0001575705-17-000068.txt : 20170515 0001575705-17-000068.hdr.sgml : 20170515 20170515171330 ACCESSION NUMBER: 0001575705-17-000068 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 57 CONFORMED PERIOD OF REPORT: 20170331 FILED AS OF DATE: 20170515 DATE AS OF CHANGE: 20170515 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: 17845758 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_1q17.htm FORM 10-Q
 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended: March 31, 2017

 

or

 

o 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, 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 x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes x No o

 

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

 

Large accelerated filer o   Accelerated filer o
Non-accelerated filer o   Smaller reporting company x
Emerging growth company o      

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

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

 

As of May 12, 2017, there were 26,803,994 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, 2017 (unaudited) and December 31, 2016   3
         
    Condensed consolidated statements of income for the three months ended March 31, 2017 and 2016 (unaudited)   4
         
    Condensed consolidated statement of stockholders’ equity for the three months ended March 31, 2017 (unaudited)   5
         
    Condensed consolidated statements of cash flows for the three months ended March 31, 2017 and 2016 (unaudited)   6
         
    Notes to condensed consolidated financial statements (unaudited)   7
         
  ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   19
         
  ITEM 3. Quantitative and Qualitative Disclosures about Market Risk   25
         
  ITEM 4. Controls and Procedures   25
         
PART II. OTHER INFORMATION   26
         
  ITEM 1. Legal Proceedings   26
  ITEM 1A. Risk Factors   26
  ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds   26
  ITEM 3. Defaults Upon Senior Securities   26
  ITEM 4. Mine Safety Disclosures   26
  ITEM 5. Other Information   26
  ITEM 6. Exhibits   26
         
  SIGNATURES   27

2

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

 

   March 31,   December 31, 
   2017   2016 
   (unaudited)     
ASSETS          
Current assets:          
Cash and cash equivalents (amounts related to VIE of $908,141 and $708,858)  $3,901,489   $4,593,638 
Accounts receivable, net (amounts related to VIE of $6,112,966 and $6,010,961)   10,390,140    9,536,830 
Employee loans (amounts related to VIE of $491,550 and $491,850)   953,132    820,341 
Prepaid and other current assets (amounts related to VIE of $392,961 and $329,427)   651,770    422,512 
Total current assets   15,896,531    15,373,321 
           
Property, plant and equipment, net of accumulated depreciation of $1,264,271 and $1,165,219 (amounts related to VIE of $678,018 and $693,629)   2,619,493    2,544,816 
           
Other assets (amounts related to VIE of $921,470)   4,137,521    4,227,957 
           
Total assets  $22,653,545   $22,146,094 
           
           
LIABILITIES AND EQUITY          
Current liabilities:          
Accounts payable and accrued expenses (amounts related to VIE of $1,638,148 and $1,366,143)  $2,437,080   $2,083,231 
Accounts payable, related party (amount related to VIE of $251,588)   251,588    251,588 
AMT tax payable   181,029    181,029 
Line of credit, short term (amount related to VIE of $439,524)   1,539,524    1,539,524 
Notes payable, current portion   402,372    519,452 
Unearned revenue   43,854    26,936 
Deferred rent, short term portion (amount related to VIE of $237,923)   237,923    237,923 
Total current liabilities   5,093,370    4,839,683 
           
Long term debt:          
Deposits held   41,930    41,930 
Notes payable, long term portion   23,599    14,531 
Deferred rent, long term portion (amount related to VIE of $2,240,552 and $2,214,909)   2,345,465    2,293,594 
Total long term debt   2,410,994    2,350,055 
           
Total liabilities   7,504,364    7,189,738 
           
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, 26,803,994 and 24,631,327 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively   26,804    24,631 
Additional paid in capital   24,081,761    24,020,610 
Accumulated deficit   (9,898,015)   (10,100,534)
Total stockholders’ equity attributable to First Choice Healthcare Solutions, Inc.   14,210,550    13,944,707 
Non-controlling interest (note 10)   938,631    1,011,649 
Total equity   15,149,181    14,956,356 
           
Total liabilities and equity  $22,653,545   $22,146,094 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

3

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

 

   For the Three months ended March 31, 
   2017   2016 
Revenues:          
Patient service revenue  $7,406,986   $6,877,665 
Allowance for bad debts   (264,996)   (262,524)
Net patient service revenue less allowance for bad debts   7,141,990    6,615,141 
Rental revenue   578,363    626,612 
Total revenue   7,720,353    7,241,753 
           
Operating expenses:          
Salaries and benefits   3,354,376    2,780,569 
Other operating expenses   2,529,183    2,045,575 
General and administrative   1,535,833    1,547,576 
Depreciation and amortization   189,488    298,950 
Total operating expenses   7,608,880    6,672,670 
           
Net income from operations   111,473    569,083 
           
Other income (expense):          
Gain on sale of property and improvements       9,188,968 
Miscellaneous income (expense)   50,102    58,857 
Amortization financing costs       (15,325)
Interest expense   (32,074)   (181,135)
Total other income   18,028    9,051,365 
           
Net income before provision for income taxes   129,501    9,620,448 
           
Income taxes (benefit)        
           
Net income   129,501    9,620,448 
           
Non-controlling interest (note 10)   73,018    (53,507)
           
NET INCOME ATTRIBUTABLE TO FIRST CHOICE HEALTHCARE SOLUTIONS, INC.  $202,519   $9,566,941 
           
Net income per common share, basic  $0.01   $0.42 
           
Net income per common share, diluted  $0.01   $0.37 
           
Weighted average number of common shares outstanding, basic   26,252,505    22,886,307 
           
Weighted average number of common shares outstanding, diluted   27,052,505    25,552,974 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

4

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2017
(unaudited)

 

           Additional             
   Common stock   Paid in   Accumulated   Non-controlling     
   Shares   Amount   Capital   Deficit   Interest   Total 
Balance, December 31, 2016   24,631,327    24,631    24,020,610    (10,100,534)   1,011,649    14,956,356 
Common stock issued in settlement of convertible debt, previously accrued   1,866,667    1,867    (1,867)            
Stock based compensation, previously accrued   306,000    306    63,018            63,324 
Net income               202,519    (73,018)   129,501 
 Balance, March 31, 2017   26,803,994   $26,804   $24,081,761   $(9,898,015)  $938,631   $15,149,181 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

5

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

 

   For the Three months ended March 31, 
   2017   2016 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net Income  $129,501   $9,620,448 
Adjustments to reconcile net income to cash (used in) provided by operating activities:          
Depreciation and amortization   189,488    298,950 
Amortization of financing costs       15,325 
Bad debt expense   264,996    262,524 
Gain on sale of property       (9,188,968)
Common stock issued in connection with loan extension       92,000 
Stock based compensation   63,324    81,300 
Changes in operating assets and liabilities:          
Accounts receivable   (1,118,306)   (1,087,059)
Prepaid expenses and other current assets   (229,258)   91,623 
Restricted funds       359,414 
Employee loans   (132,791)   (245,933)
Accounts payable and accrued expenses   353,849    122,628 
Settlement payable       (150,000)
Deposits       (14,432)
Deferred rent   51,871    59,404 
Unearned income   16,918     
 Net cash (used in) provided by operating activities   (410,408)   317,224 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Proceeds from sale of property       15,068,497 
Purchase of equipment   (173,729)   (126,073)
 Net cash (used in) provided by investing activities   (173,729)   14,942,424 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from advances       90,714 
Proceeds from notes payable   22,113     
Proceeds from line of credit       372,636 
Payments on notes payable   (130,125)   (7,265,997)
Net cash used in financing activities   (108,012)   (6,802,647)
           
Net (decrease) increase in cash and cash equivalents   (692,149)   8,457,001 
Cash and cash equivalents, beginning of period   4,593,638    1,594,998 
           
Cash and cash equivalents, end of period  $3,901,489   $10,051,999 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Cash paid during the period for interest  $32,328   $181,135 
Cash paid during the period for taxes  $   $ 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

6

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

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, 2016, 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, 2017 and 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 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, 2017 are not necessarily indicative of results that may be expected for the year ending December 31, 2017. 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/A, filed with the Securities and Exchange Commission (the “SEC”) on April 3, 2017.

 

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”).

 

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 completed its acquisition of First Choice Medical Group of Brevard, LLC (“FCMG - 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 Orthopedic Spine & Pain Clinic, Inc.

  

Effective May 1, 2015, the Company, through its wholly owned subsidiary, TBC Holdings of Melbourne, Inc., entered into an Operating and Control Agreement (the Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), whereby we 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. We issued 3,000,000 options to purchase our Company’s Common Stock at $1.35 per share to The B.A.C.K. Center employees providing specific qualifications are met. The initial term of the Agreement relating to the options expired on December 31, 2016, with the Company having the right to extend the term until December 31, 2023. We exercised our option to extend the term until December 31, 2017. 

7

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

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 wholly owned subsidiary, CCSC Holdings, Inc., acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”). In connection with the investment, the Company is entitled to 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 Crane Creek.

 

Non-controlling interests relate to the third-party ownership in a consolidated entity in which the Company has a controlling interest. For financial reporting purposes, the entity’s assets, liabilities, and operations are consolidated with those of the Company, and the non-controlling interest in the entity is included in the Company’s consolidated financial statements within the equity section of the consolidated Balance Sheets.

 

The unaudited condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries: 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 VIEs, The B.A.C.K. Center and Crane Creek. All significant intercompany balances and transactions, including those involving the VIEs, 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, provision against bad debt, 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 when: (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 history and identified trends for each of our payers.

8

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

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.

 

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. Revenues and accounts receivable are concentrated between two major payers, Medicare at approximately 30% and a third party commercial insurer at approximately 20%.

 

Accounts receivables

 

As of March 31, 2017 and December 31, 2016, the Company’s allowance for bad debts was $3,750,802 and $3,680,837, respectively.

9

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

Net income per share

 

Basic net income per common share is based upon the weighted-average number of common shares outstanding. Diluted net income per common share is based on the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding and computed as follows:

 

   Three months ended March 31, 
   2017   2016 
Numerator:          
Net income  $202,519   $9,566,941 
           
Denominator:          
Weighted-average common shares, basic   26,252,505    22,886,307 
Weighted-average common shares, diluted   27,052,505    25,552,974 
           
Basic:  $0.01   $0.42 
Diluted:  $0.01   $0.37 

 

The diluted earnings per common share included the effect of 800,000 and 2,666,667 common shares issuable upon the conversion of debt for the three months ended March 31, 2017 and 2016, respectively.

 

Potentially dilutive common shares from employee equity plans and issued warrants are determined by applying the treasury stock method to the assumed exercise of warrants and share options are were excluded from the computation of the diluted net income per share because their inclusion would be anti-dilutive. In addition, there were no vested restrict stock for periods presented. Potentially dilutive securities excluded from the basic and diluted net income per share are as follows:

 

   March 31, 
   2017   2016 
Warrants to purchase common stock   1,875,000    4,324,630 
Options to purchase common stock   3,000,000    3,000,000 
Restricted stock awards   660,000     
    5,535,000    7,324,630 

 

Reclassification

 

Certain reclassifications have been made to prior periods’ data to conform to the current year’s presentation. These reclassifications had no effect on reported income or losses.

 

Recent accounting pronouncements

 

There are 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.

 

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other (Topic 350). The amendments in this update simplify the test for goodwill impairment by eliminating Step 2 from the impairment test, which required the entity to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining fair value of assets acquired and liabilities assumed in a business combination. The amendments in this update are effective for public companies for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We are evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

 

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805); Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business to help companies evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. We are evaluating the impact of adopting this guidance on our Consolidated Financial Statements. 

 

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 condensed consolidated financial statements, except as disclosed.

10

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

NOTE 3 – LIQUIDITY

 

The Company incurred various non-recurring expenses in 2016 in connection with the planned development of its Healthcare Services Business. Management believes continued growth of earnings before interest, taxes, depreciation and amortization in 2017 will support improved liquidity.

 

The Company believes that the current cash balance and line of credit (see notes), along with continued execution of its business development plan, 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 at least one year from the filing of this report.

 

However, in order to execute the Company’s business development plan, which there can be no assurance we will achieve, 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 — OTHER ASSETS

 

Other assets are comprised of the following:

  

March 31,

2017

  

December 31,

2016

 
Goodwill (amount relating to VIE of $899,465)  $899,465   $899,465 
Deferred costs, net of amortization of $618,401 and $537,740   2,608,026    2,688,687 
Patient list, net of accumulated amortization of $100,000 and $95,000   200,000    205,000 
Patents, net of accumulated amortization of $62,075 and $57,300   224,425    229,200 
Investments (amounts related to VIE of $22,005)   22,005    22,005 
Deferred tax asset   181,029    181,029 
Deposits   2,571    2,571 
Total other assets  $4,137,521   $4,227,957 

11

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

NOTE 5 — LINES OF CREDIT

 

Line of credit, CT Capital

 

FCMG - 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 $2,500,000 to FCMG - Brevard with an interest rate of 6% per annum (the “Loan”). The maturity date of the Loan is June 30, 2017. Interest is due and payable monthly. The Lender may convert up to $2,000,000 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.

 

On March 30, 2017, the Company’s Loan and Security Agreement with CT Capital, Ltd. (“Lender”) was amended to extend the Maturity Date to June 30, 2018 (the “Loan”) and further provide that neither the Company nor Lender shall effectuate any conversion of the Loan to the extent that after giving effect to any such conversion, the Lender would beneficially own in excess of 9.99% of the number of shares of our Company’s shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of the Loan by the Lender.

 

As of March 31, 2017 and December 31, 2016, the outstanding balance was $1,100,000 and the remaining principal amount the Lender can convert into common stock is $600,000.

 

Line of credit, Florida Business Bank

 

The B.A.C.K. Center is a party to 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 $1,383,000 (as amended), with an interest rate of Prime floating plus 1.0%, as published in The Wall Street Journal, with a floor of 2.75% per annum (the “Loan”) (as amended).

 

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, 2017, 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, 2017 and December 31, 2016, the outstanding balance on the Loan was $439,524.

 

NOTE 6 — COMMITMENTS AND CONTINGENCIES

 

Litigations, Claims and Assessments

 

From time to time, we may become involved in lawsuits and legal proceedings which arise in the ordinary course of business including potential disputes with patients. 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. Our contracts with hospitals generally requires us to indemnify them and their affiliates for losses resulting from the negligence of our physicians. Currently, we have no pending litigation that is deemed to be material.

12

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

NOTE 7 — CAPITAL STOCK

 

During the three months ended March 31, 2017, the Company issued an aggregate of 306,000 shares of its common stock to officers, employees and service providers at an aggregate fair value of $301,840, which were earned and expensed in 2016.

 

During the three months ended March 31, 2017, the Company issued 1,866,667 shares of its common stock in exchange for $1,400,000 in convertible debt. The value of shares was recorded as a share issuance liability as of December 31, 2016 and issued in the first quarter of 2017.

 

NOTE 8 — STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS

 

Restricted Stock Units (“RSU”)

 

The following table summarizes the restricted stock activity for the three months ended March 31, 2017:

 

Restricted shares units issued as of December 31, 2016   660,000 
Granted    
Forfeited    
Total Restricted Shares Issued at March 31, 2017   660,000 
Vested at March 31, 2017    
Unvested restricted shares as of March 31, 2017   660,000 

 

At March 31, 2017, the Company determined that there is a 100% probability the performance based restricted stock units will be earned. The fair value of all restricted stock units vesting during the three months ended March 31, 2017 and 2016 of $63,324 and $-0-, respectively, was charged to current period operations.

 

As of March 31, 2017, stock-based compensation related to restricted stock awards of $488,830 remains unamortized and is expected to be amortized over the weighted average remaining period of 2.13 years.

 

NOTE 9 — VARIABLE INTEREST ENTITY

 

Brevard Orthopaedic Spine & Pain Clinic, Inc.

 

Effective May 1, 2015, the Company, through its wholly owned subsidiary, TBC Holdings of Melbourne, Inc., entered into an Operating and Control Agreement (the “Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), whereby we 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. We issued 3,000,000 options to purchase our Company’s Common Stock at $1.35 per share with vesting contingent on The B.A.C.K. Center employees signing employment contracts with First Choice – Brevard. The initial term of the Agreement relating to the options expired on December 31, 2016, with the Company having the right to extend the term until December 31, 2023. We exercised our option to extend the term until December 31, 2017.

 

The Company has determined that The B.A.C.K. Center is a Variable Interest Entity (“VIE”). 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.

13

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

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 tables below summarize the assets and liabilities associated with The B.A.C.K. Center as of March 31, 2017 and December 31, 2016:

 

  

March 31,

2017

  

December 31,

2016

 
Current assets:          
Cash  $813,427   $355,491 
Accounts receivable   4,826,389    4,830,054 
Other current assets   772,001    691,847 
Total current assets   6,411,817    5,877,392 
Property and equipment, net   71,226    70,444 
Other assets   22,005    22,005 
Total assets  $6,505,048   $5,969,841 
Current liabilities:          
Accounts payable and accrued liabilities  $1,242,054   $904,684 
Due to First Choice Healthcare Solutions, Inc.   3,040,529    2,867,539 
Other current liabilities   677,447    677,446 
Total current liabilities   4,960,030    4,449,669 
Long term debt   1,683,704    1,658,858 
Total liabilities   6,643,734    6,108,527 
Non-controlling interest   (138,686)   (138,686)
Total liabilities and deficit  $6,505,048   $5,969,841 

 

Total revenues from The B.A.C.K. Center were $3,430,655 for the three months ended March 31, 2017. Related expenses consisted primarily of salaries and benefits of $1,718,717, operating expenses of $856,482, general and administrative expenses of $720,232, depreciation of $6,162, interest and financing costs of $3,904; and other income of $45,684 for the three months ended March 31, 2017. (See Note 11 – Segment Reporting)

 

Total revenues from The B.A.C.K. Center were $3,392,997 for the three months ended March 31, 2016. Related expenses consisted primarily of salaries and benefits of $1,457,911, operating expenses of $858,301, general and administrative expenses of $723,492, depreciation of $5,515 and interest and financing costs of $3,447 and other income of $56,725. (See Note 11 – Segment Reporting)

 

Crane Creek Surgery Center

 

Effective October 1, 2015, the Company, through its then newly formed wholly owned subsidiary, CCSC Holdings, Inc., acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”).

 

In connection with the investment, the Company is entitled to 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 Crane Creek.

 

The Company has determined that Crane Creek is a Variable Interest Entity (“VIE”). 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.

14

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

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 tables below summarize the assets and liabilities associated with the Crane Creek as of March 31, 2017 and December 31, 2016:

 

  

March 31,

2017

  

December 31,

2016

 
Current assets:          
Cash  $94,714   $353,367 
Accounts receivable   1,286,577    1,180,907 
Other current assets   112,510    129,430 
Total current assets   1,493,801    1,663,704 
Property and equipment, net   606,792    623,185 
Goodwill   899,465    899,465 
Total assets  $3,000,058   $3,186,354 

 

  

March 31,

2017

  

December 31,

2016

 
Current liabilities:          
Accounts payable and accrued liabilities  $396,094   $461,489 
Other current liabilities   251,588    251,588 
Total current liabilities   647,682    713,077 
Deferred rent   556,848    556,051 
Total liabilities   1,204,530    1,269,128 
           
Equity-First Choice Healthcare Solutions, Inc.   718,211    766,891 
Non-controlling interest   1,077,317    1,150,335 
Total liabilities and deficit  $3,000,058   $3,186,354 

 

Total revenues from Crane Creek were $1,190,425 for the three months ended March 31, 2017. Related expenses consisted primarily of salaries and benefits of $298,299, surgical supplies and operating expenses of $852,122, general and administrative expenses of $136,354, depreciation of $28,149, interest expense of $866 and miscellaneous income of $3,668 for the three months ended March 31, 2017. (See Note 11 – Segment Reporting)

 

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, surgical supplies and operating of $709,646, general and administrative expenses of $109,275, depreciation of $71,256, interest expense of $8,726 and miscellaneous income of $1,382. (See Note 11 – Segment Reporting)

15

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

NOTE 10 — NON-CONTROLLING INTEREST

 

Effective May 1, 2015, the Company, through its wholly owned subsidiary, TBC Holdings of Melbourne, Inc., entered into an Operating and Control Agreement (the Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), whereby we 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. We issued 3,000,000 options to purchase our Company’s Common Stock at $1.35 per share with vesting contingent on The B.A.C.K. Center employees signing employment contracts with First Choice – Brevard. The initial term of the Agreement relating to the options expired on December 31, 2016, with the Company having the right to extend the term until December 31, 2023. We exercised our option to extend the term until December 31, 2017.

 

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, 2017:

 

Net income  $170,842 
Average Non-controlling interest percentage of profit/losses   -0-%
Net income attributable to the non-controlling interest  $-0- 

 

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 from December 31, 2016 through March 31, 2017:

 

Balance, December 31, 2016  $(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, 2017  $(138,686)

 

Effective October 1, 2015, the Company, through its wholly owned subsidiary, CCSC Holdings, Inc., acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”). In connection with the investment, the Company is entitled to 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 Crane Creek.

 

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, 2017:

 

Net loss  $(121,698)
Average Non-controlling interest percentage of profit/losses   60%
Net income/loss attributable to the non-controlling interest  $(73,018)

 

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 

16

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

The following table summarizes the changes in non-controlling interest from December 31, 2016 through March 31, 2017:

 

Balance, December 31, 2016   1,150,335 
Transfer (to) from the non-controlling interest as a result of change in ownership    
Net income attributable to the non-controlling interest   (73,018)
Balance, March 31, 2017  $1,077,317 

 

NOTE 11 — 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 three reportable segments: FCID Medical, Inc., The B.A.C.K. Center and CCSC Holdings, Inc. (“CCSC”).

 

All reportable segments derive revenue for medical services provided to patients; and The B.A.C.K Center additionally derives revenue for subleasing space within its building and medical services provided to patients. With the aforementioned sale and leaseback of Marina Towers on March 31, 2016, the Company will no longer report segmented rental revenue received from third-party Marina Tower tenants under the segment heading “Marina Towers.” Rather, the Company has consolidated rental revenue received from third-party tenants of Marina Towers under the “Corporate” segment for both the 2017 and 2016 comparable reporting periods; and will continue to do so hereafter.

 

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

 

Summary Statement of Income for the three months ended March 31, 2017:

 

       The                 
   FCID   B.A.C.K.           Intercompany     
   Medical   Center   CCSC   Corporate   Eliminations   Total 
Revenue:                              
Net Patient Service Revenue  $2,860,986   $3,090,579   $1,190,425   $   $   $7,141,990 
Rental revenue       340,076         431,850    (193,563)   578,363 
Total Revenue   2,860,986    3,430,655    1,190,425    431,850    (193,563)   7,720,353 
                               
Operating expenses:                              
Salaries & benefits   1,095,236    1,718,717    298,299    242,124         3,354,376 
Other operating expenses   591,151    856,482    852,122    408,861    (179,433)   2,529,183 
General and administrative   525,309    638,798    136,354    249,502    (14,130)   1,535,833 
Depreciation and amortization   69,741    6,162    28,149    85,436        189,488 
Total operating expenses   2,281,437    3,220,159    1,314,924    985,923    (193,563)   7,608,880 
                               
Net income (loss) from operations:   579,549    210,496    (124,499)   (554,073)       111,473 
                               
Interest income (expense)   (27,558)   (3,904)   (866)   254        (32,074)
Other income       45,684    3,668    750        50,102 
                               
Net Income (Loss) before income taxes:   551,991    252,276    (121,697)   (553,069)       129,501 
                               
Income taxes                          
                               
Net income (Loss)   551,991    252,276    (121,697)   (553,069)       129,501 
                               
Non-controlling interest           73,018            73,018 
                               
Net income (loss) attributable to First Choice Healthcare Solutions  $551,991   $252,276   $(48,679)  $(553,069)  $   $202,519 

17

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

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

 

       The                 
   FCID   B.A.C.K.           Intercompany     
   Medical   Center   CCSC   Corporate   Eliminations   Total 
Revenue:                              
Net Patient Service Revenue  $2,308,935   $3,034,898   $1,271,308   $   $   $6,615,141 
Rental revenue       358,099         428,246    (159,733)   626,612 
Total Revenue   2,308,935    3,392,997    1,271,308    428,246    (159,733)   7,241,753 
                               
Operating expenses:                              
Salaries & benefits   829,220    1,457,911    293,337    200,101        2,780,569 
Other operating expenses   531,407    858,301    709,646    105,954    (159,733)   2,045,575 
General and administrative   361,803    723,492    109,275    353,006        1,547,576 
Depreciation and amortization   66,792    5,515    71,256    155,387        298,950 
Total operating expenses   1,789,222    3,045,219    1,183,514    814,448    (159,733)   6,672,670 
                               
Net income (loss) from operations:   519,713    347,778    87,794    (386,202)       569,083 
                               
Interest income (expense)   (56,818)   (2,459)   (8,726)   (113,132)       (181,135)
Amortization of financing costs       (988)       (14,337)       (15,325)
Gain on sale of property               9,188,968        9,188,968 
Other income (expense)       56,725    1,382    750        58,857 
                               
Net Income (loss) before income taxes:   462,895    401,056    80,450    8,676,047        9,620,448 
                               
Income taxes                          
                               
Net income   462,895    401,056    80,450    8,676,047        9,620,448 
                               
Non-controlling interest           (53,507)           (53,507)
                               
Net income attributable to First Choice Healthcare Solutions  $462,895   $401,056   $26,943   $8,676,047   $   $9,566,941 

 

Selected financial data:

 

   FCID   Brevard   The Crane         
   Medical   Orthopaedic   Center   Corporate   Total 
Assets:                         
At March 31, 2017:  $7,078,560   $6,533,306   $3,000,058   $6,041,621   $22,653,545 
At December 31, 2016:  $6,033,019   $5,995,253   $3,186,354   $6,931,468   $22,146,094 
                          
Assets acquired                         
Three months ended March 31, 2017  $150,329   $6,944   $11,756   $4,500   $173,529 
Three months ended March 31, 2016  $49,893   $2,116   $24,240   $49,824   $126,073 

 

NOTE 12 – SUBSEQUENT EVENTS

 

Effective May 5, 2017, we appointed Marcum LLP (“Marcum”) as our independent registered public accounting firm. Our engagement was approved by our Board of Directors. We previously reported in our Current Report on Form 8-K (date of Report: May 5, 2017), as filed with the Securities and Exchange Commission on May 9, 2017, our termination of our prior independent registered public accounting firm, RBSM, LLP.

18

 

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 in key expansion markets throughout the Southeastern U.S. Our flagship platform in Melbourne, Florida is comprised of non-physician-owned medical centers of excellence, which concentrate on treating patients in the following specialties: Orthopaedics, Spine Surgery, Neurology and Interventional Pain Management; and provide a robust offering of related diagnostic and ancillary services – all centrally located in a geographic region.

 

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 patient outcomes;

 

advance the quality and cost effectiveness of our patients’ healthcare, thereby achieving faster recoveries at materially reduced cost to payors; and

 

achieve strong, sustainable financial performance that serves to create long-term value for our stockholders.

19

 

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 achieve 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. As of March 31, 2017, we had 166 employees, including 13 doctors and nine physician assistants.

 

Our Healthcare Services Business

 

We have operated as First Choice Healthcare Solutions, Inc., a Delaware corporation, since February 13, 2012. Our corporate address is 709 S. Harbor City Blvd., Suite 530, Melbourne, Florida, 32901 and our phone number is 321-725-0090. Our corporate website address is www.myfchs.com. Information contained in our website is not incorporated by reference herein. In 2016, we operated our business through seven wholly owned subsidiaries; and in 2017, we have operated our business through five wholly owned subsidiaries.

 

FCID Medical, Inc. (“FCID Medical”) is the subsidiary under which we wholly own and operate First Choice Medical Group of Brevard, LLC (“FCMG”), our original Medical Center of Excellence located in Melbourne, Florida. First Choice Medical Group specializes in the delivery of Orthopaedics, Sports Medicine, Neurology and Interventional Pain Medicine, as well as diagnostic and ancillary services. The web site is www.myfcmg.com.

 

TBC Holdings of Melbourne, Inc. (“TBC Holdings”) is our wholly owned subsidiary that operates and controls Brevard Orthopaedic Spine & Pain Clinic, Inc., d/b/a The B.A.C.K. Center (“TBC”). Pursuant to an Operation and Control Agreement with The B.A.C.K. Center, TBC Holdings exercises effective control over the business of the practice to treat it as a Variable Interest Entity in accordance with Financial Accounting Standards Board and Accounting Standards Codification, effective May 1, 2015. As a result, we include the financial results of TBC in our consolidated financial statements in accordance with generally accepted accounting principles. TBC specializes in Orthopaedic Spine Surgery and Interventional Pain Management, and its website is www.thebackcenter.net.

 

In addition, TBC subleases 29,629 square feet of commercial office space to affiliated and non-affiliated tenants, including 18,828 square feet to Crane Creek Surgery Center (“CCSC”), located at 2222 South Harbor City Boulevard, Melbourne, Florida 32901, which is also TBC’s main medical practice location.

 

CCSC Holdings, Inc. (“CCSC Holdings”) is our wholly owned subsidiary which acquired a 40% interest in Crane Creek Surgery Center (“CCSC”). The other owners are CCSC TBC Group, LLC, owned by Richard Hynes, M.D., FASC and Devin Datta, M.D.; and Blue Chip Crane Creek Investments, LLC, owned by NueHealth, LLC, which develops and manages world class ambulatory surgery centers and specialty hospitals across the United States. Dr. Hynes and Dr. Datta are both affiliated with The B.A.C.K. Center. Pursuant to the CCSC Restated and Amended Operating Agreement, CCSC Holdings now exercises sufficient control over the business of CCSC to treat it as a Variable Interest Entity in accordance with Financial Accounting Standards Board and Accounting Standards Codification, effective October 1, 2015. As a result, we include the financial results of CCSC in our consolidated financial statements in accordance with generally accepted accounting principles. CCSC is an AAAHC accredited facility dedicated to delivering excellent ambulatory care in a convenient, comfortable outpatient environment, and its website is www.cranecreeksurgerycenter.com.

 

Up until its sale and leaseback on March 31, 2016, Marina Towers, a 78,000 square foot, Class A, six-story building located on the Indian River in Melbourne, Florida, was owned by our wholly owned subsidiaries, FCID Holdings, Inc. (“FCID Holdings”), which held 99% ownership, and MTMC of Melbourne, Inc., which held 1% ownership. 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 has two successive options to renew the lease for 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. In September 2016, both FCID Holdings and MTMC of Melbourne were dissolved and Marina Towers, LLC became wholly owned by First Choice Healthcare Solutions, Inc. Marina Towers subleases 38,334 square feet of commercial office space to non-affiliated tenants.

20

 

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, 2017 and 2016

 

Revenues

 

Total revenues increased 7% to $7,720,353 for the three months ended March 31, 2017 as compared to revenues of $7,241,753 for the same period in the prior year. The increase is primarily attributed by an increase in patient services revenue generated by First Choice Medical Group (“FCMG”), which increased by $552,051, or 24%, after factoring provision for doubtful accounts. In addition, Brevard Orthopedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”) patient services revenue increased by $55,681 or 2% and Crane Creek Surgical Center (“Crane Creek”) declined by 6% for the same period last year. Rental revenue decreased by $48,249, totaling $578,363 and $626,612 for the three months ended March 31, 2017 and 2016, respectively.

 

The provision for doubtful accounts during the first quarter of 2017 totaled $264,996, which represents 3.6% of patient service revenue.

 

Operating Expenses

 

Operating expenses include the following:

 

   Three Months Ended
March 31, 2017
   Three Months Ended
March 31, 2016
 
Salaries and benefits  $3,354,376   $2,780,569 
Other operating expenses   2,529,183    2,045,575 
General and administrative   1,535,833    1,547,576 
Depreciation and amortization   189,488    298,950 
Total operating expenses  $7,608,880   $6,672,670 

 

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 21% to $3,354,376 for the three months ended March 31, 2017, compared to $2,780,569 for the three months ended March 31, 2016. The increase was primarily due to the addition of physicians, physician assistants and physical therapy professional personnel in the later part of 2016 and 2017. Other operating expenses increased 24% to $2,529,183 from $2,045,575 due to the increase in patient service volume from 2016 to 2017 stemming from the addition of new personnel and one-time expenses related to setting up two new physical therapy locations approved to open in May 2017.

 

General and administrative expenses for the three months ended March 31, 2017 and 2016 remained flat for the periods at $1,535,833 and $1,547,576, respectively.

 

Depreciation and amortization decreased 37% from $298,950 reported for the three months ended March 31, 2016 to $189,488 reported for the three months ended March 31, 2017. The decrease is primarily due to the sale/leaseback of our Marina Towers office building in first quarter 2016.

21

 

Net Income from Operations

 

The decrease in net income from operations, for the reasons stated above, for the three months ended March 31, 2017 decreased 80% to $111,473, which compared to $569,083 for the same period in the prior year.

 

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 one-time gain on sale of property of $9,188,968 for the three months ended March 31, 2016.

 

Interest Expense

 

Interest expense decreased 82% to $32,074 for the three months ended March 31, 2017, which compared to $181,135 for the three months ended March 31, 2016. The decrease primarily is due to payoff of our Marina Towers mortgage in the first quarter of 2016 and a reduction of 56% of the accounts receivable line of credit with CT Capital at the end of 2016 as compared to the same period last year.

 

Net Income

 

As a result of all the above, we reported net income of $202,519 for the three months ended March 31, 2017 as compared to net income from $9,566,941 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 income (loss) by segment for the three months ended March 31, 2017 and 2016, respectively.

 

With the aforementioned sale and leaseback of Marina Towers on March 31, 2016, the Company will no longer report segmented rental revenue received from third party Marina Tower tenants under the segment heading “Marina Towers.” Rather, the Company has consolidated rental revenue received from third party tenants of Marina Towers under the “Corporate” segment for both the 2017 and 2016 comparable reporting periods; and will continue to do so hereafter. The significant fluctuations in the line items are described above.

 

For the Three Months Ended March 31, 2017:

 

       The                 
   FCID   B.A.C.K.           Intercompany     
   Medical   Center   CCSC   Corporate   Eliminations   Total 
Revenue:                              
Net Patient Service Revenue  $2,860,986   $3,090,579   $1,190,425   $   $   $7,141,990 
Rental revenue       340,076         431,850    (193,563)   578,363 
Total Revenue   2,860,986    3,430,655    1,190,425    431,850    (193,563)   7,720,353 
Total operating expenses   2,281,437    3,220,159    1,314,924    985,923    (193,563)   7,608,880 
                               
Net income (loss) from operations:  $579,549   $210,496   $(124,499)  $(554,073)  $   $111,473 

22

 

For the Three Months Ended March 31, 2016:

 

       The                 
   FCID   B.A.C.K.           Intercompany     
   Medical   Center   CCSC   Corporate   Eliminations   Total 
Revenue:                              
Net Patient Service Revenue  $2,308,935   $3,034,898   $1,271,308   $   $   $6,615,141 
Rental revenue       358,099         428,246    (159,733)   626,612 
Total Revenue   2,308,935    3,392,997    1,271,308    428,246    (159,733)   7,241,753 
Total operating expenses   1,789,222    3,045,219    1,183,514    814,448    (159,733)   6,672,670 
                               
Net income (loss) from operations:  $519,713   $347,778   $87,794   $(386,202)  $   $569,083 

 

Liquidity and Capital Resources

 

As of March 31, 2017, we had cash of $3,901,489 and accounts receivables totaling $10,390,140. This compared to cash of $4,593,638 and accounts receivable of $9,536,830 as of the end of 2016.

 

The Company believes that the current cash balance and line of credit (see notes, there is $1,400,000 available as of March 31, 2017), along with continued execution of its business development plan, 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 at least one year from the filing of this report.

 

However, in order to execute the Company’s business development plan, which there can be no assurance we will achieve, 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.

 

Net cash used in our operating activities for the three months ended March 31, 2017 totaled $410,408, which compared to net cash provided by our operations for the three months ended March 31, 2016 of $317,224. The decrease in cash used for the three months ended March 31, 2017 was due primarily to increases in our operating assets of $1,480,355 net with increases in our operating liabilities of $422,638 as compared to $881,955 and $17,600 for the three months ended March 31, 2016.

 

Net cash flows used in investing activities was $173,729 for the three months ended March 31, 2017, compared to $14,942,424 provided by investing activities for the three months ended March 31, 2016. In 2016, we received $15,068,497 net proceeds from the sale of Marina Towers. Purchases of equipment were $173,729 and $126,073 for the three months ended March 31, 2017 and 2016, respectively.

 

Net cash used in financing activities was $108,012 for three months ended March 31, 2017, compared to net cash used in financing activities of $6,802,647 for the three months ended March 31, 2016. The cash flows used in our financing activities were the result of:

 

   Three Months
ended March 31,
2017
   Three Months
ended March 31,
2016
 
Proceeds from advances  $   $90,714 
Proceeds from note payable   22,113     
Proceeds from line of credit       372,636 
Payments on notes payable   (130,125)   (7,265,997)
Net cash used in financing activities  $(108,012)  $(6,802,647)

 

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

23

 

Our aim is to distinguish our Medical Centers of Excellence from our competition by earning our Centers’ reputations as premier destinations for clinically superior, patient-centric care which is coordinated across our patients’ entire care continuums. By doing so, we deliver more meaningful and collaborative doctor-patient experiences, provide more accurate diagnoses resulting from care coordination, effective treatment plans, faster recoveries, and materially reduced costs.

 

Based on the dynamic growth taking place on Florida’s Space Coast, we are currently estimating that the total market opportunity for Orthopaedic and Spine care approximates $150 million annually, and we are working towards capturing a larger share of that market. In an effort to fully round out our Space Coast Platform, we have begun exploring opportunities to establish the infrastructure necessary to address a patient’s end-to-end episode of care by offering both pharmacy and home health services. We are also planning to expand the number of PT/OT centers that we operate to provide greater travel convenience for our patients. Currently, we own and operate one state-of-the-art PT/OT center based in Melbourne. We anticipate that in 2017 we will expand to a total of five centers geographically situated across Brevard County, Florida, which extends 72 miles from north to south on Florida’s east coast. Thus far in 2017, we have approval by the State Agency of Healthcare Administration to open two additional centers in May 2017.

 

Our longer term strategic focus is to grow primarily in select U.S. markets that can accommodate our unique business model. We have estimated there are in excess of 240 locations that might qualify for our model to be implemented. We are now studying and reviewing that list and narrowing it down to the top 10 that we feel would be a good fit to successfully replicating our current Platform. Our growth will be fueled by hiring best-in-class Orthopaedic physicians currently practicing in our target expansion markets. We will identify physicians in those markets that are seeking an alternative to owning and operating their own private practices or being employed by local hospitals. As necessary we will add diagnostic and ancillary services, to include an ambulatory surgery center, MRI, X-Ray, DME and PT/OT will also be added to these platforms.

 

Our business model is centered on our team of physicians being employees, thereby permitting us to optimize revenue generation from both physicians and ancillary services, while also providing our employed care providers with the ability to utilize our on-site diagnostic and ancillary services. Physician-owned practices, on the other hand, may be subject to prevailing federal regulations (e.g., The Ethics in Patient Referral Act of 1989, as amended; more commonly known as the “Stark Law”), which may limit their ability to refer patients for certain healthcare services provided by entities in which a physician-owner(s) has a financial interest.

 

We believe that our centralized system of back office operations will continue to allow us to achieve measurable cost and productivity efficiencies as we expand the number of centers and platforms we own and operate. We have specifically designed our centralized back office system to alleviate staff physicians from business administrative responsibilities associated with operating a medical practice or clinic, enabling them to focus strictly on caring for our patients (allowing “Doctors to be Doctors”). This is extremely attractive to physicians who own and manage their own private practices or clinics and devote valuable time and resources towards addressing business concerns – time and resources that might otherwise be spent on treating their patients.

 

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.

24

 

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.

 

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, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

25

 

PART II

 

Item 1. Legal Proceedings

 

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/A for the year ended December 31, 2016.

 

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.

26

 

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 15, 2017 By: /s/ Christian C. Romandetti
    Christian C. Romandetti
    Chief Executive Officer (Principal Executive Officer)
     
Dated: May 15, 2017 By: /s/ Timothy K. Skeldon
    Timothy K. Skeldon
    Chief Financial Officer (Principal Accounting Officer)

27

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 15, 2017  

 

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 FINANCIAL OFFICER

 

I, Timothy K. Skeldon, 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/ Timothy K. Skeldon  
    Timothy K. Skeldon  
    Chief Financial Officer  
       
    May 15, 2017  

 

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 15, 2017      

 

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, Timothy K. Skeldon, the 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 15, 2017 By:  /s/ TIMOTHY K. SKELDON  
    Timothy K. Skeldon  
    Chief Financial Officer  

 

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Center [Member] Crane Creek Surgery Center [Member] The Crane Center [Member] Corporate [Member] Intercompanyt Elimination [Member] CCSC HoldingsInc [Member] Employee Stock Option [Member] Award Type [Axis] Restricted Stock [Member] Crane Creek Surgery Center One [Member] Additional Paid-In Capital Noncontrolling Interest Document And Entity Information Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Amendment Description Current Fiscal Year End Date Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] ASSETS Current assets: Cash and cash equivalents (amounts related to VIE of $908,141 and $708,858) Accounts receivable, net (amounts related to VIE of $6,112,966 and $6,010,961) Employee loans (amounts related to VIE of $491,550 and $491,850) Prepaid and other current assets (amounts related to VIE of $392,961 and $329,427) Total current assets Property, plant and equipment, net of accumulated depreciation of $1,264,271 and $1,165,219 (amounts related to VIE of $678,018 and $693,629) Other assets (amounts related to VIE of $921,470) Total assets LIABILITIES AND EQUITY Current liabilities: Accounts payable and accrued expenses (amounts related to VIE of $1,638,148 and $1,366,143) Accounts payable, related party (amount related to VIE of $251,588) AMT Tax Payable Line of credit, short term (amount related to VIE of $439,524) Notes payable, current portion Unearned revenue Deferred rent, short term portion (amount related to VIE of $237,923) Total current liabilities Long term debt: Deposits held Notes payable, long term portion Deferred rent, long term portion (amount related to VIE of $2,240,552 and $2,214,909) Total long term debt Total liabilities 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, 26,803,994 and 24,631,327 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively Additional paid in capital Accumulated deficit Total stockholders' equity attributable to First Choice Healthcare Solutions, Inc. Non-controlling interest (note 10) Total equity Total liabilities and equity Statement [Table] Statement [Line Items] Finite-Lived Intangible Assets by Major Class [Axis] Cash Related to VIE Accounts receivable Employee loans Prepaid and other current assets Property, plant and equipment, net of accumulated depreciation Other assets Accounts payable and accrued expenses Accounts payable, related party Line of credit, short term Deferred rent, short term portion Deferred rent, long term portion Preferred stock, par value (in dollars per share) Preferred stock, shares authorized Preferred stock, issued Preferred stock, outstanding Common stock, par value (in dollars per share) Common stock, shares authorized Common stock, shares issued Common stock, shares outstanding Income Statement [Abstract] Revenues: Patient service revenue Allowance for bad debts Net patient service revenue less provision for bad debts Rental revenue Total revenue Operating expenses: Salaries and benefits Other operating expenses General and administrative Depreciation and amortization Total operating expenses Net income from operations Other income (expense): Gain on sale of property and improvements Miscellaneous income (expense) Amortization financing costs Interest expense Total other income Net income before provision for income taxes Income taxes (benefit) Net income Non-controlling interest (note 10) NET INCOME ATTRIBUTABLE TO FIRST CHOICE HEALTHCARE SOLUTIONS, INC. 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expenses and other current assets Restricted funds Employee loans Accounts payable and accrued expenses Settlement payable Deposits Deferred rent Unearned income Net cash (used in) provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of property Purchase of equipment Net cash (used in) provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from advances Proceeds from notes payable Proceeds from line of credit Payments on notes payable Net cash used in financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for interest Cash paid during the period for taxes Basis Of Presentation BASIS OF PRESENTATION Significant Accounting Policies SIGNIFICANT ACCOUNTING POLICIES Liquidity Disclosures [Abstract] LIQUIDITY Other Assets [Abstract] OTHER ASSETS Line of Credit Facility [Abstract] LINES OF CREDIT Related Party Transactions [Abstract] COMMITMENTS AND CONTINGENCIES Stockholders' Equity Note [Abstract] CAPITAL STOCK Disclosure of Compensation Related Costs, Share-based Payments [Abstract] STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS Organization, Consolidation and Presentation of Financial Statements [Abstract] VARIABLE INTEREST ENTITY Noncontrolling Interest [Abstract] NON-CONTROLLING INTEREST Segment Reporting [Abstract] SEGMENT REPORTING Subsequent Events [Abstract] SUBSEQUENT EVENTS Accounting Policies [Abstract] Use of estimates Revenue recognition Concentrations of credit risk Accounts receivable Net income per share Reclassification Recent accounting pronouncements Subsequent events Significant Accounting Policies Tables Net Income per share Other Assets Tables Schedule Of Other Assets Schedule of Share-based Compensation, Stock Options, Activity Schedule of Variable Interest Entities Non-controlling Interest Tables Schedule of Net loss attributable to non-controlling interest Schedule of Segment Reporting Information, by Segment Bearing interest rate Matures date Voting Rights, Description Options issued to purchase the Company's common stock Stock Purchase Price Significant Accounting Policies Details Numerator: Denominator: Weighted-average common shares, basic Weighted-average common shares, diluted Basic: Diluted: Potentially dilutive securities excluded from the computation of basic and diluted net income (loss) per share Allowance for Doubtful Accounts Receivable Conversion of debt Other Assets Details Goodwill (amount relating to VIE of $899,465) Deferred costs, net of amortization of $618,401 and $537,740 Patient list, net of accumulated amortization of $100,000 and $95,000 Patents, net of accumulated amortization of $62,075 and $57,300 Investments (amounts related to VIE of $22,005) Deferred tax asset Deposits Total other assets Line of Credit Facility [Table] Line of Credit Facility [Line Items] Range [Axis] Short-term Debt, Maximum Amount Outstanding During Period Line Of Credit Facility, Expiration Date Line of Credit Facility, Collateral Debt Instrument, Convertible, Terms of Conversion Feature Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures, Total Debt Instrument, Interest Rate During Period Debt Instrument, Interest Rate, Effective Percentage Line of Credit Facility, Maximum Borrowing Capacity Line of Credit Facility, Minimum Borrowing Capacity Line Of Credit Facility, Amount Outstanding Line of Credit Facility, Interest Rate Description Line of Credit Facility, Increase (Decrease), Net, Total Line of Credit Facility, Increase (Decrease), Other, Net Debt Instrument, Term Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases Line of Credit Facility, Covenant Terms Line Of Credit Guaranteed Amount Line of Credit Facility, Average Outstanding Amount Increase in the accounts receivable line 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The entire disclosure of short-term or long-term contractual arrangements with lenders, including letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdown's on the line. Net Loss per Share. Custom Element. Custom Element. Custom Element. Represents the total line of credit guaranteed amount as on period end date.. Increase in the accounts receivable line of credit. Custom Element. Custom Element. Custom Element. 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Document and Entity Information - shares
3 Months Ended
Mar. 31, 2017
May 12, 2017
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, 2017  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   26,803,994
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2017  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.7.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
Mar. 31, 2017
Dec. 31, 2016
Current assets:    
Cash and cash equivalents (amounts related to VIE of $908,141 and $708,858) $ 3,901,489 $ 4,593,638
Accounts receivable, net (amounts related to VIE of $6,112,966 and $6,010,961) 10,390,140 9,536,830
Employee loans (amounts related to VIE of $491,550 and $491,850) 953,132 820,341
Prepaid and other current assets (amounts related to VIE of $392,961 and $329,427) 651,770 422,512
Total current assets 15,896,531 15,373,321
Property, plant and equipment, net of accumulated depreciation of $1,264,271 and $1,165,219 (amounts related to VIE of $678,018 and $693,629) 2,619,493 2,544,816
Other assets (amounts related to VIE of $921,470) 4,137,521 4,227,957
Total assets 22,653,545 22,146,094
Current liabilities:    
Accounts payable and accrued expenses (amounts related to VIE of $1,638,148 and $1,366,143) 2,437,080 2,083,231
Accounts payable, related party (amount related to VIE of $251,588) 251,588 251,588
AMT Tax Payable 181,029 181,029
Line of credit, short term (amount related to VIE of $439,524) 1,539,524 1,539,524
Notes payable, current portion 402,372 519,452
Unearned revenue 43,854 26,936
Deferred rent, short term portion (amount related to VIE of $237,923) 237,923 237,923
Total current liabilities 5,093,370 4,839,683
Long term debt:    
Deposits held 41,930 41,930
Notes payable, long term portion 23,599 14,531
Deferred rent, long term portion (amount related to VIE of $2,240,552 and $2,214,909) 2,345,465 2,293,594
Total long term debt 2,410,994 2,350,055
Total liabilities 7,504,364 7,189,738
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, 26,803,994 and 24,631,327 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively 26,804 24,631
Additional paid in capital 24,081,761 24,020,610
Accumulated deficit (9,898,015) (10,100,534)
Total stockholders' equity attributable to First Choice Healthcare Solutions, Inc. 14,210,550 13,944,707
Non-controlling interest (note 10) 938,631 1,011,649
Total equity 15,149,181 14,956,356
Total liabilities and equity $ 22,653,545 $ 22,146,094
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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)
Mar. 31, 2017
Dec. 31, 2016
Prepaid and other current assets $ 651,770 $ 422,512
Property, plant and equipment, net of accumulated depreciation 1,264,271 1,165,219
Other assets 4,137,521 4,227,957
Accounts payable and accrued expenses 2,437,080 2,083,231
Accounts payable, related party 251,588 251,588
Line of credit, short term 1,539,524 1,539,524
Deferred rent, short term portion 237,923 237,923
Deferred rent, long term portion $ 2,345,465 $ 2,293,594
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 26,803,994 24,631,327
Common stock, shares outstanding 26,803,994 24,631,327
VIE [Member]    
Cash Related to VIE $ 908,141 $ 708,858
Accounts receivable 6,112,966 6,010,961
Employee loans 491,550 491,850
Prepaid and other current assets 392,961 329,427
Property, plant and equipment, net of accumulated depreciation 678,018 693,629
Other assets 921,470 921,470
Accounts payable and accrued expenses 1,638,148 1,366,143
Accounts payable, related party 251,588 251,588
Line of credit, short term 439,524 439,524
Deferred rent, short term portion 237,923 237,923
Deferred rent, long term portion $ 2,240,552 $ 2,214,909
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Revenues:    
Patient service revenue $ 7,406,986 $ 6,877,665
Allowance for bad debts (264,996) (262,524)
Net patient service revenue less provision for bad debts 7,141,990 6,615,141
Rental revenue 578,363 626,612
Total revenue 7,720,353 7,241,753
Operating expenses:    
Salaries and benefits 3,354,376 2,780,569
Other operating expenses 2,529,183 2,045,575
General and administrative 1,535,833 1,547,576
Depreciation and amortization 189,488 298,950
Total operating expenses 7,608,880 6,672,670
Net income from operations 111,473 569,083
Other income (expense):    
Gain on sale of property and improvements 9,188,968
Miscellaneous income (expense) 50,102 58,857
Amortization financing costs (15,325)
Interest expense (32,074) (181,135)
Total other income 18,028 9,051,365
Net income before provision for income taxes 129,501 9,620,448
Income taxes (benefit)
Net income 129,501 9,620,448
Non-controlling interest (note 10) 73,018 (53,507)
NET INCOME ATTRIBUTABLE TO FIRST CHOICE HEALTHCARE SOLUTIONS, INC. $ 202,519 $ 9,566,941
Net income per common share, basic $ 0.01 $ 0.42
Net income per common share, diluted $ 0.01 $ 0.37
Weighted average number of common shares outstanding, basic 26,252,505 22,886,307
Weighted average number of common shares outstanding, diluted 27,052,505 25,552,974
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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) - 3 months ended Mar. 31, 2017 - USD ($)
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Noncontrolling Interest
Total
Beginning Balance, Amount at Dec. 31, 2016 $ 24,631 $ 24,020,610 $ (10,100,534) $ 1,011,649 $ 14,956,356
Beginning Balance, Shares at Dec. 31, 2016 24,631,327        
Common stock issued in settlement of convertible debt, previously accrued, Amount $ 1,867 (1,867)
Common stock issued in settlement of convertible debt, previously accrued, Shares 1,866,667        
Stock based compensation previously accrued, Amount $ 306 63,018 63,324
Stock based compensation previously accrued, Shares 306,000        
Net income 202,519 (73,018) 202,519
Ending Balance, Amount at Mar. 31, 2017 $ 26,804 $ 24,081,761 $ (9,898,015) $ 938,631 $ 15,149,181
Ending Balance, Shares at Mar. 31, 2017 26,803,994        
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net Income $ 129,501 $ 9,620,448
Adjustments to reconcile net income to cash (used in) provided by operating activities:    
Depreciation and amortization 189,488 298,950
Amortization of financing costs 15,325
Bad debt expense 264,996 262,524
Gain on sale of property (9,188,968)
Common stock issued in connection with loan extension 92,000
Stock based compensation 63,324 81,300
Changes in operating assets and liabilities:    
Accounts receivable (1,118,306) (1,087,059)
Prepaid expenses and other current assets (229,258) 91,623
Restricted funds 359,414
Employee loans (132,791) (245,933)
Accounts payable and accrued expenses 353,849 122,628
Settlement payable (150,000)
Deposits (14,432)
Deferred rent 51,871 59,404
Unearned income 16,918
Net cash (used in) provided by operating activities (410,408) 317,224
CASH FLOWS FROM INVESTING ACTIVITIES:    
Proceeds from sale of property 15,068,497
Purchase of equipment (173,729) (126,073)
Net cash (used in) provided by investing activities (173,729) 14,942,424
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from advances 90,714
Proceeds from notes payable 22,113
Proceeds from line of credit 372,636
Payments on notes payable (130,125) (7,265,997)
Net cash used in financing activities (108,012) (6,802,647)
Net (decrease) increase in cash and cash equivalents (692,149) 8,457,001
Cash and cash equivalents, beginning of period 4,593,638 1,594,998
Cash and cash equivalents, end of period 3,901,489 10,051,999
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Cash paid during the period for interest 32,328 181,135
Cash paid during the period for taxes
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BASIS OF PRESENTATION
3 Months Ended
Mar. 31, 2017
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, 2016, 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, 2017 and 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 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, 2017 are not necessarily indicative of results that may be expected for the year ending December 31, 2017. 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/A, filed with the Securities and Exchange Commission (the “SEC”) on April 3, 2017.

 

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”).

 

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 completed its acquisition of First Choice Medical Group of Brevard, LLC (“FCMG - 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 Orthopedic Spine & Pain Clinic, Inc.

 

Effective May 1, 2015, the Company, through its wholly owned subsidiary, TBC Holdings of Melbourne, Inc., entered into an Operating and Control Agreement (the Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), whereby we 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. We issued 3,000,000 options to purchase our Company’s Common Stock at $1.35 per share to The B.A.C.K. Center employees providing specific qualifications are met. The initial term of the Agreement relating to the options expired on December 31, 2016, with the Company having the right to extend the term until December 31, 2023. We exercised our option to extend the term until December 31, 2017. 

 

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 wholly owned subsidiary, CCSC Holdings, Inc., acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”).In connection with the investment, the Company is entitled to 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 Crane Creek.

 

Non-controlling interests relate to the third-party ownership in a consolidated entity in which the Company has a controlling interest. For financial reporting purposes, the entity’s assets, liabilities, and operations are consolidated with those of the Company, and the non-controlling interest in the entity is included in the Company’s consolidated financial statements within the equity section of the consolidated Balance Sheets.

 

The unaudited condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries: 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 VIEs, The B.A.C.K. Center and Crane Creek. All significant intercompany balances and transactions, including those involving the VIEs, have been eliminated in consolidation.

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.7.0.1
SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2017
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, provision against bad debt, 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 when: (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 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.

 

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. Revenues and accounts receivable are concentrated between two major payers, Medicare at approximately 30% and a third party commercial insurer at approximately 20%.

 

Accounts receivables

 

As of March 31, 2017 and December 31, 2016, the Company’s allowance for bad debts was $3,750,802 and $3,680,837, respectively.

 

 

Net income per share

 

Basic net income per common share is based upon the weighted-average number of common shares outstanding. Diluted net income per common share is based on the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding and computed as follows:

 

    Three months ended March 31,  
    2017     2016  
Numerator:                
Net income   $ 202,519     $ 9,566,941  
                 
Denominator:                
Weighted-average common shares, basic     26,252,505       22,886,307  
Weighted-average common shares, diluted     27,052,505       25,552,974  
                 
Basic:   $ 0.01     $ 0.42  
Diluted:   $ 0.01     $ 0.37  

 

The diluted earnings per common share included the effect of 800,000 and 2,666,667 common shares issuable upon the conversion of debt for the three months ended March 31, 2017 and 2016, respectively.

 

Potentially dilutive common shares from employee equity plans and issued warrants are determined by applying the treasury stock method to the assumed exercise of warrants and share options are were excluded from the computation of the diluted net income per share because their inclusion would be anti-dilutive. In addition, there were no vested restrict stock for periods presented. Potentially dilutive securities excluded from the basic and diluted net income per share are as follows:

 

    March 31,  
    2017     2016  
Warrants to purchase common stock     1,875,000       4,324,630  
Options to purchase common stock     3,000,000       3,000,000  
Restricted stock awards     660,000        
      5,535,000       7,324,630  

 

Reclassification

 

Certain reclassifications have been made to prior periods’ data to conform to the current year’s presentation. These reclassifications had no effect on reported income or losses.

 

Recent accounting pronouncements

 

There are 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.

 

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other (Topic 350). The amendments in this update simplify the test for goodwill impairment by eliminating Step 2 from the impairment test, which required the entity to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining fair value of assets acquired and liabilities assumed in a business combination. The amendments in this update are effective for public companies for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We are evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

 

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805); Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business to help companies evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. We are evaluating the impact of adopting this guidance on our Consolidated Financial Statements. 

 

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 condensed consolidated financial statements, except as disclosed.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.7.0.1
LIQUIDITY
3 Months Ended
Mar. 31, 2017
Liquidity Disclosures [Abstract]  
LIQUIDITY

NOTE 3 – LIQUIDITY

 

The Company incurred various non-recurring expenses in 2016 in connection with the planned development of its Healthcare Services Business. Management believes continued growth of earnings before interest, taxes, depreciation and amortization in 2017 will support improved liquidity.

 

The Company believes that the current cash balance and line of credit (see notes), along with continued execution of its business development plan, 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 at least one year from the filing of this report.

 

However, in order to execute the Company’s business development plan, which there can be no assurance we will achieve, 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 v3.7.0.1
OTHER ASSETS
3 Months Ended
Mar. 31, 2017
Other Assets [Abstract]  
OTHER ASSETS

NOTE 4 — OTHER ASSETS

 

Other assets are comprised of the following:

   

March 31,

2017

   

December 31,

2016

 
Goodwill (amount relating to VIE of $899,465)   $ 899,465     $ 899,465  
Deferred costs, net of amortization of $618,401 and $537,740     2,608,026       2,688,687  
Patient list, net of accumulated amortization of $100,000 and $95,000     200,000       205,000  
Patents, net of accumulated amortization of $62,075 and $57,300     224,425       229,200  
Investments (amounts related to VIE of $22,005)     22,005       22,005  
Deferred tax asset     181,029       181,029  
Deposits     2,571       2,571  
Total other assets   $ 4,137,521     $ 4,227,957  

 

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.7.0.1
LINES OF CREDIT
3 Months Ended
Mar. 31, 2017
Line of Credit Facility [Abstract]  
LINES OF CREDIT

NOTE 5 — LINES OF CREDIT

 

Line of credit, CT Capital 

 

FCMG - Brevardentered 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 $2,500,000 to FCMG - Brevard with an interest rate of 6% per annum (the “Loan”). The maturity date of the Loan is June 30, 2017. Interest is due and payable monthly. The Lender may convert up to $2,000,000 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.

 

On March 30, 2017, the Company’s Loan and Security Agreement with CT Capital, Ltd. (“Lender”) was amended to extend the Maturity Date to June 30, 2018 (the “Loan”) and further provide that neither the Company nor Lender shall effectuate any conversion of the Loan to the extent that after giving effect to any such conversion, the Lender would beneficially own in excess of 9.99% of the number of shares of our Company’s shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of the Loan by the Lender.

 

As of March 31, 2017 and December 31, 2016, the outstanding balance was $1,100,000 and the remaining principal amount the Lender can convert into common stock is $600,000.

 

Line of credit, Florida Business Bank

 

The B.A.C.K. Center is a party to 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 $1,383,000 (as amended), with an interest rate of Prime floating plus 1.0%, as published in The Wall Street Journal, with a floor of 2.75% per annum (the “Loan”) (as amended).

 

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, 2017, 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, 2017 and December 31, 2016, the outstanding balance on the Loan was $439,524.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.7.0.1
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Mar. 31, 2017
Related Party Transactions [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 6 — COMMITMENTS AND CONTINGENCIES

 

Litigations, Claims and Assessments

 

From time to time, we may become involved in lawsuits and legal proceedings which arise in the ordinary course of business including potential disputes with patients. 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. Our contracts with hospitals generally requires us to indemnify them and their affiliates for losses resulting from the negligence of our physicians. Currently, we have no pending litigation that is deemed to be material.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.7.0.1
CAPITAL STOCK
3 Months Ended
Mar. 31, 2017
Stockholders' Equity Note [Abstract]  
CAPITAL STOCK

NOTE 7 — CAPITAL STOCK

 

During the three months ended March 31, 2017, the Company issued an aggregate of 306,000 shares of its common stock to officers, employees and service providers at an aggregate fair value of $301,840, which were earned and expensed in 2016.

 

During the three months ended March 31, 2017, the Company issued 1,866,667 shares of its common stock in exchange for $1,400,000 in convertible debt. The value of shares was recorded as a share issuance liability as of December 31, 2016 and issued in the first quarter of 2017.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.7.0.1
STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS
3 Months Ended
Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS

NOTE 8 — STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS

 

Restricted Stock Units (“RSU”)

 

The following table summarizes the restricted stock activity for the three months ended March 31, 2017:

 

Restricted shares units issued as of December 31, 2016     660,000  
Granted      
Forfeited      
Total Restricted Shares Issued at March 31, 2017     660,000  
Vested at March 31, 2017      
Unvested restricted shares as of March 31, 2017     660,000  

 

At March 31, 2017, the Company determined that there is a 100% probability the performance based restricted stock units will be earned. The fair value of all restricted stock units vesting during the three months ended March 31, 2017 and 2016 of $63,324 and $-0-, respectively, was charged to current period operations.

 

As of March 31, 2017, stock-based compensation related to restricted stock awards of $488,830 remains unamortized and is expected to be amortized over the weighted average remaining period of 2.13 years.

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VARIABLE INTEREST ENTITY
3 Months Ended
Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
VARIABLE INTEREST ENTITY

NOTE 9 — VARIABLE INTEREST ENTITY

 

Brevard Orthopaedic Spine & Pain Clinic, Inc.

 

Effective May 1, 2015, the Company, through its wholly owned subsidiary, TBC Holdings of Melbourne, Inc., entered into an Operating and Control Agreement (the “Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), whereby we 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. We issued 3,000,000 options to purchase our Company’s Common Stock at $1.35 per share with vesting contingent on The B.A.C.K. Center employees signing employment contracts with First Choice – Brevard. The initial term of the Agreement relating to the options expired on December 31, 2016, with the Company having the right to extend the term until December 31, 2023. We exercised our option to extend the term until December 31, 2017.

 

The Company has determined that The B.A.C.K. Center is a Variable Interest Entity (“VIE”). 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 tables below summarize the assets and liabilities associated with The B.A.C.K. Center as of March 31, 2017 and December 31, 2016: 

 

   

March 31,

2017

 

December 31,

2016

Current assets:        
Cash   $ 813,427     $ 355,491  
Accounts receivable     4,826,389       4,830,054  
Other current assets     772,001       691,847  
Total current assets     6,411,817       5,877,392  
Property and equipment, net     71,226       70,444  
Other assets     22,005       22,005  
Total assets   $ 6,505,048     $ 5,969,841  

 

Current liabilities:        
Accounts payable and accrued liabilities   $ 1,242,054     $ 904,684  
Due to First Choice Healthcare Solutions, Inc.     3,040,529       2,867,539  
Other current liabilities     677,447       677,446  
Total current liabilities     4,960,030       4,449,669  
Long term debt     1,683,704       1,658,858  
Total liabilities     6,643,734       6,108,527  
Non-controlling interest     (138,686 )     (138,686 )
Total liabilities and deficit   $ 6,505,048     $ 5,969,841  

 

Total revenues from The B.A.C.K. Center were $3,430,655 for the three months ended March 31, 2017. Related expenses consisted primarily of salaries and benefits of $1,718,717, operating expenses of $856,482, general and administrative expenses of $720,232, depreciation of $6,162, interest and financing costs of $3,904; and other income of $45,684 for the three months ended March 31, 2017. (See Note 11 – Segment Reporting)

 

Total revenues from The B.A.C.K. Center were $3,392,997 for the three months ended March 31, 2016. Related expenses consisted primarily of salaries and benefits of $1,457,911, operating expenses of $858,301, general and administrative expenses of $723,492, depreciation of $5,515 and interest and financing costs of $3,447 and other income of $56,725. (See Note 11 – Segment Reporting)

 

Crane Creek Surgery Center

 

Effective October 1, 2015, the Company, through its then newly formed wholly owned subsidiary, CCSC Holdings, Inc., acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”).

 

In connection with the investment, the Company is entitled to 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 Crane Creek.

 

The Company has determined that Crane Creek is a Variable Interest Entity (“VIE”). 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 tables below summarize the assets and liabilities associated with the Crane Creek as of March 31, 2017 and December 31, 2016:  

   

March 31,

2017

 

December 31,

2016

Current assets:        
Cash   $ 94,714     $ 353,367  
Accounts receivable     1,286,577       1,180,907  
Other current assets     112,510       129,430  
Total current assets     1,493,801       1,663,704  
Property and equipment, net     606,792       623,185  
Goodwill     899,465       899,465  
Total assets   $ 3,000,058     $ 3,186,354  

 

   

March 31,

2017

 

December 31,

2016

Current liabilities:        
Accounts payable and accrued liabilities   $ 396,094     $ 461,489  
Other current liabilities     251,588       251,588  
Total current liabilities     647,682       713,077  
Deferred rent     556,848       556,051  
Total liabilities     1,204,530       1,269,128  
                 
Equity-First Choice Healthcare Solutions, Inc.     718,211       766,891  
Non-controlling interest     1,077,317       1,150,335  
Total liabilities and deficit   $ 3,000,058     $ 3,186,354  

 

Total revenues from Crane Creek were $1,190,425 for the three months ended March 31, 2017. Related expenses consisted primarily of salaries and benefits of $298,299, surgical supplies and operating expenses of $852,122, general and administrative expenses of $136,354, depreciation of $28,149, interest expense of $866 and miscellaneous income of $3,668 for the three months ended March 31, 2017. (See Note 11 – Segment Reporting)

 

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, surgical supplies and operating of $709,646, general and administrative expenses of $109,275, depreciation of $71,256, interest expense of $8,726 and miscellaneous income of $1,382. (See Note 11 – Segment Reporting)

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.7.0.1
NON-CONTROLLING INTEREST
3 Months Ended
Mar. 31, 2017
Noncontrolling Interest [Abstract]  
NON-CONTROLLING INTEREST

NOTE 10 — NON-CONTROLLING INTEREST

 

Effective May 1, 2015, the Company, through its wholly owned subsidiary, TBC Holdings of Melbourne, Inc., entered into an Operating and Control Agreement (the Agreement”) with Brevard Orthopaedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”), whereby we 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. We issued 3,000,000 options to purchase our Company’s Common Stock at $1.35 per share with vesting contingent on The B.A.C.K. Center employees signing employment contracts with First Choice – Brevard. The initial term of the Agreement relating to the options expired on December 31, 2016, with the Company having the right to extend the term until December 31, 2023. We exercised our option to extend the term until December 31, 2017.

 

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, 2017:

 

Net income   $ 170,842  
Average Non-controlling interest percentage of profit/losses     -0- %
Net income attributable to the non-controlling interest   $ -0-  

 

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 from December 31, 2016 through March 31, 2017:

 

Balance, December 31, 2016   $ (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, 2017   $ (138,686 )

 

Effective October 1, 2015, the Company, through its wholly owned subsidiary, CCSC Holdings, Inc., acquired a 40% interest in Crane Creek Surgery Center (“Crane Creek”). In connection with the investment, the Company is entitled to 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 Crane Creek.

 

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, 2017:

 

Net loss   $ (121,698 )
Average Non-controlling interest percentage of profit/losses     60 %
Net income/loss attributable to the non-controlling interest   $ (73,018 )

 

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 December 31, 2016 through March 31, 2017:

 

Balance, December 31, 2016     1,150,335  
Transfer (to) from the non-controlling interest as a result of change in ownership      
Net income attributable to the non-controlling interest     (73,018 )
Balance, March 31, 2017   $ 1,077,317  

 

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.7.0.1
SEGMENT REPORTING
3 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
SEGMENT REPORTING

NOTE 11 — 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 three reportable segments: FCID Medical, Inc., The B.A.C.K. Center and CCSC Holdings, Inc. (“CCSC”).

 

All reportable segments derive revenue for medical services provided to patients; and The B.A.C.K Center additionally derives revenue for subleasing space within its building and medical services provided to patients. With the aforementioned sale and leaseback of Marina Towers on March 31, 2016, the Company will no longer report segmented rental revenue received from third-party Marina Tower tenants under the segment heading “Marina Towers.” Rather, the Company has consolidated rental revenue received from third-party tenants of Marina Towers under the “Corporate” segment for both the 2017 and 2016 comparable reporting periods; and will continue to do so hereafter.

 

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

 

Summary Statement of Income for the three months ended March 31, 2017:

 

          The                          
    FCID     B.A.C.K.                 Intercompany        
    Medical     Center     CCSC     Corporate     Eliminations     Total  
Revenue:                                                
Net Patient Service Revenue   $ 2,860,986     $ 3,090,579     $ 1,190,425     $     $     $ 7,141,990  
Rental revenue           340,076               431,850       (193,563 )     578,363  
Total Revenue     2,860,986       3,430,655       1,190,425       431,850       (193,563 )     7,720,353  
                                                 
Operating expenses:                                                
Salaries & benefits     1,095,236       1,718,717       298,299       242,124               3,354,376  
Other operating expenses     591,151       856,482       852,122       408,861       (179,433 )     2,529,183  
General and administrative     525,309       638,798       136,354       249,502       (14,130 )     1,535,833  
Depreciation and amortization     69,741       6,162       28,149       85,436             189,488  
Total operating expenses     2,281,437       3,220,159       1,314,924       985,923       (193,563 )     7,608,880  
                                                 
Net income (loss) from operations:     579,549       210,496       (124,499 )     (554,073 )           111,473  
                                                 
Interest income (expense)     (27,558 )     (3,904 )     (866 )     254             (32,074 )
Other income           45,684       3,668       750             50,102  
                                                 
Net Income (Loss) before income taxes:     551,991       252,276       (121,697 )     (553,069 )           129,501  
                                                 
Income taxes                                        
                                                 
Net income (Loss)     551,991       252,276       (121,697 )     (553,069 )           129,501  
                                                 
Non-controlling interest                 73,018                   73,018  
                                                 
Net income (loss) attributable to First Choice Healthcare Solutions   $ 551,991     $ 252,276     $ (48,679 )   $ (553,069 )   $     $ 202,519  

17

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

 

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

 

          The                          
    FCID     B.A.C.K.                 Intercompany        
    Medical     Center     CCSC     Corporate     Eliminations     Total  
Revenue:                                                
Net Patient Service Revenue   $ 2,308,935     $ 3,034,898     $ 1,271,308     $     $     $ 6,615,141  
Rental revenue           358,099               428,246       (159,733 )     626,612  
Total Revenue     2,308,935       3,392,997       1,271,308       428,246       (159,733 )     7,241,753  
                                                 
Operating expenses:                                                
Salaries & benefits     829,220       1,457,911       293,337       200,101             2,780,569  
Other operating expenses     531,407       858,301       709,646       105,954       (159,733 )     2,045,575  
General and administrative     361,803       723,492       109,275       353,006             1,547,576  
Depreciation and amortization     66,792       5,515       71,256       155,387             298,950  
Total operating expenses     1,789,222       3,045,219       1,183,514       814,448       (159,733 )     6,672,670  
                                                 
Net income (loss) from operations:     519,713       347,778       87,794       (386,202 )           569,083  
                                                 
Interest income (expense)     (56,818 )     (2,459 )     (8,726 )     (113,132 )           (181,135 )
Amortization of financing costs           (988 )           (14,337 )           (15,325 )
Gain on sale of property                       9,188,968             9,188,968  
Other income (expense)           56,725       1,382       750             58,857  
                                                 
Net Income (loss) before income taxes:     462,895       401,056       80,450       8,676,047             9,620,448  
                                                 
Income taxes                                        
                                                 
Net income     462,895       401,056       80,450       8,676,047             9,620,448  
                                                 
Non-controlling interest                 (53,507 )                 (53,507 )
                                                 
Net income attributable to First Choice Healthcare Solutions   $ 462,895     $ 401,056     $ 26,943     $ 8,676,047     $     $ 9,566,941  

 

Selected financial data:

 

    FCID     Brevard     The Crane              
    Medical     Orthopaedic     Center     Corporate     Total  
Assets:                                        
At March 31, 2017:   $ 7,078,560     $ 6,533,306     $ 3,000,058     $ 6,041,621     $ 22,653,545  
At December 31, 2016:   $ 6,033,019     $ 5,995,253     $ 3,186,354     $ 6,931,468     $ 22,146,094  
                                         
Assets acquired                                        
Three months ended March 31, 2017   $ 150,329     $ 6,944     $ 11,756     $ 4,500     $ 173,529  
Three months ended March 31, 2016   $ 49,893     $ 2,116     $ 24,240     $ 49,824     $ 126,073  

 

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.7.0.1
SUBSEQUENT EVENTS
3 Months Ended
Mar. 31, 2017
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 12 – SUBSEQUENT EVENTS

 

Effective May 5, 2017, we appointed Marcum LLP (“Marcum”) as our independent registered public accounting firm. Our engagement was approved by our Board of Directors. We previously reported in our Current Report on Form 8-K (date of Report: May 5, 2017), as filed with the Securities and Exchange Commission on May 9, 2017, our termination of our prior independent registered public accounting firm, RBSM, LLP.

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.7.0.1
SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Mar. 31, 2017
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, provision against bad debt, 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 when: (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 history and identified trends for each of our payers.

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. Revenues and accounts receivable are concentrated between two major payers, Medicare at approximately 30% and a third party commercial insurer at approximately 20%.

Accounts receivable

Accounts receivables

 

As of March 31, 2017 and December 31, 2016, the Company’s allowance for bad debts was $3,750,802 and $3,680,837, respectively.

Net income per share

Net income per share

 

Basic net income per common share is based upon the weighted-average number of common shares outstanding. Diluted net income per common share is based on the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding and computed as follows:

 

    Three months ended March 31,  
    2017     2016  
Numerator:                
Net income   $ 202,519     $ 9,566,941  
                 
Denominator:                
Weighted-average common shares, basic     26,252,505       22,886,307  
Weighted-average common shares, diluted     27,052,505       25,552,974  
                 
Basic:   $ 0.01     $ 0.42  
Diluted:   $ 0.01     $ 0.37  

 

The diluted earnings per common share included the effect of 800,000 and 2,666,667 common shares issuable upon the conversion of debt for the three months ended March 31, 2017 and 2016, respectively.

 

Potentially dilutive common shares from employee equity plans and issued warrants are determined by applying the treasury stock method to the assumed exercise of warrants and share options are were excluded from the computation of the diluted net income per share because their inclusion would be anti-dilutive. In addition, there were no vested restrict stock for periods presented. Potentially dilutive securities excluded from the basic and diluted net income per share are as follows:

 

    March 31,  
    2017     2016  
Warrants to purchase common stock     1,875,000       4,324,630  
Options to purchase common stock     3,000,000       3,000,000  
Restricted stock awards     660,000        
      5,535,000       7,324,630  

Reclassification

Reclassification

 

Certain reclassifications have been made to prior periods’ data to conform to the current year’s presentation. These reclassifications had no effect on reported income or losses.

Recent accounting pronouncements

Recent accounting pronouncements

 

There are 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.

 

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other (Topic 350). The amendments in this update simplify the test for goodwill impairment by eliminating Step 2 from the impairment test, which required the entity to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining fair value of assets acquired and liabilities assumed in a business combination. The amendments in this update are effective for public companies for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We are evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

 

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805); Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business to help companies evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. We are evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

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 condensed consolidated financial statements, except as disclosed.

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.7.0.1
SIGNIFICANT ACCOUNTING POLICIES (Tables)
3 Months Ended
Mar. 31, 2017
Significant Accounting Policies Tables  
Net Income per share

Potentially dilutive common shares outstanding and computed as follows:

 

    Three months ended March 31,  
    2017     2016  
Numerator:                
Net income   $ 202,519     $ 9,566,941  
                 
Denominator:                
Weighted-average common shares, basic     26,252,505       22,886,307  
Weighted-average common shares, diluted     27,052,505       25,552,974  
                 
Basic:   $ 0.01     $ 0.42  
Diluted:   $ 0.01     $ 0.37  

 

    March 31,  
    2017     2016  
Warrants to purchase common stock     1,875,000       4,324,630  
Options to purchase common stock     3,000,000       3,000,000  
Restricted stock awards     660,000        
      5,535,000       7,324,630  

XML 32 R21.htm IDEA: XBRL DOCUMENT v3.7.0.1
OTHER ASSETS (Tables)
3 Months Ended
Mar. 31, 2017
Other Assets Tables  
Schedule Of Other Assets

Other assets are comprised of the following:

   

March 31,

2017

   

December 31,

2016

 
Goodwill (amount relating to VIE of $899,465)   $ 899,465     $ 899,465  
Deferred costs, net of amortization of $618,401 and $537,740     2,608,026       2,688,687  
Patient list, net of accumulated amortization of $100,000 and $95,000     200,000       205,000  
Patents, net of accumulated amortization of $62,075 and $57,300     224,425       229,200  
Investments (amounts related to VIE of $22,005)     22,005       22,005  
Deferred tax asset     181,029       181,029  
Deposits     2,571       2,571  
Total other assets   $ 4,137,521     $ 4,227,957  

 

XML 33 R22.htm IDEA: XBRL DOCUMENT v3.7.0.1
STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS (Tables)
3 Months Ended
Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Schedule of Share-based Compensation, Stock Options, Activity

The following table summarizes the restricted stock activity for the three months ended March 31, 2017:

 

Restricted shares units issued as of December 31, 2016     660,000  
Granted      
Forfeited      
Total Restricted Shares Issued at March 31, 2017     660,000  
Vested at March 31, 2017      
Unvested restricted shares as of March 31, 2017     660,000  

XML 34 R23.htm IDEA: XBRL DOCUMENT v3.7.0.1
VARIABLE INTEREST ENTITY (Tables)
3 Months Ended
Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Variable Interest Entities

The tables below summarize the assets and liabilities associated with The B.A.C.K. Center as of March 31, 2017 and December 31, 2016:

 

   

March 31,

2017

   

December 31,

2016

 
Current assets:                
Cash   $ 813,427     $ 355,491  
Accounts receivable     4,826,389       4,830,054  
Other current assets     772,001       691,847  
Total current assets     6,411,817       5,877,392  
Property and equipment, net     71,226       70,444  
Other assets     22,005       22,005  
Total assets   $ 6,505,048     $ 5,969,841  
Current liabilities:                
Accounts payable and accrued liabilities   $ 1,242,054     $ 904,684  
Due to First Choice Healthcare Solutions, Inc.     3,040,529       2,867,539  
Other current liabilities     677,447       677,446  
Total current liabilities     4,960,030       4,449,669  
Long term debt     1,683,704       1,658,858  
Total liabilities     6,643,734       6,108,527  
Non-controlling interest     (138,686 )     (138,686 )
Total liabilities and deficit   $ 6,505,048     $ 5,969,841  

 

The tables below summarize the assets and liabilities associated with the Crane Creek as of March 31, 2017 and December 31, 2016:

 

   

March 31,

2017

   

December 31,

2016

 
Current assets:                
Cash   $ 94,714     $ 353,367  
Accounts receivable     1,286,577       1,180,907  
Other current assets     112,510       129,430  
Total current assets     1,493,801       1,663,704  
Property and equipment, net     606,792       623,185  
Goodwill     899,465       899,465  
Total assets   $ 3,000,058     $ 3,186,354  

 

   

March 31,

2017

   

December 31,

2016

 
Current liabilities:                
Accounts payable and accrued liabilities   $ 396,094     $ 461,489  
Other current liabilities     251,588       251,588  
Total current liabilities     647,682       713,077  
Deferred rent     556,848       556,051  
Total liabilities     1,204,530       1,269,128  
                 
Equity-First Choice Healthcare Solutions, Inc.     718,211       766,891  
Non-controlling interest     1,077,317       1,150,335  
Total liabilities and deficit   $ 3,000,058     $ 3,186,354  

 

XML 35 R24.htm IDEA: XBRL DOCUMENT v3.7.0.1
NON-CONTROLLING INTEREST (Tables)
3 Months Ended
Mar. 31, 2017
Non-controlling Interest Tables  
Schedule of Net loss attributable to non-controlling interest

Net income attributable to non-controlling interest for the three months ended March 31, 2017:

 

Net income   $ 170,842  
Average Non-controlling interest percentage of profit/losses     -0- %
Net income attributable to the non-controlling interest   $ -0-  

 

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 from December 31, 2016 through March 31, 2017:

 

Balance, December 31, 2016   $ (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, 2017   $ (138,686 )

butable to non-controlling interest for the three months ended March 31, 2017:

 

Net loss   $ (121,698 )
Average Non-controlling interest percentage of profit/losses     60 %
Net income/loss attributable to the non-controlling interest   $ (73,018 )

 

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 December 31, 2016 through March 31, 2017:

 

Balance, December 31, 2016     1,150,335  
Transfer (to) from the non-controlling interest as a result of change in ownership      
Net income attributable to the non-controlling interest     (73,018 )
Balance, March 31, 2017   $ 1,077,317  

XML 36 R25.htm IDEA: XBRL DOCUMENT v3.7.0.1
SEGMENT REPORTING (Tables)
3 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment

Summary Statement of Income for the three months ended March 31, 2017:

 

          The                          
    FCID     B.A.C.K.                 Intercompany        
    Medical     Center     CCSC     Corporate     Eliminations     Total  
Revenue:                                                
Net Patient Service Revenue   $ 2,860,986     $ 3,090,579     $ 1,190,425     $     $     $ 7,141,990  
Rental revenue           340,076               431,850       (193,563 )     578,363  
Total Revenue     2,860,986       3,430,655       1,190,425       431,850       (193,563 )     7,720,353  
                                                 
Operating expenses:                                                
Salaries & benefits     1,095,236       1,718,717       298,299       242,124               3,354,376  
Other operating expenses     591,151       856,482       852,122       408,861       (179,433 )     2,529,183  
General and administrative     525,309       638,798       136,354       249,502       (14,130 )     1,535,833  
Depreciation and amortization     69,741       6,162       28,149       85,436             189,488  
Total operating expenses     2,281,437       3,220,159       1,314,924       985,923       (193,563 )     7,608,880  
                                                 
Net income (loss) from operations:     579,549       210,496       (124,499 )     (554,073 )           111,473  
                                                 
Interest income (expense)     (27,558 )     (3,904 )     (866 )     254             (32,074 )
Other income           45,684       3,668       750             50,102  
                                                 
Net Income (Loss) before income taxes:     551,991       252,276       (121,697 )     (553,069 )           129,501  
                                                 
Income taxes                                        
                                                 
Net income (Loss)     551,991       252,276       (121,697 )     (553,069 )           129,501  
                                                 
Non-controlling interest                 73,018                   73,018  
                                                 
Net income (loss) attributable to First Choice Healthcare Solutions   $ 551,991     $ 252,276     $ (48,679 )   $ (553,069 )   $     $ 202,519  

 

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

 

          The                          
    FCID     B.A.C.K.                 Intercompany        
    Medical     Center     CCSC     Corporate     Eliminations     Total  
Revenue:                                                
Net Patient Service Revenue   $ 2,308,935     $ 3,034,898     $ 1,271,308     $     $     $ 6,615,141  
Rental revenue           358,099               428,246       (159,733 )     626,612  
Total Revenue     2,308,935       3,392,997       1,271,308       428,246       (159,733 )     7,241,753  
                                                 
Operating expenses:                                                
Salaries & benefits     829,220       1,457,911       293,337       200,101             2,780,569  
Other operating expenses     531,407       858,301       709,646       105,954       (159,733 )     2,045,575  
General and administrative     361,803       723,492       109,275       353,006             1,547,576  
Depreciation and amortization     66,792       5,515       71,256       155,387             298,950  
Total operating expenses     1,789,222       3,045,219       1,183,514       814,448       (159,733 )     6,672,670  
                                                 
Net income (loss) from operations:     519,713       347,778       87,794       (386,202 )           569,083  
                                                 
Interest income (expense)     (56,818 )     (2,459 )     (8,726 )     (113,132 )           (181,135 )
Amortization of financing costs           (988 )           (14,337 )           (15,325 )
Gain on sale of property                       9,188,968             9,188,968  
Other income (expense)           56,725       1,382       750             58,857  
                                                 
Net Income (loss) before income taxes:     462,895       401,056       80,450       8,676,047             9,620,448  
                                                 
Income taxes                                        
                                                 
Net income     462,895       401,056       80,450       8,676,047             9,620,448  
                                                 
Non-controlling interest                 (53,507 )                 (53,507 )
                                                 
Net income attributable to First Choice Healthcare Solutions   $ 462,895     $ 401,056     $ 26,943     $ 8,676,047     $     $ 9,566,941  

 

Selected financial data:

 

    FCID     Brevard     The Crane              
    Medical     Orthopaedic     Center     Corporate     Total  
Assets:                                        
At March 31, 2017:   $ 7,078,560     $ 6,533,306     $ 3,000,058     $ 6,041,621     $ 22,653,545  
At December 31, 2016:   $ 6,033,019     $ 5,995,253     $ 3,186,354     $ 6,931,468     $ 22,146,094  
                                         
Assets acquired                                        
Three months ended March 31, 2017   $ 150,329     $ 6,944     $ 11,756     $ 4,500     $ 173,529  
Three months ended March 31, 2016   $ 49,893     $ 2,116     $ 24,240     $ 49,824     $ 126,073  

XML 37 R26.htm IDEA: XBRL DOCUMENT v3.7.0.1
BASIS OF PRESENTATION (Details Textual) - $ / shares
3 Months Ended 4 Months Ended 9 Months Ended
Mar. 31, 2017
May 01, 2015
Oct. 01, 2015
Matures date Apr. 01, 2016    
Options issued to purchase the Company's common stock   3,000,000  
Stock Purchase Price   $ 1.35  
Crane Creek Surgery Center [Member]      
Bearing interest rate     40.00%
Matures date     Apr. 15, 2016
Voting Rights, Description    

In connection with the investment, the Company is entitled to 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 Crane Creek

B.A.C.K. Center [Member]      
Options issued to purchase the Company's common stock 3,000,000    
Stock Purchase Price $ 1.35    
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.7.0.1
SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Numerator:    
Net income $ 202,519 $ 9,566,941
Denominator:    
Weighted-average common shares, basic 26,252,505 22,886,307
Weighted-average common shares, diluted 27,052,505 25,552,974
Basic: $ 0.01 $ 0.42
Diluted: $ 0.01 $ 0.37
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.7.0.1
SIGNIFICANT ACCOUNTING POLICIES (Details 1) - shares
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Potentially dilutive securities excluded from the computation of basic and diluted net income (loss) per share 5,535,000 7,324,630
Warrants to purchase common stock [Member]    
Potentially dilutive securities excluded from the computation of basic and diluted net income (loss) per share 1,875,000 4,324,630
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 3,000,000
Restricted stock awards [Member]    
Potentially dilutive securities excluded from the computation of basic and diluted net income (loss) per share 660,000
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.7.0.1
SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Accounting Policies [Abstract]    
Allowance for Doubtful Accounts Receivable $ 3,750,802 $ 3,680,837
Conversion of debt $ 2,666,667 $ 800,000
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.7.0.1
OTHER ASSETS (Details) - USD ($)
Mar. 31, 2017
Dec. 31, 2016
Other Assets Details    
Goodwill (amount relating to VIE of $899,465) $ 899,465 $ 899,465
Deferred costs, net of amortization of $618,401 and $537,740 2,608,026 2,688,687
Patient list, net of accumulated amortization of $100,000 and $95,000 200,000 205,000
Patents, net of accumulated amortization of $62,075 and $57,300 224,425 229,200
Investments (amounts related to VIE of $22,005) 22,005 22,005
Deferred tax asset 181,029 181,029
Deposits 2,571 2,571
Total other assets $ 4,137,521 $ 4,227,957
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.7.0.1
LINES OF CREDIT (Details Textual) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 14, 2015
Jun. 13, 2013
Apr. 09, 2013
Jun. 27, 2012
Mar. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Line of Credit Facility [Line Items]              
Line Of Credit Facility, Amount Outstanding   $ 2,000,000     $ 1,100,000 $ 600,000  
Debt Instrument, Term 60 days            
Line of Credit Facility, Average Outstanding Amount         $ 439,524    
Matures date         Apr. 01, 2016    
Shares issued convertible debt, Amount         $ 2,236,907    
CT Capital LTD [Member]              
Line of Credit Facility [Line Items]              
Short-term Debt, Maximum Amount Outstanding During Period   $ 2,500,000          
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.

         
Debt Instrument, Interest Rate During Period   6.00%          
Line Of Credit Facility, Amount Outstanding         $ 1,100,000    
Matures date   Jun. 30, 2017     Jun. 30, 2018    
TBC Equipment Leasing, LLC member [Member]              
Line of Credit Facility [Line Items]              
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 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, 2017, 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]              
Debt Instrument, Interest Rate During Period       1.00%      
Line of Credit Facility, Maximum Borrowing Capacity       $ 1,383,000      
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       $ 1,383,000      
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.7.0.1
CAPITAL STOCK (Details Textual)
3 Months Ended
Mar. 31, 2017
USD ($)
shares
Stock Issued During Period, Shares, Conversion of Convertible Securities | shares 1,866,667
Stock Issued During Period, Value, Conversion of Convertible Securities | $ $ 1,400,000
Employee Stock Option [Member]  
Common Stock, Shares, Issued for Services | shares 306,000
Common Stock, Shares, Issued for Services Amount | $ $ 301,840
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.7.0.1
STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS (Details) - Restricted Stock [Member]
3 Months Ended
Mar. 31, 2017
shares
Restricted shares units issued as of December 31, 2016 660,000
Number of Shares, Granted
Number of Shares, Forfeited
Number of Shares, Outstanding 660,000
Vested at March 31, 2017
Unvested restricted shares as of March 31, 2017 660,000
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.7.0.1
STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS (Details Textual) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]      
Fair value restricted stock vesting $ 63,324 $ 0  
Stock based compensation related to restricted stock $ 488,830   $ 552,154
Weighted average remaining period 2 years 1 month 17 days    
Probability the performance 100.00%    
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.7.0.1
VARIABLE INTEREST ENTITY (Details) - USD ($)
Mar. 31, 2017
Dec. 31, 2016
Mar. 31, 2016
Dec. 31, 2015
Current assets:        
Cash $ 3,901,489 $ 4,593,638 $ 10,051,999 $ 1,594,998
Accounts receivable 10,390,140 9,536,830    
Total current assets 15,896,531 15,373,321    
Property and equipment, net 2,619,493 2,544,816    
Other assets 4,137,521 4,227,957    
Total assets 22,653,545 22,146,094    
Current liabilities:        
Accounts payable and accrued liabilities 2,437,080 2,083,231    
Total current liabilities 5,093,370 4,839,683    
Total liabilities 7,504,364 7,189,738    
Non-controlling interest 938,631 1,011,649    
Total liabilities and deficit 22,653,545 22,146,094    
B.A.C.K. Center [Member]        
Current assets:        
Cash 813,427 355,491    
Accounts receivable 4,826,389 4,830,054    
Other current assets 772,001 691,847    
Total current assets 6,411,817 5,877,392    
Property and equipment, net 71,226 70,444    
Other assets 22,005 22,005    
Total assets 6,505,048 5,969,841    
Current liabilities:        
Accounts payable and accrued liabilities 1,242,054 904,684    
Due to First Choice Healthcare Solutions, Inc. 3,040,529 2,867,539    
Other current liabilities 677,447 677,446    
Total current liabilities 4,960,030 4,449,669    
Long term debt 1,683,704 1,658,858    
Total liabilities 6,643,734 6,108,527    
Non-controlling interest (138,686) (138,686)    
Total liabilities and deficit $ 6,505,048 $ 5,969,841    
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.7.0.1
VARIABLE INTEREST ENTITY (Details 1) - USD ($)
Mar. 31, 2017
Dec. 31, 2016
Mar. 31, 2016
Dec. 31, 2015
Current assets:        
Cash $ 3,901,489 $ 4,593,638 $ 10,051,999 $ 1,594,998
Accounts receivable 10,390,140 9,536,830    
Total current assets 15,896,531 15,373,321    
Property and equipment, net 2,619,493 2,544,816    
Goodwill 899,465 899,465    
Total assets 22,653,545 22,146,094    
Current liabilities:        
Accounts payable and accrued liabilities 2,437,080 2,083,231    
Total current liabilities 5,093,370 4,839,683    
Deferred rent 2,345,465 2,293,594    
Total liabilities 7,504,364 7,189,738    
Equity-First Choice Healthcare Solutions, Inc 26,804 24,631    
Non-controlling interest 938,631 1,011,649    
Total liabilities and deficit 22,653,545 22,146,094    
Crane Creek Surgery Center [Member]        
Current assets:        
Cash 94,714 353,367    
Accounts receivable 1,286,577 1,180,907    
Other current assets 112,510 129,430    
Total current assets 1,493,801 1,663,704    
Property and equipment, net 606,792 623,185    
Goodwill 899,465 899,465    
Total assets 3,000,058 3,186,354    
Current liabilities:        
Accounts payable and accrued liabilities 396,094 461,489    
Other current liabilities 251,588 251,588    
Total current liabilities 647,682 713,077    
Deferred rent 556,848 556,051    
Total liabilities 1,204,530 1,269,128    
Equity-First Choice Healthcare Solutions, Inc 718,211 766,891    
Non-controlling interest 1,077,317 1,150,335    
Total liabilities and deficit $ 3,000,058 $ 3,186,354    
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.7.0.1
VARIABLE INTEREST ENTITY (Details Textual) - USD ($)
3 Months Ended 4 Months Ended 9 Months Ended
Mar. 31, 2017
Mar. 31, 2016
May 01, 2015
Oct. 01, 2015
Options issued to purchase the Company's common stock     3,000,000  
Total revenues $ 7,720,353 $ 7,241,753 $ 9,789,366  
Salaries and benefits 3,354,376 2,780,569 4,084,312  
Operating expenses 7,608,880 6,672,670    
General and administrative expenses 1,535,833 1,547,576 3,928,244  
Depreciation     18,404  
Interest and financing costs (32,074) (181,135) $ 28,524  
Other income (expense) $ 50,102 58,857    
Matures date Apr. 01, 2016      
Stock Purchase Price     $ 1.35  
Crane Creek Surgery Center [Member]        
Total revenues $ 1,190,425 1,271,308    
Salaries and benefits 298,299 293,337    
Operating expenses 852,122 709,646    
General and administrative expenses 136,354 109,275    
Depreciation 28,149 71,256    
Interest and financing costs 866 8,726    
Miscellaneous income 3,668 1,382    
Bearing interest rate       40.00%
Matures date       Apr. 15, 2016
Voting Rights, Description      

In connection with the investment, the Company is entitled to 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 Crane Creek

Gain on sale of equipment $ 18,878      
Crane Creek Surgery Center One [Member]        
Matures date       Apr. 15, 2016
Voting Rights, Description      

In connection with the investment, the Company is entitled to 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 Crane Creek.

B.A.C.K. Center [Member]        
Options issued to purchase the Company's common stock 3,000,000      
Total revenues $ 3,430,655 3,392,997    
Salaries and benefits 1,718,717 1,457,911    
Operating expenses 856,482 858,301    
General and administrative expenses 720,232 723,492    
Depreciation 6,162 5,515    
Interest and financing costs 3,904 3,447    
Other income (expense) $ 45,684 $ 56,725    
Stock Purchase Price $ 1.35      
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.7.0.1
NON-CONTROLLING INTEREST (Details) - USD ($)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Net income loss attributable to the non-controlling interest $ 73,018 $ (53,507)
B.A.C.K. Center [Member]    
Net income $ 170,842 $ 328,741
Average Non-controlling interest percentage of profit/losses 0.00% (0.00%)
Net income loss attributable to the non-controlling interest $ 0 $ (0)
CCSC HoldingsInc [Member]    
Net income $ (121,698) $ 89,177
Average Non-controlling interest percentage of profit/losses 60.00% 60.00%
Net income loss attributable to the non-controlling interest $ (73,018) $ 53,507
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.7.0.1
NON-CONTROLLING INTEREST (Details 1) - USD ($)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Balance, December 31, 2016 $ 1,011,649  
Net income loss attributable to the non-controlling interest 73,018 $ (53,507)
Balance, March 31, 2017 938,631  
B.A.C.K. Center [Member]    
Balance, December 31, 2016 (138,686)  
Net income loss attributable to the non-controlling interest 0 (0)
Balance, March 31, 2017 (138,686)  
CCSC HoldingsInc [Member]    
Balance, December 31, 2016 1,150,335  
Transfer (to) from the non-controlling interest as a result of change in ownership  
Net income loss attributable to the non-controlling interest (73,018) $ 53,507
Balance, March 31, 2017 $ 1,077,317  
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.7.0.1
NON-CONTROLLING INTEREST (Details Textual) - $ / shares
3 Months Ended 4 Months Ended 9 Months Ended
Mar. 31, 2017
May 01, 2015
Oct. 01, 2015
Matures date Apr. 01, 2016    
Options issued to purchase the Company's common stock   3,000,000  
Stock Purchase Price   $ 1.35  
Crane Creek Surgery Center [Member]      
Matures date     Apr. 15, 2016
Voting Rights, Description    

In connection with the investment, the Company is entitled to 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 Crane Creek

B.A.C.K. Center [Member]      
Options issued to purchase the Company's common stock 3,000,000    
Stock Purchase Price $ 1.35    
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.7.0.1
SEGMENT REPORTING (Details) - USD ($)
3 Months Ended 4 Months Ended
Mar. 31, 2017
Mar. 31, 2016
May 01, 2015
Dec. 31, 2016
Revenue:        
Net patient service revenue $ 7,141,990 $ 6,615,141    
Rental revenue 578,363 626,612    
Total revenue 7,720,353 7,241,753 $ 9,789,366  
Operating expenses:        
Salaries & benefits 3,354,376 2,780,569 4,084,312  
Other operating expenses 2,529,183 2,045,575    
General and administrative 1,535,833 1,547,576 3,928,244  
Depreciation and amortization 189,488 298,950    
Total operating expenses 7,608,880 6,672,670    
Net income (loss) from operations: 111,473 569,083    
Interest income (expense) (32,074) (181,135) $ 28,524  
Amortization of financing costs 15,325    
Gain on sale of property   9,188,968    
Other income 50,102 58,857    
Net Income (loss) before income taxes: 129,501 9,620,448    
Income taxes    
Net income (loss) 129,501 9,620,448    
Non-controlling interest 73,018 (53,507)    
Net income (loss) attributable to First Choice Healthcare Solutions 202,519 9,566,941    
Assets: 22,653,545     $ 22,146,094
Assets acquired 173,529 126,073    
FCID Medical [Member]        
Revenue:        
Net patient service revenue 2,860,986 2,308,935    
Rental revenue    
Total revenue 2,860,986 2,308,935    
Operating expenses:        
Salaries & benefits 1,095,236 829,220    
Other operating expenses 591,151 531,407    
General and administrative 525,309 361,803    
Depreciation and amortization 69,741 66,792    
Total operating expenses 2,281,437 1,789,222    
Net income (loss) from operations: 579,549 519,713    
Interest income (expense) (27,558) (56,818)    
Amortization of financing costs      
Gain on sale of property      
Other income    
Net Income (loss) before income taxes: 551,991 462,895    
Income taxes    
Net income (loss) 551,991 462,895    
Non-controlling interest    
Net income (loss) attributable to First Choice Healthcare Solutions 551,991 462,895    
Assets: 7,078,560     6,033,019
Assets acquired 150,329 49,893    
Brevard Orthopaedic [Member]        
Revenue:        
Net patient service revenue 3,090,579 3,034,898    
Rental revenue 340,076 358,099    
Total revenue 3,430,655 3,392,997    
Operating expenses:        
Salaries & benefits 1,718,717 1,457,911    
Other operating expenses 856,482 858,301    
General and administrative 638,798 723,492    
Depreciation and amortization 6,162 5,515    
Total operating expenses 3,220,159 3,045,219    
Net income (loss) from operations: 210,496 347,778    
Interest income (expense) (3,904) (2,459)    
Amortization of financing costs   (988)    
Gain on sale of property      
Other income 45,684 56,725    
Net Income (loss) before income taxes: 252,276 401,056    
Net income (loss) 252,276 401,056    
Non-controlling interest    
Net income (loss) attributable to First Choice Healthcare Solutions 252,276 401,056    
Assets: 6,533,306     5,995,253
Assets acquired 6,944 2,116    
The Crane Center [Member]        
Revenue:        
Net patient service revenue 1,190,425 1,271,308    
Total revenue 1,190,425 1,271,308    
Operating expenses:        
Salaries & benefits 298,299 293,337    
Other operating expenses 852,122 709,646    
General and administrative 136,354 109,275    
Depreciation and amortization 28,149 71,256    
Total operating expenses 1,314,924 1,183,514    
Net income (loss) from operations: (124,499) 87,794    
Interest income (expense) (866) (8,726)    
Amortization of financing costs      
Gain on sale of property      
Other income 3,668 1,382    
Net Income (loss) before income taxes: (121,697) 80,450    
Net income (loss) (121,697) 80,450    
Non-controlling interest 73,018 (53,507)    
Net income (loss) attributable to First Choice Healthcare Solutions (48,679) 26,943    
Assets: 3,000,058     3,186,354
Assets acquired 11,756 24,240    
Corporate [Member]        
Revenue:        
Net patient service revenue    
Rental revenue 431,850 428,246    
Total revenue 431,850 428,246    
Operating expenses:        
Salaries & benefits 242,124 200,101    
Other operating expenses 408,861 105,954    
General and administrative 249,502 353,006    
Depreciation and amortization 85,436 155,387    
Total operating expenses 985,923 814,448    
Net income (loss) from operations: (554,073) (386,202)    
Interest income (expense) 254 (113,132)    
Amortization of financing costs   (14,337)    
Gain on sale of property   9,188,968    
Other income 750 750    
Net Income (loss) before income taxes: (553,069) 8,676,047    
Income taxes    
Net income (loss) (553,069) 8,676,047    
Non-controlling interest    
Net income (loss) attributable to First Choice Healthcare Solutions (553,069) 8,676,047    
Assets: 6,041,621     $ 6,931,468
Assets acquired 4,500 49,824    
Intercompanyt Elimination [Member]        
Revenue:        
Net patient service revenue    
Rental revenue (193,563) (159,733)    
Total revenue (193,563) (159,733)    
Operating expenses:        
Salaries & benefits      
Other operating expenses (179,433) (159,733)    
General and administrative (14,130)    
Depreciation and amortization    
Total operating expenses (193,563) (159,733)    
Net income (loss) from operations:    
Interest income (expense)    
Amortization of financing costs      
Gain on sale of property      
Other income    
Net Income (loss) before income taxes:    
Income taxes    
Net income (loss)    
Non-controlling interest    
Net income (loss) attributable to First Choice Healthcare Solutions    
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