10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒   Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal years ended December 31, 2014 & 2013

☐  Transition report under section 13 or 15(d) of the Securities Act of 1934.

For the Transition period from ________ to ______.

Commission File Number: 1-9927

ADVANZEON SOLUTIONS, INC.

(Exact name of Registrant as specified in its charter)

Delaware	95-2594724
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
2901 W. Busch Blvd. Suite 701  Tampa, FL	33618
(Address of Principal Executive Offices)	(Zip Code)

813-517-8484

(Registrant’s telephone number including area code)

Securities to be registered pursuant to Section 12(b) of the Exchange Act:

Securities registered or to be registered pursuant to Section 12(g) of the Exchange Act:

(Title of class)

Common Stock, Par Value $0.01 per share

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.      Yes ☐ No ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.      Yes ☐ No ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K ☐

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

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☒

As of May 4, 2018, the aggregate market value of the voting and non-voting common equity of the registrant held by non-affiliates of the registrant was $3,312,768 based on the latest transaction price as reported on the OTC Bulletin Board on such date. This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purposes.

The number of shares of the registrant’s common stock outstanding on May 4, 2018 was 63,063,685.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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TABLE OF CONTENTS

			Page
PART I
	Item 1.	Business	3
	Item 1A.	Risk Factors	11
	Item 2.	Properties	17
	Item 3.	Legal Proceedings	18
	Item 4.	Mine Safety Disclosure	18
PART II
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
	Item 6.	Selected Financial Data	21
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	27
	Item 8.	Consolidated Financial Statements	27
	Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	27
	Item 9A.	Controls and Procedures	28
PART III
	Item 10.	Directors, Executive Officers and Corporate Governance	30
	Item 11.	Executive Compensation	34
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	39
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	42
	Item 14.	Principal Accountants’ Fees and Services	43
PART IV
	Item 15.	Exhibits	44

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PART I

ITEM 1. BUSINESS

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Certain information included in this Annual Report on Form 10-K and in our other reports, Securities and Exchange Commission (“SEC”) filings, statements, and presentations is forward looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, our anticipated operating results, financial resources, increases in revenues, increased profitability, interest expense, predictions of anticipated healthcare costs, growth and expansion, and the ability to obtain new behavioral healthcare contracts. Such forward-looking information involves important risks and uncertainties that could significantly affect actual results and cause them to differ materially from expectations expressed herein and in our other reports, SEC filings, statements, and presentations. These risks and uncertainties include, among others, changes in local, regional, and national economic and political conditions, the effect of governmental regulation, competitive market conditions, varying trends in member utilization, our ability to manage healthcare operating expenses, the profitability of our capitated contracts, cost of care, seasonality, our ability to obtain additional financing, our ability to renegotiate or extend expiring customer contracts, the risk that any definitive agreements or additional business will result from letters of intent entered into by us, and other risks detailed from time to time in our SEC reports.

OVERVIEW

Fiscal year 2013

GENERAL

Established in 1969, Advanzeon Solutions, Inc., (formerly Comprehensive Care Corp.) (“Advanzeon”, “we” or the “Company”),through its wholly-owned subsidiary Comprehensive Behavioral Care, Inc., and its wholly-owned subsidiaries provided managed care services in the behavioral health and substance abuse fields. We primarily offered these services to commercial, Medicare, Medicaid, Children’s Health Insurance Program (“CHIP”) health plans, as well as self-insured companies. Our managed care operations include administrative service agreements, fee-for-service agreements, and capitation contracts.

The behavioral health and substance abuse services provided through our provider network include outpatient programs (such as counseling or therapy), intermediate care programs (such as intensive outpatient programs and partial hospitalization services), and inpatient and crisis intervention services. In 2013, we had a network of approximately 60,000 contracted providers in the following areas: psychiatrists, psychologists, therapists, other licensed healthcare professionals, psychiatric hospitals, general medical facilities with psychiatric beds, residential treatment centers and other treatment facilities.

In 1999 we were awarded our first National Committee for Quality Assurance (“NCQA”) accreditation.

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MARKET OPPORTUNITIES

Advanzeon markets to regional health plans that do not have their own behavioral health network. These health plans will often contract with a managed behavioral healthcare organization (“MBHO”) to obtain access to behavioral healthcare professionals, claims processing, case management, better-integrated behavioral healthcare, and in some cases pharmacy management services. The health plans typically engage an MBHO like Advanzeon on a fixed fee paid on a per-member-per-month (“PMPM”) basis. Often, the PMPM will include the costs of care, which are the costs paid out to the providers and for pharmaceuticals, if applicable. Such an arrangement is known as an at-risk contract and the MBHO bears the risk/reward of the costs associated with higher or lower utilization of care. If the PMPM excludes the cost of care, the MBHO is essentially providing administrative services only (“ASO”). In such a case, the MBHO is not at risk of over/under utilization.

In fiscal year 2013, through our primary operating subsidiary, Comprehensive Behavioral Care, Inc. (“CBC”) and its subsidiaries, we provide managed behavioral healthcare, and substance abuse. Additionally, CBC provided analytic services for its health plan customers and self-insured companies to integrate medical claims data into actionable information so patient care can be coordinated cost effectively. We coordinate and manage the delivery of our services and products to:

● commercial members;

● Medicare members;

● Medicaid members; and

● CHIP member.

We provided services primarily through a network of contracted providers that includes:

● psychiatrists;

● psychologists;

● therapists;

● other licensed healthcare professionals;

● psychiatric hospitals;

● general medical facilities with psychiatric beds;

● residential treatment centers; and

● other treatment facilities.

The services provided through our provider network include outpatient programs (such as counseling or therapy), intermediate care programs (such as intensive outpatient programs and partial hospitalization services), inpatient programs and crisis intervention services. We do not directly provide treatment or own any treatment facilities.

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We typically enter into contracts on an annual basis to provide managed behavioral healthcare and substance abuse, services to our clients’ members. Our arrangements with our clients fall into two broad categories:

●    at-risk arrangements where our clients pay us a fixed fee per member in exchange for our assumption of the financial risk of providing services; and

●    Administrative Service Only or ASO arrangements where we manage behavioral healthcare programs or perform various managed care services, such as clinical care management, provider network development, and claims processing without assuming financial risk for member behavioral healthcare costs. 

Under our at-risk arrangements, the number of covered members as reported to us by our clients determines the amount of premiums we receive, which is independent of the cost of services rendered to members. The amount of premiums we receive for each member is fixed by our contract at the beginning of its term. Under certain circumstances, these premiums may be subsequently adjusted up or down, or the contract terminated, generally at the commencement of each renewal period.

Our largest expense is the cost of the behavioral health services that we provide, which is based primarily on our arrangements with healthcare providers. Since we are subject to increases in healthcare operating costs based primarily on an increase in the number and frequency of our members seeking behavioral care services, but also inflationary factors, our profitability depends on our ability to predict and effectively manage healthcare operating costs in relation to the fixed premiums we receive under capitation arrangements. Providing services on an at-risk basis exposes us to the risk that our contracts may ultimately be unprofitable if we are unable to control or otherwise anticipate healthcare costs. Accrued claims payable and claims expense were our most significant critical accounting estimates.

We manage programs through which services are provided to recipients in eight] states. Our objective is to provide easily accessible, high quality behavioral healthcare and pharmacy services and products and to manage costs through measures such as the monitoring of hospital inpatient admissions, review of authorizations for various types of outpatient therapy and effective management of prescription drugs. Our goal is to combine access to quality behavioral healthcare services with effective management controls in order to ensure the most cost-effective use of healthcare resources.

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Our programs and services include:

●     fully integrated behavioral healthcare services;

●     analytic services for medical claims for medical integration of behavioral and medical care coordination;

●     case management/utilization review services;

●     administrative services management;

●     preferred provider network development;

●     management and physician advisor reviews; and

●     overall care management services.

SOURCES OF REVENUE

During our fiscal year ended December 31, 2013, the majority of our revenue was earned from at-risk contracts pursuant to which we provide managed behavioral healthcare and substance abuse to recipients, primarily through subcontracts with health plans that have historically outsourced these functions to MBHOs like us. In exchange for arranging behavioral health and substance abuse services, we generally receive a negotiated amount on a per-member per-month, or capitated, basis in exchange for providing these services. We then contract directly with behavioral healthcare providers that receive discounted fees at predetermined per-service, per-case or per-diem rates. During the latter part of 2013, we conducted a review of CBC’s operations and determined that we would not continue with the business. On December 30, 2013, we sold CBC which operated our ASO and at-risk contracts, see Note 11 of the Notes to the Consolidated Financial Statements.

Under at-risk behavioral contracts, our profit is a function of utilization and the amount of claims payments made to our network providers. We performed periodic reviews of our current client contracts to determine profitability. In the event a contract is not profitable, we may seek to revise the terms of the contract or to terminate the agreement in accordance with its terms.

During 2013, we provided services under at-risk arrangements for Medicare and commercial patients in 6 states. Such services generated approximately 87% of our managed care operating revenue.

Our Medicare, Medicaid and CHIP contracts were subject to agreements with our health plan clients whose contracts with the various governmental agencies may be subject to renegotiation at the election of the specific agency.

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Under our at-risk contracts, we assume the financial risk for the costs of member behavioral healthcare services in exchange for a fixed, per member per month fee. Under our ASO contracts, we may manage behavioral healthcare programs or perform various managed care functions, such as clinical care management, provider network development and claims processing without assuming financial risk for member behavioral healthcare costs.

MARKETING AND SALES

Our marketing and sales efforts are led by our management team. In addition, we utilized consultants for direct sales to commercial, Medicare Medicaid, and CHIP health plans, as well as self-insured companies and unions.

PROVIDER NETWORK

As of December 31, 2013, we had approximately 60,000 behavioral healthcare practitioners in our network located in 47 states. As a result of selling CBC, we had no provider network in 2014. However, as part of the sale of CBC, the Company has the ability to lease the network at a future date.

Our managed behavioral healthcare services are provided by contracted providers, including behavioral healthcare professionals and facilities. Our behavioral healthcare professionals included a variety of specialized behavioral healthcare personnel, such as:

●           psychiatrists;

●           psychologists;

●           therapists;

●           licensed clinical social workers;

●           substance abuse counselors; and

●           other licensed healthcare professionals.

The facilities we provide our services to include:

●           psychiatric hospitals;

●           general medical facilities with psychiatric beds;

●           residential treatment facilities; and

●           other treatment facilities.

Outpatient providers include both individual practitioners, as well as individuals who are members of group practices or other licensed centers or programs. Outpatient providers typically enter into contracts with us under whom they are generally paid on a discounted fee-for-service basis.

Our provider network also included contractual arrangements with intensive outpatient facilities, partial hospitalization facilities, community health centers, and other community-based facilities. Our contracts with facilities were on a per diem or discounted fee-for-service basis and, in some cases, on a “case rate” basis, whereby a fixed amount is paid irrespective of the amount of services provided. To help ensure quality of care, we credential and re-credential all professional providers with whom we contract in accordance with standards of the NCQA. After we sold CBC in December 2013, we no longer maintained a provider network in 2014.

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COMPETITION

The behavioral healthcare industry is very competitive and provides products and services that are price sensitive. Competitors include independent MBHOs as well as health plans and insurers with internal behavioral health units or subsidiaries. Many of these competitors have revenues, financial resources, and membership bases that are substantially larger than ours. The extent of competition results in significant pricing pressures which limits our revenue growth.

EFFECTS OF INFLATION AND CHANGES IN INTEREST RATES

Our business operations were subject to the effects of inflation, particularly as to the types of healthcare costs we cover on an at risk basis. However, to minimize the effect of inflation, some of our multi-year revenue contracts contained provisions for annual rate increases that average approximately three percent per year. Our largest expense, the cost of care provided by our contracted providers, is frequently tied to standard Medicaid, CHIP, and Medicare reimbursement rates set by governmental entities. To the extent these standard rates are increased periodically to reflect the effects of inflation, we may be adversely affected by rising prices, absent a sufficient compensating increase in our revenues from our customers. Although currently, all our debt instruments bear fixed interest rates, we have historically funded our operations with increased borrowings annually, often at higher than market interest rates as a result of our currently weak financial condition, cash flows and operating results, and, thus, unless we are successful in raising sufficient additional equity capital, we may be subject to the effects of changing interest rates.

SEASONALITY OF BUSINESS

Historically, we have experienced increased member utilization principally during the months of March, April and May and consistently low utilization by members during the months of June, July, and August. Such variations in member utilization impact our costs of care during these months, generally having a positive impact on our gross margins and operating profits during the June through August period and an adverse impact on our gross margins and operating profits during the months of March through May.

GOVERNMENT REGULATION

We are subject to extensive and evolving state and federal regulations relating to the nation’s mental health system, as well as changes in Medicaid and Medicare reimbursement that could have an effect on our profitability. These regulations range from licensure and compliance with regulations related to insurance companies and other risk-assuming entities, to licensure and compliance with regulations related to healthcare providers. These laws and regulations may vary considerably between states. As a result, we may be subject to the specific regulatory approach adopted by each state for regulation of managed care companies and for providers of behavioral healthcare treatment services. As of November 31, 2013, we held licenses or certificates to perform utilization review and/or third party administrator (“TPA”) services in:

● California;

● Connecticut;

● Florida;

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● Louisiana;

● Michigan;

● Missouri;

● Pennsylvania; and

● Texas.

ACCREDITATION

The NCQA provides information about the quality of national managed care plans to enable consumers to evaluate health plan performance. To develop standards that effectively evaluate the structure and function of medical and quality management systems in managed care organizations, NCQA has an extensive review and development process in conjunction with the managed care industry, healthcare purchasers, state regulators, and consumers. The Standards for Accreditation of MBHOs used by NCQA reviewers to evaluate an MBHO address the following areas: quality improvement, utilization management, credentialing, members’ rights and responsibilities, and preventative care. These standards validate that an MBHO is founded on principles of quality and is continuously improving the clinical care and services it provides. NCQA utilizes the Health Plan Employer Data and Information Set, which is a core set of industry-wide performance measurements developed by NCQA to respond to complex but clearly defined employer needs as standards for patient care and customer satisfaction.

In October 2011, we were awarded Full Accreditation by NCQA extending until October 2014. Full Accreditation is granted for a period of three years to those plans that have, according to the NCQA, excellent programs for continuous quality improvement and that meet NCQA’s rigorous standards.

NCQA accreditation was required by several of our client contracts and is frequently an important consideration to our prospective clients. We believe our NCQA accreditation is beneficial to our clients and their members we serve. After the sale of CBC, we no longer needed to maintain such accreditation.

MANAGEMENT INFORMATION SYSTEMS

All of our health plan information technology and systems operate on a single platform. This approach avoids the costs associated with maintaining multiple systems and improves productivity. The open architecture of the systems gives us the ability to transfer data from other systems thereby facilitating the integration of new health plan business. We use our information system for claims processing, utilization management, reporting, cost trending, planning, and analysis. The system also supports member and provider service functions, including:

● enrollment;

● member eligibility verification;

● provider rosters;

● claims status inquiries; and

● referrals and authorizations.

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We are subject to the requirements of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). One of the purposes of HIPAA is to improve the efficiency and effectiveness of the healthcare system through standardization of the electronic data interchange of certain administrative and financial transactions and, also, to protect the security and privacy of protected health information. Entities subject to HIPAA include some healthcare providers and all healthcare plans.

We significantly enhanced our network by installing a storage area network and virtualizing our computer servers. This implementation brought in the current best practices approach and permitted a major overhaul of our information technology infrastructure. The technology centralizes storage management, increases the utilization of equipment, improves redundancy of the servers, reduces the overall hardware requirements, and facilitates growth, while driving down the total cost of ownership.

Fiscal year 2014

In January of 2014, we changed our name to Advanzeon Solutions, Inc.

During the fiscal year ended December 31, 2014, the fee we received from CBC was our only source of revenue. In January 2014, we entered into an agreement with CBC whereby we provided software and managerial oversight and facilities to CBC staff for the contracts held by CBC. Our only business in 2014 was servicing ASO contract for CBC.

	2014		2013
At-risk contracts	$	—	$	766,116
Administrative services only contracts		535,863		2,415,673
Total	$	535,863	$	3,181,789

ADMINISTRATION AND EMPLOYEES

Our executive and administrative offices are located in Tampa, Florida, where we maintain operations, business development, accounting, reporting and information systems, and provider and member service functions. Provider management, account management, and certain clinical and utilization management functions are also performed by employees located in Michigan. As of December 31, 2013, we employed 15 full-time employees and one consultant for our day to day operation. As of December 31, 2014, we employed 2 full time employees. We also oversaw the operations of 13 full time CBC employees.

AVAILABLE INFORMATION

Our investors’ website can be found at www.advanzeonshareholders.com. We make available free of charge, through a link to the SEC internet site, our annual, quarterly, and current reports, and any amendments to these reports, as well as any beneficial ownership reports of officers and directors filed electronically on Forms 3, 4, and 5. Information contained on our website or linked through our website is not part of this Annual Report on Form 10-K. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov.

Our Board of Directors has two committees, an audit committee and a compensation and stock option committee. Each of these committees has a formal charter which was filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2009. Any references to our stockholder website and the SEC’s website above are intended to be inactive textual references only, and the contents of those Web sites are not incorporated by reference herein.

In addition, you may request a copy of the foregoing charters at no cost by writing us at the following address or telephoning us at the following telephone number:

Advanzeon Solutions, Inc.

P.O. Box 271485

Tampa, FL 33688

Attention: Investor Relations 

Tel: (813) 517-8484

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ITEM 1A. RISK FACTORS

You should carefully consider and evaluate all of the information in this Annual Report on Form 10-K, including the risk factors listed below. Risks and uncertainties in addition to those we describe below, that may not be presently known to us, or that we currently believe are immaterial, may also harm our business and operations in the future. If any of these risks occur, our business, and its future financial condition, results of operations and cash flows could be harmed, the price of shares of our common stock could decline, and future events and circumstances could differ significantly from those expected that are set forth in or underlie the forward-looking statements contained in this report.

Risks related to our industry

The industry is subject to extensive state and federal regulations, as well as diverse licensure requirements varying by state. Changes in regulations could affect the profitability of our contracts or our ability to retain clients or to gain new customers.

We are required to hold licenses or certificates to perform utilization review and/or TPA services in California, Connecticut, Florida, Louisiana, Missouri, Pennsylvania, and Texas. Additional utilization review or TPA licenses may be required in the future, and we may not qualify to obtain new licenses or renew existing licenses. In many states in which we provide services, entities that assume risk under contract with licensed insurance companies or health plans have not been considered by state regulators to be conducting an insurance or HMO business. As a result, we have not sought licensure as either an insurer or HMO in any state. If the regulatory positions of these states were to change, our business could be materially affected until such time, if any, as we are able to meet the regulatory requirements, if at all. Additionally, some states may decide to contract directly with enterprises such as ours for managed behavioral healthcare services, in which case they may also require us to meet or exceed regulatory net worth requirements that we may not readily be able to meet. Currently, we cannot quantify the potential effects of additional regulation, if any, of the managed care industry.

The status and future effect of healthcare reform in the U.S. is uncertain.

The Patient Protection and Affordable Care Act and the Healthcare and Education Reconciliation Act of 2010 contain provisions that may, among other things, reduce government payments for healthcare services, and is currently subject to political controversy and significant uncertainty. We cannot predict the effect of this legislation and any future changes therein on our business.

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Healthcare organizations could be adversely affected in 2013 and 2014 by costs associated with adoption of the new federally mandated ICD-10 standardized coding set for diagnoses.

The federal government will require that healthcare organizations adopt updated and expanded standardized code sets (known as ICD-10) effective October 2014 for documenting health diagnoses. These new standardized code will require us to make additional investments that could be significant.

We can be adversely affected by changes in federal, state and local healthcare policies, programs, funding and enrollments.

At December 31, 2014, all of our business was attributable to health plans serving Medicare, Medicaid, and CHIP members. We are unable to predict the impact on our operations of future regulations or legislation affecting these programs, or the healthcare industry in general, and future regulations or legislation may have a material adverse effect on us. Moreover, any reduction in government spending for such programs may also have a material adverse effect.

We are subject to federal statutes prohibiting false claims.

The Federal False Claims Act imposes civil penalties for knowingly making or causing to be made false claims with respect to governmental programs, such as Medicare and Medicaid, for services not rendered, or for misrepresenting actual services rendered, in order to obtain higher reimbursement. Although we do not directly provide services to beneficiaries of federally funded health programs and, accordingly, do not submit claims to the federal government, we do provide services to health plans that could become subject to allegations about false claims, which could, in turn, result in allegations against us as well.

Failure to adequately comply with HIPAA may result in penalties.

Our industry is subject to the security and privacy requirements of HIPAA relative to patients’ health information. Although we believe we are fully compliant with all HIPAA regulations, any assertions of lack of compliance with HIPAA regulations could result in penalties and have a material adverse effect on our ability to retain our customers or to gain new business.

The managed care industry is often subject to class action lawsuits and claims for professional liability that could increase our future costs and expenses.

In recent years, the managed care industry has been subjected to a greater number of lawsuits and claims of professional liability alleging negligence in performing utilization review and other managed care activities and for denial of payment for services. Such incidents could result in professional negligence or other claims against us causing us to incur fees and expend substantial resources in defense of such actions in excess of the limits of our professional liability insurance.

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Risks related to our business

In addition to all of the foregoing general industry-related risks that may particularly affect our business, we are also subject to the following more particular risks:

Our auditors have expressed substantial doubt about our ability to continue as a going concern.

We have experienced a significant decrease in operating revenues beginning January 1, 2013 due to the loss of our major contract in Puerto Rico on December 31, 2012. On December 30, 2013, we sold CBC which eliminated our revenue from at-risk contracts. The loss of these contracts and our inability to generate sufficient cash flow to meet our obligations and sustain our operations raised substantial doubt about our ability to continue as a going concern. Our financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. Our future is dependent on our ability to execute our business and liquidity plans successfully. If we fail to do so for any reason, this will affect our ability to continue as a going concern in which event investors could lose their entire investment in the Company. Accordingly, in their audit report dated May 10, 2018 on our consolidated financial statements contained herein, our auditors expressed substantial doubt as to our ability to continue as a going concern. In addition, the auditors in their Report cited their inability to obtain sufficient appropriate evidential matter with regard to a cash receipts, cash disbursements and cutoff.

Dependence on our Chief Executive Officer.

We are dependent on the services of Mr. Clark A. Marcus, our Chief Executive Officer. The loss of his services would have a material adverse effect on the performance and growth of our business for some period of time. We do not have any “Key Man” insurance for Mr. Marcus.

The sale of CBC severely decreased our revenue stream.

In December 2013, we sold CBE. CBC held all of the at-risk contracts and ASO contracts and the provider network contracts which were the extent of our business operations. This action while limiting our losses severely decreased our cash flow. As a result, we will need to obtain additional sources of revenue or obtain financing from other sources. Our ability to support our cost structure could be adversely affected.

Our existing and potential managed care clients operate in a highly competitive environment and may be subject to a higher rate of merger, acquisition, and regulation than in other industries.

Our clients may decide to manage the behavioral healthcare benefits “in-house” and, as a result, discontinue contracting with us. For example, our Puerto Rico client terminated its contract with us as of December 31, 2012 and is now managing its members’ behavioral benefit internally. The loss of this contract resulted in a decrease of approximately 83% of our revenue. Additionally, our small to medium-sized health plan clients may be acquired by larger health plans, resulting in non-renewals of our contracts.

Our inability to renew, extend or replace expiring or terminated contracts in the near term could adversely affect our liquidity, profitability and financial condition.

Many of the contracts we service could be terminated immediately either for cause or without cause by the client upon notice of a specified time (typically between 60 and 120 days). The loss of one of these contracts could materially reduce our net revenue and have a material adverse effect on our liquidity, profitability and financial condition.

Many of our clients provide services to groups covered by Medicare, Medicaid and/or CHIP programs. Such federal and state controlled programs are susceptible to annual changes in reimbursement rates and eligibility requirements.

Any changes in Medicare, Medicaid, and/or CHIP reimbursement could ultimately affect us adversely through contract bidding and cost structures with the health plans affected by such change, especially if we are unable to adapt to the differing needs of our Medicare members and the Medicare regulations. Also, because governmental healthcare programs account for such a large portion of state budgets, efforts to contain overall government spending could result in a significant decrease in healthcare programs.

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Temporary reductions in governmental funding for Medicare, Medicaid and CHIP programs have previously had an adverse impact on us that could continue. In addition, states in which we operate may pass legislation that would further reduce our revenue from such sources or increase our claims expense through changes in the reimbursement rates, changes in the benefit covered, or in the number of eligible participants. We may be unable to reduce our costs to a level that would allow us to maintain current gross margins specific to our Medicare, Medicaid and CHIP programs.

We rely on the accuracy of eligibility lists provided by our clients to collect premiums and to pay claims. Any inaccuracies in those lists may cause our clients to recoup premium payments from us or for us to pay claims inappropriately.

Premium payments that we receive and claims payments that we make are based on eligibility lists that are produced and maintained by our clients. We are required to reimburse our clients for premiums received based on an eligibility list that the client may later discover contains individuals who were not eligible. Our review of all remittance files to identify potential duplicate members, members that should be terminated or members for which we have been paid an incorrect rate may not identify all such members and could result in repayment of premiums or claims that we paid incorrectly and for which we are unable to recover.

We must estimate the amount of claims incurred but not reported, and actual claims ultimately reported may differ materially.

Our costs of care include estimated amounts for claims incurred but not reported (“IBNR”). These estimates are subject to the effects of trends in utilization and other factors and at times may be inadequate.

We may be subject to regulatory fines and penalties.

From time to time, we receive notifications from various state agencies concerning our business and operations. Many of our contracts contain provisions stating that we are responsible for regulatory penalties or fines assessed to the client that are due to our noncompliance with a contractual requirement. Our inability to comply with these contractual or regulatory requirements may have a material adverse effect on our business.

A failure of our information systems could significantly impair our ability to serve our customers and manage our business.

An effective and secure information system, available at all times, is vital to our health plan customers and their members. We depend on our computer systems for significant service and management functions, such as providing membership verification, monitoring utilization, processing provider claims, and providing regulatory data and other client and managerial reports. Although our computer and communications hardware is protected by physical and software safeguards and other internal controls, it is still vulnerable to computer viruses and other technological threats, fire, storm, flood, power loss, telecommunications failures, or physical break-ins, and similar catastrophic events. We do not have 100% redundancy for all of our computer and telecommunications facilities. We also depend on a third-party provider of application services for our core business application. Any sustained disruption in their services to us would have a material negative effect on our business.

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We are subject to intense competition that may prevent us from gaining new customers or pricing our contracts at levels sufficient to achieve gross margins to ensure profitability.

We are continually pursuing new business. Many of our competitors are significantly larger and better capitalized than we are. Our smaller size and weak financial condition has been a deterrent to some prospective customers. Additionally, we will likely have difficulty in matching the financial resources expended on marketing by larger competitors. As a result, we may not be able to successfully compete in our industry in some respects, markets or instances.

We will require additional funding, and we cannot guarantee that we will find adequate sources of capital at acceptable terms in the future or that we will be able to continue as a going concern.

We cannot provide assurance that our available cash will be sufficient to fund our business. We will need to seek new financing, possibly including, which cannot be assured, additional debt or equity or financing (which could dilute current stockholders’ ownership interests), we also cannot provide assurance that such additional funding will be available on acceptable terms, if at all. Failure to achieve these goals may affect our ability to continue as a going concern.

We may be unsuccessful in obtaining required performance bonds or other security, and consequently may lose clients.

Some of our clients may require us to maintain performance bonds, restricted cash accounts, or other security with respect to our obligations to pay claims. Due to current market conditions or other factors, we may be unable to provide the security required by the client or prospect.

Claims brought against us could exceed our insurance coverage.

From time-to-time, we are subject to a variety of legal actions including provider disputes and breach of contract actions. Although we establish provisions for estimated litigation costs as we believe appropriate, we cannot provide assurance that our recorded provisions will be adequate to cover such costs. We maintain a program of insurance coverage against a broad range of risks related to our business. As part of this program of insurance, we are subject to certain deductibles and self-insured retentions. Our insurance limits or covered risks may not be sufficient to cover all judgments, settlements, or costs relating to future claims, suits or complaints. In addition, upon expiration of our insurance policies, we could find that sufficient.

We may be unable to attract and retain qualified personnel.

The success of our business is largely dependent on the skills, experience and performance of key members of our senior management team, such as our CEO, President, and Chief Financial Officer and others. We believe our ability to attract and retain highly skilled and qualified technical, managerial, and marketing personnel will determine whether we meet our goals. The market for highly skilled sales, marketing and support personnel is highly competitive as a result of the limited availability of technically qualified personnel with the requisite understanding of the markets which we serve. The inability to hire or retain qualified personnel may hinder our ability to implement our business strategy and may harm our business.

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Risks related to our common and preferred stock

Our Series C Convertible Preferred stockholders have significant rights and preferences over the holders of our common stock and may be deemed to operate as an anti-takeover device.

Our Series C Convertible Preferred stockholders are entitled to receive dividends when declared by our Board of Directors before dividends are paid on our common stock and also have a claim against our assets senior to the claim of the holders of our common stock in the event of our liquidation, dissolution or winding-up. The aggregate amount of that senior claim is currently $2,608,500. In addition, each Series C Convertible Preferred stockholder is entitled to vote together with the holders of our common stock on an “as converted” basis, and, voting together as a separate class, all holders have the right to elect five of our nine directors to our Board of Directors. The holders by their ability to control a majority of our Directors may be deemed to be an anti-takeover device.

The holders of our Series C Convertible Preferred Stock have other rights and preferences as detailed elsewhere in this report. These rights and preferences could adversely affect our ability to finance future operations, satisfy capital needs or engage in other business activities that may be in our interest.

Our Series D Convertible Preferred stockholders have significant rights and preferences over the holders of our common stock and may be deemed to operate as an anti-takeover device.

We also have a class of convertible preferred stock, Series D, for which 7,000 shares are authorized and 250 shares have been issued. Subject to certain conditions, the shares do not vest until the tenth anniversary of the grant date of January 4, 2012, at which time the each share will be convertible into 100,000 shares of common stock. Prior to vesting and thereafter, each Series D convertible preferred share is entitled to all voting, dividend, liquidation and other rights accorded a share of Series D convertible preferred stock. If a dividend is declared on the common stock, each share of Series D stock is entitled to receive a dividend equal to 50% of the dividend declared for the common stock as if the Series D stock had been converted. Despite their nonvested status, voting rights of each share nevertheless consist of the right to cast the number of votes equal to those of 500,000 shares of common stock. Unless otherwise required by applicable law, holders of shares of Series D have the right to vote together with holders of common stock as a single class on all matters submitted to a vote of our stockholders. The holders by virtue of their superior voting rights may be deemed to operate as an anti-takeover device.

We may raise additional funds in the future through issuances of securities and such additional funding may be dilutive to stockholders or impose operational restrictions.

To fund acquisitions, sales expansions and our operations, we may raise additional capital in the future through sales of shares of our common stock or securities convertible into shares of our common stock. Such additional financing may be dilutive to our stockholders, and debt financing, if available, may involve significant interest costs and/or restrictive covenants which may limit our operating flexibility.

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We are not subject to certain provisions of the Sarbanes-Oxley Act of 2002 and other requirements of the federal securities laws and regulations, and accordingly neither the Company nor its investors may receive the benefits and protections they were enacted to provide.

Since we are a smaller reporting entity, and since our common stock is not listed for trading on a national securities exchange, we are not subject to certain of the more robust requirements of the federal securities laws and regulations and the large stock exchanges, including, but not limited to many disclosure requirements of Regulation S-X, certain corporate governance rules and other provisions of the Sarbanes-Oxley Act of 2002, including Section 404(b), which, if applicable, would require our independent auditors to report on the Company’s internal control over financial reporting. The corporate governance rules that do not apply to us relate to independent director standards, director nomination procedures, audit and compensation committees standards, the use of an audit committee financial expert and the adoption of a code of ethics, some of which we nevertheless comply with voluntarily in some significant respects.

Applicable SEC rules governing the trading of “penny stocks” may limit the trading and liquidity of our common stock which, along with our small public capitalization may affect the trading price of our common stock and may subject us to securities litigation.

Our common stock is a “penny stock” as defined under Rule 3a51-1 of the Exchange Act and is accordingly subject to SEC rules and regulations that impose limitations upon the manner in which our common stock may be publicly traded. These regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the associated risks. Under these regulations, certain brokers who recommend such securities to persons other than established customers or certain accredited investors must make a special written suitability determination regarding such a purchaser and receive such purchaser’s written agreement to a transaction prior to sale. These regulations may have the effect of limiting the trading activity of our common stock and reducing the liquidity of an investment in our common stock. In addition, the size of our public market capitalization is relatively small, resulting in highly limited trading volume in, and high volatility in the price of, our common stock.

We expect that our per share price will continue to be volatile for the indefinite future. In the past, securities class action litigation has often been initiated against a company by investors following periods of volatility in the market price of its securities. Accordingly we could be the target of similar litigation in the future. Securities litigation, if it were to occur, even if we were to successfully defend it, would likely result in substantial costs and divert management’s attention and other Company resources.

ITEM 2. PROPERTIES

We do not own any real property. During 2013 and the first part of 2014, we leased our Tampa corporate office and paid $218,250 in 2013 and $52,326 in 2014 in rent. In May 2014, we moved our offices to a smaller location in Tampa, Florida. The term of the lease is for 5 years beginning in May of 2014 and ending on June 30, 2019. We lease approximately 3,133 square feet. We currently pay approximately $7,697 per month. We consider the condition of our leased property to be average and adequate for our current needs. In our Tampa office we maintain clinical operations, business development, accounting, financial and regulatory reporting and other management information systems, and provider and member service functions. 

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ITEM 3. LEGAL PROCEEDINGS

In the ordinary conduct of our business, we are subject to periodic lawsuits and claims. Although we cannot predict with certainty the ultimate resolution of lawsuits and claims asserted against us, we do not believe that any currently pending legal proceedings to which we are a party could have a material adverse effect on our business, or our future results of operations, cash flows or financial condition except as described below as of April 23, 2018:

We initiated an action against Jerry Katzman, a former director, in July 2009 alleging that Mr. Katzman fraudulently induced us to enter into an employment agreement and, alternatively, that Mr. Katzman breached that alleged employment agreement and was rightfully terminated. In September 2010, the matter proceeded to a trial by jury. The jury found that Mr. Katzman did not fraudulently induce Advanzeon to enter into the contract but also found that Mr. Katzman was not entitled to damages. On defendant’s motion to amend the verdict due to inconsistency, the trial court set aside the jury verdict and awarded Mr. Katzman damages of approximately $1.3 million. The Company appealed the lower court’s decision and posted a collateralized appeal bond for approximately $1.3 million. On February 14, 2013, the 11^th Circuit Court of Appeals of the State of Florida reversed the lower court’s judgment in favor of Katzman and remanded the case for a new trial on both liability and damages. The appellate court also taxed appellate costs in favor of Advanzeon against Katzman. The decision of the appellate court also reverses the lower court’s award of attorney’s fees previously awarded to Katzman against Advanzeon. To avoid litigating the case a second time, we began making payments in accordance with a Term Sheet. Katzman objected to the amounts we were paying monthly and filed suit in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida, Case No. 12-CA-2570, to find us in breach of the Term Sheet. On March 8, 2017 the Court determined that we had breached the Term Sheet and entered a Final Judgment in the amount of $866,052 bearing interest at the statutory rate. Management is in the process of securing a bond against the judgment. The case is currently on appeal in the Second District Court of Appeal, Florida, Case No. 2D17-1433. However the case remains active for execution (collection) on the judgment. Since filing the appeal the execution portion of the proceedings has been removed from the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida and is now before the United States District Court, Middle District, Tampa Division, Case. No. 8:17-CV-2107-T-23AEP.

In a related matter to the Katzman litigation, on January 10, 2017, the Company brought an action against Melanie Damian et al. Case number 17-CA-00252, Thirteenth Judicial Circuit Court, Hillsborough County, FL. The Company alleges wrongful collection practices including wrongful garnishment of bank accounts.

The Company has filed a claim for money it maintains is owed by Universal Health Care Insurance Company. In re: The Receivership of Universal Health Care Insurance Company. Case number 2013-CA-00358 and Case number 2013-CA-00375 in the Second Judicial Circuit Court, Leon County, FL. The objection to the claim by the receivership was heard April 4, 2018.

In Michael Ross et.al v. Advanzeon Solutions, Inc., Plaintiff is suing the Company for money it claims is owed pursuant to a promissory note. The Company is filing a motion for summary judgment. Case Number 16-CA-005737, Thirteenth Judicial Circuit Court Hillsborough County, FL. Filed April 7, 2015.

In Advanzeon Solutions, Inc. v. Mayer Hoffman et. al.., Case Number 16-CA-005737 Thirteenth Judicial Circuit Court Hillsborough County, FL., the Company has sued Defendants for damages for breach of audit services contract. The Judge ruled in favor of Defendants motion for summary judgment, but no judgment has been entered. The Company will file for a rehearing of the summary judgment and or an appeal. Filed June 17, 2016.

In a matter entitled Pharmacy Value Management Solutions, Inc. vs Young & Son Tax and Accounting, LLC, Charles Young Sr., Charles Young Jr. and Jay Jacques, the Company brought this action for damages for among other things breach of accounting service contract, mandatory injunction, return of documents and conversion of accounting funds held in the accountants’ trust account. The case is in the initial stage. Case Number 18-CA-000960 Thirteenth Judicial Circuit, Hillsborough County, FL. Filed March 31, 2018.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES 

(a) Market Information - Our common stock is traded on the OTCBB under the symbol CHCR. The following table sets forth the range of high and low bid quotations for the common stock, as reported by the OTCBB, for the fiscal quarters indicated. The market quotations reflect inter-dealer prices without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.   The below quotations, as determined through a query of Yahoo Finance, reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:

	High		Low
Year ended December 31, 2014
4th quarter, ended December 31, 2014	$	0.12	$	0.05
3rd quarter, ended September 30, 2014	$	0.12	$	0.02
2nd quarter, ended June 30, 2014	$	0.06	$	0.02
1st quarter, ended March 31, 2014	$	0.08	$	0.02
Year ended December 31, 2013
4th quarter, ended December 31, 2013	$	0.13	$	0.03
3rd quarter, ended September 30, 2013	$	0.19	$	0.09
2nd quarter, ended June 30, 2013	$	0.19	$	0.07
1st quarter, ended March 31, 2014	$	0.02	$	0.05

(b) Holders - As of May 4, 2018, we had 520 holders of record of our common stock.

(c) Dividends - We did not pay any cash dividends on our common stock during the years ended December 31, 2014 or 2013 and do not contemplate the initiation of payment of any cash dividends in the foreseeable future. In the event that we do pay dividends, the holders of record of our Series C Convertible Preferred Stock and Series D Convertible Preferred Stock are entitled to receive such dividends in preference to the holders of our common stock, when and if declared by our Board of Directors. If declared, holders of our Series C Convertible Preferred Stock will receive dividends in an amount equal to the amount that would have been payable had the Series C Convertible Preferred Stock been converted into shares of our common stock immediately prior to the declaration of such dividend. Holders of our Series D Convertible Preferred Stock will receive dividends in an amount equal to 50% of the amount that would have been payable had the Series D Convertible Preferred Stock been converted into shares of our common stock. No dividends shall be authorized, declared, paid or set apart for payment on any class or series of our stock ranking, as to dividends, on a parity with or junior to the Series C Convertible Preferred Stock for any period unless full cumulative dividends have been, or contemporaneously are, authorized, declared, paid or set apart in trust for such payment on the Series C Convertible Preferred Stock. In addition, as long as a majority of the 10,434 shares of our Series C Convertible Preferred Stock are outstanding, we cannot declare or pay any dividend or other distribution with respect to any equity securities without the affirmative vote of holders of at least 50% of the outstanding shares of Series C Convertible Preferred Stock.

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(d) Securities Authorized for Issuance under Equity Compensation Plans - The equity compensation plan information contained in Item 12 of Part III of this Annual Report on Form 10-K is incorporated herein by reference.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three month period ended March 30, 2013, the Company issued 325,000 shares to various individuals for consulting services performed during the period. The shares issued were valued at $0.24 per share or an aggregate price of $77,005. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

During the three month period ended June 30, 2013, the Company issued 1,420,588 shares to various individuals for consulting services performed during the period. The shares issued were valued at $0.07 - $0.12 per share or an aggregate price of $171,946. The Company also issued 1,119,078 shares as payments for accrued interest. The shares issued were valued at $0.10-$0.24 per share or an aggregate price of $132,219. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

During the three month period ended September 30, 2013, the Company issued 721,400 shares to various individuals for consulting services performed during the period. The shares issued were valued at $0.10 per share or an aggregate price of $72,140. The Company also issued 25,783 shares as payments for accrued interest. The shares issued were valued at $0.10 per share or an aggregate price of $2,578. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

Based on certain representations and warranties of the purchasers in their respective subscription agreements, we relied on Section 3(a)(9) and Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), for an exemption from the registration requirements of the Securities Act for the sales and issuances described above. These shares, and the shares underlying the warrants, have not been registered under the Securities Act and may not be sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. No underwriting discounts or commissions were given or paid in connection with the sales described above. We intend to use the net proceeds from the sales and issuances described above for product and sales expansion and for working capital purposes.

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ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report includes forward-looking statements, the realization of which may be affected by certain important factors discussed previously above under Item 1A, “Risk Factors.”

OVERVIEW

Advanzeon manages the delivery of a continuum of behavioral healthcare, substance abuse, and drug management services for commercial, Medicare, Medicaid, and CHIP members on behalf of health plans. It also provides these services to employees of self-insured companies and members of unions. Our managed care operations included at-risk contracts, administrative service agreements, and fee-for-service agreements. The customer base for our services was primarily health plans that contract with governmental entities. Our clinical services were provided by unrelated contracted providers on a fee for service or subcontracted basis. In December 2013, we sold our wholly owned subsidiary, Comprehensive Behavioral Care, Inc., (“CBC”) which handled all of our at-risk contracts, ASO contracts and held the provider network contracts. In January 2014, we entered in an agreement with CBC whereby we oversaw administrative services for CBC’s contract services. We conducted no other revenue generating operations in 2014. In 2014, we continued our plan to market our Pharmacy Savings Management Program. In October 2013, we established a wholly-owned subsidiary, Pharmacy Value Management System (“PVMS”). The purpose of PVMS was to act as a strategic partner to Pharmacy Benefit Mangers (“PBM”) PVMS would contract with health plans, self-insured entities, unions and Taft-Hartley health and welfare funds whereby we would offer to manage on an at-risk basis prescription drug programs. We would secure a bond to cover our guaranteed savings. PVMS would enter into agreements with smaller PBM’s whereby they would agree to the discounts we would provide. After working on the program for most of 2014, we determined that we did not have the financial resources to successfully implement the program. In the fourth of quarter of 2014, we began working on a business model for the virtual treatment of Obstructive Sleep Apnea or OSA.

SOURCES OF REVENUE

A quantitative summary of our revenues by source category for 2014 and 2013 follows:

	2014		2013
At-risk contracts	$	—	$	766,116
Administrative services only contracts		535,863		2,415,673
Total	$	535,863	$	3,181,789

Fiscal years ended December 31, 2013 and 2014.

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Results of Operations

Revenues for the fiscal year ended December 31, 2014, were $535,863 compared to revenues of $3,181,789 for the comparable period ending December 31, 2013. At-risk contract revenue totaled $766,116 in 2013. In December 2013, we sold CBC which held all of our at-risk and ASO contracts. For the fiscal year ended December 31, 2014, all of our revenues were derived from the fee we received from CBC for servicing, on an ASO basis, their contracts which totaled $535,863. For the comparable period ending December 31, 2013, revenue from the ASO contracts totaled $460,619. The decrease in revenue is attributable to the sale of CBC in December 2013.

Selling, general and administrative expense decreased from $5,229,607 in fiscal year 2013, to $$1,399,814 in the fiscal year ending December 31, 2014. This decrease was largely due to the sale of CBC. Approximately $2.4 million of the decrease was due to the sale of CBC. Another $1.2 million in expense reduction was due to the closing of our Puerto Rico operations.

Other Income (Expense) components changed as follows:

Interest expense decreased $512,390 from $1,881,193 to $1,369,803 due primarily to reduced average balances outstanding and reduced amortization of debt discount.

Gain on sale of subsidiary was $9,270,336 and did not exist in 2014. On December 30, 2013, The Company sold its wholly-owned subsidiary, Comprehensive Behavioral Care, Inc. (“CBC”). The sales price was $100.00 and the buyer received all of the issued and outstanding equity of CBC. As part of the transaction, the Company was entitled to receive any sums owing or payable to the Company or its subsidiaries for work or event occurring prior to the date of the sale. On January 1, 2014, the Company and CBC entered into an arrangement whereby the Company agreed to provide administrative services only for contracts held by CBC. These services consisted of the performance of clinical management, utilization management, claims administration, intensive case management, discharge planning and referral. In return CBC agreed to pay a monthly fee based on the number of employees/members covered on a client by client basis. The initial term is three years with provisions for subsequent one year renewals that has occurred every year since since commencement. Also on January 1, 2014, the Company and CBC entered into an agreement whereby the Company could lease the access to the Network Providers. The initial term was two years with provisions for subsequent one year term renewals. The Company agreed to pay a fixed rate per member, per month. See Note 11 Sale of Comprehensive Behavioral Care, Inc. for more detail.

Legal settlement was $1,185,000 in 2014 and did not exist in 2013. The Company’s subsidiary, CompCare de Puerto Rico (“Puerto Rico”) entered into an agreement with MAPRE Life Insurance Company of Puerto Rico (“MAPFRE”) whereby the Company made available to MAPFRE’s Medicare Advantage beneficiaries its network of providers for behavioral, and mental health amongst other services effective December 1, 2008. From that time until August 13, 2012, the Company claimed that overpayments for medical costs were made and requested reimbursement. An arbitration case was filed, and the parties settled on June 12, 2014 for a settlement of $1,150,000, which was received by the Company. This settlement is recorded as part of Other Income on the face of the financial statements.

Liquidity and Capital Resources

During the fiscal year ended December 31, 2013, we funded our operations from revenues and a line of credit. For the fiscal year ended December 31, 2014, we funded our operations from revenues and private borrowings. We will continue to fund our operations from these sources until we are able to produce operating revenue sufficient to cover our cost structure. In the event we are not able to secure such funding, our operations will be adversely affected.

Short Term: We funded our operations with revenues from sales and private borrowings. We could not access commercial lines of credit during 2014.

Our customer base primarily includes regional health plans that do not have their own behavioral network. We provide services primarily through a network of contracted providers that includes:

● psychiatrists;

● psychologists;

● therapists;

● other licensed healthcare professionals;

● psychiatric hospitals;

● general medical facilities with psychiatric beds;

● residential treatment centers; and

● other treatment facilities.

The services provided through our provider network include outpatient programs (such as counseling or therapy), intermediate care programs (such as intensive outpatient programs and partial hospitalization services), inpatient programs and crisis intervention services. We do not directly provide treatment or own any treatment facility.

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We typically enter into contracts on an annual basis to provide managed behavioral healthcare and substance abuse services to our customers’ members. Our arrangements with our clients fall into two broad categories:

● At-risk arrangements under which our clients pay us a fixed fee per member in exchange for our assumption of the financial risk of providing services; and

● ASO arrangements where we manage behavioral healthcare programs or perform various managed care services, such as clinical care management, provider network development, and claims processing without assuming financial risk for member behavioral healthcare costs.

Under at-risk arrangements, the number of covered members as reported to us by our clients determines the amount of premiums we receive, which is independent of the cost of services rendered to members. The amount of premiums we receive for each member is fixed by our contract at the beginning of our contract term. Under certain circumstances these premiums may be subsequently adjusted up or down, or the contract terminated, generally at the commencement of each renewal period.

Our largest expense is the cost of behavioral health services that we provide, which is based primarily on our arrangements with healthcare providers. Since we are subject to increases in healthcare operating expenses based on an increase in the number and frequency of our members seeking behavioral care services, our profitability depends on our ability to predict and effectively manage healthcare operating expenses in relation to the fixed premiums we receive under at-risk arrangements. Providing services on an at-risk basis exposes us to the risk that our contracts may ultimately be unprofitable if we are unable to control or otherwise anticipate healthcare costs. Accrued claims payable and claims expense are our most critical accounting estimates. See “Critical Accounting Policies and Estimates” below.

During 2013, we managed programs through which services were provided to recipients in 8 states. Our objective is to provide easily accessible, high quality behavioral healthcare services and to manage costs through measures such as the monitoring of hospital inpatient admissions and the review of authorizations for various types of outpatient therapy. Our goal is to combine access to quality behavioral healthcare services with effective management controls in order to ensure the most cost-effective use of healthcare resources.

Our programs and services include:

● management of prescription drugs on an at-risk basis for health plans, self-insured companies, and unions;

● fully integrated behavioral healthcare and pharmacy management services;

● analytic services for medical and pharmacy claims for medical integration of behavioral and medical care coordination;

● case management/utilization review services;

● administrative services management;

● preferred provider network development;

● management and physician advisor reviews; and

● overall care management services.

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Debt Modification

Throughout 2013 and 2014, we negotiated agreements with several creditors to modify the due dates of previously matured and unpaid promissory notes. Under the modified terms, the maturity dates for various notes were extended as follows and are now in default.

Note Amount		Original Maturity Date	New Maturity Date
$	100,000	3/16/2013	3/16/2014
$	1,400,000	9/16/2013	None established
$	625,000	9/16/2013	None established
$	37,000	5/15/2013	4/15/2014
$	265,657	5/15/2013	4/15/2014
$	10,375	5/15/2013	4/15/2014
$	25,606	5/15/2013	4/15/2014
$	58,124	5/15/2013	4/15/2014
$	92,948	5/15/2013	4/15/2014
$	800,940	5/15/2013	4/15/2014
$	68,475	4/15/2013	4/15/2014
$	5,188	4/15/2013	4/15/2014
$	72,625	1/28/2014	1/15/2015
$	11,309	4/15/2014	10/15/2015
$	51,875	1/30/2014	2/15/2015

In June 2014, we settled an arbitration matter for $1,150,000. Of the proceeds we paid fees of $150,000 and used the remaining $1,000,000 for the repayment of a portion of our outstanding debt. See Note 12 Legal Settlement of the notes to the consolidated financial statements.

ACCOUNTING POLICIES AND ESTIMATES

Preparation of our consolidated financial statements requires us to make significant estimates and judgments to develop the amounts reflected and disclosed in the consolidated financial statements. On an on-going basis, we evaluate the appropriateness of our estimates and we maintain a thorough process to review the application of our accounting policies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

We believe our accounting policies specific to our revenue recognition, accrued claims payable, premium deficiencies and claims expense, goodwill, and income taxes are critical to the preparation of our consolidated financial statements.

Revenue recognition. In 2013, the majority of our managed care activities were performed under at-risk arrangements pursuant to terms of agreements primarily with health plans to provide contracted behavioral healthcare and pharmacy management services to subscribing members. In December 2013, we sold CBC which held our at-risk agreements. For the year ended December 31, 2013 such agreements accounted for approximately 24% or $766,116 of our revenue. Revenue under these agreements is earned continuously over time regardless of services actually provided and, therefore, is recognized monthly based on the number of qualified members. The information regarding qualified members is supplied by our clients, and we review member eligibility records and other reported information to verify its accuracy and determine the amount of revenue to be recognized. The remaining balance of our revenues is earned and recognized as services are delivered on a non-risk basis. In 2014, all of our revenue was earned and recognized as services delivered on a non-risk basis.

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Accrued claims payable. Claims expense, a major component of cost of revenue, is recognized in the period in which an eligible plan member actually receives services and includes a provision for claims incurred but not reported (“IBNR”). We contracted with various healthcare providers including hospitals, physician groups and other licensed behavioral healthcare professionals either on a discounted fee-for-service or a per-case basis. We determine that a member has received services when we receive a claim within the contracted timeframe with all required billing elements correctly completed by the service provider. We then determine whether the member is eligible to receive the service, the service provided is medically necessary and is covered by the benefit plan’s certificate of coverage, and the service is authorized by one of our employees, if required. If all of these requirements are met, the claim is entered into our claims system for payment.

The accrued claims payable liability represents the estimated ultimate net amounts owed for all behavioral healthcare services provided through the respective balance sheet dates, including estimated amounts for claims IBNR. We have used the same methodology and assumptions for estimating the IBNR portion of the accrued claims liability for the last three years ending in December 2013.

Our unpaid claims liability is estimated using an actuarial paid completion factor methodology and other statistical analyses. These estimates are subject to the effects of trends in utilization and other factors. Any significant increase in member utilization that falls outside of our estimates would increase claims expense and could adversely affect our ability to achieve and sustain improvements in profitability and positive cash flow. Although considerable variability is inherent in such estimates, we believe that our unpaid claims liability is adequate.

Whenever we believe it is probable that a future loss will be incurred under our managed care contracts based on a perceived contractual premium deficiency, and we expect to be unable to cancel our obligation or renegotiate, and the amount of the loss can be reasonably estimated, we also provide for such expected losses. We perform this loss accrual analysis on a contract-by-contract basis by taking into consideration various factors such as future contractual revenue, estimated future healthcare and maintenance costs, and each contract’s specific terms related to future revenue increases as compared to expected increases in healthcare costs. The estimated future healthcare and maintenance costs are based on historical trends and expected future cost increases.

Accrued claims payable consists primarily of amounts established for reported claims and IBNR claims, which are unpaid through the respective balance sheet dates. Our policy is to record management’s best estimate of IBNR. The IBNR liability is estimated monthly using an actuarial paid completion factor methodology and is continually reviewed and adjusted, if necessary, to reflect any change in the estimated liability as more information becomes available. In deriving an initial range of estimates, we use an industry accepted actuarial model that incorporates past claims payment experience, enrollment data and key assumptions such as trends in healthcare costs and seasonality. Authorization data, utilization statistics, calculated completion percentages and qualitative factors are then combined with the initial range to form the basis of management’s best estimate of the accrued claims payable balance. However, estimating IBNR claims involved a significant amount of judgment by our management.

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Income taxes. Computing our provision for income taxes involves significant judgment and estimates particularly in relation to the determination of a valuation allowance for deferred tax assets (primarily from net operating loss carryforwards). See Note 14 to the consolidated financial statements. As further discussed in Item9A Controls and Procedures, during the fourth quarter of 2013, there was a departure of the entire fiscal management department including the Chief Financial Officer. As a result, management did not have access to any of the financial records of the Company. Consequently, the Company has not filed any federal, state, or local income returns since 2012. The financial statements do not reflect any fines or penalties that may result from not filing the various income tax returns.

Stock-based compensation. We issue various stock-based compensation awards to our employees and members of our Board of Directors. We account for the awards in accordance with ASC 718 “Compensation – Stock Compensation” and measure compensation cost for stock options at fair value on the grant date and recognize compensation cost on a straight-line basis over the service period for those options expected to vest. We use the Black-Scholes option pricing model, which requires us to use certain variable assumptions for input, to calculate the fair value of a stock award on the grant date. These assumptions, which are set forth in Note 2 to our consolidated financial statements variables include the expected volatility of our stock price, award exercise behaviors, the risk free interest rate, and expected dividends. We use significant judgment in estimating expected volatility of the stock, exercise behavior and forfeiture rates developing our assumptions as follows:

Expected Volatility

We estimate the volatility of the share price by using historical data of our traded stock in combination with our expectation of the extent of fluctuation in future stock prices. We believe our historical volatility is more representative of future stock price volatility and as such it has been given greater weight in estimating future volatility.

Expected Term

A variety of factors are considered in determining the expected term of options granted. Options granted are grouped by their homogeneity based on the optionees’ position, whether managerial or clerical, and length of service and turnover rate. Where possible, we analyze exercise and post-vesting termination behavior. For any group without sufficient information, we estimate the expected term of the options granted by averaging the vesting term and the contractual term of the options.

Expected Forfeiture Rate

We generally separate our option awards into two groups: employee and non-employee awards. The historical data of each group are analyzed independently to estimate the forfeiture rate of options at the time of grant. These estimates are revised in subsequent periods if actual forfeitures differ from estimated forfeitures.

Risk-free interest rate

We estimate the risk-free interest rate by reference to the interest rate for a U.S. Treasury constant maturity security with the same estimated term as the stock based award being issued.

Expected dividends

No dividends are expected to be paid for the expected life of the instruments; therefore, we assume a dividend rate of zero.

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RECENT ACCOUNTING PRONOUNCEMENTS

No recent accounting pronouncements have been issued that are not yet effective and have not been early adopted that we believe will have a significant effect on our consolidated financial in future periods.

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have no material exposure to changing interest rates as the interest rates on our short term and long-term debt are fixed. Additionally, we do not use derivative financial instruments for investment or trading purposes and our investments are generally limited to cash deposits.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS

Our audited financial statements may be found beginning on Page 55, appearing elsewhere in this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

On July 15, 2016, the Company was informed that its Independent registered public accounting firm Mayer Hoffman McCann P.C. (“MHM”) had resigned. On November 7, 2016, the Audit Committee of the Board of Directors of the Company unanimously recommended and authorized the engagement of Isdaner & Company, LLC (“Isdaner”) to serve as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for the 2013, 2014 and 2015 fiscal years and to perform a review of the Company’s condensed consolidated interim financial statements for the first, second and third quarters of fiscal 2016, and to perform an audit of the Company’s consolidated financial statements for the fiscal year ended December 31, 2016. The Board of Directors unanimously accepted and approved the action of the Audit Committee. The appointment was effective November 7, 2016.

Except as cited below , no audit report of MHM on the Company’s consolidated financial statements for either of the two fiscal years ending December 31, 2012, and 2011,( which are the last fiscal years to be audited), contained an adverse opinion or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles. Such reports were modified to raise substantial doubt about the Company’s ability to continue as a going concern.

During the last two years for which an audit report was issued, 2012 and 2011, on the Company’s consolidated financial statements preceding MHM’s resignation, there was no disagreement (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with MHM on any matter of accounting principles, financial statement or auditing scope or procedures which, if not resolved to the satisfaction of MHM, would have caused MHM to make reference to the matter in their report(s).

On December 19, 2016, the Company and Isdaner & Company, LLP (“Isdaner”) mutually agreed to terminate their relationship and the Company accepted their resignation. On the same date, the Audit Committee of the Board of Directors of the Company unanimously recommended and authorized the engagement of Louis Plung & Company, LLP (“Louis Plung”) to serve as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for the 2013, 2014 and 2015 fiscal years. The appointment was effective December 19, 2016. Isdaner issued no audit report on the Company’s consolidated financial statements having only been appointed on November 7, 2016.

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Prior to the engagement of Isdaner or Louis Plung neither the Company nor anyone on its behalf consulted Isdaner or Louis Plung regarding, (i) the application of accounting principles to a specific transaction, either completed or proposed or the type of audit opinion that might be rendered on the Company’s consolidated financial statements and no written report or oral advice was provided by Isdaner or Louis Plung to the Company that Isdaner or Louis Plung concluded was an important factor considered by the Company in reaching a decision as to accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a disagreement (as described in Item 304(a)1)(iv) of Regulation S-K and related instructions) or a reportable event (as described in Item 304(a)(1)(iv) of Regulation S-K). 

ITEM 9A. CONTROLS AND PROCEDURES

During the fourth quarter of 2013, there was a departure of the entire fiscal management department including the Chief Financial Officer. As a result, management did not have access to any of the financial records of the Company and was unable to perform an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Management was unable to conclude that, as of the evaluation date, such disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

In connection with our assessment of internal control over financial reporting, we identified a material weakness in our internal control over financial reporting relating to our accounting of December 31, 2014 and 2013.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material misstatements of the annual or interim financial statements will not be prevented or detected. Beginning in June 2016, significant internal control, informational systems, and process improvements have been implemented in our accounting system. However, we determined that control deficiencies existed related to

● Cash receipt process

● Cash disbursements process

● Financial closing process

● Related party transactions

● Management information systems

● Management use of estimates

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The control deficiencies did not result in a material misstatement to our consolidated financial statements in any period presented.

The material weakness in our internal control over financial reporting did adversely affect our ability to provide timely and accurate financial information.

In December 2012, we hired a financial consultant who, working with two staff members, oversaw our accounts payable and accounts receivables. This consultant then became our acting CFO during 2014 and through 2015. During this period, management did not have access to the Company’s general ledger software program.

In July, 2016, the Company retained an outside accounting firm and was eventually able to access its general ledger. The Company is in the process of completing the development of a system of internal controls covering the areas listed above.

Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal control over financial reporting includes those policies and procedures that:

● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets;

● provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and

● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Furthermore, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time. Our system contains self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified.

Our management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our system of internal control over financial reporting was ineffective as of December 31, 2014 and 2013. As noted in their report, our independent auditors were unable to obtain sufficient appropriate evidential matter related to cash receipts, cash disbursements and cutoff.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table lists our executive officers and directors serving as of December 31, 2013 and December 31, 2014. Each director is serving a term that will expire at our next shareholder meeting. There are no family relationships among any of our directors or executive officers.

NAME		AGE		POSITION
Clark A. Marcus	75		Chairman of the Board, Chief Executive Officer and Director
Mark T. Heidt	64		President, Director
James L. Koenig	59		Chief Financial Officer; Chief Accounting Officer
Arnold B. Finestone, Ph.D.	87		Director, Audit Committee Chairman and Compensation and Stock Option Committee Member
Sharon Kay Ray	58		Director and Compensation and Stock Option Committee Member
Arthur K. Yeap	61		Director, Audit Committee Member, and Compensation and Stock Option Committee Chairman
Jairo Estrada	59		Director
Stephen M. Kreitzer	72		Director

CLARK A. MARCUS

Clark A. Marcus was appointed as our Co-Chief Executive Officer, a director and Chairman of the Board on May 11, 2009. In September, 2010, he assumed the position of sole Chief Executive Officer. Mr. Marcus was formerly Chairman and Chief Executive Officer of Core from September 2008 to January 2009. Prior to that, he was a founder, Chairman and Chief Executive Officer at The Amacore Group, Inc., a public company and marketer of healthcare related memberships, from September 1993 to August 2008. Mr. Marcus has been a practicing attorney since 1968 and was a senior partner in the New York law firms of Victor & Marcus and Marcus & Marcus. He currently serves on the U.S. Chamber of Commerce Corporate Leadership Advisory Council. Mr. Marcus contributes to the Board of Directors through his unique expertise in the healthcare industry, legal expertise, decades of experience in building and operating companies as well as proven leadership skills in guiding public companies.

ARNOLD B FINESTONE, Ph.D.

Arnold B. Finestone was appointed to our Board of Directors on January 21, 2009. He is a business management consultant and formerly served on the Board of Directors of The Amacore Group, Inc., a public company and marketer of healthcare related memberships. He has served on the Boards of public companies and start-up business ventures since 1985. From 1982 to 1985, he was President of Dartco, Inc., a subsidiary of Dart & Kraft Inc., which was engaged in marketing and manufacturing of high-performance engineering plastics for consumer, industrial, and military uses. From 1970 to 1982, he served as Executive Vice President of the Chemical–Plastics Group of Dart Industries and Dart & Kraft, Inc. From 1957 to 1970, he was Vice President and Director of Planning, Development and Marketing for Foster Grant, Inc. Dr. Finestone’s qualifications to sit on our Board of Directors include his financial expertise, which qualify him as our “Audit Committee Chairman and “financial expert,” and his extensive governance and executive experience, including executive level roles in complex organizations. In April 2018, Mr. Finestone was appointed as our Chief Financial Officer.

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SHARON KAY RAY

Sharon Kay Ray was appointed to our Board of Directors on January 21, 2009. Since March 1989 she has served as a regional marketing representative for Novo Nordisk, a multi-national pharmaceutical company, and as a special marketing consultant for a number of public and non-public corporations. Within the last five years Ms. Ray served on the Board of Directors of The Amacore Group, Inc. a public company and marketer of healthcare related memberships. Ms. Ray brings to the Board of Directors a unique marketing perspective that provides strategic insight into the promotion of our healthcare related consumer products.

ARTHUR K. YEAP

Arthur K. Yeap joined our Board of Directors on January 21, 2009. Since 1983, Mr. Yeap has served as Chief Executive Officer of Novo Group, consultants and manufacturers in the USA and Asia of audio, green lighting and LED Display products for professional use. He also has been a principal investigator on the staff of the University of California at Berkeley, engaged in research in perception and hearing for advanced military and consumer uses of the Internet. From 1996 to 1999, he was Director of Marketing, Consumer Products, for ITV Corporation. From 1995 to 1996 Mr. Yeap was Chief Engineer for WYSIWYG Networks. Mr. Yeap was a member of the Board of Directors of the Golden Gate Regional Center, which provides services and state funding for the mentally handicapped from 1992-1996 and served as its Chairperson from 1996-1997. He served on the Board of Trustees of Grace Cathedral in San Francisco, and is currently on the Board of Clausen House in Oakland, a nonprofit agency serving individuals with special needs. Mr. Yeap provides valuable managerial knowledge to the Board of Directors as well as experience in strategic product development and operations, with a focus on information technology and systems.

JAIRO ESTRADA

Jairo Estrada joined our Board of Directors in March 2013. Mr. Estrada is the chairman of N.S.C. of Puerto Rico, a manufacturing company serving the pharmaceutical industry. He is the former chairman of the Board of directors of Telafonas Publicas of Puerto Rico. He is also the former chairman of Choice-Tele Co. Mr. Estrada is a founder and shareholder in World Extend, an on demand enterprise application deployment system that provides high level security on client access using an external browser without the need for VPN’s. Mr. Estrada resigned in November 2014.

STEPHEN M. KREITZER, M.D.

Dr. Kreitzer, who is a graduate of the Albert Einstein College of Medicine of the Yeshiva University, completed his fellowship training at the Harvard Medical School. He is Board Certified in Internal Medicine, Pulmonary Medicine and Sleep Medicine and has been in practice for over 30 years in Tampa, Florida. Dr. Kreitzer currently serves as the Medical Director of the Sleep Laboratory at Memorial Hospital of Tampa, as well as the Chief of Pulmonary Medicine. He has previously been Chief of Pulmonary Medicine at St. Joseph’s Hospital in Tampa. He chairs the Medical Ethics Committee at Memorial Hospital and previously served on the Board of Censors of the Hillsborough County Medical Association. He also served as a Major in the United States Air Force and has conducted over 100 clinical FDA approved trials besides authoring numerous articles in his field. Dr. Kreitzer has been voted “Top Doctor” by his peers in both sleep medicine and pulmonary medicine in the Tampa-St. Petersburg-Clearwater Florida area for 2016 and 2017.

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MARK T. HEIDT

Mr. Heidt joined our Board of Directors in September 2014. Prior to his appointment; he served as a consultant to the Company since January 2014. Prior to that time he was the owner and manager of BEC Worldwide, LLC, a national advertising, marketing and management company. Mr. Heidt contributes to the Board with over thirty years of experience in mass marketing, media placement and advertising placement with a specialty in infomercial design.

Section 16(a) Beneficial Ownership Reporting Compliance

Under Section 16(a) of the Securities Exchange Act of 1934, as amended, an officer, director or greater than 10% stockholder of our outstanding common stock must file with the SEC initial reports of ownership and reports of changes in ownership of our equity securities. Such persons are required by SEC regulations to furnish us with copies of all such reports they file. Based solely upon a review of Section 16(a) reports furnished to us, we believe all such entities or persons subject to the Section 16(a) reporting requirements have complied with applicable filing requirements during 2014, with the exception of the following:

Mr. Mark Heidt became our President and a Director in September 2014. He filed his Form 3 in January 2017.

Mr. James Koenig became our CFO in February 2014. He filed his Form 3 in September 2017. Mr. Koenig resigned as our chief financial officer in April 2018.

Board Leadership Structure

Our Board is led by its Chairman, Mr. Marcus, who is also CEO of the Company. We believe that having our CEO serve as Chairman of the Board provides us with unified leadership and direction and strengthens the ability of the CEO to develop and implement strategic initiatives and respond efficiently to various situations. The Board is aware of the potential conflicts that may arise when an insider chairs the Board, but believes any such conflicts are offset by the fact that independent directors comprise a majority of the Board and each of its committees. The committees facilitate deeper analysis of various matters and promote regular monitoring of our activities in their advisory role to the Board. At present, the Board believes that its current structure effectively maintains independent oversight of management and that having an independent director as Chair is unnecessary. The Board has the ability to quickly adjust its leadership structure should business or managerial conditions change.

Governance and Nominating Committee

Our Board does not utilize a separate Governance and Nominating Committee. Instead, our full Board performs the functions that are normally the responsibility of a Governance and Nominating Committee. In considering candidates for open Board positions, diversity of background and personal experience is considered by the Board in assembling a group of individuals that will work well together in overseeing our affairs. Although we do not have a formal diversity policy, the Board considers, among other things, diverse business experiences, the candidate’s range of experiences with public companies, and racial and gender diversity in evaluating Board candidates. While diversity in background in directors is important, it does not necessarily outweigh other attributes or factors the Board may consider in evaluating any particular candidate.

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Code of Ethics

We have adopted a code of ethics applicable to all of our employees, including our principal executive officer, principal financial and accounting officer and persons performing similar functions. The text of this code of ethics can be found on our website at www.Advanzeon.com. We intend to post notice on our website of any waiver from, or amendment to, any provision of our code of ethics.

Audit Committee

Although we are not required to have an Audit Committee, we maintain one whose primary function is to assist the Board of Directors (“the Board”) in the oversight of the integrity of our financial statements, the effectiveness of our internal control over financial reporting, the identification and management of risk, and in evaluation of the performance of our independent auditor. As of December 31, 2014, the Audit Committee of our Board consisted of Arnold B. Finestone, (Chairman) and Arthur K. Yeap. The Board of Directors has determined that, although not applicable in our case, all members of the Committee nevertheless were independent as defined in Section 303A of the New York Stock Exchange’s listing standards and SEC Rule 10A-3, and that Dr. Finestone qualifies as a “financial expert,” as defined by Item 407(d)(5) of Regulation S-K.

Compensation and Stock Option Committee

The purpose of the Compensation and Stock Option Committee is to determine, or recommend to the Board for determination, the direct and indirect compensation of the CEO and all other officers and to administer any incentive compensation plans from which stock options and other stock based awards may be granted. At December 31, 2014, the Compensation and Stock Option Committee of our Board consisted of Arthur K. Yeap (Chairman), Sharon Kay Ray, and Arnold B. Finestone.

Compensation Consultants

We did not use any compensation consultants during 2014 or 2013.

Indemnification matters

In connection with our indemnification program for executive officers and directors, Mr. Marcus, Mr. Kulbick, and Mr. Landis, as well as nine current, key management employees, directors, or subsidiary directors, 26 former directors, and 19 former officers, are entitled to indemnification pursuant to Indemnification Agreements.

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ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the cash and non-cash compensation for our named executive officers during the 2014 and 2013 fiscal years.

Principal Position	Year		Salary ($)(1)
Clark A. Marcus		2014	$	1,525,280
Chairman of the Board and		2013	$	1,224,305
Chief Executive Officer
Mark T. Heidt		2014	$	90,000
President (eff. 9/12/14)		2013		—
Ramon Martinez		2014		—
President (eff. 4/29/13-3/28/14)		2013	$	37,010
Robert Kulbick		2013	$	24,231
President (eff. 11/28/11-5/1/13)
James L. Koenig		2014		—
Acting Chief Financial Officer
(eff. 2/11/14)
Kyle Chastain		2014		—
Acting Chief Financial Officer		2013	$	2,150
(eff. 12/17/13-2/11/14)
Robert J. Landis		2013	$	184,792
Chief Financial Officer
(resigned eff. 9/20/13)

(1) Amounts represent salary earned, which may have been paid during the year indicated or deferred until a future year.

Executive Employment Agreements

Chairman and Chief Executive Officer

On May 11, 2009, we executed an employment agreement with our Chairman of the Board and CEO, Clark Marcus. Mr. Marcus’ employment contract has a term of three years and includes an initial base salary of $700,000 per annum. As of December 31, 2014, the base salary for Mr. Marcus was $1,407,951.This compensation may, at our election, be accrued, in whole or in part, until such time as we receive financing and/or generate sufficient cash flows with which to pay Mr. Marcus his stated compensation, after the payment of our operating expenses. At December 31, 2014, we had accrued approximately $2,171,368 of compensation and bonuses to Mr. Marcus.

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Upon execution of the agreement in 2009, Mr. Marcus was paid an $80,000 signing bonus. In addition, Mr. Marcus is entitled to receive a special annual bonus in an amount equal to one percent of our pre-tax profits from the preceding year (as determined by the application of generally accepted accounting principles), up to the first $1,000,000 of such profits; plus an additional sum equal to two percent of our pre-tax profits for all sums over $1,000,000. Mr. Marcus may also receive a bonus determined at the discretion of the Board of Directors.

In November 2011, the Compensation and Stock Option Committee modified Mr. Marcus’ employment agreement to state that it will not be deemed to have begun until all outstanding, deferred salary and bonus amounts have been paid, at which time the employment agreement will then proceed for a term of five years. In addition, Mr. Marcus will receive an annual increase on January 1^st of each year the contract is effective, with such increase equal to the greater of 15% or the percentage change in the Consumer Price Index for the Tampa Bay metropolitan area for the preceding year. Furthermore, the Company will continue to pay the premiums on Mr. Marcus’ life insurance policies existing and following the termination of his employment through his 81^st birthday.

In the event Mr. Marcus’ employment is terminated without cause, or Mr. Marcus terminates his employment within 12 months from a change in control, we will pay to Mr. Marcus a lump sum amount equal to the aggregate of (i) accrued unpaid salary, if any; (ii) accrued but unpaid expenses, if any; (iii) accrued but unpaid bonuses, if any; (iv) unissued warrants, if any; and (v) the total compensation which would have been paid to Mr. Marcus through five full years of compensation from the date of termination.

President

On November 6, 2011, Robert R. Kulbick was appointed by the Board to serve as our President effective November 28, 2011 Upon hiring, he was also paid a signing bonus of $50,000 and given an option to purchase 300,000 shares of our common stock. 

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Outstanding Equity Awards at Year-End

The following table sets forth all outstanding equity awards held by our named executive officers as of December 31, 2014.  

					[Update]
		Number of shares underlying unexercised options, warrants		Option of  Warrant Exercise Price ($)	Option or Warrant Expiration Date
Name		Exercisable  (#)	Unexercisable (#)
Clark A. Marcus		6,500,000		0.25	11/21/2021
		4,000,000		0.50	12/31/2018	(1)
		1,000,000		0.25	11/21/2021
Mark T. Heidt		0
James Koenig		100,000	(2)	0.25	2/4/2017
Total	2014	11,600,000

(1) Subsequent to December 31, 2015, Mr. Marcus transferred a total of 1,050,000 warrants. In April 2015, the term of the warrants was extended to December 31, 2018, and the exercise price was reduced to $0.6 per warrant. Also in April 2015, Mr. Marcus was granted an additional 5,000,000 warrants with a term ending in April 2020. The exercise price is $0.6.

(2) Mr. Koenig was granted 1,500,000 additional warrants in April 2015. The exercise price is $0.6 per warrant and the warrants expire on April 28, 2020. Also, 100,000 of the warrants owed to Mr. Koenig was extended to December 2018 and the exercise price was reduced to $.06.

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Director Compensation

The following table provides information regarding compensation earned by non-employee directors during years ended December 31, 2013 and 2014. 

Name	Year		Fees Earned (1)
Arnold B. Finestone, Ph.D.		2014	$	90,000
		2013		90,000
Jairo Estrada (2)		2014		—
		2013		—
Sharon Kay Ray		2014		30,000
		2013		30,000
Joshua I. Smith		2013		96,000
Arthur K. Yeap		2014		30,000
		2013		30,000
D. Pitts		2014		12,000
		2013	$	12,000

(1) Amounts represent fees earned for service as a director on our Board of Directors and as a member of one or more Board committees. Three of our directors are paid a monthly fee. Dr. Finestone is paid $7,500 per month; Ms. Ray is paid $7,500 per month and Mr. Yeap is paid $2,500 per month. Mr. Joshua Smith, a former director, was paid $8,000 per month. Each of the above-named persons agreed in October, 2013, to waive off on payments by the Company of any existing accrued fees and/or future fees until further notice. As of December, 31, 2014, the total amount of accrued compensation for all of the named individuals was $99,000

(2) Mr. Estrada was appointed in March 2013, and resigned in August 2014.

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Members of the Board of Directors who are also executive officers or employees of the Company receive no compensation for serving as directors. Outstanding stock option and warrant awards for each non-employee director as of December 31, 2014 are as follows:

	Number of Common Shares Underlying Awards:
Name	Options (#)		Warrants (#)
Arnold B. Finestone, Ph.D.		1,025,000		1,500,000	(1)
Sharon Kay Ray		775,000		0
Arthur Yeap		775,000		0
Jairo Estrada		0		0

(1) In April 2015, Dr. Finestone, Ph.D. was awarded an additional 500,000 warrants.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Equity Compensation Plan Information

The following table summarizes share and exercise price information with respect to the Plans (including individual compensation arrangements) under which our equity securities are authorized for issuance as of December 31, 2013 and 2014:

			(a)		(b)		(c)
Plan category	Year		Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans		2014		0		0
approved by stockholders		2013		7,322,000		.30	2,678,000
Equity compensation plans not approved by stockholders		2014		3,399,000		.36	0

*Equity compensation plans not approved by stockholders consist of:

● warrants to purchase shares of common stock issued to key employees as incentive compensation,

● warrants to purchase shares of common stock issued to consultants in exchange for financial advisory, or investment banking services in lieu of cash compensation,

● warrants to purchase shares of common stock issued to certain note holders of the Company and to a client in exchange for a cash advance.

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Security Ownership of Certain Beneficial Owners

The following table sets forth, as of April 23, 2018, the name, address, stock ownership and voting power of each person or group of persons known by us who is not a director or a named executive officer of the Company to own beneficially more than five percent of the outstanding shares of our common stock. Unless otherwise indicated, each of the stockholders has sole voting and investment power with respect to shares beneficially owned.

Name and Address of Beneficial Owner	Common  stock owned  directly		Common stock acquirable (1)		Total common stock beneficially owned			Percent of Voting Common Stock Outstanding
Howard Jenkins		26,885,714		9,000,000		35,885,714	(2)		49.80	%
c/o Advanzeon Solutions, Inc.
2901 W. Busch Blvd., Suite 701
Tampa, Florida 33618
Bernard C. Sherman		0		14,712,500		14,712,500	(3)		18.92	%
150 Signet Dr.
Weston, Ontario Canada M9L 1T9
Lloyd I. Miller		602,100		5,121,100		5,723,100	(4)		7.51	%
222 Lakeview Ave., Suite 100-365
West Palm Beach, Florida 33401
Benjamin B. West		4,000,000		50,000		4,050,000	(5)		6.42	%
c/o Advanzeon Solutions, Inc.
2901 W. Busch Blvd, Suite 701
Tampa, Florida 33618
Joshua I. Smith		1,922,829		2,525,000		4,447,829	(6)		6.78	%
c/o Advanzeon Solutions, Inc.
2901 W. Busch Blvd, Suite 701
Tampa, Florida 33618

(1) Includes common stock acquirable through the conversion of equity instruments convertible into common stock and the exercise of options and warrants to acquire common stock.

(2) Information obtained from Form 13D/A dated June 4, 2010, filed on July 29, 2010 and Company records.

(3) Information obtained from Form 13G/A dated November 14, 2011, filed on December 9, 2011 and Company records.

(4) Information obtained from Form 13G/A dated February 5, 2015, filed on February 5, 2015. Of the 5,162,600 shares beneficially owned, Mr. Miller has sole voting and investment power over 4,790,808 shares and shared voting and investment power over 371,792 shares.

(5) Information obtained from Form 13G/A dated December 31, 2011, filed on February 14, 2012.

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(6) Information obtained from Company records. Does not include 5,000,000 shares obtainable from the conversion of the 50 shares of the Series D Convertible Preferred Stock. The Series D Convertible Preferred Stock vests in 10 years from the date of grant. Early vesting can occur if (a) the Grantee’s service as a member of the Board of Directors is terminated by the Company, or (b) by mutual agreement between the Company and the Grantee, or (c) by the Grantee for Good Reason, which is defined to mean without the Grantee’s express written consent, a material breach of any material provision of any agreement between the Company or a successor and the Grantee which breach is not cured within 30 days after notice, or (d) due to the Grantee’s death or disability before the vesting date.

Security Ownership of Management

The following table sets forth, as of May 4, 2018, information concerning the beneficial ownership of our common stock by each director of the Company and the named executive officers and all directors and executive officers as a group, as of December 31, 2014. According to rules adopted by the SEC, a person is the “beneficial owner” of securities if he or she has, or shares, the power to vote such securities or to direct their investment. Unless otherwise indicated, each of the stockholders has sole voting and investment power with respect to shares beneficially owned.

Name of Beneficial Owner	Shares Beneficially Owned		Percent of Common Stock Outstanding
Clark A. Marcus (1)(5)		15,502,000		19.74	%
Arnold B. Finestone, Ph.D. (2)(5)		3,102,171		4.66	%
Sharon Kay Ray (3)(5)		1,175,000		1.83	%
Arthur K. Yeap (3)(5)		1,175,000		1.83	%
Mark T. Heidt (4)		1,000,000		1.56	%
James L. Koenig (4)		1,600,000		2.47	%
Stephen M. Kreitzer, M.D. (6)		1,200,000		1.84	%
All directors and named executive officers as a group (7 persons)		24,754,171		28.35	%

(1) Includes 70,000 shares of common stock held directly, 1,000,000 shares subject to options that are presently exercisable, and 14,450,000 million shares acquirable with warrants that are presently exercisable. Of this amount, 4,000,000 warrants that were to expire June 30, 2015, were extended in April 2015, until December 31, 2018. Does not include 10,000,000 shares obtainable from the conversion of 100 shares of the Series D Convertible Preferred Stock.

(2) Includes 1,025,000 shares subject to options that are presently exercisable, 2.0 million shares acquirable with a warrant that is presently exercisable, and 77,171 shares obtainable from the conversion of 244 Series C Convertible Preferred Stock shares that are presently convertible. . Does not include 5,000,000 shares obtainable from the conversion of 50 shares of the Series D Convertible Preferred Stock.

(3) Includes 322,829 shares of common stock held directly, 775,000 shares subject to options that are presently exercisable, and 77,171 shares obtainable from the conversion of 244 Series C Convertible Preferred Stock shares that are presently convertible. Does not include 2,500,000 shares obtainable from the conversion of 25 shares of the Series D Convertible Preferred Stock.

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(4) Represents warrants to purchase common stock. In April 2015, 100,000 warrants held by Mr. Koenig which were to expire February 4, 2017, were extended to December 31, 2018.

(5) The Series D Convertible Preferred Stock vests in 10 years from the date of grant. Early vesting can occur if (a) the Grantee’s service as a member of the Board of Directors is terminated by the Company, or (b) by mutual agreement between the Company and the Grantee, or (c) by the Grantee for Good Reason, which is defined to mean without the Grantee’s express written consent, a material breach of any material provision of any agreement between the Company or a successor and the Grantee which breach is not cured within 30 days after notice, or (d) due to the Grantee’s death or disability before the vesting date. 

(6) Appointed as a Director on April 26, 2018. Represents warrants to purchase common stock. Does not include a convertible promissory note in the principle amount of $100,000. At the option of the holder all or any part of the principle and any unpaid interest may be converted into shares of our common stock. The conversion rate shall be the lessor of (i) 15% below the average daily closing bid price of our common stock for the immediate preceding twenty business days or (ii) $0.11.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with Related Persons

In connection with an employment agreement with our Chairman and CEO, Clark A. Marcus, we have accrued compensation and bonuses payable to Mr. Marcus of approximately $2,171,368 as of December 31, 2014.

Although we do not have a separate, written policy over the review and approval of related party transactions, the Company’s authority guidelines that delineate the responsibilities of management and the Board of Directors state that all related party transactions shall be reviewed and approved by the Board. Such review procedures require management to conduct an initial review of the transaction and submit its recommendation to the full Board. The Board will then review management’s recommendation, and based on such factors as materiality, business purpose, comparability to other arms-length transactions, and effect on the Company’s business, will approve or deny management’s request to enter into the transaction or relationship.

Director Independence

Although we are not listed on the New York Stock Exchange, and therefore not subject to its requirements, we nevertheless have used the definition of “independent” set forth in Section 303A of the New York Stock Exchange listing standards for the purpose of determining the independence of our directors and members of a committee of our Board of Directors. Such standards define an independent director, generally, as one who has no material relationship with us, has not been employed by us within the last three years, has not received compensation from us in excess of $120,000 other than director and committee fees, is not related to a person who is a partner or employee of our external auditor, is not related to any of our officers, and is not an officer or owner of a business having transactions with us that exceed the greater of $1 million or 2% of our consolidated gross revenues.

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The following is a list of individuals that served as a director at any point during the period covered by this Annual Report on Form 10-K and that were considered independent:

Arnold B. Finestone

Joshua I. Smith (1)

Sharon Kay Ray

Arthur K. Yeap

Jairo Estrada (2)

There were no transactions, relationships, or arrangements considered by the Board of Directors in determining that a director is independent other than those described immediately above under the caption “Transactions with Related Persons.”

(1) Mr. Smith resigned as a director in September of 2013. 

(2) Mr. Estrada resigned as a director in August of 2014.

ITEM 14. PRINCIPAL ACCOUNTANTS’ FEES AND SERVICES

Audit and Related Fees

The firm of Luis Plung & Company, LLP (“Louis Plung”) currently serves as our independent registered public accounting firm to perform audits and to prepare our income tax returns. The Audit Committee approved 100% of the services described below for audit fees.

Audit Fees. The aggregate fees billed by Louis Plung for services relative to audits of our annual consolidated financial statements conducted during 2014 and 2013 were $28,333 for each year.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm and assure that the provision of such services does not impair the firm’s independence. These services may include audit services, audit-related services, tax services and other services. Management is required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date.

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PART IV

ITEM 15 EXHIBITS [UPDATE]

(a)	1.	Consolidated Financial Statements - Included in Part II of this report:
		Report of Independent Registered Public Accounting Firm	52
		Consolidated Balance Sheets as of December 31, 2014 and 2013	54
		Consolidated Statements of Operations for the years ended December 31, 2014 and 2013	56
		Consolidated Statements of Stockholders’ Equity Deficiency for the years ended December 31, 2014 and 2013	57
		Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013	58
		Notes to Consolidated Financial Statements	59
	2.	Consolidated Financial Statement Schedules: None.
	3.	Exhibits:

Exhibit Number		Description and Reference
3.0(i)	Amended and Restated Certificate of Incorporation. (filed herewith)
3.1		Amended and Restated Bylaws, as amended July 20, 2000. (4)
3.2		Amendment to Amended and Restated Bylaws, effective June 14, 2005. (3)
3.3		Amendment to Amended and Restated Bylaws, effective October 28, 2005. (8)
3.4		Amendment to Amended and Restated Bylaws, effective January 12, 2007.(13)
3.5		Certificate of Designation, Rights and Preferences of Series D Convertible Preferred Stock of the Company, dated March 31, 2009. (14)
3.6		Amendment to Amended and Restated Bylaws, effective May 11, 2009. (15)
3.7		Certificate of Designation, Rights and Preferences of Series C Convertible Preferred Stock dated June 23, 2009.(16)
3.8		Certificate of Amendment to the Amended and Restated Certificate of Incorporation dated January 12, 2012.(33)
4.1		Form of Common Stock Certificate. (7)
4.2		Subscription Agreement dated February 23, 2009 between the Company and Howard M. Jenkins (18)

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4.3	Subscription Agreement dated February 26, 2009 between the Company and Harry Ross (20)
4.4	Form of warrant to purchase Series D Preferred Stock issued by the Company on March 31, 2009 (14)
4.5	Form of warrant to purchase Series D Preferred Stock issued by the Company on May 13, 2009 (15)
4.6	Form of 10% Senior Promissory Note issued by the Company to Lloyd I. Miller, III (22)
4.7	Warrant to purchase Common Stock dated April 30, 2010 issued by the Company to Lloyd I. Miller, III (22)
4.8	Subscription Agreement dated April 14, 2010 between the Company and Howard Jenkins (23)
4.9	Convertible promissory note dated June 4, 2010 issued by the Company to Howard Jenkins (23)
4.10	Warrant to purchase Common Stock dated June 4, 2010 issued by the Company to Howard Jenkins (23)
4.11	Form of 10% Senior Promissory Note issued by the Company to the James A. & Rosemary L. Meyer Trust (24)
4.12	Form of warrant to purchase Common Stock issued by the Company to the James A. & Rosemary L. Meyer Trust (24)
4.13	Form of 10% Senior Promissory Note issued by the Company to the Schwarting Revocable Trust (24)
4.14	Form of warrant to purchase Common Stock issued by the Company to the Schwarting Revocable Trust (24)
4.15	Form of 10% Senior Promissory Note issued by the Company to the Linda S. Vogt Indenture Trust (25)
4.16	Form of warrant to purchase Common Stock issued by the Company to the Linda S. Vogt Indenture Trust (25)
4.17	Subscription Agreement dated July 27, 2010 between the Company and Howard Jenkins (26)
4.18	Form of warrant to purchase Common Stock dated June 30, 2010 issued by the Company to Clark Marcus and Giuseppe Crisafi (27)
4.19	Form of warrant to purchase Common Stock dated September 18, 2010 issued by the Company to MSO of Puerto Rico, Inc. (27)
4.20	Form of Subscription Agreement dated August 30, 2011 between the Company and Sherfam Inc. and two individuals. (30)
4.21	Form of Convertible Promissory Note dated August 30, 2011 issued by the Company to Sherfam Inc. and two individuals. (30)

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4.22	Form of Addendum to Promissory Note dated August 30, 2011 issued by the Company to Sherfam Inc. and two individuals. (30)
4.23	Form of Warrant to Purchase Shares of Common Stock of the Company issued by the Company to Sherfam Inc. and two individuals. (30)
4.24	Loan Extension Agreement dated March 15, 2013 between the Company and Sherfam Inc. (33)
10.1	Form of Stock Option Agreement. *(1)
10.2	Advanzeon Solutions, Inc. 1995 Incentive Plan, as amended on November 17, 1998. (5)
10.3	Amended and Restated Non-Employee Directors’ Stock Option Plan. *(2)
10.4	Amendment No. 1 to Advanzeon Solutions, Inc. Amended and Restated Non-Employee Directors’ Stock Option Plan, effective as of March 23, 2006.* (9)
10.5	Advanzeon Solutions, Inc. 2002 Incentive Plan as amended. *(6)
10.6	Lease Agreement between Comprehensive Behavioral Care, Inc. and Highwoods/Florida Holdings, L.P., dated November 12, 2008. (11)
10.7	Merger Agreement, dated as of January 20, 2009, among Advanzeon Solutions, Inc., Advanzeon Acquisition, Inc. and Core Corporate Consulting Group, Inc. (12)
10.8	Employment Agreement dated March 5, 2009 between the Company and Robert J. Landis.*(13)
10.9	Employment Agreement dated May 11, 2009 between the Company and Clark A. Marcus.* (15)
10.10	Callable Convertible Promissory Note dated June 24, 2009 between Advanzeon Solutions, Inc. and Howard Jenkins(19)
10.11	Advanzeon Solutions, Inc. 2009 Equity Compensation Plan*(17)
10.12	Agreement of Exchange and Issuance of Senior Notes and Warrants dated April 30, 2010 between the Company and Lloyd I. Miller, III (22)
10.13	Agreement of Exchange and Issuance of Senior Notes and Warrants dated June 14, 2010 between the Company and the James A. & Rosemary L. Meyer Trust (24)
10.14	Agreement of Exchange and Issuance of Senior Notes and Warrants dated June 14, 2010 between the Company and the Schwarting Revocable Trust (24)
10.15	Agreement of Exchange and Issuance of Senior Notes and Warrants dated June 17, 2010 between the Company and the Linda S. Vogt Indenture Trust (25)
10.16	Agreement for the Provision of Services dated September 18, 2010 between Advanzeon de Puerto Rico, Inc. and MMM Healthcare, Inc. and PMC Medicare Choice, Inc. (29)
10.17	Amendment effective May 10, 2011 to the Agreement for the Provision of Services dated September 18, 2010 between Advanzeon de Puerto Rico, Inc. and MMM Healthcare, Inc. and PMC Medicare Choice, Inc. (33)

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10.18	Second Amendment to the Agreement for the Provision of Services with an effective date of March 1, 2012, by and between Advanzeon de Puerto Rico, Inc. and MSO of Puerto Rico, Inc. (31)
10.19	Third Amendment to the Agreement for the Provision of Services with an effective date of May 1, 2012, by and between Advanzeon de Puerto Rico, Inc. and MSO of Puerto Rico, Inc. (32)
10.20	Lease between Twin Lakes Office Park and Advanzeon solutions, Inc. dated May 23, 2014.(filed herewith)
14.1	Code of Business Conduct and Ethics (Revised). (10)
16	Letter dated November 19, 2010 from Kirkland, Russ, Murphy &Tapp. PA (“KRMT”) to the U.S. Securities and Exchange Commission stating its agreement with the Company’s statements made concerning KRMT in the Company’s Form 8-K disclosure under Item 4.01 “Changes in Registrant’s Certifying Accountant.” (28)
21.1	List of the Company’s active subsidiaries (filed herewith).
23.1	Consent of Louis Plung & Company dated May 10, 2018 (filed herewith).
31.1	Advanzeon Solutions, Inc. CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Advanzeon Solutions, Inc. CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Advanzeon Solutions, Inc. CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2	Advanzeon Solutions, Inc. CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
99.1	Audit Committee Charter (33)
99.2	Compensation and Stock Option Committee Charter (33)
101	The following materials from Advanzeon Solutions, Inc.’s Annual Report on Form 10-K for the years ended December 31, 2013 and 2014, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Stockholder’s Equity Deficiency, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

- 47 -

* Management contract or compensatory plan or arrangement with one or more directors or executive officers.

(1) Filed as an exhibit to the Company’s Form 10-K for the fiscal year ended May 31, 1988.

(2) Filed as an exhibit to the Company’s Form 8-K dated November 9, 1995.

(3) Filed as an exhibit to the Company’s Form 8-K dated June 14, 2005.

(4) Filed as an exhibit to the Company’s Form 10-K for the fiscal year ended May 31, 2000.

(5) Filed as an exhibit to the Company’s Form 8-K dated November 25, 1998.

(6) Filed as Appendix A to the Company’s definitive proxy statement on Schedule 14A filed on January 28, 2005.

(7) Filed as an exhibit to Form S-8 (File No. 333-108561) filed on September 5, 2003.

(8) Filed as an exhibit to the Company’s Form 8-K, dated November 3, 2005.

(9) Filed as an exhibit to the Company’s Form 10-K for the fiscal year ended May 31, 2006.

(10) Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 2007.

(11) Filed as an exhibit to the Company’s Form 8-K, dated November 12, 2008.

(12) Filed as an exhibit to the Company’s Form 8-K, dated January 16, 2009.

(13) Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 2008.

(14) Filed as an exhibit to the Company’s Form 8-K, dated March 31, 2009.

(15) Filed as an exhibit to the Company’s Form 10-Q for the quarterly period ended March 31, 2009.

(16) Filed as an exhibit to the Company’s Form 8-K, dated June 17, 2009.

(17) Filed as an exhibit to the Company’s Form 10-Q for the quarterly period ended September 30, 2009.

(18) Filed as an exhibit to the Company’s Form 8-K, dated February 25, 2009.

(19) Filed as an exhibit to the Company’s Form 8-K, dated June 24, 2009.

(20) Filed as an exhibit to the Company’s Form 8-K/A, dated January 16, 2009 and filed April 6, 2009.

(21) Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 2009.

(22) Filed as an exhibit to the Company’s Form 8-K, dated May 6, 2010.

(23) Filed as an exhibit to the Company’s Form 8-K, dated June 10, 2010.

(24) Filed as an exhibit to the Company’s Form 8-K, dated June 15, 2010.

(25) Filed as an exhibit to the Company’s Form 8-K, dated June 22, 2010.

(26) Filed as an exhibit to the Company’s Form 8-K, dated July 28, 2010.

(27) Filed as an exhibit to the Company’s Form 10-Q for the quarterly period ended June 30, 2010.

(28) Filed as an exhibit to the Company’s Form 8-K, dated November 19, 2010.

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(29) Filed as an exhibit to the Company’s Form 10-Q/A for the quarterly period ended September 30, 2010.

(30) Filed as an exhibit to the Company’s Form 8-K, dated August 30, 2011.

(31) Filed as an exhibit to the Company’s Form 8-K, dated March 5, 2012.

(32) Filed as an exhibit to the Company’s Form 8-K, dated June 25, 2012.

(33) Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 2012.

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SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, May 18, 2018.

		ADVANZEON SOLUTIONS, INC.
By:		/s/ CLARK A. MARCUS
		Chief Executive Officer and Chairman (Principal Executive Officer)
	By:	/s/ ARNOLD B. FINESTONE
		Chief Financial Officer and Chief Accounting Officer (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates so indicated.

SIGNATURE	TITLE	DATE
/s/ CLARK A. MARCUS	Chief Executive Officer and Chairman (Principal Executive Officer)	May 18, 2018
Clark A. Marcus
	Chief Financial Officer and Chief Accounting Officer
/s/ ARNOLD B. FINESTONE, Ph.D.	(Principal Financial and Accounting Officer)	May 18, 2018
Arnold B. Finestone, Ph.D.
/s/ ARTHUR K. YEAP	Director	May 18, 2018
Arthur K. Yeap
/s/ SHARON KAY RAY	Director	May 18, 2018
Sharon Kay Ray
/s/ JAMES L. KOENIG	Director	May 18, 2018
James L. Koenig
/s/ MARK T. HEIDT	Director	May 18, 2018
Mark T. Heidt
/s/ STEPHEN M. KEITZER, MD.
Stephen M. Keitzer, M.D.	Director	May 18, 2018

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ADVANZEON SOLUTIONS, INC.

FINANCIAL STATEMENTS AND 

INDEPENDENT AUDITORS’ REPORT 

December 31, 2014 and 2013 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Advanzeon Solutions, Inc.

Disclaimer of Opinion on the Financial Statements

We were engaged to audit the accompanying balance sheets of Advanzeon Solution Inc. (the “Company”) as of December 31, 2014 and 2013, and the related statements of operations, stockholders’ deficiency and cash flows, for the years then ended and the related notes (collectively referred to as the “financial statements”). As described in the following paragraph, because the Company was unable to provide sufficient appropriate evidential matter with regard to cash receipts, cash disbursements, and cutoff, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements, and we do not express, an opinion on these financial statements.

Basis for Disclaimer of Opinion

During the fourth quarter of 2013, there was a departure of the entire fiscal management department including the Chief Financial Officer. As a result, management did not have access to any of the financial records of the Company wand was unable to provide appropriate evidential matter to support the Company’s financial statements as of for the years ended December 31, 2014 and 2013.

These financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 and to the consolidated financial statements, the Company has suffered recurring losses from operations and has not generated sufficient cash flows from operations to fund its working capital requirements. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 6. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We have served as the Company’s auditor since December 2016.

Pittsburgh, Pennsylvania 

May 10, 2018

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ADVANZEON SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS 

December 31, 2014 and 2013

ASSETS
		2014		2013
CURRENT ASSETS
Cash	$	11,533	$	324,324
Accounts Receivable		271,459		711,478
Other		122,995		118,165
Total current assets		405,987		1,153,967
NON-CURRENT ASSETS
Property and equipment, net		1,652		26,652
Other				44,582
Total Non-currents assets		75,263		71,234
TOTAL ASSETS	$	407,639	$	1,225,201

The accompanying notes are an integral part of these consolidated financial statements. 

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ADVANZEON SOLUTIONS, INC.

Consolidated BALANCE SHEETS 

December 31, 2014 and 2013

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
		2014			2013
CURRENT LIABILITIES
Notes payable:
Related parties	$	3,040,405		$	3,000,000
Other
Current portion of long-term debt		4,661,625			5,155,186
Borrowings under lines of credit		926,167			602,617
Account payable		543,047			641,090
Accrued claims payable		648,313			1,302,825
Other accrued expenses		7,533,334			6,234,983
Total current liabilities		17,352,981			16,936,611
Long-term debt, net of current portion		90,000			90,000
TOTAL LIABILITIES		17,442,891			17,026,611
STOCKHOLDERS’ DEFICIENCY
Preferred stock, $50,000 per value, non-cumulative		521,700			521,700
Series C Convertible, 14,400 shares authorized; 10,424 shares issued and outstanding		—			—
Other series, 981,260 shares authorized; none issued		—			—
Common stock, $0.01 per value; 500,000 shares authorized; 63,063,685 shares issued and outstanding		630,637			630,637
Additional paid-in capital		27,235,067			27,235,067
Accumulated deficit		(45,422,656	)		(44,188,816	)
Total stockholders’ deficiency		(17,035,253	)		(15,801,413	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY	$	407,638		$	1,225,197

The accompanying notes are an integral part of these consolidated financial statements.

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ADVANZEON SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS 

For the Years Ended December 31, 2014 and 2013

	2014			2013
Managed care revenues	$	535,863		$	3,125,693
Costs and expenses:
Costs of revenues		—			1,086,000
General and administrative		1,549,814			5,183,825
Goodwill impairment		—			—
Depreciation and amortization		25,000			33,148
Total costs and expenses		1,574,814			6,302,973
Operating loss		(1,038,951	)		(3,177,280	)
Other income (expense):
Interest expense		(1,344,889	)		(1,880,955	)
Gain on sale of subsidiary (See Note 11)		—			10,969,615
Legal settlement (See Note 12)		1,150,000			—
Income taxes		—			(59,100	)
Net loss attributable to common stockholders	$	(1,233,840	)	$	5,852,281

The accompanying notes are an integral part of these consolidated financial statements.

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ADVANZEON SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY 

December 31, 2014 and 2013

	Preferred Stock Number of Shares		Preferred Stock Amount		Common Stock Number of Shares		Common Stock Amount		Additional Paid-in Capital		Accumulated Deficit			Total
Balance at December 31, 2012		10,434		521,700		59,451,836		594,518		25,981,680		(50,041,097	)		(22,943,198	)
Stock issued to non-employees for consulting services		—		—		2,466,988		24,670		296,421		—			321,091
Stock issued for payment of interest		—		—		1,144,861		11,449		123,348		—			134,797
Warrants issued to employees		—		—		—		—		102,687		—			102,687
Warrants issued to non-employees for services		—		—		—		—		164,361		—			164,361
Warrants issued in connection with debt financings		—		—		—		—		6,247		—			6,247
Issuance of unvested Series D preferred stock		—		—		—		—		343,856		—			343,856
Issuance of stock options		—		—		—		—		216,467		—			216,467
Net income		—		—		—		—		—		5,852,281			5,852,281
Balance at December 31, 2013		10,434		521,700		63,063,685		630,637		27,235,066		(44,188,816	)		(15,801,413	)
Net loss		—		—		—		—		—		(1,233,840	)		(1,309,926	)
Balance at December 31, 2014		10,434	$	521,700		63,063,685	$	630,637	$	27,235,066	$	(45,422,656	)	$	(17,035,253	)

The accompanying notes are an integral part of these consolidated financial statements.

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ADVANZEON SOLUTIONS, INC.

STATEMENTS OF CASH FLOWS 

For the Years Ended December 31, 2014 and 2013

	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(1,233,840	)	$	5,852,281
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		25,000			33,148
Bad Debts					28 ,000
Gain on sale of subsidiary					(10,969,615	)
Discount amortization on notes payable		56,631			153,887
Stock-based compensation
Changes in assets and liabilities:
Accounts receivable		440,018			3,021,868,
Other current assets		(4,830	)		30,065
Other assets		44,582			107,295
Accounts payable		(98,043	)		(422,816	)
Accrued claims payable		(654,512	)		2,238,600
Other accrued expenses		1,298,441			(1,182,623	)
Net cash provided by (used in) operating activities		(126,552	)		(1,109,910	)
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities		—			—
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from line of credit, net		323,550			602,617
Accrued interest added to debt balances		934
Proceeds from borrowings		573,870			979,998
Increase in related party debt		40,405			—
Repayment of debt		(1,125,000	)		(1,068,381	)
Net cash (used in) provided by financing activities		(186,241	)		514,234
Net decrease in cash		(14,103	)		(595,676	)
Cash - Beginning of Year					920,000
		25,644
CASH - END OF YEAR
		11,531			324,324
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest	$	—		$	—
Income taxes	$	—		$	—

The accompanying notes are an integral part of these consolidated financial statements. 

- 57 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

Note 1 DESCRIPTION OF THE COMPANY’S BUSINESS AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Advanzeon Solutions, Inc and its wholly owned subsidiaries, each with their respective subsidiaries (collectively referred to herein as, the “Company,” “Advanzeon,” “we”, “us,” or “our”).

Nature of Operations - We provide managed care services in the behavioral health, substance abuse, and pharmacy management fields for commercial, Medicare, Medicaid and Children’s Health Insurance Program (“CHIP”) members primarily on behalf of health plans. Our managed care operations include administrative service agreements, fee-for-service agreements, and capitation contracts. The customer base for our services includes both private and governmental entities. Our services are provided by unrelated vendors on a subcontract basis.

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING AND PRINCIPLES OF CONSOLIDATION

Going Concern Basis - The consolidated financial statements are prepared on the basis that the Company will continue its operations as a going concern. As a result of certain conditions described in Note 6, our  ability to continue as a going concern will be dependent upon the success of management’s plans, as set forth also in Note 6, and is subject to significant uncertainty.

The Company has elected to not adopt the option available under United States generally accepted accounting principles (“GAAP”) to measure any eligible financial instruments or other items at fair market value at this time. Accordingly, the Company measures all of its assets and liabilities on the historical cost basis of accounting, except as otherwise required by GAAP.

- 58 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

Inter-company accounts and transactions have been eliminated in consolidation. Certain minor reclassifications of prior period amounts have been made to conform to the current year presentation.

Use of Estimates - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts. Actual results could differ from these estimates. Estimates involved in the determination of an allowance for doubtful accounts receivable and accrued claims payable, including incurred but not reported, are considered by management as particularly susceptible to material change in the next year. Other significant estimates relate to stock-based compensation, valuation of goodwill, warrants and beneficial conversion features.

Accounts Receivable - Accounts and notes receivable are carried net of an allowance at their estimated collectible value. Since customer credit is generally extended on a short-term basis, accounts receivable do not bear interest and are uncollateralized. We manage credit risk and determine necessary allowances by evaluating customers’ credit worthiness before extending credit and periodically for collectability, based primarily on customers’ past credit history and current financial conditions and general economic conditions, results of prior collection efforts, the relative strength of our relationship therewith and, in the event of a dispute, its legal position and the estimated cost of proposed collection proceedings. Management has not established a policy for when to charge off uncollectible accounts receivable or to use external collection agencies and makes such decisions on a case-by-case basis. The maximum losses that the Company would incur if a customer failed to pay would be limited to the carrying value of the receivable after any related allowances provided.

Property and Equipment - Property and equipment (Note 3) is stated at cost less accumulated depreciation. Depreciation and amortization are computed using the straight-line method over the estimated useful lives ranging from 2 to 12 years. Leasehold improvements are amortized over the shorter of the lease term or the asset’s useful life.

Accrued Claims Payable - Accrued claims payable includes estimated claims incurred but not yet reported (“IBNR”) to us, and any provisions for losses under our managed care contracts when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. We perform this loss accrual analysis on a contract-by-contract basis taking into consideration such factors as future contractual revenue, estimated future healthcare and maintenance costs, and each contract’s specific terms related to future revenue increases as compared to expected increases in healthcare costs. Future healthcare and maintenance costs are estimated based on historical trends and expected future cost increases.

Generally, we have the ability to cancel a managed care contract with 60 to 120 days’ written notice or to request a renegotiation of terms under certain circumstances, if the contract is not meeting our financial goals. Prior to a cancellation, we typically submit a request for a rate increase accompanied by supporting utilization data. Although historically, our clients have been generally receptive to such requests, no assurance can be given that such requests will be fulfilled in our favor in the future. If a rate increase is not granted, we have the ability, in some cases, to terminate the contract and thereby limit our exposure to risk.

- 59 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

Fair Value Measurements - The carrying amounts of cash, accounts receivable and accounts payable approximate their estimated fair value due to the short-term nature of these instruments. Since our other financial liabilities are not traded in an open market, we generally use a present value technique, which is a level 3 input, as defined in GAAP, to measure the estimated fair value of these financial instruments, except for valuing stock options and warrants (see below). The rate used for discounting expected cash flows is a risk-free rate adjusted for systematic and unsystematic risk.

Due to the inherent nature of related party transactions, we have not attempted to estimate the fair value of liabilities payable to related parties of the Company. As such, promissory notes payable with carrying values of $3,000,000 and $3, 000,000, respectively, at December 31, 2014 and 2013, are excluded from the following table. The carrying amounts and estimated fair values of other financial instruments (all are liabilities) at December 31, 2014 and 2013, are as follows (in thousands):

	December 31,
	2014					2013
	Carrying Amount			Estimated Fair Value		Carrying Amount			Estimated Fair Value
Promissory notes	$	—		$	—	$	—		$	—
Zero-coupon promissory Notes		—			—		—			—
Debentures		3,586,004			—		3,586,004			—
Senior promissory notes		1,771,013			—		1,771,013			—
Long-term promissory notes		—			—		—
Less unamortized discount		(55,200	)		—		(111,831	)		—
	$	5,301,817		$	—	$	5,245,186		$	—

Revenue Recognition - Revenue under our contractual agreements to provide behavioral healthcare and pharmacy management services to subscribing members is earned regardless of services actually provided and, therefore, recognized monthly based on the number of qualified members. The information regarding qualified members is supplied by our clients subject to our periodic review of their member eligibility records and other reported information to verify its accuracy and determine the amount of revenue to be recognized.

- 60 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

Cost of Revenues - Costs of revenues consist of two major components: claims costs and healthcare operating expense. Claims costs are recognized in the period in which an eligible member actually receives services and includes an estimate for costs of behavioral health services that have been incurred but not yet reported.

Legal Defense Costs - We accrue an estimate of incurred legal defense costs to be incurred in connection with pending disputes and litigation matters as part of our estimated minimum probable losses (see Note 7).

Income Taxes - We are subject to the income tax jurisdictions of the U.S. and multiple state tax jurisdictions. However, our provisions for income taxes for 2013 and 2014 include only state income taxes (see Note 11).

Management has evaluated our tax positions taken or to be taken on income tax returns that remain subject to examination (i.e., tax years 2008 and thereafter federally), and has concluded that there have been no uncertain tax positions (as defined in GAAP) taken that require recognition or disclosure in the consolidated financial statements. In the event of any income tax-related interest or penalties are incurred, they would be included in general and administrative expense.

Stock Options and Warrants - We grant stock options and warrants (see Note 8) to our employees, non-employee directors, note holders and certain consultants and clients allowing them to purchase our common stock pursuant to approved terms. The estimated value of the warrants issued with debt instruments is recorded as a discount on notes payable and amortized as interest expense over the term of the notes using the effective interest method.

We use a Black-Scholes valuation model to estimate the fair value of options and warrants on the measurement date and for determining the allocation of the relative values of debt and warrants. In applying the model, we use level 3 inputs, as defined by GAAP, consisting of historical data and management judgment to estimate the expected terms of the instruments. Expected volatility is based on the historical volatility of our traded stock. We do not expect to pay dividends for the period of the expected life of the instruments, and therefore we assume no expected dividend. The assumed risk-free rates used are based on the U.S. Treasury yield curve with the same expected terms as those of the equity instruments at the time of grant.

The following table lists the assumptions utilized in applying the Black-Scholes valuation model for options and warrants.

- 61 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

	Year ended December 31,
	2014			2013
Expected volatility		160	%		160	%
Expected life (in years) of options		3	%		4	%
Expected life (in years) of warrants		2-3	%		2-3	%
Risk-free interest rate range, options		0	%		0	%
Risk-free interest rate range, warrants		0	%		0	%
Expected dividend yield		0	%		0	%

PER SHARE DATA

For the periods presented, since losses would produce anti-dilution, no diluted loss per common share is presented. The following table sets forth the computation of basic loss per common share (amounts in thousands, except per share data):

	Year ended December 31,
	2014			2013
Numerator:
Net loss attributable to common stockholders	$	3,632,451		$	7,146,162
Denominator:	$	63,063,685		$	61,589,316
Weighted average common shares
Basic loss per share attributable to common stockholders	$	(0.06	)	$	(0.12	)

Note 3 PROPERTY AND EQUIPMENT

Property and equipment, net, consists of the following at December 31:

	2014		2013
Furniture and equipment	$	336,242	$	336,492
Less accumulated depreciation and amortization		261,229		155,229
Property and equipment – net	$	75,263	$	181,263

Depreciation expense for 2013 and 2014 is $105,907 and $106, 000 respectively. 

Note 4 Intangible Assets

There are no intangible assets for 2013 and 2014. 

- 62 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

Note 5 RELATED PARTY NOTES PAYABLE

Related party notes payable consists of the following at December 31, 2014 and 2013:

	2014		2013
Convertible Promissory Note payable dated June 4, 2010 for $2,000,000 bearing interest at 24% payable quarterly in arrears, with a maturity date of June 4, 2011. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share. The note may be prepaid upon providing five days written notice.	$	2,000,000	$	2,000,000
Eighteen Month Promissory note payable dated November 8, 2011 for $1,000,000 bearing interest at 14% payable quarterly, with a maturity date of May 8, 2013.		1,000,000		1,000,000
Various borrowings during 2014		40,405		—
	$	3,040,405	$	3,000,000

Note 6 NOTES PAYABLE

Notes payable consists of the following at December 31, 2014 and 2013:

	2014		2013
14% Senior Promissory Note payable dated April 15, 2010, as amended on July 13, 2012, for $14,525 bearing interest at 14%, with a maturity date of April 15, 2014. In case of default, the default interest rate is 18%.	$	14,525	$	14,525
Note payable dated April 10, 2010, as amended on April 15, 2012, for $5,188 bearing interest at 14%, with a maturity date of April 15, 2014. In case of default, the default interest rate is 18%.		5,188		5,188
14% Senior Note payable dated April 15, 2010, as amended on April 15, 2013, for $1,290,650 bearing interest at 14%, with a maturity date of April 15, 2014. The Lender owns warrants to purchase a total of 5,162,600 shares of common stock issued by the Company pursuant to two warrant agreements.		1,290,650		1,290,650
Promissory Note payable dated January 31, 2012, as amended on April 30, 2013, for $100,000, plus interest at 14%, with a maturity date of October 31, 2013. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share.		100,000		100,000
Convertible Promissory Note payable for $230,000 dated February 28, 2013, as amended on August 31, 2013. Amount of loan amended to $245,000 including interest in arrears of $15,000. Interest accrues at 14% and loan matures on November 30, 2013. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share.		245,000		245,000
Promissory Note payable dated June 13, 2013, for $100,000, plus interest at 14%, with a maturity date of December 13, 2014. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share.		100,000		100,000
Subtotal	$	1,755,363	$	1,755,363

- 63 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

	2014		2013
Subtotal from page 67	$	1,755,363	$	1,755,363
Senior Note payable dated April 15, 2010, as amended on September 10, 2012, for $10,375 bearing interest at 14%, with an amended maturity date of October 15, 2015. Lender agreed to forgive past due interest of $1,867.50 and note has been converted to a 7% Senior Note, effective April 15, 2014. The lender accepted $933.75 of the interest forgiveness in cash and the remaining $933.75 was added to the loan balance.		11,309		10,375
14% Senior Note payable, dated April 15, 2010, as amended on July 30, 2012, for $15,563 bearing interest at 14%, with a maturity date of April 15, 2013. In case of default, the default interest rate is 18%.		15,563		15,563
Senior Note payable dated April 15, 2010, as amended on July 13, 2012, for $72,625 initially bearing interest at 14%, with an amended maturity date of January 15, 2015. Lender agreed to forgive past due interest of $5,083.75 and note has been converted to a 7% Senior Note, effective October 15, 2013.		72,625		72,625
14% Senior Note payable dated April 15, 2010, as amended on July 6, 2012, for $264,563 bearing interest at 14%, with a maturity date of April 15, 2013. In case of default, the default interest rate is 18%. Per terms of the amendment, the Company agreed to pay the Kennedy Estate $13,228 in cash as compensation and consideration for agreeing to the terms of the amendment to the loan agreement.		264,563		264,563
Convertible Promissory Note payable dated March 2, 2012, as amended on March 2, 2013, for $50,000 bearing interest at 7% payable quarterly in arrears, with a maturity date of March 2, 2014. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.50 per share. The note may be prepaid upon providing five days written notice.		50,000		50,000
14% Senior Note payable dated April 15, 2010, as amended on July 6, 2012, for $68,475 bearing interest at 14%, with an amended maturity date of April 15, 2014. In case of default, the default interest rate is 18%.		68,475		68,475
Subtotal	$	2,237,898	$	2,236,964

- 64 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

	2014		2013
Subtotal from page 68	$	2,237,898	$	2,236,964
Promissory note payable for $250,000, bearing interest at 9%, payable, in conjunction with the note listed below, in the amount of $10,000 per month, beginning October 1, 2011		289,000		189,000
Promissory note payable for $200,000, bearing interest at 8.5%, payable, in conjunction with note listed above, in the amount of $10,000 per month, beginning October 1, 2011.		90,000		190,000
Subordinated Debentures		487,000		537,000
Convertible Promissory Note payable dated March 16, 2013 for $100,000 bearing interest at 10% payable quarterly in arrears, with a maturity date of March 16, 2014. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share. The note may be prepaid upon providing five days written notice. As additional consideration, a separate three-year warrant agreement was issued which entitles Paul Dorn to purchase 25,000 shares of common stock at $.15 per share. The warrants vest immediately.		100,000		100,000
Note payable dated August 1, 2012, bearing interest at 12%.		25,000		25,000
10% Senior Promissory Note payable dated November 3, 2010, for $1,037.50 bearing interest at 10%, payable semiannually, with a maturity date of April 15, 2012. The note may be prepaid upon providing five days written notice.		1,038		1,038
10% Senior Promissory Note payable dated November 3, 2010, for $15,562.50 bearing interest at 10%, payable semiannually, with a maturity date of April 15, 2012. The note may be prepaid upon providing five days written notice.		15,563		15,563
Subtotal	$	3,245,499	$	3,294,565

- 65 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

	2014		2013
Subtotal from page 69	$	3,245,499	$	3,294,565
Twenty-four Month Convertible Promissory Note payable dated February 7, 2012 for $100,000, bearing interest at 12% payable quarterly in arrears, with a maturity date of February 7, 2014. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share. The note may be extended for an additional six months.		100,000		100,000
Eighteen Month Convertible Promissory Note payable dated August 30, 2011 for $1,400,000. Extended through January 15, 2014 per terns of an Extension and Forbearance Agreement. Lender is also granted a first lien security interest over all existing and future assets for CompCare de Puerto Rico, Inc, including the arbitration claim against MAPFRE Life Insurance Co. filed on August 10, 2012 at December 2`, 2013. $1,000.000 of proceeds was applied to this debt in 2014 upon receipt of the proceeds from MAFRE		400,000		1,400,000
Eighteen Month Convertible Promissory Note payable dated November 14, 2011 for $625,000. Extended through January 15, 2014 per terns of an Extension and Forbearance Agreement which requires payments of $75,000 each on September 13, 2013 and January 6, 2014. Lender is also granted a first lien security interest over all existing and future assets of CompCare de Puerto Rico, Inc, including the arbitration claim against MAPFRE Life Insurance Co. filed on August 10, 2012 at December 31, 2012.		475,000		550,000
14% Senior Promissory Note payable dated October 24, 2012, for $7,262.50 bearing interest at 14%, payable semiannually, with a maturity date of April 15, 2013. The note may be prepaid upon providing five days written notice.		7,263		7,263
14% Senior Promissory Note payable dated November 30, 2012, for $5,187.50 bearing interest at 14%, payable semiannually, with an amended maturity date of April 15, 2014. The note may be prepaid upon providing five days written notice.		5,188		5,188
Subtotal	$	4,232,950	$	5,357,016

- 66 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

	2014		2013
Subtotal from page 70	$	4,232,950	$	5,357,016
Convertible Promissory Note payable to dated October 6, 2014, for $100,000, bearing interest at 12%, with a maturity date of the earliest of October 6, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the acquisition of all of the Company’s assets. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.11per share. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		100,000		—
Convertible Promissory Note payable dated January 6, 2014, for $50,000, bearing interest at 18%, with a maturity date of the earliest of January 6, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		50,000		—
Convertible Promissory Note payable dated January 23, 2014, for $67,000, bearing interest at 18%, with a maturity date of the earliest of January 23, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		67,000		—

Subtotal $ 4,449,950 $ 5,357,016

- 67 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

	2014		2013
Subtotal from page 71	$	4,449,950	$	5,357,016
Convertible Promissory Note payable dated February 25, 2014, for $45,000, bearing interest at 18%, with a maturity date of the earliest of February 25, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		45,000		—
Convertible Promissory Note payable dated April 14, 2014, for $23,000, bearing interest at 18%, with a maturity date of the earliest of April 14, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		23,000		—
Convertible Promissory Note payable dated April 21, 2014, for $37,000, bearing interest at 18%, with a maturity date of the earliest of April 21, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinate in right of payment to all other notes.		37,000		—
Convertible Promissory Note payable dated July 1, 2014, for $50,000, bearing interest at 18%, with a maturity date of the earliest of April 14, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is senior in right of payment to all other notes.		50,000		—
Subtotal	$	4,604,950	$	5,357,016

- 68 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

	2014			2013
Subtotal from page 72		4,604,950			8,357,016
Convertible Promissory Note payable dated September 9, 2014, for $50,000, bearing interest at 12%, with a maturity date of the earliest of March 9, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.11 per share. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		50,000			—
Convertible Promissory Note payable dated July 17, 2014, for $100,000, bearing interest at 18%, with a maturity date of the earliest of July 17, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is senior in right of payment to all other notes		100,000			—
7½% Senior Note payable dated January 30, 2014, for $51,875 bearing interest at 7½%, with a maturity date of February 15, 2015. This note was issued in exchange for the $50,000 in 7½% Convertible Subordinated Debentures plus accrued interest of $1,875. The note may be prepaid upon providing five days written notice.		51,875			—
	$	4,806,825		$	5,357,016
Less Discounts on Notes		(55,200	)		(111,831	)
Total notes payable		4,751,625			5,245,185
Less: long term portion		(90,000	)		(90,000	)
Current notes payable	$	4,661,625		$	5,155,185

Note 7 BORROWINGS REVOLVING LINE OF CREDIT

The Company has a $2 million revolving line of credit with a financial institution. Interest on this line of credit is prime plus .25%. The prime rate at December 31, 2014 and 2013 was 3.25%. The outstanding balance on the revolving line of credit was $926,167 and $602,617 at December 31, 2014 and 2013, respectively. Interest is payable monthly, and principal is payable on demand. The revolving line of credit is collateralized by a first lien security interest in the Company’s account receivable.

Note 8. COMMITMENTS AND CONTINGENCIES

The Company lease its corporate office space under an operating lease. In May 2014, the Company moved its corporate office and entered into a new operating lease. The terms of the lease are for 5 years beginning on May 1, 2014 and ending June 30, 2019 with a monthly lease payment of $7,697. The lease contains an annual escalation clause and a provision for payment of real estate taxes, insurance, and maintenance and repair expenses. Total rental expense for the lease was approximately $82,000 and $218,000, respectively, for 2014 and 2013.

- 69 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

Future minimum payments under the non-cancelable operating lease with initial or remaining terms of one year or more consist of the following at December 31, 2014.

2015	$	92,364
2016		92,364
2017		92,634
2018		92,364
2019		46,182
	$	415,630

b. Economic conditions and related risks, concentrations and uncertainties

At December 31, 2014, we had a working capital deficiency of approximately $17.1 million and a stockholders’ equity deficiency of approximately $17.2 million resulting from a history of operating losses. There can be no assurance that we will be able to find such financing in amounts or on terms acceptable to us, if at all, or that we will be able to achieve or sustain profitable operations and positive operating cash flows in the near term. Although subject to the general economic conditions, management believes that our current cash position will likely not be sufficient to meet our current levels of operations in the short term, our ability to achieve our business objectives and continue as a going concern for a reasonable period of time may be dependent upon the success of our plans to obtain sufficient debt or equity financing.

- 70 -

ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

Note 9. LITIGATION

In the ordinary conduct of the Company business, they are subject to periodic lawsuits and claims. Although management cannot predict with certainty the ultimate resolution of lawsuits and claims asserted against the Company, management does not believe that any currently pending legal proceedings to which the Company is a party could have a material adverse effect on the Company, or the Company’s future results of operations, cash flows or financial condition except as described below:

The Company initiated an action against Jerry Katzman, a former director, in July 2009 alleging that Mr. Katzman fraudulently induced us to enter into an employment agreement and, alternatively, that Mr. Katzman breached that alleged employment agreement and was rightfully terminated. In September 2010, the matter proceeded to a trial by jury. The jury found that Mr. Katzman did not fraudulently induce Advanzeon to enter into the contract but also found that Mr. Katzman was not entitled to damages. On defendant’s motion to amend the verdict due to inconsistency, the trial court set aside the jury verdict and awarded Mr. Katzman damages of approximately $1.3 million. The Company appealed the lower court’s decision and posted a collateralized appeal bond for approximately $1.3 million. On February 14, 2013, the 11^th Circuit Court of Appeals of the State of Florida reversed the lower court’s judgment in favor of Katzman and remanded the case for a new trial on both liability and damages. The appellate court also taxed appellate costs in favor of Advanzeon against Katzman. The decision of the appellate court also reverses the lower court’s award of attorney’s fees previously awarded to Katzman against Advanzeon. To avoid litigating the case a second time, we began making payments in accordance with a Term Sheet. Katzman objected to the amounts we were paying monthly and filed suit in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida, Case No. 12-CA-2570, to find us in breach of the Term Sheet. On March 8, 2017 the Court determined that we had breached the Term Sheet and entered a Final Judgment in the amount of $866,052 bearing interest at the statutory rate. Management is in the process of securing a bond against the judgment. The case is currently on appeal in the Second District Court of Appeal, Florida, Case No. 2D17-1433. However, the case remains active for execution (collection) on the judgment. Since filing the appeal the execution portion of the proceedings has been removed from the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida and is now before the United States District Court, Middle District, Tampa Division, Case. No. 8:17-CV-2107-T-23AEP.

In a related matter to the Katzman litigation, on January 10, 2017, the Company brought an action against Melanie Damian et al. Case number 17-CA-00252, Thirteenth Judicial Circuit Court, Hillsborough County, FL. The Company alleges wrongful collection practices including wrongful garnishment of bank accounts.

The Company has filed a claim for money it maintains is owed by Universal Health Care Insurance Company. In re: The Receivership of Universal Health Care Insurance Company. Case number 2013-CA-00358 and Case number 2013-CA-00375 in the Second Judicial Circuit Court, Leon County, FL. The objection to the claim by the receivership was heard April 4, 2018.

In Michael Ross et.al v. Advanzeon Solutions, Inc., Plaintiff is suing the Company for money it claims is owed pursuant to a promissory note. The Company is filing a motion for summary judgment. Case Number 16-CA-005737, Thirteenth Judicial Circuit Court Hillsborough County, FL. Filed April 7, 2015.

In Advanzeon Solutions, Inc. v. Mayer Hoffman et. al.., Case Number 16-CA-005737 Thirteenth Judicial Circuit Court Hillsborough County, FL., the Company has sued Defendants for damages for breach of audit services contract. The Judge ruled in favor of Defendants motion for summary judgment, but no judgment has been entered. The Company will file for a rehearing of the summary judgment and or an appeal. Filed June 17, 2016.

In a matter entitled Pharmacy Value Management Solutions, Inc. vs Young & Son Tax and Accounting, LLC, Charles Young Sr., Charles Young Jr. and Jay Jacques, the Company brought this action for damages for among other things breach of accounting service contract, mandatory injunction, return of documents and conversion of accounting funds held in the accountants’ trust account. The case is in the initial stage. Case Number 18-CA-000960 Thirteenth Judicial Circuit, Hillsborough County, FL. Filed March 31, 2018.

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ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

Note 10 EQUITY INSTRUMENTS

Our Series C preferred stock is currently convertible into common stock at the rate of 316.28 common shares for each share of Series C preferred, adjustable for any dilutive issuances of common occurring in the future. Series C preferred shares vote with the common stockholders on an as-converted basis. The shares are nonparticipating except that dividends, when declared by our Board of Directors on the common stock, must be paid on the Series C stock on an as-converted basis before any dividends are paid on our common stock. The Series C is also cumulative with respect to dividends on common stock and junior series of preferred stock. Other significant rights and preferences of the Series C preferred include:

● the right to vote as a separate class to appoint five directors of the Company, and

● liquidation preferences, whereby the Series C holders have a claim against our assets senior to the claim of the holders of our common stock in the event of our liquidation, dissolution or winding-up (the value of the liquidation preference is $250 per share, or approximately $2,608,500 million at December 31, 2014 and 2013).

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ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

We also have a class of convertible preferred stock, Series D, for which 7,000 shares are authorized and 250 shares were issued during the year ended December 31, 2014. The shares, which were granted in January 2012, do not vest until the tenth anniversary of the grant date. Such shares were issued in exchange for the cancelation of 120 previously granted warrants to purchase Series D shares. Once vested, a Series D preferred share will be convertible at any time into 100,000 shares of common stock, subject to adjustment in the event of any common stock dividend, split, combination thereof or other similar recapitalization, without additional consideration. Prior to vesting and thereafter, each Series D convertible preferred share is entitled to all voting, dividend, liquidation and other rights accorded a share of Series D convertible preferred stock. As to dividends, the Series D stock is noncumulative. If a dividend is declared on the common stock, each share of Series D stock is entitled to receive a dividend equal to 50% of the dividend declared for the common stock as if the Series D stock had been converted. Despite their nonvested status, voting rights of each share nevertheless consist of the right to cast the number of votes equal to those of 500,000 shares of common stock. Unless otherwise required by applicable law, holders of shares of Series D have the right to vote together with holders of common stock as a single class on all matters submitted to a vote of our stockholders.

STOCK INCENTIVE COMPENSATION PLANS

WARRANTS:

To Purchase Common Stock

During the three month period ended March 30, 2013, the Company issued 325,000 shares to various individuals for consulting services performed during the period. The shares issued were valued at $0.24 per share or an aggregate price of $77,005. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

During the three month period ended June 30, 2013, the Company issued 1,420,588 shares to various individuals for consulting services performed during the period. The shares issued were valued at $0.07 - $0.12 per share or an aggregate price of $171,946. The Company also issued 1,119,078 shares as payments for accrued interest. The shares issued were valued at $0.10-$0.24 per share or an aggregate price of $132,219. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

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ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

During the three month period ended September 30, 2013, the Company issued 721,400 shares to various individuals for consulting services performed during the period. The shares issued were valued at $0.10 per share or an aggregate price of $72,140. The Company also issued 25,783 shares as payments for accrued interest. The shares issued were valued at $0.10 per share or an aggregate price of $2,578. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

A summary of warrant activity for 2014 and 2013 follows:

Warrants	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Instrinsic Value
Outstanding at January 1, 2013		35,957,583			0.33	4.26 years	$	—
Granted		8,320,000			0.24	3.38 years	$	—
Reclassified
Forfeited, expired or cancelled
Outstanding at December 31, 2013		44,277,583			0.31
Granted		3,399,000			0.27
Forfeited, expired, or cancelled		(3,212,599	)		0.25
Outstanding at December 31, 2014		44,463,984			0.31
Exercisable at December 31, 2014		44,463,984			0.31	3.47 years

We recognized approximately $2.5 million and $2.6 million of compensation costs during 2014 and 2013, respectively.

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ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

Due to the significant uncertainty of future realization (Note 6), we did not recognize the effect of approximately $624,000 of potential tax benefits attributable to equity-based expense recorded for warrants issued to key employees for 2011.  

OPTIONS:

From time-to-time, we grant stock options as compensation for services to our employees, non-employee directors and certain consultants (“grantees”) allowing grantees to purchase our common stock pursuant to stockholder-approved stock option plans. We currently have three active incentive qualified option plans, the 1995 Incentive Plan, the 2002 Incentive Plan and the 2009 Equity Compensation Plan (collectively, the “Plans”), that provide for the granting of stock options, stock appreciation rights, limited stock appreciation rights, restricted preferred stock, and common stock grants to grantees. Grants issued under the Plans may qualify as incentive stock options (“ISOs”) under Section 422A of the Internal Revenue Code of 1986, as amended. Options for ISOs may be granted for terms of up to ten years. The vesting of options issued under the 1995 and 2002 plans generally occurs after six months for one-half of the options and after 12 months for the remaining options. For the 2009 Equity Compensation Plan, the vesting period is determined by our Compensation and Stock Option Committee. The exercise price for ISOs must equal or exceed the fair market value of the underlying shares on the date of grant. The Plans also provide for the full vesting of all outstanding options under certain change of control events. The maximum number of common shares authorized for issuance under the plans is 52,000,000. As of December 31, 2013 and 2014, the information regarding the options is set forth below.

	2014		2013
Shares available		52,000,000		52,000,000
Options outstanding (Directors and employees)		6,322,000		6,322,000
Options exercisable		6,046,334		6,046,334

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ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

In addition, under our Non-employee Directors’ Stock Option Plan, we are authorized to issue non-qualified stock options to our non-employee directors for up to 1,000,000 common shares. Each non-qualified stock option is exercisable at a price equal to the average of the closing bid and asked prices of the common stock in the over-the-counter market for the most recent preceding day there was a sale of the stock prior to the grant date. Grants of options vest in accordance with vesting schedules established by our Board of Directors’ Compensation and Stock Option Committee. Upon joining our Board of Directors, directors receive an initial grant of 25,000 options for common shares. Annually, directors are granted 15,000 options for common shares on the date of our annual meeting. As of December 31, 2014, there were 2,678,000 shares available for option grants and 10,000,000 options for common shares outstanding under the non-qualified directors’ plan, Amount of which were exercisable.

A summary of activity for 2014 and 2013 follows:

	Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Instrinsic Value
Outstanding at January 1, 2013		6,261,334		0.33	8.25 years
Granted		300,000		0.25
Forfeited, expired or cancelled		-10,000		0.25
Outstanding at December 31, 2013		6,551,334		0.28	9.85  years
Granted		0
Forfeited, expired or cancelled		-143,834		.25
Outstanding at December 31, 2014		6,407,500		.28	9.85  years
Exercisable at December 31, 2014		0

The following table summarizes information about options granted and vested during the years ended December 31.

	2014		2013
Options granted		0		300,000
Weighted-average grant-date fair value ($)		N/A		0.07
Options vested		0		40,000
Fair value of vested options ($)		N/A	$	2,800

During 2014 and 2013, we granted options for common shares to employees, non-employee directors and consultants.

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ADVANZEON SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS   

A summary of common stock options outstanding and exercisable as of December 31, 2014 follows:

Options Outstanding		Exercise Price Range		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Options Exercisable		Weighted- Average Exercise Price of Exercisable Options
	6,407,500		.28		.25-.65		9.85		0	N/A

Note 11 SALE OF COMPREHENSIVE BEHAVIORAL CARE, INC

On December 30, 2013, The Company sold its wholly-owned subsidiary, Comprehensive Behavioral Care, Inc. (“CBC”). The sales price was $100.00 and the buyer received all of the issued and outstanding equity of CBC. As part of the transaction, the Company was entitled to receive any sums owing or payable to the Company or its subsidiaries for work or event occurring prior to the date of the sale. On January 1, 2014, the Company and CBC entered into an arrangement whereby the Company agreed to provide administrative services only for contracts held by CBC. These services consisted of the performance of clinical management, utilization management, claims administration, intensive case management, discharge planning and referral. In return CBC agreed to pay a monthly fee based on the number of employees/members covered on a client by client basis. The initial term is three years with provisions for subsequent one year renewals that has occurred every year since since commencement. Also on January 1, 2014, the Company and CBC entered into an agreement whereby the Company could lease the access to the Network Providers. The initial term was two years with provisions for subsequent one year term renewals. The Company agreed to pay a fixed rate per member, per month.

Pursuant to the terms of the sale, the existing receivables of the Company went to the acquirer with the exception of the outstanding Accounts receivable at the date of sale for a total consideration of $100. The Company recorded a gain on sale of CBC of $9,270,336 as follows:

Cash received on sale	$	100
Assets and liabilities transferred to purchaser
Accounts payable		891,725
Accrued claims payable		9,557,575
Other accrued expenses		767,725
Other current assets		(32,719	)
Property and equipment – net		(61,670	)
Other long-term assets		(153,122	)
Total net transfer		10,969,715
Gain on sale	$	10,969,615

Note 12 LEGAL SETTLEMENT

The Company’s subsidiary, CompCare de Puerto Rico (“Puerto Rico”) entered into an agreement with MAPRE Life Insurance Company of Puerto Rico (:MAPFRE”) whereby the Company made available to MAPFRE’s Medicare Advantage beneficiaries its network of providers for behavioral, and mental health amongst other services effective December 1, 2008. From that time until August 13, 2012, the Company claimed that overpayments for medical costs were made and requested reimbursement. An arbitration case was filed, and the parties settled on June 12, 2014 for a settlement of $1,150,000, which was received by the Company. This settlement is recorded as part of Other Income on the face of the financial statements. Of the proceeds, $150,000 was paid as fees and $1,000,000 for the repayment of outstanding debt.

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Note 13 RELATED PARTY TRANSACTION

We recognized interest expense of approximately $620,000 and $616,000 during 2014 and 2013, respectively, in connection with loans from related parties of the Company.

Employment agreement with Chief Executive Officer and Directors compensation - In accordance with the employment agreement between the Company and our Board Chairman and CEO, Clark Marcus, we are obligated to pay to Mr. Marcus a total of approximately $10.9 million in base salary over the next five years. In addition, we will pay on his behalf approximately a total of $68,000 in health insurance premiums and $603,000 in life insurance premiums, also over the next five years. This compensation may, at our election, be only accrued but not paid, in whole or in part, until such time as we receive financing and/or generate sufficient cash flows, after the payment of our operating expenses, with which to pay Mr. Marcus his agreed compensation.

In the event Mr. Marcus’ employment is terminated without cause, or Mr. Marcus voluntarily terminates his employment within one year following a change in control, if any, we will be obligated to pay to Mr. Marcus any accrued but unpaid bonuses and the total compensation that would have been paid to him for five full years following the date of termination. In connection with this employment agreement, we have accrued compensation payable of $ 1,640,280 and $832,479 included in accrued expenses as of December 31, 2014 and 2013, respectively.

Note 14 INCOME TAXES

The Company did not provide for income taxes with respect to differences between financial loss and taxable loss arising from the timing of when certain transactions are recorded for book purposes versus tax purpose. The Company has not filed any federal or state income returns since 2012. The financial statements do not reflect any fines or penalties that may or may result from not filing the various income tax returns.  

Note 15 GOING CONCERN

During the fiscal year ended December 31, 2013, we funded our operations from revenues and a line of credit. For the fiscal year ended December 31, 2014, we funded our operations from revenues and the line of credit. We will continue to fund our operations from these sources until we are able to produce operating revenue sufficient to cover our cost structure. In the event we are not able to secure such funding, our operations will be adversely affected.

Note 16 SUBSEQUENT EVENTS

Other than the events discussed elsewhere above, no events were identified by management that in our opinion require accounting recognition or disclosure in these financial statements.

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EX-3.0

Exhibit 3.0

 

 

 

 

EX-10.2

Exhibit 10.20

COMMERCIAL LEASE

This COMMERCIAL LEASE (the “Lease”) made and entered into this 23 day of May, 2014 (the “Effective Date”) by and between Twin Lakes Office Park (“Lessor”) and Advanzeon Solutions, Inc a Delaware Corporation (“Lessee”), the foregoing sometimes being herein referred to individually as a “Party” or collectively as the “Parties”.

W I T N E S S E T H:

NOW, THEREFORE for and in consideration of the mutual promises and covenants container hereinbelow and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:

1.          Lease of Leased Premises. In consideration of the Rent (as defined hereinbelow) to be paid by Lessee to Lessor, and of the covenants terms and conditions to be kept and performed as herein provided, Lessor does hereby lease and rent unto Lessee and Lessee does hereby accept a lease upon the following described Leased Premises (the “Leased Premises”):

2901 W. BUSCH BOULEVARD, UNIT 701, TAMPA, FL 33618

This Lease shall include the nonexclusive right to use the parking areas, roadways, means of ingress and egress, sidewalks, and other areas, and surroundings of the project which are included for the common use and enjoyment of Lessee and third persons (the “Common Areas”).

2.          Acceptance of Leased Premises. Lessee warrants and represents that it has had a sufficient opportunity to inspect the Leased Premises and that it has found the same to be suitable for Lessee’s intended use Lessee hereby accepts the Leased Premises in its AS IS, WHERE IS, WITH ALL FAULTS SUBJECT ONLY TO EXHIBIT A, LANDLORD’S WORK, condition, and further acknowledges and agrees that, other than Lessor’s warranty of title, Lessor makes and has made no warranties and/or representations concerning the condition of Leased Premises and specifically disclaims any and all warranties (statutory or otherwise) of merchantability, habitability and/or fitness for a particular use or purpose.

3.          Term of Lease; Holding Over. The term of this Lease (the “Term”) shall be for five (5) years, commencing as of 12:01 AM on July 1, 2014 (the “Commencement Date”) and ending as of 11:59 PM on June 30, 2019 (the “Expiration Date”) unless sooner terminated as hereinafter provided. Each successive 12 month period during the Term is referred to herein as a “Lease Year”. Any holding over by Lessee after the expiration or termination of this Lease, by lapse of time or otherwise, shall not operate to extend or renew this Lease except by express mutual written agreement between the parties hereto; and in the absence of such agreement Lessee shall continue in possession as a month-to-month Lessee only, except that the monthly Rent shall be increased to an amount equal to 150% of the monthly installment paid in the month immediately preceding the termination of this Lease and either party may thereafter terminate such occupancy at the end of any calendar month by first giving to the other party at least 30 days prior written notice.

4.          Rent. Lessee shall pay Lessor, as annual rent for the Leased Premises (hereafter the “Rent”), without demand, deduction or set off, during the entire Term of this Lease, the respective amount for each Lease Year, as set forth on the table below together with Florida state sales tax on such amounts, all of which shall be due and payable by Lessee to Lessor on the first day of each successive calendar month throughout the Term of this Lease. The first and last month’s rent ($5,949,58) will be due to Landlord upon the execution of this Lease together with the Security Deposit as defined herein.

Lease Year	Monthly Installment1
Months 1-12	$2,300.00	.9978 Per SF
Months 13-24	$3,358.87	1.4572
Months 25-36	$3,453.83	1.4984
Months 37-48	$3,551.65	1.5408
Months 49-60	$3,652.40	1.5846

¹ Does not include the sales tax and or any other amounts due under this Lease

5.          Late Fees and Interest. Any installment of Rent due hereunder that is not received by Lessor on or by the 10^th day of the respective month in which it became due and payable, shall be assessed late payment fee of 5% of the unpaid amount due for each month or fraction thereof, or such lesser amount as may be the maximum amount permitted by law, until paid. All unpaid amounts due and owing as of the 11^th day of the respective month in which they became due and payable shall accrue interest at a rate equal to the lesser of 18% per annum or the maximum non-usurious rate chargeable under applicable law. Any partial payments received by Lessor may, in Lessor’s sole and absolute discretion, be applied in the following order, first to the payment of any late fees then to the payment of any accrued interest, then to the payment of any attorneys’ fees and/or collection costs and lastly to any Rent due hereunder.

6.          Lessor’s Lien for Rent. Lessee acknowledges and confirms that Lessor has and shall have, throughout the Term of this Lease, a lien upon all of Lessor’s goods, chattels, furnishings, equipment, fixtures and other personal property located from time to time, upon, within or about the Leased Premises, with such lien securing the payment of Rent and all other amounts due and owing from Lessee to Lessor hereunder. The foregoing lien may, upon default of Lessee hereunder, be enforced by Lessor, subject to applicable law. through distress proceedings, foreclosure suit or by taking and sale of such personal property in the such manner as may be exercised in connection with a chattel mortgage or other security agreement. Said lien in subordinate to Tenant’s shareholders and lenders. The exercise of rights by Lessor with respect to its lien hereunder shall not preclude Lessor from pursuing any and all other rights and/or remedies that it may have, in contract, at law or in equity, it being acknowledged and agreed that Lessor’s rights and remedies in the event of a default by Lessee shall be cumulative and not mutually exclusive.

7.          Operating Expenses, Insurance, Property Tax & Other Additional Rent. Tenant shall pay to Landlord its Pro Rata Share of the amount by which the Operating Expenses (defined below) exceed the Operating Expenses for the Base Year (“Operating Expense Increase’’). As used in this Lease, the term “Operating Expenses” means all expenses and disbursements (subject to the limitations set forth below) that Landlord incurs in connection with the ownership, operation management, and maintenance of the Project, determined in accordance with sound accounting principles consistently applied, including the following costs: (i) wages and salaries of all on-site employees engaged in the operation, maintenance or security of the Project (together with Landlords reasonable allocation of expenses of off-site employees who perform a portion of their services in connection with the operation, maintenance or security of the Project), including taxes, insurance and benefits relating thereto; (ii) all supplies and materials used in the operation, maintenance repair, and security of the Project: (iii) costs for improvement made to the Project which, although capital in nature, are expected to reduce the normal operating costs (including all utility costs) of the Project, as amortized using a commercially reasonable interest rate over the time period reasonably estimated by Landlord to recover the costs thereof taking into consideration the anticipated cost savings, as determined by Landlord using its good faith, commercially reasonable judgment, as well as capital improvements made in order to comply with any Law hereafter promulgated or any interpretation hereafter rendered with respect to any existing Law, as amortized using a commercially reasonable interest rate over the useful economic life of such improvements as determined by Landlord in its reasonable description; (iv) cost of all utilities, except the cost of utilities for individual tenant spaces; (vi) repairs, and general maintenance of the Project including the roof sprinkler system, landscaping, drainage, lighting, signage. utilities, and similar systems and structures of the Project; (vii) fair market rental and other costs with respect to the management office for the Project; and (viii) service, maintenance and management contracts for the operation, maintenance, management repair, replacement, or security of the Project. Operating Expenses shall not include costs for (i) repair, replacements and general maintenance paid by proceeds of insurance or by Tenant or other third parties; (ii) interest, amortization or other payments on loans to Landlord; (iii) depreciation; (iv) leasing commissions; (v) legal expenses for services, other than those that benefit the Project tenants generally (e.g, tax disputes or Iiability issues); (vi) renovating or otherwise improving space for occupants of the Project or vacant space in the project; and (vii) federal income taxes imposed on or measured by the income of Landlord from the operation of the Project.

a.           Tenant shall pay to Landlord its Pro Rata Share of the amount by which the Insurance Expense (defined below) exceed the Insurance Expense for the Base Year (“Insurance Expense Increase”) As used in this Lease, the term “Insurance Expense” means all insurance premiums and other charges for insurance on or in respect to the Project, including liability, property, flood, loss of rents and other coverage.

Page 1 of 7
Lessee:		Lessor:

b.          Tenant shall pay to Landlord its Pro Rata Share of the amount by which the Tax Expense (defined below) exceed the Tax Expenses for the Base Year (“Tax Expense Increase”). As used in this Lease, the term “Tax Expense” shall mean all ad valorem real estate and tangible personal property taxes including all consulting fees paid in an effort to reduce the amount of taxes owed.

c.          Landlord may make a good faith estimate of the Operating Expenses, Insurance Expense, and Tax Expense in be due by Tenant for any calendar year or part thereof during the Lease Term. During each calendar year or partial calendar year of the Lease Term (after the Base Year), Tenant shall pay to Landlord, in advance concurrently with each monthly installment of Base Monthly Rent, an amount equal to the estimated Operating Expense Increase, Insurance Expense Increase, and Tax Expense Increase for such calendar year or part thereof divided by the number of months therein, From time to time. Landlord may estimate and re-estimate the Operating Expense increase, Insurance Expense Increase, and Tax Expense increase payable by Tenant and deliver a copy of the estimate or re-estimate to Tenant Thereafter, the monthly installments of Operating Expense Increase, Insurance Expense increase, and Tax Expense Increase payable by Tenant shall be appropriately adjusted in accordance with the estimations so that, by the end of the calendar year in question, Tenant shall have paid all of the Operating Expense Increase. Insurance Expense Increase, and Tax Expense Increase as estimated by Landlord. Any amounts paid based on such an estimate shall be subject to adjustment as herein provided when actual Operating Expense Increase, Insurance Expense Increase, and Tax Expense Increase are available for such calendar year. All such Operating Expense Increase Insurance Expense Increase and Tax Expense. Increase shall be treated as Additional Rent. The Base Year is defined as calendar year in which the lease was executed.

d.         By April 1 of each calendar year, or as soon thereafter as practicable, Landlord shall furnish to Tenant a statement of Operating Expenses. Insurance Expense, and Tax Expense for the previous calendar year or portion thereof, in each case adjusted as provided in. Section 2.f. (the “ Operating Expenses, Insurance Expense, and Tax Expense Statement”). If Tenant’s estimated payments of Operating Expense Increase, Insurance Expense Increase, and Tax Expense Increase under this Section 2 for the year or the portion thereof covered by the Operating Expense, insurance Expense, and Tax Expense Statement exceed Tenant’s Pm Rata Share of such items as indicated in the Operating Expenses. Insurance Expense. and Tax Expense Statement, then Landlord shall promptly credit or reimburse Tenant for such excess; Likewise, if Tenant s estimated payments of Operating Expense Increase. Insurance Expense Increase, and Tax Expense Increase under this Section 2 for such year are less than Tenant’s Pro Rata Share of such items as indicated in the Operating Expenses, Insurance Expense, and Tax Expense Statement, then Tenant shall pay Landlord such deficiency within ten (10) days after mailing of the Operating Expenses. Insurance Expense and Tax Expense Statement.

e.          Tenant will pay Landlord all state and local sales, excise and use taxes imposed by law on all Base Rent, Additional Rent and other charges or services due from Tenant to Landlord under this Lease, Said taxes to be remitted together with the Base Rent, Additional Rent, charges, or service to which they pertain.

All amounts payable by Tenant according to this Section 8 will be payable as rent, without abatement, reduction, recoupment, deduction or offset. If Tenant fails to pay any amounts due according to this Section, Landlord will have all the rights and remedies available to it on account of Tenant’s failure to pay rent.

8.          Security Deposit. Upon the execution of this Lease, Lessee shall deposit with lessor the sum of $3,500 (the “Security Deposit”) as the security for the performance of Lessee’s obligations under this Lease including, without limitation, the surrender of possession of the Leased Premises to Lessor as provided herein, it being expressly understood and agreed that such Deposit is not an advance Rent deposit or a measure of Lessor’s damages in case of Lessee’s default If Lessor applies any part of the Deposit to cure any default of lessee, Lessee shall, upon demand, remit to Lessor the amount so applied so that Lessor shall have the full Deposit on hand at all times during the Term of this Lease. Lessee agrees that the Deposit may be commingled with other deposits held by Lessor, that no interest shall be due in connection there with and that Lessor shall not be obligated to apply the Deposit in Rent and/or am other charges in arrears or to damages for Lessee’s failure to perform under the Lease; provided, however Lessor may so apply the Deposit, in Lessor’s sole and unfettered discretion, and Lessor’s right to possession of the Leased Premises for nonpayment of Rent or for any other reason shall not in any way be affected by reason of the fact that Lessor holds such Deposit.

9.          Occupancy and Use. Lessee may use the Leased Premises for any lawful use permitted by the zoning designation of the Leased Premises and for no other purpose. Lessee shall he responsible for ascertaining that its proposed use is, in fact, permissible under the current zoning designation, and Lessee shall be responsible for obtaining any and all permits, licenses and/or other approvals governmental and/or regulatory agencies or entities having jurisdiction over the Leased Premises and/or lessee’s proposed business operations. Lessee’s use of the Leased Premises shall be conducted in compliance with all laws, orders and regulations of federal, state, county and municipal authorities, and with any direction or recommendation of and public officer or officers, pursuant to law and shall bear all costs of any kind or nature whatsoever occasioned by or necessary for compliance with the same Lessor shall cause the Leased Premises, and the common areas to comply with all laws, orders and regulations of federal, state, count) and municipal authorities, and with any direction or recommendation of any public officer or officers, except to the extent such compliance is necessitated solely by virtue of Lessee’s particular use of the Leased Premises.

10.       Rules and Regulations. Lessee shall observe and fully comply (and cause all third parties under its control and/or direction to observe and fully comply) with any and all rules and regulations and/or use restrictions (the “Rules & Regulations”) concerning the Common Areas and the use and enjoyment thereof, as promulgated, from lime to time, by Lessor.

11.        Signage. No signs, advertisement or notices of any kind shall be inscribed, painted or affixed upon, or be projected from any part of the Leased Premises, except as may be permitted by the Lessor in its sole and absolute discretion, and in any event, only such signs may only be located at the entrance of the Leased Premises.

12.       Lessor’s Right of Entry. Lessor shall have the right, without charge or diminution of Rent, to enter the Leased Premises at all reasonable times. upon at least 24 hours advance notice. for the purpose of examining the Leased Premises and making its required repairs, alterations or improvements either to the Leased Premises or to utility lines or other facilities of the building in which the Leased Premises are located, or to install such lines or facilities Lessee shall, upon the discovery of any defect in or damage to the Leased Premises or any need for repairs, which are the responsibility of the Lessor, promptly report same to Lessor in writing, specifying such defect or damage. Lessor shall make such repairs, alterations, improvements and installations as arc its responsibility in a reasonable manner and with due diligence.

13.        Services Provided by Lessor. Lessor agrees to furnish the following services “Services”) with respect to the Leased Premises and the Common Areas;

(a)          Potable water service for drinking and lavatory purposes.

(b)          Electric utility service to the Leased Premises for the operation of standard lighting fixtures and general office equipment, including computers and general service non-production type office cops machines (subject to Lessees payment of the utility service fees therefor); provided, however, that Lessor shall have no obligation to provide electric utility services in excess of that customarily required for the number of convenience outlets and electrical circuits existing in the Leased Premises as of the Effective Date hereof. if Lessee requires electrical services in excess of that deemed by Lessor to be standard, such services may he provided upon such conditions as Lessor may reasonably determine (including, without limitation, the requirement that sub meters be installed at Lessee’s expense), and Lessee shall bear the entire cost of such excess Service based upon actual consumption (if sub metered) or Lessors reasonable estimate of the cost of such excess service.

(c)          Heating and air conditioning for the reasonably comfortable use and occupancy of the Leased Premises within an acceptable temperature range, as determined by Lessor in its sole reasonable discretion; provided, however, that heating and air conditioning service at any times other than normal business hours of 8:00 AM Eastern and 6:00 PM or no more than 50 hours during any seven (7) consecutive day period Eastern, Monday through Friday (weekends and national holidays being excepted) may be furnished, at Lessee’s cost, not to exceed $30.00 per hour, upon the written request of Lease delivered to Lessor no later than 48 hours in advance of the date on which such services are required.

(d)          Illumination of Common Areas (including maintenance thereof and the replacement of lighting fixtures, bulbs and ballasts, if and when required) in the manner and to the extent deemed necessary by Lessor in us sole reasonable discretion; provided, however, that Lessor shall have no) Liability to Lessee its employees, agents, invitees, guests and/or licensees for Losses due to theft or burglary and/or damage, of vandalism caused by third parties.

(e)           General maintenance and repair of all parking areas, sidewalks, landscape, hardscape and other improvements deemed or considered Common Areas.

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Lessee:		Lessor:

Notwithstanding the foregoing, Lessor shall not be liable to Lessee or others nor shall Lessee be entitled to an abatement of Rent on account of any disruption or interruption in the delivery or provision of the Services by Lessor hereunder, including, without limitation, any disruption or interruption on account of equipment malfunction, causes of force majeure, or otherwise.

14.          Maintenance, Repairs and Alterations. Except as otherwise expressly provided in this Lease, Lessor shall maintain and rnake all repairs and replacements with respect to the building in which the Leased Premises are located, including the roof, foundations, exterior walls, interior structural walls, all structural components and all building systems, such as mechanical, electrical, HVAC and plumbing, except to the extent caused by the negligent acts or omissions of Lessee. Repairs or replacements shall be made within a reasonable time (depending on the nature of the repair or replacement needed) after receiving notice from Lessee or upon Lessor having actual knowledge of the need for a repair or replacement.

Lessee shall, throughout the Term of this Lease, keep and maintain the Leased Premises in good, clean and presentable condition and repair and shall commit no waste with respect thereto. Upon the expiration or sooner termination of this Lease, Lessee shall surrender the Leased Premises in as good condition as existed on the Cornmencernent Date of this Lease, failing which, Lessor may restore the same to their required condition and Lessee shall pay the cost thereof upon demand. All of Lessee’s personal property, furniture, trade fixtures, shelves, bins and machinery not removed from the Leased Premises when Lessee vacates the Leased Premises on termination of this Lease shall thereupon be conclusively presumed to have been abandoned by Lessee and forthwith become Lessor’s property; provided, however, that Lessor may require lessee to remove such personal property, furniture, trade fixtures, shelves, bins and machinery or may have such property removed at Lessee’s expense.

Lessee shall make no alterations, additions or physical improvements to the Leased Premises (including, but not limited to the installation of permanent or semi-permanent partitions, walls, panels, shelving, floor coverings, cabinets and similar items) without first obtaining the prior written consent of the lessor, which consent shall not be unreasonably withheld in the case of minor alterations to the Leased Premises to accommodate Lessee’s proposed use thereof. All costs and expense of such alterations, additions or improvements shall be borne solely by Lessee, and, if and to the extent that a building or alteration permit is required therefor, all such work shall be performed by a licensed, bonded contractor, approved, in advance, by Lessor (such approval not being unreasonably withheld). Upon completion all additions, alterations and improvements made by Lessee (excepting only movable office furniture, detached bookshelves and similar equipment) shall become the property of the Lessor and shall remain upon and be surrendered with the Leased Premises upon the expiration or sooner termination of this Lease, unless otherwise agreed or directed by Lessor.

Lessee agrees that it will make full and prompt payment of all sums necessary to pay for the cost of repairs, alterations, improvements, changes or other work done by Lessee to the Leased Premises and further agrees to indemnify and hold harmless Lessor from and against any and all mechanic’s, materialmen’s or laborer’s liens arising out of or from such work or the cost thereof which may be asserted, claimed or charged against the Leased Premises. Notwithstanding anything to the contrary contained in this Lease. IT IS AGREED THAT LESSOR’S INTEREST IN THE LEASER PREMISES SHALL NOT BE SUBJECT TO ANY LIENS UNDER CHAPTER 713, FLORIDA STATUTES AND NOTICE IS HEREBY GIVEN THAT LESSOR SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE HOLDING THE LEASED PREMISES OR ANY PART THEREOF THROUGH OR UNDER LESSEE, AND THAT NO MECHANIC’S OR OTHER LIENS FOR ANY SUCH LABOR. SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR IN AND TO THE LEASED PREMISES. All persons dealing with Lessee are hereupon placed upon notice of the foregoing prohibition provision.

In the event any notice or claim of lien shall be asserted of record against the interest of Lessor in the Leased Premises on account of or in connection with any improvement or work done by or for Lessee, or any person claiming by, through or under Lessee, or for improvements or work the cost of which is the responsibility of Lessee. Lessee agrees to have such notice or claim of lien canceled and discharged of record as a claim against the interest of Lessor in the Leased Premises, either by payment and satisfaction or by removal by transfer to bond or deposit as permitted by law, within thirty (30) days after notice to Lessee by Lessor, and in the event Lessec shall fail to do so Lessee shall be considered in default under this Lease.

15.           Assignment and Subletting. Lessee shall not, without the prior written consent of Lessor (which shall not be unreasonably withheld) assign this Lease or sublease the Leased Premises, or any part thereof or grant any concession or license within the Leased Premises, and any attempt to do any of the foregoing shall be void and of no effect.

16.           Default. Each and all of the following events shall be deemed and constitute events of default on the part of Lessee under the terms and conditions of this Lease:

(a)       if any installment of Rent or any other sums required to be paid by Lessee hereunder, or any part thereof, shall at any time be in arrears and unpaid by the 5^th day of the month;

(b)      if there be any default on the part of Lessee in the observance or performance of any of the other covenants, agreements or conditions of this Lease on the part of Lessee to be kept and performed and said default shall continue for a period of 30 days after written notice thereof from Lessor to Lessee (unless such default cannot reasonably be cured within 30 days and Lessee shall have commenced to cure said default within said 30 days and continue diligently to pursue the curing of same);

(c)     if Lessee shall file a petition in bankruptcy or be adjudicated a bankrupt, or file any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present of future federal, state or other statute, law or regulation or make an assignment for the benefit of creditors, or if any trustee, receiver or liquidator of Lessee or of all of any substantial part of its properties or of the Leased Premises shall be appointed in any action, suit or proceeding by or against Lessee and such proceeding or action shall not have been dismissed or bonded within 30 days after such appointment;

(d)    if the Leasehold estate hereby created shall be taken on execution or by other process of law, except eminent domain; or

(c)     if Lessee shall vacate, abandon or fails to occupy the Leased Premises for a period in excess of 30 days

17.          Lessor’s Remedies. In the event of any default set forth in Section 17 hereof. Lessor, may, at its option, exercise any and all of the following remedies, in addition to those that may be available to Lessor, at law:

(a)       Lessor may, without terminating this Lease, enter upon the Leased Premises, without being liable for prosecution or any claim for damages therefore, and do whatever Lessee is obligated to do under the terms of this Lease, in which event Lessee shall reimburse Lessor on demand for any expenses which Lessor may incur thus effecting compliance with Lessee’s obligation under this Lease and Lessor shall not be liable for any damages resulting to Lessee from such action;

(b)       Lessor may, if it elects to do so, bring suit for the collection of Rent and/or any damages resulting from Lessee’s default without entering into possession of the Leased Premises or voiding this Lease;

(c)       Lessor may terminate this Lease after 15 days’ written notice to Lessee, whereupon Lessee shall quit and surrender the Leased Premises by said date, failing which, Lessor may enter upon the Leased Premises forthwith or at any subsequent time without additional notice or demand, (which additional notice or demand is hereby expressly waived by Lessee), without being liable for prosecution of any claim for damages therefore, and expel Lessee and those claiming under is and remove their effects without being guilty of any manner of trespass, whereupon, Lessor may: (i) accelerate and declare the entire remaining unpaid Rent and any and all other monies payable under this Lease for the balance of the term hereof to be immediately due and payable; or (ii) collect from Lessee, as liquidated damages, all past due Rent and other amounts due Lessor up to the date of termination, plus the difference between Rent provided for herein and the proceeds from any re-letting of the Leased Premises, payable in monthly installments over the period that would otherwise have constituted the remaining term, of this Lease, plus all expenscs in connection with such re-letting including without limitation all costs, fees and expenses of repossession, brokers, advertising, attorneys, courts, repairing, cleaning, repainting and remodeling the Leased Premises for re-letting, less the proceeds of any re-letting or the value of Lessor’s use of the Leased Premises.

(d)       Without waiving its rights to terminate at any time as provided above, Lessor may retake possession of the Leased Premises, it being agreed that any such retaking or the commencement and prosecution of any action by Lessor in eviction, forcible entry and detainer, ejectment or otherwise, or any execution of any judgment or decree obtained in any action to recover possession of the Leased Premises shall not be construed as an election to terminate this Lease unless Lessor expressly exercises its option hereinbefore provided to declare the term hereof ended, whether or not such entry or reentry be, had or taken under summary proceedings or otherwise, and shall not be deemed to have absolved or discharged Lessee from any of its obligations and liabilities, for the remainder of the current term of the Lease; rather, this Lease shall continue in effect for the remainder of the then current term, and Lessee shall remain liable and obligated under all of the covenants and conditions hereof during the said period and shall pay as and when due the Rent and other amount, payable hereunder as if Lessee had not defaulted. Lessor may re-lease the Leased Premises for the account of Lessee, crediting the Rent received on such re-leasing first to the costs of such re-leasing and then to any other amounts owing by Lessee hereunder—Such continuance of this in case shall not constitute any waiver or consent by lessor of or to said default or any subsequent default.

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Lessee:		Lessor:

No remedy herein or otherwise conferred upon or reserved to Lessor shall be considered exclusive of any other remedy, but the same shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute, and every power and remedy given by the Lease to Lessor may be exercised from time to time and as often as the occasion may rise or may be deemed expedient.

In addition to the foregoing remedies and regardless of which remedies Lessor pursues. Lessee covenants that it will indemnify Lessor from and against any reasonable loss and damage directly or indirectly sustained by reason of any termination resulting from any event of default as provided above or the enforcement or declaration of any rights and remedies of Lessor or obligations of Lessee, whether arising under this lease or granted, permitted or imposed by law or otherwise. Lessor’s damages hereunder shall include, but shall not be limited to. any loss of Rent prior to or after re-leasing the Leased Premises, brokers/salespersons commissions, advertising costs, reasonable costs of repairing, and remodeling, the Leased Premises for re-leasing, moving and storage charges incurred by Lessor in moving Lessees property and effects and legal costs and reasonable Attorney’s fees incurred by Lessor in any proceedings resulting from Lessee’s default, collecting any damages hereunder, obtaining possession of the Leased Premises by summary process or otherwise or re-leasing the Leased Premises, or the enforcement or declaration of any of the rights or remedies of Lessor or obligations of Lessee, whether arising under this Lease or granted, permitted or imposed by law or otherwise In the event that any court or governmental authority shall limit any amount, which Lessor may be entitled to recover under this paragraph. Lessor shall be entitled to recover the maximum amount permitted under law . Nothing in this paragraph shall be deemed to limit Lessor’s recovery from Lessee of the maximum amount permitted under law or of any other sums or damages which Lessor may be entitled to so recover in addition to the damages set forth herein

18.       Non-waiver of Defaults. No delay or omission of Lessor to execute any right or power arising from any default shall impair any such right or power or shall be construed to be a waiver of any such default or any acquiescence therein. No waiver of any breach of any of the covenants of this Lease shall be construed, taken or held to be a waiver of any other breach or waiver or acquiescence in or consent to any further or succeeding breach of the same covenant. Receipt by Lessor of less than the full amount due from Lessee shall not be construed to be other than a payment on account of the amounts then due, nor shall any statement on Lessee’s check or any letter accompanying Lessee’s payment be deemed an accord and satisfaction, and Lessor may accept such payment as a partial payment only. The rights herein given to receive, collect, sue or distrain for any Rent or Rents, monies or payments, or to enforce the terms provisions and conditions of this Lease, or to prevent the breach of nonobservance thereof, or the exercise of any such right or of any other right or remedy hereunder or otherwise granted or arising, shall not in any way affect or impair or take away the right or power of Lessor to declare the term hereby granted ended and to terminate this Lease as herein provided because of any default in or breach of any of the covenants, provisions or conditions of this lease.

19.      Fire and Casualty. In the event of the total destruction of the building by fire or otherwise, or so much thereof that Lessee shall be unable to operate its business, Lessor or Lessee, as the case may be, shall so notify Lessee or Lessor within 60 days of the casualty, the Rent shall be paid up to the date of the casualty, and from the date of the casualty, and henceforth, this Lease shall cease and come to an end. In the event the Leased Premises or the building in which the Leased Premises is located shall be partially damaged by fire or other casualty, the same, except as hereinafter provided, shall be repaired as speedily as possible by and at the expenses of Lessor, and the Rent shall be shared in proportion to that part of the Leased Premises which are untenable. However, if such damages resulted from or was contributed to by the act, omission, fault or neglect of lessee, or Lessee’s employees invitees or agents, then there shall be no abatement of Rent except to the extent recovered from Rental insurance. In the event the Leased Premises arc not repaired and tenable within 180 days after the damage or casually, Lessee shall have the option to terminate this Lease at any time thereafter but prior to the Leased Premises being repaired and made tenable. In the event the holder of any indebtedness secured by a mortgage or deed of trust covering the Leased Premises requires that the insurance proceeds be applied to such indebtedness, then Lessor shall have the right to terminate this Lease by delivering written notice of termination to Lessee within fifteen (15) days after such requirement is made by any such holder, whereupon all rights and obligations hereunder shall cease and terminate.

20.       Indemnification. Lessee shall indemnify, defend and hold Lessor harmless against and from any and all claims, liabilities, demands, actions, losses, damages, orders, judgments, penalties, fines and any and all costs and expenses (including, without limitation, reasonable attorneys’ fees and costs of litigation) incurred as a result of, in connection with or arising, directly or indirectly, from Lessee’s occupation and/or use of the Leased Premises, including, without limitation, injury to any person or damage to any property occurring in, on or about the Leased Premises; provided, however, that Lessee shall not be liable to indemnify Lessor with respect to any of the foregoing arising out of the negligence gross negligence or intentional misconduct of Lessor or any of its contractors, agents, employees, officers, partners or other Lessees or their invitees.

21.       Casualty and General Liability Insurance. Lessor shall keep and maintain, with respect to the Leased Premises and the building in which it is located, the following policies of insurance, in such amounts and having such deductibles as Lessor may, in its sole and absolute discretion, deem appropriate: (i) property and casualty insurance: and (ii) comprehensive general, public liability insurance. Commencing as of the second Lease Year. Lessee shall pay its prorata share (calculated by multiplying the amount of increase, if any, by a fraction, the numerator of which is the gross leasable area of the Leased Premises, and the denominator of which is the total gross leasable urea of all property insured by such policy or policies) of any increase in the costs of such policies over the annual premium amount paid or payable by Lessor as of the Effective Date hereof. Notwithstanding the foregoing, lessee shall have no right to receive all or any portion of the proceeds of such policies of insurance, with regard to any claims made thereunder on account of casualty, damage to or loss of the Leased Premises and/or the building which the Leased Premises is located.

22.          Personal Property Insurance. Lessee shall, at all times during the Term of this Lease, keep and maintain, at Lessee’s sole cost and expense, such policy or policies of insurance providing Lessee coverage (in such amounts and having such deductibles as Lessee may deem appropriate) against loss or damage to its equipment and other personal property in the Leased Premises by fire and all other casualties usually covered under a fire and extended coverage policy of casualty insurance. Any and all deductibles due and payable in connection with covered losses hereunder shall be the responsibility of Lessee.

23.          Environmental Indemnification. Lessee hereby represents, warrants, covenants and agrees to at all times to be, in all material respects, in compliance with all state, federal, and local laws and regulations governing or in any way relating to the generation, handling, manufacturing, treatment, storage use, transportation, spillage, leakage dumping, discharge, or disposal (weather legal or illegal, accidental or intentional) of any Hazardous Substance (as defined hereinbelow). Lessee hereby agrees to indemnify, protect, defend, (with counsel) and hold Lessor, its managers, officers, partners, directors, shareholders, agents, lenders, and employees harmless from and against any and all claims (including, without limitation, third party claims for personal injury or real or personal property damage), actions, administrative proceedings, judgments, damages, punitive damages, penalties, fines, costs, liabilities (including sums paid in settlements of claims) and expense of whatsoever kind and/or nature (including attorneys fees) arising out of or in connection with directly or indirectly, the release or suspected release during the Term of this Lease, of any Hazardous Substance in or into the air soil, surface water, groundwater or soil vapor at, on about, under or within the Leased Premises, or any portion thereof.

As used herein, the term “Hazardous Substances” means any hazardous or toxic substances materials or wastes including, but not limited to those listed in the United States Department of Transportation Tables, or by the Environmental Protection Agency as Hazardous substances, or such substances, materials, and wastes which are or become regulated under any applicable local, slate or federal law including, without limitation, any material, waste, or substance which is (i) petroleum, (ii) asbestos, (iii) polychlorinated biphenyls, (iv) designated as a Hazardous Substance pursuant to sections of the Clean Water Act defined as a Hazardous waste pursuant to Sections of the Resource Conservation and Recovery Act defined as a Hazardous substance pursuant to sections of the Comprehensive Environmental Response, Compensation and Liability Act, or defined as Hazardous Substances pursuant to Florida Statutes.

24.       Eminent Domain. Should the Leased Premises or the building in which the Leased Premises are located, be taken. appropriated or condemned for public purposes, or voluntarily transferred in lieu of condemnation, in whole or in such substantial part as to render the building unsuitable for Lessor’s purposes or the Leased Premises unsuitable for Lessee’s purposes, the Term of this Lease shall, at the option of Lessor in the first instance and at the option of Lessee in the second instance, terminate when Lessee’s right to possession is terminated If neither party exercises this option to terminate within 10 days after the dale of such taking, or if the portion of the Leased Premises or the building taken, appropriated, condemned or voluntarily transferred in lieu of condemnation does not render the building unsuitable for lessor’s purposes or the Leased Premises unsuitable for Lessee’s purposes, then this Lease shall terminate only as to the part taken or conveyed on the date Lessee shall yield possession, and Lessor shall make such repairs and alterations as may be necessary to make the part not taken usable, and the Rental payable hereunder shall be reduced in proportion to the part of the Leased Premises taken. Lessee shall have the right to recover from the condemning authority, such compensation as may be awarded to Lessee on account of interruption of Lessee’s business, for moving and relocation expenses and for depreciation to and removal of Lessee’s goods and trade fixtures.

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Lessee:		Lessor:

25.       Subordination. Lessor reserves the right to sell, assign, transfer, mortgage or convey any and all rights it may have in the building the Leased Premises or this Lease, and to subject this Lease to the lien of any mortgage [up to but not exceeding seventy-five percent (75%) of the fair market value of the Leased Premises] now or hereafter placed upon the building or the Leased Premises; provided, however, Lessee’s possession and occupancy shall not be disturbed or the Lease modified, so long as Lessee shall comply with the provisions of this Lease.

26.       Notices. Any notice required or permitted to be given under this Lease shall be deemed to have been given if reduced to writing and delivered in person or mailed by certified mail, postage prepaid, or by overnight delivery service, to the party who is to receive such notice at the address set forth on the signature page of this Lease or to such other places as may be designated in writing by Lesser or Lessee. Delivery shall be deemed to have occurred upon receipt or refusal of service.

27.       Estoppel Certificate. Lessee shall at any time and from time to time upon not less, than 20 days’ prior written request from Lessor, execute, acknowledge and deliver to Lessor a written certificate stating: (a) whether this Lease is in full force and effect; (b) whether this Lease has been modified or amended and, if so, identifying and describing any such modification or amendment; (c) the date to which Rent has been paid; (d) whether Lessee knows of any default on the part of Lessor and, if so, specifying the nature of such default; and (e) that the improvements have been fully completed by Lessor in accordance with the plans and specifications approved by Lessee, and that Lessee is in full and complete possession thereof.

28.       Quiet Enjoyment. Lessor covenants with Lessee that Lessee, having performed its covenants and agreements herein set forth, shall have quiet and peaceable possession of the Leased Premises on the terms and conditions herein provided.

29       Governing Law. This Lease shall be interpreted under the laws of the state of Florida and venue for any litigation shall be proper in any county, state or federal court located in Hillsborough County, Florida.

30.       Waivers. Neither party shall be considered to have waived any of the rights, covenants or conditions of this Lease unless evidenced by its written waiver; and the waiver of one default or right shall not constitute the waiver of any other. The acceptance of Rent shall not be construed to be a waiver of any breach or condition of this Lease.

31.       Successors. The provisions of this Lease shall be binding upon and inure to the benefit of Lessor and Lessee, respectively, and their respective successors, assigns, heirs, executors and administrators.

32.       Partial Invalidity. If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws, the remainder of this Lease shall not be affected thereby; and there shall be added as part of this Lease a replacement clause or provision or similar in terms to such illegal, invalid or unenforceable clause or provisions as may be possible and be legal, valid and enforceable.

33.       Relationship of the Parties. Lessor and Lessee agree that the relationship between them is that of Lessor and Lessee and that Lessor is leasing space to Lessee. It is not the intention of the parties, not shall anything herein be constructed to constitute Lessor as a partner or joint venture with Lessee, or as a “warehouseman” or a “bailee”.

34.       Headings. The headings as to the contents of particular paragraphs herein are intended only for convenience and are in no way to be constructed as a part of this Lease of as a limitation of the scope of the particular paragraphs to which they refer.

35.       Survival of Obligations. All obligations of any party hereunder not fully performed as of the expiration or earlier termination of the term of this Lease shall survive the expiration or earlier termination of the term hereof for a period commensurate with the applicable status of limitations that an action could be maintained with respect thereto.

36.       Lessee Authority. Lessee represents and warrants to Lessor that Lessee has the full right, power and authority to enter into this Lease and to fully perform each and all of its obligations hereunder the party signing below has the due and proper authority to execute and deliver this Lease.

37.       Redemption. Lessee hereby expressly waives any and all rights of redemption, if any, granted by or under am present or future law in the event Lessor shall obtain possession of the Leased Premises by virtue of the provisions of this Lease, or otherwise.

38.       Waivee of Jury Trial. LESSOR, LESSEE AND GUARANTORS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT Of, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT OF THE LESSOR ENTERING INTO THIS AGREEMENT.

39.       Radon Gas. RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY PRESENT HEALTH RISKS TO PERSONS WHO ARE EXPOSED TO IT OVER TIME. LEVELS OF RADON THAT EXCEED FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN FLORIDA. ADDITIONAL INFORMATION REGARDING RADON AND RADON TESTING MAY BE OBTAINED FROM YOUR COUNTY PUBLIC HEALTH UNIT. DISCLOSURE MADE PURSUANT TO §404.056(8), FLORIDA STATUES.

40.       Multiple Counterparts. This Lease may be executed in one or more counterparts, each of which shall be deemed and original and all together shall constitute one and the same instrument.

41.       Construction. The parties have participated jointly in the negotiation and drafting of this Lease. In the event that an ambiguity or question of intent or interpretation arises, this Lease shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Lease.

42.       Attorney’s Fees. In the event any litigation ensues with respect to the rights, duties and obligations of the parties under this Lease, the non-prevailing party in any such action or proceeding shall pay for all costs, expenses and reasonable attorney’s fees incurred by the prevailing party in enforcing the covenants and agreements of this Lease. The term “prevailing party” as used herein, shall include, without limitation, a party who obtains legal counsel and brings action against the other party by reason of the other Party’s breach or default and obtains substantially the relief sought, whether by compromise, settlement or judgment.

43.       Time is of the Essence. Time is of the essence in the full and complete performance of each and every obligation of Lessee hereunder.

44.       Entire Agreement. This Lease and the Exhibits attached hereto constitute the complete and entire understanding and agreement between Lessee and Lessor. All prior inconsistent arrangements, understandings and/or agreements whether oral or written, are hereby declared null and void.

INTENTIONALLY LEFT BLANK
SIGNATURE PAGE TO FLLOW

Page 5 of 7
Lessee:		Lessor:

IN WITNESS WHEREOF, Lessor and Lessee have hereunto set their hands and seal on the day and year first above written.

Witnesses:		LESSOR:
		Twin Lakes Office Park
/s/ Clark A. Marcus
Name:	Clark A. Marcus	By:	/s/ Joseph A. Kennedy
			Joseph A. Kennedy, Manager
/s/ Dagny Rivers
Name:	Dagny Rivers	Address (for Notice purposes):
		Twin Lakes Office Park Attn: Joseph A. Kennedy 3410 Henderson Boulevard, Suite 200 Tampa, FL 33608

		LESSEE:
		Advanzeon Solutions, Inc.
		a(an)
/s/ James L. Koenig
Name:	James L. Koenig	By:	/s/ Clark A. Marcus
		Name:	Clark A. Marcus
		Title:
		FEIN:	___ - ____________________
/s/ Dagny Rivers
Name:	Dagny Rivers	Address (for Notice purposes):
		Attn:
		E-mail:

Page 6 of 7
Lessee:		Lessor:

EXHIBIT A

Landlord work

1. Landlord will demolish the walls as indicated on the attached Demo Plan.

2. Landlord will construct walls as indicated on the attached Premises plan.

3. New standard building paint & carpet throughout, wood floors to remain.

4. Replace damaged ceiling tiles and fix roof leaks.

5. HVAC to be in good working order.

6. All light bulbs and ballasts to be in good working order.

For additional layout detail see attached Premises plan and DEMO PLAN.

Page 7 of 7
Lessee:		Lessor

 

 

AMENDMENT TO LEASE AGREEMENT

This amendment to lease agreement (the “amendment”) is made this 25^th day of June, 2014, by and between Advanzeon Solutions, Inc. “Tenant”) and Twin Lakes Office Park (“Landlord”).

WITNESSETH

Whereas, Tenant and Landlord did enter into certain Lease Agreement (the “Original Lease”) dated May 23, 2014 pursuant to which Tenant does lease from Landlord Suite 701 in that office park in Tampa, Florida known as Twin Lakes Office Park (formerly Lincoln Garden) at 2910 W. Busch Blvd., Tampa, Florida (the “Premises”).

Whereas, Tenant and Landlord desire to modify and amend the Lease to add 1,008 rentable square feet to the Premises. Agreements of Original Lease will remain unaltered except for specific changes defined by this amendment and will apply to any succeeding tenant.

Now, therefore, Landlord and Tenant hereby covenant and agree as follows:

1. The Premises as defined in paragraph 1 of the Lease shall be revised to be:

2901 W. BUSCH BOULEVARD, UNITS 701 & 703, TAMPA, FL 33618

2. In accordance with paragraph 4 of the Lease the revised Rent will be as follows:

Lease Year	Monthly Installment1
Months 1-12	$3,304.72
Months 13-24	$4,828.70
Months 25-36	$4,963.98
Months 37-48	$5,104.78
Months 49-60	$5,248.34

In witness whereof, the undersigned has caused this amendment to be executed and delivered, on the day and year first written.

	Landlord
	Twin Lakes Office Park
Witness
	By:
Witness	Joseph A Kennedy
	It’s President

Date:

		Tenant
		ADVANZEON SOLUTIONS, INC.
Witness	/s/ Sharon Mandel
		By:	/s/ James L. Koenig
Witness	/s/ Dan Kane
		It’s:	Acting CFO

Date:  06-25-14

1 of 1

EX-21.1

Exhibit 21.1 

EX-21.1 LIST OF THE COMPANY’S ACTIVE SUBSIDIARIES

As of December 31, 2014, the Company had the following active subsidiaries:

Wholly-owned subsidiaries of Comprehensive Care Corporation:	State of Incorporation
Core Corporate Consulting Group, Inc.	Delaware
Comprehensive Care Benefits, Inc.	Nevada
Pharmacy Value Management Solutions, Inc	Nevada

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated May 10, 2018 on the consolidated financial statements included in the annual report of Advanzeon Solutions Inc. and Subsidiaries on Form 10-K for the years ended December 31, 2014 and 2013.

/s/ Louis Plung  Company, LLP

May 18, 2018

Pittsburgh, Pennsylvania

EX-31.1

EXHIBIT 31.1

ADVANZEON SOLUTIONS

CERTIFICATIONS

I, Clark A. Marcus, certify that:

1.        I have reviewed this annual report on Form 10-K of Advanzeon Solutions,

2.        Based on my knowledge, this annual 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 this annual report;

3.        Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report;

4.        I am 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 my supervision, to ensure that material information relating to registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my 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 annual report my 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 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 my 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 involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 18, 2018	by:	/s/ Clark A. Marcus
			Clark A. Marcus
			Chief Executive Officer

EX-31.2

EXHIBIT 31.2

 ADVANZEON SOLUTIONSCERTIFICATIONS

I, Arnold B. Finestone, Ph.D. certify that:

1.        I have reviewed this annual report on Form 10-K of Advanzeon Solutions,

2.        Based on my knowledge, this annual 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 this annual report;

3.        Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report;

4.        I am 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 my supervision, to ensure that material information relating to registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my 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 annual report my 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 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 my 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 involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 18, 2018	by:	/s/ Arnold B. Finestone, Ph.D.
			Arnold B. Finestone, Ph.D.
			Chief Financial Officer, Principal
			Accounting Officer and Director

EX-32.1

EXHIBIT 32.1

SECTION 906 CERTIFICATION

CERTIFICATION REQUIRED BY

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the 2014 and 2013 annual report of Advanzeon Solutions. (the “Company”) on Form 10-K for the periods ended December 31, 2014 and 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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.

Date:	May 18, 2018	by:	/s/ Clark A. Marcus
			Clark A. Marcus
			Chief Executive Officer and Chairman
			(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

SECTION 906 CERTIFICATION

CERTIFICATION REQUIRED BY

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the 2014 and 2013 annual report of Advanzeon Solutions (the “Company”) on Form 10-K for the periods ended December 31, 2014 and 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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.

Date:	May 18, 2018	by:	/s/ Arnold B. Finestone, Ph.D.
			Arnold B. Finestone, Ph.D.
			Chief Financial Officer and Chief Accounting Officer
			(Principal Financial and Accounting Officer)

EX-99.1

Exhibit 99.1

CHARTER OF THE AUDIT COMMITTEE

COMPREHENSIVE CARE CORPORATION 

AUTHORITY AND PURPOSE

The Audit Committee of Comprehensive Care Corporation (the “Corporation”) is appointed by the Corporation’s Board of Directors (the “Board”) to oversee the accounting and financial reporting processes of the Corporation and audits of the financial statements of the Corporation. The Audit Committee (the “Committee”) shall undertake those specific duties and responsibilities listed below and such other duties as the Board shall from time to time prescribe. All powers of the Committee are subject to the restrictions designated in the Corporation’s Bylaws and applicable law.

The Corporation’s management is responsible for preparing the Corporation’s financial statements. The independent auditors are responsible for auditing those financial statements. Management, including the internal audit function, if any, and the independent auditors, have more time, knowledge, and detailed information about the Corporation than do Committee members. Consequently, in carrying out its oversight responsibilities, the Committee is not providing any expert or special assurance as to the Corporation’s financial statements, or any professional certification as to the independent auditors’ work, including with respect to auditor independence. Each member of the Committee is entitled to rely on the integrity of people and organizations from whom the Committee receives information and the accuracy of such information, including representations by management and the independent auditors regarding non-audit services provided by the independent auditors.

STATEMENT OF POLICY

The Committee shall oversee the accounting and financial reporting processes of the Corporation and audits of the financial statements of the Corporation. In so doing, the Committee shall endeavor to maintain free and open means of communication between the directors, the independent auditors and the financial management of the Corporation. In addition, the Committee shall review the policies and procedures adopted by the Corporation to fulfill its responsibilities regarding the fair and accurate presentation of financial statements in accordance with generally accepted accounting principles and applicable rules and regulations of the Securities and Exchange Commission and the Over-The-Counter Bulletin Board (“OTCBB”) applicable to OTCBB listed issuers. The Committee shall have all authority necessary or desirable for it to comply with the Sarbanes-Oxley Act of 2002 and all applicable Securities and Exchange Commission rules and regulations.

COMMITTEE STRUCTURE AND MEMBERSHIP

The Committee shall be comprised of two or more directors, as determined by the Board. Two members of the Committee will constitute a quorum.

The Board will designate the Chair of the Committee. The Committee will fix its own rules of procedure and will meet where and as provided by such rules or by resolution of the Committee. In addition to the regular meeting schedule established by the Committee, the Chair of the Committee may call a special meeting at any time.

The Secretary of the Corporation will be the Secretary of the Audit Committee, unless the Committee designates otherwise.

In the absence of the Chair during any Committee meeting, the Committee may designate a Chair pro tempore.

The Committee will act only on the affirmative vote of a majority of the members at a meeting or by unanimous written consent.

The Committee may establish sub-committees to carry out such duties as the Committee may assign.

The Committee members shall be designated by the Board and shall serve at the discretion of the Board. The Committee shall meet at least four times each fiscal year. The Committee shall meet in separate executive sessions with the Corporation’s Chief Executive Officer and Chief Financial Officer and the Corporation’s independent auditors.

Each member of the Committee shall be an independent director. For purposes hereof, in order to be an “independent director,” a Committee Member shall not:

1. accept, directly or indirectly, any consulting, advisory or other compensatory fee from the Corporation other than in his or her capacity as a member of the Committee, the Board or any other committee of the Board, or otherwise be an affiliated person of the Corporation or any subsidiary of the Corporation, and

2. have any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment in carrying out the responsibilities of a director.

Each member of the Committee shall be able to read and understand fundamental financial statements in accordance with the rules of the SEC and OTCBB. In addition, at least one member of the Committee shall be an audit committee financial expert, as defined by Section 407 of the Sarbanes-Oxley Act of 2002 and Item 401(h) of Regulation S-K promulgated by the Securities and Exchange Commission; provided, however, the requirement of the Committee of having a financial expert may be waived or suspended by the Board.

The Committee shall take all reasonable steps necessary to ensure compliance with existing SEC and OTCBB rules and, as new rules are adopted, the Committee will ensure compliance when they are adopted.

POWERS

The Committee shall have the power to conduct or authorize investigations into any matters within the Committee’s scope of responsibilities. In discharging its oversight role, the Committee is empowered to investigate any matters within the Committee’s scope of responsibilities with full access to all books, records, facilities, and personnel of the Corporation. The Committee shall be empowered to engage independent counsel and other advisers, as it determines necessary to carry out its duties. The fees and expenses of such independent counsel and other advisers engaged by the Committee shall be paid promptly by the Corporation after such fees have been approved by the Committee. While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to ensure that the Corporation’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Those tasks are the responsibility of management and the independent auditors. The Board and the Committee are in place to represent the Corporation’s stockholders. Accordingly, the independent auditors are ultimately accountable to the Board and the Committee.

RESPONSIBILITIES

The Committee’s policies and procedures should remain flexible, in order to best react to changing conditions and to ensure to the Board and the Corporation’s stockholders that the corporate accounting and reporting practices of the Corporation are in accordance with all requirements and are of the highest quality.

The following will be the common recurring activities of the Committee in carrying out its purposes. These activities are set forth as a guide with the understanding that the Committee may diverge from this guide as appropriate given the circumstances.

1. Annually review and reassess the adequacy of this Charter and its compliance with the Audit Committee requirements established by the Securities and Exchange Commission and OTCBB listed issuers.

2. With respect to the Corporation’s independent auditors:

a. The Committee has the ultimate authority and is directly responsible for the appointment, retention, compensation and oversight of the work of the Corporation’s independent auditors

(including resolution of disagreements between management and the independent auditors regarding financial reporting). Further, the Committee has the ultimate authority and responsibility, where appropriate, to replace the independent auditors. The independent auditors shall report directly to the Committee. The Committee shall pre-approve all auditing services (including the provision of comfort letters) and non-audit services provided by the independent auditors to the Corporation and the fees relating to the provision of all such services, other than as may be allowed by applicable law. The Committee may delegate to one or more designated Committee members the authority to grant pre-approvals required by the foregoing sentence. The decisions of any Committee member to whom authority is delegated hereunder shall be presented to the Committee at each of its scheduled meetings. The independent auditors are ultimately accountable to the Board and to the Committee as representatives of the Corporation’s stockholders.

b. Review the independence of the independent auditors so that such independence is in compliance with all applicable law and rules of the SEC and OTCBB. The Committee shall require the independent auditors at least annually to provide a formal written statement delineating all relationships between the independent auditors and the Corporation consistent with all applicable rules and request information from the independent auditors and management to determine the presence or absence of a conflict of interest. The Committee shall actively engage the independent auditors in a dialogue with respect to any disclosed relationships or services that may impact the objectivity and independence of the auditors. The Committee shall take, or recommend that the full Board take, appropriate action to oversee the independence of the auditors.

3. Periodically review with management the possible need for an internal audit department and if it is determined that such a department is needed, review and concur with management on the scope and responsibilities of an internal audit department and on the appointment, replacement, reassignment or dismissal of an internal audit department manager or director.

4. Review and discuss with management and the independent auditors, before release, the audited financial statements and the Management’s Discussion and Analysis proposed to be included in the Corporation’s Annual Report in Form 10-K. Make a recommendation to the Board whether or not the audited financial statements should be included in the Corporation’s Annual Report on Form 10-K.

5. Review and discuss with management and the independent auditors, before release, the unaudited financial statements and the Management’s Discussion and Analysis proposed to be included in each Form 10-Q to be filed by the Corporation with the Securities and Exchange Commission.

6. In consultation with the independent auditors, the internal audit department, if any, and management, consider and review at the completion of the annual audit and such other times as the Committee may deem appropriate:

a. The Corporation’s annual financial statements and related notes.

b. The independent auditors’ audit of the financial statements and their report thereon.

c. The independent auditors’ reports regarding critical accounting policies, alternative treatments of financial information and other material written communications between the independent auditors and management.

d. Any deficiency in, or suggested improvement to, the procedures or practices employed by the Corporation as reported by the independent auditors in their annual management letter.

e. The adequacy and effectiveness of the Corporation’s accounting and internal accounting controls.

7. Periodically and to the extent appropriate under the circumstances, it may be advisable for the Committee, with the assistance of the independent auditors, the internal audit department, if any, and/or management, to consider and review the following:

a. Any significant changes required in the independent auditors’ audit plan.

b. Any difficulties or disputes with management encountered during the course of the audit.

c. The effect or potential effect of any regulatory regime, accounting initiatives or off-balance sheet structures on the Corporation’s financial statements.

d. Any correspondence with regulators or governmental agencies and any employee complaints or published reports that raise material issues regarding the Corporation’s financial statements or accounting policies.

e. Other matters related to the conduct of the audit, which are to be communicated to the Committee under generally accepted auditing standards.

8. Establish procedures for (a) the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters and (b) the confidential, anonymous submission by the Corporation’s employees of concerns regarding questionable accounting or auditing matters.

9. Review and approve or disapprove any transaction or arrangement that may present a material conflict of interest between a member of management or the Board and the Corporation.

10. Prepare a report in the Corporation’s proxy statement in accordance with SEC requirements.

11. Take other such actions and do other such things as may be referred to it from time to time by the Board.

COMMITTEE REPORTS

The Chair of the Committee will report to the full Board on the Committee’s activities.

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2014	May 04, 2018
Document And Entity Information
Entity Registrant Name	Advanzeon Solutions, Inc.
Entity Central Index Key	0000022872
Document Type	10-K
Trading Symbol	CHCR
Document Period End Date	Dec. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	No
Entity Filer Category	Smaller Reporting Company
Entity Public Float		$ 3,312,768
Entity Common Stock, Shares Outstanding		63,063,685
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2014

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2014	Dec. 31, 2013
Current assets:
Cash	$ 11,533	$ 324,324
Accounts Receivable	271,459	711,478
Other	122,995	118,165
Total current assets	405,987	1,153,967
NON-CURRENT ASSETS
Property and equipment, net	1,652	26,652
Other		44,582
Total Non-currents assets	75,263	71,234
TOTAL ASSETS	407,639	1,225,201
Notes payable:
Related parties	3,040,405	3,000,000
Other
Current portion of long-term debt	4,661,625	5,155,186
Borrowings under lines of credit	926,167	602,617
Account payable	543,047	641,090
Accrued claims payable	648,313	1,302,825
Other accrued expenses	7,533,334	6,234,983
Total current liabilities	17,352,981	16,936,611
Long-term debt, net of current portion	90,000	90,000
TOTAL LIABILITIES	17,442,891	17,026,611
Preferred stock, $50,000 per value, non-cumulative
Preferred stock	521,700	521,700
Common stock, $0.01 per value; 500,000 shares authorized; 63,063,685 shares issued and outstanding	630,637	630,637
Additional paid-in capital	27,235,067	27,235,067
Accumulated deficit	(45,422,656)	(44,188,816)
Total stockholders' deficiency	(17,035,253)	(15,801,413)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY	407,638	1,225,197
Preferred Stock, Series C [Member]
Preferred stock, $50,000 per value, non-cumulative
Preferred stock
Other Series Preferred Stock [Member]
Preferred stock, $50,000 per value, non-cumulative
Preferred stock

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2014	Dec. 31, 2013
Preferred stock, par value	$ 50,000	$ 50,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	500,000	500,000
Common stock, shares issued	63,063,685	63,063,685
Common stock, shares outstanding	63,063,685	63,063,685
Preferred Stock, Series C [Member]
Preferred stock, shares authorized	14,400	14,400
Preferred stock, shares issued	10,424	10,424
Preferred Stock, shares outstanding	10,424	10,424
Other Series Preferred Stock [Member]
Preferred stock, shares authorized	981,260	981,260

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Income Statement [Abstract]
Managed care revenues	$ 535,863	$ 3,125,693
Costs and expenses:
Costs of revenues		1,086,000
General and administrative	1,549,814	5,183,825
Goodwill impairment
Depreciation and amortization	25,000	33,148
Total costs and expenses	1,574,814	6,302,973
Operating loss	(1,038,951)	(3,177,280)
Other income (expense):
Interest expense	(1,344,889)	(1,880,955)
Gain on sale of subsidiary (See Note 11)		10,969,615
Legal settlement (See Note 12)	1,150,000
Income taxes		(59,100)
Net loss attributable to common stockholders	$ (1,233,840)	$ 5,852,281

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Preferred Stock [Member]
Beginning balance	$ 521,700	$ 521,700
Beginning balance (in shares)	10,434	10,434
Ending balance	$ 521,700	$ 521,700
Ending balance (in shares)	10,434	10,434
Common Stock [Member]
Beginning balance	$ 630,637	$ 594,518
Beginning balance (in shares)	63,063,685	59,451,836
Stock issued to non-employees for consulting services		$ 24,670
Stock issued to non-employees for consulting services (in shares)		2,466,988
Stock issued for payment of interest		$ 11,449
Stock issued for payment of interest (in shares)		1,144,861
Ending balance	$ 630,637	$ 630,637
Ending balance (in shares)	63,063,685	63,063,685
Additional Paid-In Capital [Member]
Beginning balance	$ 27,235,066	$ 25,981,680
Stock issued to non-employees for consulting services		296,421
Stock issued for payment of interest		123,348
Warrants issued to employees		102,687
Warrants issued to non-employees for services		164,361
Warrants issued in connection with debt financings		6,247
Issuance of unvested Series D preferred stock		343,856
Issuance of stock options		216,467
Ending balance	27,235,066	27,235,066
Accumulated Deficit [Member]
Beginning balance	(44,188,816)	(50,041,097)
Net income (loss)	(1,233,840)	5,852,281
Ending balance	(45,422,656)	(44,188,816)
Beginning balance	(15,801,413)	(22,943,198)
Net income (loss)	(1,309,926)	5,852,281
Stock issued to non-employees for consulting services		321,091
Stock issued for payment of interest		134,797
Warrants issued to employees		102,687
Warrants issued to non-employees for services		164,361
Warrants issued in connection with debt financings		6,247
Issuance of unvested Series D preferred stock		343,856
Issuance of stock options		216,467
Ending balance	$ (17,035,253)	$ (15,801,413)

XML

STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (1,233,840)	$ 5,852,281
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	25,000	33,148
Bad Debts		28,000
Gain on sale of subsidiary		(10,969,615)
Discount amortization on notes payable	56,631	153,887
Stock-based compensation
Changes in assets and liabilities:
Accounts receivable	440,018	3,021,868
Other current assets	(4,830)	30,065
Other assets	44,582	107,295
Accounts payable	(98,043)	(422,816)
Accrued claims payable	(654,512)	2,238,600
Other accrued expenses	1,298,441	(1,182,623)
Net cash provided by (used in) operating activities	(126,552)	(1,109,910)
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from line of credit, net	323,550	602,617
Accrued interest added to debt balances	934
Proceeds from borrowings	573,870	979,998
Increase in related party debt	40,405
Repayment of debt	(1,125,000)	(1,068,381)
Net cash (used in) provided by financing activities	(186,241)	514,234
Net decrease in cash	(14,103)	(595,676)
Cash - Beginning of Year	324,324	920,000
CASH - END OF YEAR	11,531	324,324
Cash paid during the year for:
Interest
Income taxes

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DESCRIPTION OF THE COMPANY’S BUSINESS AND BASIS OF PRESENTATION

12 Months Ended

Dec. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DESCRIPTION OF THE COMPANY'S BUSINESS AND BASIS OF PRESENTATION

Note 1 DESCRIPTION OF THE COMPANY’S BUSINESS AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Advanzeon Solutions, Inc and its wholly owned subsidiaries, each with their respective subsidiaries (collectively referred to herein as, the “Company,” “Advanzeon,” “we”, “us,” or “our”).

Nature of Operations - We provide managed care services in the behavioral health, substance abuse, and pharmacy management fields for commercial, Medicare, Medicaid and Children’s Health Insurance Program (“CHIP”) members primarily on behalf of health plans. Our managed care operations include administrative service agreements, fee-for-service agreements, and capitation contracts. The customer base for our services includes both private and governmental entities. Our services are provided by unrelated vendors on a subcontract basis.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING AND PRINCIPLES OF CONSOLIDATION

Going Concern Basis - The consolidated financial statements are prepared on the basis that the Company will continue its operations as a going concern. As a result of certain conditions described in Note 6, our  ability to continue as a going concern will be dependent upon the success of management’s plans, as set forth also in Note 6, and is subject to significant uncertainty.

The Company has elected to not adopt the option available under United States generally accepted accounting principles (“GAAP”) to measure any eligible financial instruments or other items at fair market value at this time. Accordingly, the Company measures all of its assets and liabilities on the historical cost basis of accounting, except as otherwise required by GAAP.

Inter-company accounts and transactions have been eliminated in consolidation. Certain minor reclassifications of prior period amounts have been made to conform to the current year presentation.

Use of Estimates - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts. Actual results could differ from these estimates. Estimates involved in the determination of an allowance for doubtful accounts receivable and accrued claims payable, including incurred but not reported, are considered by management as particularly susceptible to material change in the next year. Other significant estimates relate to stock-based compensation, valuation of goodwill, warrants and beneficial conversion features.

Accounts Receivable - Accounts and notes receivable are carried net of an allowance at their estimated collectible value. Since customer credit is generally extended on a short-term basis, accounts receivable do not bear interest and are uncollateralized. We manage credit risk and determine necessary allowances by evaluating customers’ credit worthiness before extending credit and periodically for collectability, based primarily on customers’ past credit history and current financial conditions and general economic conditions, results of prior collection efforts, the relative strength of our relationship therewith and, in the event of a dispute, its legal position and the estimated cost of proposed collection proceedings. Management has not established a policy for when to charge off uncollectible accounts receivable or to use external collection agencies and makes such decisions on a case-by-case basis. The maximum losses that the Company would incur if a customer failed to pay would be limited to the carrying value of the receivable after any related allowances provided.

Property and Equipment - Property and equipment (Note 3) is stated at cost less accumulated depreciation. Depreciation and amortization are computed using the straight-line method over the estimated useful lives ranging from 2 to 12 years. Leasehold improvements are amortized over the shorter of the lease term or the asset’s useful life.

Accrued Claims Payable - Accrued claims payable includes estimated claims incurred but not yet reported (“IBNR”) to us, and any provisions for losses under our managed care contracts when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. We perform this loss accrual analysis on a contract-by-contract basis taking into consideration such factors as future contractual revenue, estimated future healthcare and maintenance costs, and each contract’s specific terms related to future revenue increases as compared to expected increases in healthcare costs. Future healthcare and maintenance costs are estimated based on historical trends and expected future cost increases.

Generally, we have the ability to cancel a managed care contract with 60 to 120 days’ written notice or to request a renegotiation of terms under certain circumstances, if the contract is not meeting our financial goals. Prior to a cancellation, we typically submit a request for a rate increase accompanied by supporting utilization data. Although historically, our clients have been generally receptive to such requests, no assurance can be given that such requests will be fulfilled in our favor in the future. If a rate increase is not granted, we have the ability, in some cases, to terminate the contract and thereby limit our exposure to risk.

Fair Value Measurements - The carrying amounts of cash, accounts receivable and accounts payable approximate their estimated fair value due to the short-term nature of these instruments. Since our other financial liabilities are not traded in an open market, we generally use a present value technique, which is a level 3 input, as defined in GAAP, to measure the estimated fair value of these financial instruments, except for valuing stock options and warrants (see below). The rate used for discounting expected cash flows is a risk-free rate adjusted for systematic and unsystematic risk.

Due to the inherent nature of related party transactions, we have not attempted to estimate the fair value of liabilities payable to related parties of the Company. As such, promissory notes payable with carrying values of $3,000,000 and $3, 000,000, respectively, at December 31, 2014 and 2013, are excluded from the following table. The carrying amounts and estimated fair values of other financial instruments (all are liabilities) at December 31, 2014 and 2013, are as follows (in thousands):

	December 31,
	2014					2013
	Carrying Amount			Estimated Fair Value		Carrying Amount			Estimated Fair Value
Promissory notes	$	—		$	—	$	—		$	—
Zero-coupon promissory Notes		—			—		—			—
Debentures		3,586,004			—		3,586,004			—
Senior promissory notes		1,771,013			—		1,771,013			—
Long-term promissory notes		—			—		—
Less unamortized discount		(55,200	)		—		(111,831	)		—
	$	5,301,817		$	—	$	5,245,186		$	—

Revenue Recognition - Revenue under our contractual agreements to provide behavioral healthcare and pharmacy management services to subscribing members is earned regardless of services actually provided and, therefore, recognized monthly based on the number of qualified members. The information regarding qualified members is supplied by our clients subject to our periodic review of their member eligibility records and other reported information to verify its accuracy and determine the amount of revenue to be recognized.

Cost of Revenues - Costs of revenues consist of two major components: claims costs and healthcare operating expense. Claims costs are recognized in the period in which an eligible member actually receives services and includes an estimate for costs of behavioral health services that have been incurred but not yet reported.

Legal Defense Costs - We accrue an estimate of incurred legal defense costs to be incurred in connection with pending disputes and litigation matters as part of our estimated minimum probable losses (see Note 7).

Income Taxes - We are subject to the income tax jurisdictions of the U.S. and multiple state tax jurisdictions. However, our provisions for income taxes for 2013 and 2014 include only state income taxes (see Note 11).

Management has evaluated our tax positions taken or to be taken on income tax returns that remain subject to examination (i.e., tax years 2008 and thereafter federally), and has concluded that there have been no uncertain tax positions (as defined in GAAP) taken that require recognition or disclosure in the consolidated financial statements. In the event of any income tax-related interest or penalties are incurred, they would be included in general and administrative expense.

Stock Options and Warrants - We grant stock options and warrants (see Note 8) to our employees, non-employee directors, note holders and certain consultants and clients allowing them to purchase our common stock pursuant to approved terms. The estimated value of the warrants issued with debt instruments is recorded as a discount on notes payable and amortized as interest expense over the term of the notes using the effective interest method.

We use a Black-Scholes valuation model to estimate the fair value of options and warrants on the measurement date and for determining the allocation of the relative values of debt and warrants. In applying the model, we use level 3 inputs, as defined by GAAP, consisting of historical data and management judgment to estimate the expected terms of the instruments. Expected volatility is based on the historical volatility of our traded stock. We do not expect to pay dividends for the period of the expected life of the instruments, and therefore we assume no expected dividend. The assumed risk-free rates used are based on the U.S. Treasury yield curve with the same expected terms as those of the equity instruments at the time of grant.

The following table lists the assumptions utilized in applying the Black-Scholes valuation model for options and warrants.

	Year ended December 31,
	2014			2013
Expected volatility		160	%		160	%
Expected life (in years) of options		3	%		4	%
Expected life (in years) of warrants		2-3	%		2-3	%
Risk-free interest rate range, options		0	%		0	%
Risk-free interest rate range, warrants		0	%		0	%
Expected dividend yield		0	%		0	%

PER SHARE DATA

For the periods presented, since losses would produce anti-dilution, no diluted loss per common share is presented. The following table sets forth the computation of basic loss per common share (amounts in thousands, except per share data):

	Year ended December 31,
	2014			2013
Numerator:
Net loss attributable to common stockholders	$	3,632,451		$	7,146,162
Denominator:	$	63,063,685		$	61,589,316
Weighted average common shares
Basic loss per share attributable to common stockholders	$	(0.06	)	$	(0.12	)

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PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

Note 3 PROPERTY AND EQUIPMENT

Property and equipment, net, consists of the following at December 31:

	2014		2013
Furniture and equipment	$	336,242	$	336,492
Less accumulated depreciation and amortization		261,229		155,229
Property and equipment – net	$	75,263	$	181,263

Depreciation expense for 2013 and 2014 is $105,907 and $106, 000 respectively. 

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Intangible Assets

12 Months Ended

Dec. 31, 2014

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Intangible Assets

Note 4 Intangible Assets

There are no intangible assets for 2013 and 2014. 

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RELATED PARTY NOTES PAYABLE

12 Months Ended

Dec. 31, 2014

Notes Payable [Abstract]

RELATED PARTY NOTES PAYABLE

Note 5 RELATED PARTY NOTES PAYABLE

Related party notes payable consists of the following at December 31, 2014 and 2013:

	2014		2013
Convertible Promissory Note payable dated June 4, 2010 for $2,000,000 bearing interest at 24% payable quarterly in arrears, with a maturity date of June 4, 2011. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share. The note may be prepaid upon providing five days written notice.	$	2,000,000	$	2,000,000
Eighteen Month Promissory note payable dated November 8, 2011 for $1,000,000 bearing interest at 14% payable quarterly, with a maturity date of May 8, 2013.		1,000,000		1,000,000
Various borrowings during 2014		40,405		—
	$	3,040,405	$	3,000,000

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NOTES PAYABLE

12 Months Ended

Dec. 31, 2014

Notes Payable [Abstract]

NOTES PAYABLE

Note 6 NOTES PAYABLE

Notes payable consists of the following at December 31, 2014 and 2013:

	2014		2013
14% Senior Promissory Note payable dated April 15, 2010, as amended on July 13, 2012, for $14,525 bearing interest at 14%, with a maturity date of April 15, 2014. In case of default, the default interest rate is 18%.	$	14,525	$	14,525
Note payable dated April 10, 2010, as amended on April 15, 2012, for $5,188 bearing interest at 14%, with a maturity date of April 15, 2014. In case of default, the default interest rate is 18%.		5,188		5,188
14% Senior Note payable dated April 15, 2010, as amended on April 15, 2013, for $1,290,650 bearing interest at 14%, with a maturity date of April 15, 2014. The Lender owns warrants to purchase a total of 5,162,600 shares of common stock issued by the Company pursuant to two warrant agreements.		1,290,650		1,290,650
Promissory Note payable dated January 31, 2012, as amended on April 30, 2013, for $100,000, plus interest at 14%, with a maturity date of October 31, 2013. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share.		100,000		100,000
Convertible Promissory Note payable for $230,000 dated February 28, 2013, as amended on August 31, 2013. Amount of loan amended to $245,000 including interest in arrears of $15,000. Interest accrues at 14% and loan matures on November 30, 2013. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share.		245,000		245,000
Promissory Note payable dated June 13, 2013, for $100,000, plus interest at 14%, with a maturity date of December 13, 2014. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share.		100,000		100,000
Subtotal	$	1,755,363	$	1,755,363

	2014		2013
Subtotal from page 67	$	1,755,363	$	1,755,363
Senior Note payable dated April 15, 2010, as amended on September 10, 2012, for $10,375 bearing interest at 14%, with an amended maturity date of October 15, 2015. Lender agreed to forgive past due interest of $1,867.50 and note has been converted to a 7% Senior Note, effective April 15, 2014. The lender accepted $933.75 of the interest forgiveness in cash and the remaining $933.75 was added to the loan balance.		11,309		10,375
14% Senior Note payable, dated April 15, 2010, as amended on July 30, 2012, for $15,563 bearing interest at 14%, with a maturity date of April 15, 2013. In case of default, the default interest rate is 18%.		15,563		15,563
Senior Note payable dated April 15, 2010, as amended on July 13, 2012, for $72,625 initially bearing interest at 14%, with an amended maturity date of January 15, 2015. Lender agreed to forgive past due interest of $5,083.75 and note has been converted to a 7% Senior Note, effective October 15, 2013.		72,625		72,625
14% Senior Note payable dated April 15, 2010, as amended on July 6, 2012, for $264,563 bearing interest at 14%, with a maturity date of April 15, 2013. In case of default, the default interest rate is 18%. Per terms of the amendment, the Company agreed to pay the Kennedy Estate $13,228 in cash as compensation and consideration for agreeing to the terms of the amendment to the loan agreement.		264,563		264,563
Convertible Promissory Note payable dated March 2, 2012, as amended on March 2, 2013, for $50,000 bearing interest at 7% payable quarterly in arrears, with a maturity date of March 2, 2014. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.50 per share. The note may be prepaid upon providing five days written notice.		50,000		50,000
14% Senior Note payable dated April 15, 2010, as amended on July 6, 2012, for $68,475 bearing interest at 14%, with an amended maturity date of April 15, 2014. In case of default, the default interest rate is 18%.		68,475		68,475
Subtotal	$	2,237,898	$	2,236,964

	2014		2013
Subtotal from page 68	$	2,237,898	$	2,236,964
Promissory note payable for $250,000, bearing interest at 9%, payable, in conjunction with the note listed below, in the amount of $10,000 per month, beginning October 1, 2011		289,000		189,000
Promissory note payable for $200,000, bearing interest at 8.5%, payable, in conjunction with note listed above, in the amount of $10,000 per month, beginning October 1, 2011.		90,000		190,000
Subordinated Debentures		487,000		537,000
Convertible Promissory Note payable dated March 16, 2013 for $100,000 bearing interest at 10% payable quarterly in arrears, with a maturity date of March 16, 2014. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share. The note may be prepaid upon providing five days written notice. As additional consideration, a separate three-year warrant agreement was issued which entitles Paul Dorn to purchase 25,000 shares of common stock at $.15 per share. The warrants vest immediately.		100,000		100,000
Note payable dated August 1, 2012, bearing interest at 12%.		25,000		25,000
10% Senior Promissory Note payable dated November 3, 2010, for $1,037.50 bearing interest at 10%, payable semiannually, with a maturity date of April 15, 2012. The note may be prepaid upon providing five days written notice.		1,038		1,038
10% Senior Promissory Note payable dated November 3, 2010, for $15,562.50 bearing interest at 10%, payable semiannually, with a maturity date of April 15, 2012. The note may be prepaid upon providing five days written notice.		15,563		15,563
Subtotal	$	3,245,499	$	3,294,565

	2014		2013
Subtotal from page 69	$	3,245,499	$	3,294,565
Twenty-four Month Convertible Promissory Note payable dated February 7, 2012 for $100,000, bearing interest at 12% payable quarterly in arrears, with a maturity date of February 7, 2014. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share. The note may be extended for an additional six months.		100,000		100,000
Eighteen Month Convertible Promissory Note payable dated August 30, 2011 for $1,400,000. Extended through January 15, 2014 per terns of an Extension and Forbearance Agreement. Lender is also granted a first lien security interest over all existing and future assets for CompCare de Puerto Rico, Inc, including the arbitration claim against MAPFRE Life Insurance Co. filed on August 10, 2012 at December 2`, 2013. $1,000.000 of proceeds was applied to this debt in 2014 upon receipt of the proceeds from MAFRE		400,000		1,400,000
Eighteen Month Convertible Promissory Note payable dated November 14, 2011 for $625,000. Extended through January 15, 2014 per terns of an Extension and Forbearance Agreement which requires payments of $75,000 each on September 13, 2013 and January 6, 2014. Lender is also granted a first lien security interest over all existing and future assets of CompCare de Puerto Rico, Inc, including the arbitration claim against MAPFRE Life Insurance Co. filed on August 10, 2012 at December 31, 2012.		475,000		550,000
14% Senior Promissory Note payable dated October 24, 2012, for $7,262.50 bearing interest at 14%, payable semiannually, with a maturity date of April 15, 2013. The note may be prepaid upon providing five days written notice.		7,263		7,263
14% Senior Promissory Note payable dated November 30, 2012, for $5,187.50 bearing interest at 14%, payable semiannually, with an amended maturity date of April 15, 2014. The note may be prepaid upon providing five days written notice.		5,188		5,188
Subtotal	$	4,232,950	$	5,357,016

	2014		2013
Subtotal from page 70	$	4,232,950	$	5,357,016
Convertible Promissory Note payable to dated October 6, 2014, for $100,000, bearing interest at 12%, with a maturity date of the earliest of October 6, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the acquisition of all of the Company’s assets. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.11per share. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		100,000		—
Convertible Promissory Note payable dated January 6, 2014, for $50,000, bearing interest at 18%, with a maturity date of the earliest of January 6, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		50,000		—
Convertible Promissory Note payable dated January 23, 2014, for $67,000, bearing interest at 18%, with a maturity date of the earliest of January 23, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		67,000		—

Subtotal $ 4,449,950 $ 5,357,016

	2014		2013
Subtotal from page 71	$	4,449,950	$	5,357,016
Convertible Promissory Note payable dated February 25, 2014, for $45,000, bearing interest at 18%, with a maturity date of the earliest of February 25, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		45,000		—
Convertible Promissory Note payable dated April 14, 2014, for $23,000, bearing interest at 18%, with a maturity date of the earliest of April 14, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		23,000		—
Convertible Promissory Note payable dated April 21, 2014, for $37,000, bearing interest at 18%, with a maturity date of the earliest of April 21, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinate in right of payment to all other notes.		37,000		—
Convertible Promissory Note payable dated July 1, 2014, for $50,000, bearing interest at 18%, with a maturity date of the earliest of April 14, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is senior in right of payment to all other notes.		50,000		—
Subtotal	$	4,604,950	$	5,357,016

	2014			2013
Subtotal from page 72		4,604,950			8,357,016
Convertible Promissory Note payable dated September 9, 2014, for $50,000, bearing interest at 12%, with a maturity date of the earliest of March 9, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.11 per share. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		50,000			—
Convertible Promissory Note payable dated July 17, 2014, for $100,000, bearing interest at 18%, with a maturity date of the earliest of July 17, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is senior in right of payment to all other notes		100,000			—
7½% Senior Note payable dated January 30, 2014, for $51,875 bearing interest at 7½%, with a maturity date of February 15, 2015. This note was issued in exchange for the $50,000 in 7½% Convertible Subordinated Debentures plus accrued interest of $1,875. The note may be prepaid upon providing five days written notice.		51,875			—
	$	4,806,825		$	5,357,016
Less Discounts on Notes		(55,200	)		(111,831	)
Total notes payable		4,751,625			5,245,185
Less: long term portion		(90,000	)		(90,000	)
Current notes payable	$	4,661,625		$	5,155,185

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BORROWINGS REVOLVING LINE OF CREDIT

12 Months Ended

Dec. 31, 2014

Borrowings Revolving Line Of Credit

BORROWINGS REVOLVING LINE OF CREDIT

Note 7 BORROWINGS REVOLVING LINE OF CREDIT

The Company has a $2 million revolving line of credit with a financial institution. Interest on this line of credit is prime plus ..25%. The prime rate at December 31, 2014 and 2013 was 3.25%. The outstanding balance on the revolving line of credit was $926,167 and $602,617 at December 31, 2014 and 2013, respectively. Interest is payable monthly, and principal is payable on demand. The revolving line of credit is collateralized by a first lien security interest in the Company’s account receivable.

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Note 8. COMMITMENTS AND CONTINGENCIES

The Company lease its corporate office space under an operating lease. In May 2014, the Company moved its corporate office and entered into a new operating lease. The terms of the lease are for 5 years beginning on May 1, 2014 and ending June 30, 2019 with a monthly lease payment of $7,697. The lease contains an annual escalation clause and a provision for payment of real estate taxes, insurance, and maintenance and repair expenses. Total rental expense for the lease was approximately $82,000 and $218,000, respectively, for 2014 and 2013.

Future minimum payments under the non-cancelable operating lease with initial or remaining terms of one year or more consist of the following at December 31, 2014.

2015	$	92,364
2016		92,364
2017		92,634
2018		92,364
2019		46,182
	$	415,630

b. Economic conditions and related risks, concentrations and uncertainties

At December 31, 2014, we had a working capital deficiency of approximately $17.1 million and a stockholders’ equity deficiency of approximately $17.2 million resulting from a history of operating losses. There can be no assurance that we will be able to find such financing in amounts or on terms acceptable to us, if at all, or that we will be able to achieve or sustain profitable operations and positive operating cash flows in the near term. Although subject to the general economic conditions, management believes that our current cash position will likely not be sufficient to meet our current levels of operations in the short term, our ability to achieve our business objectives and continue as a going concern for a reasonable period of time may be dependent upon the success of our plans to obtain sufficient debt or equity financing.

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LITIGATION

12 Months Ended

Dec. 31, 2014

Litigation

LITIGATION

Note 9. LITIGATION

In the ordinary conduct of the Company business, they are subject to periodic lawsuits and claims. Although management cannot predict with certainty the ultimate resolution of lawsuits and claims asserted against the Company, management does not believe that any currently pending legal proceedings to which the Company is a party could have a material adverse effect on the Company, or the Company’s future results of operations, cash flows or financial condition except as described below:

The Company initiated an action against Jerry Katzman, a former director, in July 2009 alleging that Mr. Katzman fraudulently induced us to enter into an employment agreement and, alternatively, that Mr. Katzman breached that alleged employment agreement and was rightfully terminated. In September 2010, the matter proceeded to a trial by jury. The jury found that Mr. Katzman did not fraudulently induce Advanzeon to enter into the contract but also found that Mr. Katzman was not entitled to damages. On defendant’s motion to amend the verdict due to inconsistency, the trial court set aside the jury verdict and awarded Mr. Katzman damages of approximately $1.3 million. The Company appealed the lower court’s decision and posted a collateralized appeal bond for approximately $1.3 million. On February 14, 2013, the 11^th Circuit Court of Appeals of the State of Florida reversed the lower court’s judgment in favor of Katzman and remanded the case for a new trial on both liability and damages. The appellate court also taxed appellate costs in favor of Advanzeon against Katzman. The decision of the appellate court also reverses the lower court’s award of attorney’s fees previously awarded to Katzman against Advanzeon. To avoid litigating the case a second time, we began making payments in accordance with a Term Sheet. Katzman objected to the amounts we were paying monthly and filed suit in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida, Case No. 12-CA-2570, to find us in breach of the Term Sheet. On March 8, 2017 the Court determined that we had breached the Term Sheet and entered a Final Judgment in the amount of $866,052 bearing interest at the statutory rate. Management is in the process of securing a bond against the judgment. The case is currently on appeal in the Second District Court of Appeal, Florida, Case No. 2D17-1433. However, the case remains active for execution (collection) on the judgment. Since filing the appeal the execution portion of the proceedings has been removed from the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida and is now before the United States District Court, Middle District, Tampa Division, Case. No. 8:17-CV-2107-T-23AEP.

In a related matter to the Katzman litigation, on January 10, 2017, the Company brought an action against Melanie Damian et al. Case number 17-CA-00252, Thirteenth Judicial Circuit Court, Hillsborough County, FL. The Company alleges wrongful collection practices including wrongful garnishment of bank accounts.

The Company has filed a claim for money it maintains is owed by Universal Health Care Insurance Company. In re: The Receivership of Universal Health Care Insurance Company. Case number 2013-CA-00358 and Case number 2013-CA-00375 in the Second Judicial Circuit Court, Leon County, FL. The objection to the claim by the receivership was heard April 4, 2018.

In Michael Ross et.al v. Advanzeon Solutions, Inc., Plaintiff is suing the Company for money it claims is owed pursuant to a promissory note. The Company is filing a motion for summary judgment. Case Number 16-CA-005737, Thirteenth Judicial Circuit Court Hillsborough County, FL. Filed April 7, 2015.

In Advanzeon Solutions, Inc. v. Mayer Hoffman et. al.., Case Number 16-CA-005737 Thirteenth Judicial Circuit Court Hillsborough County, FL., the Company has sued Defendants for damages for breach of audit services contract. The Judge ruled in favor of Defendants motion for summary judgment, but no judgment has been entered. The Company will file for a rehearing of the summary judgment and or an appeal. Filed June 17, 2016.

In a matter entitled Pharmacy Value Management Solutions, Inc. vs Young & Son Tax and Accounting, LLC, Charles Young Sr., Charles Young Jr. and Jay Jacques, the Company brought this action for damages for among other things breach of accounting service contract, mandatory injunction, return of documents and conversion of accounting funds held in the accountants’ trust account. The case is in the initial stage. Case Number 18-CA-000960 Thirteenth Judicial Circuit, Hillsborough County, FL. Filed March 31, 2018.

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EQUITY INSTRUMENTS

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

EQUITY INSTRUMENTS

Note 10 EQUITY INSTRUMENTS

Our Series C preferred stock is currently convertible into common stock at the rate of 316.28 common shares for each share of Series C preferred, adjustable for any dilutive issuances of common occurring in the future. Series C preferred shares vote with the common stockholders on an as-converted basis. The shares are nonparticipating except that dividends, when declared by our Board of Directors on the common stock, must be paid on the Series C stock on an as-converted basis before any dividends are paid on our common stock. The Series C is also cumulative with respect to dividends on common stock and junior series of preferred stock. Other significant rights and preferences of the Series C preferred include:

● the right to vote as a separate class to appoint five directors of the Company, and

● liquidation preferences, whereby the Series C holders have a claim against our assets senior to the claim of the holders of our common stock in the event of our liquidation, dissolution or winding-up (the value of the liquidation preference is $250 per share, or approximately $2,608,500 million at December 31, 2014 and 2013).

We also have a class of convertible preferred stock, Series D, for which 7,000 shares are authorized and 250 shares were issued during the year ended December 31, 2014. The shares, which were granted in January 2012, do not vest until the tenth anniversary of the grant date. Such shares were issued in exchange for the cancelation of 120 previously granted warrants to purchase Series D shares. Once vested, a Series D preferred share will be convertible at any time into 100,000 shares of common stock, subject to adjustment in the event of any common stock dividend, split, combination thereof or other similar recapitalization, without additional consideration. Prior to vesting and thereafter, each Series D convertible preferred share is entitled to all voting, dividend, liquidation and other rights accorded a share of Series D convertible preferred stock. As to dividends, the Series D stock is noncumulative. If a dividend is declared on the common stock, each share of Series D stock is entitled to receive a dividend equal to 50% of the dividend declared for the common stock as if the Series D stock had been converted. Despite their nonvested status, voting rights of each share nevertheless consist of the right to cast the number of votes equal to those of 500,000 shares of common stock. Unless otherwise required by applicable law, holders of shares of Series D have the right to vote together with holders of common stock as a single class on all matters submitted to a vote of our stockholders.

STOCK INCENTIVE COMPENSATION PLANS

WARRANTS:

To Purchase Common Stock

During the three month period ended March 30, 2013, the Company issued 325,000 shares to various individuals for consulting services performed during the period. The shares issued were valued at $0.24 per share or an aggregate price of $77,005. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

During the three month period ended June 30, 2013, the Company issued 1,420,588 shares to various individuals for consulting services performed during the period. The shares issued were valued at $0.07 - $0.12 per share or an aggregate price of $171,946. The Company also issued 1,119,078 shares as payments for accrued interest. The shares issued were valued at $0.10-$0.24 per share or an aggregate price of $132,219. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

During the three month period ended September 30, 2013, the Company issued 721,400 shares to various individuals for consulting services performed during the period. The shares issued were valued at $0.10 per share or an aggregate price of $72,140. The Company also issued 25,783 shares as payments for accrued interest. The shares issued were valued at $0.10 per share or an aggregate price of $2,578. We believe that Section 4(2) of the Securities Act of 1933, as amended, was available because these transactions did not involve a public offering and there was no general solicitation or general advertising involved in these transactions. We placed legends on the stock certificates stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.

A summary of warrant activity for 2014 and 2013 follows:

Warrants	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Instrinsic Value
Outstanding at January 1, 2013		35,957,583			0.33	4.26 years	$	—
Granted		8,320,000			0.24	3.38 years	$	—
Reclassified
Forfeited, expired or cancelled
Outstanding at December 31, 2013		44,277,583			0.31
Granted		3,399,000			0.27
Forfeited, expired, or cancelled		(3,212,599	)		0.25
Outstanding at December 31, 2014		44,463,984			0.31
Exercisable at December 31, 2014		44,463,984			0.31	3.47 years

We recognized approximately $2.5 million and $2.6 million of compensation costs during 2014 and 2013, respectively. 

Due to the significant uncertainty of future realization (Note 6), we did not recognize the effect of approximately $624,000 of potential tax benefits attributable to equity-based expense recorded for warrants issued to key employees for 2011.  

OPTIONS:

From time-to-time, we grant stock options as compensation for services to our employees, non-employee directors and certain consultants (“grantees”) allowing grantees to purchase our common stock pursuant to stockholder-approved stock option plans. We currently have three active incentive qualified option plans, the 1995 Incentive Plan, the 2002 Incentive Plan and the 2009 Equity Compensation Plan (collectively, the “Plans”), that provide for the granting of stock options, stock appreciation rights, limited stock appreciation rights, restricted preferred stock, and common stock grants to grantees. Grants issued under the Plans may qualify as incentive stock options (“ISOs”) under Section 422A of the Internal Revenue Code of 1986, as amended. Options for ISOs may be granted for terms of up to ten years. The vesting of options issued under the 1995 and 2002 plans generally occurs after six months for one-half of the options and after 12 months for the remaining options. For the 2009 Equity Compensation Plan, the vesting period is determined by our Compensation and Stock Option Committee. The exercise price for ISOs must equal or exceed the fair market value of the underlying shares on the date of grant. The Plans also provide for the full vesting of all outstanding options under certain change of control events. The maximum number of common shares authorized for issuance under the plans is 52,000,000. As of December 31, 2013 and 2014, the information regarding the options is set forth below.

	2014		2013
Shares available		52,000,000		52,000,000
Options outstanding (Directors and employees)		6,322,000		6,322,000
Options exercisable		6,046,334		6,046,334

In addition, under our Non-employee Directors’ Stock Option Plan, we are authorized to issue non-qualified stock options to our non-employee directors for up to 1,000,000 common shares. Each non-qualified stock option is exercisable at a price equal to the average of the closing bid and asked prices of the common stock in the over-the-counter market for the most recent preceding day there was a sale of the stock prior to the grant date. Grants of options vest in accordance with vesting schedules established by our Board of Directors’ Compensation and Stock Option Committee. Upon joining our Board of Directors, directors receive an initial grant of 25,000 options for common shares. Annually, directors are granted 15,000 options for common shares on the date of our annual meeting. As of December 31, 2014, there were 2,678,000 shares available for option grants and 10,000,000 options for common shares outstanding under the non-qualified directors’ plan, Amount of which were exercisable.

A summary of activity for 2014 and 2013 follows:

	Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Instrinsic Value
Outstanding at January 1, 2013		6,261,334		0.33	8.25 years
Granted		300,000		0.25
Forfeited, expired or cancelled		-10,000		0.25
Outstanding at December 31, 2013		6,551,334		0.28	9.85  years
Granted		0
Forfeited, expired or cancelled		-143,834		.25
Outstanding at December 31, 2014		6,407,500		.28	9.85  years
Exercisable at December 31, 2014		0

The following table summarizes information about options granted and vested during the years ended December 31.

	2014		2013
Options granted		0		300,000
Weighted-average grant-date fair value ($)		N/A		0.07
Options vested		0		40,000
Fair value of vested options ($)		N/A	$	2,800

During 2014 and 2013, we granted options for common shares to employees, non-employee directors and consultants.

A summary of common stock options outstanding and exercisable as of December 31, 2014 follows:

Options Outstanding		Exercise Price Range		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Options Exercisable		Weighted- Average Exercise Price of Exercisable Options
	6,407,500		.28		.25-.65		9.85		0	N/A

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SALE OF COMPREHENSIVE BEHAVIORAL CARE, INC

12 Months Ended

Dec. 31, 2014

Sale Of Comprehensive Behavioral Care Inc

SALE OF COMPREHENSIVE BEHAVIORAL CARE, INC

Note 11 SALE OF COMPREHENSIVE BEHAVIORAL CARE, INC

On December 30, 2013, The Company sold its wholly-owned subsidiary, Comprehensive Behavioral Care, Inc. (“CBC”). The sales price was $100.00 and the buyer received all of the issued and outstanding equity of CBC. As part of the transaction, the Company was entitled to receive any sums owing or payable to the Company or its subsidiaries for work or event occurring prior to the date of the sale. On January 1, 2014, the Company and CBC entered into an arrangement whereby the Company agreed to provide administrative services only for contracts held by CBC. These services consisted of the performance of clinical management, utilization management, claims administration, intensive case management, discharge planning and referral. In return CBC agreed to pay a monthly fee based on the number of employees/members covered on a client by client basis. The initial term is three years with provisions for subsequent one year renewals that has occurred every year since since commencement. Also on January 1, 2014, the Company and CBC entered into an agreement whereby the Company could lease the access to the Network Providers. The initial term was two years with provisions for subsequent one year term renewals. The Company agreed to pay a fixed rate per member, per month.

Pursuant to the terms of the sale, the existing receivables of the Company went to the acquirer with the exception of the outstanding Accounts receivable at the date of sale for a total consideration of $100. The Company recorded a gain on sale of CBC of $9,270,336 as follows:

Cash received on sale	$	100
Assets and liabilities transferred to purchaser
Accounts payable		891,725
Accrued claims payable		9,557,575
Other accrued expenses		767,725
Other current assets		(32,719	)
Property and equipment – net		(61,670	)
Other long-term assets		(153,122	)
Total net transfer		10,969,715
Gain on sale	$	10,969,615

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LEGAL SETTLEMENT

12 Months Ended

Dec. 31, 2014

Legal Settlement

LEGAL SETTLEMENT

Note 12 LEGAL SETTLEMENT

The Company’s subsidiary, CompCare de Puerto Rico (“Puerto Rico”) entered into an agreement with MAPRE Life Insurance Company of Puerto Rico (:MAPFRE”) whereby the Company made available to MAPFRE’s Medicare Advantage beneficiaries its network of providers for behavioral, and mental health amongst other services effective December 1, 2008. From that time until August 13, 2012, the Company claimed that overpayments for medical costs were made and requested reimbursement. An arbitration case was filed, and the parties settled on June 12, 2014 for a settlement of $1,150,000, which was received by the Company. This settlement is recorded as part of Other Income on the face of the financial statements. Of the proceeds, $150,000 was paid as fees and $1,000,000 for the repayment of outstanding debt.

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RELATED PARTY TRANSACTION

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTION

Note 13 RELATED PARTY TRANSACTION

We recognized interest expense of approximately $620,000 and $616,000 during 2014 and 2013, respectively, in connection with loans from related parties of the Company.

Employment agreement with Chief Executive Officer and Directors compensation - In accordance with the employment agreement between the Company and our Board Chairman and CEO, Clark Marcus, we are obligated to pay to Mr. Marcus a total of approximately $10.9 million in base salary over the next five years. In addition, we will pay on his behalf approximately a total of $68,000 in health insurance premiums and $603,000 in life insurance premiums, also over the next five years. This compensation may, at our election, be only accrued but not paid, in whole or in part, until such time as we receive financing and/or generate sufficient cash flows, after the payment of our operating expenses, with which to pay Mr. Marcus his agreed compensation.

In the event Mr. Marcus’ employment is terminated without cause, or Mr. Marcus voluntarily terminates his employment within one year following a change in control, if any, we will be obligated to pay to Mr. Marcus any accrued but unpaid bonuses and the total compensation that would have been paid to him for five full years following the date of termination. In connection with this employment agreement, we have accrued compensation payable of $ 1,640,280 and $832,479 included in accrued expenses as of December 31, 2014 and 2013, respectively.

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INCOME TAXES

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

Note 14 INCOME TAXES

The Company did not provide for income taxes with respect to differences between financial loss and taxable loss arising from the timing of when certain transactions are recorded for book purposes versus tax purpose. The Company has not filed any federal or state income returns since 2012. The financial statements do not reflect any fines or penalties that may or may result from not filing the various income tax returns. 

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GOING CONCERN

12 Months Ended

Dec. 31, 2014

Going Concern

GOING CONCERN

Note 15 GOING CONCERN

During the fiscal year ended December 31, 2013, we funded our operations from revenues and a line of credit. For the fiscal year ended December 31, 2014, we funded our operations from revenues and the line of credit. We will continue to fund our operations from these sources until we are able to produce operating revenue sufficient to cover our cost structure. In the event we are not able to secure such funding, our operations will be adversely affected.

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2014

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

Note 16 SUBSEQUENT EVENTS

Other than the events discussed elsewhere above, no events were identified by management that in our opinion require accounting recognition or disclosure in these financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Going Concern Basis

Going Concern Basis - The consolidated financial statements are prepared on the basis that the Company will continue its operations as a going concern. As a result of certain conditions described in Note 6, our  ability to continue as a going concern will be dependent upon the success of management’s plans, as set forth also in Note 6, and is subject to significant uncertainty.

The Company has elected to not adopt the option available under United States generally accepted accounting principles (“GAAP”) to measure any eligible financial instruments or other items at fair market value at this time. Accordingly, the Company measures all of its assets and liabilities on the historical cost basis of accounting, except as otherwise required by GAAP.

Inter-company accounts and transactions have been eliminated in consolidation. Certain minor reclassifications of prior period amounts have been made to conform to the current year presentation.

Use of Estimates

Use of Estimates - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts. Actual results could differ from these estimates. Estimates involved in the determination of an allowance for doubtful accounts receivable and accrued claims payable, including incurred but not reported, are considered by management as particularly susceptible to material change in the next year. Other significant estimates relate to stock-based compensation, valuation of goodwill, warrants and beneficial conversion features.

Accounts Receivable

Accounts Receivable - Accounts and notes receivable are carried net of an allowance at their estimated collectible value. Since customer credit is generally extended on a short-term basis, accounts receivable do not bear interest and are uncollateralized. We manage credit risk and determine necessary allowances by evaluating customers’ credit worthiness before extending credit and periodically for collectability, based primarily on customers’ past credit history and current financial conditions and general economic conditions, results of prior collection efforts, the relative strength of our relationship therewith and, in the event of a dispute, its legal position and the estimated cost of proposed collection proceedings. Management has not established a policy for when to charge off uncollectible accounts receivable or to use external collection agencies and makes such decisions on a case-by-case basis. The maximum losses that the Company would incur if a customer failed to pay would be limited to the carrying value of the receivable after any related allowances provided.

Property and Equipment

Property and Equipment - Property and equipment (Note 3) is stated at cost less accumulated depreciation. Depreciation and amortization are computed using the straight-line method over the estimated useful lives ranging from 2 to 12 years. Leasehold improvements are amortized over the shorter of the lease term or the asset’s useful life.

Accrued Claims Payable

Accrued Claims Payable - Accrued claims payable includes estimated claims incurred but not yet reported (“IBNR”) to us, and any provisions for losses under our managed care contracts when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. We perform this loss accrual analysis on a contract-by-contract basis taking into consideration such factors as future contractual revenue, estimated future healthcare and maintenance costs, and each contract’s specific terms related to future revenue increases as compared to expected increases in healthcare costs. Future healthcare and maintenance costs are estimated based on historical trends and expected future cost increases.

Generally, we have the ability to cancel a managed care contract with 60 to 120 days’ written notice or to request a renegotiation of terms under certain circumstances, if the contract is not meeting our financial goals. Prior to a cancellation, we typically submit a request for a rate increase accompanied by supporting utilization data. Although historically, our clients have been generally receptive to such requests, no assurance can be given that such requests will be fulfilled in our favor in the future. If a rate increase is not granted, we have the ability, in some cases, to terminate the contract and thereby limit our exposure to risk.

Fair Value Measurements

Fair Value Measurements - The carrying amounts of cash, accounts receivable and accounts payable approximate their estimated fair value due to the short-term nature of these instruments. Since our other financial liabilities are not traded in an open market, we generally use a present value technique, which is a level 3 input, as defined in GAAP, to measure the estimated fair value of these financial instruments, except for valuing stock options and warrants (see below). The rate used for discounting expected cash flows is a risk-free rate adjusted for systematic and unsystematic risk.

Due to the inherent nature of related party transactions, we have not attempted to estimate the fair value of liabilities payable to related parties of the Company. As such, promissory notes payable with carrying values of $3,000,000 and $3, 000,000, respectively, at December 31, 2014 and 2013, are excluded from the following table. The carrying amounts and estimated fair values of other financial instruments (all are liabilities) at December 31, 2014 and 2013, are as follows (in thousands):

	December 31,
	2014					2013
	Carrying Amount			Estimated Fair Value		Carrying Amount			Estimated Fair Value
Promissory notes	$	—		$	—	$	—		$	—
Zero-coupon promissory Notes		—			—		—			—
Debentures		3,586,004			—		3,586,004			—
Senior promissory notes		1,771,013			—		1,771,013			—
Long-term promissory notes		—			—		—
Less unamortized discount		(55,200	)		—		(111,831	)		—
	$	5,301,817		$	—	$	5,245,186		$	—

Revenue Recognition

Revenue Recognition - Revenue under our contractual agreements to provide behavioral healthcare and pharmacy management services to subscribing members is earned regardless of services actually provided and, therefore, recognized monthly based on the number of qualified members. The information regarding qualified members is supplied by our clients subject to our periodic review of their member eligibility records and other reported information to verify its accuracy and determine the amount of revenue to be recognized.

Cost of Revenues

Cost of Revenues - Costs of revenues consist of two major components: claims costs and healthcare operating expense. Claims costs are recognized in the period in which an eligible member actually receives services and includes an estimate for costs of behavioral health services that have been incurred but not yet reported.

Legal Defense Costs

Legal Defense Costs - We accrue an estimate of incurred legal defense costs to be incurred in connection with pending disputes and litigation matters as part of our estimated minimum probable losses (see Note 7).

Income Taxes

Income Taxes - We are subject to the income tax jurisdictions of the U.S. and multiple state tax jurisdictions. However, our provisions for income taxes for 2013 and 2014 include only state income taxes (see Note 11).

Management has evaluated our tax positions taken or to be taken on income tax returns that remain subject to examination (i.e., tax years 2008 and thereafter federally), and has concluded that there have been no uncertain tax positions (as defined in GAAP) taken that require recognition or disclosure in the consolidated financial statements. In the event of any income tax-related interest or penalties are incurred, they would be included in general and administrative expense.

Stock Options and Warrants

Stock Options and Warrants - We grant stock options and warrants (see Note 8) to our employees, non-employee directors, note holders and certain consultants and clients allowing them to purchase our common stock pursuant to approved terms. The estimated value of the warrants issued with debt instruments is recorded as a discount on notes payable and amortized as interest expense over the term of the notes using the effective interest method.

We use a Black-Scholes valuation model to estimate the fair value of options and warrants on the measurement date and for determining the allocation of the relative values of debt and warrants. In applying the model, we use level 3 inputs, as defined by GAAP, consisting of historical data and management judgment to estimate the expected terms of the instruments. Expected volatility is based on the historical volatility of our traded stock. We do not expect to pay dividends for the period of the expected life of the instruments, and therefore we assume no expected dividend. The assumed risk-free rates used are based on the U.S. Treasury yield curve with the same expected terms as those of the equity instruments at the time of grant.

The following table lists the assumptions utilized in applying the Black-Scholes valuation model for options and warrants.

NOTES TO FINANCIAL STATEMENTS

	Year ended December 31,
	2014			2013
Expected volatility		160	%		160	%
Expected life (in years) of options		3	%		4	%
Expected life (in years) of warrants		2-3	%		2-3	%
Risk-free interest rate range, options		0	%		0	%
Risk-free interest rate range, warrants		0	%		0	%
Expected dividend yield		0	%		0	%

PER SHARE DATA

PER SHARE DATA

For the periods presented, since losses would produce anti-dilution, no diluted loss per common share is presented. The following table sets forth the computation of basic loss per common share (amounts in thousands, except per share data):

	Year ended December 31,
	2014			2013
Numerator:
Net loss attributable to common stockholders	$	3,632,451		$	7,146,162
Denominator:	$	63,063,685		$	61,589,316
Weighted average common shares
Basic loss per share attributable to common stockholders	$	(0.06	)	$	(0.12	)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Schedule of carrying and estimated fair values of financial instruments

The carrying amounts and estimated fair values of other financial instruments (all are liabilities) at December 31, 2014 and 2013, are as follows (in thousands):

	December 31,
	2014					2013
	Carrying Amount			Estimated Fair Value		Carrying Amount			Estimated Fair Value
Promissory notes	$	—		$	—	$	—		$	—
Zero-coupon promissory Notes		—			—		—			—
Debentures		3,586,004			—		3,586,004			—
Senior promissory notes		1,771,013			—		1,771,013			—
Long-term promissory notes		—			—		—
Less unamortized discount		(55,200	)		—		(111,831	)		—
	$	5,301,817		$	—	$	5,245,186		$	—

Schedule of assumptions for options and warrants

The following table lists the assumptions utilized in applying the Black-Scholes valuation model for options and warrants.

	Year ended December 31,
	2014			2013
Expected volatility		160	%		160	%
Expected life (in years) of options		3	%		4	%
Expected life (in years) of warrants		2-3	%		2-3	%
Risk-free interest rate range, options		0	%		0	%
Risk-free interest rate range, warrants		0	%		0	%
Expected dividend yield		0	%		0	%

Computation of basic loss per common share

The following table sets forth the computation of basic loss per common share (amounts in thousands, except per share data):

	Year ended December 31,
	2014			2013
Numerator:
Net loss attributable to common stockholders	$	3,632,451		$	7,146,162
Denominator:	$	63,063,685		$	61,589,316
Weighted average common shares
Basic loss per share attributable to common stockholders	$	(0.06	)	$	(0.12	)

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PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

Property and equipment, net, consists of the following at December 31:

	2014		2013
Furniture and equipment	$	336,242	$	336,492
Less accumulated depreciation and amortization		261,229		155,229
Property and equipment – net	$	75,263	$	181,263

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RELATED PARTY NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2014

Related Party Notes Payable Tables

Schedule of related party notes payable

Related party notes payable consists of the following at December 31, 2014 and 2013:

	2014		2013
Convertible Promissory Note payable dated June 4, 2010 for $2,000,000 bearing interest at 24% payable quarterly in arrears, with a maturity date of June 4, 2011. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share. The note may be prepaid upon providing five days written notice.	$	2,000,000	$	2,000,000
Eighteen Month Promissory note payable dated November 8, 2011 for $1,000,000 bearing interest at 14% payable quarterly, with a maturity date of May 8, 2013.		1,000,000		1,000,000
Various borrowings during 2014		40,405		—
	$	3,040,405	$	3,000,000

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NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2014

Notes Payable [Abstract]

Schedule of Notes payable

Notes payable consists of the following at December 31, 2014 and 2013:

	2014		2013
14% Senior Promissory Note payable dated April 15, 2010, as amended on July 13, 2012, for $14,525 bearing interest at 14%, with a maturity date of April 15, 2014. In case of default, the default interest rate is 18%.	$	14,525	$	14,525
Note payable dated April 10, 2010, as amended on April 15, 2012, for $5,188 bearing interest at 14%, with a maturity date of April 15, 2014. In case of default, the default interest rate is 18%.		5,188		5,188
14% Senior Note payable dated April 15, 2010, as amended on April 15, 2013, for $1,290,650 bearing interest at 14%, with a maturity date of April 15, 2014. The Lender owns warrants to purchase a total of 5,162,600 shares of common stock issued by the Company pursuant to two warrant agreements.		1,290,650		1,290,650
Promissory Note payable dated January 31, 2012, as amended on April 30, 2013, for $100,000, plus interest at 14%, with a maturity date of October 31, 2013. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share.		100,000		100,000
Convertible Promissory Note payable for $230,000 dated February 28, 2013, as amended on August 31, 2013. Amount of loan amended to $245,000 including interest in arrears of $15,000. Interest accrues at 14% and loan matures on November 30, 2013. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share.		245,000		245,000
Promissory Note payable dated June 13, 2013, for $100,000, plus interest at 14%, with a maturity date of December 13, 2014. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share.		100,000		100,000
Subtotal	$	1,755,363	$	1,755,363

Subtotal from page 67	$	1,755,363	$	1,755,363
Senior Note payable dated April 15, 2010, as amended on September 10, 2012, for $10,375 bearing interest at 14%, with an amended maturity date of October 15, 2015. Lender agreed to forgive past due interest of $1,867.50 and note has been converted to a 7% Senior Note, effective April 15, 2014. The lender accepted $933.75 of the interest forgiveness in cash and the remaining $933.75 was added to the loan balance.		11,309		10,375
14% Senior Note payable, dated April 15, 2010, as amended on July 30, 2012, for $15,563 bearing interest at 14%, with a maturity date of April 15, 2013. In case of default, the default interest rate is 18%.		15,563		15,563
Senior Note payable dated April 15, 2010, as amended on July 13, 2012, for $72,625 initially bearing interest at 14%, with an amended maturity date of January 15, 2015. Lender agreed to forgive past due interest of $5,083.75 and note has been converted to a 7% Senior Note, effective October 15, 2013.		72,625		72,625
14% Senior Note payable dated April 15, 2010, as amended on July 6, 2012, for $264,563 bearing interest at 14%, with a maturity date of April 15, 2013. In case of default, the default interest rate is 18%. Per terms of the amendment, the Company agreed to pay the Kennedy Estate $13,228 in cash as compensation and consideration for agreeing to the terms of the amendment to the loan agreement.		264,563		264,563
Convertible Promissory Note payable dated March 2, 2012, as amended on March 2, 2013, for $50,000 bearing interest at 7% payable quarterly in arrears, with a maturity date of March 2, 2014. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.50 per share. The note may be prepaid upon providing five days written notice.		50,000		50,000
14% Senior Note payable dated April 15, 2010, as amended on July 6, 2012, for $68,475 bearing interest at 14%, with an amended maturity date of April 15, 2014. In case of default, the default interest rate is 18%.		68,475		68,475
Subtotal	$	2,237,898	$	2,236,964

Subtotal from page 68	$	2,237,898	$	2,236,964
Promissory note payable for $250,000, bearing interest at 9%, payable, in conjunction with the note listed below, in the amount of $10,000 per month, beginning October 1, 2011		289,000		189,000
Promissory note payable for $200,000, bearing interest at 8.5%, payable, in conjunction with note listed above, in the amount of $10,000 per month, beginning October 1, 2011.		90,000		190,000
Subordinated Debentures		487,000		537,000
Convertible Promissory Note payable dated March 16, 2013 for $100,000 bearing interest at 10% payable quarterly in arrears, with a maturity date of March 16, 2014. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share. The note may be prepaid upon providing five days written notice. As additional consideration, a separate three-year warrant agreement was issued which entitles Paul Dorn to purchase 25,000 shares of common stock at $.15 per share. The warrants vest immediately.		100,000		100,000
Note payable dated August 1, 2012, bearing interest at 12%.		25,000		25,000
10% Senior Promissory Note payable dated November 3, 2010, for $1,037.50 bearing interest at 10%, payable semiannually, with a maturity date of April 15, 2012. The note may be prepaid upon providing five days written notice.		1,038		1,038
10% Senior Promissory Note payable dated November 3, 2010, for $15,562.50 bearing interest at 10%, payable semiannually, with a maturity date of April 15, 2012. The note may be prepaid upon providing five days written notice.		15,563		15,563
Subtotal	$	3,245,499	$	3,294,565

Subtotal from page 69	$	3,245,499	$	3,294,565
Twenty-four Month Convertible Promissory Note payable dated February 7, 2012 for $100,000, bearing interest at 12% payable quarterly in arrears, with a maturity date of February 7, 2014. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.25 per share. The note may be extended for an additional six months.		100,000		100,000
Eighteen Month Convertible Promissory Note payable dated August 30, 2011 for $1,400,000. Extended through January 15, 2014 per terns of an Extension and Forbearance Agreement. Lender is also granted a first lien security interest over all existing and future assets for CompCare de Puerto Rico, Inc, including the arbitration claim against MAPFRE Life Insurance Co. filed on August 10, 2012 at December 2`, 2013. $1,000.000 of proceeds was applied to this debt in 2014 upon receipt of the proceeds from MAFRE		400,000		1,400,000
Eighteen Month Convertible Promissory Note payable dated November 14, 2011 for $625,000. Extended through January 15, 2014 per terns of an Extension and Forbearance Agreement which requires payments of $75,000 each on September 13, 2013 and January 6, 2014. Lender is also granted a first lien security interest over all existing and future assets of CompCare de Puerto Rico, Inc, including the arbitration claim against MAPFRE Life Insurance Co. filed on August 10, 2012 at December 31, 2012.		475,000		550,000
14% Senior Promissory Note payable dated October 24, 2012, for $7,262.50 bearing interest at 14%, payable semiannually, with a maturity date of April 15, 2013. The note may be prepaid upon providing five days written notice.		7,263		7,263
14% Senior Promissory Note payable dated November 30, 2012, for $5,187.50 bearing interest at 14%, payable semiannually, with an amended maturity date of April 15, 2014. The note may be prepaid upon providing five days written notice.		5,188		5,188
Subtotal	$	4,232,950	$	5,357,016

Subtotal from page 70	$	4,232,950	$	5,357,016
Convertible Promissory Note payable to dated October 6, 2014, for $100,000, bearing interest at 12%, with a maturity date of the earliest of October 6, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the acquisition of all of the Company’s assets. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.11per share. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		100,000		—
Convertible Promissory Note payable dated January 6, 2014, for $50,000, bearing interest at 18%, with a maturity date of the earliest of January 6, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		50,000		—
Convertible Promissory Note payable dated January 23, 2014, for $67,000, bearing interest at 18%, with a maturity date of the earliest of January 23, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		67,000		—

Subtotal $ 4,449,950 $ 5,357,016

Subtotal from page 71	$	4,449,950	$	5,357,016
Convertible Promissory Note payable dated February 25, 2014, for $45,000, bearing interest at 18%, with a maturity date of the earliest of February 25, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		45,000		—
Convertible Promissory Note payable dated April 14, 2014, for $23,000, bearing interest at 18%, with a maturity date of the earliest of April 14, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		23,000		—
Convertible Promissory Note payable dated April 21, 2014, for $37,000, bearing interest at 18%, with a maturity date of the earliest of April 21, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is subordinate in right of payment to all other notes.		37,000		—
Convertible Promissory Note payable dated July 1, 2014, for $50,000, bearing interest at 18%, with a maturity date of the earliest of April 14, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is senior in right of payment to all other notes.		50,000		—
Subtotal	$	4,604,950	$	5,357,016

Subtotal from page 72		4,604,950			8,357,016
Convertible Promissory Note payable dated September 9, 2014, for $50,000, bearing interest at 12%, with a maturity date of the earliest of March 9, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s common stock at a conversion price of $.11 per share. The note may be prepaid at any time without penalty. The note is subordinated in right of payment to all other notes.		50,000			—
Convertible Promissory Note payable dated July 17, 2014, for $100,000, bearing interest at 18%, with a maturity date of the earliest of July 17, 2015, the first closing of the Series A-1 Preferred Equity, or an Acquisition Transaction, i.e. the sale of all of the Company’s assets or by a merger. The face value of the debt can be converted to the Company’s Series A-1 preferred stock at the applicable price per share at the date of conversion. The note may be prepaid at any time without penalty. The note is senior in right of payment to all other notes		100,000			—
7½% Senior Note payable dated January 30, 2014, for $51,875 bearing interest at 7½%, with a maturity date of February 15, 2015. This note was issued in exchange for the $50,000 in 7½% Convertible Subordinated Debentures plus accrued interest of $1,875. The note may be prepaid upon providing five days written notice.		51,875			—
	$	4,806,825		$	5,357,016
Less Discounts on Notes		(55,200	)		(111,831	)
Total notes payable		4,751,625			5,245,185
Less: long term portion		(90,000	)		(90,000	)
Current notes payable	$	4,661,625		$	5,155,185

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Future minimum payments under non-cancelable operating leases

Future minimum payments under the non-cancelable operating lease with initial or remaining terms of one year or more consist of the following at December 31, 2014.

2015	$	92,364
2016		92,364
2017		92,634
2018		92,364
2019		46,182
	$	415,630

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EQUITY INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Schedule of warrant activity

A summary of warrant activity for 2014 and 2013 follows:

Warrants	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Instrinsic Value
Outstanding at January 1, 2013		35,957,583			0.33	4.26 years	$	—
Granted		8,320,000			0.24	3.38 years	$	—
Reclassified
Forfeited, expired or cancelled
Outstanding at December 31, 2013		44,277,583			0.31
Granted		3,399,000			0.27
Forfeited, expired, or cancelled		(3,212,599	)		0.25
Outstanding at December 31, 2014		44,463,984			0.31
Exercisable at December 31, 2014		44,463,984			0.31	3.47 years

Summary of warrants outstanding and exercisable

As of December 31, 2013 and 2014, the information regarding the options is set forth below.

	2014		2013
Shares available		52,000,000		52,000,000
Options outstanding (Directors and employees)		6,322,000		6,322,000
Options exercisable		6,046,334		6,046,334

Schedule of option activity

A summary of activity for 2014 and 2013 follows:

	Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Instrinsic Value
Outstanding at January 1, 2013		6,261,334		0.33	8.25 years
Granted		300,000		0.25
Forfeited, expired or cancelled		-10,000		0.25
Outstanding at December 31, 2013		6,551,334		0.28	9.85  years
Granted		0
Forfeited, expired or cancelled		-143,834		.25
Outstanding at December 31, 2014		6,407,500		.28	9.85  years
Exercisable at December 31, 2014		0

Summary of options granted and vested

The following table summarizes information about options granted and vested during the years ended December 31.

	2014		2013
Options granted		0		300,000
Weighted-average grant-date fair value ($)		N/A		0.07
Options vested		0		40,000
Fair value of vested options ($)		N/A	$	2,800

Summary of common stock options outstanding and exercisable

A summary of common stock options outstanding and exercisable as of December 31, 2014 follows:

Options Outstanding		Exercise Price Range		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Options Exercisable		Weighted- Average Exercise Price of Exercisable Options
	6,407,500		.28		.25-.65		9.85		0	N/A

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SALE OF COMPREHENSIVE BEHAVIORAL CARE, INC (Tables)

12 Months Ended

Dec. 31, 2014

Sale Of Comprehensive Behavioral Care Inc Tables

Schedule of gain on sale

The Company recorded a gain on sale of CBC of $9,270,336 as follows:

Cash received on sale	$	100
Assets and liabilities transferred to purchaser
Accounts payable		891,725
Accrued claims payable		9,557,575
Other accrued expenses		767,725
Other current assets		(32,719
Property and equipment – net		(61,670
Other long-term assets		(153,122
Total net transfer		10,969,715
Gain on sale	$	10,969,615

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Dec. 31, 2014	Dec. 31, 2013
Schedule of carrying and estimated fair values of financial instruments
Less: unamortized discount	$ (55,200)	$ (111,831)
Net liabilities carrying amount	5,301,817	5,245,186
Promissory Notes [Member]
Schedule of carrying and estimated fair values of financial instruments
Financial Instrument Carrying Amount
Debt instrument, Fair Value Disclosure
Zero Coupon Notes [Member]
Schedule of carrying and estimated fair values of financial instruments
Financial Instrument Carrying Amount
Debt instrument, Fair Value Disclosure
Debentures [Member]
Schedule of carrying and estimated fair values of financial instruments
Financial Instrument Carrying Amount	3,586,004	3,586,004
Debt instrument, Fair Value Disclosure
Senior Promissory Notes [Member]
Schedule of carrying and estimated fair values of financial instruments
Financial Instrument Carrying Amount	1,771,013	1,771,013
Debt instrument, Fair Value Disclosure
Long Term Promissory Notes [Member]
Schedule of carrying and estimated fair values of financial instruments
Financial Instrument Carrying Amount
Debt instrument, Fair Value Disclosure

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Schedule of assumptions for options and warrants
Expected volatility	160.00%	160.00%
Expected dividend yield	0.00%	0.00%
Stock Option [Member]
Schedule of assumptions for options and warrants
Expected life (in years)	3 years	4 years
Risk-free interest rate range	0.00%	0.00%
Warrant [Member]
Schedule of assumptions for options and warrants
Risk-free interest rate range	0.00%	0.00%
Warrant [Member] | Maximum [Member]
Schedule of assumptions for options and warrants
Expected life (in years)	3 years	3 years
Warrant [Member] | Minimum [Member]
Schedule of assumptions for options and warrants
Expected life (in years)	2 years	2 years

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Numerator:
Net loss attributable to common stockholders	$ (1,233,840)	$ 5,852,281
Denominator:
Weighted average common shares	63,063,685	61,589,316
Basic loss per share attributable to common stockholders	$ (0.06)	$ (0.12)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Diluted loss per common share	$ 0.00
Promissory notes payable related party	$ 3,000,000	$ 3,000,000
Minimum [Member]
Estimated useful lives of property and equipment	2 years
Notice period for cancellation of contract	60 days
Maximum [Member]
Estimated useful lives of property and equipment	12 years
Notice period for cancellation of contract	120 days

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PROPERTY AND EQUIPMENT (Details) - USD ($)	Dec. 31, 2014	Dec. 31, 2013
Schedule of property and equipment
Property, plant and equipment, gross	$ 336,242	$ 336,492
Less accumulated depreciation and amortization	261,229	155,229
Property, plant and equipment, net	1,652	26,652
Furniture and Fixtures [Member]
Schedule of property and equipment
Property, plant and equipment, gross	$ 336,242	$ 336,492

XML

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Property And Equipment Details Narrative
Depreciation expense	$ 106,000	$ 105,907

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Intangible Assets (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Amortization of intangible assets	$ 0	$ 0

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RELATED PARTY NOTES PAYABLE (Details) - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Convertible notes payable	$ 3,040,405	$ 3,000,000
24% Convertible Notes Payable Due June 4, 2010 [Member]
Convertible notes payable	$ 2,000,000	$ 2,000,000
Interest rate	24.00%	24.00%
Maturity Date	Jun. 04, 2011	Jun. 04, 2011
Principal	$ 2,000,000	$ 2,000,000
14% Convertible Notes Payable Due November 8, 2011 [Member]
Convertible notes payable	$ 1,000,000	$ 1,000,000
Interest rate	14.00%	14.00%
Maturity Date	May 08, 2013	May 08, 2013
Principal	$ 1,000,000	$ 1,000,000
Various borrowings during 2014 [Member]
Convertible notes payable	$ 40,405

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NOTES PAYABLE (Details) - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Notes payable, gross	$ 4,806,825	$ 5,357,016
Less Discounts on Notes	(55,200)	(111,831)
Total notes payable	4,751,625	5,245,185
Less: long term portion	(90,000)	(90,000)
Current notes payable	4,661,625	5,155,186
14% Convertible Promissory Note Payable Due on November 30, 2013 [Member]
Notes payable, gross	245,000	245,000
7% Convertible Promissory Note Payable Due on March 2, 2014 [Member]
Notes payable, gross	50,000	50,000
10% Convertible Promissory Note Payable Due on March 16, 2014 [Member]
Notes payable, gross	100,000	100,000
12% Convertible Promissory Note Payable Due on February 7, 2014 [Member]
Notes payable, gross	100,000	100,000
Convertible Promissory Note Payable Due on January 15, 2014 [Member]
Notes payable, gross	400,000	1,400,000
Convertible Promissory Note Payable Due on January 15, 2014 [Member]
Notes payable, gross	475,000	550,000
12% Convertible Promissory Note Payable Due on October 6, 2015 [Member]
Notes payable, gross	100,000
18% Convertible Promissory Note Payable Due on January 6, 2015 [Member]
Notes payable, gross	50,000
18% Convertible Promissory Note Payable Due on January 23, 2015 [Member]
Notes payable, gross	67,000
18% Convertible Promissory Note Payable Due on February 25, 2015 [Member]
Notes payable, gross	45,000
18% Convertible Promissory Note Payable Due on April 14, 2015 [Member]
Notes payable, gross	23,000
18% Convertible Promissory Note Payable Due on April 21, 2015 [Member]
Notes payable, gross	37,000
18% Convertible Promissory Note Payable Due on April 14, 2015 [Member]
Notes payable, gross	50,000
12% Convertible Promissory Note Payable Due on March 9, 2015 [Member]
Notes payable, gross	50,000
18% Convertible Promissory Note Payable Due on July 17, 2015 [Member]
Notes payable, gross	100,000
14% Senior Promissory Note Payable Due on April 15, 2014 [Member]
Notes payable, gross	14,525	14,525
14% Note Payable Due on April 15, 2014 [Member]
Notes payable, gross	5,188	5,188
14% Senior Promissory Note Payable Due on April 15, 2014 [Member]
Notes payable, gross	1,290,650	1,290,650
14% Promissory Note Payable Due on October 31, 2013 [Member]
Notes payable, gross	100,000	100,000
14% Promissory Note Payable Due on December 13, 2014 [Member]
Notes payable, gross	100,000	100,000
14% Senior Promissory Note Payable Due on October 15, 2015 [Member]
Notes payable, gross	11,309	10,375
14% Senior Promissory Note Payable Due on April 15, 2013 [Member]
Notes payable, gross	15,563	15,563
14% Senior Promissory Note Payable Due on January 15, 2015 [Member]
Notes payable, gross	72,625	72,625
14% Senior Promissory Note Payable Due on April 15, 2013 [Member]
Notes payable, gross	264,563	264,563
14% Senior Promissory Note Payable Due on April 15, 2014 [Member]
Notes payable, gross	68,475	68,475
9% Promissory Note Payable [Member]
Notes payable, gross	289,000	189,000
8.5% Promissory Note Payable [Member]
Notes payable, gross	90,000	190,000
Subordinated Debentures [Member]
Notes payable, gross	487,000	537,000
12% Promissory Note Payable [Member]
Notes payable, gross	25,000	25,000
10% Senior Promissory Note Payable Due on April 15, 2012 [Member]
Notes payable, gross	1,038	1,038
10% Senior Promissory Note Payable Due on April 15, 2012 [Member]
Notes payable, gross	15,563	15,563
14% Senior Promissory Note Payable Due on April 15, 2013 [Member]
Notes payable, gross	7,263	7,263
14% Senior Promissory Note Payable Due on April 15, 2014 [Member]
Notes payable, gross	5,188	5,188
7.5% Senior Promissory Note Payable Due on February 15, 2015 [Member]
Notes payable, gross	$ 51,875

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NOTES PAYABLE (Details Narrative) - USD ($)

12 Months Ended

Oct. 06, 2014

Sep. 09, 2014

Jul. 17, 2014

Jul. 01, 2014

Apr. 21, 2014

Apr. 14, 2014

Feb. 25, 2014

Jan. 31, 2014

Jan. 23, 2014

Jan. 06, 2014

Aug. 31, 2013

Jun. 13, 2013

Apr. 30, 2013

Apr. 15, 2013

Mar. 16, 2013

Mar. 02, 2013

Nov. 30, 2012

Oct. 24, 2012

Sep. 10, 2012

Aug. 01, 2012

Jul. 30, 2012

Jul. 13, 2012

Jul. 06, 2012

Apr. 13, 2012

Feb. 07, 2012

Nov. 14, 2011

Oct. 01, 2011

Aug. 30, 2011

Nov. 03, 2010

Dec. 31, 2014

14% Convertible Promissory Note Payable Due on November 30, 2013 [Member]

Issuance date

Feb. 28, 2013

Face amount

$ 230,000

Conversion price (in dollars per share)

$ 0.25

Periodic payment

$ 15,000

7% Convertible Promissory Note Payable Due on March 2, 2014 [Member]

Issuance date

Mar. 02, 2012

Face amount

$ 50,000

Conversion price (in dollars per share)

$ 0.50

10% Convertible Promissory Note Payable Due on March 16, 2014 [Member]

Issuance date

Mar. 16, 2013

Face amount

$ 100,000

Conversion price (in dollars per share)

$ 0.25

12% Convertible Promissory Note Payable Due on February 7, 2014 [Member]

Issuance date

Feb. 07, 2012

Face amount

$ 100,000

Conversion price (in dollars per share)

$ 0.25

Notes term

24 months

Convertible Promissory Note Payable Due on January 15, 2014 [Member]

Issuance date

Aug. 30, 2011

Face amount

$ 1,400,000

Notes term

18 months

Proceeds from issuance of debt

$ 1,000

Convertible Promissory Note Payable Due on January 15, 2014 [Member]

Issuance date

Nov. 14, 2011

Face amount

$ 625,000

Repayments of notes

$ 75,000

12% Convertible Promissory Note Payable Due on October 6, 2015 [Member]

Issuance date

Oct. 06, 2014

Face amount

$ 100,000

Conversion price (in dollars per share)

$ 0.11

18% Convertible Promissory Note Payable Due on January 6, 2015 [Member]

Issuance date

Jan. 06, 2014

Face amount

$ 50,000

18% Convertible Promissory Note Payable Due on January 23, 2015 [Member]

Issuance date

Jan. 23, 2014

Face amount

$ 67,000

18% Convertible Promissory Note Payable Due on February 25, 2015 [Member]

Issuance date

Feb. 25, 2014

Face amount

$ 45,000

18% Convertible Promissory Note Payable Due on April 14, 2015 [Member]

Issuance date

Apr. 14, 2014

Face amount

$ 23,000

18% Convertible Promissory Note Payable Due on April 21, 2015 [Member]

Issuance date

Apr. 21, 2014

Face amount

$ 37,000

18% Convertible Promissory Note Payable Due on April 14, 2015 [Member]

Issuance date

Jul. 01, 2014

Face amount

$ 50,000

12% Convertible Promissory Note Payable Due on March 9, 2015 [Member]

Issuance date

Sep. 09, 2014

Face amount

$ 50,000

18% Convertible Promissory Note Payable Due on July 17, 2015 [Member]

Issuance date

Jul. 17, 2014

Face amount

$ 100,000

Warrant [Member] | Paul Dorn [Member] | 10% Convertible Promissory Note Payable Due on March 16, 2014 [Member]

Number of shares issued

25,000

Warrant term

3 years

Shares issued price per share (in dollars per share)

$ 0.15

14% Senior Promissory Note Payable Due on April 15, 2014 [Member]

Issuance date

Apr. 15, 2010

Face amount

$ 14,525

Default interest rate

18.00%

14% Note Payable Due on April 15, 2014 [Member]

Issuance date

Apr. 10, 2010

Face amount

$ 5,188

Default interest rate

18.00%

14% Senior Promissory Note Payable Due on April 15, 2014 [Member]

Face amount

$ 1,290,650

14% Senior Promissory Note Payable Due on April 15, 2014 [Member] | Warrant [Member] | Lender [Member] | Two Warrant Agreement [Member]

Issuance date

Apr. 15, 2010

Number of shares issued

5,162,600

14% Promissory Note Payable Due on October 31, 2013 [Member]

Issuance date

Jan. 31, 2012

Face amount

$ 100,000

Conversion price (in dollars per share)

$ 0.25

14% Promissory Note Payable Due on December 13, 2014 [Member]

Issuance date

Jun. 13, 2013

Face amount

$ 100,000

Conversion price (in dollars per share)

$ 0.25

14% Senior Promissory Note Payable Due on October 15, 2015 [Member]

Issuance date

Apr. 15, 2010

Face amount

$ 10,375

14% Senior Promissory Note Payable Due on October 15, 2015 [Member] | Lender [Member]

Description of interest forgiveness

Lender agreed to forgive past due interest of $1,867.50 and note has been converted to a 7% Senior Note, effective April 15, 2014. The lender accepted $933.75 of the interest forgiveness in cash and the remaining $933.75 was added to the loan balance.

14% Senior Promissory Note Payable Due on April 15, 2013 [Member]

Issuance date

Apr. 15, 2010

Face amount

$ 15,563

Default interest rate

18.00%

14% Senior Promissory Note Payable Due on January 15, 2015 [Member]

Issuance date

Apr. 15, 2010

Face amount

$ 72,625

14% Senior Promissory Note Payable Due on January 15, 2015 [Member] | Lender [Member]

Description of interest forgiveness

Lender agreed to forgive past due interest of $5,083.75 and note has been converted to a 7% Senior Note, effective October 15, 2013.

14% Senior Promissory Note Payable Due on April 15, 2013 [Member]

Issuance date

Apr. 15, 2010

Face amount

$ 264,563

Default interest rate

18.00%

14% Senior Promissory Note Payable Due on April 15, 2013 [Member] | Kennedy Estate [Member] | Loan Agreement [Member]

Repayments of notes

$ 13,228

14% Senior Promissory Note Payable Due on April 15, 2014 [Member]

Issuance date

Apr. 15, 2010

Face amount

$ 68,475

Default interest rate

18.00%

9% Promissory Note Payable [Member]

Issuance date

Oct. 01, 2011

Face amount

$ 250,000

Frequency of periodic payment

Per month

Periodic payment

$ 10,000

8.5% Promissory Note Payable [Member]

Issuance date

Oct. 01, 2011

Face amount

$ 250,000

Frequency of periodic payment

Per month

Periodic payment

$ 10,000

12% Promissory Note Payable [Member]

Issuance date

Aug. 01, 2012

10% Senior Promissory Note Payable Due on April 15, 2012 [Member]

Issuance date

Nov. 03, 2010

Face amount

$ 1,038

10% Senior Promissory Note Payable Due on April 15, 2012 [Member]

Issuance date

Nov. 03, 2010

Face amount

$ 15,563

14% Senior Promissory Note Payable Due on April 15, 2013 [Member]

Issuance date

Nov. 30, 2012

Oct. 24, 2012

Face amount

$ 5,188

$ 7,263

7.5% Senior Promissory Note Payable Due on February 15, 2015 [Member]

Issuance date

Jan. 30, 2014

Face amount

$ 51,875

7.5% Convertible Subordinated Debentures [Member]

Face amount

$ 50,000

Interest amount

$ 1,875

XML

BORROWINGS REVOLVING LINE OF CREDIT (Details Narrative) - Revolving Credit Facility [Member] - USD ($)

12 Months Ended

Dec. 31, 2014

Dec. 31, 2013

Line of credit

$ 2,000,000

Description of line of credit

prime plus .25%

Prime rate

3.25%

3.25%

Revolving line of credit outstanding

$ 926,167

$ 602,617

XML

COMMITMENTS AND CONTINGENCIES (Details)	Dec. 31, 2014 USD ($)
Future minimum payments under non-cancelable operating leases
2015	$ 92,364
2016	92,364
2017	92,364
2018	92,364
2019	46,182
Total	$ 415,630

XML

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	1 Months Ended	12 Months Ended
	May 31, 2014	Dec. 31, 2014	Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract]
Rental expenses		$ 82,000	$ 218,000
Terms of lease	5 years
Monthly lease Payment	$ 7,697
Working capital deficiency		17,100,000
Stockholders equity deficiency		$ 17,200,000

XML

LITIGATION (Details Narrative) - USD ($)	1 Months Ended
	Sep. 30, 2010	Mar. 08, 2017
Damages Awarded Amount to Mr. Katzman	$ 1,300,000
Collateralized Bond Amount, Appeal	$ 1,300,000
Subsequent Event [Member]
Bearing Amount		$ 866,052

XML

EQUITY INSTRUMENTS (Details) - Warrant [Member] - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Shares
Outstanding balance at beginning	44,277,583	35,957,583
Granted	3,399,000	8,320,000
Reclassified
Forfeited, expired or cancelled	(3,212,599)
Outstanding balance at end	44,463,984	44,277,583	35,957,583
Exercisable at end	44,463,984
Weighted Average Exercise Price
Outstanding balance at beginning	$ 0.31	$ 0.33
Granted	0.27	0.24
Reclassified
Forfeited, expired or cancelled	0.25
Outstanding balance at end	0.31	$ 0.31	$ 0.33
Exercisable at end	$ 0.31
Weighted Average Remaining Contractual Term
Outstanding balance at beginning			4 years 3 months 4 days
Granted		3 years 4 months 17 days
Exercisable at end	3 years 5 months 17 days
Aggregate Instrinsic Value
Outstanding balance at beginning
Granted

XML

EQUITY INSTRUMENTS (Details 1) - shares	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Shares available	500,000	500,000
Stock Option [Member]
Shares available	52,000,000	52,000,000
Options outstanding	6,407,500	6,551,334	6,261,334
Options exercisable	6,046,334	6,046,334
Stock Option [Member] | Directors and Employees [Member]
Options outstanding	6,322,000	6,322,000

XML

EQUITY INSTRUMENTS (Details 2) - Stock Option [Member] - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Options
Outstanding balance at beginning	6,551,334	6,261,334
Granted	0	300,000
Forfeited, expired or cancelled	(143,834)	(10,000)
Outstanding balance at end	6,407,500	6,551,334	6,261,334
Exercisable at end	0
Weighted Average Exercise Price
Outstanding balance at beginning	$ 0.28	$ 0.33
Granted		0.25
Forfeited, expired or cancelled	0.25	0.25
Outstanding balance at end	0.28	$ 0.28	$ 0.33
Exercisable at end
Weighted Average Remaining Contractual Term
Outstanding balance at beginning	9 years 10 months 6 days	9 years 10 months 6 days	8 years 3 months
Outstanding balance at end	9 years 10 months 6 days	9 years 10 months 6 days	8 years 3 months
Aggregate Instrinsic Value
Outstanding balance at beginning
Forfeited, expired or cancelled
Outstanding balance at end

XML

EQUITY INSTRUMENTS (Details 3) - Stock Option [Member] - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Options granted	0	300,000
Weighted-average grant-date fair value		$ 0.07
Options vested	0	40,000
Fair value of vested options		$ 2,800

XML

EQUITY INSTRUMENTS (Details 4) - Stock Option [Member] - $ / shares	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Options Outstanding	6,407,500	6,551,334	6,261,334
Weighted Average Exercise Price	$ 0.28	$ 0.28	$ 0.33
Weighted Average Remaining Contractual Term	9 years 10 months 6 days	9 years 10 months 6 days	8 years 3 months
Options Exercisable	0
Weighted Average Exercise Price of Exercisable Options
Minimum [Member]
Exercise Price Range	0.25
Maximum [Member]
Exercise Price Range	$ 0.65

XML

EQUITY INSTRUMENTS (Details Narrative)

3 Months Ended

12 Months Ended

Sep. 30, 2013

USD ($)

$ / shares

shares

Jun. 30, 2013

USD ($)

$ / shares

shares

Mar. 30, 2013

USD ($)

$ / shares

shares

Dec. 31, 2014

USD ($)

Number

$ / shares

shares

Dec. 31, 2013

USD ($)

$ / shares

Number of directors to be appointed | Number

5

Convertible Preferred Stock [Member]

Liquidation preference per share value | $ / shares

$ 250

$ 250

Liquidation preference value | $

$ 2,608,500

$ 2,608,500

Series D Convertible Preferred Stock [Member]

Series D convertible preferred stock, authorized shares

7,000

Preferred stock, shares issued

250

Preferred stock, vesting period

10 years

Number of warrants cancelled in exchange of share issue

120

Convertible preferred stock, shares issued upon conversion

100,000

Preferred stock voting rights

Equal to of 500,000 shares of common stock

Dividend issued treated as conversion percent

50.00%

Warrant [Member]

Compensation costs recognized | $

$ 2,500,000

$ 2,600,000

Tax benefits attributable to stock based compensation expense recognized | $

$ 624,000

Non Qualified Directors Plan [Member]

Non qualified stock options to our non employee directors

1,000,000

Options available for grant, initially

25,000

Options available for grant, annually

15,000

Options available for grant

2,678,000

Options outstanding

10,000,000

Common Stock [Member]

Conversion rate of preferred stock into common stock | $ / shares

$ 316.28

Number of common stock issued to consultants

721,400

1,420,588

325,000

Shares issued price (in dollars per share) | $ / shares

$ 0.10

$ 0.24

Value of common stock issued to consultants | $

$ 72,140

$ 171,946

$ 77,005

Common Stock [Member] | Minimum [Member]

Shares issued price (in dollars per share) | $ / shares

$ 0.07

Common Stock [Member] | Maximum [Member]

Shares issued price (in dollars per share) | $ / shares

$ 0.12

Common Stock [Member]

Number of common stock issued to consultants

25,783

1,119,078

Shares issued price (in dollars per share) | $ / shares

$ 0.10

Value of common stock issued to consultants | $

$ 2,578

$ 132,219

Common Stock [Member] | Minimum [Member]

Shares issued price (in dollars per share) | $ / shares

$ 0.10

Common Stock [Member] | Maximum [Member]

Shares issued price (in dollars per share) | $ / shares

$ 0.24

XML

SALE OF COMPREHENSIVE BEHAVIORAL CARE, INC (Details) - Comprehensive Behavioral Care, Inc. [Member]	Dec. 30, 2013 USD ($)
Cash received on sale	$ 100
Assets and liabilities transferred to purchaser
Accounts payable	891,725
Accrued claims payable	9,557,575
Other accrued expenses	767,725
Other current assets	(32,719)
Property and equipment - net	(61,670)
Other long-term assets	(153,122)
Total net transfer	10,969,715
Gain on sale	$ 10,969,615

XML

SALE OF COMPREHENSIVE BEHAVIORAL CARE, INC (Details Narrative) - Comprehensive Behavioral Care, Inc. [Member]	Dec. 30, 2013 USD ($)
Cash receieved on sale	$ 100
Accounts receivable on date of sale	100
Gain on sale of CBC	10,969,615
Sale of Subsidiary Gain (Loss) [Member]
Gain on sale of CBC	$ 9,270,336

XML

LEGAL SETTLEMENT (Details Narrative) - MAPRE Life Insurance Company [Member]	Jun. 12, 2014 USD ($)
Settlement amount received	$ 1,150,000
Legal fees	150,000
Repayments of outstanding debt	$ 1,000,000

XML

RELATED PARTY TRANSACTION (Details Narrative) - Management [Member] - USD ($)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Obligation to pay basic salary	$ 10,900,000
Obligation to pay health insurance premiums	68,000
Obligation to pay life insurance premiums	$ 603,000
Period of agreement	5 years
Deferred compensation payable	$ 1,640,280	$ 832,479