Exhibit 99.3

 

First Choice Healthcare

Solutions, Inc.

 

Condensed Consolidated Pro 

Forma Unaudited Financial

Statements

 

Year ended 

December 31, 2014 and Nine

Months Ended September 30, 2015

 

 

 

 

Table of Contents

 

  Page
   
FINANCIAL STATEMENTS  
   
Condensed Consolidated Pro Forma Unaudited Balance Sheets as of September 30, 2015 2
   
Condensed Consolidated Pro Forma Unaudited Statement of Operations Nine Months Ended September 30, 2015 3
   
Condensed Consolidated Pro Forma Unaudited Statement of Operations Year Ended December 31, 2014 4
   
Notes to Pro Forma Unaudited Condensed Consolidated Financial Statements 5-7

 

 

 

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

CONDENSED CONSOLIDATED PRO FORMA UNAUDITED BALANCE SHEET SEPTEMBER 30, 2015

 

   Balance Sheet
First Choice
Healthcare
Solutions, Inc.
September 30,
  Balance Sheet
Crane
Creek
Surgical
Partners, LLC.
September 30,
  Pro Forma Adjustments to
Reflect The Variable
Interest Entity of
Crane Creek Surgical
Partners, LLC.
As of January 1, 2015
  Balance Sheet
Consolidated
Pro Forma
September 30,
   2015  2015  Dr  Cr  2015
                
ASSETS                         
                          
Current assets                         
Cash  $751,559   $164,323           $915,882 
Cash-restricted   395,637                395,637 
Accounts receivable   5,611,386    706,957            6,318,343 
Employee loans   493,360                493,360 
Prepaid and other current assets   548,211                548,211 
Capitalized financing costs, current portion   54,858                54,858 
Total current assets   7,855,011    871,280            8,726,291 
                          
Property, plant and equipment, net of accumulated depreciation of $4,152,225 and $1,546,095   8,027,163    715,896            8,743,059 
                          
Other assets                         
Deferred costs, net of amortization of $134,435   3,091,992                3,091,992 
Patient list, net of accumulated amortization of $70,000   230,000                230,000 
Patents, net of amortization of $33,425   253,075                253,075 
Investments   22,200                22,200 
Notes receivable, acquisition deposit   141,352            141,352     
Deposits   2,571                2,571 
Total other assets   3,741,190            141,352    3,599,838 
                          
Total assets  $19,623,364   $1,587,176       $141,352   $21,069,188 
                          
LIABILITIES AND STOCKHOLDERS’ DEFICIT                         
Current liabilities                         
Accounts payable and accrued expenses  $2,476,718   $673,772   $   $   $3,150,490 
Accrued interest       1,352    1,352         
Related party payable       251,588            251,588 
Capital lease payable                    
Due to members       940,000    140,000        800,000 
Line of credit, short term   1,788,164                1,788,164 
Notes payable, current portion   7,852,176                7,852,176 
Unearned revenue   42,704                42,704 
Deferred rent, short term portion   118,810                118,810 
Total current liabilities   12,278,572    1,866,712    141,352        14,003,932 
                          
Long term debt:                         
Deposits held   67,432                67,432 
Deferred rent, long term portion   1,489,636    522,046            2,011,682 
Notes payable, long term portion   894,835                894,835 
Total long term debt   2,451,903    522,046            2,973,949 
                          
Total liabilities   14,730,475    2,388,758    141,352         16,997,881 
                          
Equity                         
Common stock, $0.001 par value; 100,000,000 shares authorized, 18,432,055 and 17,951,055 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively   22,433                22,433 
Additional paid in capital   20,696,977                20,696,977 
Members’ capital       1,409,858            1,409,858 
Accumulated deficit   (15,687,835)   (2,211,440)           (17,899.275)
Subtotal equity   5,031,575    (801,582)            4,229,993 
Non-controlling interest   (138,686)               (138,686)
Total equity   4,892,889    (801,582)           4,091,307 
Total liabilities and equity  $19,623,364   $1,587,176   $141,352       $21,069,188 

 

See the accompanying notes to these unaudited condensed consolidated pro forma financial statements

 

2 

 

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

CONDENSED CONSOLIDATED PRO FORMA UNAUDITED STATEMENTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2015

 

   First Choice
Healthcare
Solutions, Inc.
9 Months Ended
September 30,
  Crane Creek
Surgical
Partners, LLC
9 Months Ended
September 30,
   Pro Forma Adjustments to
Reflect The Variable Interest Entity of
Crane Creek Surgical
Partners, LLC
As of January 1, 2015
   
 
Consolidated
Pro Forma
9 Months Ended
September 30,
   2015  2015  Dr  Cr  2015
                
Revenues:                         
Patient Service Revenue  $11,871,574   $2,076,563             $13,948,137 
Provision for bad debts   (51,485)                 (51,485)
Net patient service revenue less provision for bad debts   11,820,089    2,076,563              13,896,652 
Rental Revenue   1,301,515                  1,301,515 
Total Revenue   13,121,604    2,076,563              15,198,167 
                          
Operating expenses:                         
Salaries & Benefits   5,311,710    754,083              6,065,793 
Other Operating expenses   1,685,830    740,373              2,426,203 
General & Administrative   4,437,801    1,065,081              5,502,882 
Depreciation and amortization   558,189    229,661              787,850 
Total operating expenses   11,993,530    2,789,198              14,782,728 
Net income from operations   1,128,074    (712,635)             415,439 
Other income (expense):                         
Miscellaneous income   22,719    13,149              35,868 
Amortization Financing costs   (60,507)                 (60,507)
Interest expense, net   (925,045)   (14,464)   1,352    1,352    (939,509)
Total other expense   (962,833)   (1,315)             (964,148)
                          
NET INCOME (LOSS)  $165,241   $(713,950)            $(548,709)
Non-controlling Interest       (428,370)             (428,370)
Net Income (Loss) available to shareholder   0.01    (7,418.51)             (7,418.52)
Net Income (loss) per common share, basic   0.01    (7,418.51)             (7,418.52)
                          
Net Income (loss) per common share, diluted   0.01    (7,418.51)             (7,418.52)
                          
Weighted average number of common shares outstanding, basic   12,249,783    96.239              12,249,879.239 
                          
Weighted average number of common shares outstanding, diluted   21,583,117    96.239              21,583,213.239 

 

 

See the accompanying notes to these unaudited condensed consolidated pro forma financial statements 

 

3 

 

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

CONDENSED CONSOLIDATED PRO FORMA UNAUDITED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2014

 

   First Choice
Healthcare
Solutions, Inc.
Year Ended
December 31,
  Crane Creek
Surgical
Partners, LLC
Year Ended
December 31,
   Pro Forma Adjustments
to Reflect The Variable Interest Entity of
Crane Creek Surgical
Partners, LLC
As of January 1, 2014
   
Consolidated
Pro Forma
Year Ended
December 31,   
   2014  2014  Dr  Cr  2014
                     
Revenues:                        
Patient Service Revenue  $7,966,385   $3,248,786             $ 11,215,171  
Provision for bad debts   (912,782)                  (912,782 )
Net patient service revenue less provision for bad debts   7,053,603    3,248,786               10,302,389  
Rental Revenue   1,048,999                   1,048,999  
Total Revenue   8,102,602    3,248,786               11,351,388  
                             
Operating expenses:                            
Salaries & Benefits   4,761,573    917,317               5,678,890  
Other Operating expenses   1,897,780    905,203               2,802,983  
General & Administrative   2,434,259    1,394,630               3,828,889  
Depreciation and amortization   552,084    307,266               859,350  
Total operating expenses   9,645,696    3,524,416               13,170,112  
                             
Net (loss) income from operations   (1,543,094)   (275,630)              (1,818,724 )
                             
Other income (expense):                            
Miscellaneous income   3,000    15,424               18,424  
Amortization Financing costs   (82,744)                  (82,744 )
Interest expense, net   (866,701)   (65,864)              (932,565 )
Total other expense   (946,445)   (50,440)              (996,885 )
                             
Net loss before provision for income taxes   (2,489,539)   (326,070)              (2,815,609 )
                             
Income taxes (benefit)                       
                             
NET LOSS  $(2,489,539)  $(326,070)            $ (2,815,609 )
                             
Net loss per common share, basic and diluted  $(0.14)   $(3,388.13)            $ (3,388.27 )
                             
Weighted average number of common shares outstanding, basic and diluted   17,249,921    96.239               17,250,017.239  

  

See the accompanying notes to these unaudited condensed .onsolidated pro forma financial statements

 

4 

 

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1 - DESCRIPTION OF BUSINESS

 

First Choice Healthcare Solutions, Inc. (“FCHS,” the “Company,” “we,” “our” or “us”) is engaged in the creation of state-of-the-art, multi-specialty “Medical Centers of Excellence” primarily in select markets in the southeastern region of the United States. We intend to own and operate these “Medical Centers of Excellence” under the FCHS brand.

We believe by integrating the synergistic mix of orthopedic, spine, neurology and interventional pain specialties with related diagnostic and ancillary services and state-of-the-art equipment and technologies all in one location, or a “Medical Center of Excellence,” we are able to:

  provide patients with convenient access to musculoskeletal and rehabilitative care via orthopedic, spine, neurology and interventional pain medicine treatment, diagnostics and ancillary care services, including, but not limited to magnetic resonance imaging (“MRI”), x-ray (“X-ray”), durable medical equipment (“DME”) and physical therapy (“PT”);

 

  empower physicians to collaborate as a unified care team, optimizing care coordination and improving outcomes; and

 

  advance the quality and cost effectiveness of our patients’ healthcare; and ultimately, achieve strong, sustainable financial performance that serves to create long-term value for our stockholders.

 

Our goal is to build a network of non-physician-owned and operated Medical Centers of Excellence in diverse locations, primarily throughout the southeastern region of the United States. By centralizing current and future Centers’ business management functions, including call center operations, scheduling, billing, compliance, accounting, marketing, advertising, legal, information technology and record-keeping, at our corporate headquarters, we will maintain efficiencies and scales of economies. We believe our structure will enable our staff physicians to focus on the practice of medicine and the delivery of quality care to the patients we serve, as opposed to having their time and attention focused on business administration responsibilities.

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

 

A summary of the significant accounting policies applied in the presentation of the accompanying unaudited condensed financial statements follows:

 

General

 

The unaudited condensed combined pro forma balance sheet gives effect to the acquisition as if the Agreement had taken place on September 30, 2015 and combines CCSP’s unaudited condensed balance sheet as of September 30, 2015 with First Choice Healthcare Solutions, Inc.’s (FCHS) condensed balance sheet as of September 30, 2015. The unaudited condensed combined pro forma balance sheet gives effect to the acquisition as if the Agreement had taken place on September 30, 2015 and combines CCSP’s unaudited condensed balance sheet as of September 30, 2015 with FCHS’s condensed balance sheet as of September 30, 2015. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

 

Use of estimates

 

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Actual results could differ from those estimates. Significant estimates include the useful life of fixed assets.

 

Revenue recognition

 

The Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

 

The Company recognizes in accordance with Accounting Standards Codification subtopic 954-310, “Health Care Entities” (“ASC 954-310”), significant patient service revenue at the time the services are rendered, even though it does not assess the patient’s ability to pay.

 

Cash

 

Cash consists of cash held in bank demand deposits. The Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents.

 

Property and Equipment

 

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 5 to 39 years.

 

5 

 

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

 

VIE Consolidation 

 

ASC 810 provides guidance on the accounting for variable interest entities under US GAAP. Based on management’s interpretation of the six requirements of Accounting Standards Codification subtopic 810-15-22, the Company meets the definition of the primary beneficiary with control, without a majority equity interest, for consolidation of the Company’s financial position and operations with the financial position of CCSC Holdings, Inc. and its parent company, FCHS.

 

Fair value of financial instruments

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2015 and December 31, 2014. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts payable line of credit and advances. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

 

Recent accounting pronouncements

 

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s condensed financial position, results of operations or cash flows.

 

NOTE 3 - LIQUIDITY

 

As of September 30, 2015, the Company’s working capital deficit current liabilities minus current assets was $5,277,641. The Company’s owners have entered into an operating and control agreement giving CCSC Holdings Inc. a wholly owned subsidiary of First Choice Healthcare Solutions, Inc. (FCHS), a controlling variable interest in the Company. On November 12, 2015, the operating agreement was executed but made effective October 1, 2015.

 

NOTE 4 - PROPERTY AND EQUIPMENT

 

Property plant and equipment, at September 30, 2015, was $8,743,059 net of accumulated depreciation of $5,698,320.

 

During the nine months ended September 30, 2015, $787,850 was charge to operations depreciation expense.

 

NOTE 5 - OWNERS’ EQUITY

 

The Company’s membership interest as of November 2, 2015 was owned by CCSC Holdings, Inc., a wholly owned subsidiary of First Choice Healthcare Solutions, Inc. (“FCHS”) CCSC TBC Group, LLC, which is owned by Richard Hynes, M.D., FASC and Devin K. Datta, M.D., and HMA Blue Chip Investments, LLC (Blue Chip Surgical Center Partners), which developed and manages 17 world class ambulatory surgery centers across the United States.

 

Together, CCSC Holdings, Inc. and TBC Group own 75% interest in Crane Creek Surgical Partners. LLC. In accordance with the Crane Creek Restated and Amended Operating Agreement, CCSC Holdings, Inc. will exercise sufficient control over the business of Crane Creek that will allow FCHS to treat it as a variable interest entity (“VIE”), effective October 1, 2015.

 

6 

 

 

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

NOTE 6 - COMMITMENTS AND CONTINGENCIES

 

Operating and Control Agreement for the controlling variable interest in the Company.

 

FCHS has the power to make decisions that most significantly affect the economic performance of CCSP and to absorb significant losses or right to receive benefits that could potentially be significant. As a result, the Company will include the financial results of the VIE in its consolidated financial statements in accordance with generally accepted accounting principles.

 

NOTE 7 - SUBSEQUENT EVENTS

 

In accordance with FASB ASC 855 “Subsequent Events,” FCHS has evaluated subsequent events through the date the financial statements are available to be issued, January 25, 2016.

 

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