U

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C.  20549


FORM 10-Q/A1



[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2014


[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


     For the transition period from

 to


Commission File No.   000-54917


FUTURE HEALTHCARE OF AMERICA

 (Exact name of registrant as specified in its charter)


WYOMING

45-5547692

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)


420 Royal Palm Way, Suite 100

Palm Beach, FL 33480


 (Address of Principal Executive Offices)


Registrant's Telephone Number:  (561) 693-1422



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   (1) Yes [X ] No[ ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X ] No [  ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of ‘‘large accelerated filer”, “accelerated filer’’ and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer  [  ]

 

 

Accelerated filer [  ]

 

 

Non-accelerated filer  [  ]

 

 

Smaller reporting company  [ X ]

 

 

 


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]



As of August 10, 2015, there were 10,665,631 shares of common stock, par value $0.001, of the registrant issued and outstanding.








1





PART I - FINANCIAL INFORMATION



The Unaudited Consolidated Financial Statements of Future Healthcare of America, a Wyoming corporation (the “Company,” “FHA,” “we,” “our,” “us” and words of similar import) were prepared by management and commence on the following page, together with related notes.  In the opinion of management, the Unaudited Consolidated Financial Statements fairly present the financial condition of the Company.





Future Healthcare of America



Index to Unaudited Financial Statements


  

Page

 

 

  

  

Unaudited Consolidated Balance Sheets

3

  

 

Unaudited Consolidated Statements of Operations

4

  

 

Unaudited Consolidated Statements of Cash Flows

5

  

 

Notes to Unaudited Consolidated Financial Statements

6



























2




FUTURE HEALTHCARE OF AMERICA

 UNAUDITED CONSOLIDATED BALANCE SHEETS


 

 

June 30,  2014

 

December 31, 2013

 

   CURRENT ASSETS:

Restated

 

Restated

 

     Cash

$  970,359

 

$  1,073,686

 

     Accounts receivable

349,154

[1]

594,911

[1]

     Prepaid expenses

66,590

 

58,495

 

     Deferred tax asset, net

7,318

 

7,318

 

   Total current assets

1,393,421

 

1,734,410

 

 

 

 

 

 

   Property and equipment, net

134

 

188

 

   Goodwill

79,809

 

79,809

 

   Deposit

28,224

 

-

 

   Deferred tax asset, net

491,516

 

491,516

 

   Total assets

$  1,993,104

 

$  2,305,923

 

 

 

 

 

 

   CURRENT LIABILITIES:

 

 

 

 

     Accounts payable

50,296

 

74,334

 

     Accrued expenses

123,396

 

155,498

 

     Deferred revenue

927

 

-

 

     Derivative liability

275,583

 

732,242

 

     CONVERTIBLE SECURED DEBENTURE PAYABLE, net of

       discount of $782,879

227,121

 

-

 

   Total current liabilities

677,323

 

962,074

 

 

 

 

 

 

CONVERTIBLE SECURED DEBENTURE PAYABLE, net of discount of $919,221

-

 

90,779

 

 

 

 

 

 

   Total liabilities

677,323

 

1,052,853

 

 

 

 

 

 

   STOCKHOLDERS' EQUITY

 

 

 

 

     Common stock

10,616

 

10,163

 

     Additional paid-in capital

1,271,784

 

1,220,123

 

     Retained earnings (accumulated deficit)

33,381

 

22,784

 

   Total stockholders' equity

1,315,781

 

1,253,070

 

   Total liabilities and stockholders' equity

$  1,993,104

 

$  2,305,923

 



Future Healthcare of America and Subsidiaries Balance Sheet (Parenthetical)

 

 

 

Statement of Financial Position

 

June 30,   2014

 

 

December 31, 2013

   Allowance for doubtful accounts

 

20,200

 

 

20,200

   Common stock authorized

 

200,000,000

 

 

200,000,000

   Common stock par value

 

0.001

 

 

0.001

   Common stock outstanding

 

10,615,631

 

 

10,063,249







The accompanying notes are an integral part of these financial statements.



3




FUTURE HEALTHCARE OF AMERICA

 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

April 1 to June 30, 2014

 

April 1 to June 30, 2013

 

Jan. 1 to June 30, 2014

 

Jan. 1 to June 30, 2013

 

Restated

 

 

 

Restated

 

 

   REVENUE

 

 

 

 

 

 

 

          Total Revenue

872,087

 

1,083,188

 

1,864,618

 

2,295,799

 

 

 

 

 

 

 

 

   COST OF SERVICES

 

 

 

 

 

 

 

          Total Cost of Services

672,105

 

738,980

 

1,404,955

 

1,577,842

 

 

 

 

 

 

 

 

   Gross Profit

199,982

 

344,208

 

459,663

 

717,957

   OPERATING EXPENSES

 

 

 

 

 

 

 

     Selling expenses

17,411

 

17,454

 

32,150

 

37,741

     General and administrative

147,354

 

108,805

 

265,107

 

214,409

     Salaries, wages and related expenses

159,474

 

157,930

 

313,747

 

319,114

     Professional and consulting fees

70,500

 

6,223

 

138,327

 

63,963

          Total Operating Expenses

394,739

 

290,412

 

749,331

 

635,227

   INCOME (LOSS) FROM OPERATIONS

(194,757)

 

53,796

 

(289,668)

 

82,730

 

 

 

 

 

 

 

 

   OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

     Interest income

54

 

34

 

87

 

45

     Gain on derivative

402,984

 

-

 

456,659

 

 

     Interest expense

(107,242)

 

-

 

(176,741)

 

-

     Other income (expense)

20,260

 

-

 

20,260

 

2,387

          Total Other Income (Expense)

316,056

 

34

 

300,265

 

2,432

   INCOME (LOSS) BEFORE INCOME TAXES

121,299

 

53,830

 

10,597

 

85,162

   CURRENT INCOME TAX EXPENSE (BENEFIT)

-

 

-

 

-

 

-

   DEFERRED INCOME TAX EXPENSE (BENEFIT)

-

 

-

 

-

 

-

   NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS

121,299

 

53,830

 

10,597

 

85,162

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   BASIC INCOME PER COMMON SHARE

0.01

 

0.01

 

0.001

 

0.01

   BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

10,473,106

 

10,103,908

 

10,335,807

 

10,083,691

   DILUTED INCOME PER COMMON SHARE -

0.01

 

0.01

 

0.001

 

0.01

   DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

10,473,106

 

10,103,908

 

10,335,807

 

10,083,691









The accompanying notes are an integral part of these financial statements.




4




FUTURE HEALTHCARE OF AMERICA

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS


 

 

June 30,    2014

 

June 30,   2013

 

 

Restated

 

 

   Cash Flows from Operating Activities

 

 

 

 

     Net income

$

10,597

$

85,162

     Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

          Interest to be paid with stock

 

40,400

 

-

          Stock issued to consultants

 

7,000

 

15,000

          Depreciation and amortization expense

 

54

 

358

          Accretion on discount

 

136,341

 

-

          Gain on derivative instruments

 

(456,659)

 

-

          Change in assets and liabilities:

 

 

 

 

               Accounts receivable

 

244,039

 

34,766

               Prepaid expenses

 

(36,319)

 

(647)

               Accounts payable

 

(24,038)

 

9,171

               Accrued expense

 

(27,389)

 

(44,124)

               Deferred revenue

 

2,647

 

5,772

                    Net Cash Provided/(Used) by Operating Activities

 

(103,327)

 

105,458

 

 

 

 

 

   Cash Flows from Investing Activities:

 

 

 

 

     Purchase of property & equipment

 

-

 

-

 

 

 

 

 

                    Net Cash Used in Investing Activities

 

-

 

-

 

 

 

 

 

   Cash Flows from Financing Activities:

 

 

 

 

     Payments (to)/from FAB Universal

 

-

 

-

 

 

 

 

 

                    Net Cash Provided/ (Used) by Financing Activities

 

-

 

-

 

 

 

 

 

   Net Increase (Decrease) in Cash

 

(103,327)

 

105,458

   Cash at Beginning of Period

 

1,073,686

 

208,458

   Cash at End of Period

$

970,359

$

313,916

 

 

 

 

 

   Supplemental Disclosures of Cash Flow Information

 

 

 

 

     Cash paid during the periods for:

 

 

 

 

          Interest

 

-

 

-

          Income taxes

 

-

 

-

   Supplemental Disclosures of Non-Cash Investing and Financing

     Activities:

 

 

For the Six Months Ended

 

 

June 30,

NON-CASH EXPENDITURES

 

2014

 

2013

Amortization of discount on note payable

 

136,341

 

-

Depreciation expense

 

54

 

358

Interest expense to be paid with stock

 

40,400

 

-

Change in FMV of derivative liability

 

(456,659)

 

-

Expenditures paid with issuance of common stock

 

7,000

 

15,000

Total non-cash expenditures

 

(272,864)

 

15,358



The accompanying notes are an integral part of these financial statements



5




FUTURE HEALTHCARE OF AMERICA

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Organization – On June 22, 2012, FAB Universal (FAB) formed Future Healthcare of America (“FHA”), a wholly owned subsidiary. On October 1, 2012, FHA operations were spun-off in a 1 for 1 dividend to the shareholders of record of FAB on September 5, 2012, the record date.  Interim Healthcare of Wyoming, Inc. ("Interim"), a Wyoming corporation, a wholly owned subsidiary of Future Healthcare of America, was organized on September 30, 1991. Interim operates primarily in the home healthcare and healthcare staffing services in Wyoming and Montana.  On April 3, 2007, Interim purchased the operations of Professional Personnel, Inc., d.b.a., Professional Nursing Personnel Pool.  


Accounting Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Management made assumptions and estimates for determining reserve for accounts receivable, obsolete inventory and in determining the impairment of definite life intangible assets and goodwill.  Actual results could differ from those estimated by management.


Cash and Cash Equivalents – The Company considers all highly liquid investments with an original maturity date of three months or less when purchased to be cash equivalents.  At June 30, 2014, the Company had $268,463 cash balances in excess of federally insured limits.


Accounts Receivable - Accounts receivable consist of trade receivables arising in the normal course of business. At June 30, 2014 and 2013, the Company has an allowance for doubtful accounts of $20,200, which reflects the Company's best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. During the six months ended June 30, 2014 and 2013, the Company adjusted the allowance for bad debt by $0.


Depreciation - Depreciation of property and equipment is provided on the straight-line method over the estimated useful lives.


Goodwill - Goodwill is evaluated for impairment annually in the fourth quarter of the Company’s fiscal year, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of goodwill or a significant decrease in expected cash flows.


Income /(Loss) Per Share - The Company computes income (loss) per share in accordance with Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260 Earnings Per Share, which requires the Company to present basic earnings per share and diluted earnings per share when the effect is dilutive (see Note 12).


Leases - The Company accounts for leases in accordance with Financial FASB ASC Topic 840, (formerly Statement of Financial Accounting Standards SFAS No. 13 "Accounting for Leases").  Leases that meet one or more of the capital lease criteria of standard are recorded as a capital lease, all other leases are operating leases.


Income Taxes - The Company accounts for income taxes in accordance with FASB ASC Topic 740 Accounting for Income Taxes.  This topic requires an asset and liability approach for accounting for income taxes (see Note 10).


Advertising Costs - Advertising costs are expensed as incurred and amounted to $16,952 and $21,458 for the periods ending June 30, 2014 and 2013, respectively.



6




FUTURE HEALTHCARE OF AMERICA

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued


Fair Value of Financial Instruments – The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with FASB ASC Topic 820. The authoritative guidance, which, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:


Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.


Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, accounts receivable, prepaid expenses, and accounts payable and accrued expenses approximates their recorded values due to their short-term maturities.


Derivative Financial Instruments – The Company is required to recognize all of its derivative instruments as either assets or liabilities in the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated, and is effective, as a hedge and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, or cash flow hedge. Gains and losses related to a hedge are either recognized in income immediately to offset the gain or loss on the hedged item or are deferred and reported as a component of Accumulated Other Comprehensive Income in the Stockholders' Equity and subsequently recognized in Net income when the hedged item affects Net income. The change in fair value of the ineffective portion of a financial instrument is recognized in Net income immediately. The gain or loss related to financial instruments that are not designated as hedges are recognized immediately in Net income.


Revenue Recognition - Revenue is generated from various payer’s including Medicare, Medicaid, Insurance Companies, and various other entities and individuals.  In accordance with FASB ASC Topic 605, Revenue is recognized when persuasive evidence of an arrangement exists, services have been provided, the price of services is fixed or determinable, and collection is reasonably assured. Payments received prior to services being provided are recorded as a liability (deferred revenue) until such services are performed.  Revenue is recorded as net revenue where contractual adjustments and discounts are deducted from Gross Revenue to determine net revenue.


Recently Enacted Accounting Standards - Recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on the Company’s present or future financial statements.


NOTE 2 - GOING CONCERN


The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America, which contemplate continuation of the Company as a going concern.  However, the Company has incurred losses and has a short-term note payable in excess of anticipated cash.  These factors raise substantial doubt about the ability of the Company to continue as a going concern. There is no assurance that the Company will be successful in achieving profitable operations.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.




7




FUTURE HEALTHCARE OF AMERICA

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - PROPERTY & EQUIPMENT


The following is a summary of property and equipment at:

 

 

 

June 30,

 

December 31,

 

Life

 

2014

 

2013

Furniture, fixtures and equipment

2-10 yrs.

$

36,384

$

36,384

 

 

 

36,384

 

36,384

Less: Accumulated depreciation

 

 

(36,250)

 

(36,196)

Property & equipment, net

 

$

134

$

188


Depreciation expense for the periods ended June 30, 2014 and 2013 was $54 and $358, respectively.


NOTE 4 - GOODWILL


Impairment - During the fourth quarter of 2013, FHA management performed its annual test of impairment of goodwill by comparing the net carrying value of the intangible asset with the fair value of the reporting unit.  Based upon the results of this analysis, it was determined that the goodwill was not impaired.


Goodwill - The following is a summary of goodwill:


 

 

For the periods ended

 

 

June 30,

 

December 31,

 

 

2014

 

2013

Goodwill at beginning of period

$

79,809

$

79,809

Impairment

 

-

 

-

Goodwill at end of period

$

79,809

$

79,809


Goodwill consists of:

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2014

 

2013

 

 

 

 

 

Interim Healthcare of Wyoming - Billings

$

79,809

$

79,809

Total Goodwill

$

79,809

$

79,809

 

 

 

 

 


NOTE 5 – VARIABLE RATE SENIOR SECURED CONVERTIBLE DEBENTURE


On September 9, 2013, the Company closed a Subscription Agreement by which one institutional investor purchased a) a Variable Rate Senior (8% at June 30, 2014) Secured Convertible Note payable having a total principal amount of $1,010,000, convertible into common shares of the Company at the lesser of $0.25 per share or the average market price of the Company stock for the 20 days prior to the conversion and maturing March 9, 2015; b) Warrants to purchase a total of 3,030,000 shares of common stock, at $0.50 per share, exercisable for four years, and c) a greenshoe to purchase a total of 2,000,000 shares of common stock at $0.25 per share, exercisable for one year from the closing date. The fair value of the beneficial conversion feature of the warrants and greenshoe totaled $952,254 and was recorded as a derivative liability until the registration statement becomes effective. The Company recorded a discount on the note for beneficial conversion feature of the note.   The $952,254 discount on the beneficial conversion feature is being amortized as interest expense over the term of the note. As of June 30, 2014, the Company has amortized $169,379 of the discount, with the remaining $782,879 unamortized discount being offset against the outstanding balance of the note in the accompanying balance sheet.  As of June 30, 2014, the Company had accrued interest payable on the debenture of $20,200.




8




FUTURE HEALTHCARE OF AMERICA

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 – VARIABLE RATE SENIOR SECURED CONVERTIBLE DEBENTURE - Continued


Future Maturities of the note payable at June 30, 2014 are as follows:


Year ending June 30, 2014,

2015

$

1,010,000

Thereafter

 

-

 

$

1,010,000


NOTE 6 – DERIVATIVE FINANCIAL INSTRUMENTS


The Company entered into a variable rate senior secured convertible debenture, wherein the Company agreed to register the underlying share, warrants and greenshoe.  The fair value of the beneficial conversion feature of the warrants and greenshoe was estimated using the Black Scholes pricing model and totaled $952,254 upon issuance and was recorded as a derivative liability until the registration of the shares becomes effective.  As of June, 2014, the fair value of the unregistered conversion feature, warrants and green shoe based on the following assumptions (Life 3.2 years, risk free interest rate .88%, volatility of 216%, stock price of $.07 and exercise price of $.50) was $275,583, and a gain totaling $456,659 was recorded for the six months ended June 30, 2014.


NOTE 7 – FAIR VALUE OF FINANCIAL INSTRUMENTS


The Fair Value Measurement and Disclosure Topic of FASB and ASC:

·

Defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, and establishes a framework for measuring fair value;

·

Establishes a three-level hierarchy for fair value measurement based upon the transparency of inputs to the valuation as of the measurement date;

·

Expands disclosures about financial instruments measured at fair value.


Financial assets and financial liabilities record on the Balance sheet at fair value are categorized based on the reliability of inputs to the valuation techniques as follows:


Level 1: Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access.


Level 2: Financial assets and financial liabilities whose values are based on the following:


Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical or similar assets or liabilities in non-active markets or Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the assets or liability


Level 3: Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs may reflect our estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities.







9




FUTURE HEALTHCARE OF AMERICA

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7 – FAIR VALUE OF FINANCIAL INSTRUMENTS - Continued


The following tables summarize Level 1, 2 and 3 financial assets and financial (liabilities) by their classification in the Consolidated Balance Sheet:


As of June 30, 2014:

 

Level 1

 

Level 2

 

Level 3

Derivative liability – Registration rights of debenture, warrants and greenshoe

 

-

 

-

 

(275,583)

 

NOTE 8 - CAPITAL STOCK


Common Stock - The Company has authorized 200,000,000 shares of common stock, $0.001 par value.  As of June 30, 2014, 10,615,631 shares were issued and outstanding.  


On February 4, 2014, the Company issued 50,000 unregistered common shares valued at $7,000 for consulting services.


On February 18, 2014, the Company issued 226,485 common shares in payment of $24,913 of accrued interest.


On April 22, 2014, the Company issued 175,897 common shares in payment of $20,200 of accrued interest.


On May 24, 2013, the Company issued 100,000 common shares valued at $15,000 to employees for services rendered.


NOTE 9 – WARRANTS AND GREENSHOE


A summary of the status of the warrants and greenshoe granted is presented below for the twelve months ended:


 

June 30, 2014

 

December 31, 2013

 

Shares

 

Weighted Average Exercise Price

 

Shares

 

Weighted Average Exercise Price

Outstanding at beginning of period

5,030,000

$

0.40

 

-

$

-

Granted

-

 

-

 

5,030,000

 

0.40

Exercised

-

 

-

 

-

 

-

Forfeited

-

 

-

 

-

 

-

Expired

-

 

-

 

-

 

-

Outstanding at end of period

5,030,000

$

0.40

 

5,030,000

$

0.40


On September 9, 2013, the Company closed a Subscription Agreement wherein the Company granted warrants to purchase a total of 3,030,000 shares of common stock, at $0.50 per share, exercisable for four years, and a greenshoe to purchase a total of 2,000,000 shares of common stock at $0.25 per share, exercisable for one year from the closing date







10




FUTURE HEALTHCARE OF AMERICA

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - INCOME TAXES


The Company accounts for income taxes in accordance with FASB ASC Topic 740, Accounting for Income Taxes which requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carryforwards.  At June 30, 2014 and 2013 the total of all deferred tax assets was $498,834 and $431,582, respectively, and the total of the deferred tax liabilities was $0 and $0, respectively.  


The amount of and ultimate realization of the benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events. The Company anticipates earnings in the near future and the realization of the benefit of the deferred tax assets.   We file U.S. federal, and U.S. states return, we are generally no longer subject to tax examinations for years prior to 2009 for U.S. federal and U.S. states tax returns.


NOTE 11 – LEASES


Operating Lease - The Company leases office space in Casper, Wyoming for $4,892 a month through June 2018.  The Company further leases space in Billings, Montana for of $1,475 a month through February 2015, and $1,490 a month through February 2017. The Company also leases office space in Palm Beach, Florida for $14,112 a month through July 2015.


The future minimum lease payments for non-cancelable operating leases having remaining terms in excess of one year as of June 30, 2014 are as follows:


Twelve months ending June 30                Lease Payments

2015                                            245,693

2016                                              90,696

2017                                              70,624

2018                                              58,704

Thereafter                                             -

Total Minimum Lease Payments      $       465,717

 

Lease expense charged to operations was $104,046 and $37,185 for the six months ended June 30, 2014 and 2013, respectively.


NOTE 12 – INCOME/ (LOSS) PER SHARE


The following data shows the amounts used in computing income (loss) per share and the weighted average number of shares of common stock outstanding for the periods presented for the periods ended:


 

 

For the Three Months

 

For the Six Months

 

 

June 30

 

June 30

 

 

2014

 

2013

 

2014

 

2013

Income from continuing operations available to common stockholders (numerator)

$

Restated

121,299

$

53,830

$

Restated

10,597

$

85,162

Income available to common stockholders (numerator)

 

121,299

 

53,830

 

10,597

 

85,162

Weighted average number of common shares outstanding during the period used in loss per share (denominator)

 

10,473,106

 

10,103,908

 

10,335,807

 

10,083,691





11




FUTURE HEALTHCARE OF AMERICA

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 – INCOME/ (LOSS) PER SHARE – Continued


At June 30, 2014 and 2013, the Company had 3,030,000 and 0, respectively  warrants  to purchase common stock of the Company at $0.50 per share, and an greenshoe option  outstanding to purchase 2,000,000 and 0, respectively shares of common stock of the Company at $0.25 per share and a convertible debenture payable wherein the holder could convert the note and underlying accrued interest into a minimum of 4,139,652 and 0, respectively shares of common stock which were not included in the loss per share computation because their effect would be anti-dilutive.

 

NOTE 13 - RESTATEMENT OF PREVIOUSLY ISSUED UNAUDITED QUARTERLY FINANCIAL INFORMATION

 

Subsequent to the issuance of our interim financial statements for the second quarter of 2014, management adjusted the amortization of the discount on the note payable from straight-line to the effective interest method. The restatement does not impact Income (Loss) from Operations. The Company has restated certain line items in the unaudited consolidated financial statements.

 

The effect of restatement and the impact on the quarterly unaudited condensed consolidated balance sheet as of June 30, 2014, the unaudited consolidated statement of operation and comprehensive income (loss) for the three and six month periods ended June 30, 2014, are presented below.

 

 

As of June 30, 2014

 

As restated

 

As previously reported

  

 

 

 

     Derivative Liability

275,583

 

212,291

     Convertible Note Payable, net of discount

227,121

 

602,024

               Total liabilities

677,323

 

988,934

 

 

 

 

     Additional paid-in capital

1,271,784

 

1,425,950

     Retained earnings

33,381

 

(432,396)

          Total stockholders' equity

1,315,781

 

1,004,170

 

 

 

For the Three Months Ended June 30, 2014

 

For the Six Months Ended June 30, 2014

 

As restated

 

As previously reported

 

As restated

 

As previously reported

 

 

 

 

 

 

 

 

Gain on derivative instrument

402,984

 

285,629

 

456,659

 

301,931

Interest expense

(107,242)

 

(188,534)

 

(176,741)

 

(377,067)

Total Other Income (Expense)

316,056

 

117,409

 

300,265

 

(54,789)

 

 

 

 

 

 

 

 

Net income (loss) available to common shareholders

$ 121,299

 

$  (77,348)

 

$ 10,597

 

$ (344,457)

 

 

 

 

 

 

 

 

BASIC AND DILUTED INCOME PER COMMON SHARE FROM CONTINUING OPERATIONS

$    0.01

 

$      (0.01)

 

$  0.001

 

$   (0.03)

BASIC AND DILUTED INCOME PER COMMON SHARE

$    0.01

 

$      (0.01)

 

$  0.001

 

$  (0.03)


NOTE 14 - SUBSEQUENT EVENTS


Subsequent events have been evaluated through the date and time of this report:




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Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations.


Safe Harbor Statement.


Statements made in this Form 10-Q which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of the Company, including, without limitation, (i) our ability to gain a larger share of the home healthcare industry, our ability to continue to develop services acceptable to our industry, our ability to retain our business relationships, and our ability to raise capital and the growth of the home healthcare industry, and (ii) statements preceded by, followed by or that include the words "may", "would", "could", "should", "expects", "projects", "anticipates", "believes", "estimates", "plans", "intends", "targets", "tend" or similar expressions.


Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond the Company's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, in addition to those contained in the Company's reports on file with the Securities and Exchange Commission: general economic or industry conditions, nationally and/or in the communities in which the Company conducts business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, changes in the home healthcare industry, the development of services that may be superior to the services offered by the Company, competition, changes in the quality or composition of the Company's services, our ability to develop new services, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting the Company’s operations, services and prices.


Accordingly, results actually achieved may differ materially from expected results in these statements.  Forward-looking statements speak only as of the date they are made.  The Company does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.


Business Highlights


Based in Casper, Wyoming, and Billings, Montana, FHA’s wholly-owned subsidiary, Interim Healthcare of Wyoming, Inc., a Wyoming corporation (“Interim”), is an independent franchisee of Interim HealthCare that has been serving its community for 18 years and is providing a wide range of visiting nurse services to the elderly, wounded and sick. It is one of the 300 independent home health agencies that comprise the Interim HealthCare network. Our business consists of providing healthcare services for those in need.  We record all revenue and expenses and provide all services under one umbrella.  Below is a description of our Home Healthcare and Staffing operations.


As the census (number of patients utilizing facilities) in the hospitals fluctuates, we are taking the necessary steps to position ourselves for the ups and downs of the census for these facilities.  Our home healthcare service continued to generate the majority or our revenue during the first quarter of 2014.


During the first quarter of 2014, FHA experienced an 18% decrease in revenue over the first quarter of 2013.  This was driven by decreases across both locations as well as within both staffing and home health businesses.


In 2014, we have seen a decrease in the census within the hospitals in both locations as well as the utilization of our staffing services in Billings, Montana.  During the first quarter of 2014, we have seen a significant decrease in the utilization of our staffing services as our clients set their goals and objectives for operating their facilities.  These facilities are reducing the utilization of our staffing services. As for our operations, we anticipate the trends seen in the fourth quarter of 2013 and the first quarter of 2014 to continue throughout the remainder of 2014.  As such, we will continue to evaluate opportunities to expand the realm of services we offer.  Promotional activities and operations are being managed as the offices experience fluctuations in the day-to-day activities and as we embark on new business opportunities.




13




Our home healthcare business continues to be a substantial revenue generator for our Company as our country's population ages and new methods of patient data capture become critical components for delivering high quality, affordable healthcare services in a patient's home.  Although this has been a gradual process, we continue to build a solid business that will offer a complimentary package of new technology and traditional services.


Home Healthcare


Through trained health care professionals, FHA provides home care services including senior care and pediatric nursing; physical, occupational and speech therapy.  FHA offices deliver quality home care and treat each patient with genuine compassion, kindness and respect.  FHA provides health care professionals at all skill levels, including registered nurses, therapists, LPN's and certified home health aides. FHA derives is revenue from multiple payer sources.  These include Medicare, Medicaid, Insurance, Medicaid LTW, and Private Payers.  Because our officers are located in areas that do not contain a large population base (less than 200,000 residents), we continually explore opportunities to increase our revenue with our current payer sources and expand through new sources of revenue.  The healthcare team is utilized across all payer sources, including staffing services.  Our customer base comes from referrals from hospitals, rehab facilities, nursing homes, assisted living facilities and previous patients.


In additional to our professional team, we employ a management team at each facility to handle the day to day direction of the office.  This is provided by our Administrators.  We also have a Director of Nursing in each location. This person is responsible for the day to day oversight of the service providers and ensuring the certified professionals obtain the necessary training to maintain their certificates as well as the training necessary to be in compliance with all regulating organizations.


Staffing


FHA provide nurses, nurse aides and management services to hospitals, prisons, schools, corporations and other health care facilities.  FHA’s success is based on our ability to recruit the best health care professionals and the responsiveness of our local managers to fill the needs of our clients in a timely manner.   Additionally, we work with our clients should they decide they would like to hire our service professional on a full time basis.  Another key to our success is the personal relationship that our management and sales team build with each of our existing and new clients.  As noted previously, in order to reduce turnover of our service team by providing as many hours as possible, similar to the hours of a full-time employee, we utilize the same service team members across all payer sources.


As each of our businesses is located in smaller based population areas of the country, the competition is significantly heightened and the relationships maintained with our clients become very critical to the continued success of our operations.


As we provide diversified services and accept payments from multiple payer sources, we are not heavily dependent on a few clients in order for our business to be successful.


Results of Operations


Six Months Ended June 30, 2014 and 2013.


During the six months ended June 30, 2014, FHA recorded revenues of $1,864,618, a 19% decrease over revenues of $2,295,799 for the same period in 2013.  The decrease for 2014 reflects a decrease in revenue for both home healthcare and staffing services.  The decrease in revenue from staffing services in Billings, Montana is due to customers having to reduce their costs and not needing staffing services.  The decrease in revenue from our home healthcare business is due to a decline in census within the hospitals.


For the six months ended June 30, 2014, cost of services totaled $1,404,955, an 11% decrease compared to $1,577,842 in the comparable period of 2013. This is a reflection of the costs associated with the decrease in revenue as well as the locations not reducing employment levels. FHA posted a gross profit of $459,663 during the first six months of 2014, versus a gross profit of $717,957 for the first six months of 2013, a decrease of 36%.  The decrease in gross margin was driven because as revenue decreased, we did not flex down accordingly with our employment levels.



14




FHA recorded total operating expenses of $749,331 during the first six months of 2014, an 18% increase as compared to operating expenses of $635,227 in the same period of 2013.  General and administrative expenses totaled $265,107 in the first six months of 2014 versus $214,409 in the first six months of 2013, an increase of 24%, due to an increase in rent and consulting fees.  Consulting fees increased from $63,963 to $138,327 when comparing the first six months of 2013 versus 2014.  The increase was driven by consulting fees incurred as the company continues to search for growth opportunities through potential acquisition strategies. Salaries, wages and related expenses decreased to $313,747 in the first six months of 2014 from $319,114 in 2013, a decrease of 2%.  Selling expenses in the first six months of 2014 were $32,150 versus $37,741 in the comparable period of 2013.


Other expense included interest income of $456,659 for recognition of gain on the derivative liability and interest expense of $176,741 for the accretion of the discount on the note payable as well as $40,400 of interest expense on the note payable.


FHA’s net income available to common shareholders was $10,597 for the first six months of 2013.  This represents a 88% decrease from our net income of $85,162 in the first six months of 2013.


Three Months Ended June 30, 2014 and 2013.


During the three months ended June 30, 2014, FHA recorded revenues of $872,087, a 19% decrease over revenues of $1,083,188 for the same period in 2013.  The decrease for 2013 reflects a decrease in revenue for the use of our staffing services in Billings, Montana as well as our home healthcare in Casper, Wyoming.  We saw a decrease in census in hospitals and an overall decrease in the need for our services during the second quarter of 2014


For the quarter ended June 30, 2014, cost of services totaled $672,105, a 9% decrease as compared to $738,980 in the comparable period of 2013. This is a reflection of the costs associated with the decrease in revenue coupled with a slower flexing of available staff with the decrease in revenue, thus resulting in FHA posting a gross profit of $199,982 during the second quarter 2014, versus a gross profit of $344,208 for the second quarter of 2013, a decrease of 42%.


FHA recorded total operating expenses of $394,739 during the second quarter of 2014, a 36% increase as compared to operating expenses of $290,412 in the same period of 2013.  General and administrative expenses totaled $147,354 in the second quarter 2014 versus $108,805 in the second quarter 2013, an increase of 35%, due to an increase in rent expense.  Consulting fees increased from $6,223 to $70,500 when comparing the second quarter of 2013 versus 2014. The increase was driven by consulting fees incurred as the company continues to search for growth opportunities through potential acquisition strategies. Salaries, wages and related expenses increased to $159,474 in the second quarter of 2014 from $157,930 in 2013, an increase of 1%.  Selling expenses in the second quarter of 2014 were $17,411 versus $17,454 in the comparable quarter of 2013.


FHA’s net income available to common shareholders was $121,299 for the second quarter of 2014.  This represents a 125% increase from our net income of $53,830 in the second quarter of 2013.


Liquidity and Capital Resources.


Cash on hand was $970,359 at June 30, 2014, a decrease of $103,327 from the $1,073,686 on hand at December 31, 2013.  Cash used by operations for the six months ended June 30, 2014, was $103,327, as compared to $105,458 of cash provided by operations for the six months ended June 30, 2013.  The decrease in accounts receivable is a direct result of the collections efforts experienced during the first six months of 2014, which was off-set by the results of operations during the first six months of 2014.


Item 3. Quantitative and Qualitative Disclosures About Market Risk.  


Not required for smaller reporting companies.




15




Item 4. Controls and Procedures.


(a)  Evaluation of Disclosure Controls and Procedures


Our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")), which we refer to as disclosure controls, are controls and procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any control system. A control system, no matter how well conceived and operated, can provide only reasonable assurance that its objectives are met. No evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.


As of June 30, 2014, an evaluation was carried out under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls.  Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of such date, the design and operation of these disclosure controls were effective to accomplish their objectives at the reasonable assurance level.


(b)  Changes in Internal Control over Financial Reporting


No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), occurred during the fiscal quarter ended June 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II - OTHER INFORMATION


Item 1.   Legal Proceedings.


Future Healthcare of America is involved in routine legal and administrative proceedings and claims of various types. We have no material pending legal or administrative proceedings, other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries are a party or of which any property is the subject.  While any proceeding or claim contains an element of uncertainty, management does not expect that any such proceeding or claim will have a material adverse effect on our results of operations or financial position.


Item 1A.   Risk Factors.


Not required for smaller reporting companies.


Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.


None; not applicable.


Item 3.   Defaults Upon Senior Securities.


None; not applicable.


Item 4.   Mine Safety Disclosures.


None; not applicable.


Item 5.   Other Information.


(a)

None; not applicable.



16





(b)  During the quarterly period ended June 30, 2014, there were no changes to the procedures by which shareholders may recommend nominees to the Company’s board of directors.


Item 6.   Exhibits.


Exhibit No.                          Description


31.1                                    302 Certification of Christopher J. Spencer


31.2                                    302 Certification of John Busshaus


32                                       906 Certification.



17




SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


FUTURE HEALTHCARE OF AMERICA




Date:

8/14/15

 

By:

/s/ Christopher J. Spencer

 

 

 

 

 

 

 

 

 

Christopher J. Spencer

 

 

 

 

Chief Executive Officer and President and Director




Date:

814/15

 

 

/s/ John Busshaus

 

 

 

 

 

 

 

 

 

John Busshaus

 

 

 

 

Chief Financial Officer




Date:

8/14/15

 

 

/s/  Denis Yevstifeyev

 

 

 

 

 

 

 

 

 

Denis Yevstifeyev

 

 

 

 

Director




Date:

8/14/15

 

 

/s/  Douglas Polinsky

 

 

 

 

 

 

 

 

 

Douglas Polinsky

 

 

 

 

Director




Date:

8/14/15

 

 

/s/ J. Gregory Smith

 

 

 

 

 

 

 

 

 

J. Gregory Smith

 

 

 

 

Director







18