[X]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2017
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||
[_]
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Colorado
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34-1720075
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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4120 Boardman-Canfield Road, Canfield, Ohio
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44406
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☑
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Emerging growth company ☐
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PART I
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Page
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||
Item 1.
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Business
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2
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Item 1A.
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Risk Factors
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14
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Item 1B.
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Unresolved Staff Comments
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14
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Item 2.
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Properties
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14
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Item 3.
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Legal Proceedings
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14
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Item 4.
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Mine Safety Disclosures
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14
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PART II
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||
Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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15
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Item 6.
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Selected Financial Data
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15
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Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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16
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Item 7A.
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Quantitative and Qualitative Disclosures about Market Risk
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17
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Item 8.
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Financial Statements and Supplementary Data
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17
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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19
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Item 9A.
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Controls and Procedures
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19
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Item 9B.
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Other Information
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19
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PART III
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||
Item 10.
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Directors, Executive Officers and Corporate Governance
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20
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Item 11.
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Executive Compensation
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21
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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21
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Item 13.
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Certain Relationships and Related Transactions and Director Independence
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22
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Item 14.
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Principal Accounting Fees and Services
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22
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PART IV
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||
Item 15.
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Exhibits, Financial Statement Schedules
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23
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Signatures
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24
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1. |
Providing in-home delivery, set-up, and maintenance of equipment;
|
2. |
Providing patients and caregivers with written instructions about home safety, self-care, and the proper use of equipment;
|
3. |
Processing claims to third-party payors and billing/collecting patient co-pays and deductibles.
|
1. |
Electric wheelchairs, scooters, and lift chairs
|
2. |
Manual wheelchairs and ambulatory equipment, such as wheeled walkers, canes, and crutches;
|
3. |
Hospital beds;
|
4. |
Bathroom equipment, such as bedside commodes, shower chairs, grab bars, and toilet risers;
|
5. |
Support surfaces, such as pressure pads and mattresses, for patients at risk for developing pressure sores or decubitus ulcers;
|
6. |
Threshold ramps, folding ramps, and lift systems for cars or vans that make it easy to exit the home or transport electric wheelchairs or scooters.
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
Medicare
|
38
|
%
|
39
|
%
|
||||
Medicaid
|
14
|
%
|
13
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%
|
||||
Private pay/private insurance
|
47
|
%
|
45
|
%
|
||||
Other
|
1
|
%
|
3
|
%
|
||||
Total
|
100
|
%
|
100
|
%
|
1. |
Reputation with referral sources, including local physicians and hospital-based professionals;
|
2. |
Price of products and services;
|
3. |
Accessibility and overall ease of doing business;
|
4. |
Quality of patient care and associated services;
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5. |
Range of home healthcare products and services;
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6. |
Ability to provide local maintenance service on products sold.
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● |
Medical Necessity & Other Documentation Requirements. In order to ensure that Medicare beneficiaries only receive medically necessary and appropriate items and services, the Medicare program has adopted a number of documentation requirements. For example, the DME MAC Supplier Manuals provide that clinical information from the "patient's medical record" is required to justify the initial and ongoing medical necessity for the provision of DME. Some DME MACs, CMS staff and government subcontractors have taken the position, among other things, that the "patient's medical record" refers not to documentation maintained by the DME supplier but instead to documentation maintained by the patient's physician, healthcare facility or other clinician, and that clinical information created by the DME supplier's personnel and confirmed by the patient's physician is not sufficient to establish medical necessity. It may be difficult, and sometimes impossible, for us to obtain documentation from other healthcare providers. Moreover, auditors' interpretations of these policies are inconsistent and subject to individual interpretation. This is then translated to individual supplier significant error rates and aggregated into a DMEPOS industry error rate, which is significantly higher than other Medicare provider/supplier types. High error rates lead to further audit activity and regulatory burdens. In fact, DME MACs have continued to conduct extensive pre-payment reviews across the DME industry and have determined a wide range of error rates. For example, error rates for CPAP claims have ranged from 50% to 80%. DME MACs have repeatedly cited medical necessity documentation insufficiencies as the primary reason for claim denials. If these or other burdensome positions are generally adopted by auditors, DME MACs, other contractors or CMS in administering the Medicare program, we would have the right to challenge these positions as being contrary to law. If these interpretations of the documentation requirements are ultimately upheld, however, it could result in our making significant refunds and other payments to Medicare and our future revenues from Medicare may be significantly reduced. We have adjusted certain operational policies to address the current expectations of Medicare and its contractors. We cannot predict the adverse impact, if any, these interpretations of the Medicare documentation requirements or our revised policies might have on our operations, cash flow, and capital resources, but such impact could be material.
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Page
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REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
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F-1
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FINANCIAL STATEMENTS
|
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Balance Sheets
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F-3
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Statements of Operations
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F-4
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Statements of Changes in Stockholders' Deficit
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F-5
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Statements of Cash Flows
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F-6
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Notes to Financial Statements
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F-7 - F-13
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1438 N. HIGHWAY 89, STE. 120
FARMINGTON, UTAH 84025
PH (801) 447-9572 FAX (801) 447-9578
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CANFIELD MEDICAL SUPPLY, INC.
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||||||||
BALANCE SHEETS
|
||||||||
December 31,
|
December 31,
|
|||||||
ASSETS
|
2017
|
2016
|
||||||
Current Assets
|
||||||||
Cash
|
$
|
17,921
|
$
|
61,659
|
||||
Accounts receivable
|
151,262
|
206,254
|
||||||
Inventory
|
25,209
|
25,231
|
||||||
Total Current Assets
|
194,392
|
293,144
|
||||||
Equipment, net of accumulated depreciation of $93,158 and $76,197
|
46,636
|
62,190
|
||||||
Total Assets
|
$
|
241,028
|
$
|
355,334
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
Current Liabilities
|
||||||||
Accounts payable and accrued liabilities
|
$
|
226,210
|
$
|
209,069
|
||||
Line of credit
|
62,378
|
70,373
|
||||||
Current portion of long-term debt
|
11,296
|
10,918
|
||||||
Total Current Liabilities
|
299,884
|
290,360
|
||||||
Long-term debt
|
14,009
|
25,305
|
||||||
Total Liabilities
|
313,893
|
315,665
|
||||||
Stockholders' Equity (Deficit)
|
||||||||
Preferred stock, no par value; 5,000,000 shares authorized; no shares
|
||||||||
issued and outstanding
|
-
|
-
|
||||||
Common stock, no par value; 100,000,000 shares authorized;
|
||||||||
11,277,200 (December 31, 2017) and 10,927,200 (December 31, 2016) shares
|
||||||||
issued and outstanding
|
243,515
|
208,515
|
||||||
Accumulated deficit
|
(316,380
|
)
|
(168,846
|
)
|
||||
Total Stockholders' Equity (Deficit)
|
(72,865
|
)
|
39,669
|
|||||
Total Liabilities and Stockholders' Equity (Deficit)
|
$
|
241,028
|
$
|
355,334
|
||||
The accompanying footnotes are an integral part of these financial statements.
|
|
||||||||
Year Ended
|
Year Ended
|
|||||||
December 31, 2017
|
December 31, 2016
|
|||||||
Sales (net of returns)
|
$
|
895,346
|
$
|
1,012,291
|
||||
Cost of goods sold
|
440,417
|
484,908
|
||||||
Gross profit
|
454,929
|
527,383
|
||||||
Operating expenses:
|
||||||||
Salaries and wages
|
319,519
|
298,368
|
||||||
Professional fees
|
58,167
|
87,198
|
||||||
Depreciation
|
71,917
|
55,760
|
||||||
Other selling, general and administrative
|
162,532
|
136,058
|
||||||
Total operating expenses
|
612,135
|
577,384
|
||||||
Income (loss) from operations
|
(157,206
|
)
|
(50,001
|
)
|
||||
Other income (expense):
|
||||||||
Interest expense
|
(4,463
|
)
|
(4,671
|
)
|
||||
Gain on sale of fixed assets
|
14,135
|
5,826
|
||||||
Total other income (expense)
|
9,672
|
1,155
|
||||||
Income (loss) before provision for income taxes
|
(147,534
|
)
|
(48,846
|
)
|
||||
Provision for income tax
|
-
|
-
|
||||||
Net income (loss)
|
$
|
(147,534
|
)
|
$
|
(48,846
|
)
|
||
Net income (loss) per share (basic and fully diluted)
|
$
|
(0.01
|
)
|
$
|
(0.00
|
)
|
||
Weighted average number of common shares outstanding
|
11,267,611
|
10,484,113
|
Common Stock (No Par)
|
Accumulated
|
Stockholders'
|
||||||||||||||
Shares
|
Amount
|
Deficit
|
Equity (Deficit)
|
|||||||||||||
Balances at December 31, 2015
|
10,027,200
|
$
|
118,515
|
$
|
(120,000
|
)
|
$
|
(1,485
|
)
|
|||||||
Sales of common stock
|
900,000
|
90,000
|
-
|
90,000
|
||||||||||||
Net income (loss) for the year
|
-
|
-
|
(48,846
|
)
|
(48,846
|
)
|
||||||||||
Balances at December 31, 2016
|
10,927,200
|
$
|
208,515
|
$
|
(168,846
|
)
|
$
|
39,669
|
||||||||
Sales of common stock
|
350,000
|
35,000
|
-
|
35,000
|
||||||||||||
Net income (loss) for the year
|
-
|
-
|
(147,534
|
)
|
(147,534
|
)
|
||||||||||
Balances at December 31, 2017
|
11,277,200
|
$
|
243,515
|
$
|
(316,380
|
)
|
$
|
(72,865
|
)
|
|||||||
December 31,
|
December 31,
|
|||||||
2017
|
2016
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net income (loss)
|
$
|
(147,534
|
)
|
$
|
(48,846
|
)
|
||
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
|
||||||||
Gain on disposal of fixed assets
|
(14,135
|
)
|
(5,826
|
)
|
||||
Depreciation
|
71,917
|
55,760
|
||||||
Changes in current assets and liabilities
|
||||||||
Decrease (Increase) in accounts receivable
|
54,992
|
(39,191
|
)
|
|||||
Decrease (Increase) in inventory
|
22
|
(3,642
|
)
|
|||||
Increase in accounts payable and accrued liabilities
|
17,141
|
73,858
|
||||||
Net cash provided by (used for) operating activities
|
(17,597
|
)
|
32,113
|
|||||
Cash Flows From Investing Activities:
|
||||||||
Proceeds from sale of fixed assets
|
16,047
|
6,348
|
||||||
Purchases of property and equipment
|
(58,275
|
)
|
(58,424
|
)
|
||||
Net cash provided by (used for) investing activities
|
(42,228
|
)
|
(52,076
|
)
|
||||
Cash Flows From Financing Activities:
|
||||||||
Net payments on line of credit
|
(7,995
|
)
|
(6,877
|
)
|
||||
Payments on long-term debt
|
(10,918
|
)
|
(8,844
|
)
|
||||
Proceeds from sales of common stock.
|
35,000
|
90,000
|
||||||
Net cash provided by (used for) financing activities
|
16,087
|
74,279
|
||||||
Net Increase (Decrease) in Cash
|
(43,738
|
)
|
54,316
|
|||||
Cash At The Beginning Of The Period
|
61,659
|
7,343
|
||||||
Cash At The End Of The Period
|
$
|
17,921
|
$
|
61,659
|
||||
Schedule Of Non-Cash Investing And Financing Activities
|
||||||||
Purchase of equipment with long-term debt
|
$
|
-
|
$
|
16,295
|
||||
Supplemental Disclosure
|
||||||||
Cash paid for interest
|
$
|
4,463
|
$
|
4,671
|
||||
Cash paid for income taxes
|
$
|
-
|
$
|
-
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
Medicare
|
38
|
%
|
39
|
%
|
||||
Medicaid
|
14
|
%
|
13
|
%
|
||||
Private pay/private insurance
|
47
|
%
|
45
|
%
|
||||
Other
|
1
|
%
|
3
|
%
|
||||
Total
|
100
|
%
|
100
|
%
|
|
December 31,
|
|||||||
|
2017
|
2016
|
||||||
Rent
|
$
|
27,497
|
$
|
27,492
|
||||
Office expenses
|
54,382
|
43,107
|
||||||
Other SG&A
|
80,653
|
65,459
|
||||||
Total
|
162,532
|
136,058
|
December 31,
|
||||||||
2017 |
2017
|
|||||||
Office equipment
|
$
|
2,934
|
$
|
2,934
|
||||
Vehicles
|
58,577
|
58,577
|
||||||
Wheelchair rental pool
|
78,283
|
76,876
|
||||||
Total property and equipment
|
139,794
|
138,387
|
||||||
Accumulated depreciation
|
(93,158
|
)
|
(76,197
|
)
|
||||
Net property and equipment
|
$
|
46,636
|
$
|
62,190
|
|
Office equipment
|
7 yeas
|
|
Vehicles
|
5 years
|
|
Wheelchair rental pool
|
13 months
|
December 31,
|
||||||||
2017
|
2016
|
|||||||
|
||||||||
3.53% installment note payable $352 monthly, including interest, through July 2019, collateralized by vehicle with carrying value of $2,936 and $7,503, respectively
|
$
|
6,502
|
$
|
10,426
|
||||
|
||||||||
2.99% installment note payable $350 monthly, including interest, through August 2019, collateralized by vehicle with carrying value of $5,834 and $9,723, respectively
|
6,816
|
10,745
|
||||||
|
||||||||
3.79% installment note payable $299 monthly, including interest, through July 2021, collateralized by vehicle with carrying value of $11,732 and $14,665, respectively
|
11,987
|
15,052
|
||||||
25,305
|
36,223
|
|||||||
Less principal due within one year
|
(11,296
|
)
|
(10,918
|
)
|
||||
TOTAL LONG-TERM DEBT
|
$
|
14,009
|
$
|
25,305
|
Principal payments due on long-term debt subsequent to December 31, 2017, are as follows:
|
||||
2018
|
$
|
11,296
|
||
2019
|
8,511
|
|||
2020
|
3,434
|
|||
2021
|
2,064
|
|||
2022
|
-
|
|||
TOTAL
|
$
|
25,305
|
||
Name and Address
|
Age
|
Position(s)
|
||
Michael J. West
4120 Boardman-Canfield Road
Canfield, OH 44406
|
63
|
President, Chief Executive Officer and Director
|
||
Stephen H. West
16325 E. Dorado Ave.
Centennial, CO 80045
|
62
|
Chief Financial Officer, Secretary and Director
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards($)
|
Option
Awards($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings($)
|
All Other
Compensation
($)
|
Total($)
|
||||||||||||||||||||||||
Michael West
|
2017
|
$
|
78,050
|
-
|
-
|
-
|
-
|
-
|
-
|
$
|
78,050
|
||||||||||||||||||||||
2016
|
$
|
88,000
|
-
|
-
|
-
|
-
|
-
|
-
|
$
|
88,000
|
|||||||||||||||||||||||
Steve West
|
2017
|
$
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
$
|
-
|
||||||||||||||||||||||
2016
|
$
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
$
|
-
|
Name and Address of Beneficial Owner
|
Beneficial
Ownership(1)(2)
|
Approximate
Percent Owned
|
||
Michael J. West
4120 Boardman-Canfield Road
Canfield, OH 44406
|
8,344,000
|
74.0%
|
||
Stephen H. West
16325 East Dorado Avenue
Centennial, CO 80015
|
300,000
|
2.7%
|
||
All Officers and Directors as a group
(2 persons)
|
8,644,000
|
76.7%
|
(1)
|
This table is based upon 11,277,200 shares of common stock issued and outstanding as of March 30, 2018.
|
|
|
(2)
|
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting and investment power with respect to the shares. Shares of Common Stock subject to options or warrants currently exercisable or exercisable within 60 days are deemed outstanding for computing the percentage of the person holding such options or warrants, but are not deemed outstanding for computing the percentage of any other person.
|
CANFIELD MEDICAL SUPPLY, INC.
(Registrant)
|
||
Date: April 2, 2018
|
By: /s/ Michael J. West
|
|
Name: Michael J. West
Title: President and CEO (Principal Executive Officer)
|
||
Date: April 2, 2018
|
By: /s/ Stephen H. West
|
|
Name: Stephen H. West
Title: Chief Financial Officer, (Principal Financial and Principal Accounting Officer)
|
Name
|
Title
|
Date
|
|
/s/ Michael J. West
|
President, CEO (Principal Executive Officer) and Director
|
April 2, 2018
|
|
Michael J. West
|
|||
/s/ Stephen H. West
|
Chief Financial Officer (Principal Financial and Principal Accounting Officer) and Director
|
April 2, 2018
|
|
Stephen H. West
|
|||
Exhibit
Number
|
Description
|
Articles of Incorporation and Bylaws
|
|
101
|
XBRL
|
Date: April 2, 2018
|
/s/ Michael J. West
|
|
|
Michael J. West
Chief Executive Officer
(Principal Executive Officer)
|
|
Date: April 2, 2018
|
/s/ Stephen H. West
|
|
|
Stephen H. West
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
(Principal Executive Officer) |
|
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Mar. 30, 2018 |
Jun. 30, 2017 |
|
Document And Entity Information | |||
Entity Registrant Name | CANFIELD MEDICAL SUPPLY, INC. | ||
Entity Central Index Key | 0001553788 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 263,320 | ||
Entity Common Stock, Shares Outstanding | 11,277,200 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2017 |
BALANCE SHEETS (Parenthetical) - USD ($) |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, no par value | $ 0 | $ 0 |
Preferred stock, authorized shares | 5,000,000 | 5,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, no par value | $ 0 | $ 0 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 11,277,200 | 10,927,200 |
Common stock, outstanding shares | 11,277,200 | 10,927,200 |
Accumulated depreciation | $ (93,158) | $ (76,197) |
STATEMENTS OF OPERATIONS - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Statement [Abstract] | ||
Sales (net of returns) | $ 895,346 | $ 1,012,291 |
Cost of goods sold | 440,417 | 484,908 |
Gross profit | 454,929 | 527,383 |
Operating expenses: | ||
Salaries and wages | 319,519 | 298,368 |
Professional fees | 58,167 | 87,198 |
Depreciation | 71,917 | 55,760 |
Other selling, general and administrative | 162,532 | 136,058 |
Total operating expenses | 612,135 | 577,384 |
Income (loss) from operations | (157,206) | (50,001) |
Other income (expense): | ||
Interest expense | (4,463) | (4,671) |
Gain on sale of fixed assets | 14,135 | 5,826 |
Total other income (expense) | 9,672 | 1,155 |
Income (loss) before provision for income taxes | (147,534) | (48,846) |
Provision for income tax | 0 | 0 |
Net income (loss) | $ (147,534) | $ (48,846) |
Net income (loss) per share (basic and fully diluted) | $ (0.01) | $ (0.00) |
Weighted average number of common shares outstanding | 11,267,611 | 10,484,113 |
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) |
Common Stock (No Par) |
Accumulated Deficit |
Total |
---|---|---|---|
Beginning Balance at Dec. 31, 2015 | $ 118,515 | $ (120,000) | $ (1,485) |
Beginning Balance, in Shares at Dec. 31, 2015 | 10,027,200 | ||
Sales of common stock | $ 90,000 | 0 | $ 90,000 |
Sales of common stock, in Shares | 900,000 | 900,000 | |
Net income (loss) | $ 0 | (48,846) | $ (48,846) |
Ending Balance at Dec. 31, 2016 | $ 208,515 | (168,846) | 39,669 |
Ending Balance, in Shares at Dec. 31, 2016 | 10,927,200 | ||
Sales of common stock | $ 35,000 | 0 | $ 35,000 |
Sales of common stock, in Shares | 350,000 | 350,000 | |
Net income (loss) | $ 0 | (147,534) | $ (147,534) |
Ending Balance at Dec. 31, 2017 | $ 243,515 | $ (316,380) | $ (72,865) |
Ending Balance, in Shares at Dec. 31, 2017 | 11,277,200 |
ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Canfield Medical Supply, Inc. (the "Company"), was incorporated in the State of Ohio on September 3, 1992, and changed domicile to Colorado on April 18, 2012. The Company is in the business of home health services, primarily the selling of durable medical equipment and medical supplies to the public, nursing homes, hospitals and other end users.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.
Accounts receivable
The majority of the Company's revenues are received from Medicare, Medicaid, and private insurance companies. As such, the Company records revenues at allowable amounts, net of estimated allowances and discounts based on contracted prices and historical collection rates. The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. The Company has determined that at December 31, 2017 and 2016 no allowance for bad debts was necessary.
Property and equipment
Property and equipment are recorded at cost and depreciated under straight line methods over each item's estimated useful life.
Inventory
The Company carries inventory of durable medical equipment and medical supplies for resale. Inventory is stated at cost and accounted for on a first–in first-out basis.
Revenue recognition
Revenue from product sales is recognized subsequent to a patient (customer) ordering a product at an agreed upon price, and when delivery has occurred, and collectability is reasonably assured. A purchase arrangement is evidenced by a written order, with delivery considered as made after physical customer acceptance. Although rare, defective products may be returned, with other return issues considered on a case by case basis. Services such as periodic scheduled deliveries are contracted in writing, and generally billed monthly. Any service revenue earned by the Company for services such as safety and set up consulting or claims processing is recorded after the service is performed. Rental of durable home medical equipment is evidenced by written contract, with revenue recognized when rent is earned.
The Company's primary source of revenue is reimbursement from Medicare, Medicaid, and private insurance companies for the procurement and sale of medical equipment and supplies to patients. The amount of revenue earned from each classification as a percent of total revenues is as follows:
Advertising costs
Advertising costs are expensed as incurred. The Company had advertising costs in 2017 and 2016 of $7,074 and $4,912, respectively.
Income tax
The Company accounts for income taxes pursuant to ASC 740. Under ASC 740, deferred taxes are provided for using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Through February 2012, the Company was an S-Corporation for income tax purposes, and therefore a pass-through entity paying no income tax at the corporate level. The Company had no material loss carryforwards as of December 31, 2011. Included in the Company's accumulated deficit from February 2012 forward is approximately $99,000 in undistributed S-Corporation losses.
The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act, and have presented the Federal tax provision, deferred tax asset, and valuation allowance using the new rates adjusted in the period of enactment. At December 31, 2017 and 2016 the Company had net operating loss carryforwards (NOL's) of approximately $220,000 and $70,000 respectively, which may be applied against future taxable income and which expire beginning in 2034. However, if certain substantial changes in the Company's ownership should occur, there could be an annual limitation on the amount of net operating loss carryforwards that can be utilized. The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined. Because of the uncertainty surrounding the realization of the loss carryforwards, the Company has established a valuation allowance equal to the tax effect (2017: 26% - 21% federal and 5% state; 2016: 35% - 30% federal and 5% state) of the loss carryforwards of approximately $57,200 and $24,500 at December 31, 2017 and 2016, respectively, and therefore, no deferred tax asset has been recognized for the loss carryforwards. The change in valuation allowance is approximately $32,700 and $17,150 for the periods ended December 31, 2017 and 2016, respectively. The tax effect of remaining NOL's and resulting deferred tax assets of $220,000 remain fully reserved by valuation allowance, due to continued uncertainty as to their utilization.
Net income (loss) per share
The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.
There were no potentially dilutive debt or equity instruments issued or outstanding during the twelve months ended December 31, 2017 or 2016.
Financial Instruments
The carrying value of the Company's financial instruments, as reported in the accompanying balance sheets, approximates fair value.
Concentrations
Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents. The Company places its cash and cash equivalents at well-known financial institutions, where at times, such balances may exceed FDIC insurance limits.
The Company receives a significant amount of its revenues in reimbursements from Medicare and Medicaid. During the years ended December 31, 2017 and 2016, the Company received 52% and 52%, respectively, of its net revenues from Medicare and Medicaid. The Company is able to obtain reimbursements through competitive bidding processes, and there is no guarantee that the Company will be selected as a winning contract supplier under future bidding rounds.
Long-Lived Assets
In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value.
Products and services, geographic areas and major customers
The Company's business of medical supply sales constitutes one operating segment. All revenues each year were domestic and to external customers.
Other selling, general and administrative expenses
Other selling, general and administrative expenses included the following:
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EQUIPMENT |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUIPMENT | NOTE 2. EQUIPMENT
Property and equipment are recorded at cost and consist of the following:
Depreciation is computed using the straight-line method based upon estimated useful lives as follows:
Depreciation expense for 2017 and 2016 was $71,917 and $55,760, respectively.
The wheelchair rental pool consists of wheelchairs rented to customers over the shorter of the 13 month use period as mandated by Medicare and Medicaid, or the period over which the customer requires use of a wheelchair. At the end of the use period, the chair is either returned to the pool to be rented to another customer, or title of the chair is transferred to the customer. |
LINE OF CREDIT |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
LINE OF CREDIT | NOTE 3. LINE OF CREDIT
At December 31, 2017 and 2016, the Company owed a bank $62,378 and $70,373, respectively, under a line of credit note payable. The line of credit is secured by all Company assets, due on demand, and bears interest at variable rates approximating 4%. Interest expense under the note in 2017 and 2016 was $4,001 and $3,597, respectively. During 2017 and 2016, the Company made net principal payments of $7,995 and $6,877, respectively. |
LONG-TERM DEBT |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT | NOTE 4. LONG-TERM DEBT
Long-term debt consists of the following:
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COMMON STOCK |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
COMMON STOCK | NOTE 5. COMMON STOCK
In January 2017, the Company received net proceeds of $35,000 from the sale of 350,000 shares of no-par value common stock at $0.10 per share.
In March and December 2016, the Company received net proceeds of $90,000 from the sale of 900,000 shares of no-par value common stock at $0.10 per share. |
LEASE COMMITMENTS |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Leases [Abstract] | |
LEASE COMMITMENTS | NOTE 6. LEASE COMMITMENTS
The Company rents office space under a non-cancellable lease through September 2020 with monthly payments of approximately $2,292 plus costs.
Lease expense incurred in each of the years ended 2017 and 2016 was approximately $33,000, which is comprised of approximately $27,500 in rent and $5,500 in common area maintenance. Subsequent to December 31, 2017, future minimum rent payments under the leases total approximately $68,750 including: 2018 - $27,500, 2019 - $27,500, and 2020 - $13,750 plus common area maintenance fees. |
GOING CONCERN |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | NOTE 7. GOING CONCERN
The Company has suffered losses from operations and has working capital and stockholders' deficits. In all likelihood, the Company will be required to make significant future expenditures in connection with marketing efforts along with general administrative expenses. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through borrowings from financial institutions or related parties. By doing so, the Company hopes to generate sufficient capital to execute its business plan of selling medical supplies on an ongoing basis. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern. |
SUBSEQUENT EVENTS |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date these financial statements were issued and determined that there are no reportable subsequent events. |
ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates | Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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Cash and cash equivalents | Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. |
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Accounts receivable | Accounts receivable
The majority of the Company's revenues are received from Medicare, Medicaid, and private insurance companies. As such, the Company records revenues at allowable amounts, net of estimated allowances and discounts based on contracted prices and historical collection rates. The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. The Company has determined that at December 31, 2017 and 2016 no allowance for bad debts was necessary. |
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Property and equipment | Property and equipment
Property and equipment are recorded at cost and depreciated under straight line methods over each item's estimated useful life. |
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Inventory | Inventory
The Company carries inventory of durable medical equipment and medical supplies for resale. Inventory is stated at cost and accounted for on a first–in first-out basis. |
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Revenue recognition | Revenue recognition
Revenue from product sales is recognized subsequent to a patient (customer) ordering a product at an agreed upon price, and when delivery has occurred, and collectability is reasonably assured. A purchase arrangement is evidenced by a written order, with delivery considered as made after physical customer acceptance. Although rare, defective products may be returned, with other return issues considered on a case by case basis. Services such as periodic scheduled deliveries are contracted in writing, and generally billed monthly. Any service revenue earned by the Company for services such as safety and set up consulting or claims processing is recorded after the service is performed. Rental of durable home medical equipment is evidenced by written contract, with revenue recognized when rent is earned.
The Company's primary source of revenue is reimbursement from Medicare, Medicaid, and private insurance companies for the procurement and sale of medical equipment and supplies to patients. The amount of revenue earned from each classification as a percent of total revenues is as follows:
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Advertising costs | Advertising costs
Advertising costs are expensed as incurred. The Company had advertising costs in 2017 and 2016 of $7,074 and $4,912, respectively. |
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Income tax | Income tax
The Company accounts for income taxes pursuant to ASC 740. Under ASC 740, deferred taxes are provided for using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Through February 2012, the Company was an S-Corporation for income tax purposes, and therefore a pass-through entity paying no income tax at the corporate level. The Company had no material loss carryforwards as of December 31, 2011. Included in the Company's accumulated deficit from February 2012 forward is approximately $99,000 in undistributed S-Corporation losses.
The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act, and have presented the Federal tax provision, deferred tax asset, and valuation allowance using the new rates adjusted in the period of enactment. At December 31, 2017 and 2016 the Company had net operating loss carryforwards (NOL's) of approximately $220,000 and $70,000 respectively, which may be applied against future taxable income and which expire beginning in 2034. However, if certain substantial changes in the Company's ownership should occur, there could be an annual limitation on the amount of net operating loss carryforwards that can be utilized. The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined. Because of the uncertainty surrounding the realization of the loss carryforwards, the Company has established a valuation allowance equal to the tax effect (2017: 26% - 21% federal and 5% state; 2016: 35% - 30% federal and 5% state) of the loss carryforwards of approximately $57,200 and $24,500 at December 31, 2017 and 2016, respectively, and therefore, no deferred tax asset has been recognized for the loss carryforwards. The change in valuation allowance is approximately $32,700 and $17,150 for the periods ended December 31, 2017 and 2016, respectively. The tax effect of remaining NOL's and resulting deferred tax assets of $220,000 remain fully reserved by valuation allowance, due to continued uncertainty as to their utilization. |
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Net income (loss) per share | Net income (loss) per share
The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.
There were no potentially dilutive debt or equity instruments issued or outstanding during the twelve months ended December 31, 2017 or 2016. |
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Financial Instruments | Financial Instruments
The carrying value of the Company's financial instruments, as reported in the accompanying balance sheets, approximates fair value. |
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Concentrations | Concentrations
Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents. The Company places its cash and cash equivalents at well-known financial institutions, where at times, such balances may exceed FDIC insurance limits.
The Company receives a significant amount of its revenues in reimbursements from Medicare and Medicaid. During the years ended December 31, 2017 and 2016, the Company received 52% and 52%, respectively, of its net revenues from Medicare and Medicaid. The Company is able to obtain reimbursements through competitive bidding processes, and there is no guarantee that the Company will be selected as a winning contract supplier under future bidding rounds. |
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Long-Lived Assets | Long-Lived Assets
In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value. |
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Products and services, geographic areas and major customers | Products and services, geographic areas and major customers
The Company's business of medical supply sales constitutes one operating segment. All revenues each year were domestic and to external customers. |
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Selling, general and administrative expenses | Other selling, general and administrative expenses
Other selling, general and administrative expenses included the following:
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ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Classification of percent of total revenues | The amount of revenue earned from each classification as a percent of total revenues is as follows:
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Schedule of selling, general and administrative expenses | Other selling, general and administrative expenses included the following:
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EQUIPMENT (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equipment Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and equipment | Property and equipment are recorded at cost and consist of the following:
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Schedule of estimated useful lives of equipment | Depreciation is computed using the straight-line method based upon estimated useful lives as follows:
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LONG-TERM DEBT (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long Term Debt | Long-term debt consists of the following:
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Schedule of Principal amount due to Long Term Assets |
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ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Accounting Policies [Abstract] | ||
Rent | $ 27,497 | $ 27,492 |
Office expenses | 54,382 | 43,107 |
Other SG&A | 80,653 | 65,459 |
Total | $ 162,532 | $ 136,058 |
ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Revenue recognition percent | 100.00% | 100.00% |
Medicare | ||
Revenue recognition percent | 38.00% | 39.00% |
Medicaid | ||
Revenue recognition percent | 14.00% | 13.00% |
Private pay/private insurance | ||
Revenue recognition percent | 47.00% | 45.00% |
Other | ||
Revenue recognition percent | 1.00% | 3.00% |
ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Advertising cost | $ 7,074 | $ 4,912 |
Net operating loss carryforwards | $ 220,000 | $ 70,000 |
Operating Loss Carryforwards, Expiration Date | Dec. 31, 2034 | |
Federal tax rate | 21.00% | 30.00% |
State tax rate | 5.00% | 5.00% |
Change in valuation allowance | $ 32,700 | $ 17,150 |
Deferred tax assets | $ 220,000 | |
Sales Revenue, Net [Member] | ||
Concentration Risk, Percentage | 52.00% | 52.00% |
EQUIPMENT (Details) - USD ($) |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Property and equipment, gross | $ 139,794 | $ 138,387 |
Accumulated depreciation | 93,158 | 76,197 |
Property and equipment, net | 46,636 | 62,190 |
Office Equipment [Member] | ||
Property and equipment, gross | 2,934 | 2,934 |
Vehicles [Member] | ||
Property and equipment, gross | 58,577 | 58,577 |
Wheelchair rental pool [Member] | ||
Property and equipment, gross | $ 78,283 | |
Wheelchair/hospital bed rental pool [Member] | ||
Property and equipment, gross | $ 76,876 |
EQUIPMENT (Details 1) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Office Equipment [Member] | |
Useful life of asset (in years) | 7 years |
Vehicles [Member] | |
Useful life of asset (in years) | 5 years |
Wheelchair rental pool [Member] | |
Useful life of asset (in years) | 13 months |
EQUIPMENT (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 71,917 | $ 55,760 |
LINE OF CREDIT (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Debt Disclosure [Abstract] | ||
Line of credit | $ 62,378 | $ 70,373 |
Interest rate | 4.00% | |
Interest expense | $ 4,001 | 3,597 |
Principal payments | $ 7,995 | $ 6,877 |
LONG-TERM DEBT (Details) - USD ($) |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Long Term Gross | $ 25,305 | $ 36,223 |
Less principal due within one year | (11,296) | (10,918) |
Total Long Term debt | 14,009 | 25,305 |
Long-term Debt One [Member] | ||
Note Payable, monthly installment | 352 | |
Carrying Value | 2,936 | 7,503 |
Long Term Gross | 6,502 | 10,426 |
Long-term Debt Two [Member] | ||
Note Payable, monthly installment | 350 | |
Carrying Value | 5,834 | 9,723 |
Long Term Gross | 6,816 | 10,745 |
Long-term Debt Three [Member] | ||
Note Payable, monthly installment | 299 | |
Carrying Value | 11,732 | 14,665 |
Long Term Gross | $ 11,987 | $ 15,052 |
LONG-TERM DEBT (Details 1) |
Dec. 31, 2017
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2018 | $ 11,296 |
2019 | 8,511 |
2020 | 3,434 |
2021 | 2,064 |
2022 | 0 |
Total | $ 25,305 |
COMMON STOCK (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Accounting Policies [Abstract] | ||
Proceeds from sales of common stock | $ 35,000 | $ 90,000 |
Number of shares sold for proceeds | 350,000 | 900,000 |
Value of common stock sold (per share) | $ 0.10 | $ 0.10 |
LEASE COMMITMENTS (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Leases [Abstract] | ||
Office space approximate monthly payment | $ 2,292 | |
Lease expense on all leases | 33,000 | $ 33,000 |
Rent | 27,500 | 27,500 |
Common area maintenance | 5,500 | $ 5,500 |
Future minimum payments 2018 | 27,500 | |
Future minimum payments 2019 | 27,500 | |
Future minimum payments 2020 | 13,750 | |
Total future minimum payments | $ 68,750 |
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end