Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Delray Beach, Florida, on the 31st day of January 2014.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
Notes to the Financial Statements
December 31, 2012 and 2011
NOTE 1 - ORGANIZATION AND BUSINESS ACTIVITY
The Company was incorporated in Florida
on July 31, 2001. On September 21, 2001, the Company was acquired by PlaNet.Com, Inc., a Nevada public, non-reporting corporation.
Pla.Net.Com, Inc. was considered a shell at the time of acquisition and therefore the acquisition was treated as a reverse merger
(the acquired company is treated as the acquiring company for accounting purposes). Pla.Net.Com, Inc. changed its name to Inpatient
Clinical Solutions, Inc. immediately after the merger.
Through March 2013, the Company provided
health care services in South Florida. The Company provided inpatient physician care to various health care facilities and health
plans in the South Florida area. Prior to February 2012, the Company provided Hospitalist services at acute care hospitals. Hospitalists
focus on a patient’s care from the time of admission to discharge, working in close consultation with primary care physicians,
other referring physicians and medical providers to coordinate the inpatient care delivery system and manage the entire inpatient
episode of care.
As more fully described in note 3, the
Company sold the hospitalist business during February 2012. At that time, the Company changed its name from Inpatient Clinical
Solutions, Inc. to Integrated Inpatient Solutions, Inc. In November 2011, the Company entered into an agreement with a hospital
to provide intensivist services. Under the exclusive agreement, the Company provided critical care intensivist coverage for all
medical and surgical intensive care unit patients at the hospital. The physicians include full-time employees, part-time and temporary
physicians as well as contracted physician providers. The intensivist agreement was terminated in January 2013.
The Company is developing an interior
design business targeting budget minded individuals. The business operates under the trade name Integrated Interior Design. The
Company expects to earn revenues from providing decorator services which are billed on hourly and per diem rates. The interior
design business will initially operate in South Florida and will expand regionally and nationally. The business provides interior
design, interior staging, accompanied shopping, paint color selection, architectural drawing and other design services.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Use of Estimates
The preparation of financial statements
in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. The areas involving the most significant use of estimates include the estimated realizable
value of accounts receivable, contractual adjustment of gross billings, medical malpractice insurance receivable and payable for
known claims and liabilities for claims incurred but not reported (IBNR) related to medical malpractice. These estimates are based
on knowledge of current events and anticipated future events. The Company adjusts these estimates each period as more current
information becomes available. The impact of any changes in estimates is included in the determination of earnings in the period
in which the estimate is adjusted. Actual results may ultimately differ materially from those estimates.
Integrated Inpatient Solutions, Inc.
Notes to the Financial Statements
December 31, 2012 and 2011
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Cash
The Company considers cash in banks
and other highly liquid investments with insignificant interest rate risk and maturities of three months or less at the time of
acquisition to be cash and cash equivalents. At December 31, 2012 and 2011, the Company had no cash equivalents. The Company maintains
cash accounts in financial institutions that are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”).
FDIC insurance has temporarily increased from $100,000 to $250,000 per depositor through December 31, 2013. Deposits in excess
of FDIC insurance totaled approximately $637,000 at December 31, 2012 and $0 at December 31, 2011.
Accounts Receivable
Accounts receivable represent amounts
due from third-party payors, including government sponsored Medicare and Medicaid programs, insurance companies and patients for
medical services provided. Accounts receivable are recorded and stated at the amount expected to be collected and have been adjusted
to reflect the differences between charges and the estimated reimbursable amounts.
Accounts receivable balances as of December
31 were as follows:
|
|
|
2012
|
|
|
|
2011
|
|
Accounts Receivable
|
|
$
|
1,074,528
|
|
|
$
|
3,163,267
|
|
Less Contractual Allowances and Allowances for Doubtful Accounts
|
|
|
(937,057
|
)
|
|
|
(1,976,713
|
)
|
|
|
$
|
137,471
|
|
|
$
|
1,186,554
|
|
Property and Equipment
Property and equipment are recorded
at cost and depreciated on a straight-line basis over the estimated useful life of the asset. Expenditures for major renewals and
betterments that extend the useful lives of properly and equipment are capitalized. Expenditures for maintenance and repairs are
charged to expense as incurred.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets
for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered.
The Company assesses the recoverability
of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or
group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment,
if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally
determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If
long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than
originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated
useful lives. The Company determined that there were no impairments of long-lived assets as of December 31, 2012 or
December 31, 2011.
Integrated Inpatient Solutions, Inc.
Notes to the Financial Statements
December 31, 2012 and 2011
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Fair Value of Financial Instruments
U.S. GAAP for fair value measurements
establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three levels.
The fair value hierarchy gives the highest priority to quoted market prices (unadjusted) in active markets for identical assets
or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 2 inputs are inputs, other than quoted
prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. The fair
value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities
and the lowest priority to unobservable inputs.
The carrying amounts of the Company’s
financial assets and liabilities, such as cash, accounts receivable, deposits, accounts payable and accrued expenses, approximate
their fair values because of the short maturity of these instruments. The Company’s debt to financial institutions approximate
the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the
Company for similar financial arrangement.
Revenue Recognition
Hospitalist/Intensivist
- Revenue
consists primarily of net patient service revenues that are recorded based upon established billing rates less allowances for contractual
adjustments. Revenues are recorded during the period the healthcare services are provided, based upon the estimated amounts due
from the patients and third party payors, including federal and state agencies (under the Medicare and Medicaid programs), managed
care health plans and commercial insurance companies. Estimates of contractual allowances under third-party payor arrangements
are based upon the payment terms specified in the related contractual agreements. Third-party payor contractual payment terms are
generally based upon predetermined rates per diagnosis, per diem rates, or discounted fee-for-service rates.
The Company derives a significant portion
of its revenues from third party insurers and accordingly receives discounts from standard charges. The Company must estimate the
total amount of these discounts to prepare its financial statements. The various managed care contracts under which these discounts
must be calculated are complex and are subject to interpretation and adjustment. These interpretations sometimes result in payments
that differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur frequently,
necessitating regular review and assessment of the estimation process by management. Changes in estimates related to the allowance
for contractual discounts affect revenues reported in the Company’s statements of operations in the period of the change.
The Medicare and Medicaid reimbursing
entities (“Entities”) provide a substantial portion of the Company revenues. These Entities are subject to numerous
laws and regulations of federal, state and local governments, including but not limited to matters such as licensure, accreditation,
participation requirements, reimbursement formulas and fraud and abuse. Compliance with standards and other regulations can be
subject to future government review and interpretation. Any future changes in federal and state reimbursement funding mechanisms
could affect the Company.
Interior Design
- The Company
follows ASC 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue
when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive
evidence of an arrangement that the services have been rendered to the customer, the sales rice is fixed or determinable, and
collectability is reasonably assured.
Integrated Inpatient Solutions, Inc.
Notes to the Financial Statements
December 31, 2012 and 2011
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Income Taxes
The Company follows Section 740-10-30
of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial statements or tax returns. Under this method,
deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities
using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets
are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be
realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment
date.
The Company adopted section 740-10-25
of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under
Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not
that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The
Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section
740-10-25.
Earnings Per Share
The Company computes earnings per share
in accordance with the provisions of FASB ASC Topic 260, "Earnings Per Share," which specifies the computation, presentation
and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. Basic earnings
per share are computed by dividing net earnings available to common shareholders by the weighted average number of common shares
outstanding during the period. Diluted earnings per share are computed assuming the exercise of dilutive stock options
under the treasury stock method and the related income tax effects.
As of December 31, 2012 and 2011, we
had 250,000 and 750,000 shares of Convertible Preferred Stock outstanding convertible into 2,500,000 and 7,500,000 common shares,
respectively.
Integrated Inpatient Solutions, Inc.
Notes to the Financial Statements
December 31, 2012 and 2011
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Earnings Per Share (continued)
The following tables set forth the computation
of basic and diluted earnings per share as shown on the face of the accompanying Statements of Operations:
|
|
Years Ended December 31,
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
Shares
|
|
Per Share Amount
|
|
Net Loss
|
|
Shares
|
|
Per Share Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings per Share:
|
|
$
|
2,658,917
|
|
|
|
|
|
|
|
|
|
|
$
|
(577,685
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount allocated to participating securities
|
|
|
(210,000
|
)
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Net income available for basic common shares and basic earnings per share
|
|
$
|
2,448,917
|
|
|
|
46,597,338
|
|
|
$
|
0.05
|
|
|
$
|
(577,685
|
)
|
|
|
43,612,365
|
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
2,658,617
|
|
|
|
|
|
|
|
|
|
|
$
|
(577,685
|
)
|
|
|
|
|
|
|
|
|
Amount allocated to participating securities
|
|
|
(210,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for dilutive potential common shares
|
|
|
|
|
|
|
2,500,000
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Net income available for diluted common shares and diluted earnings per share
|
|
$
|
2,448,917
|
|
|
|
49,097,338
|
|
|
$
|
0.05
|
|
|
$
|
(577,685
|
)
|
|
|
43,612,365
|
|
|
$
|
(0.01
|
)
|
Recent Accounting Pronouncements
In August 2010, the Financial Accounting
Standard Board (FASB) issued revised GAAP on the presentation of insurance claims and related insurance recoveries. The revised
GAAP requires a healthcare entity to present medical malpractice claims and similar liabilities without consideration of insurance
recoveries. Related insurance recoveries are to be presented as a receivable net of a valuation allowance for uncollectible amounts.
The accompanying financial statements present reserves for known malpractice claims. As of December 31, 2012 and 2011, the company
had no receivables for related insurance recoveries. Had any such receivables existed, they would be presented on an undiscounted
basis based upon loss projections.
Integrated Inpatient Solutions, Inc.
Notes to the Financial Statements
December 31, 2012 and 2011
NOTE 3 - ASSET SALE
On March 19, 2012, the Company executed
an Asset Purchase Agreement (“APA”) with an unrelated third party to sell the facility agreements, provider agreements,
payor contracts and other intangible assets related to the hospitalist business for a total purchase price of $6,500,000. The carrying
value of the purchased assets was $0 resulting in a total gain on the sale of $6,500,000. The APA did not include rights to any
cash, accounts receivable, prepaid expenses, deposits, property or equipment. No obligations or liabilities existing prior to the
closing of the APA were assumed by the purchaser.
Pursuant to the APA, $300,000 was placed
in escrow for the purposes of indemnifying the sellers for a period of eighteen months. After eighteen months, the funds are available
to the Company to use for operations.
Under the APA, the Company and its officers
are restricted from conducting hospitalist services for a period of 36 months from the closing date within a 50 mile radius of
any facility from which it had previously conducted such services.
NOTE 4 - PREPAID EXPENSES AND
OTHER CURRENT ASSETS
Prepaid expenses and other current assets
consist of the following at December 31, 2012 and 2011:
|
|
|
2012
|
|
|
|
2011
|
|
Escrow deposit held for indemnification
|
|
$
|
300,000
|
|
|
$
|
—
|
|
Prepaid insurance-medical professional liability
|
|
|
121,197
|
|
|
|
26,741
|
|
Other current assets
|
|
|
—
|
|
|
|
40,560
|
|
|
|
$
|
421,197
|
|
|
$
|
67,301
|
|
NOTE 5 - PROPERTY AND EQUIPMENT
The Company’s property and equipment
consisted of the following at December 31, 2012 and 2011:
|
|
2012
|
|
2011
|
|
Estimated Useful Life
|
|
|
|
|
|
|
|
|
|
|
|
Computer and Office Equipment
|
|
$
|
33,868
|
|
|
$
|
33,868
|
|
|
5 -7 years
|
Furniture and Fixtures
|
|
|
18,530
|
|
|
|
18,530
|
|
|
7 years
|
|
|
|
52,398
|
|
|
|
52,398
|
|
|
|
Less: Accumulated Depreciation
|
|
|
(40,574
|
)
|
|
|
(37,777
|
)
|
|
|
|
|
$
|
11,824
|
|
|
$
|
14,621
|
|
|
|
Depreciation expense for the years ended
December 31, 2012 and 2011 was $2,797 and $5,997 respectively.
Integrated Inpatient Solutions, Inc.
Notes to the Financial Statements
December 31, 2012 and 2011
NOTE 6 - DEBT
As of December 31, 2012 and 2011, debt
obligations consisted of the following:
|
|
|
2012
|
|
|
|
2011
|
|
Note payable to Citibank payable $993 monthly. Interest accrues at a variable rate based upon a rate of prime plus 1%. The loan is secured by all property and assets of the Company and is personally guaranteed by certain members of management.
|
|
$
|
—
|
|
|
$
|
8,667
|
|
|
|
|
|
|
|
|
|
|
Citibank, line of credit, payable over 60 months accruing interest at 4.25% per year. The original principal balance was $500,000. The loan is payable November, 25, 2012.
|
|
|
—
|
|
|
|
485,527
|
|
Less current portion
|
|
|
—
|
|
|
|
(494,194
|
)
|
Long-term debt
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest expense was $6,797 and $23,889
for the years ended December 31, 2012 and 2011, respectively. During March 2012, the Company paid off the debt with Citibank for
a total amount of $494,194.
NOTE 7 - RELATED PARTY TRANSACTIONS
During 2012, the Company received advance
of $7,000 from one officer. This advance was unsecured, non-interest bearing and due on demand.
During 2011, the Company received advances
of $53,000 from two officers. These advances were unsecured, non-interest bearing and due on demand. During March
of 2012, the Company repaid the advances due to the officers.
Included in accounts payable and accrued
liabilities are accrued payroll amounts due to two officers of approximately $7,000 and $138,000 at December 31, 2012 and 2011,
respectively.
NOTE 8 - INCOME TAXES
Deferred income taxes reflect the net
tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Significant components of the Company’s net current and deferred income tax
provision are as follows:
|
|
Fiscal year ended December 31, 2012
|
|
Fiscal year ended December 31, 2011
|
|
|
Total
|
|
Continuing Operations
|
|
Discontinued Operations
|
|
Total
|
|
Continuing Operations
|
|
Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
$
|
1,578,930
|
|
|
$
|
(31,579
|
)
|
|
$
|
1,610,509
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Deferred:
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,600
|
|
|
$
|
—
|
|
|
$
|
12,600
|
|
|
Total
|
|
|
$
|
1,578,930
|
|
|
$
|
(31,579
|
)
|
|
$
|
1,610,509
|
|
|
$
|
12,600
|
|
|
$
|
—
|
|
|
$
|
12,600
|
|
Integrated Inpatient Solutions, Inc.
Notes to the Financial Statements
December 31, 2012 and 2011
NOTE 8 - INCOME TAXES (continued)
The tax effects of temporary differences
which give rise to deferred tax assets at December 31, 2012 and 2011, are summarized as follows:
|
|
2012
|
|
2011
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss
|
|
$
|
—
|
|
|
$
|
12,600
|
|
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
12,600
|
|
The following is a reconciliation of
the effective income tax rate to the Federal statutory rate:
|
|
2012
|
|
2011
|
Statutory rate
|
|
|
34.00
|
%
|
|
|
34.00
|
%
|
State income taxes, net of Federal tax benefit
|
|
|
5.50
|
|
|
|
5.50
|
|
Permanent differences
|
|
|
—
|
|
|
|
(35.30
|
)
|
Valuation allowance-deferred tax asset from NOL
|
|
|
—
|
|
|
|
(2.10
|
)
|
Effective rate
|
|
|
39.50
|
%
|
|
|
(2.10
|
)%
|
At December 31, 2012 and 2011, the Company
had a net operating loss carry forwards for both federal and state purposes of approximately $0 and $32,000, respectively, which
may be offset against future taxable income through 2031.
The Company has determined that a valuation
for the income tax provision was not required at December 31, 2011. A valuation allowance is required if, based on the weight of
evidence, it is more likely than not that some or the entire portion of the deferred tax asset will not be realized. After consideration
of all the evidence, both positive and negative, management has determined that a valuation allowance is not necessary to reduce
the deferred tax asset.
The accompanying financial statements
include refundable income taxes of $69,585 and $22,347 at December 31, 2012 and 2011. These amounts represent the excess of federal
and state income tax deposits over the expected tax liability.
NOTE 9 - STOCKHOLDERS' EQUITY
Preferred Stock
The Company has 10,000,000 authorized
shares of non-redeemable, convertible preferred stock with a par value of $.0001. Each share of preferred stock is convertible
to 10 shares of commons stock. In May 2012, 500,000 of the 750,000 shares of preferred stock outstanding were converted into 5
million shares of common stock.
Common Stock
On February 14, 2012, the Company's
stockholders approved an amendment to the Company’s Articles of Incorporation to increase the authorized number of shares
of common stock, $.0001 par value, from 50,000,000 shares to 100,000,000 shares.
Dividends
During March and April of 2012, the
Company paid dividends for $1,431,146.
Integrated Inpatient Solutions, Inc.
Notes to the Financial Statements
December 31, 2012 and 2011
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Commitments
In July 2007, the Company entered into
a one year office lease agreement at $3,000 per month. The lease agreement expired and is currently a month to month agreement
that can be terminated at any time. Total rent expense for the years ended December 31, 2012 and 2011 was $23,150 and $34,301,
respectively.
Contingencies
In the ordinary course of our business,
the Company becomes involved in lawsuits and legal proceedings involving claims of medical malpractice related to medical services
provided by our affiliated physicians. The Company is currently involved in one such matter where the claim could exceed insurance
coverage. This matter is in the early stages of discovery and an estimate of loss, if any, cannot currently be made.
The Company is currently not aware of
any other such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse affect
on its business, financial condition or operating results except for the item described below. Litigation is subject to inherent
uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business.
In October 2011, the Company became
involved in a legal settlement relating to an AHCA settlement for approximately $30,000. As a result of the settlement agreement,
the Company agreed to pay a total amount of approximately $30,000, which was paid in full as of December 31, 2012.
In November 2011, the Company became
involved in a legal settlement relating to a malpractice claim for $100,000. As a result of the settlement agreement, the Company
agreed to pay a total amount of $100,000. As of December 31, 2012, the Company still has a remaining balance of approximately $79,000
which is due in equal yearly installments of $20,000 over the next four years.
Regulatory Matters
Laws and regulations governing the Medicare
and Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future
government review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from the
Medicare and Medicaid programs. We believe that we are in compliance with all applicable laws and regulations. We are not aware
of any specific investigations involving allegations of potential wrongdoing.
NOTE 11 - CONCENTRATIONS
Revenue
The Company has one affiliated provider,
who is a director of the Company with revenues that represented approximately 1% and 6% of net revenues as of December 31, 2012
and 2011, respectively.
The Company’s top five unaffiliated
providers represented approximately 94% of revenues for the year ended December 31, 2012. The Company’s top five unaffiliated
providers represented approximately 33%, of revenues for the year ended December 31, 2011. The Company enjoys good relations
with these providers. However, the loss of any of these providers, if not replaced, could have an adverse impact on the Company’s
operations.
Integrated Inpatient Solutions, Inc.
Notes to the Financial Statements
December 31, 2012 and 2011
NOTE 12 -
Discontinued
Operations
In March 2013, management decided to
exit the
health care provider
business
and change the Company's
strategy in order to focus on its interior design business. Accordingly, the financial statements have been presented in accordance
with ASC 205-20,
Discontinued Operations
.
The following table illustrates the
reporting of the discontinued operations included in the Statements of Operations for the years ended December 31, 2012 and 2011:
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient Service Revenue (net of contractual allowances and discounts)
|
|
$
|
2,785,498
|
|
|
$
|
6,777,591
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Cost of services-physicians
|
|
|
3,234,533
|
|
|
|
5,731,549
|
|
General and administrative
|
|
|
1,705,449
|
|
|
|
1,451,496
|
|
Professional liability settlement
|
|
|
—
|
|
|
|
100,000
|
|
Total operating expenses
|
|
|
4,939,982
|
|
|
|
7,283,045
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(6,792
|
)
|
|
|
(23,878
|
)
|
Gain on sale of assets
|
|
|
6,500,000
|
|
|
|
—
|
|
Total other income (expenses)
|
|
|
6,493,208
|
|
|
|
(23,878
|
)
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operation
|
|
$
|
4,338,724
|
|
|
$
|
(529,332
|
)
|
The Company expects to receive funds
from the collection of accounts receivable related to discontinued operations through July 2013.
NOTE 13 - SUBSEQUENT EVENTS
As disclosed
in Note 1, t
hrough March 2013, the Company provided health care services in South Florida.
As disclosed
in Note 12, i
n March 2013, management decided to
exit the
health care provider
business
and change the Company's strategy in order to focus on its interior design business.
In preparing these financial statements, the Company
has evaluated events and transactions for potential recognition or disclosure through September 23, 2013, the date the financial
statements were issued.
Integrated Inpatient Solutions, Inc.
|
Condensed Balance Sheets
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
2013
|
|
2012
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
319,366
|
|
|
$
|
927,895
|
|
Accounts receivable, net
|
|
|
—
|
|
|
|
137,471
|
|
Refundable income taxes
|
|
|
69,585
|
|
|
|
69,585
|
|
Deferred income tax benefit
|
|
|
281,702
|
|
|
|
—
|
|
Prepaid expenses and other current assets
|
|
|
300,000
|
|
|
|
421,197
|
|
Total current assets
|
|
|
970,653
|
|
|
|
1,556,148
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
4,273
|
|
|
|
11,824
|
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
2,485
|
|
|
|
6,000
|
|
Other assets
|
|
|
—
|
|
|
|
144,222
|
|
TOTAL ASSETS
|
|
$
|
977,411
|
|
|
$
|
1,718,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDER'S EQUITY
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
72,277
|
|
|
$
|
61,012
|
|
Accrued legal settlement
|
|
|
129,379
|
|
|
|
79,379
|
|
Loans payable - related parties
|
|
|
7,000
|
|
|
|
7,000
|
|
Total current liabilities
|
|
|
208,656
|
|
|
|
147,391
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
208,656
|
|
|
|
147,391
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contigencies (See Note 9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 10,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
250,000 shares issued and oustanding as of September 30, 2013 and
|
|
|
|
|
|
|
|
|
December 31, 2012, respectively
|
|
|
25
|
|
|
|
25
|
|
Common stock, $0.0001 par value, 100,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
48,612,365 shares issued and outstanding as of September 30,
|
|
|
|
|
|
|
|
|
2013 and December 31, 2012, respectively.
|
|
|
4,861
|
|
|
|
4,861
|
|
Additional paid-in capital
|
|
|
137,114
|
|
|
|
137,114
|
|
Retaining earnings
|
|
|
626,755
|
|
|
|
1,428,803
|
|
Total Stockholders’ Equity
|
|
|
768,755
|
|
|
|
1,570,803
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
977,411
|
|
|
$
|
1,718,194
|
|
See notes to condensed financial statements.
Integrated Inpatient Solutions, Inc.
|
Statement of Operations
|
(Unaudited)
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Revenue
|
|
$
|
8,064
|
|
|
$
|
—
|
|
|
$
|
10,226
|
|
|
$
|
—
|
|
Cost of services
|
|
|
2,430
|
|
|
|
1,250
|
|
|
|
8,171
|
|
|
|
5,834
|
|
Gross Income (Loss)
|
|
|
5,634
|
|
|
|
(1,250
|
)
|
|
|
2,055
|
|
|
|
(5,834
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
172,701
|
|
|
|
14,151
|
|
|
|
368,871
|
|
|
|
91,330
|
|
Loss from continuing operations
|
|
|
(167,067
|
)
|
|
|
(15,401
|
)
|
|
|
(366,816
|
)
|
|
|
(97,164
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit from income taxes on continuing operations
|
|
|
25,970
|
|
|
|
4,821
|
|
|
|
95,347
|
|
|
|
30,416
|
|
Loss from continuing operations
|
|
|
(141,097
|
)
|
|
|
(10,580
|
)
|
|
|
(271,469
|
)
|
|
|
(66,748
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations
|
|
|
(388,904
|
)
|
|
|
(588,838
|
)
|
|
|
(716,934
|
)
|
|
|
5,110,926
|
|
Benefit (provision) from income taxes
|
|
|
60,454
|
|
|
|
218,573
|
|
|
|
186,355
|
|
|
|
(1,897,146
|
)
|
Income (loss) on discontinued operations
|
|
|
(328,450
|
)
|
|
|
(370,265
|
)
|
|
|
(530,579
|
)
|
|
|
3,213,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(469,547
|
)
|
|
$
|
(380,845
|
)
|
|
$
|
(802,048
|
)
|
|
$
|
3,147,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share - basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
Income (loss) from discontinued operations
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.07
|
|
Net income (loss) per share - basic
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share - diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
Income (loss) from discontinued operations
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.06
|
|
Net income (loss) per share - diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic
|
|
|
48,612,365
|
|
|
|
48,612,365
|
|
|
|
48,612,365
|
|
|
|
45,920,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - diluted
|
|
|
48,612,365
|
|
|
|
48,612,365
|
|
|
|
48,612,365
|
|
|
|
48,420,759
|
|
See notes to condensed financial statements.
Integrated Inpatient Solutions, Inc.
|
Condensed Statements of Cash Flows
|
(Unaudited)
|
|
|
|
|
|
|
|
Nine months ended
|
|
|
September 30,
|
|
|
2013
|
|
2012
|
Cash Flow from Operating Activities
|
|
|
|
|
|
|
|
|
Net (Loss) Income
|
|
$
|
(802,048
|
)
|
|
$
|
3,147,032
|
|
Adjustments to reconcile net (loss) income to net cash
|
|
|
|
|
|
|
|
|
used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
7,551
|
|
|
|
2,098
|
|
Gain on sale of assets
|
|
|
—
|
|
|
|
(6,500,000
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
137,471
|
|
|
|
583,053
|
|
Deferred income tax benefit
|
|
|
(281,702
|
)
|
|
|
251,761
|
|
Prepaid expenses and other current assets
|
|
|
121,197
|
|
|
|
(52,896
|
)
|
Other assets
|
|
|
147,737
|
|
|
|
(175,287
|
)
|
Accounts payable and accrued liabilities
|
|
|
11,265
|
|
|
|
(173,272
|
)
|
Accrued legal settlement
|
|
|
50,000
|
|
|
|
(38,486
|
)
|
Net cash used in operating activities
|
|
|
(608,529
|
)
|
|
|
(2,955,997
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
Proceeds from sale of assets
|
|
|
—
|
|
|
|
6,200,000
|
|
Net cash provided by investing activities
|
|
|
—
|
|
|
|
6,200,000
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Overdraft
|
|
|
—
|
|
|
|
(20,475
|
)
|
Repayment of long term debt
|
|
|
—
|
|
|
|
(494,194
|
)
|
Loans payable - related parties
|
|
|
—
|
|
|
|
(46,000
|
)
|
Dividends paid
|
|
|
—
|
|
|
|
(1,431,146
|
)
|
Net cash used in financing activities
|
|
|
—
|
|
|
|
(1,991,815
|
)
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash
|
|
|
(608,529
|
)
|
|
|
1,252,188
|
|
|
|
|
|
|
|
|
|
|
Cash - Beginning of year
|
|
|
927,895
|
|
|
|
13,699
|
|
Cash - End of the period
|
|
$
|
319,366
|
|
|
$
|
1,265,887
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
—
|
|
|
$
|
6,797
|
|
Cash paid for income taxes
|
|
$
|
—
|
|
|
$
|
1,613,568
|
|
See notes to condensed financial statements.
Integrated Inpatient Solutions, Inc.
Condensed Financial Statements
September 30, 2013
(Unaudited)
NOTE 1 - ORGANIZATION AND BUSINESS ACTIVITY
The Company was incorporated in Florida on
July 31, 2001. On September 21, 2001 the Company was acquired by PlaNet.Com, Inc., a Nevada public, non-reporting corporation.
Pla.Net.Com, Inc. was considered a shell at the time of acquisition and therefore the acquisition was treated as a reverse merger
(the acquired company is treated as the acquiring company for accounting purposes). Pla.Net.Com, Inc. changed its name to Inpatient
Clinical Solutions, Inc. immediately after the merger.
Through March 2013, the Company provided health
care services in South Florida. The Company provided inpatient physician care to various health care facilities and health plans
in the South Florida area. Prior to February 2012, the Company provided Hospitalist services at acute care hospitals. Hospitalists
focus on a patient’s care from the time of admission to discharge, working in close consultation with primary care physicians,
other referring physicians and medical providers to coordinate the inpatient care delivery system and manage the entire inpatient
episode of care.
As more fully described in note 3, the Company
sold the hospitalist business during February 2012. At that time, the Company changed its name from Inpatient Clinical Solutions,
Inc. to Integrated Inpatient Solutions, Inc. In November 2011, the Company entered into an agreement with a hospital to provide
intensivist services. Under the exclusive agreement, the Company provided critical care intensivist coverage for all medical and
surgical intensive care unit patients at the hospital. The physicians include full-time employees, part-time and temporary physicians
as well as contracted physician providers. The intensivist agreement was terminated in January 2013.
The Company is developing an interior design
business targeting budget minded individuals. The business operates under the trade name Integrated Interior Design. The Company
earns revenues from providing decorator services which are billed on hourly and per diem rates. The interior design business initially
operates in South Florida and will expand regionally and nationally. The business provides interior design, interior staging, accompanied
shopping, paint color selection, architectural drawing and other design services.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Jobs Act of 2012
Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words,
an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised
accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with
public company effective dates.
BASIS OF PRESENTATION
The unaudited interim financial statements
have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial
information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by GAAP for complete financial statements.
The financial information furnished herein
reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation
of the Company’s financial position, results of operations and cash flows for the interim periods. The results
of operations for the nine months ended September 30, 2013 are not necessarily indicative of the results to be expected for the
year ending December 31, 2013.
Integrated Inpatient Solutions, Inc.
Condensed Financial Statements
September 30, 2013
(Unaudited)
BASIS OF PRESENTATION (continued)
The information included in these interim
unaudited condensed financial statements should be read in conjunction with the Company’s Registration Statement on Form
S-1 for the year ended December 31, 2012.
Use of Estimates
The preparation of financial statements in
accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. The areas involving the most significant use of estimates include legal contingencies, deferred
tax benefits, refundable income taxes, the estimated realizable value of accounts receivable, contractual adjustment of gross billings
and payables for known claims and liabilities for claims incurred but not reported (IBNR) related to medical malpractice. These
estimates are based on knowledge of current events and anticipated future events. The Company adjusts these estimates each period
as more current information becomes available. The impact of any changes in estimates is included in the determination of earnings
in the period in which the estimate is adjusted. Actual results may ultimately differ materially from those estimates.
Cash
The Company considers cash in banks and other
highly liquid investments with insignificant interest rate risk and maturities of three months or less at the time of acquisition
to be cash and cash equivalents. At September 30, 2013 and December 31, 2012, the Company had no cash equivalents. The Company
maintains cash accounts in financial institutions that are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”).
FDIC insurance has increased from $100,000 to $250,000 per depositor as of December 31, 2012. Deposits in excess of FDIC insurance
totaled approximately $26,000 and $637,000 at September 30, 2013 and December 31, 2012, respectively.
Accounts Receivable
Accounts receivable represent amounts due from
third-party payors, including government sponsored Medicare and Medicaid programs, insurance companies and patients for medical
services provided. Accounts receivable are recorded and stated at the amount expected to be collected and have been adjusted to
reflect the differences between charges and the estimated reimbursable amounts.
Accounts receivable balances as of September
30, 2013 and December 31, 2012 were as follows:
|
|
|
2013
|
|
|
|
2012
|
|
Accounts Receivable
|
|
$
|
—
|
|
|
$
|
1,074,528
|
|
Less Contractual Allowances and Allowances for Doubtful Accounts
|
|
|
—
|
|
|
|
(937,057
|
)
|
|
|
$
|
—
|
|
|
$
|
137,471
|
|
Property and Equipment
Property and equipment are recorded at cost
and depreciated on a straight-line basis over the estimated useful life of the asset. Expenditures for major renewals and betterments
that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to
expense as incurred.
Integrated Inpatient Solutions, Inc.
Condensed Financial Statements
September 30, 2013
(Unaudited)
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for
impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered.
The Company assesses the recoverability of
its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group
of long-lived assets over their remaining estimated useful lives, against their respective carrying amounts. Impairment,
if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally
determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If
long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than
originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated
useful lives. The Company determined that there were no impairments of long-lived assets as of September 30, 2013 and
December 31, 2012.
Fair Value of Financial Instruments
U.S. GAAP for fair value measurements establishes
a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three levels. The fair
value hierarchy gives the highest priority to quoted market prices (unadjusted) in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3). Level 2 inputs are inputs, other than quoted prices included
within Level 1, which are observable for the asset or liability, either directly or indirectly. The fair value hierarchy
gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority
to unobservable inputs.
The carrying amounts of the Company’s
financial assets and liabilities, such as cash, accounts receivable, deposits, accounts payable and accrued liabilities, approximate
their fair values because of the short maturity of these instruments.
Revenue Recognition
Hospitalist/Intensivist
- Revenue consists
primarily of net patient service revenues that are recorded based upon established billing rates less allowances for contractual
adjustments. Revenues are recorded during the period the healthcare services are provided, based upon the estimated amounts due
from the patients and third party payors, including federal and state agencies (under the Medicare and Medicaid programs), managed
care health plans and commercial insurance companies. Estimates of contractual allowances under third-party payor arrangements
are based upon the payment terms specified in the related contractual agreements. Third-party payor contractual payment terms are
generally based upon predetermined rates per diagnosis, per diem rates, or discounted fee-for-service rates.
The Company derives a significant portions
of its revenues from third party insurers and accordingly receives discounts from standard charges. The Company must estimate
the total amount of these discounts to prepare its financial statements. The various managed care contracts under which these
discounts must be calculated are complex and are subject to interpretation and adjustment. These interpretations sometimes result
in payments that differ from the Company’s estimates. Additionally, updated regulations and contract renegotiations occur
frequently, necessitating regular review and assessment of the estimation process by management. Changes in estimates related
to the allowance for contractual discounts affect revenues reported in the Company’s statement of operations in the period
of the change.
Integrated Inpatient Solutions, Inc.
Condensed Financial Statements
September 30, 2013
(Unaudited)
The Medicare and Medicaid reimbursing entities
(“Entities”) provide a substantial portion of the Company revenues. These Entities are subject to numerous laws and
regulations of federal, state and local governments, including but not limited to matters such as licensure, accreditation, participation
requirements, reimbursement formulas and fraud and abuse. Compliance with standards and other regulations can be subject to future
government review and interpretation. Any future changes in federal and state reimbursement funding mechanisms could affect the
Company.
Interior Design
- The Company follows
ASC 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when
it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive
evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, and
collectability is reasonably assured.
Income Taxes
The Company follows Section 740-10-30 of the
FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred
tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities
using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets
are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be
realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment
date.
The Company adopted section 740-10-25 of the
FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether
tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under
Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not
that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The
Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section
740-10-25.
Earnings Per Share
The Company computes earnings per share in
accordance with the provisions of FASB ASC Topic 260, "Earnings Per Share," which specifies the computation, presentation
and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. Basic earnings
per share are computed by dividing net earnings available to common shareholders by the weighted average number of common shares
outstanding during the period. Diluted earnings per share are computed assuming the exercise of dilutive stock options
under the treasury stock method and the related income tax effects.
As of September 30, 2013 and 2012, we had 250,000
shares of Convertible Preferred Stock outstanding convertible into 2,500,000 common shares.
Integrated Inpatient Solutions, Inc.
Condensed Financial Statements
September 30, 2013
(Unaudited)
The following tables set forth the computation
of basic and diluted earnings per share as shown on the face of the accompanying Statements of Operations:
|
|
For the Nine Months
Ended September 30,
|
|
|
2013
|
|
2012
|
|
|
Net
Loss
|
|
Shares
|
|
Per
Share
Amount
|
|
Net
Income
|
|
Shares
|
|
Per
Share
Amount
|
Basic
Earnings per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(802,048
|
)
|
|
|
|
|
|
|
|
|
|
$
|
3,147,032
|
|
|
|
|
|
|
|
|
|
Amount allocated to participating securities
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Net income (loss) available for basic common shares
|
|
$
|
(802,048
|
)
|
|
|
48,612,365
|
|
|
$
|
(0.02
|
)
|
|
$
|
3,147,032
|
|
|
|
45,920,759
|
|
|
$
|
0.07
|
|
and basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(802,048
|
)
|
|
|
|
|
|
|
|
|
|
$
|
3,147,032
|
|
|
|
|
|
|
|
|
|
Amount allocated to participating securities
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for dilutive potential common shares
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
2,500,000
|
|
|
|
|
|
Net income (loss) available for diluted common shares and diluted earnings per share
|
|
$
|
(802,048
|
)
|
|
|
48,612,365
|
|
|
$
|
(0.02
|
)
|
|
|
3,147,032
|
|
|
|
48,420,759
|
|
|
$
|
0.06
|
|
|
|
For the Three Months Ended September 30,
|
|
|
2013
|
|
2012
|
|
|
Net Loss
|
|
Shares
|
|
Per Share Amount
|
|
Net Loss
|
|
Shares
|
|
Per Share Amount
|
Basic Earnings per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(469,547
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(380,845
|
)
|
|
|
|
|
|
|
|
|
Amount allocated to participating securities
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Net income (loss) available for basic common shares and basic earnings per share
|
|
$
|
(469,547
|
)
|
|
|
48,612,365
|
|
|
$
|
(0.01
|
)
|
|
$
|
(380,845
|
)
|
|
|
48,612,365
|
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(469,547
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(380,845
|
)
|
|
|
|
|
|
|
|
|
Amount allocated to participating securities
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Adjustment for dilutive potential common shares
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Net income (loss) available for diluted common shares and diluted earnings per share
|
|
$
|
(469,547
|
)
|
|
|
48,612,365
|
|
|
$
|
(0.01
|
)
|
|
$
|
(380,845
|
)
|
|
|
48,612,365
|
|
|
$
|
(0.01
|
)
|
Recent Accounting Pronouncements
There have been no accounting pronouncements
or changes in accounting pronouncements during the nine months ended September 30, 2013 that are expected to have a material impact
on the Company’s financial position, results of operations or cash flows. Accounting pronouncements that became
effective during the nine months ended September 30, 2013 did not have a material impact on disclosures or on the Company’s
financial position, results of operations or cash flows.
Integrated Inpatient Solutions, Inc.
Condensed Financial Statements
September 30, 2013
(Unaudited)
NOTE 3 - ASSET SALE
On March 19, 2012, the Company executed an
Asset Purchase Agreement (“APA”) with an unrelated third party to sell the facility agreements, provider agreements,
payor contracts and other intangible assets related to the hospitalist business for a total purchase price of $6,500,000. The carrying
value of the purchased assets was $0 resulting in a total gain on the sale of $6,500,000. The APA did not include rights to any
cash, accounts receivable, prepaid expenses, deposits, property or equipment. No obligations or liabilities existing prior to the
closing of the APA were assumed by the purchaser.
Pursuant to the APA, $300,000 was placed in
escrow for the purposes of indemnifying the sellers for a period of eighteen months. After eighteen months, the funds are available
to the Company to use for operations. The Company received $300,000 of the escrow funds in November 2013.
Under the APA, the Company and its officers
are restricted from conducting hospitalist services for a period of 36 months from the closing date within a 50 mile radius of
any facility from which it had previously conducted such services.
NOTE 4 - PREPAID EXPENSES AND OTHER
CURRENT ASSETS
Prepaid expenses and other current assets consist
of the following at September 30, 2013 and December 31, 2012:
|
|
2013
|
|
2012
|
Escrow Deposit held for indemnification
|
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Prepaid insurance - medical professional liability
|
|
|
—
|
|
|
|
121,197
|
|
|
|
$
|
300,000
|
|
|
$
|
421,197
|
|
The Company received the escrow funds in November,
2013.
NOTE 5 - PROPERTY AND EQUIPMENT
The Company’s property and equipment
consisted of the following at September 30, 2013 and December 31, 2012:
|
|
2013
|
|
2012
|
|
Estimated Useful Life
|
Computer and Office Equipment
|
|
$
|
33,868
|
|
|
$
|
33,868
|
|
|
5 -7 years
|
Furniture and Fixtures
|
|
|
18,530
|
|
|
|
18,530
|
|
|
7 years
|
|
|
$
|
52,398
|
|
|
$
|
52,398
|
|
|
|
Less: Accumulated Depreciation
|
|
|
(48,125
|
)
|
|
|
(40,574
|
)
|
|
|
|
|
$
|
4,273
|
|
|
$
|
11,824
|
|
|
|
Depreciation expense for the periods ended
September 30, 2013 and 2012 was $7,551 and $2,098 respectively.
NOTE 6 - OTHER ASSETS
Other assets arise from prepayments on two
medical malpractice insurance policies with coverage that indemnifies the Company on the claims-made basis. The policy periods
end in February 2016 and March 2015, respectively. The Company had unamortized premiums of $121,197 in current assets and $144,222
in other assets at December 31, 2012. No amounts remained as of September 30, 2013 as the Company wrote-off the remaining unamortized
premiums in conjunction with discontinuing the intensivist and hospitalist programs.
Integrated Inpatient Solutions, Inc.
Condensed Financial Statements
September 30, 2013
(Unaudited)
NOTE 7 - INCOME TAXES
Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. The Company’s net current and deferred income tax provision are as follows:
Income Tax
|
|
Nine Months Ended September 30, 2013
|
|
Nine Months Ended September 30, 2012
|
Expense (Benefit)
|
|
Total
|
|
Continuing Operations
|
|
Discontinued Operations
|
|
Total
|
|
Continuing Operations
|
|
Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
$
|
(281,702
|
)
|
|
$
|
(95,347
|
)
|
|
$
|
(186,355
|
)
|
|
$
|
1,866,730
|
|
|
$
|
(30,416
|
)
|
|
$
|
1,897,146
|
|
The following is a reconciliation of the effective
income tax rate to the Federal statutory rate:
|
|
2013
|
|
2012
|
Statutory rate
|
|
|
30.00
|
%
|
|
|
30.00
|
%
|
State income taxes, net of Federal tax benefit
|
|
|
5.50
|
|
|
|
5.50
|
|
|
|
|
35.50
|
|
|
|
35.50
|
|
Less: Valuation Allowance
|
|
|
9.50
|
|
|
|
—
|
|
|
|
|
26.00
|
%
|
|
|
35.50
|
%
|
The accompanying unaudited condensed financial
statements include refundable income taxes of $69,585 at September 30, 2013 and December 31, 2012. This amount represents the excess
of federal and state income tax deposits over the expected tax liability.
During 2013, the Company recognized a deferred
income tax benefit of approximately $282,000 arising from operating loss carrybacks. In addition, the Company recognized a deferred
tax benefit of $119,000 resulting from the write-off of prepaid malpractice insurance policy premiums that will be amortized over
a three year period for income tax reporting purposes. The Company recorded a valuation allowance of $119,000 for the deferred
tax benefit because of uncertainty of its realization. The Company had no deferred tax assets at December 31, 2012.
NOTE 8 - STOCKHOLDERS' EQUITY
Preferred Stock
The Company has 10,000,000 authorized shares
of non-redeemable, convertible preferred stock with a par value of $.0001. Each share of preferred stock is convertible to 10
shares of common stock. In May 2012, 500,000 of the 750,000 shares of preferred stock outstanding were converted into 5 million
shares of common stock.
Common Stock
On February 14, 2012, the Company's shareholder approved an amendment to the Company’s Articles of Incorporation to increase
the authorized number of shares of common stock, $.0001 par value, from 50,000,000 shares to 100,000,000 shares.
Integrated Inpatient Solutions, Inc.
Condensed Financial Statements
September 30, 2013
(Unaudited)
NOTE 9 - COMMITMENT AND CONTINGENCIES
Commitment
In July 2007, the Company entered into a one
year office lease agreement at $3,000 per month. The lease agreement expired and has been terminated. In April 2013, the Company
entered into a new one year office lease agreement at $450 per month, the lease expires in May 2014. Total rent expense for the
periods ended September 30, 2013 and September 30, 2012 was $9,297 and $18,380, respectively.
Contingencies
In the ordinary course of our business, the
Company becomes involved in lawsuits and legal proceedings involving claims of medical malpractice related to medical services
provided by our affiliated physicians. The Company is currently involved in the settlement stages of one such matter. The accompanying
financial statements include an accrual of $50,000 for this matter under the caption accrued legal settlement. This accrual represents
the Company’s anticipated deductible on the settlement.
Edra Schwartz as the Personal Representative
of the Estate of Robert A. Schwartz, Deceased, v. Jason Strong, M.D., Aretha Nelson, M.D. and Inpatient Clinical Solutions, Inc.
This
matter involves a 66 year old white male who developed a MRSA (methicillin-resistant staphylococcus aureus) infection following
a craniotomy to remove a suspected meningioma. (1) Failure to properly interpret
the brain MRIs preoperatively (this is directed at the radiologist preoperatively); and (2) Failure to diagnose a MRSA infection
and brain abscess following the craniotomy on May 6, 2009. The patient died on September 24, 2009.
The suit commenced October 18, 2011 and the case is pending in
the circuit court of the 17 Judical Circuit in and for Broward County, FL, Case # 11-10485. The claim is for unspecified
monetary damages. The Company is defending this case vigorously and, while the claims for damages have not been quantified, the
Company does not believe that a negative decision would have a material impact on the Company.
The Company is currently not aware of any other
such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse affect on its
business, financial condition or operating results except for the item described below. Litigation is subject to inherent uncertainties,
and an adverse result in these or other matters may arise from time to time that may harm its business.
In November 2011, the Company became involved
in a legal settlement relating to a malpractice claim for $100,000. As a result of the settlement agreement, the Company agreed
to pay a total amount of $100,000. As of September 30, 2013 and December 31, 2012, the remaining balance is approximately $79,000
which is due in equal yearly installments of $20,000 over the next four years.
Regulatory Matters
Laws and regulations governing the Medicare
and Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future
government review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from the
Medicare and Medicaid programs. We believe that we are in compliance with all applicable laws and regulations. We are not aware
of any specific investigations involving allegations of potential wrongdoing.
Integrated Inpatient
Solutions, Inc.
Condensed Financial Statements
September 30, 2013
(Unaudited)
NOTE 10 - CONCENTRATIONS
Revenue
The Company has one affiliated medical provider,
who is a director of the Company with revenues that represented approximately 4% and 2% of net revenues as of September 30, 2013
and September 30, 2012, respectively.
The Company’s top 3 unaffiliated medical
providers represented approximately 96% of revenues for the nine month period ended September 30, 2013. The Company’s top
3 unaffiliated providers represented approximately 43% of revenues for the nine month period ended September 30, 2012. The
Company enjoyed good relations with these providers. However, the loss of any of these providers, if they had not been replaced,
could have had an adverse impact on the Company’s operations.
NOTE 11 -
Discontinued
Operations
In March 2013, management decided to
exit
the
health care provider
business
and change the Company's strategy in order to focus
on its interior design business. Accordingly, the financial statements have been presented in accordance with ASC 205-20,
Discontinued
Operations
.
The following table illustrates the reporting
of the discontinued operations included in the Statements of Operations for the nine months ended September 30, 2013 and 2012:
|
|
Nine Months Ended September 30,
|
|
|
2013
|
|
2012
|
|
|
|
|
|
Patient Service Revenue (net of contractual allowances and discounts)
|
|
$
|
123,642
|
|
|
$
|
2,807,941
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Cost of services-physicians
|
|
|
233,178
|
|
|
|
2,468,562
|
|
General and administrative
|
|
|
607,398
|
|
|
|
1,721,661
|
|
Total operating expenses
|
|
|
840,576
|
|
|
|
4,190,223
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
—
|
|
|
|
(6,792
|
)
|
Gain on sale of assets
|
|
|
—
|
|
|
|
6,500,000
|
|
Total other income (expenses)
|
|
|
—
|
|
|
|
6,493,208
|
|
|
|
|
|
|
|
|
|
|
Income (loss) on discontinued operations
|
|
$
|
(716,934
|
)
|
|
$
|
5,110,926
|
|
NOTE 12 – SUBSEQUENT EVENT
During November 2013, $300,000 of funds placed
into escrow pursuant to the APA, were released.
In preparing these interim condensed unaudited financial statements, the Company has evaluated events and transactions for potential
recognition or disclosure through December 13, 2013, the date the financial statements were available to be filed.