquired

   
B.A.C.K. Center [Member]            
Options issued to purchase the Company's common stock           3,000,000
Total revenues       $ 3,449,722    
Salaries and benefits       1,457,911    
General and administrative expenses       1,654,107    
Depreciation       5,515    
Interest and financing costs       $ 3,447    
XML 69 R58.htm IDEA: XBRL DOCUMENT v3.4.0.3
NON-CONTROLLING INTEREST (Details) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Net income $ 9,566,941 $ 30,689
Net income loss attributable to the non-controlling interest (53,507)  
B.A.C.K. Center [Member]    
Net income $ 328,741  
Average Non-controlling interest percentage of profit/losses 0.00%  
Net income loss attributable to the non-controlling interest $ 0  
Crane Creek Surgery Center [Member]    
Net income $ 89,177  
Average Non-controlling interest percentage of profit/losses 60.00%  
Net income loss attributable to the non-controlling interest $ 53,507  
XML 70 R59.htm IDEA: XBRL DOCUMENT v3.4.0.3
NON-CONTROLLING INTEREST (Details 1)
3 Months Ended
Mar. 31, 2016
USD ($)
Balance, December 31, 2015 $ 918,990
Net income loss attributable to the non-controlling interest (53,507)
Balance, March 31, 2016 972,497
B.A.C.K. Center [Member]  
Balance, December 31, 2015 (138,686)
Transfer (to) from the non-controlling interest as a result of change in ownership 0
Net income loss attributable to the non-controlling interest 0
Balance, March 31, 2016 (138,686)
Crane Creek Surgery Center [Member]  
Balance, December 31, 2015 1,057,676
Transfer (to) from the non-controlling interest as a result of change in ownership 0
Net income loss attributable to the non-controlling interest 53,507
Balance, March 31, 2016 $ 1,111,183
XML 71 R60.htm IDEA: XBRL DOCUMENT v3.4.0.3
NON-CONTROLLING INTEREST (Details Textual) - USD ($)
1 Months Ended 3 Months Ended
Dec. 14, 2015
Jun. 09, 2015
Oct. 31, 2015
Mar. 31, 2016
Matures date Jul. 30, 2017 Jul. 30, 2017   Apr. 01, 2016
Crane Creek Surgery Center [Member]        
Amount paid in exchange of investment       $ 560,000
Cash paid       140,000
Promissory note       $ 420,000
Bearing interest rate       8.00%
Matures date     Apr. 15, 2016 Apr. 15, 2016
Voting Rights, Description      

In connection with the investment, the Company is entitled 51% voting rights for all decisions that most significantly affect the economic performance of Crane Creek. The 40% equity interest acquired entitles the Company to 40% of the profit or loss of Crank Creek.

Acquisition voting rights, Description      

40% equity interest along with the 51% voting rights acquired

XML 72 R61.htm IDEA: XBRL DOCUMENT v3.4.0.3
SEGMENT REPORTING (Details) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Revenue:      
Net Patient Service Revenue $ 6,615,141 $ 2,240,064  
Rental revenue 626,612 265,103  
Total Revenue 7,241,753 2,505,167  
Operating expenses:      
Salaries & benefits 2,780,569 946,120  
Other operating expenses 1,187,274 451,485  
General and administrative 2,405,877 553,284  
Depreciation and amortization 298,950 140,509  
Total operating expenses 6,672,670 2,091,398  
Net income (loss) from operations: 569,083 413,769  
Interest expense (181,135) (363,144)  
Amortization of financing costs (15,325) (20,686)  
Gain on sale of property 9,188,968    
Other income (expense) 58,857 750  
Net Income (loss) before income taxes: 9,620,448 30,689  
Income taxes 0 0  
Net income (loss) 9,620,448 30,689  
Non-controlling interest (53,507)    
Net income (loss) attributable to First Choice Healthcare Solutions 9,566,941 30,689  
Assets: 25,847,165 25,847,165 $ 22,623,988
Assets acquired $ 126,073 $ 8,284  
Marina Towers [Member]      
Revenue:      
Net Patient Service Revenue  
Rental revenue $ 428,246 $ 375,321  
Total Revenue 428,246 375,321  
Operating expenses:      
Salaries & benefits 3,000 3,000  
Other operating expenses 105,954 103,331  
General and administrative 23,907 22,642  
Depreciation and amortization 69,951 69,219  
Total operating expenses 202,812 198,192  
Net income (loss) from operations: 225,434 177,129  
Interest expense (110,156) (110,496)  
Amortization of financing costs (14,337) (14,337)  
Gain on sale of property 9,188,968    
Other income (expense) 750 $ 750  
Net Income (loss) before income taxes: $ 9,290,659    
Income taxes  
Net income (loss) $ 9,290,659 $ 53,046  
Non-controlling interest    
Net income (loss) attributable to First Choice Healthcare Solutions $ 9,290,659 53,046  
Assets: 8,642,412   6,309,955
Assets acquired 49,824 6,628  
FCID Medical [Member]      
Revenue:      
Net Patient Service Revenue $ 2,308,935 $ 2,240,064  
Rental revenue  
Total Revenue $ 2,308,935 $ 2,240,064  
Operating expenses:      
Salaries & benefits 829,220 836,987  
Other operating expenses 531,407 458,372  
General and administrative 361,803 291,159  
Depreciation and amortization 66,792 66,515  
Total operating expenses 1,789,222 1,653,033  
Net income (loss) from operations: 519,713 587,031  
Interest expense $ (56,818) (51,784)  
Amortization of financing costs $ (6,349)  
Gain on sale of property    
Other income (expense)    
Net Income (loss) before income taxes: $ 462,895    
Income taxes  
Net income (loss) $ 462,895 $ 528,898  
Non-controlling interest    
Net income (loss) attributable to First Choice Healthcare Solutions $ 462,895 528,898  
Assets: 4,872,351   4,391,192
Assets acquired 49,893 $ 1,656  
Brevard Orthopaedic [Member]      
Revenue:      
Net Patient Service Revenue 3,034,898    
Rental revenue 358,099    
Total Revenue 3,392,997    
Operating expenses:      
Salaries & benefits 1,457,911    
General and administrative 1,581,793    
Depreciation and amortization 5,515    
Total operating expenses 3,045,219    
Net income (loss) from operations: 347,778    
Interest expense (2,459)    
Amortization of financing costs $ (988)    
Gain on sale of property    
Other income (expense) $ 56,725    
Net Income (loss) before income taxes: 401,056    
Net income (loss) $ 401,056    
Non-controlling interest    
Net income (loss) attributable to First Choice Healthcare Solutions $ 401,056    
Assets: 6,176,738   5,623,370
Assets acquired 2,116  
The Crane Center [Member]      
Revenue:      
Net Patient Service Revenue 1,271,308    
Total Revenue 1,271,308    
Operating expenses:      
Salaries & benefits 293,337    
Other operating expenses 709,646    
General and administrative 109,275    
Depreciation and amortization 71,256    
Total operating expenses 1,183,514    
Net income (loss) from operations: 87,794    
Interest expense $ (8,726)    
Amortization of financing costs    
Gain on sale of property    
Other income (expense) $ 1,382    
Net Income (loss) before income taxes: 80,450    
Net income (loss) 80,450    
Non-controlling interest (53,507)    
Net income (loss) attributable to First Choice Healthcare Solutions 26,943    
Assets: 2,961,076   3,013,011
Assets acquired $ 24,240  
Corporate [Member]      
Revenue:      
Net Patient Service Revenue  
Rental revenue  
Total Revenue  
Operating expenses:      
Salaries & benefits $ 197,101 $ 106,133  
Other operating expenses  
General and administrative $ 329,099 $ 239,483  
Depreciation and amortization 85,436 4,775  
Total operating expenses 611,636 350,391  
Net income (loss) from operations: (611,636) (350,391)  
Interest expense $ (2,976) $ (200,864)  
Amortization of financing costs  
Gain on sale of property    
Other income (expense)    
Net Income (loss) before income taxes: $ (614,612)    
Income taxes  
Net income (loss) $ (614,612) $ (551,255)  
Non-controlling interest    
Net income (loss) attributable to First Choice Healthcare Solutions $ (614,612) $ (551,255)  
Assets: $ 3,194,588   $ 3,286,460
Assets acquired  
Intersegment Elimination [Member]      
Revenue:      
Net Patient Service Revenue  
Rental revenue $ (159,733) $ (110,218)  
Total Revenue $ (159,733) $ (110,218)  
Operating expenses:      
Salaries & benefits  
Other operating expenses $ (159,733) $ (110,218)  
General and administrative  
Depreciation and amortization  
Total operating expenses $ (159,733) $ (110,218)  
Net income (loss) from operations:  
Interest expense  
Amortization of financing costs  
Gain on sale of property  
Other income (expense)    
Net Income (loss) before income taxes:    
Income taxes  
Net income (loss)  
Non-controlling interest    
Net income (loss) attributable to First Choice Healthcare Solutions  
XML 73 R62.htm IDEA: XBRL DOCUMENT v3.4.0.3
COMMITMENTS AND CONTINGENCIES (Details) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Operating Leases, Future Minimum Payments Due, Rolling Maturity [Abstract]    
Nine months ended December 31, 2016   $ 2,620,910
Year ended December 31, 2017   3,444,197
Year ended December 31, 2018   3,444,209
Year ended December 31, 2019   3,444,221
Operating Leases, Future Minimum Payments Due, Total $ 11,690,741 $ 12,953,537
XML 74 R63.htm IDEA: XBRL DOCUMENT v3.4.0.3
COMMITMENTS AND CONTINGENCIES (Details 1)
Dec. 31, 2015
USD ($)
Operating Leases, Future Minimum Payments Due, Rolling Maturity [Abstract]  
Nine months ended December 31, 2016 $ 828,506
Year ended December 31, 2017 1,104,675
Year ended December 31, 2018 1,104,675
Year ended December 31, 2019 1,121,246
Year ended December 31, 2020 1,143,670
Year ended December 31, 2021 and thereafter 6,387,969
Operating Leases, Future Minimum Payments Due, Total $ 11,690,741
XML 75 R64.htm IDEA: XBRL DOCUMENT v3.4.0.3
COMMITMENTS AND CONTINGENCIES (Details Textual) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Commitments and Contingencies [Line Items]    
Loss Contingency, Damages Sought, Value   $ 118,000
Lease expense   $ 2,360,986
Lease expiration date   Dec. 31, 2026
Rental revenue from third party tenants of Marina Towers $ 268,513  
Minimum [Member]    
Commitments and Contingencies [Line Items]    
Lease Rent Expense Per Month   $ 4,200
Maximum [Member]    
Commitments and Contingencies [Line Items]    
Lease Rent Expense Per Month   $ 200,000
XML 76 R65.htm IDEA: XBRL DOCUMENT v3.4.0.3
INCOME TAXES (Details Textual)
3 Months Ended
Mar. 31, 2016
USD ($)
Income Tax Disclosure [Abstract]  
Gain on sale of the property $ 9,188,968
Tax basis gain 9,051,430
Alternative Minimum Tax liability $ 181,089
Effective tax rate 38.60%
XML 77 R66.htm IDEA: XBRL DOCUMENT v3.4.0.3
SUBSEQUENT EVENTS (Details Textual) - USD ($)
3 Months Ended
Apr. 15, 2016
Apr. 02, 2016
Dec. 14, 2015
Jun. 09, 2015
Mar. 31, 2016
Subsequent Event [Line Items]          
Maturity date     Jul. 30, 2017 Jul. 30, 2017 Apr. 01, 2016
Interest rate         12.00%
Cash advances from non related party         $ 133,796
MedTRX [Member] | Two Promissory Notes [Member]          
Subsequent Event [Line Items]          
Balance due         $ 450,000
Subsequent Event [Member] | MedTRX [Member] | Two Promissory Notes [Member]          
Subsequent Event [Line Items]          
Maturity date   Apr. 02, 2016      
Non-interest bearing promissory notes   $ 650,000      
Subsequent Event [Member] | B.A.C.K. Center [Member]          
Subsequent Event [Line Items]          
Purchase price $ 560,000        
Ownership percentage 40.00%        
Cash Consideration $ 140,000        
Maturity date Apr. 15, 2016        
Non-interest bearing promissory notes $ 420,000        
Interest rate 8.00%        
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