Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 31, 2023 | Jun. 30, 2022 | |
Document Information Line Items | |||
Entity Registrant Name | PACIFIC HEALTH CARE ORGANIZATION, INC. | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 12,800,000 | ||
Entity Public Float | $ 4,275,100 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001138476 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 000-50009 | ||
Entity Incorporation, State or Country Code | UT | ||
Entity Tax Identification Number | 87-0285238 | ||
Entity Address, Address Line One | 19800 MacArthur Boulevard, Suites 306 & 307 | ||
Entity Address, City or Town | Irvine | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92612 | ||
City Area Code | 949 | ||
Local Phone Number | 721-8272 | ||
Title of 12(g) Security | $.001 par value, common voting shares | ||
Entity Interactive Data Current | Yes | ||
Auditor Firm ID | 6117 | ||
Auditor Name | Pinnacle Accountancy Group of Utah | ||
Auditor Location | Farmington, Utah |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | |
ASSETS | |||
Cash | $ 2,036,432 | $ 10,085,372 | |
Investments | 8,748,435 | 0 | |
Accounts receivable, net of allowance of $7,807 and $23,083 | 934,990 | 927,990 | |
Deferred rent assets | 0 | 10,055 | |
Income tax receivable | 0 | 19,779 | |
Receivable – other | 3,000 | 3,000 | |
Prepaid expenses | 175,355 | 96,977 | |
Total current assets | 11,898,212 | 11,143,173 | |
Computer equipment | 256,500 | 526,249 | |
Furniture and fixtures | 20,328 | 226,323 | |
Office equipment | 0 | 9,556 | |
Total property and equipment | 276,828 | 762,128 | |
Less: accumulated depreciation and amortization | (179,423) | [1] | (669,592) |
Net property and equipment | 97,405 | 92,536 | |
Operating lease right-of-use assets, net | 50,137 | 70,368 | |
Other assets | 6,602 | 26,788 | |
Total Assets | 12,052,356 | 11,332,865 | |
Current Liabilities | |||
Accounts payable | 263,022 | 44,899 | |
Accrued expenses | 332,551 | 315,495 | |
Income tax payable | 3,132 | 0 | |
Dividend payable | 37,000 | 37,000 | |
Operating lease liabilities, current portion | 39,620 | 70,368 | |
Unearned revenue | 33,544 | 33,544 | |
Total current liabilities | 708,869 | 501,306 | |
Long Term Liabilities | |||
Operating lease liabilities, long term portion | 10,517 | 0 | |
Deferred tax liabilities | 15,679 | 7,154 | |
Total Liabilities | 735,065 | 508,460 | |
Commitments and Contingencies | 0 | 0 | |
Stockholders’ Equity | |||
Convertible preferred stock, $0.001 par value, 5,000,000 shares authorized of which 40,000 shares designated as Series A preferred and 16,000 shares issued and outstanding | 16 | 16 | |
Common stock, $0.001 par value, 800,000,000 shares authorized, 12,800,000 shares issued and outstanding | 12,800 | 12,800 | |
Additional paid-in capital | 416,057 | 416,057 | |
Retained earnings | 10,888,418 | 10,395,532 | |
Total stockholders’ equity | 11,317,291 | 10,824,405 | |
Total Liabilities and Stockholders’ Equity | $ 12,052,356 | $ 11,332,865 | |
[1]Depreciation and amortization expense for the years ended December 31, 2022 and 2021, totaled $33,998 and $48,887, respectively. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Accounts receivable, allowance (in Dollars) | $ 7,807 | $ 23,083 |
Convertible Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Convertible Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Convertible Preferred stock, shares issued | 16,000 | 16,000 |
Convertible Preferred stock, shares outstanding | 16,000 | 16,000 |
Common stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares issued | 12,800,000 | 12,800,000 |
Common stock, outstanding | 12,800,000 | 12,800,000 |
Common stock, shares authorized | 800,000,000 | 800,000,000 |
Series A Preferred Stock [Member] | ||
Convertible Preferred stock, shares authorized | 40,000 | 40,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | ||
Revenues | $ 5,744,957 | $ 5,403,110 |
Expenses | ||
Depreciation and amortization | 33,998 | 48,887 |
Bad debt provision | (626) | 15,656 |
Consulting fees | 227,406 | 237,582 |
Salaries and wages | 2,689,842 | 2,740,806 |
Professional fees | 314,013 | 293,936 |
Insurance | 315,919 | 321,690 |
Outsource service fees | 610,277 | 364,951 |
Data maintenance | 182,437 | 204,725 |
General and administrative | 705,567 | 658,402 |
Total expenses | 5,078,833 | 4,886,635 |
Income from operations | 666,124 | 516,475 |
Other income (expense) | ||
Paycheck Protection Program loan forgiveness income | 0 | 684,785 |
Interest income | 27,199 | 0 |
Paycheck Protection Program loan interest expense | 0 | (5,185) |
Total other income (expense) | 27,199 | 679,600 |
Income before taxes | 693,323 | 1,196,075 |
Income tax provision | 200,437 | 201,055 |
Net income | $ 492,886 | $ 995,020 |
Basic earnings per share: | ||
Earnings per share amount (in Dollars per share) | $ 0.04 | $ 0.08 |
Basic common shares outstanding (in Shares) | 12,800,000 | 12,800,000 |
Fully diluted earnings per share: | ||
Earnings per share amount (in Dollars per share) | $ 0.04 | $ 0.08 |
Fully diluted common shares outstanding (in Shares) | 12,816,000 | 12,816,000 |
HCO [Member] | ||
Revenues | ||
Revenues | $ 1,500,363 | $ 1,449,345 |
MPN [Member] | ||
Revenues | ||
Revenues | 534,447 | 524,148 |
Medical bill review [Member] | ||
Revenues | ||
Revenues | 412,015 | 368,721 |
Utilization review [Member] | ||
Revenues | ||
Revenues | 1,636,632 | 1,091,792 |
Medical case management [Member] | ||
Revenues | ||
Revenues | 1,513,659 | 1,771,718 |
Other Revenues [Member] | ||
Revenues | ||
Revenues | $ 147,841 | $ 197,386 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Balances at Dec. 31, 2020 | $ 16 | $ 12,800 | $ 416,057 | $ 9,400,512 | $ 9,829,385 |
Balances (in Shares) at Dec. 31, 2020 | 16,000 | 12,800,000 | |||
Net Income | 995,020 | 995,020 | |||
Balances at Dec. 31, 2021 | $ 16 | $ 12,800 | 416,057 | 10,395,532 | 10,824,405 |
Balances (in Shares) at Dec. 31, 2021 | 16,000 | 12,800,000 | |||
Net Income | 492,886 | 492,886 | |||
Balances at Dec. 31, 2022 | $ 16 | $ 12,800 | $ 416,057 | $ 10,888,418 | $ 11,317,291 |
Balances (in Shares) at Dec. 31, 2022 | 16,000 | 12,800,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash Flows from Operating Activities | ||
Net income | $ 492,886 | $ 995,020 |
Depreciation | 33,998 | 48,887 |
Bad debt provision | (626) | 15,656 |
Paycheck Protection Program loan forgiveness | 0 | (679,600) |
Noncash interest on investments | (27,125) | 0 |
Changes in operating assets and liabilities: | ||
(Increase) decrease in accounts receivable | (6,374) | 119,444 |
(Increase) decrease in taxes receivable | 19,779 | (19,779) |
(Increase) decrease in deferred rent asset‐s | 10,055 | (10,055) |
Decrease in receivable - other | 0 | 1,000 |
Decrease in other assets | 20,186 | 0 |
Increase in prepaid expenses | (78,378) | (14,478) |
Increase (decrease) in deferred tax liabilities | 8,525 | (12,259) |
(Decrease) increase in accounts payable | 218,123 | (35,235) |
Increase in accrued expenses | 17,056 | 40,343 |
Increase (decrease) in income tax payable | 3,132 | (61,828) |
Decrease in deferred rent expense | 0 | (2,725) |
Increase in unearned revenue | 0 | 2,000 |
Net cash provided by operating activities | 711,237 | 386,391 |
Cash Flows from Investing Activities | ||
Purchase of investments | (8,721,310) | 0 |
Purchase of furniture and equipment | (38,867) | (18,376) |
Net cash used in investing activities | (8,760,177) | (18,376) |
Cash Flows from Financing Activities | ||
Proceeds from Paycheck Protection Program loans | 0 | 218,900 |
Net cash provided by financing activities | 0 | 218,900 |
Net increase (decrease) in cash | (8,048,940) | 586,915 |
Cash at beginning of period | 10,085,372 | 9,498,457 |
Cash at end of period | 2,036,432 | 10,085,372 |
Cash paid for: | ||
Interest | 0 | 0 |
Income taxes | 170,000 | 294,000 |
Non-cash investing and financing activities | ||
Initial recognition of operating lease right-of-use assets and operating lease liabilities | $ 52,563 | $ 0 |
CORPORATE HISTORY
CORPORATE HISTORY | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | NOTE 1 CORPORATE HISTORY Pacific Health Care Organization, Inc. (the “Company” or “PHCO”) is a specialty workers’ compensation cost containment company providing a range of services principally to California employers and claims administrators. The Company was incorporated under the laws of the state of Utah in April 1970, under the name Clear Air, Inc. The Company changed its name to Pacific Health Care Organization, Inc., in January 2001. In February 2001, the Company acquired Medex Healthcare, Inc. (“Medex”), a California corporation organized in March 1994, in a share for share exchange. Medex is a wholly owned subsidiary of the Company. Medex is in the business of managing and administering both Health Care Organizations (“HCOs”) and Medical Provider Networks (“MPNs”) in the state of California. Medex also offers Workers’ Compensation carve-out services and Medicare set-asides, and expert witness testimony. In February 2012, we incorporated Medex Medical Management, Inc., (“MMM”) in the state of Nevada, as a wholly owned subsidiary of the Company. MMM is responsible for overseeing and managing medical case management services. In March 2011, we incorporated Medex Managed Care, Inc. (“MMC”) in the state of Nevada, as a wholly owned subsidiary of the Company. MMC oversees and manages the Company’s utilization review, medical bill review services, and lien representation services. On October 19, 2021, the Company completed short-form mergers between PHCO and each of its wholly owned subsidiaries Industrial Resolutions Coalition (“IRC”), Medex Legal Support, Inc. (“MLS”), and Pacific Medical Holding Company (“PMHC”). As a result of the short-form mergers the separate existence of IRC, MLS and PMHC terminated and the business, assets and liabilities of those entities have been transferred to PHCO and, as appropriate to its other subsidiaries. The Company continues to offer the services of IRC and MLS through its other subsidiaries as described in the preceding paragraph. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | NOTE 2 SIGNIFICANT ACCOUNTING POLICIES A. Basis of Accounting The Company used the accrual method of accounting in accordance with accounting principles generally accepted in the United States for the periods ended December 31, 2022 and 2021. B. Revenue Recognition Revenue Recognition — The Company recognizes revenue in accordance with ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle underlying Topic 606 is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The core principle underlying Topic 606 is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The ASU requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenues are generated as services are provided to the customer based on the sales price agreed and collected. The Company recognizes revenue as the time is worked or as units of production are completed, which is when the revenue is earned and realized. Labor costs are recognized as the costs are incurred. The Company derives its revenue from the sale of services offered through its HCOs, MPNs, medical bill review, utilization review, medical case management services, lien defense, carve-outs, Medicare set-aside. These services are billed individually as separate components to our customers. These fees include monthly and/or annual HCO and/or MPN administration fees, claim and network access fees, medical bill review fees, legal support fees, Medicare set-aside fees, lien service fees, workers’ compensation carve-outs, utilization review fees, medical case management flat rate fees or hourly fees depending on the agreement with the customer. The Company enters into arrangements for bundled managed care, standalone services, or add-on ancillary services which includes various units of accounting such as network solutions and patient management, including managed care. Such elements are considered separate units of accounting due to each element having value to the customer on a stand-alone basis and are billed separately. The selling price for each unit of accounting is determined using the contract price. When the Company’s customers purchase several products the pricing of the products sold is generally the same as if the products were sold on an individual basis. Revenue is recognized as the work is performed in accordance with the Company’s customer contracts. Based upon the nature of the Company’s products, bundled managed care elements are generally delivered in the same accounting period. The Company recognizes revenue for patient management services ratably over the life of the customer contract. Based upon prior experience in managed care, the Company estimates the deferral amount from when the customer’s claim is received to when the customer contract expires. Advance payments from subscribers and billings made in advance are recorded on the balance sheet as deferred revenue. C. Cash Equivalents The Company considers all short term, highly liquid investments that are readily convertible, within three months of origination, to known amounts as cash equivalents. As of December 31, 2022 and 2021, the Company had no cash equivalents. D. Investments Investments consist of short term investments in U.S. Treasury bills having maturities exceeding three months and less than one year at the time of purchase. On December 8, 2022, the Company purchased $8,721,310 in U.S. Treasury bills with a six month maturity date of June 8, 2023. As of December 31, 2022, we had interest accretion of $27,125 on those investments. E. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risks consist of cash and cash equivalents. The Company places its cash and cash equivalents at well-known, quality financial institutions. At times, such cash and investments may be in excess of the FDIC insurance limit. In December 2022, the Company purchased $8,721,310 of U.S. Treasury bills, which will mature on June 8, 2023. As of December 31, 2022 the Company held $2,036,432 in cash, which we believe is enough to cover operating expenses until the bills mature and limits our exposure of holding such cash in excess of the FDIC insurance limit. F. Earnings Per Share of Common Stock The computation of earnings per share of common stock is based on the weighted average number of shares outstanding at the date of these audited consolidated financial statements. The fully diluted earnings per share includes 16,000 shares of Series A convertible preferred stock, as disclosed in Section L of Note 2. For the Years Ended December 31, 2022 2021 Basic Earnings per share: Income (numerator) $ 492,886 $ 995,020 Shares (denominator) 12,800,000 12,800,000 Per share amount $ 0.04 $ 0.08 Fully Diluted Earnings per share: Income (numerator) $ 492,886 $ 995,020 Shares (denominator) 12,816,000 12,816,000 Per share amount $ 0.04 $ 0.08 G. Depreciation The cost of property and equipment is depreciated over the estimated useful lives of the related assets. The cost of leasehold improvements is depreciated over the lesser of the length of the lease of the related assets or the estimated lives of the assets. Depreciation is computed on the straight-line method which is five years for computer equipment, office equipment, and furniture and fixtures. In 2022, the Company disposed of fully depreciated assets such as furniture and equipment, computer equipment and software. H. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in these audited consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates include the values assigned to the allowance for doubtful accounts and accruals for income taxes. I. Principles of Consolidation The accompanying audited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. J. Fair Value of Financial Instruments The Company applies ASC 820, “Fair Value Measurements . • Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. The carrying amounts reported in the balance sheets for cash and cash equivalents, receivables and current assets and liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. K. General and Administrative Expenses General and administrative expenses include fees for advertising, charity, rent expense for office, shareholders’ expense, auto expenses, bank charges, dues and subscriptions, education, equipment/repairs, IT enhancement and internet expenses, licenses and permits, office supplies, parking, postage and delivery, printing and reproduction, rent expense for equipment, telephone, office rent-expense, shareholders’ expense, travel expenses and entertainment costs, and compensated absences. L. Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are provided based on the difference between the financial statements and tax basis of assets and liabilities measured by the currently enacted tax rates in effect for the years in which these differences are expected to reverse. Deferred tax expense or benefit is the result of changes in deferred tax assets and liabilities. M. Capital Structure On January 6, 2020, the Company effected a four-shares-for-one-share (4:1) forward stock split (“Forward Split”) of its common stock and its Series A convertible preferred stock. Unless otherwise noted, impacted amounts, share and per share information included in the financial statements and notes thereto have been retroactively adjusted for the Forward Split as if such Forward Split occurred on the first day of the first period presented. The Company has two classes of stock. The Articles of Incorporation of the Company, as amended, authorize 5,000,000 shares of $0.001 par value preferred stock, which may be issued in one or more series, with designation, rights and privileges of such preferred stock to be set by the board of directors of the Company from time to time. On November 21, 2016, the board of directors of the Company approved a Certificate of Designation of Rights, Privileges and Preferences of Series A convertible preferred stock and authorized the Company’s officers to file such with the Utah Division of Corporations and Commercial Code to create the Series A convertible preferred stock. The Series A convertible preferred stock has a par value of $0.001 and consists of 40,000 shares. The holders of Series A convertible preferred stock are entitled to vote with the common stockholders on all matters brought for approval of the common stockholders. In connection with any such matter, each outstanding share of Series A convertible preferred stock is entitled to 20,000 votes of common stock of the Company. In the event of a liquidation, dissolution or winding up of the Company, the Series A convertible preferred stock shall rank in parity with the Company’s common stock. Holders of Series A convertible preferred stock are entitled to receive dividends, when, as and if declared by the board of directors. The Series A convertible preferred stock shall rank in parity with the Company’s common stock as to any dividends. As of December 31, 2022 and 2021, 16,000 shares of the Series A convertible preferred stock were outstanding. The Company also has voting common stock of 800,000,000 shares authorized at December 31, 2022 and 2021, and 12,800,000 shares issued and outstanding. The Company purchased no shares of treasury stock at cost during fiscal 2022 or 2021. As of December 31, 2022 and 2021, the Company had dividends payable of $37,000 and $37,000, respectively, from a dividend declared in September 2015. As of December 31, 2022 and 2021, no shareholder entitled to claim the unpaid September 2015 dividend made a claim to such dividend, accordingly the Company paid $0 and $0, respectively during in connection with the September 2015 dividend during the years ended December 31, 2022 and 2021. N. Share Based Compensation The Company has adopted the fair value method of accounting for stock-based employee and non-employee compensation in accordance with statement of ASC Topic 718, “Compensation – Stock Compensation” which requires that equity-based payments (to the extent they are compensatory) be recognized in these audited consolidated statements of operations as compensation expense over the requisite service (vesting) period, based on the award’s fair value at grant date. O. Trade Receivables In the normal course of business, the Company extends credit to its customers on a short-term basis. Although the credit risk associated with these customers is minimal, the Company routinely reviews its accounts receivable balances and makes provisions for doubtful accounts. The Company ages its receivables by date of invoice. Management reviews bad debt reserves quarterly and reserves specific accounts as warranted or sets up a general reserve based on amounts over 90 days past due. When an account is deemed uncollectible, the Company charges off the receivable against the bad debt reserve. A considerable amount of judgment is required in assessing the realization of these receivables including the current creditworthiness of each customer and related aging of the past-due balances, including any billing disputes. In order to assess the collectability of these receivables, the Company performs ongoing credit evaluations of its customers’ financial condition. Through these evaluations, the Company may become aware of a situation where a customer may not be able to meet its financial obligations due to deterioration of its financial viability, credit ratings or bankruptcy. The allowance for doubtful accounts is based on the best information available to the Company and is reevaluated and adjusted as additional information is received. The Company evaluates the allowance based on historical write-off experience, the size of the individual customer balances, past-due amounts and the overall national economy. At fiscal year-end 2022 and 2021, the Company had a bad debt reserve of $7,807 and $23,083, respectively, as a general reserve for certain balances over 90 days past due and for accounts that are potentially uncollectible. The percentages of the amounts due from major customers to total accounts receivable as of December 31, 2022 and 2021, are as follows: 12/31/22 12/31/21 Customer A 24 % 24 % Customer B 18 % 11 % P. Major Customers The Company provides services to insurers, third party administrators, self-administered employers, municipalities, and other industries. The Company can provide a full range of services to virtually any size employer in the state of California. The Company is also able to provide medical bill review, utilization review, and medical case management services both inside and outside the state of California. During 2022, three major customers accounted for more than 44% of our sales, approximately 24%, 10%, and 10% respectively, of our total sales. By comparison, during 2021 our three largest customers accounted for 43% of sales, approximately 24%, 11%, and 8%, respectively. Q. Leases The Company follows the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. At December 31, 2022, the Company recognized the operating lease right-of-use assets of $50,137, lease liabilities for operating leases of $50,137, and a zero cumulative-effect adjustment to accumulated deficit. On April 1, 2022, we moved office locations from 1201 Dove Street, Suite 300 in Newport Beach, California to 19800 MacArthur Boulevard, Suite 300, in Irvine, California. This lease expires as of March 31, 2023, but was renewed on December 10, 2022 for an additional 12-month lease, with a new expiration of March 31, 2024. The Company elected to exclude from its balance sheets recognition of leases having a term of 12 months or less (“short-term leases”). Lease expense is recognized on a straight-line basis over the lease term. If a Company lease does not provide an implicit rate, the Company develops an estimated incremental borrowing rate at the commencement date based on the estimated rate at which it would borrow, in the current economic environment, an amount equal to the lease payments over a similar term on a collateralized basis which is used to determine the present value of lease payments. The Company had no finance leases at December 31, 2022 and 2021. R. Subsequent Events In accordance with ASC 855-10 Company management reviewed all material events through the date of issuance and except as follows, there are no other material subsequent events to report. We were recently notified that Fortra, LLC, the third-party vendor that provides the GoAnywhere managed file transfer as a service system (MFTaaS), experienced a data security incident that affected many of Fortra’s customers, including the Company. The Company uses GoAnywhere as a means by which our customers electronically share certain data regarding their employees and other third parties with the Company. Based on the information we have obtained from Fortra and our own diligence, we understand that this activity only affected Fortra’s systems, and did not involve unauthorized access into the Company’s information systems. Our current understanding is that this activity was the result of the threat actor’s exploit of a zero-day vulnerability in Fortra’s systems. Through this exploit, the threat actor created unauthorized user accounts for certain customer MFTaaS, including that of the Company. Upon receiving notification of this incident, we began an investigation with the assistance of outside experts. Through that investigation, we have learned that this incident included the unauthorized access to and exfiltration of data in the Company’s GoAnywhere account. While the investigation is ongoing, early indications are that the threat actor accessed certain of our customers’ employees’ and other third parties’ data from January 28 to January 31, 2023. Such data likely includes protected health information, as defined by the Health Insurance Portability and Accountability Act (“PHI”), and personal information (“PI”). Our current understanding is that the threat actor exfiltrated approximately 900 gigabytes of data. We are continuing our investigation to determine the contents of the exfiltrated data and the individuals to whom the PI/PHI, if any, belongs. As of the date of this annual report, this incident has not caused a material interruption of our business operations. To the extent we discover further details of this incident and data accessed, we will provide the appropriate notifications to any individuals affected by the incident, as well as to government and regulatory agencies as required by federal and state law. The Company carries cyber/privacy liability insurance to protect it against certain losses related to matters of this nature. However, the Company has incurred, and may incur in the future, expenses and losses related to this incident that are not covered by insurance. Further, because of the preliminary nature of our investigation into this incident and current unknowns, an estimate of the impacts on our business, results of operations and other potential liabilities, cannot be made. |
RECENTLY ISSUED ACCOUNTING STAN
RECENTLY ISSUED ACCOUNTING STANDARDS | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Accounting Standards Update and Change in Accounting Principle [Text Block] | NOTE 3 RECENTLY ISSUED ACCOUNTING STANDARDS Recently Issued Accounting Standards In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes”. The pronouncement simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, “Income Taxes”. The pronouncement also improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This standard became effective for fiscal years beginning after December 15, 2020, with early adoption permitted. The reported results for the fiscal year ended December 31, 2022 and 2021 reflect the application of the guidance of ASC 740-10. Other than the foregoing, the Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements will be expected to cause a material impact on its financial statements. |
FIXED ASSETS
FIXED ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment Disclosure [Text Block] | NOTE 4 FIXED ASSETS The Company capitalizes the purchase of equipment and fixtures for major purchases more than $1,000 per item. Capitalized amounts are depreciated over the useful life of the assets using the straight-line method of depreciation which is five years for computer equipment, office equipment, and furniture and fixtures. Scheduled below are the assets, costs and accumulated depreciation at December 31, 2022 and 2021. Cost Accumulated Depreciation and Amortization Assets December 31, 2022 December 31, 2021 December 31, 2022 (1) December 31, 2021 Computer equipment $ 256,500 $ 526,249 $ 164,222 $ 441,597 Furniture and fixtures 20,328 226,323 15,201 206,884 Office equipment - 9,556 - 21,111 Totals $ 276,828 $ 762,128 $ 179,423 $ 669,592 (1) |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | NOTE 5 INCOME TAXES The Company accounts for corporate income taxes in accordance with ASC 740-10 “Income Taxes.” ASC 740-10 requires an asset and liability approach for financial accounting and reporting for income tax purposes. The tax provision for the years ended December 31, 2022 and 2021, consisted of the following: 2022 2021 Current Federal $ 127,240 $ 101,118 State 64,672 112,196 Deferred Federal 6,400 (9,304 ) State 2,125 (2,955 ) Total tax provision $ 200,437 $ 201,055 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s total deferred tax liabilities, deferred tax assets, and deferred tax asset valuation allowances at December 31, 2022 and December 31, 2021, are as follows: 2022 2021 Depreciation Federal $ (20,456 ) $ (19,215 ) State (6,791 ) (6,391 ) Reserve for bad debts Federal 1,640 4,793 State 544 1,594 Deferred Rent Federal - 2,088 State - 694 Deferred Revenues Federal 7,044 6,965 State 2,340 2,318 State tax deductions - - Net deferred tax asset (liabilities) $ (15,679 ) $ (7,154 ) The reconciliation of income tax computed at statutory rates of income tax benefits is as follows: 2022 2021 Expense at federal statutory rate of 21% $ 138,683 $ 251,176 State income taxes, net of federal benefit 46,045 79,789 Non-deductible expenses 12,070 10,063 Tax exempt income - (143,805 ) Other items 3,639 3,832 Income tax provision $ 200,437 $ 201,055 The Company follows ASC 740, Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. The Company follows the interpretations of the ASC 740, which establishes a single model to address accounting for uncertain tax positions. The interpretations clarify the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements and provide guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company takes a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon effective settlement. The Company re-evaluates its income tax positions on a quarterly basis to consider factors such as changes in facts or circumstances, changes in or interpretations of tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in recognition of a tax benefit or an additional charge to the tax provision. Interest and penalties on unrecognized tax benefits are classified as income tax expense. The Company includes interest and penalties arising from the underpayment of income taxes in these audited consolidated statements of operations in the provision for income taxes. As of December 31, 2022, the Company had no accrued interest or penalties. The years 2019, 2020, 2021 and 2022 are still open for examination by the Internal Revenue Service. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Disclosure Text Block [Abstract] | |
Lessee, Operating Leases [Text Block] | NOTE 6 LEASES In July 2015, the Company entered a 79-month office lease that commenced on September 28, 2015 and expired on April 30, 2022. The lease provided for approximately 9,439 square feet of office space. During this period, the office space served as the principal executive offices of the Company, as well as the principal offices of the Company’s operating subsidiaries. On April 1, 2022, the Company moved its principal executive offices, as well as the principal offices of the Company’s operating subsidiaries to 19800 MacArthur Blvd, Suite 300 in Irvine, California. The new lease was for a 12-month term, which would have expired on March 31, 2023. On December 10, 2022, the Company renewed the office lease for another 12-month term, which will expire on March 31, 2024. The lease provides 320 square feet of office space for the executive team and a shared office space for key employees to use as needed. All other employees will continue to work remotely. Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. The components of lease expense and supplemental cash flow information related to leases for the period are as follows: Year Ended December 31, 2022 Lease Cost Operating lease cost (included in general and administrative in the Company’s consolidated statement of operations) $ 52,563 Other Information Cash paid for amounts included in the measurement of lease liabilities for the year ended December 31, 2022 $ 105,292 Weighted average remaining lease term – operating leases (in years) 1.25 years Average discount rate – operating leases 5.75 % The supplemental balance sheet information related to leases for the period is as follows: At December 31, 2022 At December 31, 2021 Operating leases Remaining right-of-use assets $ 50,137 $ 70,368 Short-term operating lease liabilities $ 39,620 $ 70,368 Long-term operating lease liabilities 10,517 - Total operating lease liabilities $ 50,137 $ 70,368 Maturities of the Company’s undiscounted lease liabilities are as follows: Year Ending Operating Leases 2023 $ 41,898 2024 10,665 Total lease payments 52,563 Less: Imputed interest/present value discount 2,426 Present value of lease liabilities $ 50,137 Lease expenses were $105,292 and $279,385 during the years ended December 31, 2022 and 2021, respectively. |
ACCRUED AND OTHER LIABILITIES
ACCRUED AND OTHER LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
Disclosure Text Block Supplement [Abstract] | |
Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block] | NOTE 7 ACCRUED EXPENSES As of December 31, 2022 and 2021, accrued expenses consist of the following: 2022 2021 Salaries and wages $ 99,943 $ 115,744 Compensated absences 151,150 154,774 Legal fees 22,960 815 Accounting fees 42,426 26,372 Sales commissions 12,472 12,989 Other 3,600 4,801 Total $ 332,551 $ 315,495 |
EQUITY INCENTIVE AWARDS
EQUITY INCENTIVE AWARDS | 12 Months Ended |
Dec. 31, 2022 | |
Disclosure Text Block Supplement [Abstract] | |
Shareholders' Equity and Share-Based Payments [Text Block] | NOTE 8 EQUITY INCENTIVE AWARDS 2018 Plan The Pacific Health Care Organization 2018 Equity Incentive Plan (the “2018 Plan”) became effective on April 6, 2018. The 2018 Plan permits the granting of 8,000,000 shares of Common Stock. No awards or grants have been awarded or granted under the Plan. The 2018 Plan provides for grants of equity incentive compensation to employees and consultants of the Company and such other individuals the Company reasonably expects to become employees or consultants of the Company. The 2018 Plan allows for awards of (a) incentive stock options, (b) non-qualified stock options, (c) stock appreciation rights, (d) restricted awards, and (e) other equity-based awards. The 2018 Plan will terminate automatically on the tenth anniversary of the 2018’s Plan Effective Date. The 2018 Plan is currently administered by the full board of directors. The Company did not award any equity incentive compensation during the years ended December 31, 2022 and 2021. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Disclosure Text Block Supplement [Abstract] | |
Legal Matters and Contingencies [Text Block] | NOTE 9 COMMITMENTS AND CONTINGENCIES From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in such matters may arise from time to time that may harm the Company’s business. To the knowledge of management, there is no material litigation or governmental agency proceeding pending or threatened against the Company or any of its subsidiaries. Further, the Company is not aware of any material proceeding to which any director, member of senior management or owner of record or beneficially of more than five percent of any class of voting securities of the Company, or any associate of any of them is a party adverse to or has a material interest adverse to the Company or any of its subsidiaries. |
BENEFITS AND OTHER COMPENSATION
BENEFITS AND OTHER COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
Disclosure Text Block Supplement [Abstract] | |
Compensation and Employee Benefit Plans [Text Block] | NOTE 10 BENEFITS AND OTHER COMPENSATION The Company offers a 401(k)-profit sharing plan for employees who meet the eligibility requirements. Pursuant to the plan, the Company may make discretionary matching contributions and/or discretionary profit-sharing contributions to the plan. All such contributions must comply with federal pension laws, non-discrimination requirements and the terms of the plan. In determining whether to make a discretionary contribution, the board of directors would evaluate current and prospective costs of such awards to the Company and management’s desire to reward and retain employees and attract new employees. To date, the Company has never made matching contributions and/or discretionary profit-sharing contributions to any plan. |
PAYCHECK PROTECTION PROGRAM LOA
PAYCHECK PROTECTION PROGRAM LOAN | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | NOTE 11 PAYCHECK PROTECTION PROGRAM LOAN In February 2021 the principal and interest on the Paycheck Protection Program (“PPP”) loans in the aggregate amount of $460,700 (the “first draw PPP loans”) issued to PHCO, MMC and MMM in April and May 2020 were forgiven in full. Economic Aid Act In December 2021 the principal and interest on section 311 of the Economic Aid Act Paycheck Protection Program Second Draw Loans in the amount of $218,900 (the “second draw PPP loan”) issued to MMM in April 2021 were forgiven in full. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Accounting The Company used the accrual method of accounting in accordance with accounting principles generally accepted in the United States for the periods ended December 31, 2022 and 2021. |
Revenue [Policy Text Block] | Revenue Recognition Revenue Recognition — The Company recognizes revenue in accordance with ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The core principle underlying Topic 606 is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The core principle underlying Topic 606 is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The ASU requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenues are generated as services are provided to the customer based on the sales price agreed and collected. The Company recognizes revenue as the time is worked or as units of production are completed, which is when the revenue is earned and realized. Labor costs are recognized as the costs are incurred. The Company derives its revenue from the sale of services offered through its HCOs, MPNs, medical bill review, utilization review, medical case management services, lien defense, carve-outs, Medicare set-aside. These services are billed individually as separate components to our customers. These fees include monthly and/or annual HCO and/or MPN administration fees, claim and network access fees, medical bill review fees, legal support fees, Medicare set-aside fees, lien service fees, workers’ compensation carve-outs, utilization review fees, medical case management flat rate fees or hourly fees depending on the agreement with the customer. The Company enters into arrangements for bundled managed care, standalone services, or add-on ancillary services which includes various units of accounting such as network solutions and patient management, including managed care. Such elements are considered separate units of accounting due to each element having value to the customer on a stand-alone basis and are billed separately. The selling price for each unit of accounting is determined using the contract price. When the Company’s customers purchase several products the pricing of the products sold is generally the same as if the products were sold on an individual basis. Revenue is recognized as the work is performed in accordance with the Company’s customer contracts. Based upon the nature of the Company’s products, bundled managed care elements are generally delivered in the same accounting period. The Company recognizes revenue for patient management services ratably over the life of the customer contract. Based upon prior experience in managed care, the Company estimates the deferral amount from when the customer’s claim is received to when the customer contract expires. Advance payments from subscribers and billings made in advance are recorded on the balance sheet as deferred revenue. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash Equivalents The Company considers all short term, highly liquid investments that are readily convertible, within three months of origination, to known amounts as cash equivalents. As of December 31, 2022 and 2021, the Company had no cash equivalents. |
Investment, Policy [Policy Text Block] | Investments Investments consist of short term investments in U.S. Treasury bills having maturities exceeding three months and less than one year at the time of purchase. On December 8, 2022, the Company purchased $8,721,310 in U.S. Treasury bills with a six month maturity date of June 8, 2023. As of December 31, 2022, we had interest accretion of $27,125 on those investments. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risks consist of cash and cash equivalents. The Company places its cash and cash equivalents at well-known, quality financial institutions. At times, such cash and investments may be in excess of the FDIC insurance limit. In December 2022, the Company purchased $8,721,310 of U.S. Treasury bills, which will mature on June 8, 2023. As of December 31, 2022 the Company held $2,036,432 in cash, which we believe is enough to cover operating expenses until the bills mature and limits our exposure of holding such cash in excess of the FDIC insurance limit. |
Earnings Per Share, Policy [Policy Text Block] | Earnings Per Share of Common Stock The computation of earnings per share of common stock is based on the weighted average number of shares outstanding at the date of these audited consolidated financial statements. The fully diluted earnings per share includes 16,000 shares of Series A convertible preferred stock, as disclosed in Section L of Note 2. For the Years Ended December 31, 2022 2021 Basic Earnings per share: Income (numerator) $ 492,886 $ 995,020 Shares (denominator) 12,800,000 12,800,000 Per share amount $ 0.04 $ 0.08 Fully Diluted Earnings per share: Income (numerator) $ 492,886 $ 995,020 Shares (denominator) 12,816,000 12,816,000 Per share amount $ 0.04 $ 0.08 |
Depreciation, Depletion, and Amortization [Policy Text Block] | Depreciation The cost of property and equipment is depreciated over the estimated useful lives of the related assets. The cost of leasehold improvements is depreciated over the lesser of the length of the lease of the related assets or the estimated lives of the assets. Depreciation is computed on the straight-line method which is five years for computer equipment, office equipment, and furniture and fixtures. In 2022, the Company disposed of fully depreciated assets such as furniture and equipment, computer equipment and software. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in these audited consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates include the values assigned to the allowance for doubtful accounts and accruals for income taxes. |
Consolidation, Policy [Policy Text Block] | Principles of Consolidation The accompanying audited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value of Financial Instruments The Company applies ASC 820, “Fair Value Measurements . • Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. The carrying amounts reported in the balance sheets for cash and cash equivalents, receivables and current assets and liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. |
Selling, General and Administrative Expenses, Policy [Policy Text Block] | General and Administrative Expenses General and administrative expenses include fees for advertising, charity, rent expense for office, shareholders’ expense, auto expenses, bank charges, dues and subscriptions, education, equipment/repairs, IT enhancement and internet expenses, licenses and permits, office supplies, parking, postage and delivery, printing and reproduction, rent expense for equipment, telephone, office rent-expense, shareholders’ expense, travel expenses and entertainment costs, and compensated absences. |
Income Tax, Policy [Policy Text Block] | Income Taxes |
Stockholders' Equity, Policy [Policy Text Block] | Capital Structure On January 6, 2020, the Company effected a four-shares-for-one-share (4:1) forward stock split (“Forward Split”) of its common stock and its Series A convertible preferred stock. Unless otherwise noted, impacted amounts, share and per share information included in the financial statements and notes thereto have been retroactively adjusted for the Forward Split as if such Forward Split occurred on the first day of the first period presented. The Company has two classes of stock. The Articles of Incorporation of the Company, as amended, authorize 5,000,000 shares of $0.001 par value preferred stock, which may be issued in one or more series, with designation, rights and privileges of such preferred stock to be set by the board of directors of the Company from time to time. On November 21, 2016, the board of directors of the Company approved a Certificate of Designation of Rights, Privileges and Preferences of Series A convertible preferred stock and authorized the Company’s officers to file such with the Utah Division of Corporations and Commercial Code to create the Series A convertible preferred stock. The Series A convertible preferred stock has a par value of $0.001 and consists of 40,000 shares. The holders of Series A convertible preferred stock are entitled to vote with the common stockholders on all matters brought for approval of the common stockholders. In connection with any such matter, each outstanding share of Series A convertible preferred stock is entitled to 20,000 votes of common stock of the Company. In the event of a liquidation, dissolution or winding up of the Company, the Series A convertible preferred stock shall rank in parity with the Company’s common stock. Holders of Series A convertible preferred stock are entitled to receive dividends, when, as and if declared by the board of directors. The Series A convertible preferred stock shall rank in parity with the Company’s common stock as to any dividends. As of December 31, 2022 and 2021, 16,000 shares of the Series A convertible preferred stock were outstanding. The Company also has voting common stock of 800,000,000 shares authorized at December 31, 2022 and 2021, and 12,800,000 shares issued and outstanding. The Company purchased no shares of treasury stock at cost during fiscal 2022 or 2021. As of December 31, 2022 and 2021, the Company had dividends payable of $37,000 and $37,000, respectively, from a dividend declared in September 2015. As of December 31, 2022 and 2021, no shareholder entitled to claim the unpaid September 2015 dividend made a claim to such dividend, accordingly the Company paid $0 and $0, respectively during in connection with the September 2015 dividend during the years ended December 31, 2022 and 2021. |
Share-Based Payment Arrangement [Policy Text Block] | Share Based Compensation The Company has adopted the fair value method of accounting for stock-based employee and non-employee compensation in accordance with statement of ASC Topic 718, “Compensation – Stock Compensation” which requires that equity-based payments (to the extent they are compensatory) be recognized in these audited consolidated statements of operations as compensation expense over the requisite service (vesting) period, based on the award’s fair value at grant date. |
Receivable [Policy Text Block] | Trade Receivables In the normal course of business, the Company extends credit to its customers on a short-term basis. Although the credit risk associated with these customers is minimal, the Company routinely reviews its accounts receivable balances and makes provisions for doubtful accounts. The Company ages its receivables by date of invoice. Management reviews bad debt reserves quarterly and reserves specific accounts as warranted or sets up a general reserve based on amounts over 90 days past due. When an account is deemed uncollectible, the Company charges off the receivable against the bad debt reserve. A considerable amount of judgment is required in assessing the realization of these receivables including the current creditworthiness of each customer and related aging of the past-due balances, including any billing disputes. In order to assess the collectability of these receivables, the Company performs ongoing credit evaluations of its customers’ financial condition. Through these evaluations, the Company may become aware of a situation where a customer may not be able to meet its financial obligations due to deterioration of its financial viability, credit ratings or bankruptcy. The allowance for doubtful accounts is based on the best information available to the Company and is reevaluated and adjusted as additional information is received. The Company evaluates the allowance based on historical write-off experience, the size of the individual customer balances, past-due amounts and the overall national economy. At fiscal year-end 2022 and 2021, the Company had a bad debt reserve of $7,807 and $23,083, respectively, as a general reserve for certain balances over 90 days past due and for accounts that are potentially uncollectible. The percentages of the amounts due from major customers to total accounts receivable as of December 31, 2022 and 2021, are as follows: 12/31/22 12/31/21 Customer A 24 % 24 % Customer B 18 % 11 % |
Concentration Risk, Customer Risk, Policy [Policy Text Block] | Major Customers The Company provides services to insurers, third party administrators, self-administered employers, municipalities, and other industries. The Company can provide a full range of services to virtually any size employer in the state of California. The Company is also able to provide medical bill review, utilization review, and medical case management services both inside and outside the state of California. During 2022, three major customers accounted for more than 44% of our sales, approximately 24%, 10%, and 10% respectively, of our total sales. By comparison, during 2021 our three largest customers accounted for 43% of sales, approximately 24%, 11%, and 8%, respectively. |
Lessee, Leases [Policy Text Block] | Leases The Company follows the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. At December 31, 2022, the Company recognized the operating lease right-of-use assets of $50,137, lease liabilities for operating leases of $50,137, and a zero cumulative-effect adjustment to accumulated deficit. On April 1, 2022, we moved office locations from 1201 Dove Street, Suite 300 in Newport Beach, California to 19800 MacArthur Boulevard, Suite 300, in Irvine, California. This lease expires as of March 31, 2023, but was renewed on December 10, 2022 for an additional 12-month lease, with a new expiration of March 31, 2024. The Company elected to exclude from its balance sheets recognition of leases having a term of 12 months or less (“short-term leases”). Lease expense is recognized on a straight-line basis over the lease term. If a Company lease does not provide an implicit rate, the Company develops an estimated incremental borrowing rate at the commencement date based on the estimated rate at which it would borrow, in the current economic environment, an amount equal to the lease payments over a similar term on a collateralized basis which is used to determine the present value of lease payments. The Company had no finance leases at December 31, 2022 and 2021. |
Subsequent Events, Policy [Policy Text Block] | Subsequent Events In accordance with ASC 855-10 Company management reviewed all material events through the date of issuance and except as follows, there are no other material subsequent events to report. We were recently notified that Fortra, LLC, the third-party vendor that provides the GoAnywhere managed file transfer as a service system (MFTaaS), experienced a data security incident that affected many of Fortra’s customers, including the Company. The Company uses GoAnywhere as a means by which our customers electronically share certain data regarding their employees and other third parties with the Company. Based on the information we have obtained from Fortra and our own diligence, we understand that this activity only affected Fortra’s systems, and did not involve unauthorized access into the Company’s information systems. Our current understanding is that this activity was the result of the threat actor’s exploit of a zero-day vulnerability in Fortra’s systems. Through this exploit, the threat actor created unauthorized user accounts for certain customer MFTaaS, including that of the Company. Upon receiving notification of this incident, we began an investigation with the assistance of outside experts. Through that investigation, we have learned that this incident included the unauthorized access to and exfiltration of data in the Company’s GoAnywhere account. While the investigation is ongoing, early indications are that the threat actor accessed certain of our customers’ employees’ and other third parties’ data from January 28 to January 31, 2023. Such data likely includes protected health information, as defined by the Health Insurance Portability and Accountability Act (“PHI”), and personal information (“PI”). Our current understanding is that the threat actor exfiltrated approximately 900 gigabytes of data. We are continuing our investigation to determine the contents of the exfiltrated data and the individuals to whom the PI/PHI, if any, belongs. As of the date of this annual report, this incident has not caused a material interruption of our business operations. To the extent we discover further details of this incident and data accessed, we will provide the appropriate notifications to any individuals affected by the incident, as well as to government and regulatory agencies as required by federal and state law. The Company carries cyber/privacy liability insurance to protect it against certain losses related to matters of this nature. However, the Company has incurred, and may incur in the future, expenses and losses related to this incident that are not covered by insurance. Further, because of the preliminary nature of our investigation into this incident and current unknowns, an estimate of the impacts on our business, results of operations and other potential liabilities, cannot be made. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The computation of earnings per share of common stock is based on the weighted average number of shares outstanding at the date of these audited consolidated financial statements. The fully diluted earnings per share includes 16,000 shares of Series A convertible preferred stock, as disclosed in Section L of Note 2. For the Years Ended December 31, 2022 2021 Basic Earnings per share: Income (numerator) $ 492,886 $ 995,020 Shares (denominator) 12,800,000 12,800,000 Per share amount $ 0.04 $ 0.08 Fully Diluted Earnings per share: Income (numerator) $ 492,886 $ 995,020 Shares (denominator) 12,816,000 12,816,000 Per share amount $ 0.04 $ 0.08 |
Schedules of Concentration of Risk, by Risk Factor [Table Text Block] | The percentages of the amounts due from major customers to total accounts receivable as of December 31, 2022 and 2021, are as follows: 12/31/22 12/31/21 Customer A 24 % 24 % Customer B 18 % 11 % |
FIXED ASSETS (Tables)
FIXED ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment [Table Text Block] | The Company capitalizes the purchase of equipment and fixtures for major purchases more than $1,000 per item. Capitalized amounts are depreciated over the useful life of the assets using the straight-line method of depreciation which is five years for computer equipment, office equipment, and furniture and fixtures. Scheduled below are the assets, costs and accumulated depreciation at December 31, 2022 and 2021. Cost Accumulated Depreciation and Amortization Assets December 31, 2022 December 31, 2021 December 31, 2022 (1) December 31, 2021 Computer equipment $ 256,500 $ 526,249 $ 164,222 $ 441,597 Furniture and fixtures 20,328 226,323 15,201 206,884 Office equipment - 9,556 - 21,111 Totals $ 276,828 $ 762,128 $ 179,423 $ 669,592 (1) |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | The tax provision for the years ended December 31, 2022 and 2021, consisted of the following: 2022 2021 Current Federal $ 127,240 $ 101,118 State 64,672 112,196 Deferred Federal 6,400 (9,304 ) State 2,125 (2,955 ) Total tax provision $ 200,437 $ 201,055 |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s total deferred tax liabilities, deferred tax assets, and deferred tax asset valuation allowances at December 31, 2022 and December 31, 2021, are as follows: 2022 2021 Depreciation Federal $ (20,456 ) $ (19,215 ) State (6,791 ) (6,391 ) Reserve for bad debts Federal 1,640 4,793 State 544 1,594 Deferred Rent Federal - 2,088 State - 694 Deferred Revenues Federal 7,044 6,965 State 2,340 2,318 State tax deductions - - Net deferred tax asset (liabilities) $ (15,679 ) $ (7,154 ) |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | The reconciliation of income tax computed at statutory rates of income tax benefits is as follows: 2022 2021 Expense at federal statutory rate of 21% $ 138,683 $ 251,176 State income taxes, net of federal benefit 46,045 79,789 Non-deductible expenses 12,070 10,063 Tax exempt income - (143,805 ) Other items 3,639 3,832 Income tax provision $ 200,437 $ 201,055 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Disclosure Text Block [Abstract] | |
Lease, Cost [Table Text Block] | The components of lease expense and supplemental cash flow information related to leases for the period are as follows: Year Ended December 31, 2022 Lease Cost Operating lease cost (included in general and administrative in the Company’s consolidated statement of operations) $ 52,563 Other Information Cash paid for amounts included in the measurement of lease liabilities for the year ended December 31, 2022 $ 105,292 Weighted average remaining lease term – operating leases (in years) 1.25 years Average discount rate – operating leases 5.75 % |
Lessee, Operating Lease, Disclosure [Table Text Block] | The supplemental balance sheet information related to leases for the period is as follows: At December 31, 2022 At December 31, 2021 Operating leases Remaining right-of-use assets $ 50,137 $ 70,368 Short-term operating lease liabilities $ 39,620 $ 70,368 Long-term operating lease liabilities 10,517 - Total operating lease liabilities $ 50,137 $ 70,368 |
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | Maturities of the Company’s undiscounted lease liabilities are as follows: Year Ending Operating Leases 2023 $ 41,898 2024 10,665 Total lease payments 52,563 Less: Imputed interest/present value discount 2,426 Present value of lease liabilities $ 50,137 |
ACCRUED AND OTHER LIABILITIES (
ACCRUED AND OTHER LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Disclosure Text Block Supplement [Abstract] | |
Schedule of Accrued Liabilities [Table Text Block] | As of December 31, 2022 and 2021, accrued expenses consist of the following: 2022 2021 Salaries and wages $ 99,943 $ 115,744 Compensated absences 151,150 154,774 Legal fees 22,960 815 Accounting fees 42,426 26,372 Sales commissions 12,472 12,989 Other 3,600 4,801 Total $ 332,551 $ 315,495 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended | ||||||||
Dec. 08, 2022 USD ($) | Jan. 06, 2020 | Apr. 05, 2018 $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 10, 2022 | Apr. 01, 2022 | Jan. 01, 2019 USD ($) | Sep. 28, 2015 | |
SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||||||||
Payments to Acquire Investments | $ 8,721,310 | $ 8,721,310 | |||||||
Unrealized Gain (Loss) on Investments | $ 27,125 | 27,125 | $ 0 | ||||||
Cash, Uninsured Amount | $ 2,036,432 | ||||||||
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Preferred Stock (in Shares) | shares | 16,000 | ||||||||
Property, Plant and Equipment, Useful Life | 5 years | ||||||||
Stockholders' Equity Note, Stock Split | four-shares-for-one-share | ||||||||
Preferred Stock, Shares Authorized (in Shares) | shares | 40,000 | 5,000,000 | 5,000,000 | ||||||
Preferred Stock, Par or Stated Value Per Share (in Dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Preferred Stock, Voting Rights | 20,000 | ||||||||
Preferred Stock, Shares Outstanding (in Shares) | shares | 16,000 | 16,000 | |||||||
Common Stock, Shares Authorized (in Shares) | shares | 800,000,000 | 800,000,000 | 800,000,000 | ||||||
Common Stock, Shares, Issued (in Shares) | shares | 12,800,000 | 12,800,000 | |||||||
Dividends Payable | $ 37,000 | $ 37,000 | |||||||
Dividends Payable, Current | 0 | 0 | |||||||
Accounts Receivable, Allowance for Credit Loss | 7,807 | 23,083 | |||||||
Operating Lease, Right-of-Use Assets | 50,137 | 70,368 | $ 50,137 | ||||||
Operating Lease, Liabilities | 50,137 | 70,368 | 50,137 | ||||||
Retained Earnings (Accumulated Deficit) | $ 10,888,418 | $ 10,395,532 | $ 0 | ||||||
Lessee, Operating Lease, Term of Contract | 12 months | 12 months | 79 months | ||||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |||||||||
SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||||||||
Number of Customers | 3 | 3 | |||||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Three Customers [Member] | |||||||||
SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||||||||
Concentration Risk, Percentage | 44% | 43% | |||||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer A [Member] | |||||||||
SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||||||||
Concentration Risk, Percentage | 24% | 24% | |||||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer B [Member] | |||||||||
SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||||||||
Concentration Risk, Percentage | 10% | 11% | |||||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer C [Member] | |||||||||
SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items] | |||||||||
Concentration Risk, Percentage | 10% | 8% |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of Earnings Per Share, Basic and Diluted - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Basic Earnings per share: | ||
Income (numerator) | $ 492,886 | $ 995,020 |
Shares (denominator) | 12,800,000 | 12,800,000 |
Per share amount | $ 0.04 | $ 0.08 |
Fully Diluted Earnings per share: | ||
Income (numerator) | $ 492,886 | $ 995,020 |
Shares (denominator) | 12,816,000 | 12,816,000 |
Per share amount | $ 0.04 | $ 0.08 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedules of Concentration of Risk, by Risk Factor - Accounts Receivable [Member] - Customer Concentration Risk [Member] | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Customer A [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk | 24% | 24% |
Customer B [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk | 18% | 11% |
FIXED ASSETS (Details)
FIXED ASSETS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Property, Plant and Equipment, Cost Capitalization | $1,000 | |
Property, Plant and Equipment, Useful Life | 5 years | |
Depreciation, Depletion and Amortization | $ 33,998 | $ 48,887 |
FIXED ASSETS (Details) - Proper
FIXED ASSETS (Details) - Property, Plant and Equipment - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Cost | $ 276,828 | $ 762,128 | |
Accumulated Depreciation and Amortization | 179,423 | [1] | 669,592 |
Computer Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 256,500 | 526,249 | |
Accumulated Depreciation and Amortization | 164,222 | [1] | 441,597 |
Furniture and Fixtures [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 20,328 | 226,323 | |
Accumulated Depreciation and Amortization | 15,201 | [1] | 206,884 |
Office Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 0 | 9,556 | |
Accumulated Depreciation and Amortization | $ 0 | [1] | $ 21,111 |
[1]Depreciation and amortization expense for the years ended December 31, 2022 and 2021, totaled $33,998 and $48,887, respectively. |
INCOME TAXES (Details)
INCOME TAXES (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Tax Examination, Description | The years 2019, 2020, 2021 and 2022 are still open for examination by the Internal Revenue Service |
INCOME TAXES (Details) - Schedu
INCOME TAXES (Details) - Schedule of Components of Income Tax Expense (Benefit) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current | ||
Federal | $ 127,240 | $ 101,118 |
State | 64,672 | 112,196 |
Deferred | ||
Federal | 6,400 | (9,304) |
State | 2,125 | (2,955) |
Total tax provision | $ 200,437 | $ 201,055 |
INCOME TAXES (Details) - Sche_2
INCOME TAXES (Details) - Schedule of Deferred Tax Assets and Liabilities - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Revenues | ||
State tax deductions | $ 0 | $ 0 |
Net deferred tax asset | (15,679) | (7,154) |
Domestic Tax Authority [Member] | ||
Depreciation | ||
Depreciation | (20,456) | (19,215) |
Reserve for bad debts | ||
Reserve for bad debts | 1,640 | 4,793 |
Deferred Rent | ||
Deferred Rent | 0 | 2,088 |
Deferred Revenues | ||
Deferred Revenues | 7,044 | 6,965 |
State and Local Jurisdiction [Member] | ||
Depreciation | ||
Depreciation | (6,791) | (6,391) |
Reserve for bad debts | ||
Reserve for bad debts | 544 | 1,594 |
Deferred Rent | ||
Deferred Rent | 0 | 694 |
Deferred Revenues | ||
Deferred Revenues | $ 2,340 | $ 2,318 |
INCOME TAXES (Details) - Sche_3
INCOME TAXES (Details) - Schedule of Effective Income Tax Rate Reconciliation - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule Of Effective Income Tax Rate Reconciliation Abstract | ||
Expense at federal statutory rate of 21% | $ 138,683 | $ 251,176 |
State income taxes, net of federal benefit | 46,045 | 79,789 |
Non-deductible expenses | 12,070 | 10,063 |
Tax exempt income | 0 | (143,805) |
Other items | 3,639 | 3,832 |
Income tax provision | $ 200,437 | $ 201,055 |
INCOME TAXES (Details) - Sche_4
INCOME TAXES (Details) - Schedule of Effective Income Tax Rate Reconciliation (Parentheticals) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule Of Effective Income Tax Rate Reconciliation Abstract | ||
Federal statutory rate | 21% | 21% |
LEASES (Details)
LEASES (Details) | 12 Months Ended | ||||
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 10, 2022 | Apr. 01, 2022 ft² | Sep. 28, 2015 ft² | |
Disclosure Text Block [Abstract] | |||||
Lessee, Operating Lease, Term of Contract | 12 months | 12 months | 79 months | ||
Area of Real Estate Property (in Square Feet) | ft² | 320 | 9,439 | |||
Operating Lease, Expense (in Dollars) | $ | $ 105,292 | $ 279,385 |
LEASES (Details) - Lease, Cost
LEASES (Details) - Lease, Cost | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Lease, Cost [Abstract] | |
Operating lease cost (included in general and administrative in the Company’s consolidated statement of operations) | $ 52,563 |
Cash paid for amounts included in the measurement of lease liabilities for the year ended December 31, 2022 | $ 105,292 |
Weighted average remaining lease term – operating leases (in years) | 1 year 3 months |
Average discount rate – operating leases | 5.75% |
LEASES (Details) - Lessee, Oper
LEASES (Details) - Lessee, Operating Lease, Disclosure - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 01, 2019 |
Lessee Operating Lease Disclosure Abstract | |||
Remaining right-of-use assets | $ 50,137 | $ 70,368 | $ 50,137 |
Short-term operating lease liabilities | 39,620 | 70,368 | |
Long-term operating lease liabilities | 10,517 | 0 | |
Total operating lease liabilities | $ 50,137 | $ 70,368 | $ 50,137 |
LEASES (Details) - Lessee, Op_2
LEASES (Details) - Lessee, Operating Lease, Liability, Maturity - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 01, 2019 |
Lessee Operating Lease Liability Maturity Abstract | |||
2023 | $ 41,898 | ||
2024 | 10,665 | ||
Total lease payments | 52,563 | ||
Less: Imputed interest/present value discount | 2,426 | ||
Present value of lease liabilities | $ 50,137 | $ 70,368 | $ 50,137 |
ACCRUED AND OTHER LIABILITIES_2
ACCRUED AND OTHER LIABILITIES (Details) - Schedule of Accrued Liabilities - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule Of Accrued Liabilities Abstract | ||
Salaries and wages | $ 99,943 | $ 115,744 |
Compensated absences | 151,150 | 154,774 |
Legal fees | 22,960 | 815 |
Accounting fees | 42,426 | 26,372 |
Sales commissions | 12,472 | 12,989 |
Other | 3,600 | 4,801 |
Total | $ 332,551 | $ 315,495 |
EQUITY INCENTIVE AWARDS (Detail
EQUITY INCENTIVE AWARDS (Details) | Apr. 06, 2018 shares |
Disclosure Text Block Supplement [Abstract] | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized | 8,000,000 |
PAYCHECK PROTECTION PROGRAM L_2
PAYCHECK PROTECTION PROGRAM LOAN (Details) - USD ($) | 1 Months Ended | |
Dec. 31, 2021 | Feb. 28, 2021 | |
Debt Disclosure [Abstract] | ||
Debt Instrument, Decrease, Forgiveness | $ 218,900 | $ 460,700 |