UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For
the quarterly period ended: |
OR
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from ___________ to ___________ | |
| Commission
File Number: |
| (Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | None | None |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐
The number of shares of the issuer’s common stock outstanding as of November 12, 2021 was shares, par value $0.0001 per share.
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | ||
| Item 1. |
|
F-1 |
| F-1 | ||
| Condensed Consolidated Statement of Operations | F-2 | |
| F-3 | ||
| F-4 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 3 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 10 |
| Item 4. | Controls and Procedures | 10 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 11 |
| Item 1A. | Risk Factors | 11 |
| Item 6. | Exhibits | 11 |
| SIGNATURES | 12 | |
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ASSISTED 4 LIVING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2021 | December 31, 2020 | |||||||
| (UNAUDITED) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Operating Lease right-of-use assets | ||||||||
| Goodwill | ||||||||
| Leasehold improvements, net | ||||||||
| Property and equipment, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Notes payable | ||||||||
| Accrued interest, Including related party | ||||||||
| Loans Payable - other | ||||||||
| Operating Lease obligations - current portion | ||||||||
| Advanced payments | ||||||||
| Deferred Revenue | ||||||||
| Deferred HHS Revenue | ||||||||
| Liability to issue shares | ||||||||
| Due to Seller for acquisition | ||||||||
| Total current liabilities | ||||||||
| Operating Lease obligations - net of current portion | ||||||||
| Liability to issue shares - long term | ||||||||
| Notes payable, net of current portion | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, par value $; shares authorized, , and shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Subscription receivable | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | $ | |||||||
| Total liabilities and stockholders’ equity | $ | |||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| F-1 |
ASSISTED 4 LIVING, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Service Revenue | $ | $ | $ | $ | ||||||||||||
| Rental income | ||||||||||||||||
| Other revenue | ( | ) | ||||||||||||||
| Net Revenue | ||||||||||||||||
| Cost of services provided | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Salaries and payroll expense | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Lease expense | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Marketing and advertising | ||||||||||||||||
| Depreciation and amortization expense | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Loss on disposal of asset | - | ( | ) | - | ( | ) | ||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES AND RESULTS FROM DISCONTINUED OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes | - | - | - | - | ||||||||||||
| LOSS FROM CONTINUING OPERATIONS BEFORE DISCONTINUED OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from discontinued operations | - | - | ( | ) | - | |||||||||||
| Gain on disposal of discontinued operations | - | - | - | |||||||||||||
| Income from discontinued operations | - | - | - | |||||||||||||
| Net loss attributable to common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Continuing Operations | ||||||||||||||||
| Loss per share - basic and diluted - Continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of shares outstanding - basic and diluted | ||||||||||||||||
| Discontinued operations net income per share | ||||||||||||||||
| Earnings per share - basic | n/a | n/a | $ | n/a | ||||||||||||
| Earnings per share - diluted | n/a | n/a | $ | n/a | ||||||||||||
| Weighted average number of shares - basic | n/a | n/a | n/a | |||||||||||||
| Weighted average shares outstanding - diluted | n/a | n/a | n/a | |||||||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| F-2 |
ASSISTED 4 LIVING, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
| Common Stock | Additional | Total | ||||||||||||||||||||||
| Number of | paid-in | Subscription | Accumulated | stockholders’ | ||||||||||||||||||||
| shares | Amount | Capital | Receivable | deficit | Equity | |||||||||||||||||||
| For the Three and Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||
| Balance at December 31, 2019 | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss for the period | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Balance at March 31, 2020 | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss for the period | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Balance at June 30, 2020 | ( | ) | ( | ) | ||||||||||||||||||||
| Issuance of stock warrant expense | - | - | - | - | ||||||||||||||||||||
| Issuance of shares for conversion of debt | - | - | ||||||||||||||||||||||
| Net loss for the period | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Balance at September 30, 2020 | ( | ) | ( | ) | ||||||||||||||||||||
| For the Three and Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||
| Balance at December 31, 2020 | ( | ) | ( | ) | ||||||||||||||||||||
| Collection on subscription receivable | - | - | - | - | ||||||||||||||||||||
| Issuance of shares for acquisition | - | - | ||||||||||||||||||||||
| Net loss for the period | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Balance at March 31, 2021 | - | ( | ) | |||||||||||||||||||||
| Issuance of shares via private placement | - | - | ||||||||||||||||||||||
| Issuance of shares for the conversion of debt | - | - | ||||||||||||||||||||||
| Shares returned and cancelled for transfer of discontinued operations | ( | ) | ( | ) | ( | ) | - | - | ( | ) | ||||||||||||||
| Net loss for the period | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Balance at June 30, 2021 | - | ( | ) | |||||||||||||||||||||
| Issuance of shares via private placement | - | - | ||||||||||||||||||||||
| Stock-based compensation and issuance of employee stock award plan | - | - | - | - | ||||||||||||||||||||
| Net loss for the period | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Balance at September 30, 2021 | - | ( | ) | |||||||||||||||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| F-3 |
ASSISTED 4 LIVING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Net gain from discontinued operations | ( | ) | ||||||
| Depreciation and amortization | ||||||||
| (Increase) decrease in assets | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Deposits and other assets | ( | ) | ||||||
| Accounts receivable | ( | ) | ||||||
| Increase (decrease) in liabilities | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Deferred Revenues | ||||||||
| Advance payments | ( | ) | ||||||
| Accrued interest | ( | ) | ||||||
| Cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Goodwill from acquisition | ( | ) | ||||||
| Non-cash operating lease expense | ||||||||
| Cash and assets from acquisition | ||||||||
| Investment in leasehold improvements | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Repayment of principal on notes payable | ( | ) | ||||||
| Proceeds from the sale of common stock | ||||||||
| Proceeds from notes payable | ||||||||
| Repayment on loans payable | ( | ) | ||||||
| Warrants to be issued | ||||||||
| Proceeds from the issuance of registered shares | ||||||||
| Cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash, beginning of year | ||||||||
| Cash, end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOWS | ||||||||
| Interest Paid | ||||||||
| Taxes Paid | ||||||||
| NON-CASH ITEMS | ||||||||
| Liability to issue shares for acquisition | ||||||||
| Goodwill from acquisition | ||||||||
| Recognition of lease liability and right of use asset at inception | ||||||||
| Conversion of notes payable and accrued interest for common stock | ||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| F-4 |
ASSISTED 4 LIVING, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Assisted 4 Living, Inc. (“the Company,” “we”, “our” or “us”) was incorporated in the state of Nevada on May 24, 2017, and is based in Bradenton, Florida. Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America (“GAAP”), and the fiscal year end is December 31.
As discussed in NOTE 3, on March 23, 2021, we entered into a Plan of Merger with our wholly-owned subsidiary, BPCC Acquisition, Inc., a Florida corporation (“Merger Sub”) and Banyan Pediatric Care Centers, Inc. (“Banyan”). Under the terms of the Plan of Merger, Merger Sub merged with and into Banyan with Banyan surviving the merger (the “Surviving Entity”) and becoming a wholly-owned subsidiary of the Company (the “Merger”). Pursuant to the Merger, we succeeded to the business of Banyan. The Merger has been treated as a recapitalization and reverse acquisition of the Company for financial accounting purposes, and Banyan is considered the acquirer for financial reporting purposes. This means that the Company’s historical financial statements before the Merger have been replaced with the historical financial statements of Banyan before the Merger in this Quarterly Report and future filings with the SEC.
Banyan, operates three pediatric extended care centers (“PPECs”) in southwest Florida. A PPEC is a nurse-staffed pediatric day care center for medically complex children age birth to 21 years. Our staff includes Registered Nurses (RNs), Licensed Practical Nurses (LPNs), Certified Nursing Assistants (CNAs) and Caregivers, who attend to the children’s medical conditions throughout the day in classroom, dining, play, and clinical settings. Banyan is fully licensed and accepts Florida Medicaid.
As discussed in NOTE 5, on June 10, 2021, we entered into an Amended and Restated Membership Interest Purchase Agreement (the “Restated Purchase Agreement”), by and among the Company, Richard T. Mason (“Mason”), G. Shayne Bench (“Bench”) and Trillium Healthcare Group, LLC, a Florida limited liability company (“Trillium”) to acquire all of the issued and outstanding ownership interests of Fairway Healthcare Properties, LLC (“FHP”) and Trillium Healthcare Consulting, LLC (together with FHP, the “Trillium Subsidiaries”) from Trillium. The transaction closed and was effective June 10, 2021.
The facilities provide room and board, routine daily care services, post-acute care including rehabilitation and memory care. The Trillium Subsidiaries were organized under the laws of the State of Florida on February 9, 2012, for the purpose of acquiring and managing long term care facilities, such as skilled nursing facilities and assisted living centers.
We are headquartered in Bradenton, Florida.
The corporate website is www.assisted4living.com.
COVID-19
In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic based on the rapid increase in global exposure. COVID-19 continues to spread throughout the world. We are closely monitoring developments and are taking steps to mitigate the potential risks related to the COVID-19 pandemic to the Company, its employees, as well as its residential and consulting clients.
Our evaluations of our practices, procedures, and operations, related to COVID-19, is ongoing. Additional updates to policies, procedures and operations will occur as best practices are adopted and as we deem necessary or advisable, or as further governmental guidance or regulations are implemented.
| F-5 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company (“Financial Statements”) have been prepared in accordance with GAAP for interim financial statements and with the instructions to Form 10-Q and Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.
In the opinion of management, the accompanying condensed consolidated Financial Statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2021, and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended September 30, 2021, are not necessarily indicative of the operating results for the full fiscal year or any future period. These condensed consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021 and Current Report on Form 8-K on June 2, 2021. As of April 30, 2021, we had discontinued operations reflected in the accompanying condensed consolidated Financial Statements. As a result of the Plan of Merger completed on March 23, 2021 (see NOTE 3) we have changed our year end reporting period from November to December.
Capital Requirements, Liquidity and Going Concern Considerations
These
condensed consolidated Financial Statements are prepared using the generally accepted accounting principles applicable to a going concern,
which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Although we had cash and
accounts receivable in the amount of approximately $
As a result of these factors, we determined it was necessary to review our cash flow for 2021 and an overall analysis of market trends to determine whether or not we have sufficient liquidity to continue as a going concern for a period of at least twelve months from the date of this Quarterly Report. We also determined it was necessary to take certain corporate actions, including reducing discretionary expenses (and reduced reliance on agency staffing), improving revenue (including added Therapy and Rehab services), and raising additional capital, in order to ensure we have sufficient liquidity to continue as a going concern for a period of at least twelve months from the date of this Quarterly Report.
During
the three months ended September 30, 2021 we sold million
shares for an aggregate total of $
Basis of Consolidation
These condensed consolidated Financial Statements include the accounts of the Company and the wholly-owned subsidiaries, Banyan Pediatric Care Centers – OPS, LLC, Banyan Pediatric Care Centers – St. Petersburg, LLC, Banyan Pediatric Care Centers, - Pasco, LLC and Banyan Pediatric Care Centers – Sarasota, LLC and the discontinued operations of Assisted 2 Live, Inc., the wholly owned subsidiary that was discontinued as of April 30, 2021. All material intercompany balances and transactions have been eliminated. The condensed consolidated Financial Statements also include the accounts of the Trillium Subsidiaries from June 10, 2021, the effective date of the transaction with Trillium.
Use of Estimates and Assumptions
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
| F-6 |
Cash and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. The Company had
Accounts Receivable
Accounts receivable primarily consists of amounts due from third-party payers (non-governmental), governmental payers and private pay patients and is recorded net of contractual allowances and reserves for doubtful accounts. The Company’s ability to collect outstanding receivables is critical to its results of operations and cash flows. Accordingly, accounts receivable reported in the Company’s Financial Statements is recorded at the net amount expected to be received. The Company’s primary collection risks are (i) the risk of overestimation of net revenues at the time of billing that may result in the Company receiving less than the recorded receivable, (ii) the risk of non-payment as a result of commercial insurance companies’ denial of claims, (iii) the risk that patients will fail to remit insurance payments to the Company when the commercial insurance company pays out-of-network claims directly to the patient, (iv) resource and capacity constraints that may prevent the Company from handling the volume of billing and collection issues in a timely manner, (v) the risk that patients do not pay the Company for their self-pay balances (including co-pays, deductibles and any portion of the claim not covered by insurance) and (vi) the risk of non-payment from uninsured patients.
The Company’s accounts receivable from third-party payers are recorded net of estimated contractual adjustments and allowances from third-party payers, which are estimated based on the historical trend of the Company’s facilities’ cash collections and contractual write-offs, accounts receivable aging, established fee schedules, relationships with payers and procedure statistics. While changes in estimated reimbursement from third-party payers remain a possibility, the Company expects that any such changes would be minimal and, therefore, would not have a material effect on the Company’s financial condition or results of operations. The Company’s collection policies and procedures are based on the type of payor, size of claim and estimated collection percentage for each patient account. The Company analyzes accounts receivable at each of the facilities to ensure the proper collection and aged category. The operating systems generate reports that assist in the collection efforts by prioritizing patient accounts. Collection efforts include direct contact with insurance carriers or patients and written correspondence.
Allowance for Doubtful Accounts, Contractual and Other Discounts
Management estimates the allowance for contractual and other discounts based on its historical collection experience and contracted relationship with the payers. The services authorized and provided and related reimbursement are often subject to interpretation and negotiation that could result in payments that differ from the Company’s estimates. The Company’s allowance for doubtful accounts is based on historical experience, but management also takes into consideration the age of accounts, creditworthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. An account may be written-off only after the Company has pursued collection efforts or otherwise determines an account to be uncollectible. Uncollectible balances are written-off against the allowance. Recoveries of previously written-off balances are credited to income when the recoveries are made.
COVID-19 Pandemic and CARES Act Funding
COVID-19
Pandemic. In January 2020, the Secretary of the U.S. Department of Health and Human Services (“HHS”) declared a national
public health emergency due to a novel strain of coronavirus. In March 2020, the World Health Organization declared the outbreak of COVID-19,
a disease caused by this coronavirus, a pandemic. The resulting measures to contain the spread and impact of COVID-19 and other developments
related to COVID-19 have materially affected the Company’s results of operations during 2020. Where applicable, the impact resulting
from the COVID-19 pandemic during the year ended December 31, 2020, has been considered, including updated assessments of the recoverability
of assets and evaluation of potential credit losses. As a result of the COVID-19 pandemic, federal and state governments have passed
legislation, promulgated regulations and taken other administrative actions intended to assist healthcare providers in providing care
to COVID-19 and other patients during the public health emergency. Sources of relief include the Coronavirus Aid, Relief and Economic
Security Act (the “CARES Act”), which was enacted on March 27, 2020, the Paycheck Protection Program and Health Care Enhancement
Act (the “PPPHCE Act”), which was enacted on April 24, 2020, and the Consolidated Appropriations Act, 2021 (the “CAA”),
which was enacted on December 27, 2020. In total, the CARES Act, PPPHCE Act and the CAA authorize $178 billion in funding to be distributed
to hospitals and other healthcare providers through the Public Health and Social Services Emergency Fund (the “PHSSEF”).
In addition, the CARES Act provide for an expansion of the Medicare Accelerated and Advance Payment Program whereby inpatient acute care
hospitals and other eligible providers were able to request accelerated payment of up to
| F-7 |
The Company’s accounting policies for the recognition of these stimulus monies is as follows:
Pandemic Relief Funds
Trillium
received an aggregate of $
The Company’s assessment of whether the terms and conditions for amounts received are reasonably assured of having been met considers, among other things, the CARES Act, the CAA and all frequently asked questions and other interpretive guidance issued by HHS, including the Post-Payment Notice of Reporting Requirements issued on January 15, 2021 (the “January 15, 2021 Notice”) and frequently asked questions issued by HHS on January 28, 2021 which clarified previously issued guidance, as well as expenses incurred attributable to the coronavirus and the Company’s results of operations during such period as compared to the Company’s budget. Such guidance, specifically the various Post-Payment Notice of Reporting Requirements and frequently asked questions issued by HHS, set forth the allowable methods for quantifying eligible healthcare related expenses and lost revenues. Only healthcare related expenses attributable to coronavirus that another source has not reimbursed and is not obligated to reimburse are eligible to be claimed. On the basis of guidance available at the time, the Company’s estimate of lost revenues was first based on the negative change in year-over-year net patient care operating revenue, then on the negative change in year-over-year net patient care operating income and finally on the difference between budgeted and actual revenue for calendar year. The calculation as of September 30, 2021 is in accordance with the CAA which indicates that lost revenues may be calculated pursuant to frequently asked questions published by HHS in June 2020, including the difference between a provider’s budgeted and actual revenue if such budget had been established prior to March 27, 2020. The use of funds calculation as of September 30, 2021 takes into account expenses attributable to each respective entity, which primarily relate to incremental labor and supply costs, as well as lost revenues. General fund distributions were allocated among subsidiaries according to total unreimbursed losses. Targeted distributions were not allocated or transferred among subsidiaries. While the CAA, January 15, 2021 Notice and frequently asked questions published by HHS on January 28, 2021 indicate that targeted distribution payments may be allocated or transferred to subsidiaries, distinct conditions exist for such allocations or transfers including that the parent organization have a “direct ownership relationship” with the subsidiary who received the targeted distribution payment. Additionally, the subsidiary that was the recipient of the targeted distribution payment retains responsibility for reporting to HHS on the use of such funds even if they are transferred or allocated to other subsidiaries. There are significant uncertainties as to the meaning and interpretation of conditions specific to the allocation or transfer of targeted distribution payments such that as of September 30, 2021, the Company is not reasonably assured that it can or will choose to comply with such conditions in order to allocate or transfer targeted distribution payments.
HHS’ interpretation of the underlying terms and conditions of such PHSSEF payments, including auditing and reporting requirements, continues to evolve. Additional guidance or new and amended interpretations of existing guidance on the terms and conditions of such PHSSEF payments may result in changes in the Company’s estimate of amounts for which the terms and conditions are reasonably assured of being met, and any such changes may be material. Additionally, any such changes may result in the Company’s inability to recognize additional PHSSEF payments or may result in the de recognition of amounts previously recognized, which (in any such case) may be material.
Medicare Accelerated Payments
The
Company recorded payments under the Medicare Accelerated and Advance Payment program in accordance with FASB ASC 606 and has recorded
amounts as a contract liability under FASB ASC 606-10-45-2. The contract liability will be reduced over time as revenue is recognized
for claims submitted for services provided after the recoupment period begins. Effective October 1, 2020, the program was amended such
that providers are required to repay accelerated payments beginning one year after the payment was issued. After such one-year period,
Medicare payments owed to providers will be recouped according to the repayment terms.
| F-8 |
The company receives a substantial portion of our revenues from the Medicare and Medicaid programs. Included in Managed Care and other third-party payors is operating revenues from insurance companies with which we have insurance provider contracts, Medicare managed care, insurance companies for which we do not have insurance provider contracts, workers’ compensation carriers and non-patient service revenue, such as rental income and cafeteria sales. In the future, we generally expect the portion of revenues received from the Medicare and Medicaid programs to increase over the long-term due to the general aging of the population and the impact of the Affordable Care Act. The Affordable Care Act has increased the number of insured patients in states that have expanded Medicaid, which in turn, has reduced the percentage of revenues from self-pay patients. However, it is unclear whether the trend of increased coverage will continue, due in part to the impact of the COVID-19 pandemic and the elimination of the financial penalty associated with the individual mandate, effective January 1, 2019. Further, the Affordable Care Act imposes significant reductions in amounts the government pays Medicare managed care plans. Moreover, the trend toward increased enrollment in Medicare and Medicaid managed care may adversely affect our operating revenue. An executive order issued in October 2019 seeks to accelerate this shift away from traditional fee-for-service Medicare to Medicare managed care. We may also be impacted by regulatory requirements imposed on insurers, such as minimum medical-loss ratios and specific benefit requirements. Furthermore, in the normal course of business, managed care programs, insurance companies and employers actively negotiate the amounts paid to hospitals. Our relationships with payors may be impacted by price transparency initiatives and out-of-network billing restrictions. There can be no assurance that we will retain our existing reimbursement arrangements or that these third-party payors will not attempt to further reduce the rates they pay for our services.
Net operating revenues include amounts estimated by management to be reimbursable by Medicare and Medicaid under prospective payment systems and provisions of cost-based reimbursement and other payment methods. In addition, we are reimbursed by non-governmental payors using a variety of payment methodologies. Amounts we receive for the treatment of patients covered by Medicare, Medicaid and non-governmental payors are generally less than our standard billing rates. We account for the differences between the estimated program reimbursement rates and our standard billing rates as contractual allowance adjustments, which we deduct from gross revenues to arrive at net operating revenues. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the periods that such adjustments become known.
Fair Value of Financial Instruments
The carrying amount of accounts receivable and accounts payable approximate their respective fair values due to the short- term nature. The carrying amount of the line of credit and note payable approximates fair values due to their market interest rates. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Additions and improvements to property and equipment are capitalized at cost. Depreciation of owned assets and amortization of leasehold improvements are computed using the straight-line method over the shorter of the estimated useful lives of the related assets or the lease term. The cost of assets sold or retired, and the related accumulated depreciation are removed from the accounts and any resulting gains or losses are reflected in other income (expense) for the year. Expenditures for maintenance and repairs are charged to expense as incurred.
Goodwill
Our goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in business combinations. The goodwill generated from the business combinations is primarily related to the value placed on the employee workforce and expected synergies. Judgment is involved in determining if an indicator or change in circumstances relating to impairment has occurred. Such changes may include, among others, a significant decline in expected future cash flows, a significant adverse change in the business climate, and unforeseen competition. There was no goodwill impairment for the periods presented.
| F-9 |
The Company tests goodwill for impairment on an annual basis, and when events or circumstances indicate the fair value of a reporting unit may be below its carrying value.
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. There were no impairments of long-lived assets for the years presented.
Advertising and Marketing
The Company uses advertising and marketing to promote its services. Advertising and marketing costs are expensed as incurred.
Basic Earnings (loss) per common share is computed by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is determined using the weighted-average of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of the conversion option embedded in convertible debt. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would have an anti-dilutive effect.
Fixed grantee stock options (fixed awards) and nonvested stock (including restricted stock) shall be included in the computation of diluted earnings per common share. Even though their issuance may be contingent upon vesting, they shall be considered to be contingently issuable shares. Because issuance of performance based stock options (and performance based nonvested stock) is contingent upon satisfying conditions in addition to the mere passage of time, those options and non vested stock shall be considered to be contingently issuable shares in the computation of diluted earnings per common share.
The dilutive effect of outstanding call options and warrants (and their equivalents) are reflected in diluted earnings per common share by application of the treasury stock method unless another method is required. Equivalents of options and warrants include nonvested stock granted under a share based payment arrangement, stock purchase contracts, and partially paid stock subscriptions. Antidilutive contracts such as purchased put options and purchased call options shall be excluded from diluted earnings per common share.
The Company has included shares issuable under its 2021 Incentive Award Plan in deriving its fully diluted earnings per common share using the Treasury Method in accordance with ASC 260-10-45.
Income Taxes
The Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets, liabilities, the carry forward of operating losses and tax credits, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.
Any future benefit arising from losses have been offset by a valuation allowance. Accordingly, no provision for income taxes is reflected in the condensed consolidated financial statements. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. Interest and penalties related to income tax matters, if any, would be recognized as a component of income tax expense. At September 30, 2021 and December 31, 2020, the Company had no liabilities for uncertain tax positions. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Currently, the tax years subsequent to 2017 are open and subject to examination by the taxing authorities.
Revenue Recognition
We follow ASC 606, “Revenue from Contracts with Customers.” Revenues are recognized when promised services are transferred to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those services. We derive our revenues from the rendering of services, such as skilled nursing services. The five-step armodel defined by ASC 606 requires us to: (i) identify our contracts with customers, (ii) identify our performance obligations under those contracts, (iii) determine the transaction prices of those contracts, (iv) allocate the transaction prices to our performance obligations in those contracts and (v) recognize revenue when each performance obligation under those contracts is satisfied.
| F-10 |
Reimbursement rates to provide services in our facilities are determined by the fee schedules set by the government programs and negotiated in contracts with non-governmental third-party payors and private pay patients. Fees are billed to the payors and private pay patients weekly and monthly following billing guidelines and contract requirements.
Net Patient Revenue
Net operating revenues are recorded at the transaction price estimated by the Company to reflect the total consideration due from patients and third-party payors in exchange for providing services in patient care. These services are considered to be a single performance obligation and have a duration of less than one year. Revenues are recorded as these services are provided. The transaction price, which involves significant estimates, is determined based on the Company’s standard charges for the services provided, with a reduction recorded for price concessions related to third party contractual arrangements as well as patient discounts and other patient price concessions.
The collection of outstanding receivables for Medicare, Medicaid, managed care payers, other third-party payers and patients is our primary source of cash and is critical to our operating performance. The primary collection risks relate to uninsured patient accounts, including patient accounts for which the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and copayments) remain outstanding. Implicit price concessions relate primarily to amounts due directly from patients. Estimated implicit price concessions are recorded for all uninsured accounts, regardless of the aging of those accounts. Accounts are written off when all reasonable internal and external collection efforts have been performed.
The estimates for implicit price concessions are based upon management’s assessment of historical write-offs and expected net collections, business and economic conditions, trends in federal, state and private employer health care coverage and other collection indicators. Management relies on the results of detailed reviews of historical write-offs and collections at facilities that represent a majority of our revenues and accounts receivable.
Reclassification
Certain amounts from prior periods have been reclassified to conform to the current period presentation.
NOTE 3 – BANYAN MERGER
Effective March 23, 2021, we entered into a Plan of Merger with Merger Sub and Banyan. Under the terms of the Plan of Merger, Merger Sub merged with and into Banyan with Banyan as the Surviving Entity and wholly owned subsidiary of the Company.
The Merger has been treated as a recapitalization and reverse acquisition of the Company for financial accounting purposes, and Banyan is considered the acquirer for accounting purposes. This means that the Company’s historical financial statements before the Merger have been replaced with the historical financial statements of Banyan.
In
connection with the Merger, we issued shares of our common stock in exchange for outstanding shares of Banyan’s
common stock held by 64 shareholders, based on an exchange ratio of one (1) share of our common stock for every twelve (12) shares of
Banyan common stock. We also issued a warrant to purchase
| F-11 |
NOTE 4 – DISCONTINUED OPERATIONS
On
April 30, 2021, our Board of Directors (the “Board”) approved the discontinuance of our wholly owned subsidiary, Assisted
2 Live, Inc. (the “Discontinued Subsidiary”). The operations of the Discontinued Subsidiary are reflected on our condensed
consolidated statement of operations from the date of the Merger as a loss from discontinued operations in the amount of $
The
April 30, 2021, Board decision was the result of the Purchase and Sale Option Agreement (the “Option Agreement”) with Romulus
Barr (“Barr”) which we entered into on November 7, 2020. The Option Agreement provided us with the option to sell all of
our interest in Assisted 2 Live, Inc., consisting of shares of common stock of the discontinued subsidiary, to Barr in exchange
for shares of our common stock (the “Shares”) held by Barr. The returned Shares were cancelled and included in authorized
but unissued shares of common stock of the Company. The number of issued and outstanding shares of common stock was decreased by
as of April 30, 2021. The transfer resulted in a gain on disposal of discontinued operations in the amount of $
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Cost of net revenues | - | - | - | - | ||||||||||||
| Gross profit | - | - | - | - | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Salary and tax expense | - | - | - | |||||||||||||
| General and administrative | - | - | - | |||||||||||||
| Lease expense | - | - | - | |||||||||||||
| Total operating expenses | - | - | - | |||||||||||||
| Income from discontinued operations | - | - | ( | ) | - | |||||||||||
| Interest and other, net | - | - | - | - | ||||||||||||
| Income from discontinued operations before income taxes | - | - | ( | ) | - | |||||||||||
| Provision for income taxes | - | - | ||||||||||||||
| Income from discontinued operations, net of income taxes | $ | $ | $ | ( | ) | $ | ||||||||||
NOTE 5 – TRILLIUM ACQUISITION
On
June 10, 2021, we entered into the Restated Purchase Agreement, by and among the Company, Mason, Bench and Trillium to acquire all of
the issued and outstanding ownership interests of the Trillium Subsidiaries from Trillium (the “Transaction”). The Transaction
closed and was effective
Pursuant
to the terms and conditions of the Restated Purchase Agreement, the aggregate purchase price consists of: (i) a cash payment of $
| F-12 |
As
a condition to closing, the Trillium Subsidiaries paid with cash on hand $
The
Preferred Shares, with respect to rights on liquidation, winding up and dissolution, rank pari passu with the Common Shares. The holders
of Preferred Shares have the right to cast one
In connection with obtaining the Landlords’ consent to the Transaction, the Company entered into: (i) a guaranty agreement with each Landlord under which the Company agreed to guaranty all obligations and liabilities under master leases for property and facilities owned by the Landlords’ and their affiliates and leased by FHP’s direct and indirect wholly-owned subsidiaries; and (ii) a Consent Agreement and Fifth Amendment to Master Lease with Omega (the “Consent”) regarding the Properties. Under the terms of the Consent, until the earlier of the purchase of the Properties closes or the expiration of the master lease agreement for the Properties in 2027: (a) Mason and Bench must remain responsible for, and have authority over, the day to day management and operations of the Properties and related facilities; and (b) the Company may not make any payment, transfer or distribution of cash or any assets to one or more equity holders or any person or entity with possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Company, through the ownership of voting securities (an “Affiliate”), or return any capital, redemption of any security, or making or assumption of any loans, advances or extension of credit or capital contribution to, or any other investment in, any Affiliate, including, but not limited to, a fee for management, a payment for services rendered, a reimbursement for expenditures or overhead incurred on behalf of the Company or a payment on any debt of an Affiliate; provided, however, the Company may contribute or transfer cash or other assets to its, direct or indirect, wholly-owned subsidiaries, and pay reasonable cash compensation to the members of the Board and executive officers provided that such compensation does not in the aggregate, exceed $ in any six month period.
The initial purchase price has been allocated to the acquired assets and assumed liabilities based on estimated fair values. The purchase price allocation is preliminary pending a final determination of the fair values of the assets and liabilities. The table below provides a preliminary recording of assets acquired and liabilities assumed as of the acquisition date. During the three month period ended September 30, 2021 certain adjustments were made to the fair value of accounts receivable, share liability and goodwill. The amounts recorded for property, plant and equipment, leasehold improvements and goodwill are preliminary and pending finalization of valuation efforts.
| Assets acquired | ||||
| Cash | $ | |||
| Accounts receivable | ||||
| Prepaid expenses and other current assets | ||||
| Property and equipment | ||||
| Goodwill | ||||
| Leasehold improvements | ||||
| Lease right of use asset | ||||
| Total identifiable assets acquired | $ | |||
| Liabilities assumed | ||||
| Advance payments | $ | |||
| Accounts payable and accrued expenses | ||||
| Deferred revenue | ||||
| Loan Payable - other | ||||
| Lease liability - current portion | ||||
| Notes payable | ||||
| Lease liability - net of current portion | ||||
| Cash due to seller | ||||
| Share liability | ||||
| $ |
| F-13 |
NOTE 6– ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Our accounts payable and accrued liabilities at September 30, 2021 and December 31, 2020 consisted of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| Accounts payable | $ | $ | ||||||
| Credit Card | ||||||||
| Accrued Expense | ||||||||
| Accrued Salary | - | |||||||
| Payroll Tax Payable | - | |||||||
| $ | $ | |||||||
NOTE 7 – NOTES PAYABLE
Notes payable at September 30, 2021 and December 31, 2020 consisted of the following:
| September 30, 2021 | December 31, 2020 | |||||||||
| Excel Family Partners, LLLP / Banyan Pediatric Investment, Inc. (Sep 2020) | a | $ | $ | |||||||
| NuView Trust Co. (Nov 2020) | b | |||||||||
| Grand Trinity Plaza, LLC (Dec 2020) | c | |||||||||
| Reliant | d.i | |||||||||
| HCSG | d.ii | |||||||||
| Medline | d.iii | |||||||||
| SLR - RLOC | e | |||||||||
| $ | $ | |||||||||
| a. | |
| b. |
| F-14 |
| c. | ||||
| d. | In 2019, certain vendors of Trillium agreed to extend payment terms by converting then outstanding amounts of accounts payable balances to long-term debt bearing interest at rates ranging from | |||
| i. | ||||
| ||||
| ii. | ||||
| iii. | ||||
| e. | ||||
The entire balance due on each line has been classified as a current liability in accordance with FASB ASC Topic 470-10-45-5, Classification of Revolving Credit Agreements Subject to Lock-Box Arrangements. FASB guidance stipulates that if the contractual provisions of a loan arrangement require, in the ordinary course of business and without another event occurring, the cash receipts of a debtor to be used to repay the existing obligation, the credit agreement should be considered a short-term obligation.
| F-15 |
NOTE 8 – LEASEHOLD IMPROVEMENTS
The Company had the following leasehold improvements as of September 30, 2021 and December 31, 2020:
| September 30, | December 31, | Amortization | ||||||||||
| 2021 | 2020 | Period | ||||||||||
| Leasehold improvements | ||||||||||||
| Less: amortization | ( | ) | ( | ) | ||||||||
| Net | ||||||||||||
During
the year ended December 31, 2020, we recorded $
Amortization
expense for the three months ended September 30, 2021 and 2020 was $
Amortization
expense for the nine months ended September 30, 2021 and 2020 was $
NOTE 9 – PROPERTY AND EQUIPMENT
| September 30, | December 31, | Amortization Period | ||||||||||
| 2021 | 2020 | |||||||||||
| Furniture and fixtures | ||||||||||||
| Computers / equipment / software | ||||||||||||
| Motor vehicles | ||||||||||||
| Buildings | - | |||||||||||
| Land | - | |||||||||||
| Construction in progress | - | |||||||||||
| Less: depreciation | ( | ) | ( | ) | ||||||||
| Net | ||||||||||||
During
the year ended December 31, 2020 we recorded $
During
the nine month period ending September 30, 2021 we recorded additional furniture and fixtures related to the Banyan locations in the
amount of approximately $
Through
the Trillium acquisition on June 10, 2021 we recorded approximately $
NOTE 10 – OPERATING AND CAPITAL LEASES
On
August 24, 2019, through Banyan Pediatric Care Centers-Sarasota, LLC, we entered into an operating lease with Northeast Plaza Venture
I, LLC for the premises located in the Northeast Plaza Shopping Center located on the Northeast corner of 17th Street & Lockwood
Ridge Road, in the County of Sarasota, Florida. The initial term of the lease is years with minimum annual rent of $
| F-16 |
On
October 15, 2019, through Banyan, we entered into an assignment and assumption of lease agreement with The Kidz Club – St. Pete,
LLC whereby we assumed approximately
Effective
April 1, 2020, through Banyan Pediatric Care Centers – Pasco, LLC, we entered into an
On
June 9, 2020, through Banyan, we entered into a
On
August 25, 2020, through Banyan, we entered into a
On
October 20, 2020, through Banyan, we entered into a
In
April of 2021, through Banyan, we entered into a
In
July of 2021, through Banyan, we entered into a
In
August of 2021, through Banyan we entered into a
In
July of 2021, through Trillium we entered into a
| F-17 |
In
August of 2021, through Trillium we entered into a
In
July of 2021, through Trillium we entered into a
The leases assumed in the Trillium acquisition effective June 10, 2021 are reflected in accordance with FASB ASC Topic 842-10-65 which states; for leases in which the acquiree is a lessee, the acquirer shall measure the lease liability at the present value of the remaining lease payments, as if the acquired lease were a new lease of the acquirer at the acquisition date. The acquirer shall measure the right-of-use asset at the same amount as the lease liability as adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms.
Through
the Trillium acquisition (see NOTE 5) we assumed two master lease agreements. The first master lease agreement with Omega consists of
The
second master lease with CTR accounts for
| ● | 2 phone systems for facilities | |
| ● | 6 van leases for facilities to transport residents | |
| ● | 15 copy machine leases for use at the facilities | |
| ● | 3 postage machine leases for use at the facilities | |
| ● | 1 lease for a washing machine at a facility |
These leases are treated as capital leases for accounting purposes.
In accordance with ASC 842, we recorded the operating lease right of use asset and lease liability as follows:
| September 30, 2021 | December 31, 2020 | |||||||
| Right of Use (ROU) assets | $ | $ | ||||||
| September 30, 2021 | December 31, 2020 | |||||||
| Operating lease obligations: | ||||||||
| Current | $ | $ | ||||||
| Non-Current | ||||||||
| Total | $ | $ | ||||||
Maturity of Operating Lease obligations for period ended September 30, 2021 ,
| 2021 (three months) | $ | |||
| 2022 | ||||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| After 2025 | $ | |||
| Total lease obligation |
| F-18 |
Information associated with the measurement of our remaining operating lease obligations as of September 30, 2021 is as follows:
The
operating leases range from a term of
The
capital leases range from a term of
The
weighted average discount rate for operating leases is
The
weighted average discount rate for capital leases is
The
lease expense for the three and nine month periods ended September 30, 2021 were $
NOTE 11 - EQUITY
Preferred Stock
We have authorized preferred shares with a par value of per share. The Board is authorized to divide the authorized preferred shares into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. As of September 30, 2021 and December 31, 2020, we had no classes of preferred shares designated.
As discussed in NOTE 5, as part of the Trillium acquisition, Trillium is entitled to shares of the Company’s Series A Preferred Stock. The Preferred Shares, with respect to rights on liquidation, winding up and dissolution, rank pari passu with the Common Shares. The holders of Preferred Shares have the right to cast one (1) vote for each Preferred Share held of record on all matters submitted to a vote of holders of the Common Shares, including the election of directors, and all other matters as required by law. The Preferred Shares are not convertible into Common shares at the election of the holder. However, the Preferred Shares do automatically convert into Common Shares at a one to one ratio two years from date of issuance. In lieu of converting the Preferred Shares, the holders thereof may elect to have the Company redeem one or more Preferred Shares at the redemption price of $per share two years from the date of issuance. The Company is required to issue the Preferred Shares to Trillium within 30 days after the purchase of the Properties closes. In connection with the issuance of the Preferred Shares, the Company will file a Certificate of Designation with the Nevada Secretary of State prior to such issuance. A liability to issue the shares is reflected as a long-term liability on the condensed consolidated balance sheet as of September 30, 2021in the amount of $.
Common Stock
We have authorized Common Shares with a par value of $ per share. Each Common Share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought. As of September 30, 2021, we had Common Shares issued and outstanding.
Fiscal Year 2021
On March 23, 2021, we entered into a Plan of Merger with Banyan (See NOTE 3).
In connection with the Merger, we issued Common Shares in exchange for outstanding shares of Banyan’s common stock held by 64 shareholders, based on an exchange ratio of one (1) Common Share of our common stock for every twelve (12) shares of Banyan common stock.
In conjunction with the Merger, the previously issued Common Shares prior to the Merger were deemed issued for the Merger.
During
the period from February 11, 2021 through March 31, 2021 we issued Common Shares at $ per share for an aggregate consideration
of $
| F-19 |
During
the three months ended June 30, 2021, noteholders of the $
During
the three months ended June 30, 2021, we issued Common Shares in satisfaction of a liability to issue shares in the amount of $
for stock purchases of
As
discussed in NOTE 5, as part of the Trillium acquisition, Trillium is entitled to Common Shares having an aggregate value of $
During
the three month period ended September 30, 2021 we issued Common Shares at $ per share for an aggregate consideration of
$
On August 26, 2021, a majority of the stockholders approved, by written consent without a meeting, the 2021 Incentive Award Plan (“Award Plan”). The Award Plan was approved by the board of directors on August 19, 2021, and recommended to the stockholders for their approval. Under the Award Plan, shares of our common stock will be initially reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards, dividend equivalents or other stock or cash based awards. As of the nine month period ending September 30, 2021 of the reserved shares were provided as stock options to 10 employees as part of the 2021 Incentive Award Plan. (See NOTE 14)
Fiscal Year 2020
During
the year ended December 31, 2020, $
On
September 19, 2020, we issued restricted Common Shares to a noteholder for the conversion of $
Warrants
In
association with the September 27, 2019, Asset Purchase Agreement (The Kidz Club St Pete, LLC), we issued
| Weighted | ||||||||||||||||
| Weighted- | Average | |||||||||||||||
| Average | Remaining | Aggregate | ||||||||||||||
| Exercise | Contractual | Intrinsic | ||||||||||||||
| Shares | Price | Term | Value | |||||||||||||
| Outstanding at January 1, 2020 | - | $ | - | |||||||||||||
| Granted | $ | Years | $ | - | ||||||||||||
| Expired | - | |||||||||||||||
| Exercised | - | |||||||||||||||
| Outstanding at December 31, 2020 | $ | Years | $ | |||||||||||||
| Granted | - | |||||||||||||||
| Expired | - | |||||||||||||||
| Exercised | - | |||||||||||||||
| Outstanding and exercisable September 30, 2021 | $ | Years | $ | |||||||||||||
| F-20 |
NOTE 12 – RELATED PARTY TRANSACTIONS
On
February 1, 2021 (the “Effective Date”), we signed an employment agreement with our new CEO, Louis Collier (“Collier”).
Collier will be paid a base salary of $
On
March 23, 2021, we entered into a Plan of Merger (See NOTE 3) whereas we assumed debt of $
During
the three months ended September 30, 2021 and 2020, we compensated members of the Board $
During
the three months ended September 30, 2021 accrued payroll of $
NOTE 13 – SEGMENT INFORMATION
The Company has adopted provisions of ASC 280-10 Segment Reporting for the three and nine months ended September 30, 2021, and 2020. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions. The Company and its Chief Operating Decision Makers determined that the Company’s operations consist of two segments: (i) Banyan’s three pediatric extended care centers (“PPECs”) in southwest Florida, and (ii) the second segment is the Trillium Subsidiaries consisting of senior housing communities including skilled nursing facilities, assisted living facilities and independent living facilities.
The table below reflects the segment operations for the nine months ended September 30, 2021.
| PPEC | Trillium | Adjustments, eliminations and unallocated items | Consolidated | |||||||||||||
| Total revenue, net | $ | $ | $ | $ | ||||||||||||
| Cost of Sales | ( | ) | ( | ) | - | ( | ) | |||||||||
| Gross Profit | - | |||||||||||||||
| Salaries and payroll expense | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Lease expense | - | |||||||||||||||
| Professional fees | ||||||||||||||||
| Marketing and advertising | - | |||||||||||||||
| Depreciation and amortization expense | ||||||||||||||||
| Operating Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | $ | $ | ||||||||||||
| Cash used in operating activities | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Cash used in investing activities | $ | ( | ) | $ | $ | |||||||||||
| Cash provided by financing activities | $ | ( | ) | $ | $ | $ | ||||||||||
| F-21 |
On August 26, 2021, a majority of the stockholders approved, by written consent without a meeting, the 2021 Incentive Award Plan (“Award Plan”). The Award Plan was approved by the board of directors on August 19, 2021 and recommended to the stockholders for their approval. Under the Award Plan, shares of our common stock will be initially reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards, dividend equivalents or other stock or cash based awards. As of the nine month period ending September 30, 2021 of the reserved shares were provided as stock options to 10 employees as part of the 2021 Incentive Award Plan. The shares vest over a year period with a vesting commencement date of September 1, 2021, as of September 30, 2021 there were of the shares vested with options outstanding.
The following table summarizes our Stock Options activity under the Award Plan for the nine months ended September 30, 2021:
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Vesting Period (Years) | ||||||||||
| Outstanding At December 31, 2020 | ||||||||||||
| Granted | $ | |||||||||||
| Forfeited | - | |||||||||||
| Exercised | - | |||||||||||
| Outstanding September 30, 2021 | ||||||||||||
At
September 30, 2021 the weighted average period over which compensation cost on non-vested Stock Options expected to be recognized is
years and the unrecognized expense is approximately
$
Stock-based compensation before income taxes included in salaries and wages in the condensed consolidated statement of operations was $ for the three months ended September 30, 2021. We did not recognize compensation cost in the three or nine month periods ended September 30, 2020 since the Stock Options were not awarded during the period.
We did not have any cash proceeds or income tax benefits realized from the exercise of Stock Options for the three and nine months ended September 30, 2021.
Valuation Assumptions
Calculating the fair value of employee stock options requires estimates and significant judgement. We use the Binomial option pricing model to estimate the fair value of the employee stock options.
We have included shares issuable under the Award Plan in deriving fully diluted earnings per share using the Treasury Method in accordance with ASC 260-10-45. Under the Treasury Method, nonvested stock options granted, where the only satisfying condition is the mere passage of time, shall be assumed exercised at the beginning of the period (or at time of issuance, if later). The proceeds from exercise of stock options shall be assumed to be used to purchase common stock at the average market price during the period using daily closing prices
| F-22 |
NOTE 15 – CONCENTRATIONS AND CREDIT RISKS
Cash
The
Company places its cash with high credit quality financial institutions. The Company had balances in excess of the Federal Deposit Insurance
Corporation (“FDIC”) coverage of $
Revenues and Accounts Receivable
For
the three and nine months ended September 30, 2021, approximately
At
September 30, 2021
NOTE 16 – SUBSEQUENT EVENTS
We have evaluated subsequent events from September 30, 2021 through the date of these financial statements were issued and determined the following events require disclosure:
Autumn Accolade
On September 30, 2021,we entered into an Agreement for the Purchase and Sale of Business Assets and Real Estate (the “Purchase Agreement”), with Autumn Accolade, Inc., (“Asset Seller”), Deborah S. Penn, as Trustee under the provisions of a Trust Agreement dated October 8, 2012, and known as the Denton M. Penn Jr. Trust, as to an undivided one-half interest; Deborah S. Penn, as Trustee under the provisions of a Trust Agreement dated October 8, 2012, and known as the Deborah S. Penn Trust, as to an undivided one-half interest (together, “RE Seller,” and collectively with Asset Seller, the “Seller”).
Asset Seller owns and operates a licensed assisted living facility located in Green Valley; Illinois known as Autumn Accolade (the “Business”). Asset Seller also owns various assets in conjunction with the operation of the Business, including all assets that are located at, on or within the Premises including those assets that are affixed to the Premises (collectively, “Assets”). RE Seller is the owner in fee simple of the real estate upon which the Assets are located (the “Premises”).
Subject
to the terms of the Purchase Agreement, we are acquiring the Assets and the Premises from the Sellers in exchange for $
The
closing shall take place promptly following the satisfaction or waiver of the conditions to closing (but in no event less than 30 days
thereafter unless otherwise agreed to by the parties). In the event the closing has not taken place by March 31, 2022, then either party
may terminate the Purchase Agreement by written notice to the other party so long as such party is not then in breach of the Purchase
Agreement, and the Deposit will be immediately returned , less $
| F-23 |
Gemino Healthcare Finance
On
September 30, 2021 we entered into a Second Amendment to our credit agreement with Gemino Healthcare Finance, LLC. The Credit Agreement
was entered into in connection with a $
The
First Amendment amended the Credit Agreement by:
The
Second Amendment further amended the Credit Agreement by:
Debt
On
October 8, 2021 we entered into a guaranty agreement in connection with a loan made to our wholly-owned subsidiary, Assisted 4 Living
Consulting, Inc. in the principal amount of $
If any portion of the principal is paid prior to July 8, 2022, then Assisted 4 Living Consulting, LLC must pay a prepayment fee calculated as the difference between nine months of interest on the amount of principal being prepaid and the amount of interest paid to date on the amount of principal being prepaid. The lender is guaranteed nine months of interest regardless of when Loan is paid off.
After
the maturity date or due date of the promissory note, interest shall be charged on the respective principal amount remaining unpaid at
a rate equivalent to the highest lawful rate or twenty-five percent (
If any payment of principal or interest or both is more than five days late, Borrower agrees to pay lender a late charge equal to five percent (5.0%) of the payment.
Crete Plus Five Property
On October 13, 2021 we entered into an Agreement of Purchase and Sale with Crete Plus Five Property, LLC, Iowa Lincoln County Property LLC, Muscatine Toledo Properties, LLC and Avery Street Property, LLC (collectively, “Owners” ). The Owners owns 13 senior housing facilities located in Iowa, Nebraska and Florida (collectively, the “Facilities”) as well the real property underlying the Facilities (the “Properties”). The Agreement of Purchase and Sale is for the purchase of the Facilities, the Properties and all of Owner’s right, title and interest in all of the personal property located at the Properties, other than certain personal property described in Exhibit B attached to the Agreement of Purchase and Sale, such as cash and the tradenames and books and records of Owner. The A4L indirect wholly-owned subsidiaries currently lease the Properties from Owner, and operate the Facilities, pursuant to an Master Lease dated as of May 13, 2015, as amended.
| F-24 |
The
purchase price for the Facilities and the Properties is $
Grace Care Centers
On
October 18, 2021 we completed the acquisition from Grace Care Centers and its affiliates (collectively, “Grace”) of three
skilled nursing facilities located in Texas (the “Skilled Facilities”), including the real property, buildings, structures,
improvements, fixtures and certain other assets comprising the Skilled Facilities (together with the Skilled Facilities, the “Assets”)
in exchange for an aggregate purchase price of $
The Skilled Facilities, located in Olney, Nocona and Henrietta, Texas, are all 5-star rated by CMS for quality and have a combined 258 beds. The Skilled Facilities will continue to be leased to local hospital districts, who will continue to be the licensed operators of the Skilled Facilities. A4L, through indirect wholly-owned subsidiaries, now owns the Assets and will manage the day-to-day activities of the Skilled Facilities pursuant to management agreements which it assumed in connection with the transaction.
A4L,
through its indirect wholly-owned subsidiary, financed part of the Purchase Price with a loan from Arena Limited SPV, LLC (“Lender”)
in the principal amount of $
The Loan is secured by a first priority lien on the Assets, including all amounts received by A4L or any subsidiaries constituting rent or other payment under any leases or management fees under each of the management agreements, which must be deposited into a segregated account at a bank and held in trust for Lender. The Loan is subject to customary affirmative and negative covenants, as well as customary default provisions for late or non-payments or breach of covenants, for loans of this nature. Pursuant to the terms of a guaranty agreement, A4L and several of its direct and indirect wholly-owned subsidiaries, have each unconditionally guaranteed to Lender the payment of all indebtedness, liabilities and obligations of every kind and nature under the Loan.
| F-25 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our results of operations and financial condition for quarterly period ended September 30, 2021, should be read in conjunction with our condensed consolidated financial statements and the related notes and the other financial information that are included elsewhere in this Quarterly Report. This discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
As used in this quarterly report, the terms “we,” “us,” “our” and the “Company” means, collectively, Assisted 4 Living, Inc. (“A4L”) and its wholly owned subsidiaries, Banyan Pediatric Care Centers, Inc, including its wholly owned subsidiaries (“Banyan”) and the Trillium Subsidiaries, including their wholly owned subsidiaries (“Trillium”), unless otherwise indicated.
General Overview
Assisted 4 Living, Inc was incorporated in Nevada on May 24, 2017, with an objective to operate as a facilitator of assisted living projects and related services. On March 23, 2021, A4L entered into a Plan of Merger (the “Plan of Merger”) with its wholly owned subsidiary, BPCC Acquisition, Inc., a Florida corporation (“Merger Sub”), and Banyan Pediatric Care Centers, Inc., a Florida corporation (“Banyan”).
Under the terms of the Plan of Merger, Merger Sub merged with and into Banyan with Banyan surviving the merger and becoming a wholly owned subsidiary of A4L.
A4L also had a wholly owned subsidiary, Assisted 2 Live, Inc., a Florida corporation (“A2L”), which was incorporated on June 15, 2017. On April 30, 2021, the Board of Directors of A4L approved the discontinuance and disposal of the operations in A2L. The operations of A2L are reflected on our condensed consolidated statement of operations for the first thirty days of the three-month period ended June 30, 2021 as a loss from discontinued operations.
On June 10, 2021, we entered into an Amended and Restated Membership Interest Purchase Agreement (the “Restated Purchase Agreement”), by and among the Company, Richard T. Mason (“Mason”), G. Shayne Bench (“Bench”) and Trillium Healthcare Group, LLC, a Florida limited liability company (“Trillium”) to acquire all of the issued and outstanding ownership interests of Fairway Healthcare Properties, LLC (“FHP”) and Trillium Healthcare Consulting, LLC (together with FHP, the “Trillium Subsidiaries”) from Trillium. The Trillium acquisition closed and was effective June 10, 2021.
As a result of the above stated transactions A4L now operates as the parent company of an organization that delivers skilled nursing and therapy services to pediatric patients through Banyan and to the senior population through our senior living communities in the Trillium subsidiaries.
Our principal executive office is located at 5115 East SR 64 Bradenton, Florida 34208 and our telephone number is (855) 668-3331. Our corporate website is www.assisted4living.com.
We have not been subject to any bankruptcy, receivership or similar proceeding.
Our Current Business
Banyan was organized under the laws of the State of Florida on January 15, 2019, for the purpose of providing health care services for medically fragile and chronically ill children. Specifically, to open and operate Prescribed Pediatric Extended Care (“PPEC”) centers in the State of Florida. Our PPEC centers provide, among other services, daily medical care for medically fragile and chronically ill children whose current locations are in Florida.
PPEC centers provide up to 12 hours of daily care for families struggling with the unique and complex medical needs of their children and allow the parents of children with special needs some independence and the opportunity to still pursue their professional goals.
On May 1, 2020, we acquired a PPEC facility located in St. Petersburg, Florida. The facility is licensed to provide PPEC services for up to 81 children. All State and County accreditations to run the facility through January 2022 are in place.
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On October 12, 2019, we entered into a lease for commercial real estate in New Port Richey Florida. The lease commenced on September 1, 2020, with an initial term of 7 years. Construction for this location has been completed and all State and County accreditations to run the facility through July of 2023.
On August 24, 2019, we entered into a lease for commercial real estate in Sarasota Florida. The lease commenced on February 1, 2020, with an initial term of 5 years. Construction for this location has been completed and all State and County accreditations to run the facility through April of 2023. In May of 2021 this location opened and started to admit children for services.
The Trillium Subsidiaries were organized under the laws of the State of Florida on February 9, 2012, for the purpose of acquiring and managing long term care facilities, such as skilled nursing facilities and assisted living centers.
Trillium has 26 facilities which primarily provide health care services for seniors that require daily care services. The facilities provide room and board, routine daily care services, post-acute care including rehabilitation and memory care.
A Skilled Nursing Facility is a state licensed and regulated in-patient rehabilitation and medical treatment center staffed with trained medical professionals. They provide the medically necessary services of licensed nurses, physical and occupational therapists, and speech pathologists.
The residents who come to our Trillium facilities receive skilled medical, respiratory, physical, occupational, and other therapies tailored to their individual needs. Trillium facilities are operated and staffed by registered nurses, licensed practical nurses, and other qualified personnel such as certified nursing assistants, physical and occupational therapists, and speech language pathologists. These specialized health care professionals are experienced in treating the frail and medically complex elderly residents and administering required medications and other therapies.
The Trillium facilities provide 24/7 care for their residents.
We lease and operate 26 Trillium facilities in four states: Florida, Georgia, Iowa, and Nebraska with 1,685 total licensed beds (1,546 skilled nursing, 139 assisted living) and 36 independent living apartments. The breakdown by state is as follows: Florida – 1 skilled nursing facility; Georgia – 1 skilled nursing facility; Iowa – 16 skilled nursing facilities, 2 independent living centers and 1 assisted living centers; Nebraska – 4 skilled nursing facilities and 1 assisted living center.
Skilled nursing and assisted living facilities are regulated and licensed by each state’s licensing agency. The licensing agency is responsible for the administration of the Medicaid program, licensure and regulation of health facilities. Our skilled nursing facilities are also Medicare certified with Centers of Medicare and Medicaid Services (CMS).
Trillium and Banyan reimbursement rates are determined by CMS for Medicare and each state’s Medicaid program. These rates could be significantly affected by any future changes in Medicare or Medicaid reimbursement. To receive authorization to be admitted to a skilled nursing facility or a PPEC facility a resident or child must have a qualifying diagnosis and a doctor’s order from a physician.
Our plans include expansion into multiple states, and we will be subject to the regulations, licensure requirements and processes, and reimbursement rates in each of those states. Each state manages their own program requirements, regulations and reimbursement programs. Our projected financial plans in these expansion states could be impacted by any changes or barriers to entry in each of these states as they expand.
Regulatory Matters
Health care operations are highly regulated by both state and federal government agencies. Regulation of health care services is an ever-evolving area of law that varies from jurisdiction to jurisdiction. Regulatory agencies generally have discretion to issue regulations and interpret and enforce laws and rules. Changes in applicable laws, statutes, regulations and interpretive guidance occur frequently. In addition, government agencies may impose taxes, fees or other assessments upon Banyan at any time.
We are also subject to certain state laws prohibiting the payment of remuneration for patient or business referrals and the provision of services where a financial relationship exists between a referring person or entity and the entity providing the service. Federal laws governing our activities include regulation under the Medicare and Medicaid programs. Federal fraud and abuse laws prohibit or restrict, among other things, the payment of remuneration to parties in a position to influence or cause the referral of patients or business, as well as the filing of false claims. Government enforcement authorities have become increasingly active in recent years in their review and scrutiny of various sectors of the health care industry.
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Changes in or new interpretations of these laws could have an adverse effect on our methods and costs of doing business. Further, failure to comply with such laws could adversely affect the ability to continue to provide, or receive reimbursement for, our services, and could subject A4L, its subsidiaries, and its officers and employees to civil and criminal penalties. There can be no assurance that A4L or its subsidiaries will not encounter regulatory impediments that could adversely affect the ability to open facilities or to expand the services currently planned to provide at the facilities.
HIPAA, HITECH Act, State Privacy Laws and Breach Notification Laws.
HIPAA and the regulations adopted under HIPAA are intended to improve the portability and continuity of health insurance coverage and simplify the administration of health insurance claims and related transactions.
The HITECH Act modified certain provisions of HIPAA by, among other things, extending the privacy and security provisions to business associates, mandating new regulations around electronic health records, expanding enforcement mechanisms, and increasing penalties for violations.
On January 25, 2013, the U.S. Department of Health and Human Services (“HHS”), as required by the HITECH Act, issued the Final Omnibus Rules that provide final modifications to HIPAA rules to implement the HITECH Act.
The HITECH Act also contains a number of provisions that provide incentives for states to initiate certain programs related to health care and health care technology, such as electronic health records. While provisions such as these will not apply to us directly, states wishing to apply for grants under the HITECH Act, or otherwise participating in such programs, may impose new health care technology requirements on us through our expected contracts with state Medicaid agencies.
All health plans are considered covered entities subject to HIPAA. HIPAA generally requires health plans, as well as their providers and vendors, to: (1) protect patient privacy and safeguard individually identifiable health information; and (2) establish the capability to receive and transmit electronically certain administrative health care transactions, such as claims payments, in a standardized format.
Specifically, the HIPAA Privacy Rule regulates use and disclosure of individually identifiable health information, known as “protected health information” (“PHI”). The HIPAA Security Rule requires covered entities to implement administrative, physical and technical safeguards to protect the security of electronic PHI. Certain provisions of the security and privacy regulations apply to business associates (entities that handle PHI on behalf of covered entities), and business associates are subject to direct liability for violation of these provisions. Furthermore, a covered entity may be subject to penalties as a result of a business associate violating HIPAA, if the business associate is found to be an agent of the covered entity.
Covered entities must report breaches of unsecured PHI to affected individuals without unreasonable delay, but not to exceed 60 days of discovery of the breach by a covered entity or its agents. Notification must also be made to HHS and, in certain situations involving large breaches, to the media. HHS is required to publish on its website a list of all covered entities that report a breach involving more than 500 individuals. All non-permitted uses or disclosures of unsecured PHI are presumed to be breaches unless the covered entity or business associate establishes that there is a low probability the information has been compromised. Various state laws and regulations may also require us to notify affected individuals in the event of a data breach involving individually identifiable information.
HIPAA violations by covered entities may result in civil and criminal penalties. Covered entities could face civil monetary penalties up to an annual maximum of $1,500,000 for uncorrected violations based on willful neglect. HHS enforces the regulations and performs audits to confirm compliance. Investigations of violations that indicate willful neglect, for which penalties are mandatory, are statutorily required. HHS may also resolve HIPAA violations through informal means, such as allowing a covered entity to implement a corrective action plan, but HHS has the discretion to move directly to impose monetary penalties and is required to impose penalties for violations resulting from willful neglect. In addition, state attorneys general are authorized to bring civil actions seeking either injunctions or damages in response to violations of HIPAA privacy and security regulations that threaten the privacy of state residents.
A4L and its subsidiaries enforce a HIPAA compliance plan, which complies with the HIPAA privacy and security regulation, also provided are dedicated resources to monitor compliance with our HIPAA compliance program.
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A4L and subsidiaries, its providers, and certain of its vendors are also subject to numerous other privacy and security laws and regulations at the federal and state levels. We remain subject to any federal or state privacy-related laws that are more restrictive than the privacy regulations issued under HIPAA. These laws vary and violations may result in additional penalties.
Fraud and Abuse Laws. Federal and state enforcement authorities have prioritized the investigation and prosecution of health care fraud, waste and abuse. Fraud, waste and abuse prohibitions encompass a wide range of operating activities, including kickbacks or other inducements for referral of members, billing for unnecessary medical services by a provider and improper marketing and violation of patient privacy rights. Companies involved in public health care programs such as Medicaid and Medicare are required to maintain compliance programs to detect and deter fraud, waste and abuse, and are often the subject of fraud, waste and abuse investigations and audits. The regulations and contractual requirements applicable to participants in these public-sector programs are complex and subject to change. Although we have structured a compliance program with care in an effort to meet all statutory and regulatory requirements, our policies and procedures will be continuously under review and subject to updates and our training and education programs will always be evolving. We intend to invest significant resources towards our compliance efforts.
False Claims Act. We are subject to federal and state laws and regulations that apply to the submission of information and claims to various agencies. For example, the federal False Claims Act provides, in part, that the federal government may bring a lawsuit against any person or entity who it believes has knowingly presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a false statement or used a false record to get a claim approved. The federal government has taken the position that claims presented in violation of the federal anti-kickback statute may be considered a violation of the federal False Claims Act. Violations of the False Claims Act are punishable by treble damages and penalties of up to a specified dollar amount per false claim. In addition, a special provision under the False Claims Act allows a private person (for example, a “whistleblower” such as a disgruntled former associate, competitor or member) to bring an action under the False Claims Act on behalf of the government alleging that an entity has defrauded the federal government and permits the private person to share in any settlement of, or judgment entered in, the lawsuit. A number of states, including Florida, have adopted false claims acts that are similar to the federal False Claims Act.
Medicare and Medicaid Regulations. As a provider of services under the Medicare and Medicaid programs (the “Programs”), we are subject to federal and state laws and regulations governing reimbursement procedures and practices. These laws include the Medicare and Medicaid fraud and abuse statutes and regulations which, among other provisions, prohibit the payment or receipt of any form of remuneration in return for referring business or patients to providers for which payments are made by a governmental health care program. Violation of these laws may result in civil and criminal penalties, including substantial fines, loss of the right to participate in the Programs and imprisonment of responsible individuals. In addition, HIPAA expanded the federal government’s fraud and abuse enforcement powers. Among other provisions, HIPAA expands the federal government’s authority to prosecute fraud and abuse beyond Medicare and Medicaid to all payors; makes exclusion from the Programs mandatory for a minimum of five years for any felony conviction relating to fraud; requires that organizations contracting with another organization or individual take steps to be informed as to whether the organization or individual is excluded from Medicare and Medicaid participation; and enhances civil penalties by increasing the amount of fines permitted. These laws also include a prohibition on referrals contained in the Omnibus Budget Reconciliation Act of 1989, which prohibits referrals by physicians to clinical laboratories where the physician has a financial interest, and further prohibitions contained in the Omnibus Budget Reconciliation Act of 1993, which prohibits such referrals for a more extensive range of services, including durable medical equipment. Various federal and state laws impose civil and criminal penalties against participants in the Programs who make false claims for payment for services or otherwise engage in false billing practices.
Many state laws prohibit the payment or receipt or the offer of anything of value in return for, or to induce, a referral for health care goods or services. In addition, there are several other statutes that, although they do not explicitly address payments for referrals, could be interpreted as prohibiting the practice. While similar in many respects to the federal laws, these state laws vary from state to state, are often vague and have sometimes been interpreted inconsistently by courts and regulatory agencies. Private insurers and various state enforcement agencies have also increased their scrutiny of health care providers’ practices and claims.
There can be no assurance that we will not become the subject of a regulatory or other investigation or proceeding or that our interpretations of applicable health care laws and regulations will not be challenged. The defense of any such challenge could result in substantial cost to us, diversion of management’s time and attention, and could have a material adverse effect on The Company.
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The Social Security Act, as amended by HIPAA, provides for the mandatory exclusion of providers and related persons from participation in the Programs if the individual or entity has been convicted of a criminal offense related to the delivery of an item or service under the Programs or relating to neglect or abuse of patients. Further, individuals or entities may be, but are not required to be, excluded from the Programs in circumstances including, but not limited to, convictions relating to fraud; obstruction of an investigation of a controlled substance; license revocation or suspension; filing claims for excessive charges or unnecessary services or failure to furnish medically necessary services; or ownership or control by an individual who has been excluded from the Programs, against whom a civil monetary penalty related to the Programs has been assessed, or who has been convicted of a crime described in this section. The illegal remuneration provisions of the Social Security Act make it a felony to solicit, receive, offer to pay, or pay any kickback, bribe, or rebate in return for referring a patient for any item or service, or in return for purchasing, leasing or ordering any good, service or item, for which payment may be made under the Programs. Other provisions in HIPAA proscribe false statements in billing and in meeting reporting requirements and in representations made with respect to the conditions or operations of providers. A violation of the illegal remuneration statute is a felony and may result in the imposition of criminal penalties, including imprisonment for up to five years and/or a fine of up to $25,000. Further, a civil action to exclude a provider from participation in the Programs could occur. There are also other civil and criminal statutes applicable to the industry, such as those governing false billings and the health care/services offenses contained in HIPAA, including health care/services fraud, theft or embezzlement, false statements and obstruction of criminal investigation of offenses. Criminal sanctions for these health care criminal offenses can be severe, including imprisonment for up to 20 years.
Results of Operations
COVID-19
In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic based on the rapid increase in global exposure. COVID-19 continues to spread throughout the world. We are closely monitoring developments and taking steps to mitigate the potential risks related to the COVID-19 pandemic to the Company, its employees, as well as its residential and pediatric patients.
Our evaluations of our practices, procedures, and operations, related to COVID-19, is ongoing. Additional updates to policies, procedures and operations will occur as best practices are adopted and as we deem necessary or advisable, or as further governmental guidance or regulations are implemented.
The following summary of our operations should be read in conjunction with our unaudited financial statements for the period ended September 30, 2021 which are included in this quarterly report.
For the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||||||||||
| 2021 | 2020 | Change | 2021 | 2020 | Change | |||||||||||||||||||
| Revenue | 22,375,092 | 659,449 | 21,715,643 | 29,093,845 | 1,102,841 | 27,991,004 | ||||||||||||||||||
| Cost of services provided | 12,310,011 | 256,825 | 12,053,186 | 15,477,070 | 409,838 | 15,067,232 | ||||||||||||||||||
| Operating expenses | 15,157,050 | 706,752 | 14,450,298 | 20,538,357 | 1,689,380 | 18,848,977 | ||||||||||||||||||
| Other income (expense) | (179,293 | ) | (30,673 | ) | (148,620 | ) | (317,881 | ) | (30,676 | ) | (287,205 | ) | ||||||||||||
| Net Loss | (5,271,262 | ) | (334,802 | ) | (4,936,460 | ) | (7,239,463 | ) | (1,027,054 | ) | (6,212,409 | ) | ||||||||||||
We recognized revenue of $22,375,092 for the three months ended September 30, 2021, compared to $659,449 for the three months ended September 30, 2020.
The first operating PPEC facility began in May of 2020 with the acquisition of the St. Petersburg location and revenues began being reported at that time. The Sarasota PPEC facility began reporting revenue in May of 2021 and the Pasco location started reporting revenue in July of 2021. The Banyan revenue for the nine months ended September 2021 was $2,094,905 compared to $1,102,841 for the same period in 2020. Operating expenses for the nine months ended September 30, 2021 and 2020 were 2,449,042 and $1,689,380 respectively. Net losses were $1,164,31 and $1,027,054 for the nine months ended September 30 2021 and 2020, respectively.
The Trillium acquisition closed on June 10, 2021, revenue reflected for the three- and nine-month periods ending September 2021 include 20 days and 92 days of revenue from the Trillium Subsidiaries respectively; compared to the revenue for the same period ending in 2020.
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Operating expenses for the three months ended September 30, 2021, increased to $15,470,758 from $706,752 from the three months ended September 30, 2020. Operating expenses consist of salary expenses, general and administrative and professional fees. The increase in operating expense was primarily due to the acquisition of Trillium.
Our net loss for the three months ended September 30, 2021, increased to $4,671,262 from $344,802 for the three months ended September 30, 2020.
For the nine month period ended September 30,2021 and 2020 we recognized revenue of $29,693,845 and $1,102,841, respectively. The increase in revenue is mainly due to the Trillium acquisition on June 10, 2021 and the consolidation of the companies. Operating expenses for the nine month periods ending September 30, 2021 and 2020 were also increased to $20,538.359 from $1,689,380; operating expenses are increased primarily from the Trillium acquisition.
Net loss for the nine month period ended September 30, 2021 increased to $7,239.465 from $1,027,054 for the same period in 2020.
Liquidity and Capital Resources
The following table provides selected financial data about us as of September 30, 2021 and December 31, 2020.
| September 30, | December 30, | |||||||||||
| 2021 | 2020 | Change | ||||||||||
| Cash | $ | 3,894,536 | $ | 345,982 | $ | 3,548,554 | ||||||
| Current Assets | $ | 15,131,867 | $ | 650,647 | $ | 14,481,220 | ||||||
| Current Liabilities | 35,722,633 | 2,860,798 | 32,861,835 | |||||||||
| Working Capital | $ | (20,590,766 | ) | $ | (2,210,151 | ) | $ | (18,380,615 | ) | |||
As of September 30, 2021, our working capital decreased $18,380,615, primarily due to an increase in liabilities assumed in the Trillium acquisition.
As of September 30, 2021 and December 31, 2020, current assets consisted of cash, accounts receivable and other current assets. The increase in cash was primarily due to the issuance of shares of restricted common stock at a purchase price of $0.50 per share for an aggregate amount of $4,115,000 during the period of February 11, 2021 through April 30, 2021. During the period of August 13, 2021 to September 30, 3031 we also sold shares at a purchase price of $1.00 for an aggregate amount of $5,000,000. Cash and other current assets also increased due to the Trillium acquisition.
As of September 30, 2021, current liabilities consisted of notes and loans payable in the amount of $7,539,899, accrued expenses and accounts payable of $10,879,082, lease obligation of $8,311,905, share liability of $ $5,000,000, deferred revenue of $1,374,635, advance payments of $1,671,698 and a liability due to the Trillium sellers in the amount of $902,847. The increases in liabilities are due to the Trillium acquisition and the liabilities assumed in that transaction.
Going Concern and Liquidity Considerations
At September 30, 2021, we had accrued expenses and current notes payable in excess of cash and accounts receivable, we had cash and accounts receivable in the amount of approximately $11.4 million and a deficiency in working capital of approximately $20.1 million. For the nine months ended September 30, 2021, our net loss was approximately $6.9 million.
As a result of these factors, we determined it was necessary to review our cash flow for 2021 and an overall analysis of market trends to determine whether or not we have sufficient liquidity to continue as a going concern for a period of at least twelve months from the date of this Quarterly Report. We also determined it was necessary to take certain corporate actions, including reducing discretionary expenses, raising additional capital and improving revenue, as discussed below, in order to ensure we have sufficient liquidity to continue as a going concern for a period of at least twelve months from the date of this Quarterly Report.
Below is a summary of the corporate actions being taken to address liquidity.
Of the $20.6 million working capital deficit, $5 million is related to a liability to issue Common Shares to Trillium as part of the acquisition. This liability will not have an impact to cash and working capital resources.
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Additional actions being taken are as follows, with expected impacts over the next 12 months following the filing of this report:
| ● | Exploring opportunities related to therapy and medical management contracts and improved pricing | ||
| ● | Purchase of 16 Omega properties (own vs lease) (see NOTE 5) – planned impact to net operating income is approximately $2.7 million | ||
| ● | Certain Medicaid rate increases that were effective July 1, 2021 – planned impact to net operating income is $3.2 million | ||
| ○ | Medicaid reimbursement rates are controlled by each state specific Medicaid program. Additional rate increases could also be recognized over the next 12 months following the filing of this report | ||
| ● | Current managed care payer contracts are being reviewed for improved reimbursement structure to be negotiated | ||
| ● | Since the acquisition date of June 10, 2021 our patient census has grown month over month, this continued trend would sustain consistent increased revenue over the next 12 months | ||
The Company has also partnered with certain investment banking relationships for future acquisition and growth strategies.
As such, the Company believes it will be able fund future liquidity and capital requirements through cash flows generated from its operating activities for a period of at least twelve months from the date its Financial Statements are issued.
Cash Flows
The below chart summarizes the Company’s cash flows for the nine months ended September 30:
| September 30, | September 30, | |||||||||||
| 2021 | 2020 | Change | ||||||||||
| Cash used in operating activities | $ | (10,012,019 | ) | $ | (870,286 | ) | $ | (9,141,734 | ) | |||
| Cash provided by investing activities | 3,568,856 | (5,316,155 | ) | 8,885,011 | ||||||||
| Cash provided by financing activities | 9,991,717 | 3,006,562 | 6,985,155 | |||||||||
| Net change in cash for period | $ | 3,548,554 | $ | (3,179,879 | ) | $ | 6,728,433 | |||||
Cash flow from Operating Activities
During the nine months ended September 30, 2021, we used $10,012,019 for operating activities compared to $870,286 cash used for operating activities during the nine months ended September 30, 2020. The change in cash used for operating activities is due to the Trillium acquisition.
Cash flow from Investing Activities
The cash from investing activities for the nine months ended September 30, 2021 was $3,568,856 compared to cash used in investing activities of $5,316,155 for the nine months ended September 30, 2020. This is primarily due to the cash acquired in the Trillium acquisition and the consolidation of the Company as a result of the acquisition.
Cash flow from Financing Activities
The cash flow from financing activities in the nine months ended September 30, 2021, was $9,991,717 compared to $3,006,562 for the nine months ended September 30, 2020. The increase is primarily due to cash received from use of the line of credit and cash received from the issuance of restricted common stock.
Critical Accounting Policies
We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our financial statements.
While we believe that the historical experience, current trends, and other factors considered support the preparation of our financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.
See Note 2 - Significant Accounting Policies and the Financial Statements that are included in this Quarterly Report.
Off Balance Sheet Arrangements
We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.
| 9 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934, as amended (the “Exchange Act”) reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As further discussed below, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, our chief executive officer and chief financial officer concluded that, because of certain material weaknesses in our internal control over financial reporting our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of September 30, 2021. The material weaknesses relate to the absence of in-house accounting personnel with the ability to properly account for complex transactions and a lack of separation of duties between accounting and other functions.
We hired a consulting firm to advise on technical issues related to U.S. GAAP as related to the maintenance of our accounting books and records and the preparation of our condensed consolidated financial statements. Although we are aware of the risks associated with not having dedicated accounting personnel, we are also at an early stage in the development of our business. We anticipate expanding our accounting functions with dedicated staff and improving our internal accounting procedures and separation of duties when we can absorb the costs of such expansion and improvement with additional capital resources. In the meantime, management will continue to observe and assess our internal accounting function and make necessary improvements whenever they may be required. If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our condensed consolidated financial statements may contain material misstatements, and we could be required to restate our financial results. In addition, if we are unable to successfully remediate this material weakness and if we are unable to produce accurate and timely financial statements, our stock price may be adversely affected, and we may be unable to maintain compliance with applicable stock exchange listing requirements.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Based on our evaluation under the framework in Internal Control—Integrated Framework (2013), our management concluded that, because of certain material weaknesses in our internal control over financial reporting our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of September 30, 2021.
| 10 |
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2021 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
From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business. To the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us.
Item 1A. Risk Factors
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 6. Exhibits
| 11 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ASSISTED 4 LIVING, INC. | |
| (Registrant) | |
| Dated: November 12, 2021 | /s/ Louis Collier |
| Louis Collier | |
Chief Executive Officer (principal executive officer) |
| 12 |
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Louis Collier, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Assisted 4 Living, 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 registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 12, 2021 | /s/ Louis Collier |
| Louis Collier | |
| Principal Executive Officer |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Diane Harden, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Assisted 4 Living, 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 registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 12, 2021 | /s/ Diane Harden |
| Diane Harden | |
| Principal Financial Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Assisted 4 Living, Inc., (the “Company”) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Louis Collier, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| /s/ Louis Collier | |
| Name: Louis Collier | |
| Title: Chief Executive Officer | |
| Date: November 12, 2021 |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Assisted 4 Living, Inc., (the “Company”) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Diane Harden, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| /s/ Diane Harden | |
| Name: Diane Harden | |
| Title: Chief Financial Officer | |
| Date: November 12, 2021 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
| Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
| Common Stock, Shares, Issued | 45,345,418 | 4,165,418 |
| Common Stock, Shares, Outstanding | 45,345,418 | 4,165,418 |
ORGANIZATION AND DESCRIPTION OF BUSINESS |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Assisted 4 Living, Inc. (“the Company,” “we”, “our” or “us”) was incorporated in the state of Nevada on May 24, 2017, and is based in Bradenton, Florida. Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America (“GAAP”), and the fiscal year end is December 31.
As discussed in NOTE 3, on March 23, 2021, we entered into a Plan of Merger with our wholly-owned subsidiary, BPCC Acquisition, Inc., a Florida corporation (“Merger Sub”) and Banyan Pediatric Care Centers, Inc. (“Banyan”). Under the terms of the Plan of Merger, Merger Sub merged with and into Banyan with Banyan surviving the merger (the “Surviving Entity”) and becoming a wholly-owned subsidiary of the Company (the “Merger”). Pursuant to the Merger, we succeeded to the business of Banyan. The Merger has been treated as a recapitalization and reverse acquisition of the Company for financial accounting purposes, and Banyan is considered the acquirer for financial reporting purposes. This means that the Company’s historical financial statements before the Merger have been replaced with the historical financial statements of Banyan before the Merger in this Quarterly Report and future filings with the SEC.
Banyan, operates three pediatric extended care centers (“PPECs”) in southwest Florida. A PPEC is a nurse-staffed pediatric day care center for medically complex children age birth to 21 years. Our staff includes Registered Nurses (RNs), Licensed Practical Nurses (LPNs), Certified Nursing Assistants (CNAs) and Caregivers, who attend to the children’s medical conditions throughout the day in classroom, dining, play, and clinical settings. Banyan is fully licensed and accepts Florida Medicaid.
As discussed in NOTE 5, on June 10, 2021, we entered into an Amended and Restated Membership Interest Purchase Agreement (the “Restated Purchase Agreement”), by and among the Company, Richard T. Mason (“Mason”), G. Shayne Bench (“Bench”) and Trillium Healthcare Group, LLC, a Florida limited liability company (“Trillium”) to acquire all of the issued and outstanding ownership interests of Fairway Healthcare Properties, LLC (“FHP”) and Trillium Healthcare Consulting, LLC (together with FHP, the “Trillium Subsidiaries”) from Trillium. The transaction closed and was effective June 10, 2021.
Trillium subsidiaries lease and operate 26 facilities in four states: Florida, Georgia, Iowa, and Nebraska with 1,685 total licensed beds (1,546 skilled nursing, 139 assisted living) and 36 independent living apartments. The breakdown by state is as follows: Florida – 1 skilled nursing facility; Georgia – 1 skilled nursing facility; Iowa – 16 skilled nursing facilities, 2 independent living centers and 1 assisted living centers; Nebraska – 4 skilled nursing facilities and 1 assisted living center.
The facilities provide room and board, routine daily care services, post-acute care including rehabilitation and memory care. The Trillium Subsidiaries were organized under the laws of the State of Florida on February 9, 2012, for the purpose of acquiring and managing long term care facilities, such as skilled nursing facilities and assisted living centers.
We are headquartered in Bradenton, Florida.
The corporate website is www.assisted4living.com.
COVID-19
In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic based on the rapid increase in global exposure. COVID-19 continues to spread throughout the world. We are closely monitoring developments and are taking steps to mitigate the potential risks related to the COVID-19 pandemic to the Company, its employees, as well as its residential and consulting clients.
Our evaluations of our practices, procedures, and operations, related to COVID-19, is ongoing. Additional updates to policies, procedures and operations will occur as best practices are adopted and as we deem necessary or advisable, or as further governmental guidance or regulations are implemented.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Accounting Policies [Abstract] | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company (“Financial Statements”) have been prepared in accordance with GAAP for interim financial statements and with the instructions to Form 10-Q and Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.
In the opinion of management, the accompanying condensed consolidated Financial Statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2021, and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended September 30, 2021, are not necessarily indicative of the operating results for the full fiscal year or any future period. These condensed consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021 and Current Report on Form 8-K on June 2, 2021. As of April 30, 2021, we had discontinued operations reflected in the accompanying condensed consolidated Financial Statements. As a result of the Plan of Merger completed on March 23, 2021 (see NOTE 3) we have changed our year end reporting period from November to December.
Capital Requirements, Liquidity and Going Concern Considerations
These condensed consolidated Financial Statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Although we had cash and accounts receivable in the amount of approximately $11.4 million at September 30, 2021, we had accrued expenses and current notes payable in excess of cash and accounts receivable in the amount of approximately $6.5 million, and a deficiency in working capital of approximately $20.6 million. For the nine months ended September 30, 2021, our net loss was approximately $6.9 million.
As a result of these factors, we determined it was necessary to review our cash flow for 2021 and an overall analysis of market trends to determine whether or not we have sufficient liquidity to continue as a going concern for a period of at least twelve months from the date of this Quarterly Report. We also determined it was necessary to take certain corporate actions, including reducing discretionary expenses (and reduced reliance on agency staffing), improving revenue (including added Therapy and Rehab services), and raising additional capital, in order to ensure we have sufficient liquidity to continue as a going concern for a period of at least twelve months from the date of this Quarterly Report.
During the three months ended September 30, 2021 we sold million shares for an aggregate total of $5.0 million. This capital raise will be used for additional growth through acquisitions and for working capital. However, no assurances can be given that we will be successful. If management is not able to timely and successfully raise additional capital and/or refinance indebtedness, the implementation of the Company’s business plan, financial condition and results of operations will be materially affected.
Basis of Consolidation
These condensed consolidated Financial Statements include the accounts of the Company and the wholly-owned subsidiaries, Banyan Pediatric Care Centers – OPS, LLC, Banyan Pediatric Care Centers – St. Petersburg, LLC, Banyan Pediatric Care Centers, - Pasco, LLC and Banyan Pediatric Care Centers – Sarasota, LLC and the discontinued operations of Assisted 2 Live, Inc., the wholly owned subsidiary that was discontinued as of April 30, 2021. All material intercompany balances and transactions have been eliminated. The condensed consolidated Financial Statements also include the accounts of the Trillium Subsidiaries from June 10, 2021, the effective date of the transaction with Trillium.
Use of Estimates and Assumptions
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at September 30, 2021 and December 31, 2020.
Accounts Receivable
Accounts receivable primarily consists of amounts due from third-party payers (non-governmental), governmental payers and private pay patients and is recorded net of contractual allowances and reserves for doubtful accounts. The Company’s ability to collect outstanding receivables is critical to its results of operations and cash flows. Accordingly, accounts receivable reported in the Company’s Financial Statements is recorded at the net amount expected to be received. The Company’s primary collection risks are (i) the risk of overestimation of net revenues at the time of billing that may result in the Company receiving less than the recorded receivable, (ii) the risk of non-payment as a result of commercial insurance companies’ denial of claims, (iii) the risk that patients will fail to remit insurance payments to the Company when the commercial insurance company pays out-of-network claims directly to the patient, (iv) resource and capacity constraints that may prevent the Company from handling the volume of billing and collection issues in a timely manner, (v) the risk that patients do not pay the Company for their self-pay balances (including co-pays, deductibles and any portion of the claim not covered by insurance) and (vi) the risk of non-payment from uninsured patients.
The Company’s accounts receivable from third-party payers are recorded net of estimated contractual adjustments and allowances from third-party payers, which are estimated based on the historical trend of the Company’s facilities’ cash collections and contractual write-offs, accounts receivable aging, established fee schedules, relationships with payers and procedure statistics. While changes in estimated reimbursement from third-party payers remain a possibility, the Company expects that any such changes would be minimal and, therefore, would not have a material effect on the Company’s financial condition or results of operations. The Company’s collection policies and procedures are based on the type of payor, size of claim and estimated collection percentage for each patient account. The Company analyzes accounts receivable at each of the facilities to ensure the proper collection and aged category. The operating systems generate reports that assist in the collection efforts by prioritizing patient accounts. Collection efforts include direct contact with insurance carriers or patients and written correspondence.
Allowance for Doubtful Accounts, Contractual and Other Discounts
Management estimates the allowance for contractual and other discounts based on its historical collection experience and contracted relationship with the payers. The services authorized and provided and related reimbursement are often subject to interpretation and negotiation that could result in payments that differ from the Company’s estimates. The Company’s allowance for doubtful accounts is based on historical experience, but management also takes into consideration the age of accounts, creditworthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. An account may be written-off only after the Company has pursued collection efforts or otherwise determines an account to be uncollectible. Uncollectible balances are written-off against the allowance. Recoveries of previously written-off balances are credited to income when the recoveries are made.
COVID-19 Pandemic and CARES Act Funding
COVID-19 Pandemic. In January 2020, the Secretary of the U.S. Department of Health and Human Services (“HHS”) declared a national public health emergency due to a novel strain of coronavirus. In March 2020, the World Health Organization declared the outbreak of COVID-19, a disease caused by this coronavirus, a pandemic. The resulting measures to contain the spread and impact of COVID-19 and other developments related to COVID-19 have materially affected the Company’s results of operations during 2020. Where applicable, the impact resulting from the COVID-19 pandemic during the year ended December 31, 2020, has been considered, including updated assessments of the recoverability of assets and evaluation of potential credit losses. As a result of the COVID-19 pandemic, federal and state governments have passed legislation, promulgated regulations and taken other administrative actions intended to assist healthcare providers in providing care to COVID-19 and other patients during the public health emergency. Sources of relief include the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020, the Paycheck Protection Program and Health Care Enhancement Act (the “PPPHCE Act”), which was enacted on April 24, 2020, and the Consolidated Appropriations Act, 2021 (the “CAA”), which was enacted on December 27, 2020. In total, the CARES Act, PPPHCE Act and the CAA authorize $178 billion in funding to be distributed to hospitals and other healthcare providers through the Public Health and Social Services Emergency Fund (the “PHSSEF”). In addition, the CARES Act provide for an expansion of the Medicare Accelerated and Advance Payment Program whereby inpatient acute care hospitals and other eligible providers were able to request accelerated payment of up to 100% of their Medicare payment amount for a six-month period to be repaid through withholding of future Medicare fee-for-service payments. Various other state and local programs also exist to provide relief, either independently or through distribution of monies received via the CARES Act. During the period ended September 30, 2021, the Company was a beneficiary of these stimulus measures, including the Medicare Accelerated and Advance Payment Program.
The Company’s accounting policies for the recognition of these stimulus monies is as follows:
Pandemic Relief Funds
Trillium received an aggregate of $13,487,923 in PHSSEF payments, of which $4,242,796 was applied during 2020. Prior to the acquisition date of June 10, 2021 Trillium had recognized $7,081,557 as other operating income. During the three and nine-month period ended September 30, 2021 we recognized $1,385,162 as other operating income resulting in a remaining balance of $778,408 which is classified on the balance sheet as Deferred HHS Revenue. The recognition of amounts received is conditioned upon the provision of care for individuals with possible or actual cases of COVID-19 after January 31, 2020, certification that payment will be used to prevent, prepare for and respond to coronavirus and shall reimburse the recipient only for healthcare-related expenses or lost revenues, as defined by HHS, that are attributable to coronavirus, as well as receipt of the funds. Amounts are recognized as a reduction to operating costs and expenses only to the extent the Company is reasonably assured that underlying conditions have been met.
The Company’s assessment of whether the terms and conditions for amounts received are reasonably assured of having been met considers, among other things, the CARES Act, the CAA and all frequently asked questions and other interpretive guidance issued by HHS, including the Post-Payment Notice of Reporting Requirements issued on January 15, 2021 (the “January 15, 2021 Notice”) and frequently asked questions issued by HHS on January 28, 2021 which clarified previously issued guidance, as well as expenses incurred attributable to the coronavirus and the Company’s results of operations during such period as compared to the Company’s budget. Such guidance, specifically the various Post-Payment Notice of Reporting Requirements and frequently asked questions issued by HHS, set forth the allowable methods for quantifying eligible healthcare related expenses and lost revenues. Only healthcare related expenses attributable to coronavirus that another source has not reimbursed and is not obligated to reimburse are eligible to be claimed. On the basis of guidance available at the time, the Company’s estimate of lost revenues was first based on the negative change in year-over-year net patient care operating revenue, then on the negative change in year-over-year net patient care operating income and finally on the difference between budgeted and actual revenue for calendar year. The calculation as of September 30, 2021 is in accordance with the CAA which indicates that lost revenues may be calculated pursuant to frequently asked questions published by HHS in June 2020, including the difference between a provider’s budgeted and actual revenue if such budget had been established prior to March 27, 2020. The use of funds calculation as of September 30, 2021 takes into account expenses attributable to each respective entity, which primarily relate to incremental labor and supply costs, as well as lost revenues. General fund distributions were allocated among subsidiaries according to total unreimbursed losses. Targeted distributions were not allocated or transferred among subsidiaries. While the CAA, January 15, 2021 Notice and frequently asked questions published by HHS on January 28, 2021 indicate that targeted distribution payments may be allocated or transferred to subsidiaries, distinct conditions exist for such allocations or transfers including that the parent organization have a “direct ownership relationship” with the subsidiary who received the targeted distribution payment. Additionally, the subsidiary that was the recipient of the targeted distribution payment retains responsibility for reporting to HHS on the use of such funds even if they are transferred or allocated to other subsidiaries. There are significant uncertainties as to the meaning and interpretation of conditions specific to the allocation or transfer of targeted distribution payments such that as of September 30, 2021, the Company is not reasonably assured that it can or will choose to comply with such conditions in order to allocate or transfer targeted distribution payments.
HHS’ interpretation of the underlying terms and conditions of such PHSSEF payments, including auditing and reporting requirements, continues to evolve. Additional guidance or new and amended interpretations of existing guidance on the terms and conditions of such PHSSEF payments may result in changes in the Company’s estimate of amounts for which the terms and conditions are reasonably assured of being met, and any such changes may be material. Additionally, any such changes may result in the Company’s inability to recognize additional PHSSEF payments or may result in the de recognition of amounts previously recognized, which (in any such case) may be material.
Medicare Accelerated Payments
The Company recorded payments under the Medicare Accelerated and Advance Payment program in accordance with FASB ASC 606 and has recorded amounts as a contract liability under FASB ASC 606-10-45-2. The contract liability will be reduced over time as revenue is recognized for claims submitted for services provided after the recoupment period begins. Effective October 1, 2020, the program was amended such that providers are required to repay accelerated payments beginning one year after the payment was issued. After such one-year period, Medicare payments owed to providers will be recouped according to the repayment terms. The repayment terms specify that for the first 11 months after repayment begins, repayment will occur through an automatic recoupment of 25% of Medicare payments otherwise owed to the provider. At the end of the eleven-month period, recoupment will increase to 50% for six months. At the end of the six months (or 29 months from the receipt of the initial accelerated payment), Medicare will issue a letter for full repayment of any remaining balance, as applicable. In such event, if payment is not received within 30 days, interest will accrue at the annual percentage rate of four percent (4%) from the date the letter was issued and will be assessed for each full 30-day period that the balance remains unpaid. As of September 30, 2021, $1,671,698 of Medicare accelerated payments are reflected on the balance sheet within advance payments line.
The company receives a substantial portion of our revenues from the Medicare and Medicaid programs. Included in Managed Care and other third-party payors is operating revenues from insurance companies with which we have insurance provider contracts, Medicare managed care, insurance companies for which we do not have insurance provider contracts, workers’ compensation carriers and non-patient service revenue, such as rental income and cafeteria sales. In the future, we generally expect the portion of revenues received from the Medicare and Medicaid programs to increase over the long-term due to the general aging of the population and the impact of the Affordable Care Act. The Affordable Care Act has increased the number of insured patients in states that have expanded Medicaid, which in turn, has reduced the percentage of revenues from self-pay patients. However, it is unclear whether the trend of increased coverage will continue, due in part to the impact of the COVID-19 pandemic and the elimination of the financial penalty associated with the individual mandate, effective January 1, 2019. Further, the Affordable Care Act imposes significant reductions in amounts the government pays Medicare managed care plans. Moreover, the trend toward increased enrollment in Medicare and Medicaid managed care may adversely affect our operating revenue. An executive order issued in October 2019 seeks to accelerate this shift away from traditional fee-for-service Medicare to Medicare managed care. We may also be impacted by regulatory requirements imposed on insurers, such as minimum medical-loss ratios and specific benefit requirements. Furthermore, in the normal course of business, managed care programs, insurance companies and employers actively negotiate the amounts paid to hospitals. Our relationships with payors may be impacted by price transparency initiatives and out-of-network billing restrictions. There can be no assurance that we will retain our existing reimbursement arrangements or that these third-party payors will not attempt to further reduce the rates they pay for our services.
Net operating revenues include amounts estimated by management to be reimbursable by Medicare and Medicaid under prospective payment systems and provisions of cost-based reimbursement and other payment methods. In addition, we are reimbursed by non-governmental payors using a variety of payment methodologies. Amounts we receive for the treatment of patients covered by Medicare, Medicaid and non-governmental payors are generally less than our standard billing rates. We account for the differences between the estimated program reimbursement rates and our standard billing rates as contractual allowance adjustments, which we deduct from gross revenues to arrive at net operating revenues. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the periods that such adjustments become known.
Fair Value of Financial Instruments
The carrying amount of accounts receivable and accounts payable approximate their respective fair values due to the short- term nature. The carrying amount of the line of credit and note payable approximates fair values due to their market interest rates. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Additions and improvements to property and equipment are capitalized at cost. Depreciation of owned assets and amortization of leasehold improvements are computed using the straight-line method over the shorter of the estimated useful lives of the related assets or the lease term. The cost of assets sold or retired, and the related accumulated depreciation are removed from the accounts and any resulting gains or losses are reflected in other income (expense) for the year. Expenditures for maintenance and repairs are charged to expense as incurred.
Goodwill
Our goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in business combinations. The goodwill generated from the business combinations is primarily related to the value placed on the employee workforce and expected synergies. Judgment is involved in determining if an indicator or change in circumstances relating to impairment has occurred. Such changes may include, among others, a significant decline in expected future cash flows, a significant adverse change in the business climate, and unforeseen competition. There was no goodwill impairment for the periods presented.
The Company tests goodwill for impairment on an annual basis, and when events or circumstances indicate the fair value of a reporting unit may be below its carrying value.
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. There were no impairments of long-lived assets for the years presented.
Advertising and Marketing
The Company uses advertising and marketing to promote its services. Advertising and marketing costs are expensed as incurred.
Basic Earnings (loss) per common share is computed by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is determined using the weighted-average of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of the conversion option embedded in convertible debt. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would have an anti-dilutive effect.
Fixed grantee stock options (fixed awards) and nonvested stock (including restricted stock) shall be included in the computation of diluted earnings per common share. Even though their issuance may be contingent upon vesting, they shall be considered to be contingently issuable shares. Because issuance of performance based stock options (and performance based nonvested stock) is contingent upon satisfying conditions in addition to the mere passage of time, those options and non vested stock shall be considered to be contingently issuable shares in the computation of diluted earnings per common share.
The dilutive effect of outstanding call options and warrants (and their equivalents) are reflected in diluted earnings per common share by application of the treasury stock method unless another method is required. Equivalents of options and warrants include nonvested stock granted under a share based payment arrangement, stock purchase contracts, and partially paid stock subscriptions. Antidilutive contracts such as purchased put options and purchased call options shall be excluded from diluted earnings per common share.
The Company has included shares issuable under its 2021 Incentive Award Plan in deriving its fully diluted earnings per common share using the Treasury Method in accordance with ASC 260-10-45.
Income Taxes
The Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets, liabilities, the carry forward of operating losses and tax credits, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.
Any future benefit arising from losses have been offset by a valuation allowance. Accordingly, no provision for income taxes is reflected in the condensed consolidated financial statements. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. Interest and penalties related to income tax matters, if any, would be recognized as a component of income tax expense. At September 30, 2021 and December 31, 2020, the Company had no liabilities for uncertain tax positions. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Currently, the tax years subsequent to 2017 are open and subject to examination by the taxing authorities.
Revenue Recognition
We follow ASC 606, “Revenue from Contracts with Customers.” Revenues are recognized when promised services are transferred to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those services. We derive our revenues from the rendering of services, such as skilled nursing services. The five-step armodel defined by ASC 606 requires us to: (i) identify our contracts with customers, (ii) identify our performance obligations under those contracts, (iii) determine the transaction prices of those contracts, (iv) allocate the transaction prices to our performance obligations in those contracts and (v) recognize revenue when each performance obligation under those contracts is satisfied.
Reimbursement rates to provide services in our facilities are determined by the fee schedules set by the government programs and negotiated in contracts with non-governmental third-party payors and private pay patients. Fees are billed to the payors and private pay patients weekly and monthly following billing guidelines and contract requirements.
Net Patient Revenue
Net operating revenues are recorded at the transaction price estimated by the Company to reflect the total consideration due from patients and third-party payors in exchange for providing services in patient care. These services are considered to be a single performance obligation and have a duration of less than one year. Revenues are recorded as these services are provided. The transaction price, which involves significant estimates, is determined based on the Company’s standard charges for the services provided, with a reduction recorded for price concessions related to third party contractual arrangements as well as patient discounts and other patient price concessions.
The collection of outstanding receivables for Medicare, Medicaid, managed care payers, other third-party payers and patients is our primary source of cash and is critical to our operating performance. The primary collection risks relate to uninsured patient accounts, including patient accounts for which the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and copayments) remain outstanding. Implicit price concessions relate primarily to amounts due directly from patients. Estimated implicit price concessions are recorded for all uninsured accounts, regardless of the aging of those accounts. Accounts are written off when all reasonable internal and external collection efforts have been performed.
The estimates for implicit price concessions are based upon management’s assessment of historical write-offs and expected net collections, business and economic conditions, trends in federal, state and private employer health care coverage and other collection indicators. Management relies on the results of detailed reviews of historical write-offs and collections at facilities that represent a majority of our revenues and accounts receivable.
Reclassification
Certain amounts from prior periods have been reclassified to conform to the current period presentation.
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BANYAN MERGER |
9 Months Ended |
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Sep. 30, 2021 | |
| Business Combination and Asset Acquisition [Abstract] | |
| BANYAN MERGER | NOTE 3 – BANYAN MERGER
Effective March 23, 2021, we entered into a Plan of Merger with Merger Sub and Banyan. Under the terms of the Plan of Merger, Merger Sub merged with and into Banyan with Banyan as the Surviving Entity and wholly owned subsidiary of the Company.
The Merger has been treated as a recapitalization and reverse acquisition of the Company for financial accounting purposes, and Banyan is considered the acquirer for accounting purposes. This means that the Company’s historical financial statements before the Merger have been replaced with the historical financial statements of Banyan.
In connection with the Merger, we issued shares of our common stock in exchange for outstanding shares of Banyan’s common stock held by 64 shareholders, based on an exchange ratio of one (1) share of our common stock for every twelve (12) shares of Banyan common stock. We also issued a warrant to purchase 75,000 shares of our common stock (the “Warrant”) in exchange for a warrant to purchase 900,000 shares of Banyan’s common stock. The Warrant is held by one investor and is exercisable for cash only until May 2, 2030 at an exercise price of $0.38 per share. The number of shares of common stock deliverable upon exercise of the Warrant contains provisions for standard anti-dilution adjustments.
The Surviving Entity assumed Banyan’s $2,300,000 of outstanding debt, and the $2,000,000 of such debt that was convertible into shares of Banyan common stock was converted at $0.50 per share into shares of our common stock, effective March 30, 2021. During the three months ended June 30, 2021, shares were issued to the Noteholders of the $2,000,000 convertible note. The remaining $300,000 of outstanding debt, evidenced by a promissory note dated November 6, 2020, accrues interest at the annual rate of 12%. Interest is payable on the sixth day of each month in the amount of $3,000 until the maturity date of this note on November 6, 2021, at which time, the remaining principal balance, if any, is due and payable.
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DISCONTINUED OPERATIONS |
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| DISCONTINUED OPERATIONS | NOTE 4 – DISCONTINUED OPERATIONS
On April 30, 2021, our Board of Directors (the “Board”) approved the discontinuance of our wholly owned subsidiary, Assisted 2 Live, Inc. (the “Discontinued Subsidiary”). The operations of the Discontinued Subsidiary are reflected on our condensed consolidated statement of operations from the date of the Merger as a loss from discontinued operations in the amount of $26,500.
The April 30, 2021, Board decision was the result of the Purchase and Sale Option Agreement (the “Option Agreement”) with Romulus Barr (“Barr”) which we entered into on November 7, 2020. The Option Agreement provided us with the option to sell all of our interest in Assisted 2 Live, Inc., consisting of shares of common stock of the discontinued subsidiary, to Barr in exchange for shares of our common stock (the “Shares”) held by Barr. The returned Shares were cancelled and included in authorized but unissued shares of common stock of the Company. The number of issued and outstanding shares of common stock was decreased by as of April 30, 2021. The transfer resulted in a gain on disposal of discontinued operations in the amount of $395,500. A share price of $ was used to determine the gain on disposal of discontinued operations based on the share price value on April 30, 2021.
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TRILLIUM ACQUISITION |
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| Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TRILLIUM ACQUISITION | NOTE 5 – TRILLIUM ACQUISITION
On June 10, 2021, we entered into the Restated Purchase Agreement, by and among the Company, Mason, Bench and Trillium to acquire all of the issued and outstanding ownership interests of the Trillium Subsidiaries from Trillium (the “Transaction”). The Transaction closed and was effective June 10, 2021.
Pursuant to the terms and conditions of the Restated Purchase Agreement, the aggregate purchase price consists of: (i) a cash payment of $902,847, minus certain transaction related costs, fees and expenses set forth in the Restated Purchase Agreement and determined post-closing; (ii) shares of the Company’s Series A Preferred Stock (the “Preferred Shares”); and (iii) shares of the Company’s common stock (“Common Shares”) having an aggregate value of $, based on the stock price at the time of issuance, upon the earlier of an initial public offering by the Company or June 10, 2022. Trillium will have the right to acquire an additional Common Shares during the two-year period after the Transaction closes pursuant to a Business Development Agreement, a copy of which is attached as Exhibit 10.1 to this Quarterly Report.
As a condition to closing, the Trillium Subsidiaries paid with cash on hand $1,200,000 to one of its landlord, CTR Partnership, L.P. (“CTR”), as an additional security deposit under a lease between Greenside Healthcare Properties, LLC, a wholly-owned subsidiary of FHP and CTR and $3,000,000 to Crete Plus Five Property, L.L.C. (“Omega,” and together with CTR, the “Landlords”) as a deposit on the Company’s purchase of 16 facilities on 14 properties (the “Properties”) currently being leased by FHP’s wholly-owned subsidiaries from Omega and its affiliates. The $3,000,000 deposit to Omega is non-refundable and is subject to forfeiture if the purchase of the Properties is not closed by December 30, 2021. If the $3,000,000 deposit is forfeited, Trillium forfeits its right to receive $ of the purchase price, first, from the cash payment mentioned in subsection (i) above, and second, from the value of common stock to be issued to Trillium mentioned in subsection (iii) above. In any event, no cash payments may be made to Trillium until the purchase of the Properties closes.
The Preferred Shares, with respect to rights on liquidation, winding up and dissolution, rank pari passu with the Common Shares. The holders of Preferred Shares have the right to cast one (1) vote for each Preferred Share held of record on all matters submitted to a vote of holders of the Common Shares, including the election of directors, and all other matters as required by law. The Preferred Shares are not convertible into Common shares at the election of the holder. However, the Preferred Shares do automatically convert into Common Shares at a one-to-one ratio two years from date of issuance. In lieu of converting the Preferred Shares, the holders thereof may elect to have the Company redeem one or more Preferred Shares at the redemption price of $1.00 per share two years from the date of issuance. The Company is required to issue the Preferred Shares to Trillium within 30 days after the purchase of the Properties closes. In connection with the issuance of the Preferred Shares, the Company will file a Certificate of Designation with the Nevada Secretary of State prior to such issuance.
In connection with obtaining the Landlords’ consent to the Transaction, the Company entered into: (i) a guaranty agreement with each Landlord under which the Company agreed to guaranty all obligations and liabilities under master leases for property and facilities owned by the Landlords’ and their affiliates and leased by FHP’s direct and indirect wholly-owned subsidiaries; and (ii) a Consent Agreement and Fifth Amendment to Master Lease with Omega (the “Consent”) regarding the Properties. Under the terms of the Consent, until the earlier of the purchase of the Properties closes or the expiration of the master lease agreement for the Properties in 2027: (a) Mason and Bench must remain responsible for, and have authority over, the day to day management and operations of the Properties and related facilities; and (b) the Company may not make any payment, transfer or distribution of cash or any assets to one or more equity holders or any person or entity with possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Company, through the ownership of voting securities (an “Affiliate”), or return any capital, redemption of any security, or making or assumption of any loans, advances or extension of credit or capital contribution to, or any other investment in, any Affiliate, including, but not limited to, a fee for management, a payment for services rendered, a reimbursement for expenditures or overhead incurred on behalf of the Company or a payment on any debt of an Affiliate; provided, however, the Company may contribute or transfer cash or other assets to its, direct or indirect, wholly-owned subsidiaries, and pay reasonable cash compensation to the members of the Board and executive officers provided that such compensation does not in the aggregate, exceed $ in any six month period.
The initial purchase price has been allocated to the acquired assets and assumed liabilities based on estimated fair values. The purchase price allocation is preliminary pending a final determination of the fair values of the assets and liabilities. The table below provides a preliminary recording of assets acquired and liabilities assumed as of the acquisition date. During the three month period ended September 30, 2021 certain adjustments were made to the fair value of accounts receivable, share liability and goodwill. The amounts recorded for property, plant and equipment, leasehold improvements and goodwill are preliminary and pending finalization of valuation efforts.
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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
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| ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | NOTE 6– ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Our accounts payable and accrued liabilities at September 30, 2021 and December 31, 2020 consisted of the following:
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NOTES PAYABLE |
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| NOTES PAYABLE | NOTE 7 – NOTES PAYABLE
Notes payable at September 30, 2021 and December 31, 2020 consisted of the following:
The entire balance due on each line has been classified as a current liability in accordance with FASB ASC Topic 470-10-45-5, Classification of Revolving Credit Agreements Subject to Lock-Box Arrangements. FASB guidance stipulates that if the contractual provisions of a loan arrangement require, in the ordinary course of business and without another event occurring, the cash receipts of a debtor to be used to repay the existing obligation, the credit agreement should be considered a short-term obligation.
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LEASEHOLD IMPROVEMENTS |
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| LEASEHOLD IMPROVEMENTS | NOTE 8 – LEASEHOLD IMPROVEMENTS
The Company had the following leasehold improvements as of September 30, 2021 and December 31, 2020:
During the year ended December 31, 2020, we recorded $2,669,047 of leasehold improvements. These amounts include costs related to the build out of the Sarasota location in the amount of $1,245,950. These costs will be amortized over the expected term of the lease including extensions that management expects to be 15 years. We also recorded costs in the amount of $1,021,793 related to the New Port Richey location buildout. The expected amortization of the improvements for the New Port Richey location is 17 years. Also recorded were $401,303 of improvements as part of the St. Petersburg-Kidz Club Acquisition. The expected amortization of the improvements for the St. Petersburg location is 15 years. We also recorded $1,213,273 in lease improvements as part of the Trillium acquisition, during the nine-month period ending September 30, 202.
Amortization expense for the three months ended September 30, 2021 and 2020 was $70,193 and $13,593, respectively.
Amortization expense for the nine months ended September 30, 2021 and 2020 was $218,140 and $54,656, respectively.
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PROPERTY AND EQUIPMENT |
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| PROPERTY AND EQUIPMENT | NOTE 9 – PROPERTY AND EQUIPMENT
During the year ended December 31, 2020 we recorded $136,079 in property plant and equipment. These expenses were related to furniture and fixtures and for the new Banyan Sarasota and Pasco locations. We also recorded expenses related to computers and equipment for these new locations, as well as the St Petersburg location acquired in May of 2020. We also purchased buses for the St. Petersburg location, as of the year ended December 2020 we had one bus that was purchased for cash and is being depreciated. Other buses have been purchased with finance leases and are reflected in Right of Use Assets and Lease Liabilities.
During the nine month period ending September 30, 2021 we recorded additional furniture and fixtures related to the Banyan locations in the amount of approximately $23,000 and additional computers and equipment in the amount of approximately $41,000. These purchases were related to the completion of the Banyan Sarasota and Pasco locations that opened in May and July of 2021.
Through the Trillium acquisition on June 10, 2021 we recorded approximately $3.6M in property, plant and equipment consisting of furniture and fixtures, equipment, leasehold improvements in construction and a building. During the three month period ended September 30, 2021 we recorded approximately $69,487 in additional furniture and fixtures for the Trillium locations .
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OPERATING AND CAPITAL LEASES |
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| OPERATING AND CAPITAL LEASES | NOTE 10 – OPERATING AND CAPITAL LEASES
On August 24, 2019, through Banyan Pediatric Care Centers-Sarasota, LLC, we entered into an operating lease with Northeast Plaza Venture I, LLC for the premises located in the Northeast Plaza Shopping Center located on the Northeast corner of 17th Street & Lockwood Ridge Road, in the County of Sarasota, Florida. The initial term of the lease is years with minimum annual rent of $180,000. The landlord granted rent abatement for this lease until February 24, 2020. The lease end date, including two successive 5-year renewal options, is January 31, 2035. A right of use asset and lease liability in the amount of $1,899,869 associated with this lease was recognized. This lease is treated as an operating lease for accounting purposes.
On October 15, 2019, through Banyan, we entered into an assignment and assumption of lease agreement with The Kidz Club – St. Pete, LLC whereby we assumed approximately 12,137 square feet of space at the southeast corner of 3rd Avenue S. and 9th Street N., Webb’s Plaza, St. Petersburg, FL 33701. The minimum annual rent for the first year of the lease was $113,681. The current lease termination date, with extensions expected to be exercised, is October 31, 2024. Upon the exercise of each extension the base rent shall increase by 1.5%. This assignment of lease was subject to the terms of the Asset Purchase Agreement with The Kidz Club-St. Pete, LLC. A right of use asset and lease liability in the amount of $875,539 was recognized in association with this lease. This lease is treated as an operating lease for accounting purposes.
Effective April 1, 2020, through Banyan Pediatric Care Centers – Pasco, LLC, we entered into an 84-month facility lease with Grand Trinity Plaza, LLC for the premises located in the shopping center known as the Grand Trinity Plaza located in New Port Richey, Florida. The initial term of the lease had a minimum annual base rent of $94,500. The landlord granted rent abatement until September 2020. The lease end date, including two successive 5-year renewals is August 31, 2037. A right of use asset and lease liability in the amount of $1,143,743 was recognized in association with this lease. This lease is treated as an operating lease for accounting purposes.
On June 9, 2020, through Banyan, we entered into a 36-month copier lease with Dex Imaging. The lease was for one copier and a printer. The minimum annual lease payment is $5,376 with annual increases not to exceed 12% annually. This lease will auto renew in 12-month increments. The equipment under this lease has a fixed $1 payment buyout option. This equipment was purchased for the St. Petersburg location. A right of use asset and lease liability in the amount of $16,066 was recognized in association with this lease. This lease is treated as an operating lease for accounting purposes.
On August 25, 2020, through Banyan, we entered into a 60-month financing agreement with Ascentium Capital LLC for two 2020 Turtletop Terra Transit passenger buses for the St. Petersburg location. This lease is considered an operating lease for accounting purposes because the lease period is less than the economic life of the asset being leased. Minimum annual rent payments under this lease are $24,859. At our discretion, we may exercise a purchase option, by giving written notice no later than 30 days but not more than 120 days before the expiration of the initial term. The purchase option price is $23,920 for each bus, based on reasonably predicted fair market value. A right of use asset and lease liability in the amount of $102,393 was recognized in association with this lease. This lease is treated as an operating lease for accounting purposes.
On October 20, 2020, through Banyan, we entered into a 60-month financing agreement with Ascentium Capital LLC for a 2020 Eldorado National Advance 220 p/t 14 passenger bus for the St. Petersburg location. This lease is considered an operating lease for accounting purposes because the lease period is less than the economic life of the asset being leased. Minimum annual rent payments under this lease are $13,381. At our discretion, we may exercise a purchase option, by giving written notice no later than 180 days but not more than 360 days before the expiration of the initial term. The purchase option price is $12,891 based on reasonably predicted fair market value. A right of use asset and lease liability in the amount of $55,345 was recognized in association with this lease. This lease is treated as an operating lease for accounting purposes.
In April of 2021, through Banyan, we entered into a 36-month copier lease with Dex Imaging. The lease was for one copy machine. The minimum annual lease payment is $4,920. The equipment under this lease has a fixed $1 payment buyout option. The equipment was purchased for the Banyan Sarasota location. A right of use asset and lease liability in the amount of $14,693 was recognized in association with this lease. This lease is treated as an operating lease for accounting purposes.
In July of 2021, through Banyan, we entered into a 60-month financing agreement with Ascentium Capital LLC for a 2021 Diamond VIP 2200 passenger bus for the Pasco location. This lease is considered an operating lease for accounting purposes. Minimum annual rent payments under this lease are $15,654 and the purchase option price is $15,193 based on reasonably predicted fair market value. A right of use asset and lease liability in the amount of $65,772 was recognized with this lease.
In August of 2021, through Banyan we entered into a 36-month financing agreement with Dex Imaging. The lease was for one copy machine. The minimum annual lease payment is $4,920. The equipment under this lease has a fixed $1 payment buyout option. The equipment was purchased for the Banyan Pasco location. A right of use asset and lease liability in the amount of $14,040 was recognized in association with this lease. This lease is treated as an operating lease for accounting purposes.
In July of 2021, through Trillium we entered into a 60-month financing agreement with Dex Imaging. The lease was for one copy machine. The minimum annual lease payment is $1,920. A right of use asset and lease liability in the amount of $8,049 was recognized in association with this lease. This lease is treated as an operating lease for accounting purposes.
In August of 2021, through Trillium we entered into a 60-month financing agreement with RJKool for a Unimac commercial washing machine. The minimum annual lease payment is $4,321. A right of use asset and lease liability in the amount of $18,476 was recognized in association with this lease. This lease is treated as an operating lease for accounting purposes.
In July of 2021, through Trillium we entered into a 36-month financing agreement with Southeastern Laundry Equipment Sales for a Unimac commercial washing machine. The minimum annual lease payment is $5,094. A right of use asset and lease liability in the amount of $13,054 was recognized in association with this lease. This lease is treated as an operating lease for accounting purposes.
The leases assumed in the Trillium acquisition effective June 10, 2021 are reflected in accordance with FASB ASC Topic 842-10-65 which states; for leases in which the acquiree is a lessee, the acquirer shall measure the lease liability at the present value of the remaining lease payments, as if the acquired lease were a new lease of the acquirer at the acquisition date. The acquirer shall measure the right-of-use asset at the same amount as the lease liability as adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms.
Through the Trillium acquisition (see NOTE 5) we assumed two master lease agreements. The first master lease agreement with Omega consists of 14 properties. The master lease with Omega was entered into on May 13, 2015, with an initial lease term that expires on May 31, 2027. The Omega master lease provides for two 10-year renewal options. At June 10, 2021 we recognized a right of use asset and lease liability in the amount of $29,906,314 in association with this lease. This lease is treated as an operating lease for accounting purposes.
The second master lease with CTR accounts for 10 properties. The master lease with CTR was entered into on August 16, 2019, with an initial lease term that expires on November 30, 2030. The CTR lease provides for two 5-year renewal options. At June 10, 2021 we recognized a right of use asset and lease liability in the amount of $14,468,509 in association with this lease. This lease is treated as an operating lease for accounting purposes.
Through the Trillium acquisition we also assumed 27 capital leases for the following:
These leases are treated as capital leases for accounting purposes.
In accordance with ASC 842, we recorded the operating lease right of use asset and lease liability as follows:
Maturity of Operating Lease obligations for period ended September 30, 2021 ,
Information associated with the measurement of our remaining operating lease obligations as of September 30, 2021 is as follows:
The operating leases range from a term of 2.89 years to 15.93 years with a weighted average lease term of 5.47 years.
The capital leases range from a term of 1 to 4.96 years with a weighted average lease term of 3.72 years.
The weighted average discount rate for operating leases is 7.80%.
The weighted average discount rate for capital leases is 7.81%.
The lease expense for the three and nine month periods ended September 30, 2021 were $2,991,078 and $3,912,133, respectively, compared to $95,319 and $193,365, during the same periods in the prior year.
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EQUITY |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EQUITY | NOTE 11 - EQUITY
Preferred Stock
We have authorized preferred shares with a par value of per share. The Board is authorized to divide the authorized preferred shares into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. As of September 30, 2021 and December 31, 2020, we had no classes of preferred shares designated.
As discussed in NOTE 5, as part of the Trillium acquisition, Trillium is entitled to shares of the Company’s Series A Preferred Stock. The Preferred Shares, with respect to rights on liquidation, winding up and dissolution, rank pari passu with the Common Shares. The holders of Preferred Shares have the right to cast one (1) vote for each Preferred Share held of record on all matters submitted to a vote of holders of the Common Shares, including the election of directors, and all other matters as required by law. The Preferred Shares are not convertible into Common shares at the election of the holder. However, the Preferred Shares do automatically convert into Common Shares at a one to one ratio two years from date of issuance. In lieu of converting the Preferred Shares, the holders thereof may elect to have the Company redeem one or more Preferred Shares at the redemption price of $per share two years from the date of issuance. The Company is required to issue the Preferred Shares to Trillium within 30 days after the purchase of the Properties closes. In connection with the issuance of the Preferred Shares, the Company will file a Certificate of Designation with the Nevada Secretary of State prior to such issuance. A liability to issue the shares is reflected as a long-term liability on the condensed consolidated balance sheet as of September 30, 2021in the amount of $.
Common Stock
We have authorized Common Shares with a par value of $ per share. Each Common Share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought. As of September 30, 2021, we had Common Shares issued and outstanding.
Fiscal Year 2021
On March 23, 2021, we entered into a Plan of Merger with Banyan (See NOTE 3).
In connection with the Merger, we issued Common Shares in exchange for outstanding shares of Banyan’s common stock held by 64 shareholders, based on an exchange ratio of one (1) Common Share of our common stock for every twelve (12) shares of Banyan common stock.
In conjunction with the Merger, the previously issued Common Shares prior to the Merger were deemed issued for the Merger.
During the period from February 11, 2021 through March 31, 2021 we issued Common Shares at $ per share for an aggregate consideration of $3,540,000.
During the three months ended June 30, 2021, noteholders of the $2,000,000 convertible note exercised their right to convert the note with an effective date of March 30, 2021 (see NOTE 3), Common Shares were issued for the conversion of the note. The conversion was previously recorded as a liability to issue shares in the amount of $2,000,000.
During the three months ended June 30, 2021, we issued Common Shares in satisfaction of a liability to issue shares in the amount of $ for stock purchases of 1,150,000 Common Shares at $ per share.
As discussed in NOTE 5, as part of the Trillium acquisition, Trillium is entitled to Common Shares having an aggregate value of $5,000,000, based on the stock price at the time of issuance, upon the earlier of an initial public offering by the Company or June 10, 2022. A share liability is recorded as a current liability in the amount of $5,000,000 on the condensed consolidated balance sheet as of September 30, 2021.
During the three month period ended September 30, 2021 we issued Common Shares at $ per share for an aggregate consideration of $5,000,000.
On August 26, 2021, a majority of the stockholders approved, by written consent without a meeting, the 2021 Incentive Award Plan (“Award Plan”). The Award Plan was approved by the board of directors on August 19, 2021, and recommended to the stockholders for their approval. Under the Award Plan, shares of our common stock will be initially reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards, dividend equivalents or other stock or cash based awards. As of the nine month period ending September 30, 2021 of the reserved shares were provided as stock options to 10 employees as part of the 2021 Incentive Award Plan. (See NOTE 14)
Fiscal Year 2020
During the year ended December 31, 2020, $140 was received against a subscription receivable balance for the 2019 authorization of the issuance of Founders shares. On December 31, 2020, we had a subscription receivable of $30 for shares issued where payments were not received.
On September 19, 2020, we issued restricted Common Shares to a noteholder for the conversion of $500,000 of note principal.
Warrants
In association with the September 27, 2019, Asset Purchase Agreement (The Kidz Club St Pete, LLC), we issued 75,000 common stock warrants (post-merger exchange adjusted) having an exercise price of $0.38 per share. These warrants have an expiration of September 27, 2029.
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RELATED PARTY TRANSACTIONS |
9 Months Ended |
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Sep. 30, 2021 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS
On February 1, 2021 (the “Effective Date”), we signed an employment agreement with our new CEO, Louis Collier (“Collier”). Collier will be paid a base salary of $400,000, which will be reassessed and renegotiated in good faith after we are profitable over a fiscal year. Collier will also receive a signing bonus of $150,000, which will be payable as follows: $50,000 within five days of the Effective Date (paid); $50,000 within 90 days of the Effective Date; and $50,000 within 180 days of the Effective Date. Collier will also be issued phantom shares within ten days after the approval and adoption a Phantom Equity Plan. The phantom shares will be subject to a phantom unit interest award agreement, which will set forth the vesting of the phantom shares.
On March 23, 2021, we entered into a Plan of Merger (See NOTE 3) whereas we assumed debt of $2,000,000 that was convertible into shares of common stock. After the Merger the debt was converted into restricted Common Shares of the Company. One of the debt holders is majority owned by a director of the Company. During the three month period ending June 30, 2021, restricted Common Shares were issued.
During the three months ended September 30, 2021 and 2020, we compensated members of the Board $42,000 and $0, respectively.
During the three months ended September 30, 2021 accrued payroll of $60,000 was paid and $6,277 interest was paid. We had accrued payroll of $60,000 and accrued interest on that payroll for the President and the Chief Financial Officer of Banyan. These unpaid amounts were the result of 2020 furloughed salaries. Interest was accrued on these unpaid balances effective May 15, 2020 at a rate of 8% per annum.
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SEGMENT INFORMATION |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT INFORMATION | NOTE 13 – SEGMENT INFORMATION
The Company has adopted provisions of ASC 280-10 Segment Reporting for the three and nine months ended September 30, 2021, and 2020. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions. The Company and its Chief Operating Decision Makers determined that the Company’s operations consist of two segments: (i) Banyan’s three pediatric extended care centers (“PPECs”) in southwest Florida, and (ii) the second segment is the Trillium Subsidiaries consisting of senior housing communities including skilled nursing facilities, assisted living facilities and independent living facilities.
The table below reflects the segment operations for the nine months ended September 30, 2021.
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STOCK-BASED COMPENSATION |
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| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCK-BASED COMPENSATION |
On August 26, 2021, a majority of the stockholders approved, by written consent without a meeting, the 2021 Incentive Award Plan (“Award Plan”). The Award Plan was approved by the board of directors on August 19, 2021 and recommended to the stockholders for their approval. Under the Award Plan, shares of our common stock will be initially reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards, dividend equivalents or other stock or cash based awards. As of the nine month period ending September 30, 2021 of the reserved shares were provided as stock options to 10 employees as part of the 2021 Incentive Award Plan. The shares vest over a year period with a vesting commencement date of September 1, 2021, as of September 30, 2021 there were of the shares vested with options outstanding.
The following table summarizes our Stock Options activity under the Award Plan for the nine months ended September 30, 2021:
At September 30, 2021 the weighted average period over which compensation cost on non-vested Stock Options expected to be recognized is years and the unrecognized expense is approximately $8.1 million.
Stock-based compensation before income taxes included in salaries and wages in the condensed consolidated statement of operations was $ for the three months ended September 30, 2021. We did not recognize compensation cost in the three or nine month periods ended September 30, 2020 since the Stock Options were not awarded during the period.
We did not have any cash proceeds or income tax benefits realized from the exercise of Stock Options for the three and nine months ended September 30, 2021.
Valuation Assumptions
Calculating the fair value of employee stock options requires estimates and significant judgement. We use the Binomial option pricing model to estimate the fair value of the employee stock options.
We have included shares issuable under the Award Plan in deriving fully diluted earnings per share using the Treasury Method in accordance with ASC 260-10-45. Under the Treasury Method, nonvested stock options granted, where the only satisfying condition is the mere passage of time, shall be assumed exercised at the beginning of the period (or at time of issuance, if later). The proceeds from exercise of stock options shall be assumed to be used to purchase common stock at the average market price during the period using daily closing prices
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CONCENTRATIONS AND CREDIT RISKS |
9 Months Ended |
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Sep. 30, 2021 | |
| Risks and Uncertainties [Abstract] | |
| CONCENTRATIONS AND CREDIT RISKS | NOTE 15 – CONCENTRATIONS AND CREDIT RISKS
Cash
The Company places its cash with high credit quality financial institutions. The Company had balances in excess of the Federal Deposit Insurance Corporation (“FDIC”) coverage of $250,000 at September 30, 2021, the aggregate amount in excess of the coverage limit was approximately $2.8 million consisting of three accounts. The Company maintains its cash in accounts at financial institutions, which may, at times, exceed federally-insured limits. The Company has not experienced any losses on such accounts and does not feel it is exposed to any significant risk with respect to cash.
Revenues and Accounts Receivable
For the three and nine months ended September 30, 2021, approximately 15% of our revenue was generated from Medicare, 67% was generated from Medicaid and approximately 13% of our revenue was generated from private pay residents. The balance consisted of other payors including managed care programs, VA programs and commercial insurance.
At September 30, 2021 18% of our accounts receivable balances consisted of Medicare receivables, 54% consisted of Medicaid receivables, 13% consisted private pay and 11% consisted of commercial insurance. The balance of the accounts receivable consisted of VA and other payors.
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SUBSEQUENT EVENTS |
9 Months Ended |
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Sep. 30, 2021 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 16 – SUBSEQUENT EVENTS
We have evaluated subsequent events from September 30, 2021 through the date of these financial statements were issued and determined the following events require disclosure:
Autumn Accolade
On September 30, 2021,we entered into an Agreement for the Purchase and Sale of Business Assets and Real Estate (the “Purchase Agreement”), with Autumn Accolade, Inc., (“Asset Seller”), Deborah S. Penn, as Trustee under the provisions of a Trust Agreement dated October 8, 2012, and known as the Denton M. Penn Jr. Trust, as to an undivided one-half interest; Deborah S. Penn, as Trustee under the provisions of a Trust Agreement dated October 8, 2012, and known as the Deborah S. Penn Trust, as to an undivided one-half interest (together, “RE Seller,” and collectively with Asset Seller, the “Seller”).
Asset Seller owns and operates a licensed assisted living facility located in Green Valley; Illinois known as Autumn Accolade (the “Business”). Asset Seller also owns various assets in conjunction with the operation of the Business, including all assets that are located at, on or within the Premises including those assets that are affixed to the Premises (collectively, “Assets”). RE Seller is the owner in fee simple of the real estate upon which the Assets are located (the “Premises”).
Subject to the terms of the Purchase Agreement, we are acquiring the Assets and the Premises from the Sellers in exchange for $2,300,000 and the assumption of certain liabilities. We paid a $110,000 deposit (the “Deposit”) upon execution of the Purchase Agreement, which is being held in escrow and will be applied to the purchase price at closing or refunded if the closing doesn’t occur. We paid an additional $15,000 deposit to the Seller upon execution of the Purchase Agreement, which is not refundable.
The closing shall take place promptly following the satisfaction or waiver of the conditions to closing (but in no event less than 30 days thereafter unless otherwise agreed to by the parties). In the event the closing has not taken place by March 31, 2022, then either party may terminate the Purchase Agreement by written notice to the other party so long as such party is not then in breach of the Purchase Agreement, and the Deposit will be immediately returned , less $35,000 to be paid to the Seller if the Seller is able to close but we have failed to meet a financing contingency prior to the March 31, 2022 closing date. We may extend the March 31, 2022 closing date to no later than June 30, 2022 upon written notice to the Seller prior to the March 31, 2022 and the payment to the Seller of a non-refundable amount of $20,000, which shall not be applied to the purchase price.
Gemino Healthcare Finance
On September 30, 2021 we entered into a Second Amendment to our credit agreement with Gemino Healthcare Finance, LLC. The Credit Agreement was entered into in connection with a $10 million credit facility to be used for working capital and general business purposes, and secured by a first priority perfected security interest in the assets of Trillium and the Trillium Group. The credit facility terminates on May 9, 2022. Each revolving loan under the credit facility bears interest on the outstanding principal amount thereof from the date made until paid in full, at a rate per annum equal to the greater of: (i) the annual rate reported as the London Interbank Offer Rate applicable to ninety (90) day deposits of United States Dollars as reported in the Money Rates Section of The Wall Street Journal on the date of determination; and (ii) 2.00%, plus 4.95% (together, the “Interest Rate”). The Interest Rate on all amounts outstanding under the credit facility is adjusted daily based on any changes in the amount under subsection (i) above and subsection (ii) above, as applicable. There are also various fees paid in connection with the credit facility, including: (1) a monthly collateral monitoring fee of 1.00% of the average borrowing base during the prior month; (2) a monthly unused line fee equal to 0.75% per annum of the unused portion of the maximum amount of credit facility; (3) a minimum use fee if the outstanding revolving loan balance is less than $2 million equal to the Interest Rate times the minimum balance of $2 million; and (4) a termination fee of $100,000 if the credit facility is terminated by A4L prior to May 9, 2022. The credit facility also contains typical affirmative and negative covenants found in credit facilities of this type and amount.
The First Amendment amended the Credit Agreement by: (1) releasing seven entities from the Trillium Group of their obligations under the credit facility in connection with Trillium’s sale of those entities; (2) increasing to 5.95% the rate used to calculate the Interest Rate; (3) increasing the monthly collateral monitoring fee to 1.50%; (4) lowering the revolving commitment amount from $10 million to $7 million; and (5) waiving borrower’s failure to comply with the fixed charge coverage ratio for the fiscal quarters ending September 30, 2019, December 31, 2019, and March 31, 2020.
The Second Amendment further amended the Credit Agreement by: (1) adding Assisted 4 Living, Inc as a guarantor to the credit facility and releasing Trillium and it’s four principal individuals from their obligations under the credit facility; (2) increasing the term of the credit facility so that it now expires on September 29, 2023; (3) revising the termination fee to reflect the increase in the term of the credit facility; (4) modifying the fixed percentage used to calculate the Interest Rate from 5.95% to a range of 4.50% to 3.90%, depending on the outstanding loan balance during the preceding three months, with the rate decreasing as the amount borrowed increases; (5) reducing the collateral monitoring fee from 1.50% to 1.00%; (6) reducing the unused line fee from 0.75% to 0.50%; (7) increasing the maximum amount of the credit facility from $10 million to $25 million; and (8) revising terms regarding financial statements and collateral reports, limitations on certain corporate guarantors and curing defaults.
Debt
On October 8, 2021 we entered into a guaranty agreement in connection with a loan made to our wholly-owned subsidiary, Assisted 4 Living Consulting, Inc. in the principal amount of $1,250,000 (the “Loan”). Pursuant to the terms of the guaranty agreement, the A4L has unconditionally guaranteed the payment of all indebtedness, liabilities and obligations of every kind and nature of Assisted 4 Living Consulting, LLC to the lender whether absolute or contingent, direct or indirect, due or to become due, heretofore or hereafter created, arising or exiting including any additional advances or future advances, renewals or extensions without limitation as to amount. The Loan is evidenced by a promissory note. Outstanding principal accrues interest at an annual rate of ten percent (10%). Monthly payments in the amount of $10,416.67 commence on November 8, 2021 and continue for 12 months until the maturity date of October 8, 2022, at which time the remaining principal balance, if any, is due and payable. The Loan is secured by a first mortgage lien on property that is owned by Borrower and serves as the A4L corporate headquarters.
If any portion of the principal is paid prior to July 8, 2022, then Assisted 4 Living Consulting, LLC must pay a prepayment fee calculated as the difference between nine months of interest on the amount of principal being prepaid and the amount of interest paid to date on the amount of principal being prepaid. The lender is guaranteed nine months of interest regardless of when Loan is paid off.
After the maturity date or due date of the promissory note, interest shall be charged on the respective principal amount remaining unpaid at a rate equivalent to the highest lawful rate or twenty-five percent (25%) per annum, whichever is less, until paid.
If any payment of principal or interest or both is more than five days late, Borrower agrees to pay lender a late charge equal to five percent (5.0%) of the payment.
Crete Plus Five Property
On October 13, 2021 we entered into an Agreement of Purchase and Sale with Crete Plus Five Property, LLC, Iowa Lincoln County Property LLC, Muscatine Toledo Properties, LLC and Avery Street Property, LLC (collectively, “Owners” ). The Owners owns 13 senior housing facilities located in Iowa, Nebraska and Florida (collectively, the “Facilities”) as well the real property underlying the Facilities (the “Properties”). The Agreement of Purchase and Sale is for the purchase of the Facilities, the Properties and all of Owner’s right, title and interest in all of the personal property located at the Properties, other than certain personal property described in Exhibit B attached to the Agreement of Purchase and Sale, such as cash and the tradenames and books and records of Owner. The A4L indirect wholly-owned subsidiaries currently lease the Properties from Owner, and operate the Facilities, pursuant to an Master Lease dated as of May 13, 2015, as amended.
The purchase price for the Facilities and the Properties is $59,000,000. A4L paid a $3,000,000 deposit (the “Deposit”) in June upon execution of a letter of intent with Owner as part of the Trillium transaction, and A4L will receive a credit at closing against the purchase price in the amount of the Deposit. If the Agreement of Purchase and Sale is Terminated prior to closing for any reason other than breach of the agreement by Owner, the Deposit will be paid to Owner as liquidated damages. The closing is to occur on March 1, 2022; provided, however, A4L may extend the March 1, 2022 closing date to no later than March 31, 2022, upon written notice to Owner prior to the February 15, 2022.
Grace Care Centers
On October 18, 2021 we completed the acquisition from Grace Care Centers and its affiliates (collectively, “Grace”) of three skilled nursing facilities located in Texas (the “Skilled Facilities”), including the real property, buildings, structures, improvements, fixtures and certain other assets comprising the Skilled Facilities (together with the Skilled Facilities, the “Assets”) in exchange for an aggregate purchase price of $7,750,000 (the “Purchase Price”). The Assets were acquired pursuant to and in accordance with three Purchase and Sale Agreements and three Management Transfer Agreements (collectively, the “Agreements”).
The Skilled Facilities, located in Olney, Nocona and Henrietta, Texas, are all 5-star rated by CMS for quality and have a combined 258 beds. The Skilled Facilities will continue to be leased to local hospital districts, who will continue to be the licensed operators of the Skilled Facilities. A4L, through indirect wholly-owned subsidiaries, now owns the Assets and will manage the day-to-day activities of the Skilled Facilities pursuant to management agreements which it assumed in connection with the transaction.
A4L, through its indirect wholly-owned subsidiary, financed part of the Purchase Price with a loan from Arena Limited SPV, LLC (“Lender”) in the principal amount of $6,600,000 (the “Loan”). Outstanding principal accrues interest at a rate per annum equal to the sum of the Prime Rate plus 4.125%, with a minimum interest rate per annum of not less than 7.875%. Monthly interest only payments commence on December 15, 2021, and continue each month until the maturity date of the Loan on April 18, 2023, at which time any outstanding principal and accrued and unpaid interest is due and payable. If any principal, interest or any other sums due under the Loan (other than the payment of principal due on the maturity date), is not paid on or prior to the due date, A4L is required to pay Lender upon demand an amount equal to 5% of such unpaid sum. In connection with any repayment or prepayment of principal, a non-refundable fee equal to 0.5% of the principal amount of such repayment or prepayment is due. A4L may prepay the outstanding amount in whole, but not part, upon prior written notice to Lender.
A4L has the right to extend the initial maturity date to October 15, 2023 upon prior written notice to Lender and the payment to Lender of a non-refundable fee equal to 1% of the outstanding principal balance no later than 30 days prior to the maturity date. A4L may extend the maturity date further, to April 15, 2024, upon prior written notice to Lender and the payment to Lender of a non-refundable fee equal to 1% of the outstanding principal balance prior to the extended maturity date.
The Loan is secured by a first priority lien on the Assets, including all amounts received by A4L or any subsidiaries constituting rent or other payment under any leases or management fees under each of the management agreements, which must be deposited into a segregated account at a bank and held in trust for Lender. The Loan is subject to customary affirmative and negative covenants, as well as customary default provisions for late or non-payments or breach of covenants, for loans of this nature. Pursuant to the terms of a guaranty agreement, A4L and several of its direct and indirect wholly-owned subsidiaries, have each unconditionally guaranteed to Lender the payment of all indebtedness, liabilities and obligations of every kind and nature under the Loan. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended |
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Sep. 30, 2021 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation | Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company (“Financial Statements”) have been prepared in accordance with GAAP for interim financial statements and with the instructions to Form 10-Q and Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.
In the opinion of management, the accompanying condensed consolidated Financial Statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2021, and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended September 30, 2021, are not necessarily indicative of the operating results for the full fiscal year or any future period. These condensed consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021 and Current Report on Form 8-K on June 2, 2021. As of April 30, 2021, we had discontinued operations reflected in the accompanying condensed consolidated Financial Statements. As a result of the Plan of Merger completed on March 23, 2021 (see NOTE 3) we have changed our year end reporting period from November to December.
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| Capital Requirements, Liquidity and Going Concern Considerations | Capital Requirements, Liquidity and Going Concern Considerations
These condensed consolidated Financial Statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Although we had cash and accounts receivable in the amount of approximately $11.4 million at September 30, 2021, we had accrued expenses and current notes payable in excess of cash and accounts receivable in the amount of approximately $6.5 million, and a deficiency in working capital of approximately $20.6 million. For the nine months ended September 30, 2021, our net loss was approximately $6.9 million.
As a result of these factors, we determined it was necessary to review our cash flow for 2021 and an overall analysis of market trends to determine whether or not we have sufficient liquidity to continue as a going concern for a period of at least twelve months from the date of this Quarterly Report. We also determined it was necessary to take certain corporate actions, including reducing discretionary expenses (and reduced reliance on agency staffing), improving revenue (including added Therapy and Rehab services), and raising additional capital, in order to ensure we have sufficient liquidity to continue as a going concern for a period of at least twelve months from the date of this Quarterly Report.
During the three months ended September 30, 2021 we sold million shares for an aggregate total of $5.0 million. This capital raise will be used for additional growth through acquisitions and for working capital. However, no assurances can be given that we will be successful. If management is not able to timely and successfully raise additional capital and/or refinance indebtedness, the implementation of the Company’s business plan, financial condition and results of operations will be materially affected.
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| Basis of Consolidation | Basis of Consolidation
These condensed consolidated Financial Statements include the accounts of the Company and the wholly-owned subsidiaries, Banyan Pediatric Care Centers – OPS, LLC, Banyan Pediatric Care Centers – St. Petersburg, LLC, Banyan Pediatric Care Centers, - Pasco, LLC and Banyan Pediatric Care Centers – Sarasota, LLC and the discontinued operations of Assisted 2 Live, Inc., the wholly owned subsidiary that was discontinued as of April 30, 2021. All material intercompany balances and transactions have been eliminated. The condensed consolidated Financial Statements also include the accounts of the Trillium Subsidiaries from June 10, 2021, the effective date of the transaction with Trillium.
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| Use of Estimates and Assumptions | Use of Estimates and Assumptions
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
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| Cash and Cash Equivalents | Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at September 30, 2021 and December 31, 2020.
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| Accounts Receivable | Accounts Receivable
Accounts receivable primarily consists of amounts due from third-party payers (non-governmental), governmental payers and private pay patients and is recorded net of contractual allowances and reserves for doubtful accounts. The Company’s ability to collect outstanding receivables is critical to its results of operations and cash flows. Accordingly, accounts receivable reported in the Company’s Financial Statements is recorded at the net amount expected to be received. The Company’s primary collection risks are (i) the risk of overestimation of net revenues at the time of billing that may result in the Company receiving less than the recorded receivable, (ii) the risk of non-payment as a result of commercial insurance companies’ denial of claims, (iii) the risk that patients will fail to remit insurance payments to the Company when the commercial insurance company pays out-of-network claims directly to the patient, (iv) resource and capacity constraints that may prevent the Company from handling the volume of billing and collection issues in a timely manner, (v) the risk that patients do not pay the Company for their self-pay balances (including co-pays, deductibles and any portion of the claim not covered by insurance) and (vi) the risk of non-payment from uninsured patients.
The Company’s accounts receivable from third-party payers are recorded net of estimated contractual adjustments and allowances from third-party payers, which are estimated based on the historical trend of the Company’s facilities’ cash collections and contractual write-offs, accounts receivable aging, established fee schedules, relationships with payers and procedure statistics. While changes in estimated reimbursement from third-party payers remain a possibility, the Company expects that any such changes would be minimal and, therefore, would not have a material effect on the Company’s financial condition or results of operations. The Company’s collection policies and procedures are based on the type of payor, size of claim and estimated collection percentage for each patient account. The Company analyzes accounts receivable at each of the facilities to ensure the proper collection and aged category. The operating systems generate reports that assist in the collection efforts by prioritizing patient accounts. Collection efforts include direct contact with insurance carriers or patients and written correspondence.
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| Allowance for Doubtful Accounts, Contractual and Other Discounts | Allowance for Doubtful Accounts, Contractual and Other Discounts
Management estimates the allowance for contractual and other discounts based on its historical collection experience and contracted relationship with the payers. The services authorized and provided and related reimbursement are often subject to interpretation and negotiation that could result in payments that differ from the Company’s estimates. The Company’s allowance for doubtful accounts is based on historical experience, but management also takes into consideration the age of accounts, creditworthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. An account may be written-off only after the Company has pursued collection efforts or otherwise determines an account to be uncollectible. Uncollectible balances are written-off against the allowance. Recoveries of previously written-off balances are credited to income when the recoveries are made.
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| COVID-19 Pandemic and CARES Act Funding | COVID-19 Pandemic and CARES Act Funding
COVID-19 Pandemic. In January 2020, the Secretary of the U.S. Department of Health and Human Services (“HHS”) declared a national public health emergency due to a novel strain of coronavirus. In March 2020, the World Health Organization declared the outbreak of COVID-19, a disease caused by this coronavirus, a pandemic. The resulting measures to contain the spread and impact of COVID-19 and other developments related to COVID-19 have materially affected the Company’s results of operations during 2020. Where applicable, the impact resulting from the COVID-19 pandemic during the year ended December 31, 2020, has been considered, including updated assessments of the recoverability of assets and evaluation of potential credit losses. As a result of the COVID-19 pandemic, federal and state governments have passed legislation, promulgated regulations and taken other administrative actions intended to assist healthcare providers in providing care to COVID-19 and other patients during the public health emergency. Sources of relief include the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020, the Paycheck Protection Program and Health Care Enhancement Act (the “PPPHCE Act”), which was enacted on April 24, 2020, and the Consolidated Appropriations Act, 2021 (the “CAA”), which was enacted on December 27, 2020. In total, the CARES Act, PPPHCE Act and the CAA authorize $178 billion in funding to be distributed to hospitals and other healthcare providers through the Public Health and Social Services Emergency Fund (the “PHSSEF”). In addition, the CARES Act provide for an expansion of the Medicare Accelerated and Advance Payment Program whereby inpatient acute care hospitals and other eligible providers were able to request accelerated payment of up to 100% of their Medicare payment amount for a six-month period to be repaid through withholding of future Medicare fee-for-service payments. Various other state and local programs also exist to provide relief, either independently or through distribution of monies received via the CARES Act. During the period ended September 30, 2021, the Company was a beneficiary of these stimulus measures, including the Medicare Accelerated and Advance Payment Program.
The Company’s accounting policies for the recognition of these stimulus monies is as follows:
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| Pandemic Relief Funds | Pandemic Relief Funds
Trillium received an aggregate of $13,487,923 in PHSSEF payments, of which $4,242,796 was applied during 2020. Prior to the acquisition date of June 10, 2021 Trillium had recognized $7,081,557 as other operating income. During the three and nine-month period ended September 30, 2021 we recognized $1,385,162 as other operating income resulting in a remaining balance of $778,408 which is classified on the balance sheet as Deferred HHS Revenue. The recognition of amounts received is conditioned upon the provision of care for individuals with possible or actual cases of COVID-19 after January 31, 2020, certification that payment will be used to prevent, prepare for and respond to coronavirus and shall reimburse the recipient only for healthcare-related expenses or lost revenues, as defined by HHS, that are attributable to coronavirus, as well as receipt of the funds. Amounts are recognized as a reduction to operating costs and expenses only to the extent the Company is reasonably assured that underlying conditions have been met.
The Company’s assessment of whether the terms and conditions for amounts received are reasonably assured of having been met considers, among other things, the CARES Act, the CAA and all frequently asked questions and other interpretive guidance issued by HHS, including the Post-Payment Notice of Reporting Requirements issued on January 15, 2021 (the “January 15, 2021 Notice”) and frequently asked questions issued by HHS on January 28, 2021 which clarified previously issued guidance, as well as expenses incurred attributable to the coronavirus and the Company’s results of operations during such period as compared to the Company’s budget. Such guidance, specifically the various Post-Payment Notice of Reporting Requirements and frequently asked questions issued by HHS, set forth the allowable methods for quantifying eligible healthcare related expenses and lost revenues. Only healthcare related expenses attributable to coronavirus that another source has not reimbursed and is not obligated to reimburse are eligible to be claimed. On the basis of guidance available at the time, the Company’s estimate of lost revenues was first based on the negative change in year-over-year net patient care operating revenue, then on the negative change in year-over-year net patient care operating income and finally on the difference between budgeted and actual revenue for calendar year. The calculation as of September 30, 2021 is in accordance with the CAA which indicates that lost revenues may be calculated pursuant to frequently asked questions published by HHS in June 2020, including the difference between a provider’s budgeted and actual revenue if such budget had been established prior to March 27, 2020. The use of funds calculation as of September 30, 2021 takes into account expenses attributable to each respective entity, which primarily relate to incremental labor and supply costs, as well as lost revenues. General fund distributions were allocated among subsidiaries according to total unreimbursed losses. Targeted distributions were not allocated or transferred among subsidiaries. While the CAA, January 15, 2021 Notice and frequently asked questions published by HHS on January 28, 2021 indicate that targeted distribution payments may be allocated or transferred to subsidiaries, distinct conditions exist for such allocations or transfers including that the parent organization have a “direct ownership relationship” with the subsidiary who received the targeted distribution payment. Additionally, the subsidiary that was the recipient of the targeted distribution payment retains responsibility for reporting to HHS on the use of such funds even if they are transferred or allocated to other subsidiaries. There are significant uncertainties as to the meaning and interpretation of conditions specific to the allocation or transfer of targeted distribution payments such that as of September 30, 2021, the Company is not reasonably assured that it can or will choose to comply with such conditions in order to allocate or transfer targeted distribution payments.
HHS’ interpretation of the underlying terms and conditions of such PHSSEF payments, including auditing and reporting requirements, continues to evolve. Additional guidance or new and amended interpretations of existing guidance on the terms and conditions of such PHSSEF payments may result in changes in the Company’s estimate of amounts for which the terms and conditions are reasonably assured of being met, and any such changes may be material. Additionally, any such changes may result in the Company’s inability to recognize additional PHSSEF payments or may result in the de recognition of amounts previously recognized, which (in any such case) may be material.
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| Medicare Accelerated Payments | Medicare Accelerated Payments
The Company recorded payments under the Medicare Accelerated and Advance Payment program in accordance with FASB ASC 606 and has recorded amounts as a contract liability under FASB ASC 606-10-45-2. The contract liability will be reduced over time as revenue is recognized for claims submitted for services provided after the recoupment period begins. Effective October 1, 2020, the program was amended such that providers are required to repay accelerated payments beginning one year after the payment was issued. After such one-year period, Medicare payments owed to providers will be recouped according to the repayment terms. The repayment terms specify that for the first 11 months after repayment begins, repayment will occur through an automatic recoupment of 25% of Medicare payments otherwise owed to the provider. At the end of the eleven-month period, recoupment will increase to 50% for six months. At the end of the six months (or 29 months from the receipt of the initial accelerated payment), Medicare will issue a letter for full repayment of any remaining balance, as applicable. In such event, if payment is not received within 30 days, interest will accrue at the annual percentage rate of four percent (4%) from the date the letter was issued and will be assessed for each full 30-day period that the balance remains unpaid. As of September 30, 2021, $1,671,698 of Medicare accelerated payments are reflected on the balance sheet within advance payments line.
The company receives a substantial portion of our revenues from the Medicare and Medicaid programs. Included in Managed Care and other third-party payors is operating revenues from insurance companies with which we have insurance provider contracts, Medicare managed care, insurance companies for which we do not have insurance provider contracts, workers’ compensation carriers and non-patient service revenue, such as rental income and cafeteria sales. In the future, we generally expect the portion of revenues received from the Medicare and Medicaid programs to increase over the long-term due to the general aging of the population and the impact of the Affordable Care Act. The Affordable Care Act has increased the number of insured patients in states that have expanded Medicaid, which in turn, has reduced the percentage of revenues from self-pay patients. However, it is unclear whether the trend of increased coverage will continue, due in part to the impact of the COVID-19 pandemic and the elimination of the financial penalty associated with the individual mandate, effective January 1, 2019. Further, the Affordable Care Act imposes significant reductions in amounts the government pays Medicare managed care plans. Moreover, the trend toward increased enrollment in Medicare and Medicaid managed care may adversely affect our operating revenue. An executive order issued in October 2019 seeks to accelerate this shift away from traditional fee-for-service Medicare to Medicare managed care. We may also be impacted by regulatory requirements imposed on insurers, such as minimum medical-loss ratios and specific benefit requirements. Furthermore, in the normal course of business, managed care programs, insurance companies and employers actively negotiate the amounts paid to hospitals. Our relationships with payors may be impacted by price transparency initiatives and out-of-network billing restrictions. There can be no assurance that we will retain our existing reimbursement arrangements or that these third-party payors will not attempt to further reduce the rates they pay for our services.
Net operating revenues include amounts estimated by management to be reimbursable by Medicare and Medicaid under prospective payment systems and provisions of cost-based reimbursement and other payment methods. In addition, we are reimbursed by non-governmental payors using a variety of payment methodologies. Amounts we receive for the treatment of patients covered by Medicare, Medicaid and non-governmental payors are generally less than our standard billing rates. We account for the differences between the estimated program reimbursement rates and our standard billing rates as contractual allowance adjustments, which we deduct from gross revenues to arrive at net operating revenues. Final settlements under some of these programs are subject to adjustment based on administrative review and audit by third parties. We account for adjustments to previous program reimbursement estimates as contractual allowance adjustments and report them in the periods that such adjustments become known.
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| Fair Value of Financial Instruments | Fair Value of Financial Instruments
The carrying amount of accounts receivable and accounts payable approximate their respective fair values due to the short- term nature. The carrying amount of the line of credit and note payable approximates fair values due to their market interest rates. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable.
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| Property and Equipment | Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Additions and improvements to property and equipment are capitalized at cost. Depreciation of owned assets and amortization of leasehold improvements are computed using the straight-line method over the shorter of the estimated useful lives of the related assets or the lease term. The cost of assets sold or retired, and the related accumulated depreciation are removed from the accounts and any resulting gains or losses are reflected in other income (expense) for the year. Expenditures for maintenance and repairs are charged to expense as incurred.
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| Goodwill | Goodwill
Our goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in business combinations. The goodwill generated from the business combinations is primarily related to the value placed on the employee workforce and expected synergies. Judgment is involved in determining if an indicator or change in circumstances relating to impairment has occurred. Such changes may include, among others, a significant decline in expected future cash flows, a significant adverse change in the business climate, and unforeseen competition. There was no goodwill impairment for the periods presented.
The Company tests goodwill for impairment on an annual basis, and when events or circumstances indicate the fair value of a reporting unit may be below its carrying value.
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| Long-Lived Assets | Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. There were no impairments of long-lived assets for the years presented.
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| Advertising and Marketing | Advertising and Marketing
The Company uses advertising and marketing to promote its services. Advertising and marketing costs are expensed as incurred.
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| Earnings (Loss) Per Share |
Basic Earnings (loss) per common share is computed by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is determined using the weighted-average of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of the conversion option embedded in convertible debt. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would have an anti-dilutive effect.
Fixed grantee stock options (fixed awards) and nonvested stock (including restricted stock) shall be included in the computation of diluted earnings per common share. Even though their issuance may be contingent upon vesting, they shall be considered to be contingently issuable shares. Because issuance of performance based stock options (and performance based nonvested stock) is contingent upon satisfying conditions in addition to the mere passage of time, those options and non vested stock shall be considered to be contingently issuable shares in the computation of diluted earnings per common share.
The dilutive effect of outstanding call options and warrants (and their equivalents) are reflected in diluted earnings per common share by application of the treasury stock method unless another method is required. Equivalents of options and warrants include nonvested stock granted under a share based payment arrangement, stock purchase contracts, and partially paid stock subscriptions. Antidilutive contracts such as purchased put options and purchased call options shall be excluded from diluted earnings per common share.
The Company has included shares issuable under its 2021 Incentive Award Plan in deriving its fully diluted earnings per common share using the Treasury Method in accordance with ASC 260-10-45.
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| Income Taxes | Income Taxes
The Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets, liabilities, the carry forward of operating losses and tax credits, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.
Any future benefit arising from losses have been offset by a valuation allowance. Accordingly, no provision for income taxes is reflected in the condensed consolidated financial statements. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. Interest and penalties related to income tax matters, if any, would be recognized as a component of income tax expense. At September 30, 2021 and December 31, 2020, the Company had no liabilities for uncertain tax positions. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Currently, the tax years subsequent to 2017 are open and subject to examination by the taxing authorities.
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| Revenue Recognition | Revenue Recognition
We follow ASC 606, “Revenue from Contracts with Customers.” Revenues are recognized when promised services are transferred to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those services. We derive our revenues from the rendering of services, such as skilled nursing services. The five-step armodel defined by ASC 606 requires us to: (i) identify our contracts with customers, (ii) identify our performance obligations under those contracts, (iii) determine the transaction prices of those contracts, (iv) allocate the transaction prices to our performance obligations in those contracts and (v) recognize revenue when each performance obligation under those contracts is satisfied.
Reimbursement rates to provide services in our facilities are determined by the fee schedules set by the government programs and negotiated in contracts with non-governmental third-party payors and private pay patients. Fees are billed to the payors and private pay patients weekly and monthly following billing guidelines and contract requirements.
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| Net Patient Revenue | Net Patient Revenue
Net operating revenues are recorded at the transaction price estimated by the Company to reflect the total consideration due from patients and third-party payors in exchange for providing services in patient care. These services are considered to be a single performance obligation and have a duration of less than one year. Revenues are recorded as these services are provided. The transaction price, which involves significant estimates, is determined based on the Company’s standard charges for the services provided, with a reduction recorded for price concessions related to third party contractual arrangements as well as patient discounts and other patient price concessions.
The collection of outstanding receivables for Medicare, Medicaid, managed care payers, other third-party payers and patients is our primary source of cash and is critical to our operating performance. The primary collection risks relate to uninsured patient accounts, including patient accounts for which the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and copayments) remain outstanding. Implicit price concessions relate primarily to amounts due directly from patients. Estimated implicit price concessions are recorded for all uninsured accounts, regardless of the aging of those accounts. Accounts are written off when all reasonable internal and external collection efforts have been performed.
The estimates for implicit price concessions are based upon management’s assessment of historical write-offs and expected net collections, business and economic conditions, trends in federal, state and private employer health care coverage and other collection indicators. Management relies on the results of detailed reviews of historical write-offs and collections at facilities that represent a majority of our revenues and accounts receivable.
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| Reclassification | Reclassification
Certain amounts from prior periods have been reclassified to conform to the current period presentation.
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DISCONTINUED OPERATIONS (Tables) |
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF CARRYING AMOUNTS OF ASSETS AND LIABILITIES AND CASH FLOWS OF DISCONTINUED OPERATIONS |
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TRILLIUM ACQUISITION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF ACQUIRED ASSETS AND LIABILITIES ASSUMED |
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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | Our accounts payable and accrued liabilities at September 30, 2021 and December 31, 2020 consisted of the following:
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NOTES PAYABLE (Tables) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF NOTES PAYABLE | Notes payable at September 30, 2021 and December 31, 2020 consisted of the following:
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LEASEHOLD IMPROVEMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leasehold Improvements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF LEASESHOLD IMPROVEMENTS | The Company had the following leasehold improvements as of September 30, 2021 and December 31, 2020:
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PROPERTY AND EQUIPMENT (Tables) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF PROPERTY AND EQUIPMENT |
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OPERATING AND CAPITAL LEASES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating And Capital Leases | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF OPERATING LEASE RIGHT OF USE ASSET AND LEASE LIABILITY | In accordance with ASC 842, we recorded the operating lease right of use asset and lease liability as follows:
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| SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITY | Maturity of Operating Lease obligations for period ended September 30, 2021 ,
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EQUITY (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF WARRANTS OUTSTANDING |
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SEGMENT INFORMATION (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF SEGMENT REPORTING INFORMATION | The table below reflects the segment operations for the nine months ended September 30, 2021.
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STOCK-BASED COMPENSATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF STOCK OPTIONS ACTIVITY | The following table summarizes our Stock Options activity under the Award Plan for the nine months ended September 30, 2021:
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ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Restated purchase agreement | Trillium subsidiaries lease and operate 26 facilities in four states: Florida, Georgia, Iowa, and Nebraska with 1,685 total licensed beds (1,546 skilled nursing, 139 assisted living) and 36 independent living apartments. The breakdown by state is as follows: Florida – 1 skilled nursing facility; Georgia – 1 skilled nursing facility; Iowa – 16 skilled nursing facilities, 2 independent living centers and 1 assisted living centers; Nebraska – 4 skilled nursing facilities and 1 assisted living center |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) shares in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
|---|---|---|---|---|
Jun. 10, 2021 |
Sep. 30, 2021 |
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Cash and accounts receivable | $ 11,400,000 | $ 11,400,000 | ||
| Accrued expenses and current notes payable cash and accounts payable | 6,500,000 | 6,500,000 | ||
| Working capital deficiency | $ 20,600,000 | 20,600,000 | ||
| Net loss | 6,900,000 | |||
| Stock Issued During Period, Shares, Other | 5 | |||
| Stock Issued During Period, Value, Other | $ 5,000,000.0 | |||
| Cash equivalents | 0 | $ 0 | $ 0 | |
| Percentage of accelerated payment | 100.00% | |||
| Other Operating Income | $ 1,385,162 | |||
| Deferred HHS Revenue | $ 778,408 | 778,408 | 25,703 | |
| Accelerated payments | $ 1,671,698 | |||
| Accounting Standards Update 2014-09 [Member] | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Accelerated Payments term | The repayment terms specify that for the first 11 months after repayment begins, repayment will occur through an automatic recoupment of 25% of Medicare payments otherwise owed to the provider. At the end of the eleven-month period, recoupment will increase to 50% for six months. At the end of the six months (or 29 months from the receipt of the initial accelerated payment), Medicare will issue a letter for full repayment of any remaining balance, as applicable. In such event, if payment is not received within 30 days, interest will accrue at the annual percentage rate of four percent (4%) from the date the letter was issued and will be assessed for each full 30-day period that the balance remains unpaid. As of September 30, 2021, $1,671,698 of Medicare accelerated payments are reflected on the balance sheet within advance payments line | |||
| Trillium Healthcare Group, LLC [Member] | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Proceeds from pandemic relief funds | $ 13,487,923 | $ 4,242,796 | ||
| Other Operating Income | $ 7,081,557 |
BANYAN MERGER (Details Narrative) - USD ($) |
3 Months Ended | |||
|---|---|---|---|---|
Mar. 23, 2021 |
Jun. 30, 2021 |
Nov. 06, 2021 |
Nov. 06, 2020 |
|
| Business Acquisition [Line Items] | ||||
| Warrants to purchase common stock | 75,000 | |||
| Warrants exercise price | $ 0.38 | |||
| Debt conversion shares | 4,000,000 | |||
| Debt conversion price per share | $ 0.50 | |||
| Outstanding note | $ 300,000 | |||
| Interest rate | 12.00% | |||
| Interest payable each month | $ 3,000 | |||
| Maturity date | Nov. 06, 2021 | |||
| Note Holder [Member] | ||||
| Business Acquisition [Line Items] | ||||
| Convertible notes | $ 2,000,000 | |||
| Banyan Pediatric Care Centers, Inc [Member] | ||||
| Business Acquisition [Line Items] | ||||
| Number of shares issued upon conversion | 4,165,418 | 4,000,000 | ||
| Number of shares converted | 49,984,649 | |||
| Stock conversion description | The Surviving Entity assumed Banyan’s $2,300,000 of outstanding debt, and the $2,000,000 of such debt that was convertible into 20,000,000 shares of Banyan common stock was converted at $0.50 per share into 4,000,000 shares of our common stock, effective March 30, 2021. During the three months ended June 30, 2021, shares were issued to the Noteholders of the $2,000,000 convertible note. The remaining $300,000 of outstanding debt, evidenced by a promissory note dated November 6, 2020, accrues interest at the annual rate of 12%. Interest is payable on the sixth day of each month in the amount of $3,000 until the maturity date of this note on November 6, 2021, at which time, the remaining principal balance, if any, is due and payable | |||
| Outstanding debt assumed | $ 2,300,000 | |||
| Convertible debt | $ 2,000,000 | $ 2,000,000 | ||
| Debt conversion shares | 20,000,000 |
SUMMARY OF CARRYING AMOUNTS OF ASSETS AND LIABILITIES AND CASH FLOWS OF DISCONTINUED OPERATIONS (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Apr. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
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| Operating expenses: | |||||
| Income from discontinued operations | $ 369,000 | ||||
| Assisted 2 Living, Inc [Member] | |||||
| Net revenues | 76,847 | ||||
| Cost of net revenues | |||||
| Gross profit | |||||
| Operating expenses: | |||||
| Salary and tax expense | 46,813 | ||||
| General and administrative | 52,555 | ||||
| Lease expense | 3,979 | ||||
| Total operating expenses | 103,347 | ||||
| Income from discontinued operations | (26,500) | ||||
| Interest and other, net | |||||
| Income from discontinued operations before income taxes | (26,500) | ||||
| Provision for income taxes | |||||
| Income from discontinued operations | $ 26,500 | $ (26,500) | |||
DISCONTINUED OPERATIONS (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Apr. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
Nov. 07, 2020 |
|
| Loss from discontinued operations | $ 369,000 | ||||||
| Common stock, shares outstanding | 45,345,418 | 45,345,418 | 4,165,418 | ||||
| Issued and outstanding shares | 200,000 | ||||||
| Disposal of discontinued | $ 395,500 | $ 395,500 | |||||
| Disposal of discontinued price per share | $ 1.85 | ||||||
| Assisted 2 Living, Inc [Member] | |||||||
| Loss from discontinued operations | $ 26,500 | $ (26,500) | |||||
| Assisted 2 Living, Inc [Member] | Purchase and Sale Option Agreement [Member] | |||||||
| Shares owned | 1,000 | ||||||
| Assisted 2 Living, Inc [Member] | Purchase and Sale Option Agreement [Member] | Romulus Barr [Member] | |||||||
| Common stock, shares outstanding | 200,000 | ||||||
SUMMARY OF ACQUIRED ASSETS AND LIABILITIES ASSUMED (Details) |
Sep. 30, 2021
USD ($)
|
|---|---|
| Business Combination and Asset Acquisition [Abstract] | |
| Cash | $ 3,432,847 |
| Accounts receivable | 5,521,080 |
| Prepaid expenses and other current assets | 2,661,683 |
| Property and equipment | 2,380,635 |
| Goodwill | 12,082,529 |
| Leasehold improvements | 1,213,273 |
| Lease right of use asset | 44,196,092 |
| Total identifiable assets acquired | 71,488,139 |
| Advance payments | 2,905,234 |
| Accounts payable and accrued expenses | 8,783,508 |
| Deferred revenue | 2,162,966 |
| Loan Payable - other | 453,043 |
| Lease liability - current portion | 7,837,406 |
| Notes payable | 2,309,884 |
| Lease liability - net of current portion | 36,383,251 |
| Cash due to seller | 902,847 |
| Share liability | 9,750,000 |
| Total identifiable liabilities acquired | $ 71,488,139 |
TRILLIUM ACQUISITION (Details Narrative) - USD ($) |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
| Business Acquisition [Line Items] | |||
| Cash | $ 3,894,536 | $ 345,982 | |
| Payment to acquire property | 76,317 | $ 61,083 | |
| Business Combination Deposits Non Refundable Amount | 3,000,000 | ||
| Deposits Amount Forfeited | 3,000,000 | ||
| Share Based Compensation Aggregate Amount | $ 600,000 | ||
| Series A Preferred Stock [Member] | |||
| Business Acquisition [Line Items] | |||
| Preferred Stock Shares Issued | 2,500,000 | ||
| Purchase Agreement [Member] | |||
| Business Acquisition [Line Items] | |||
| Cash payment | $ 902,847 | ||
| Cash | 1,200,000 | ||
| Payment to acquire property | $ 3,000,000 | ||
| Purchase Agreement [Member] | Common Stock [Member] | |||
| Business Acquisition [Line Items] | |||
| Additonal Shares Acquired during the period | $ 2,500,000 | ||
| Trillium Subsidiaries [Member] | |||
| Business Acquisition [Line Items] | |||
| Effective Date of Acquisition | Jun. 10, 2021 | ||
| Right to receive purchase price | $ 3,000,000 | ||
| Business Acquisition Description | (1) vote for each Preferred Share held of record on all matters submitted to a vote of holders of the Common Shares, including the election of directors, and all other matters as required by law. The Preferred Shares are not convertible into Common shares at the election of the holder. However, the Preferred Shares do automatically convert into Common Shares at a one-to-one ratio two years from date of issuance. In lieu of converting the Preferred Shares, the holders thereof may elect to have the Company redeem one or more Preferred Shares at the redemption price of $1.00 per share two years from the date of issuance. The Company is required to issue the Preferred Shares to Trillium within 30 days after the purchase of the Properties closes. In connection with the issuance of the Preferred Shares, the Company will file a Certificate of Designation with the Nevada Secretary of State prior to such issuance | ||
| Trillium Subsidiaries [Member] | Purchase Agreement [Member] | Common Stock [Member] | |||
| Business Acquisition [Line Items] | |||
| Right to receive purchase price | $ 5,000,000 | ||
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accounts payable | $ 6,299,400 | $ 16,298 |
| Credit Card | 37,712 | 1,050 |
| Accrued Expense | 3,513,517 | 130,832 |
| Accrued Salary | 995,265 | |
| Payroll Tax Payable | 33,189 | |
| Accounts Payable and Accrued Liabilities | $ 10,879,082 | $ 148,180 |
SCHEDULE OF NOTES PAYABLE (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Short-term Debt [Line Items] | ||||||||||||||||
| Notes payable | $ 7,041,759 | $ 2,385,010 | ||||||||||||||
| Notes Payable [Member] | ||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||
| Notes payable | 7,306,876 | 2,707,500 | ||||||||||||||
| NuView Trust Co [Member] | ||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||
| Notes payable | [1] | 300,000 | 300,000 | |||||||||||||
| Grand Trinity Plaza LLC [Member] | ||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||
| Notes payable | [2] | 346,174 | 407,500 | |||||||||||||
| Reliant [Member] | ||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||
| Notes payable | [3] | 808,310 | ||||||||||||||
| HCSG [Member] | ||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||
| Notes payable | [4] | 397,191 | ||||||||||||||
| Medline [Member] | ||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||
| Notes payable | [5] | 242,967 | ||||||||||||||
| SLR - RLOC [Member] | ||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||
| Notes payable | [6] | 5,212,234 | ||||||||||||||
| Excel Family Partners, LLLP and Banyan Pediatric Investment, Inc [Member] | ||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||
| Notes payable | [7] | $ 2,000,000 | ||||||||||||||
| ||||||||||||||||
SCHEDULE OF LEASESHOLD IMPROVEMENTS (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Property, Plant and Equipment [Line Items] | ||
| Leasehold improvements | $ 136,079 | |
| Less: amortization | $ (76,524) | (7,604) |
| Net | 2,680,115 | 128,475 |
| Leasehold Improvements [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Leasehold improvements | 3,984,470 | 2,669,047 |
| Less: amortization | (218,140) | (54,656) |
| Net | $ 3,766,330 | $ 2,614,391 |
| Leasehold Improvements [Member] | Minimum [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Amortization Period | 15 years | |
| Leasehold Improvements [Member] | Maximum [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Amortization Period | 17 years |
SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Property, Plant and Equipment [Line Items] | ||
| Furniture and fixtures | $ 987,904 | $ 73,594 |
| Computers / equipment / software | 95,952 | 50,401 |
| Motor vehicles | 12,084 | 12,084 |
| Buildings | 1,060,000 | |
| Land | 500,000 | |
| Construction in progress | 100,699 | |
| Less: depreciation | (76,524) | (7,604) |
| Net | $ 2,680,115 | $ 128,475 |
| Furniture and Fixtures [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Amortization period | 5 years | |
| Computers Equipment Software [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Amortization period | 5 years | |
| Motor Vehicles [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Amortization period | 5 years | |
| Buildings [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Amortization period | 39 years |
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Jun. 10, 2021 |
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Property, Plant and Equipment [Line Items] | |||
| Property plant and equipment | $ 136,079 | ||
| Furniture and fixtures | $ 987,904 | 73,594 | |
| Computers and equipment | 95,952 | $ 50,401 | |
| Trillium Healthcare Group, LLC [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Property plant and equipment, addition | $ 3,600,000 | ||
| Trillium Healthcare Group, LLC [Member] | Furniture and Fixtures [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Property plant and equipment, addition | 69,487 | ||
| Banyan [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Furniture and fixtures | 23,000 | ||
| Computers and equipment | $ 41,000 |
SCHEDULE OF OPERATING LEASE RIGHT OF USE ASSET AND LEASE LIABILITY (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Operating And Capital Leases | ||
| Right of Use (ROU) assets | $ 46,089,030 | $ 3,977,988 |
| Operating lease obligations: | ||
| Current | 8,311,905 | 189,397 |
| Non-Current | 38,089,042 | 3,864,321 |
| Total | $ 46,400,947 | $ 4,053,718 |
SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITY (Details) |
Sep. 30, 2021
USD ($)
|
|---|---|
| Operating And Capital Leases | |
| 2021 (three months) | $ 1,990,630 |
| 2022 | 8,545,124 |
| 2023 | 9,950,470 |
| 2024 | 8,305,778 |
| 2025 | 5,840,681 |
| After 2025 | 11,768,262 |
| Total lease obligation | $ 46,400,947 |
OPERATING AND CAPITAL LEASES (Details Narrative) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Oct. 20, 2020
USD ($)
|
Aug. 25, 2020
USD ($)
|
Jun. 09, 2020
USD ($)
|
Apr. 02, 2020
USD ($)
|
Oct. 15, 2019
USD ($)
ft²
|
Aug. 24, 2019
USD ($)
|
Aug. 31, 2021
USD ($)
|
Apr. 30, 2021
USD ($)
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2021
USD ($)
Property
|
Sep. 30, 2020
USD ($)
|
Jul. 31, 2021
USD ($)
|
Jun. 10, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
|
| Minimum annual rent | $ 46,400,947 | $ 46,400,947 | |||||||||||||
| Lease liability | 46,400,947 | 46,400,947 | $ 4,053,718 | ||||||||||||
| Lease right of use asset | $ 46,089,030 | $ 46,089,030 | $ 3,977,988 | ||||||||||||
| Operating Lease, Weighted Average Remaining Lease Term | 5 years 5 months 19 days | 5 years 5 months 19 days | |||||||||||||
| Finance Lease, Weighted Average Remaining Lease Term | 3 years 8 months 19 days | 3 years 8 months 19 days | |||||||||||||
| Operating lease, weighted average discount rate, percent | 7.80% | 7.80% | |||||||||||||
| Capital lease, weighted average discount rate, percent | 7.81% | 7.81% | |||||||||||||
| Operating Lease, Expense | $ 2,991,078 | $ 95,319 | $ 3,912,133 | $ 193,365 | |||||||||||
| Maximum [Member] | |||||||||||||||
| Lessee, Operating Lease, Remaining Lease Term | 15 years 11 months 4 days | 15 years 11 months 4 days | |||||||||||||
| Lessee, Finance Lease, Remaining Lease Term | 4 years 11 months 15 days | 4 years 11 months 15 days | |||||||||||||
| Minimum [Member] | |||||||||||||||
| Lessee, Operating Lease, Remaining Lease Term | 2 years 10 months 20 days | 2 years 10 months 20 days | |||||||||||||
| Lessee, Finance Lease, Remaining Lease Term | 1 year | 1 year | |||||||||||||
| Kidz Club - St. Pete, LLC [Member] | |||||||||||||||
| Minimum annual rent | $ 113,681 | ||||||||||||||
| Area under lease | ft² | 12,137 | ||||||||||||||
| Lease termination date | Oct. 31, 2024 | ||||||||||||||
| Lease percentage of increase in base rent | 1.50% | ||||||||||||||
| Lease right of use asset | $ 875,539 | ||||||||||||||
| Grand Trinity Plaza LLC [Member] | |||||||||||||||
| Lease term | 84 months | ||||||||||||||
| Minimum annual rent | $ 94,500 | ||||||||||||||
| Lease description | The landlord granted rent abatement until September 2020 | ||||||||||||||
| Lessee, operating lease, option to extend | The lease end date, including two successive 5-year renewals is August 31, 2037 | ||||||||||||||
| Lease renewal term | 5 years | ||||||||||||||
| Lease right of use asset | $ 1,143,743 | ||||||||||||||
| Dex Imaging [Member] | |||||||||||||||
| Lease term | 36 months | 36 months | 36 months | 60 months | |||||||||||
| Minimum annual rent | $ 5,376 | $ 4,920 | $ 4,920 | $ 1,920 | |||||||||||
| Lease description | The equipment under this lease has a fixed $1 payment buyout option | The equipment under this lease has a fixed $1 payment buyout option | The equipment under this lease has a fixed $1 payment buyout option | ||||||||||||
| Lease renewal term | 12 months | ||||||||||||||
| Lease right of use asset | $ 16,066 | $ 14,040 | $ 14,693 | $ 8,049 | |||||||||||
| Dex Imaging [Member] | Maximum [Member] | |||||||||||||||
| Lease percentage of increase in base rent | 12.00% | ||||||||||||||
| Ascentium Capital LLC [Member] | |||||||||||||||
| Lease term | 60 months | 60 months | 60 months | ||||||||||||
| Minimum annual rent | $ 13,381 | $ 24,859 | $ 15,654 | ||||||||||||
| Lease description | This lease is considered an operating lease for accounting purposes because the lease period is less than the economic life of the asset being leased | This lease is considered an operating lease for accounting purposes because the lease period is less than the economic life of the asset being leased | |||||||||||||
| Lease right of use asset | $ 55,345 | $ 102,393 | 65,772 | ||||||||||||
| Lease purchase option price | $ 12,891 | $ 23,920 | $ 15,193 | ||||||||||||
| RJ Kool [Member] | |||||||||||||||
| Lease term | 60 months | ||||||||||||||
| Minimum annual rent | $ 4,321 | ||||||||||||||
| Lease right of use asset | $ 18,476 | ||||||||||||||
| Southeastern Laundry Equipment Sales [Member] | |||||||||||||||
| Lease term | 36 months | ||||||||||||||
| Minimum annual rent | $ 5,094 | ||||||||||||||
| Lease right of use asset | $ 13,054 | ||||||||||||||
| Crete Plus Five Property LLC [Member] | |||||||||||||||
| Lease renewal term | 10 years | 10 years | |||||||||||||
| Number of Lease Agreement Properties | Property | 14 | ||||||||||||||
| Trillium Healthcare Group, LLC [Member] | |||||||||||||||
| Lease right of use asset | $ 29,906,314 | ||||||||||||||
| Capital lease description | Through the Trillium acquisition we also assumed 27 capital leases | ||||||||||||||
| CTR Partnership LP [Member] | |||||||||||||||
| Lease renewal term | 5 years | 5 years | |||||||||||||
| Lease right of use asset | $ 14,468,509 | ||||||||||||||
| Number of Lease Agreement Properties | Property | 10 | ||||||||||||||
| Banyan Pediatric Care Centers, Inc [Member] | Northeast Plaza Venture I, LLC [Member] | |||||||||||||||
| Lease term | 5 years | ||||||||||||||
| Minimum annual rent | $ 180,000 | ||||||||||||||
| Lease description | The landlord granted rent abatement for this lease until February 24, 2020 | ||||||||||||||
| Lessee, operating lease, option to extend | The lease end date, including two successive 5-year renewal options, is January 31, 2035 | ||||||||||||||
| Lease renewal term | 5 years | ||||||||||||||
| Lease liability | $ 1,899,869 | ||||||||||||||
SUMMARY OF STOCK OPTIONS ACTIVITY (Details) |
9 Months Ended |
|---|---|
|
Sep. 30, 2021
$ / shares
shares
| |
| Share-based Payment Arrangement [Abstract] | |
| Number of shares outstanding, beginning balance | |
| Number of shares granted | 2,750,208 |
| Number of shares outstanding, weighted average exercise price | $ / shares | $ 1.00 |
| Number of shares outstanding, weighted average remaining vesting period | 3 years 11 months 1 day |
| Number of shares outstanding forfeited | |
| Number of shares outstanding, exercised | |
| Number of shares outstanding, closing balance | 2,750,208 |
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | |
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2021 |
Aug. 26, 2021 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares reserved as common stock | 4,500,000 | |||
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 3 years 11 months 1 day | |||
| Stock or Unit Option Plan Expense | $ 8,100,000 | |||
| Stock based compensation | $ 171,888 | |||
| 2021 Incentive Award Plan [Member] | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares reserved as common stock | 4,500,000 | |||
| Vesting peirod | 4 years | |||
| Number of shares vested | 57,296 | |||
| Share options outstanding | 2,692,912 | 2,692,912 | 2,692,912 | |
| 2021 Incentive Award Plan [Member] | 10 Employees [Member] | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Shares reserved as common stock | 2,750,208 | 2,750,208 | 2,750,208 |
SUBSEQUENT EVENTS (Details Narrative) - USD ($) |
9 Months Ended | |||||
|---|---|---|---|---|---|---|
Oct. 18, 2021 |
Oct. 13, 2021 |
Oct. 08, 2021 |
Mar. 23, 2021 |
Sep. 30, 2021 |
Nov. 06, 2021 |
|
| Subsequent Event [Line Items] | ||||||
| Debt rate | 12.00% | |||||
| Maturity date | Nov. 06, 2021 | |||||
| Subsequent Event [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Deposits | $ 30,000 | |||||
| Debt principal amount | $ 6,600,000 | |||||
| Debt rate | 25.00% | |||||
| Payments to Acquire Productive Assets | $ 590,000 | |||||
| Subsequent Event [Member] | Grace Care Centers [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Payment to acquire business | $ 7,750,000 | |||||
| Gemino Healthcare Finance, LLC [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Line of credit facility | $ 10,000,000 | |||||
| Credit facility termination date | May 09, 2022 | |||||
| Debt description | (i) the annual rate reported as the London Interbank Offer Rate applicable to ninety (90) day deposits of United States Dollars as reported in the Money Rates Section of The Wall Street Journal on the date of determination; and (ii) 2.00%, plus 4.95% (together, the “Interest Rate”). The Interest Rate on all amounts outstanding under the credit facility is adjusted daily based on any changes in the amount under subsection (i) above and subsection (ii) above, as applicable. There are also various fees paid in connection with the credit facility, including: (1) a monthly collateral monitoring fee of 1.00% of the average borrowing base during the prior month; (2) a monthly unused line fee equal to 0.75% per annum of the unused portion of the maximum amount of credit facility; (3) a minimum use fee if the outstanding revolving loan balance is less than $2 million equal to the Interest Rate times the minimum balance of $2 million; and (4) a termination fee of $100,000 if the credit facility is terminated by A4L prior to May 9, 2022. | |||||
| Termination fees | $ 100,000,000,000 | |||||
| Grace Care Centers [Member] | Subsequent Event [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Debt description | Outstanding principal accrues interest at a rate per annum equal to the sum of the Prime Rate plus 4.125%, with a minimum interest rate per annum of not less than 7.875%. Monthly interest only payments commence on December 15, 2021, and continue each month until the maturity date of the Loan on April 18, 2023, at which time any outstanding principal and accrued and unpaid interest is due and payable. If any principal, interest or any other sums due under the Loan (other than the payment of principal due on the maturity date), is not paid on or prior to the due date, A4L is required to pay Lender upon demand an amount equal to 5% of such unpaid sum. In connection with any repayment or prepayment of principal, a non-refundable fee equal to 0.5% of the principal amount of such repayment or prepayment is due | |||||
| Non refundable fee description | A4L has the right to extend the initial maturity date to October 15, 2023 upon prior written notice to Lender and the payment to Lender of a non-refundable fee equal to 1% of the outstanding principal balance no later than 30 days prior to the maturity date. A4L may extend the maturity date further, to April 15, 2024, upon prior written notice to Lender and the payment to Lender of a non-refundable fee equal to 1% of the outstanding principal balance prior to the extended maturity date. | |||||
| Purchase Agreement [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Acquisition transaction cost | 2,300,000 | |||||
| Deposits | 110,000 | |||||
| Payment to seller | 35,000 | |||||
| Payment to seller non refundable | 20,000 | |||||
| Purchase Agreement [Member] | Seller [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Deposits | $ 15,000 | |||||
| Credit Agreement [Member] | Second Amendment [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Debt description | (1) adding Assisted 4 Living, Inc as a guarantor to the credit facility and releasing Trillium and it’s four principal individuals from their obligations under the credit facility; (2) increasing the term of the credit facility so that it now expires on September 29, 2023; (3) revising the termination fee to reflect the increase in the term of the credit facility; (4) modifying the fixed percentage used to calculate the Interest Rate from 5.95% to a range of 4.50% to 3.90%, depending on the outstanding loan balance during the preceding three months, with the rate decreasing as the amount borrowed increases; (5) reducing the collateral monitoring fee from 1.50% to 1.00%; (6) reducing the unused line fee from 0.75% to 0.50%; (7) increasing the maximum amount of the credit facility from $10 million to $25 million; and (8) revising terms regarding financial statements and collateral reports, limitations on certain corporate guarantors and curing defaults | |||||
| Credit Agreement [Member] | Trillium Group [Member] | First Amendment [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Debt description | (1) releasing seven entities from the Trillium Group of their obligations under the credit facility in connection with Trillium’s sale of those entities; (2) increasing to 5.95% the rate used to calculate the Interest Rate; (3) increasing the monthly collateral monitoring fee to 1.50%; (4) lowering the revolving commitment amount from $10 million to $7 million; and (5) waiving borrower’s failure to comply with the fixed charge coverage ratio for the fiscal quarters ending September 30, 2019, December 31, 2019, and March 31, 2020 | |||||
| Guaranty Agreement [Member] | Subsequent Event [Member] | ||||||
| Subsequent Event [Line Items] | ||||||
| Debt principal amount | $ 1,250,000 | |||||
| Debt rate | 10.00% | |||||
| Monthly payments | $ 10,416.67 | |||||
| Maturity date | Oct. 08, 2022 |