UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2018
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File No. 000-54917
FUTURE HEALTHCARE OF AMERICA
(Exact name of registrant as specified in its charter)
WYOMING | 45-5547692 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
5001 Baum Blvd, Suite 770
Pittsburgh, PA 15213
(Address of Principal Executive Offices)
Registrant's Telephone Number: (561) 693-1422
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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. (1) Yes [X ] No[ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X ][X] No [ ]
Indicate by check mark whether the Registrantregistrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitionthe definitions of “large‘‘large accelerated filer,”filer”, “accelerated filer,”’’ “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] | Accelerated filer [ ] | |||||
Non-accelerated filer [ ] |
| |||||
Smaller reporting company [X] | ||||||
Emerging Growth company [X] | ||||||
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. [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of November 8, 2017,May 2, 2018, there were 11,265,631 shares of common stock, par value $0.001, of the registrant issued and outstanding.
1
PART I - FINANCIAL INFORMATION
The Unaudited Consolidated Financial Statements of Future Healthcare of America, a Wyoming corporation (the “Company,” “FHA,” “we,” “our,” “us” and words of similar import) were prepared by management and commence on the following page, together with related notes. In the opinion of management, the Unaudited Consolidated Financial Statements fairly present the financial condition of the Company.
Future Healthcare of America
Index to Unaudited Financial Statements
| Page |
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Unaudited Consolidated Balance Sheets | 3 |
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Unaudited Consolidated Statements of Operations | 4 |
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Unaudited Consolidated Statements of Cash Flows | 5 |
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Notes to Unaudited Consolidated Financial Statements | 6 |
2
FUTURE HEALTHCARE OF AMERICA
UNAUDITED CONSOLIDATED BALANCE SHEETS
| September 30, 2017 |
| December 31, 2016 |
| March 31, 2018 |
| December 31, 2017 |
|
CURRENT ASSETS: |
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Cash | $ 113,586 |
| $ 206,352 |
| $ 27,117 |
| $ 158,072 |
|
Accounts receivable | 504,395 |
| 473,388 |
| 489,012 |
| 400,584 |
|
Prepaid expenses | 43,540 |
| 60,799 |
| 67,941 |
| 31,390 |
|
Total current assets | 661,521 |
| 740,539 |
| 584,070 |
| 590,046 |
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Deferred tax asset, net | - |
| - |
| - |
| - |
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Total assets | $ 661,521 |
| $ 740,539 |
| $ 584,070 |
| $ 590,046 |
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CURRENT LIABILITIES: |
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Accounts payable | 117,956 |
| 70,658 |
| 157,737 |
| 103,787 |
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Accrued expenses | 466,383 |
| 350,715 |
| 566,527 |
| 548,052 |
|
Derivative liability | 87,553 |
| 53,488 |
| 37,568 |
| 43,726 |
|
Deferred revenue | 2,593 |
| 3,470 |
| 11,117 |
| 12,832 |
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Note Payable | 6,822 |
| - |
| ||||
Notes payable | 41,118 |
| - |
| ||||
CONVERTIBLE SECURED DEBENTURE PAYABLE, net of discount of $0 and $0, respectively | 1,010,000 |
| 1,010,000 |
| 1,010,000 |
| 1,010,000 |
|
Total current liabilities | 1,691,307 |
| 1,488,331 |
| 1,824,067 |
| 1,718,397 |
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Total liabilities | 1,691,307 |
| 1,488,331 |
| 1,824,067 |
| 1,718,397 |
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STOCKHOLDERS' (DEFICIT) |
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STOCKHOLDERS' DEFICIT |
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| ||||
Common stock | 11,266 |
| 11,266 |
| 11,266 |
| 11,266 |
|
Additional paid-in capital | 1,313,160 |
| 1,313,160 |
| 1,313,160 |
| 1,313,160 |
|
Accumulated (deficit) | (2,354,212) |
| (2,072,218) |
| ||||
Total stockholders' (deficit) | (1,029,786) |
| (747,792) |
| ||||
Accumulated deficit | (2,564,423) |
| (2,452,777) |
| ||||
Total stockholders' deficit | (1,239,997) |
| (1,128,351) |
| ||||
Total liabilities and stockholders' deficit | $ 661,521 |
| $ 740,539 |
| $ 584,070 |
| $ 590,046 |
|
Future Healthcare of America and Subsidiaries Balance Sheet (Parenthetical) | Future Healthcare of America and Subsidiaries Balance Sheet (Parenthetical) |
|
|
| Future Healthcare of America and Subsidiaries Balance Sheet (Parenthetical) |
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| ||
Statement of Financial Position |
| September 30, 2017 |
|
| December 31, 2016 |
| March 31, 2018 |
|
| December 31, 2017 |
Allowance for doubtful accounts |
| 20,200 |
|
| 20,200 |
| 20,200 |
|
| 20,200 |
Common stock authorized |
| 200,000,000 |
|
| 200,000,000 |
| 200,000,000 |
|
| 200,000,000 |
Common stock par value |
| 0.001 |
|
| 0.001 |
| 0.001 |
|
| 0.001 |
Common stock outstanding |
| 11,265,631 |
|
| 11,265,631 |
| 11,265,631 |
|
| 11,265,631 |
The accompanying notes are an integral part of these financial statements.
3
FUTURE HEALTHCARE OF AMERICA
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
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| For the Three Months Ended |
| For the Nine Months Ended |
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| Three Months Ended |
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| September 30, 2017 |
| September 30, 2016 |
| September 30, 2017 |
| September 30, 2016 |
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| March 31, 2018 |
| March 31, 2017 |
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REVENUE |
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Total Revenue | $ | 839,585 | $ | 856,039 | $ | 2,790,436 | $ | 2,925,596 |
| $ | 772,258 | $ | 995,428 |
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COST OF SERVICES |
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Total Cost of Services |
| 608,299 |
| 678,021 |
| 2,019,050 |
| 2,227,149 |
|
| 541,459 |
| 701,485 |
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Gross Profit |
| 231,286 |
| 178,018 |
| 771,386 |
| 698,447 |
|
| 230,799 |
| 293,943 |
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OPERATING EXPENSES |
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Selling expenses |
| 7,365 |
| 7,870 |
| 27,652 |
| 28,450 |
|
| 10,543 |
| 17,084 |
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General and administrative |
| 104,314 |
| 97,214 |
| 319,878 |
| 298,021 |
|
| 109,916 |
| 125,929 |
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Salaries, wages and related expenses |
| 161,957 |
| 176,297 |
| 509,693 |
| 523,392 |
|
| 159,805 |
| 169,841 |
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Professional and consulting fees |
| 17,969 |
| 23,587 |
| 85,952 |
| 103,447 |
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Consulting fees |
| 42,758 |
| 47,299 |
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Total Operating Expenses |
| 291,605 |
| 304,968 |
| 943,175 |
| 953,310 |
|
| 323,022 |
| 360,153 |
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LOSS FROM OPERATIONS |
| (60,319) |
| (126,950) |
| (171,789) |
| (254,863) |
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| (92,223) |
| (66,210) |
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OTHER INCOME (EXPENSE): |
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Interest income |
| 142 |
| 77 |
| 350 |
| 279 |
|
| 81 |
| 81 |
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Gain/(loss) on derivative |
| (79,124) |
| 63,460 |
| (34,065) |
| 209,439 |
| ||||||
Interest expense |
| (25,492) |
| (25,250) |
| (76,486) |
| (75,750) |
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| (25,661) |
| (25,475) |
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Other income (expense) |
| (5) |
| - |
| (4) |
| - |
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Total Other Income (Expense) |
| (104,479) |
| 38,287 |
| (110,205) |
| 133,968 |
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INCOME (LOSS) BEFORE INCOME TAXES |
| (164,798) |
| (88,663) |
| (281,994) |
| (120,895) |
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Gain on Derivative |
| 6,158 |
| 20,667 |
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Total Other Loss |
| (19,422) |
| (4,727) |
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LOSS BEFORE INCOME TAXES |
| (111,645) |
| (70,937) |
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CURRENT INCOME TAX EXPENSE (BENEFIT) |
| - |
| - |
| - |
| - |
|
| - |
| - |
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DEFERRED INCOME TAX EXPENSE (BENEFIT) |
| - |
| - |
| - |
| - |
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| - |
| - |
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NET LOSS AVAILABLE TO COMMON SHAREHOLDERS | $ | (164,798) | $ | (88,663) | $ | (281,994) | $ | (120,895) |
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NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | (111,645) | $ | (70,937) |
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BASIC INCOME PER COMMON SHARE | $ | (0.01) | $ | (0.008) | $ | (0.03) | $ | (0.01) |
| ||||||
BASIC LOSS PER COMMON SHARE |
| (0.01) |
| (0.006) |
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BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
| 11,265,631 |
| 11,265,631 |
| 11,265,631 |
| 11,265,631 |
|
| 11,265,631 |
| 11,265,631 |
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DILUTED INCOME PER COMMON SHARE - | $ | (0.01) | $ | (0.008) | $ | (0.03) | $ | (0.01) |
| ||||||
DILUTED LOSS PER COMMON SHARE |
| (0.01) |
| (0.006) |
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DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
| 11,265,631 |
| 11,265,631 |
| 11,265,631 |
| 11,265,631 |
|
| 11,265,631 |
| 11,265,631 |
|
|
The accompanying notes are an integral part of these financial statements.
4
FUTURE HEALTHCARE OF AMERICA
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
| March 31, 2018 |
| March 31, 2017 |
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Cash Flows from Operating Activities |
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Net loss | $ | (111,645) | $ | (70,937) |
Adjustments to reconcile net loss to net cash used by operating activities: |
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Interest to be paid with stock |
| 25,250 |
| 25,250 |
Depreciation and amortization expense |
| - |
| - |
Gain on derivative instruments |
| (6,158) |
| (20,667) |
Change in assets and liabilities: |
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Accounts receivable |
| (88,428) |
| (53,759) |
Prepaid expenses |
| (36,551) |
| (9,689) |
Accounts payable |
| 53,950 |
| 45,366 |
Accrued expense |
| (6,776) |
| (10,231) |
Deferred revenue |
| (1,715) |
| 5,003 |
Net Cash Used by Operating Activities |
| (172,073) |
| (89,664) |
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Cash Flows from Investing Activities: |
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Net Cash Provided by Investing Activities |
| - |
| - |
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Cash Flows from Financing Activities: |
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Proceed from financing insurances |
| 49,151 |
| 22,216 |
Re-payment of insurance financing |
| (8,033) |
| (2,172) |
Net Cash Provided by Financing Activities |
| 41,118 |
| 20,044 |
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Net Decrease in Cash |
| (130,955) |
| (69,620) |
Cash at Beginning of Period |
| 158,072 |
| 206,352 |
Cash at End of Period | $ | 27,117 | $ | 136,732 |
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Supplemental Disclosures of Cash Flow Information |
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Cash paid during the periods for: |
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Interest |
| 411 |
| 225 |
Income taxes |
| - |
| - |
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| Nine Months Ended | ||
|
| September 30, | ||
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| 2017 |
| 2016 |
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Cash Flows from Operating Activities |
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Net loss | $ | (281,994) | $ | (120,895) |
Adjustments to reconcile net income to net cash used by operating activities: |
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Interest to be paid with stock |
| 75,750 |
| 75,750 |
Depreciation and amortization expense |
| - |
| 36 |
Loss (gain) on derivative instruments |
| 34,065 |
| (209,439) |
Change in assets and liabilities: |
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Accounts receivable |
| (31,007) |
| 126,073 |
Prepaid expenses |
| 17,259 |
| 8,214 |
Accounts payable |
| 47,297 |
| (3,974) |
Accrued expense |
| 39,919 |
| (34,707) |
Deferred revenue |
| (877) |
| 28,036 |
Net Cash Provided/(Used) by Operating Activities |
| (99,588) |
| (130,906) |
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Cash Flows from Investing Activities: |
| - |
| - |
Net Cash Provided/ (Used) by Investing Activities |
| - |
| - |
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Cash Flows from Financing Activities: |
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Proceed from insurance financing |
| 22,216 |
| - |
Re-payment of insurance financing |
| (15,394) |
| - |
Net Cash Provided/ (Used) by Financing Activities |
| 6,822 |
| - |
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Net Increase (Decrease) in Cash |
| (92,766) |
| (130,906) |
Cash at Beginning of Period |
| 206,352 |
| 481,115 |
Cash at End of Period | $ | 113,586 | $ | 350,209 |
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Supplemental Disclosures of Cash Flow Information |
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Cash paid during the periods for: |
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Interest |
| - |
| - |
Income taxes |
| - |
| - |
Supplemental Disclosures of Non-Cash Investing and Financing
Activities:
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| For the Nine Months Ended |
| For the Three Months Ended | ||||
|
| September 30, |
| March 31, | ||||
NON-CASH EXPENDITURES |
| 2017 |
| 2016 |
| 2018 |
| 2017 |
Depreciation expense |
| - |
| 36 | ||||
Interest expense to be paid with stock |
| 75,750 |
| 70,750 |
| 25,250 |
| 25,250 |
Change in FMV of derivative liability |
| 79,124 |
| (209,439) |
| (6,158) |
| (20,667) |
Total non-cash expenditures |
| 154,874 |
| (138,653) |
| (19,092) |
| (4,583) |
The accompanying notes are an integral part of these financial statements.
5
FUTURE HEALTHCARE OF AMERICA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization – On June 22, 2012, FAB Universal (FAB) formed Future Healthcare of America (“FHA”), a wholly owned subsidiary. On October 1, 2012, FHA operations were spun-off in a 1 for 1 dividend to the shareholders of record of FAB on September 5, 2012, the record date. On November 14, 2014, FHA organized Future Healthcare Services Corp. (“FHS”), and transferred all the shares of Interim to FHS. Interim Healthcare of Wyoming, Inc. (“Interim”), a Wyoming corporation, a wholly owned subsidiary of FHS, was organized on September 30, 1991. Interim operates primarily in the home healthcare and healthcare staffing services in Wyoming and Montana. On April 3, 2007, Interim purchased the operations of Professional Personnel, Inc., d.b.a., Professional Nursing Personnel Pool.
Consolidation - The financial statements presented reflect the accounts of FHA, FHS and Interim. All inter-company transactions have been eliminated in consolidation.
Accounting Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Management made assumptions and estimates for determining reserve for accounts receivable, obsolete inventory and in determining the impairment of definite life intangible assets and goodwill. Actual results could differ from those estimated by management.
Cash and Cash Equivalents – The Company considers all highly liquid investments with an original maturity date of three months or less when purchased to be cash equivalents. At September 30, 2017,March 31, 2018, the Company had no cash balances in excess of federally insured limits.
Accounts Receivable - Accounts receivable consist of trade receivables arising in the normal course of business. At September 30,March 31, 2018 and 2017, and 2016, the Company has an allowance for doubtful accounts of $20,200, which reflects the Company's best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. During the ninethree months ended September 30,March 31, 2018 and 2017, and 2016, the Company adjusted the allowance for bad debt by $0.
Depreciation - Depreciation of property and equipment is provided on the straight-line method over the estimated useful lives.
Income /(Loss) Per Share - The Company computes income (loss) per share in accordance with Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260 Earnings Per Share, which requires the Company to present basic earnings per share and diluted earnings per share when the effect is dilutive (see Note 12)7).
Leases - The Company accounts for leases in accordance with Financial FASB ASC Topic 840, (formerly Statement of Financial Accounting Standards SFAS No. 13 "Accounting for Leases"). Leases that meet one or more of the capital lease criteria of standard are recorded as a capital lease, all other leases are operating leases.
Income Taxes - The Company accounts for income taxes in accordance with FASB ASC Topic 740 Accounting for Income Taxes. This topic requires an asset and liability approach for accounting for income taxes (see Note 10)8).
Advertising Costs - Advertising costs are expensed as incurred and amounted to $27,653$10,119 and $26,427$11,170 for the periods ending September 30,March 31, 2018 and 2017, and 2016, respectively.
6
FUTURE HEALTHCARE OF AMERICA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Fair Value of Financial Instruments – The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with FASB ASC Topic 820. The authoritative guidance, which, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
•
Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities;
•
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
•
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, accounts receivable, prepaid expenses, and accounts payable and accrued expenses approximates their recorded values due to their short-term maturities.
Revenue Recognition - Revenue is generatedOn January 1, 2018, the Company adopted Accounting Standards Codification Topic 606, “Revenue from various payer’s including Medicare, Medicaid, Insurance Companies,Contracts with Customers,” which includes clarifying ASUs issued in 2015, 2016 and various other entities and individuals. In accordance with FASB ASC Topic 605, 2017 (“new revenue standard”). The new revenue standard did not have a material impact on revenue recognition. The Company does not expect the impact of the adoption of the new standard to be material to net income on an ongoing basis.
Revenue is recognized when persuasive evidenceperformance obligations with the customer are satisfied which occurs when services are provided to the customer. Revenue is measured as the amount of an arrangement exists,consideration expected to be received in exchange for providing services. The Company's sales contain performance obligations satisfied at a point in time when the services have been provided,are provided.
Generally, the price of servicestime between when revenue is fixed or determinable,recognized and collectionwhen payment is reasonably assured. Paymentsdue is not significant. Pre-payments received prior to services being providedsatisfaction of performance obligations through the Recovery Audit Program or RAP payments from Medicare are recorded as a liability (deferred revenue) until such services are performed. Revenue is recorded as netdeferred revenue where contractual adjustmentsliability. Given the insignificant days between revenue recognition and discounts are deducted from Gross Revenue to determine net revenue.receipt of payment, financing components do not exist between the Company and its customers.
The following table disaggregates revenue by category:
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| For the three months ended March 31, 2018 |
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| Medicare |
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| Private Pay |
| Medicaid |
| Staffing |
| Ins. |
| Total | |||||||||||||||
Wyoming | $ | 183,872 |
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| $ | 116,277 |
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| $ | 46,200 |
|
| $ | - |
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| $ | 14,297 |
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| $ | 360,646 |
| |||
Montana | - |
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| 68,814 |
|
| 40,829 |
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| 275,407 |
|
| 26,562 |
|
| 410,612 |
| |||||||||
Total Revenues | $ | 183,872 |
|
|
| $ | 185,091 |
|
| $ | 87,029 |
|
| $ | 275,407 |
|
| $ | 40,859 |
|
| $ | 772,258 |
| |||
FUTURE HEALTHCARE OF AMERICA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Derivative Financial Instruments – The Company is required to recognize all of its derivative instruments as either assets or liabilities in the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated, and is effective, as a hedge and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, or cash flow hedge. Gains and losses related to a hedge are either recognized in income immediately to offset the gain or loss on the hedged item or are deferred and reported as a component of Accumulated Other Comprehensive Income in the Stockholders' Equity and subsequently recognized in Net income when the hedged item affects Net income. The change in fair value of the ineffective portion of a financial instrument is recognized in Net income immediately. The gain or loss related to financial instruments that are not designated as hedges are recognized immediately in Net income.
Recently Enacted Accounting Standards - In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. On July 9, 2015, the FASB agreed to delay the effective date by one year; accordingly, the new standard is effective for us beginning in the first quarter of 2018 and we expect to adopt it at that time. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. We have not yet selected a transition method, nor have we determined the impact of the new standard on our consolidated financial statements.
7
FUTURE HEALTHCARE OF AMERICA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
In February 2016, the FASB issued changes to the accounting for leases that primarily affect presentation and disclosure requirements. The new standard will require the recognition of a right to use asset and underlying lease liability for operating leases with an initial life in excess of one year. This standard is effective for us beginning in the first quarter of 2019. We have not yet determined the impact of the new standard on our consolidated financial statements.
Other recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
NOTE 2 - GOING CONCERN
The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has incurred losses, an accumulated deficit and has a short-term note payable in excess of anticipated cash. These factors raise substantial doubt about the ability of the Company to continue as a going concern. There is no assurance that the Company will be successful in achieving profitable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
NOTE 3 - PROPERTY & EQUIPMENT
The following is a summary of property and equipment at:
Life September 30, 2017 December 31, 2016 Furniture, fixtures and equipment 2-10 yrs $ 36,384 $ 36,384 36,384 36,384 Less: Accumulated depreciation (36,384) (36,384) Property & equipment, net $ - $ -
Life March 31, 2018 December 31, 2017 Furniture, fixtures and equipment 2-10 yrs $ 36,384 $ 36,384 36,384 36,384 Less: Accumulated depreciation (36,384) (36,384) Property & equipment, net $ - $ -
Depreciation expense for the periods ended September 30,March 31, 2018 and 2017 and 2016 was $0 and $36,$0, respectively.
NOTE 4 – VARIABLE RATE SENIOR SECUREDNOTES PAYABLE AND CONVERTIBLE DEBENTURE
On September 9, 2013, the Company closed a Subscription Agreement by which one institutional investor purchased a) a Variable Rate Senior Secured Convertible Note payable having a total principal amount of $1,010,000, convertible into common shares of the Company at $0.25 per share and maturing March 9, 2015; b) Warrants to purchase a total of 3,030,000 shares of common stock, at $0.50 per share, exercisable for four years, and c) a greenshoe to purchase a total of 2,000,000 shares of common stock at $0.25 per share, exercisable for one year from the closing date. On September 9, 2014 the greenshoe expired unexercised. On March 9, 2015, the Note matured.
8
FUTURE HEALTHCARE OF AMERICA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 – NOTES PAYABLE AND CONVERTIBLE DEBENTURE - Continued
As the note has not been paid nor extended, the outstanding principal, plus accrued but unpaid interest, liquidated damages and other amounts, became due and payable at the election of the holder. The holder has not made such an election. Effective December 14, 2017, the conversion price was reduced from $0.25 per share to $0.10 per share.
The fair value of the beneficial conversion feature of the warrants and greenshoe totaled $952,254 and was recorded as a derivative liability. The Company recorded a discount on the note for beneficial conversion feature of the note. The $952,254 discount on the beneficial conversion feature was amortized as interest expense over the term of the note. As of September 30, 2017,March 31, 2018, the Company has amortized $952,254 of the discount, with no remaining unamortized discount being offset against the outstanding balance of the note in the accompanying balance sheet. As of September 30, 2017,March 31, 2018, the Company had accrued interest payable on the debenture of $309,552.
8
FUTURE HEALTHCARE OF AMERICA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – NOTE PAYABLE$360,052.
On January 20, 2017,2, 2018, the Company financed the premium for directors’ and officers’ insurance. The Company borrowed $22,216$26,921 at 6.00% interest, and the note will be repaid in 10 equal installments of $2,883.$3,079. As of September 30, 2017,March 31, 2018, the balance of the note payable was $6,822.$21,059.
On January 25, 2018, the Company financed the premium for liability insurance. The Company borrowed $22,230 at 6.00% interest, and the note will be repaid in 10 equal installments of $2,287. As of March 31, 2018, the balance of the note payable was $20,059.
NOTE 65 – DERIVATIVE FINANCIAL INSTRUMENTS
The Company entered into a variable rate senior secured convertible debenture, wherein the Company agreed to register the underlying share, warrants and greenshoe. The fair value of the beneficial conversion feature of the warrants and greenshoe was estimated using the Black Scholes pricing model and totaled $952,254 upon issuance and was recorded as a derivative liability. As of March 9, 2015, and March 31, 2015, the fair value of the unregistered conversion feature of the Note Payable based on the following assumptions (Life 0, risk-free interest rate 0, volatility of 0, and stock price of $.15 and conversion price of $.25) was $0, resulting in the recording of a gain totaling $311,244. As of September 30, 2017,2018, the fair value of the warrants based on the following assumptions (Life .94.44 years, risk free interest rate 1.24%1.93%, volatility of 200.32%286.4%, stock price of $.08$.05 and exercise price of $.50) was $87,553,$37,568, and a lossgain totaling $79,124$6,158 was recorded for the ninethree months ended September 30, 2017.March 31, 2018.
NOTE 76 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The Fair Value Measurement and Disclosure Topic of FASB and ASC:
·
Defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, and establishes a framework for measuring fair value;
·
Establishes a three-level hierarchy for fair value measurement based upon the transparency of inputs to the valuation as of the measurement date;
·
Expands disclosures about financial instruments measured at fair value.
Financial assets and financial liabilities record on the Balance sheet at fair value are categorized based on the reliability of inputs to the valuation techniques as follows:
Level 1: Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access.
Level 2: Financial assets and financial liabilities whose values are based on the following:
Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical or similar assets or liabilities in non-active markets or Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the assets or liability
Level 3: Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs may reflect our estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities.
9
FUTURE HEALTHCARE OF AMERICA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 76 – FAIR VALUE OF FINANCIAL INSTRUMENTS - Continued
Level 3: Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs may reflect our estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities.
The following tables summarize Level 1, 2 and 3 financial assets and financial (liabilities) by their classification in the Consolidated Balance Sheet:
As of |
| Level 1 |
| Level 2 |
| Level 3 |
Derivative liability – Conversion feature of warrants |
| - |
| - |
|
|
| ||||||
|
|
|
|
NOTE 87 - CAPITAL STOCK
Common Stock - The Company has authorized 200,000,000 shares of common stock, $0.001 par value. As of September 30, 2017,March 31, 2018, 11,265,631 shares were issued and outstanding.
NOTE 98 – WARRANTS AND GREENSHOE
A summary of the status of the warrants granted is presented below for the sixthree months ended:
| September 30, 2017 |
| December 31, 2016 | March 31, 2018 |
| December 31, 2017 | ||||||||
| Shares |
| Weighted Average Exercise Price |
| Shares |
| Weighted Average Exercise Price | Shares |
| Weighted Average Exercise Price |
| Shares |
| Weighted Average Exercise Price |
Outstanding at beginning of period | 3,030,000 | $ | 0.50 |
| 3,030,000 | $ | 0.50 | 3,030,000 | $ | 0.50 |
| 3,030,000 | $ | 0.50 |
Granted | - |
| - |
| - |
| - | - |
| - |
| - |
| - |
Exercised | - |
| - |
| - |
| - | - |
| - |
| - |
| - |
Forfeited | - |
| - |
| - |
| - | - |
| - |
| - |
| - |
Expired | - |
| - |
| - |
| - | - |
| - |
| - |
| - |
Outstanding at end of period | 3,030,000 | $ | 0.50 |
| 3,030,000 | $ | 0.50 | 3,030,000 | $ | 0.50 |
| 3,030,000 | $ | 0.50 |
On September 9, 2013, the Company closed a Subscription Agreement wherein the Company granted warrants to purchase a total of 3,030,000 shares of common stock, at $0.50 per share, exercisable for four years. On September 9, 2017 thesethe expiration date of the warrants werewas extended one year to September 9, 2018.
NOTE 109 - INCOME TAXES
The Company accounts for income taxes in accordance with FASB ASC Topic 740, Accounting for Income Taxes which requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carryforwards.
Because of the uncertainty surrounding the realization of the loss carryforwards and significant changes in the ownership of the Company, a valuation allowance has been established equal to the tax effect of the loss carryforwards and, therefore, no deferred tax asset has been recognized for the loss carryforwards. The net deferred tax assets are approximately $1,400,000$1,000,000 as of September 30, 2017,March 31, 2018, with an offsetting valuation allowance of the same amount. The changes in the valuation allowance for the nine months ended September 30, 2017 was approximately $53,000.
10
FUTURE HEALTHCARE OF AMERICA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1110 – LEASES
Operating Lease - The Company leases office space in Casper, Wyoming for $4,892 a month through June 2018. The Company further leases space in Billings, Montana for $1,525 a month through JuneMay 2020.
The future minimum lease payments for non-cancelable operating leases having remaining terms in excess of one year as of September 30, 2017March 31, 2018 are as follows:
Twelve months ending September 30, |
|
| Lease Payments | ||||
2018 |
|
| 62,328 | ||||
Twelve months ending March 31 |
|
| Lease Payments |
| |||
2019 |
|
| 18,300 |
|
| 32,976 |
|
2020 |
|
| 12,200 |
|
| 18,300 |
|
2021 |
|
| - |
|
| 3,050 |
|
2022 |
|
| - |
| |||
Thereafter |
|
| - |
|
| - |
|
Total Minimum Lease Payments |
| $ | 92,828 |
| $ | 54,326 |
|
Lease expense charged to operations was $57,578$19,251 and $57,438$19,146 for the ninethree months ended September 30,March 31, 2018 and 2017, and 2016, respectively.
NOTE 1211 – INCOME/ (LOSS) PER SHARE
The following data shows the amounts used in computing income (loss) per share and the weighted average number of shares of common stock outstanding for the periods presented for the periods ended:
|
| For the Three Months |
| For the Nine Months | ||||
|
| September 30 |
| September 30 | ||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 |
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations available to common stockholders (numerator) | $ | (164,798) | $ | (88,663) | $ | (281,994) | $ | (120,895) |
Income (loss) available to common stockholders (numerator) |
| (164,798) |
| (88,663) |
| (281,994) |
| (120,895) |
Weighted average number of common shares outstanding during the period used in loss per share (denominator) |
| 11,265,631 |
| 11,265,631 |
| 11,265,631 |
| 11,265,631 |
|
| For the Three Months | ||
|
| March 31 | ||
|
| 2018 |
| 2017 |
|
|
|
|
|
Loss from continuing operations available to common stockholders (numerator) | $ | (111,645) | $ | (70,937) |
Loss available to common stockholders (numerator) |
| (111,645) |
| (70,937) |
Weighted average number of common shares outstanding during the period used in loss per share (denominator) |
| 11,265,631 |
| 11,265,631 |
At September 30,March 31, 2018 and 2017, and 2016, the Company had 3,030,000 and 3,030,000, respectively, warrants to purchase common stock of the Company at $0.50 per share, and a convertible debenture payable wherein the holder could convert the note and underlying accrued interest into a minimum of 7,620,64814,802,870 and 6,217,870,6,919,259, respectively shares of common stock which were not included in the loss per share computation because their effect would be anti-dilutive.
NOTE 12 – COMMITEMENTS AND CONTINGENCIES
On June 17, 2016 and June 30, 2016 two complaints were filed with the Federal Equal Employment Opportunity Commission (EEOC) and the Wyoming State Department of Labor against the Company, alleging discrimination on the basis of sex and disability. The complaints do not seek any specific monetary relief. The complaints are being mediated by the Wyoming State Department of Labor. The Wyoming State Department of Labor issued a notice of dismissal for one of the complaints. After reviewing the facts and circumstances, the Company believes the claims made are weak, at best, and the Company has retained counsel and intends to continue a vigorous defense. At this time, management cannot reasonably estimate the cost to defend or the outcome of the complaints, and we do not expect it will have a material financial impact on the Company.
FUTURE HEALTHCARE OF AMERICA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 – COMMITEMENTS AND CONTINGENCIES - Continued
On February 9, 2018, a former employee filed a lawsuit against Interim Healthcare of Wyoming, claiming wrongful termination.
On March 6, 2018, a complaint was filed with the Wyoming Court of Natrona county, alleging violation of the Wyoming Fair Employment Practices Act of 1965 for discrimination based upon sex, disability and retaliation. The complaint does not seek any specific monetary relief. At this time, management cannot reasonably estimate the cost to defend or the outcome of the complaints.
NOTE 13 - SUBSEQUENT EVENTS
Subsequent events have been evaluated through the date and time of this report.
During April, 2018, an officer of the Company advanced $13,000 to the company for operating purposes.
11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Safe Harbor Statement.
Statements made in this Form 10-Q which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of the Company, including, without limitation, (i) our ability to gain a larger share of the home healthcare industry, our ability to continue to develop services acceptable to our industry, our ability to retain our business relationships, and our ability to raise capital and the growth of the home healthcare industry, and (ii) statements preceded by, followed by or that include the words "may", "would", "could", "should", "expects", "projects", "anticipates", "believes", "estimates", "plans", "intends", "targets", "tend" or similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond the Company's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, in addition to those contained in the Company's reports on file with the Securities and Exchange Commission: general economic or industry conditions, nationally and/or in the communities in which the Company conducts business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, changes in the home healthcare industry, the development of services that may be superior to the services offered by the Company, competition, changes in the quality or composition of the Company's services, our ability to develop new services, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting the Company’s operations, services and prices.
Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. The Company does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Business Highlights
Based in Casper, Wyoming, and Billings, Montana, FHA’s subsidiary, Interim Healthcare of Wyoming, Inc., a Wyoming corporation (“Interim”), is an independent franchisee of Interim HealthCare that has been serving its community for over 20 years and is providing a wide range of visiting nurse services to the elderly, wounded and sick. It is one of the 300 independent home health agencies that comprise the Interim HealthCare network. Our business consists of providing healthcare services for those in need. We record all revenue and expenses and provide all services under one umbrella. Below is a description of our Home Healthcare and Staffing operations.
Our business is driven by a number of different factors and fluctuates significantly as they change.
As the census (number of patients utilizing facilities) in the hospitals fluctuates, we are taking the necessary steps to position ourselves for the ups and downs of the census for these facilities. Our home healthcare service continued to generate the majority of our revenue during the thirdfirst quarter of 2017.2018.
As the need for labor diminishes with the gas and oil wells shutting down in Colorado, our business has seen dramatic negative impacts with the resulting decrease in population, both in number of clients as well as available personnel. As the price of gas decreases, the drilling operations stop, and the population moves to another area to support themselves.
Our operations are also heavily influenced by increases in minimum wage as well as starting wages being offered by all employers in the region. With the multiple businesses paying higher starting wages, we have seen a decrease in individuals wanting and needing to take employment in the healthcare profession.
13
We have also seen the impact of turn-over in senior management with our clients. As these positions are filled by new personnel, their decisions on utilization of services impacts our businesses, and we have seen a significant decrease in the utilization of our services.
During the thirdfirst quarter of 2017,2018, FHA experienced a 2%22% decrease in revenue over the thirdfirst quarter of 2016.2017. This was driven by a decrease inboth our Casper, Wyoming and Billings, Montana businesses, which was partially off-set by an increase in home healthcare business in Casper, Wyoming.businesses.
During the second thirdfirst quarter of 2017,2018, we have seen a significant decrease in the utilization staffing services in Billings, Montana as facilities that use our services receive directives to remove and reduce the use of staffing services. We’ve also seen significant decreases within our home healthcare services. As for our operations, we anticipate the trends seen in the thirdfirst quarter of 20172018 to continue into the fourthsecond quarter of 2017.2018. We anticipate a continued slowing of the use of our staffing services. We also anticipate a slowing of the utilization of our home healthcare business in Casper and Billings. As such, we will continue to evaluate opportunities to expand the realm of services we offer. Promotional activities and operations are being managed as the offices experience fluctuations in the day-to-day activities and as we embark on new business opportunities.
12
Our home healthcare business continues to be a substantial revenue generator for our Company as our country's population ages and new methods of patient data capture become critical components for delivering high quality, affordable healthcare services in a patient's home.
Home Healthcare
Through trained health care professionals, the Company provides home care services including senior care and pediatric nursing, andnursing; physical, occupational and speech therapy. The Company offices deliver quality home care and treat each patient with genuine compassion, kindness and respect. The Company provides health care professionals at all skill levels, including registered nurses, therapists, LPN's and certified home health aides. FHA derives itsis revenue from multiple payer sources. These include Medicare, Medicaid, Insurance, Medicaid LTW, and Private Payers. Because our offices are located in areas that do not contain a large population base (less than 200,000 residents), we continually explore opportunities to increase our revenue with our current payer sources and expand through new sources of revenue. The healthcare team is utilized across all payer sources, including staffing services. Our customer base comes from referrals from hospitals, rehab facilities, nursing homes, assisted living facilities and previous patients.
In additional to our professional team, we employ a management team at each facility to handle the day to day operations of the office. This is completed by our Administrators in each location. We also have a Director of Nursing in each location. This person is responsible for the day to day oversight of the service providers and ensuring the certified professionals obtain the necessary training to maintain their certificates as well as the training necessary to be in compliance with all regulating organizations.
Staffing
Interim offices provide nurses, nurse aides and management services to hospitals, prisons, schools, corporations and other health care facilities. Interim’s success is based on our ability to recruit the best health care professionals and the responsiveness of our local managers to fill the needs of our clients in a timely manner. Additionally, we work with our clients should they decide they would like to hire our service professionals on a full-timefull time basis. Another key to our success is the personal relationship that our management and sales team build with each of our existing and new clients. As noted previously, in order to reduce turnover of our service team by providing as many hours as possible, similar to the hours of a full-time employee, we utilize the same service team members across all payer sources.
As each of our businesses is located in smaller based population areas of the country, the competition is significantly heightened and the relationships maintained with our clients become very critical to the continued success of our operations.
As we provide diversified services and accept payments from multiple payer sources, we are not heavily dependent on a few clients in order for our business to be successful.
14
Results of Operations
NineThree Months Ended September 30,March 31, 2018 and 2017 and 2016.
During the ninethree months ended September 30, 2017,March 31, 2018, FHA recorded revenues of $2,790,436,$772,258, a 5%22% decrease over revenues of $2,925,596$995,428 for the same period in 2016.2017. The decrease for 2017 reflects2018 was driven by a significant decrease in revenue withinthe use of our staffing services in Billings, Montana, and our home healthcare services in theCasper, Wyoming and Billings, Montana location, with an off-set from an increase in revenue in home healthcare in Casper, Wyoming. Montana.
For the nine monthsquarter ended September 30, 2017,March 31, 2018, cost of services totaled $2,019,050,$541,459, a 9%23% decrease as compared to $2,227,149$701,485 in the comparable period of 2016.2017. This is a reflection of the costs associated with the changedecrease in the mix of revenue, with a shift away from staffing combined with an increase in efficiency.revenue. FHA posted a gross profit of $771,386$230,799 during the first nine months of 2017,quarter 2018, versus a gross profit of $698,447$293,943 for the first nine months of 2016, an increase of 10%.
13
FHA recorded total operating expenses of $943,175 during the first nine monthsquarter of 2017, a 1% decrease as compared to operating expenses of $953,310 in the same period of 2016. General and administrative expenses totaled $319,878 in the first nine months of 2017 versus $298,021 in the first nine months of 2016, an increase of 7%, due to an increase in legal fees and insurance expenses. Consulting fees decreased from $103,447 to $85,952 when comparing the first nine months of 2016 versus 2017. The decrease was driven by a reduction in outside consultants used in 2017 in our Casper location. Salaries, wages and related expenses decreased to $509,693 in the first nine months of 2017 from $523,392 in 2016, a decrease of 3% due to a decrease in personnel associated with turnover. Selling expenses in the first nine months of 2017 were $27,652 versus $28,450 in the comparable period of 2016.
For the first nine months of 2016, other income included $209,439 for recognition of a gain on the derivative liability and $75,750 of interest expense on the note payable.
For the first nine months of 2017, other expense included $34,065 for recognition of a loss on the derivative liability and $75,750 of interest expense on the note payable.
FHA’s net loss available to common shareholders was $281,994 for the first nine months of 2017. This represents a $161,099 increase from our net loss of $120,895 in the first nine months of 2016.
Three Months Ended September 30, 2017 and 2016.
During the three months ended September 30, 2017, FHA recorded revenues of $839,585, a 2% decrease over revenues of $856,039 for the same period in 2016. The decrease for 2017 reflects a decrease in revenue within our staffing and home healthcare services in the Billings, Montana location, with an off-set from an increase in revenue in home healthcare in Casper, Wyoming.
For the quarter ended September 30, 2017, cost of services totaled $608,299, a 10% decrease as compared to $678,021 in the comparable period of 2016. This is a reflection of the costs associated with the change in the mix of revenue, with a shift away from staffing combined with an increase in efficiency, thus resulting in FHA posting a gross profit of $231,286 during the third quarter 2017, versus a gross profit of $178,018 for the third quarter of 2016, an increase of 30%21%.
FHA recorded total operating expenses of $291,605$323,022 during the thirdfirst quarter of 2017, a 4%2018, an 10% decrease as compared to operating expenses of $304,968$360,153 in the same period of 2016.2017. General and administrative expenses totaled $104,314$109,916 in the thirdfirst quarter 2018 versus $125,929 in the first quarter 2017, versus $97,214a decrease of 13%, due to a decrease in the third quarter 2016, an increase of 4%, driven by an increase in office supplies during the third quarter of 2017.legal fees and professional fees. Consulting fees decreased from $47,299 to $17,969 from $23,587$42,758 when comparing the thirdfirst quarter of 2017 versus 2016 due to a decrease usage of outside consultants in 2017 in our Casper location.2018. Salaries, wages and related expenses decreased to $161,957$159,805 in the thirdfirst quarter of 20172018 from $176,297$169,841 in 2016,2017, a decrease of 8% due to a decrease in personnel associated with turnover.6%, driven by the reduction of personnel. Selling expenses in the thirdfirst quarter of 20172018 were $7,365$10,543 versus $7,870$17,084 in the comparable quarter of 2016.
For the third quarter of 2017, other expense included $79,124 for recognition ofdriven by a loss on the derivative liability versus a $63,460 gain recognized for the same perioddecrease in 2016.advertising.
FHA’s net loss available to common shareholders was $164,798$111,645 for the thirdfirst quarter of 2017.2018. This isrepresents a $76,135$40,708 increase from our net loss of $88,663$70,937 in the thirdfirst quarter of 2016.2017. A portion of this change was due the recording of $20,667 gain on the derivative instruments, in the first quarter of 2017, as compared to $6,158 in the 2018 period.
Liquidity and Capital Resources.
Cash on hand was $113,586$27,117 at September 30, 2017,March 31, 2018, a decrease of $92,766$130,955 from the $206,352$158,072 on hand at December 31, 2016.2017. Cash used in operations for the ninethree months ended September 30, 2017,March 31, 2018, was $99,588,$173,073, versus cash used byin operation of $130,906$89,664 for the ninethree months ended September 30, 2016.March 31, 2017. The decreaseincrease is a reflectionresult of the operatingfirst quarter increase of accounts receivables and our results during the first nine months of 2017.operations in our Casper and Billings locations.
14The Company has insufficient cash to finance operations and continues to incur losses and accumulated deficit and has a short-term note payable in default in excess of anticipated cash. These factors raise substantial doubt about the ability of the Company to continue as a going concern. There is no assurance that the Company will be successful in achieving profitable operations or finding additional equity or debt financing. During April 2018, an officer of the Company advanced $13,000 to the Company for operating purposes.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required for smaller reporting companies.
Item 4. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")), which we refer to as disclosure controls, are controls and procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any control system. A control system, no matter how well conceived and
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operated, can provide only reasonable assurance that its objectives are met. No evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
As of September 30, 2017,March 31, 2018, an evaluation was carried out under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of such date, the design and operation of these disclosure controls were effective to accomplish their objectives at the reasonable assurance level.
(b) Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), occurred during the fiscal quarter ended September 30, 2017March 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On June 17, 2016 and June 30, 2016 two complaints were filed, one with the Federal Equal Employment Opportunity Commission (EEOC)(“EEOC”) and one with the Wyoming State Department of Labor against the Company, alleging discrimination on the basis of sex and disability. The complaints do not seek any specific monetary relief. The complaints are being mediated by the Wyoming State Department of Labor.Labor, and the U.S. Equal Employment Opportunity Commission. The Wyoming State Department of Labor issued a notice of dismissal for one of the complaints. After reviewing the facts and circumstances, the Company believes the claims made are weak, at best, and the Company has retained counsel and intends to continue a vigorous defense. On March 6, 2018, a complaint was filed with the Wyoming Court of Natrona County, alleging violation of the Wyoming Fair Employment Practices Act of 1965 for discrimination based upon sex, disability and retaliation. The complaint does not seek any specific monetary relief. At this time, management cannot reasonably estimate the cost to defend or the outcome of the complaints, and we do not expect it will have a material financial impact on the Company.complaints.
Item 1A. Risk Factors.
Not required for smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
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Item 4. Mine Safety Disclosures.
None; not applicable.
Item 5. Other Information.
(a)
None; not applicable.
(b) During the quarterly period ended September 30, 2017,March 31, 2018, there were no changes to the procedures by which shareholders may recommend nominees to the Company’s board of directors.
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Item 6. Exhibits.
Exhibit No.
Description
302 Certification of Christopher J. Spencer
302 Certification of John Busshaus
906 Certification.
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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.
FUTURE HEALTHCARE OF AMERICA
Date: |
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| By: | /s/ Christopher J. Spencer |
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| Christopher J. Spencer |
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| Chief Executive Officer and President and Director |
Date: |
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| /s/ John Busshaus |
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| John Busshaus |
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| Chief Financial Officer |
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