Discontinued Operations

12 Months Ended

Dec. 31, 2014

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

Note 5 – Discontinued Operations

Prior to the reverse acquisition, Graymark committed to a plan to divest of or close certain sleep diagnostic and sleep therapy locations.  The decision was based on a combination of the financial performance of the facilities and the shift in focus to the business model of Foundation.  As a result of the pending closure or sale of these locations, the related assets, liabilities, results of operations and cash flows were classified as discontinued operations which were acquired by the Company in the reverse acquisition.

Under the plan, from July 2013 to October 2013, Graymark closed or sold 24 sleep diagnostic locations including both IDTF and contracted locations in Georgia, Iowa, Kansas, Missouri, Nevada, Oklahoma and Texas and 5 sleep therapy locations in Iowa, Kansas, Nevada, Oklahoma and Texas.

As part of the reverse acquisition, the Company acquired the special charge liability of $475,570 related to the estimated closing costs resulting from the plan to sell or close the sleep diagnostic and therapy locations.  For the years ended December 31, 2014 and 2013, the activity in the acquired accruals for restructuring charges established for lease termination and other exit costs were as follows:

	Lease Termination Cost			Other Exit Cost			Total
Acquired balance at July 22, 2013	$	335,028		$	140,542		$	475,570
Adjustments		(172,685	)		—			(172,685	)
Cash Payments		(84,108	)		(140,542	)		(224,650	)
Balance at December 31, 2013		78,235			—			78,235
Adjustments		102,761			—			102,761
Cash Payments		(70,575	)		—			(70,575	)
Balance at December 31, 2014	$	110,421		$	—		$	110,421

Additional charges may be recorded in future periods dependent upon the Company’s ability to sub-lease or otherwise mitigate future lease costs at closed facilities.

The operating results of the discontinued sleep diagnostic and therapy locations and the Company’s other discontinued operations for the year ended December 31, 2014 and from July 22, 2013 to December 31, 2013 are summarized below:

	2014			July 22 to December 31, 2013
Revenue	$	123,728		$	877,362
Loss before taxes	$	(576,535	)	$	(1,353,609	)
Income tax benefit		219,083			514,371
Loss from discontinued operations, net of tax	$	(357,452	)	$	(839,238	)

The balance sheet items for discontinued operations as of December 31, 2014 and 2013 are summarized below:

	2014		2013
Cash and cash equivalents	$	8,148	$	49,252
Accounts receivable, net of allowances		—		222,943
Inventories		—		1,893
Other current assets		334,293		244,541
Total current assets		342,441		518,629
Fixed assets, net		165,285		426,228
Other assets		—		150,000
Total non-current assets		165,285		576,228
Total assets	$	507,726	$	1,094,857
Payables and accrued liabilities	$	839,791	$	1,557,771
Short-term debt		—		3,994,932
Current portion of long-term debt		—		67,994
Total current liabilities		839,791		5,620,697
Long-term debt, net of current portion		—		9,969
Total liabilities	$	839,791	$	5,630,666

The Company’s borrowings and capital lease obligations included in discontinued operations as of December 31, 2014 and 2013 are as follows:

	2014		2013
Short-term debt
Arvest Bank	$	—	$	3,994,932
Long-term Debt
Sleep center notes payable		—		28,723
Equipment capital leases		—		49,389
Total		—		78,112
Less: Current portion of long term debt		—		(68,143	)
Long term debt	$	—	$	9,969