UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
———————
FORM 10-Q
———————
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2014
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _____________ to _____________
Commission File Number: 333-191564
Integrated Inpatient Solutions, Inc.
(Exact name of registrant as specified in its charter)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark if the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [x]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [x] No [ ]
Indicate by check mark if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained in this form, and no disclosure will 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. [x]
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company, See the definition 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 | [x] |
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No[x]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at November 18, 2014 | |
| Common Stock | 158,503,951 |
| PART I – FINANCIAL INFORMATION | PAGE | ||||
| ITEM 1. | FINANCIAL STATEMENTS | 1 | |||
| CONDENSED CONSOLIDATED BALANCE SHEETS | 1 | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | 2 | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | 3 | ||||
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) | 4 | ||||
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 12 | |||
| ITEM 4. | CONTROLS AND PROCEDURES | 15 | |||
PART II – OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS | 16 | |||
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 16 | |||
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 16 | |||
| ITEM 4. | MINE SAFETY DISCLOSURES | 16 | |||
| ITEM 5. | OTHER INFORMATION | 16 | |||
| ITEM 6. | EXHIBITS | 17 |
EXPLANATORY NOTE
As used in this Quarterly Report on Form 10-Q (“Form 10-Q”), unless the context requires otherwise, “we,” “our,” “us” or the “Company” refers to Integrated Inpatient Solutions, Inc. Pursuant to Item 10(f) of Regulation S-K promulgated under the Securities Act of 1933, as amended (the “Securities Act”), we have elected to comply with the scaled disclosure requirements applicable to “smaller reporting companies” throughout this Form 10-Q. Except as specifically included in this Form 10-Q, items not required by the scaled disclosure requirements have been omitted.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
All statements contained in this Form 10-Q, other than statements that relate to present or historical conditions, are forward-looking statements, including, but not limited to, statements containing the words “believe,” “anticipate,” “expect” and words of similar import and are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on certain assumptions and analyses made by us in light of our assessment of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved, or whether such performance or results will be achieved at all. Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties that could cause our actual performance or results to differ materially from those expressed in the statements. Important factors that could cause such differences include, but are not limited to: (i) our ability to continue as a going concern; (ii) our ability to raise additional financing on acceptable terms, or at all; (iii) industry competition, conditions, performance and consolidation; (iv) the effects of adverse general economic conditions, both within the United States and globally and the availability of debt and equity financing in view of the current economy; (v) any adverse economic or operational repercussions from terrorist activities, war or other armed conflicts; (vi) new product development and introduction in light of our lack of adequate financing; (vii) changes in business strategy or development plans; (viii) the ability to attract and retain qualified personnel; and (ix) the ability to protect our technology, among others.
Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations.
Forward-looking statements speak only as of the date the statements are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect thereto or with respect to other forward-looking statements.
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
| Integrated Inpatient Solutions, Inc. and Subsidiary | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| September 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 342,751 | $ | 538,633 | ||||
| Accounts receivable, net | 35,893 | — | ||||||
| Notes receivable - related party | 7,000 | — | ||||||
| Goodwill | — | — | ||||||
| Refundable income taxes | 515,644 | 121,677 | ||||||
| Total current assets | 901,288 | 660,310 | ||||||
| Property and equipment, net | — | 3,567 | ||||||
| Other assets | ||||||||
| Deposits | 954 | 954 | ||||||
| TOTAL ASSETS | $ | 902,242 | $ | 664,831 | ||||
| LIABILITIES AND STOCKHOLDER'S EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | 113,642 | $ | 51,407 | ||||
| Deferred revenue | 147,670 | — | ||||||
| Liabilities from discontinued operation | 109,379 | 119,379 | ||||||
| Total current liabilities | 370,691 | 170,786 | ||||||
| TOTAL LIABILITIES | 370,691 | 170,786 | ||||||
| Commitments and contingencies (See Note 5) | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 250,000 shares issued and outstanding as of September 30, 2014 and December 31, 2013 | 25 | 25 | ||||||
| Common stock, $0.0001 par value, 300,000,000 shares authorized; 158,503,951 and 48,612,365 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively | 15,850 | 4,861 | ||||||
| Additional paid-in capital | 1,011,198 | 137,114 | ||||||
| Retaining earnings | (495,522 | ) | 352,045 | |||||
| Total Stockholders’ equity | 531,551 | 494,045 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 902,242 | $ | 664,831 | ||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements.
| Integrated Inpatient Solutions, Inc. and Subsidiary | ||||||||||||||||
| Condensed Consolidated Statement of Operations | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenues | ||||||||||||||||
| Design fees | $ | 80,963 | $ | 8,064 | $ | 180,383 | $ | 10,226 | ||||||||
| Service fees-time share | — | — | — | |||||||||||||
| 80,963 | 8,064 | 180,383 | 10,226 | |||||||||||||
| Cost of services | ||||||||||||||||
| Design | 95,508 | 2,430 | 149,197 | 8,171 | ||||||||||||
| Time share | 5,700 | — | 5,700 | — | ||||||||||||
| 101,208 | 2,430 | 154,897 | 8,171 | |||||||||||||
| Gross profit | (20,245 | ) | 5,634 | 25,486 | 2,055 | |||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 691,653 | 172,701 | 894,475 | 368,871 | ||||||||||||
| Impairment of goodwill acquired in Integrated Timeshare Solutions Inc. | 372,965 | — | 372,965 | — | ||||||||||||
| Loss from continuing operations | (1,084,863 | ) | (167,067 | ) | (1,241,954 | ) | (366,816 | ) | ||||||||
| Interest Income | 116 | — | 420 | — | ||||||||||||
| Net loss before (provision) benefit for income taxes | (1,084,747 | ) | (167,067 | ) | (1,241,534 | ) | (366,816 | ) | ||||||||
| Benefit from income taxes on continuing operations | 318,983 | 25,970 | 393,967 | 95,347 | ||||||||||||
| Loss from continuing operations | (765,764 | ) | (141,097 | ) | (847,567 | ) | (271,469 | ) | ||||||||
| Discontinued operations: | ||||||||||||||||
| Loss from discontinued operations | — | (388,904 | ) | — | (716,934 | ) | ||||||||||
| Benefit from income taxes | — | 60,454 | — | 186,355 | ||||||||||||
| Loss from discontinued operations | — | (328,450 | ) | — | (530,579 | ) | ||||||||||
| Net loss | $ | (765,764 | ) | $ | (469,547 | ) | $ | (847,567 | ) | $ | (802,048 | ) | ||||
| Net loss per share - basic | ||||||||||||||||
| Loss from continuing operations | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||
| Loss from discontinued operations | (0.00 | ) | (0.01 | ) | (0.00 | ) | (0.01 | ) | ||||||||
| Net income (loss) per share - basic | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||
| Net loss per share - diluted | ||||||||||||||||
| Loss from continuing operations | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||
| Loss from discontinued operations | (0.00 | ) | (0.01 | ) | (0.00 | ) | (0.01 | ) | ||||||||
| Net loss per share - diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||
| Weighted average number of common shares outstanding - basic | 93,764,599 | 48,612,365 | 64,224,107 | 48,612,365 | ||||||||||||
| Weighted average number of common shares outstanding - diluted | 93,764,599 | 48,612,365 | 64,224,107 | 48,612,365 | ||||||||||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements.
| Integrated Inpatient Solutions, Inc. and Subsidiary | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (Unaudited) | ||||||||
| Nine months ended September 30, | ||||||||
| 2014 | 2013 | |||||||
| (Restated) | ||||||||
| Cash Flow from Operating Activities | ||||||||
| Net Loss | $ | (847,567 | ) | $ | (271,469 | ) | ||
| Plus loss from discontinued operations, net of income taxes | — | (530,579 | ) | |||||
| Loss from continuing operations, net of income taxes | (847,567 | ) | (802,048 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 3,567 | 7,551 | ||||||
| Provision for doubtful accounts | 9,537 | — | ||||||
| Stock issued for services | 506,842 | — | ||||||
| Impairment of goodwill | 372,965 | — | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (45,430 | ) | — | |||||
| Refundable income taxes | (393,967 | ) | (281,702 | ) | ||||
| Other assets | — | 3,515 | ||||||
| Accounts payable and accrued expenses | 50,395 | 11,265 | ||||||
| Deferred revenue | 147,670 | — | ||||||
| Net cash used in operating activities from continuing operations | (195,988 | ) | (1,061,419 | ) | ||||
| Net cash (used in) provided by operating activities from discontinued operations | (10,000 | ) | 452,890 | |||||
| Net cash used in operating activities | (205,988 | ) | (608,529 | ) | ||||
| Cash Flows from Investing Activity | ||||||||
| Cash acquired in acquisition of subsidiary | 10,106 | — | ||||||
| Net cash received from investing activity | 10,106 | — | ||||||
| Net decrease in cash | (195,882 | ) | (608,529 | ) | ||||
| Cash - Beginning of year | 538,633 | 927,895 | ||||||
| Cash - End of the period | $ | 342,751 | $ | 319,366 | ||||
Supplemental Cash Flow Disclosure
Issuance of common stock for acquisition of $7,000 in notes receivable - related party and assumption of accounts payable and due to related party of $11,840.
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements.
Integrated Inpatient Solutions, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
NOTE 1 – ORGANIZATION AND BUSINESS ACTIVITY
The Company was incorporated in Florida on July 31, 2001. On September 21, 2001 the Company was acquired by PlaNet.Com, Inc., a Nevada public, non-reporting corporation. Pla.Net.Com, Inc. was considered a shell at the time of acquisition and therefore the acquisition was treated as a reverse merger (the acquired company is treated as the acquiring company for accounting purposes). Pla.Net.Com, Inc. changed its name to Inpatient Clinical Solutions, Inc. immediately after the merger.
Through March 2013, the Company provided health care services in South Florida. The Company provided inpatient physician care to various health care facilities and health plans in the South Florida area. Prior to February 2012, the Company provided Hospitalist services at acute care hospitals. Hospitalists focus on a patient’s care from the time of admission to discharge, working in close consultation with primary care physicians, other referring physicians and medical providers to coordinate the inpatient care delivery system and manage the entire inpatient episode of care.
The Company sold the hospitalist business during February 2012. At that time, the Company changed its name from Inpatient Clinical Solutions, Inc. to Integrated Inpatient Solutions, Inc. In November 2011, the Company entered into an agreement with a hospital to provide intensives services. Under the exclusive agreement, the Company provided critical care intensives coverage for all medical and surgical intensive care unit patients at the hospital. The physicians included full-time employees, part-time and temporary physicians as well as contracted physician providers. The intensivist agreement was terminated in January 2013.
The Company now provides interior design services targeting budget minded individuals. The business operates under the trade name Integrated Interior Design. The Company earns revenues from providing decorator services which are billed on hourly and per diem rates. The interior design business currently operates in South Florida and will expand regionally and nationally. The business provides interior design, interior staging, accompanied shopping, paint color selection, architectural drawing and other design services.
On August 26, 2014, the Company entered into a Share Exchange Agreement pursuant to which the Company agreed to acquire all of the outstanding capital stock of Integrated Timeshare Solutions, Inc. (“ITS”), a Nevada corporation in exchange for newly issued shares of the Company’s common stock. Accordingly, as a result of the exchange, ITS is now a wholly owned subsidiary of the Company. ITS was established on July 2, 2014 as a real estate consulting firm specializing in timeshare liquidation and mortgage relief. The Company intends to carry on the business of ITS and also continue its current line of business.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.
Basis of Presentation
The unaudited interim financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation SX. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.
Integrated Inpatient Solutions, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
The financial information furnished herein reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of Integrated Inpatient Solutions, Inc. and its wholly-owned subsidiary Integrated Timeshare Solutions, Inc. All intercompany transactions and balances have been eliminated in consolidation.
Pro-forma Financial Information
As described in Note 1, the Company completed the Share Exchange Agreement on August 26, 2014. The following unaudited pro-forma information presents the combined results of operations for the nine months ended September 30, 2014 as if the Merger with Integrated Timeshare Solutions, Inc. had been completed on January 1, 2014.
| Nine Months Ended September 30, 2014 | ||||
| Revenue | $ | 180,383 | ||
| Net loss | $ | (901,840 | ) | |
| Net loss per common share, basic and diluted | $ | (0.01 | ) | |
On August 26, 2014, Integrated Inpatient Solutions, Inc. purchased 100% of the outstanding shares Integrated Timeshare Solutions, Inc. for 47,278,932 shares of common stock with a fair value of $378,231.
| Purchase price | $ | 378,231 | ||
| Cash | $ | 10,106 | ||
| Notes receivable – related party | $ | 7,000 | ||
| Accounts payable | $ | (3,250 | ) | |
| Due to related party | $ | (8,590 | ) | |
| Purchase price differential | $ | 372,965 |
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The areas involving the most significant use of estimates include legal contingencies, deferred tax benefits, refundable income taxes, estimated realizable value of accounts receivable, and payables for known claims and liabilities for claims incurred but not reported (IBNR) related to medical malpractice. These estimates are based on knowledge of current events and anticipated future events. The Company adjusts these estimates each period as more current information becomes available. The impact of any changes in estimates is included in the determination of earnings in the period in which the estimate is adjusted. Actual results may ultimately differ materially from those estimates.
Integrated Inpatient Solutions, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
Cash
The Company considers cash in banks and other highly liquid investments with insignificant interest rate risk and maturities of three months or less at the time of acquisition to be cash and cash equivalents. At September 30, 2014 and December 31, 2013, the Company had no cash equivalents. The Company maintains cash accounts in financial institutions that are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). There was no excess amount at September 30, 2014. Deposits in excess of the FDIC insurance amount of $250,000 totaled approximately $245,000 at December 31, 2013. There were no deposits in excess amount of the FDIC insurance amount of $250,000 at September 30, 2014.
Accounts Receivable
Accounts receivable represent amounts due from customers for design services and customers relinquishing their Timeshares. Accounts receivable from customers for design services are recorded and stated at the amount expected to be collected and reflect an allowance for uncollectible amounts of $9,537 at September 30, 2014. The Company had no accounts receivable from customers for design services at December 31, 2013. Accounts receivable from customers relinquishing their Timeshares is $9,000 at September 30, 2014. This amount is being held by American Express as a chargeback reserve through March 14, 2015. American Express places a six month hold on transactions dealing with Timeshares.
Property and Equipment
Property and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful life of the asset. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. The Company determined that there were no impairments of long-lived assets as of December 31, 2013. As of September 30, 2014, the Company recorded an impairment expense of $372,965 associated with its purchase of all of the outstanding of capital stock of Integrated Timeshare Solutions, Inc. (See Note 2 – pro-forma financial information).
Fair Value of Financial Instruments
U.S. GAAP for fair value measurements establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three levels. The fair value hierarchy gives the highest priority to quoted market prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 2 inputs are inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, deposits, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.
Integrated Inpatient Solutions, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
Revenue Recognition
The Company follows ASC 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably assured.
Interior Design – The Company provides design services billed at hourly rates. The Company recognizes revenue from design services when the services are rendered to the customers.
Timeshare Liquidation – The Company earns revenue from timeshare liquidation and mortgage relief services. The company offers services for timeshare owners that either owns their timeshare outright and for those that have a mortgage on their property, and are interested in exiting their timeshare property. The Company recognizes revenue when the transactions are closed. Deposits received prior to closing transactions are recorded as deferred revenue. Costs incurred prior to the contract closings are expensed as incurred.
Income Taxes
The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
Earnings (Loss) Per Share
The Company computes earnings (loss) per share in accordance with the provisions of FASB ASC Topic 260, "Earnings Per Share," which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. Basic earnings (loss) per share are computed by dividing net earnings (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed assuming the exercise of dilutive stock options under the treasury stock method and the related income tax effects. Accordingly, for purposes of dilutive earnings per share, the Company excluded the convertible preferred stock.
As of September 30, 2014 and 2013, we had 250,000 shares of Convertible Preferred Stock outstanding convertible into 2,500,000 common shares and 141,839,814 shares contingently issuable shares based on the former shareholders of ITS reaching certain milestones.
Integrated Inpatient Solutions, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
Recent Accounting Pronouncements
In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for public and non-public entities for annual periods ending after December 15, 2016. Early adoption is permitted. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.
NOTE 3 - PROPERTY AND EQUIPMENT
The Company’s property and equipment consisted of the following at September 30, 2014 and December 31, 2013:
| Estimated | ||||||||||
| 2014 | 2013 | Useful Life | ||||||||
| Computer and Office Equipment | $ | 33,868 | $ | 33,868 | 5 -7 years | |||||
| Furniture and Fixtures | 18,530 | 18,530 | 7 years | |||||||
| 52,398 | 52,398 | |||||||||
| Less: Accumulated Depreciation | (52,398 | ) | (48,831 | ) | ||||||
| $ | — | $ | 3,567 | |||||||
Depreciation expense for the nine month period ended September 30, 2014 and 2013 was $3,567 and $7,551, respectively.
NOTE 4 - STOCKHOLDERS' EQUITY
Preferred Stock
The Company has 10,000,000 authorized shares of non-redeemable, convertible preferred stock with a par value of $.0001. Each share of preferred stock is convertible to 10 shares of common stock.
Common Stock
On June 10, 2014, the Company issue 2,700,000 shares of common stock to an employee for services with a fair value of $24,570.
Integrated Inpatient Solutions, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
On June 10, 2014, the Company issued 2,700,000 shares of common stock to a non-related party for services with a fair value of $24,570.
On August 26, 2014, the Company issued 25,411,801 shares of common stock our CEO for services rendered with a fair value of $203,294.
On August 26, 2014, the Company issued 26,833,992 shares of common stock to a related party for services rendered with a fair value of $214,672.
On August 26, 2014, the Company issued 21,296,816 shares of common stock to non-related party in exchange for 450,000 shares of Integrated Timeshare Solutions, Inc. with a fair value of $170,375. (See Note 2 – pro-forma financial information).
On August 26, 2014, the Company issued 21,296,816 shares of common stock to non-related party in exchange for 450,000 shares of Integrated Timeshare Solutions, Inc with a fair value of $170,375. (See Note 2 – pro-forma financial information).
On August 26, 2014, the Company issued 4,685,300 shares of common stock to non-related party in exchange for 100,000 shares of Integrated Timeshare Solutions, Inc with a fair value of $37,481. (See Note 2 – pro-forma financial information).
On August 26, 2014, the Company issued 4,966,855 shares of common stock to a related party for legal with fair value of $39,736.
NOTE 5 - COMMITMENT AND CONTINGENCIES
Commitment
In April 2013, the Company entered into a new one year office lease agreement at $450 per month, the lease expired in May 2014. The office space is now being occupied on a month to month basis. Total rent expense for the nine months ended September 30, 2014 was $4,293 and $9,297, respectively.
On August 26, 2014, the Company entered into a Share Exchange Agreement pursuant to which the Company agreed to acquire all of the outstanding capital stock of Integrated Timeshare Solutions, Inc. (“ITS”), a Nevada corporation in exchange for newly issued shares of the Company’s common stock.
On August 26, 2014, the Company entered into an employment agreement with its Chief Executive Officer. The agreement is for a period of two years unless renewed or extended by both parties. The agreement provides an annual base salary of $80,000. The Officer is also eligible for a bonus payment based on the gross revenue achieved by the Company at the end of each twelve month period following commencement of this agreement. The bonuses are ranging from $40,000 to $100,000 for the gross revenues ranging from $3,750,000 to $7,500,000 and over $7,500,000.
On August 26, 2014, the Company entered into an employment agreement with its Senior Vice President of Sales. The agreement is for a period of two years unless renewed or extended by both parties. The agreement provides an annual base salary of $80,000. The Officer is also eligible for a bonus payment based on the gross revenue achieved by the Company at the end of each twelve month period following commencement of this agreement. The bonuses are ranging from $40,000 to $100,000 for the gross revenue ranging from $3,750,000 to $7,500,000 and over $7,500,000.
Integrated Inpatient Solutions, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
Contingencies
While providing healthcare services in the ordinary course of our business, the Company became involved in lawsuits and legal proceedings involving claims of medical malpractice related to medical services provided by our affiliated physicians. The Company is currently involved in the settlement stages of one such matter. The accompanying financial statements include an accrual of $50,000 for this matter under the caption liabilities from discontinued operations. This accrual represents the Company’s anticipated deductible on the settlement. The details of this settlement are described more fully below.
Edra Schwartz as the Personal Representative of the Estate of Robert A. Schwartz, Deceased, v. Jason Strong, M.D., Aretha Nelson, M.D. and Inpatient Clinical Solutions, Inc. - This matter involves a 66 year old white male who developed a MRSA (methicillin-resistant staphylococcus aureus) infection following a craniotomy to remove a suspected meningioma. The mater alleges (1) Failure to properly interpret the brain MRIs preoperatively (this is directed at the radiologist preoperatively); and (2) Failure to diagnose a MRSA infection and brain abscess following the craniotomy on May 6, 2009. The patient died on September 24, 2009. The suit commenced October 18, 2011 and the case is pending in the circuit court of the 17 Judicial Circuit in and for Broward County, FL, Case # 11-10485. The claim is for unspecified monetary damages. The Company is defending this case vigorously and, while the claims for damages have not been quantified, the Company does not believe that a negative decision would have a material impact on the Company.
In November 2011, the Company became involved in a legal settlement relating to a malpractice claim for $100,000. As a result of the settlement agreement, the Company agreed to pay a total amount of $100,000 and in December 2011 and September 2013 additional $30,000 and $50,000, respectively, was owed, which resulted in a total of $180,000 of liability. As of September 30, 2014, the remaining balance is approximately $109,000 which is due in equal yearly installments of $20,000 over the next five years.
The Company made payments of $10,000 on this obligation during the nine month period ended September 30, 2014.
The accrued legal settlements are presented as liabilities from discontinued operation in the accompanying balance sheets (see Note 8).
The Company is currently not aware of any other such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business.
Regulatory Matters
Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from the Medicare and Medicaid programs. We believe that we are in compliance with all applicable laws and regulations. We are not aware of any specific investigations involving allegations of potential wrongdoing.
NOTE 6 – NOTES RECEIVABLE – RELATED PARTY
On July 2, 2014, Integrated Timeshare Solutions, Inc, the Company’s wholly-owned subsidiary received a promissory note from a related party in exchange for $5,000. The note is non-interest bearing and due and payable in ten (10) monthly installments beginning January 1, 2015. If not sooner paid, the remaining indebtedness shall be due and payable on October 1, 2015.
Integrated Inpatient Solutions, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
On August 14, 2014, Integrated Timeshare Solutions, Inc, the Company’s wholly-owned subsidiary received a promissory note from a related party in exchange for $2,000. The note is non-interest bearing and due and payable in ten (10) monthly installments beginning January 1, 2015. If not sooner paid, the remaining indebtedness shall be due and payable on October 1, 2015.
NOTE 7 – CONCENTRATIONS
Geographic and Employment
Our operations are concentrated in the South Florida region. We are reliant on the services of two full time executives who manage the operations of the Company.
Revenue and Accounts Receivable
During the nine months ended September 30, 2014, approximately 59% of revenues from the design business were derived from our top three customers at 33%, 15% and 11% of net revenue.
At September 30, 2014, 61% of accounts receivable were derived from three customers at 35%, 13% and 13%.
Accounts receivable from customers relinquishing their Timeshares was $9,000 at September 30, 2014. This amount is being held by American Express as a charge back reserve until March 14, 2015. American Express places a six month hold on any transactions involving Timeshares.
NOTE 8 - Discontinued Operations
In March 2013, management decided to exit the health care provider business and change the Company's strategy in order to focus on its interior design business. Accordingly, the financial statements have been presented in accordance with ASC 205-20, Discontinued Operations.
The following table illustrates the reporting of the discontinued operations included in the Statements of Operations for the nine months ended September 30, 2014 and 2013:
| Nine Months Ended September 30, | ||||||||
| 2014 | 2013 | |||||||
| Patient Service Revenue (net of contractual allowances and discounts) | $ | — | $ | 123,642 | ||||
| Operating expenses: | ||||||||
| Cost of services-physicians | — | 233,178 | ||||||
| General and administrative | — | 607,398 | ||||||
| Total operating expenses | — | 840,576 | ||||||
| Benefit from income taxes | — | 186,355 | ||||||
| Loss on discontinued operations | $ | — | $ | (530,579 | ) | |||
Integrated Inpatient Solutions, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
As of September 30, 2014 and December 31, 2013, liabilities from discontinued operations are listed below:
| September 30, 2014 | December 31, 2013 | |||||||
| Accrued legal settlements | $ | 109,379 | $ | 119,379 | ||||
NOTE 9 – SEGMENT REPORTING
The Company has two operating segments, namely, an interior design segment and time share liquidation segment. The Company’s operating segments are each reportable segments because their activities are not economically similar. Presented below are the revenues and net loss for each segment for the three and nine months ended September 30, 2014 and 2013.
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenue: | ||||||||||||||||
| Interior Design | $ | 80,963 | $ | 8,064 | $ | 180,383 | $ | 10,226 | ||||||||
| Time Share Services | — | — | — | — | ||||||||||||
| 80,963 | 8,064 | 180,383 | 10,226 | |||||||||||||
| Net Loss: | ||||||||||||||||
| Interior Design | (403,052 | ) | (141,097 | ) | (496,806 | ) | (271,469 | ) | ||||||||
| Time Share Services | (362,712 | ) | — | (350,761 | ) | — | ||||||||||
| $ | (765,764 | ) | $ | (141,097 | ) | $ | (847,567 | ) | $ | (271,469 | ) | |||||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2013.
Cautionary Statement Regarding Forward-Looking Statements
This report may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, and we intend that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Any such forward-looking statements would be contained principally in “Management’s Discussion and Analysis or Plan of Operations” and “Risk Factors.” Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities and the effects of regulation. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss many of these risks in greater detail in “Risk Factors.” Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits to the report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Overview
In Spring 2013 we ceased operating in the health care industry and launched an interior design business targeting budget minded individuals. The business operates under the trade name Integrated Interior Design. We have already begun generating revenues from providing decorator services, which are billed on hourly and per diem rates. The business is operating in South Florida and will expand regionally and nationally. The business provides interior design, interior staging, accompanied shopping, paint color selection, architectural drawing and other services.
Our internet site, www.IntegratedInteriorDesigns.com officially launched on June 1, 2013.
Additionally, on August 26, 2014 we entered into a Share Exchange Agreement (the “Exchange Agreement”) pursuant to which we agreed to acquire all of the outstanding capital stock of Integrated Timeshare Solutions, Inc., a Nevada corporation (“ITS”), which as a result of the transaction is a wholly owned subsidiary of ours. ITS is a real estate consulting firm specializing in timeshare liquidation and mortgage relief and its business seeks to help the approximately 7 million unhappy timeshare owners by providing resources and advice on how to eliminate the financial liability that comes with timeshare ownership. We intend to carry on the business of ITS and also continue our efforts in the interior design business.
Critical Accounting Policies
Accounts Receivable
The Company had substantially no accounts receivable from customers at December 31, 2013. At September 30, 2014 accounts receivable was $35,893.
The determination of contractual and bad debt allowances constitutes a significant estimate. Accounts receivable represent amounts due from customers for design services. Accounts receivable are recorded and stated at the amount expected to be collected and have been adjusted to reflect the allowance for uncollectible amounts of approximately $9,537 at September 30, 2014.
Revenue Recognition
The Company follows ASC 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably assured.
Interior Design – The Company provides design services billed at hourly rates. The Company recognizes revenue from design services when the services are rendered to the customers.
Timeshare Liquidation – The Company earns revenue from timeshare liquidation and mortgage relief services. The Company
offers services for timeshare owners that either own their timeshare outright and for those that have a mortgage on their property,
and are interested in exiting their timeshare property. The Company recognizes revenue when the transactions are closed. Deposits
received prior to closing transactions are recorded as deferred revenue. Costs incurred prior to the contract closings are expensed
as incurred.
Income Taxes
The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
Liquidity and Capital Resources
As of September 30, 2014, we had total current assets of $901,288, consisting primarily of $342,751 in Cash and $515,644 in Refundable Income Taxes. We had total current liabilities as of September 30, 2014 of $370,691.
We believe that we have sufficient capital to cover all anticipated operations during the next twelve months: cash on hand was $342,751 of September 30, 2014. Additionally, we are generating revenue from our interior design services. We believe that these amounts are adequate to fund the company’s current projected capital requirements for at least twelve months. We do not presently have any material commitments for capital expenditures.
The Company does not expect to purchase any plant or significant equipment over the next 12 months.
We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. If we need to raise additional capital, there can be no assurance that such additional financing will be available to us on acceptable terms, or at all. If we are unsuccessful at raising sufficient capital to fund our operations, for whatever reason, we may be forced to seek opportunities outside of our new corporate focus or to seek a buyer for our business or another entity with which we could partner. Ultimately, if all of these alternatives fail, we may be required to cease operations and seek protection from creditors under applicable bankruptcy laws.
Results of Operations for the Three Months Ended September 30, 2014 and 2013
During the quarter ended September 30, 2014 we generated revenue of $80,963 compared to revenue of $8,064 in the quarter ended September 30, 2014 from our interior design operations. Through September 30, 2014, however, we have not generated any service fees from our time share business operations.
During the quarter ended September 30, 2014 the Cost of Services for our design operations totaled $95,508 and for our time share operations totaled $5,700. This compared to $2,430 and $0, respectively for the quarter ended September 30, 2013.
All operating expenses during both periods consisted of General and Administrative expenses of $691,653 and impairment of goodwill of $372,965, which totaled $1,064,618 during the quarter ended September 30, 2014, which increased from $172,701 during the same period in 2013. During the quarter ended September 30, 2014 we suffered a loss from continuing operations of $1,084,863, which was an increase from our loss of $167,067 during the same period in 2013. Also, during the quarter ended September 30, 2013 we suffered a loss on discontinued operations of $328,450. We had no loss on discontinued operations during the quarter ending September 30, 2014. In total, we incurred a net loss during the quarter ended September 30, 2014 of $765,764 as opposed to incurring a net loss of $469,547 during the quarter ended September 30, 2013.
Results of Operations for the Nine months Ended September 30, 2014 and 2013
During the nine months ended September 30, 2014 we generated revenue of $180,383 compared to revenue of $10,226 in the nine months ended September 30, 2014 from our interior design operations. Through September 30, 2014, however, we have not generated any service fees from our time share business operations.
During the nine months ended September 30, 2014 the Cost of Services for our design operations totaled $149,197 and for our time share operations totaled $5,700. This compared to $8,171 and $0, respectively for the nine months ended September 30, 2013.
All operating expenses during both periods consisted of General and Administrative expenses of $894,475 and an impairment of goodwill of $372,965, which totaled $1,267,440 during the nine months ended September 30, 2014 which increased from $368,871 during the same period in 2013. During the nine months ended September 30, 2014 we suffered a loss from continuing operations of $1,241,954, which was an increase from our loss of $366,816 during the same period in 2013. Also, during the nine months ended September 30, 2013 we suffered a loss on discontinued operations of $530,579. We had no loss on discontinued operations during the nine months ending September 30, 2014. In total, we incurred a net loss during the nine months ended September 30, 2014 of $847,567 which was an improvement from the net loss of $802,048 we incurred during the nine months ended September 30, 2013.
Off Balance Sheet Arrangements
As of September 30, 2014, there were no off balance sheet arrangements.
Recent Accounting Pronouncements
In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for public and non-public entities for annual periods ending after December 15, 2016. Early adoption is permitted. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.
ITEM 4. CONTROLS AND PROCEDURES
In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by our management, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of September 30, 2014. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, our management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the SEC's rules and forms.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of the Company’s business in the health care industry, the Company became involved in lawsuits and legal proceedings involving claims of medical malpractice related to medical services provided by the Company’s affiliated physicians. The Company is currently involved in one such matter where the claim could exceed insurance coverage and is awaiting mediation to be scheduled in the matter.
Edra Schwartz as the Personal Representative of the Estate of Robert A. Schwartz, Deceased, v. Jason Strong, M.D., Aretha Nelson, M.D. and Inpatient Clinical Solutions, Inc.
This matter involves a 66 year old white male who developed a MRSA (methicillin-resistant staphylococcus aureus) infection following a craniotomy to remove a suspected meningioma. Preoperatively the MRIs were interpreted as revealing a meningioma, but the craniotomy revealed a lymphoma-type tumor. Postoperatively, the patient developed a brain abscess that required drainage. The case involves multiple Defendants and the Plaintiff’s two basic allegations are: (1) Failure to properly interpret the brain MRIs preoperatively (this is directed at the radiologist preoperatively); and (2) Failure to diagnose a MRSA infection and brain abscess following the craniotomy on May 6, 2009. The patient died on September 24, 2009. The suit commenced October 18, 2011 and the case is pending in the circuit court of the 17 Judicial Circuit in and for Broward County, FL, Case # 11-10485. The claim is for unspecified monetary damages. The Company is defending this case vigorously and, while the claims for damages have not been quantified, the Company does not believe that a negative decision would have a material impact on the Company.
On July 7, 2014, we received notification that one of our former hospitalist physicians may be named in a lawsuit. Because this matter is in the early stages, the claim for damages, if any has not yet been determined. Our insurance carrier has retained legal counsel for this matter.
We are not aware of any other pending or threatened litigation against us that we expect will, individually or in the aggregate, have a material adverse effect on our business, financial condition, liquidity, or operating results. We cannot assure you that we will not be adversely affected in the future by legal proceedings.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit No. Description
| 3.1(a)# | Articles of Incorporation of the Company. | |
| 3.1(b)* | Articles of Amendment of Articles of Incorporation. | |
| 3.1(c)* | Articles of Amendment of Articles of Incorporation. | |
| 3.1(d)* | September 2001 Consent of Board of Directors establishing preferred stock. | |
| 3.2# | Bylaws of the Company. | |
| 10.1* | Asset Purchase Agreement. | |
| 10.2* | Bill of Sale, Assignment and Assumption Agreement. | |
| 10.3* | Seller Noncompetition Agreement. | |
| 10.4* | Owner Noncompetition Agreement. | |
| 10.5* | Owner Consulting Agreement. | |
| 10.6+ | Share Exchange Agreement between the Company and Integrated Timeshare Solutions, Inc. | |
| 10.7+ | Employment Agreement with Osnah Bloom. | |
| 10.8+ | Employment Agreement with Bradley Scott. | |
| 10.9+ | Voting Agreement among the Company, Osnah Bloom, Dominic Alto, Bradley Scott and Josh M. Bloom | |
| 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley act of 2002. | |
| 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley act of 2002. | |
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
# Filed in the Registrant’s Registration Statement on Form S-1 on October 4, 2014.
* Filed in the Amendment 1 to the Registrant’s Registration Statement on Form S-1 on January 3, 2014.
+ Filed in the Registrant’s Current Report on Form 8-K on
August 29, 2014.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned, thereunto duly authorized.
| Integrated Inpatient Solutions, Inc. | |||
| Date: November 19, 2014 | By: | /s/ Osnah Bloom | |
Osnah Bloom Principal Executive Officer and Principal Financial Officer | |||
Exhibit 31.1
CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Osnah Bloom, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Integrated Inpatient Solutions, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | 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 the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under 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 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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on 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. |
| By: | /s/ Osnah Bloom |
| Osnah Bloom | |
| Chief Executive Officer |
Date: November 19, 2014
Exhibit 31.2
CERTIFICATION BY THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Osnah Bloom, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Integrated Inpatient Solutions, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | 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 the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under 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 report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on 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. |
| By: | /s/ Osnah Bloom |
| Osnah Bloom | |
| Chief Financial Officer |
Date: November 19, 2014
EXHIBIT 32.1
CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Osnah Bloom, Chief Executive Officer of Integrated Inpatient Solutions, Inc. (the “Company”), hereby certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:
| (a) | the Company’s periodic report on Form 10-Q for the quarterly period ended September 30, 2014 (the “Form 10-Q”), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and related interpretations; and |
| (b) | the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| By: | /s/ Osnah Bloom |
| Osnah Bloom | |
| Chief Executive Officer |
Date: November 19, 2014
EXHIBIT 32.2
CERTIFICATION BY THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Osnah Bloom, Chief Financial Officer of Integrated Inpatient Solutions, Inc. (the “Company”), hereby certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:
| (a) | the Company’s periodic report on Form 10-Q for the quarterly period ended September 30, 2014 (the “Form 10-Q”), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and related interpretations; and |
| (b) | the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| By: | /s/ Osnah Bloom |
| Osnah Bloom | |
| Chief Financial Officer |
Date: November 19, 2014