SEC Info℠

Home

Search

My Interests

Help

Sign In

Please Sign In

Advanzeon Solutions, Inc. – ‘10-Q’ for 9/30/19

On:  Thursday, 11/14/19, at 1:14pm ET   ·   For:  9/30/19   ·   Accession #:  1731122-19-692   ·   File #:  1-09927

Previous ‘10-Q’:  ‘10-Q’ on 8/1/19 for 6/30/19   ·   Next:  ‘10-Q’ on 5/19/20 for 3/31/20   ·   Latest:  ‘10-Q’ on 10/8/21 for 9/30/20

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

 Text Wildcards:  ? (any letter/digit),  * (many).  Search Logic:  for Documents:  & (and),  | (or);  for Text:  | (anywhere),  "(&)" (near).  Details... 

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

11/14/19  Advanzeon Solutions, Inc.         10-Q        9/30/19   67:2.7M                                   Electro Filings LLC/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                    HTML    375K 
 2: EX-31.1     Certification -- §302 - SOA'02                      HTML     24K 
 3: EX-31.2     Certification -- §302 - SOA'02                      HTML     24K 
 4: EX-32.1     Certification -- §906 - SOA'02                      HTML     20K 
 5: EX-32.2     Certification -- §906 - SOA'02                      HTML     19K 
60: R1          Document and Entity Information                     HTML     51K 
34: R2          Consolidated Balance Sheets (Unaudited)             HTML     98K 
14: R3          Consolidated Balance Sheets (Unaudited)             HTML     43K 
                (Parenthetical)                                                  
51: R4          Consolidated Statements of Operations (Unaudited)   HTML     74K 
61: R5          Consolidated Statement of Stockholders' Deficiency  HTML     40K 
                Equity (Unaudited)                                               
35: R6          Consolidated Statements of Cash Flows (Unaudited)   HTML     94K 
15: R7          Description of The Company's Business and Basis of  HTML     24K 
                Presentation                                                     
53: R8          Summary of Significant Accounting Policies          HTML     43K 
58: R9          Other Current Assets                                HTML     29K 
56: R10         Property and Equipment                              HTML     27K 
47: R11         Leasehold Improvement                               HTML     26K 
17: R12         Related Party Loans Payable                         HTML     25K 
39: R13         Debt                                                HTML     35K 
57: R14         Contingent Liability                                HTML     30K 
48: R15         Other Accrued Liabilities                           HTML     29K 
18: R16         Right of Use Assets                                 HTML     26K 
40: R17         Right of Use Lease Liabilities                      HTML     39K 
55: R18         Common Stock                                        HTML     24K 
49: R19         Legal Proceedings                                   HTML     22K 
23: R20         Subsequent Events                                   HTML     23K 
31: R21         Summary of Significant Accounting Policies          HTML     71K 
                (Policies)                                                       
66: R22         Summary of Significant Accounting Policies          HTML     33K 
                (Tables)                                                         
45: R23         Other Current Assets (Tables)                       HTML     29K 
24: R24         Property and Equipment (Tables)                     HTML     26K 
32: R25         Leasehold Improvement (Tables)                      HTML     27K 
67: R26         Related Party Loans Payable (Tables)                HTML     24K 
46: R27         Debt (Tables)                                       HTML     37K 
25: R28         Contingent Liability (Tables)                       HTML     31K 
30: R29         Other Accrued Liabilities (Tables)                  HTML     28K 
36: R30         Right of Use Assets (Tables)                        HTML     23K 
16: R31         Right of Use Lease Liabilities (Tables)             HTML     44K 
52: R32         Summary of Significant Accounting Policies          HTML     32K 
                (Details)                                                        
62: R33         Summary of Significant Accounting Policies          HTML     30K 
                (Details Narrative)                                              
33: R34         Other Current Assets (Details)                      HTML     36K 
13: R35         Property and Equipment (Details)                    HTML     28K 
50: R36         Property and Equipment (Details Narrative)          HTML     21K 
59: R37         Leasehold Improvement (Details)                     HTML     25K 
38: R38         Leasehold Improvement (Details Narrative)           HTML     21K 
12: R39         Related Party Loans Payable (Details)               HTML     22K 
28: R40         Debt (Details)                                      HTML     20K 
22: R41         Debt (Details 1)                                    HTML     22K 
44: R42         Debt (Details 2)                                    HTML     26K 
65: R43         Debt (Details Narrative)                            HTML     39K 
27: R44         Contingent Liability (Details)                      HTML     26K 
21: R45         Contingent Liability (Details Narrative)            HTML     24K 
43: R46         Other Accrued Liabilities (Details)                 HTML     34K 
64: R47         Right of Use Assets (Details)                       HTML     24K 
29: R48         Right of Use Assets (Details Narrative)             HTML     29K 
20: R49         Right of Use Lease Liabilities (Details)            HTML     24K 
19: R50         Right of Use Lease Liabilities (Details 1)          HTML     29K 
42: R51         Right of Use Lease Liabilities (Details 2)          HTML     29K 
63: R52         Common Stock (Details Narrative)                    HTML     49K 
54: R53         Subsequent Events (Details Narrative)               HTML     46K 
26: XML         IDEA XML File -- Filing Summary                      XML    117K 
41: EXCEL       IDEA Workbook of Financial Reports                  XLSX     49K 
 6: EX-101.INS  XBRL Instance -- chcr-20190930                       XML    570K 
 8: EX-101.CAL  XBRL Calculations -- chcr-20190930_cal               XML    142K 
 9: EX-101.DEF  XBRL Definitions -- chcr-20190930_def                XML    279K 
10: EX-101.LAB  XBRL Labels -- chcr-20190930_lab                     XML    545K 
11: EX-101.PRE  XBRL Presentations -- chcr-20190930_pre              XML    448K 
 7: EX-101.SCH  XBRL Schema -- chcr-20190930                         XSD    118K 
37: ZIP         XBRL Zipped Folder -- 0001731122-19-000692-xbrl      Zip     65K 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2019

OR

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

For the transition period from ______________

Commission File Number: 1-9927

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 fling requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of November 13, 2019, the Registrant had outstanding 71,661,656 shares of its $0.01 par value Common Stock.

ADVANZEON SOLUTIONS, INC.

TABLE OF CONTENTS

ADVANZEON SOLUTIONS, INC.

PART I – FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEETS

September 30, 2019 (unaudited) and December 31, 2018

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

ADVANZEON SOLUTIONS, INC.

PART I – FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEETS

September 30, 2019 (unaudited) and December 31, 2018

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

ADVANZEON SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine Month Periods Ended September 30, 2019 and 2018 (unaudited)

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

ADVANZEON SOLUTIONS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY

For the Nine Month Period Ended September 30, 2019 (unaudited) and December 31, 2018

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

ADVANZEON SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Month Periods Ended September 30, 2019 and 2018 (unaudited)

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

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements include the accounts of Advanzeon Solutions, Inc and its wholly owned subsidiary, and its respective subsidiaries (collectively referred to herein as, the “Company,” “Advanzeon,” “we”, “us,” or “our”).

In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the Company's financial position as of December 31, 2018, the changes therein for the three and nine month periods then ended and the results of operations for the three and nine month periods ended September 30, 2019 and 2018.

The financial statements included in the Form 10-Q are presented in accordance with the requirements of the Form and do not include all of the disclosures required by accounting principles general accepted in the United States of America. For additional information, reference is made to the Company's annual report on Form 10-K for the fiscal year ended December 31, 2018, filed May 24, 2019. The results of operations for the three and nine month periods ended September 30, 2019 and 2018, are not necessarily indicative of operating results for the full year.

Established in 1969, Advanzeon Solutions, Inc., (formerly Comprehensive Care Corp.) (“Advanzeon”, “we”, “Parent”, or the “Company”), through its wholly-owned subsidiary Pharmacy Value Management Solutions, Inc.,(“PVMS”) and its wholly-owned subsidiaries during 2015, and partly in 2016, provided managed care services by acting as the administrator for certain administrative service agreements in the behavioral health and substance abuse fields. We primarily offered these services to commercial, Medicare, Medicaid, Children’s Health Insurance Program (“CHIP”) health plans, as well as self-insured companies. Our managed care operations consisted solely of servicing administrative service agreements. Starting in July of 2015, we implemented our comprehensive sleep apnea program, called “SleepMaster Solutions” ™. SleepMaster Solutions (“SMS”) utilizes an administrative system for the convenient identification/testing and therapy of Obstructive Sleep Apnea (“OSA”). We partnered with a national health care provider by initiating a sleep apnea wellness program whereby we screened, tested and when needed, offered treatment programs for treating this disorder. We also contracted with a union to treat its driver members. Beginning in 2017, our only business was our SMS sleep apnea program.

The Company has elected to not adopt the option available under United States generally accepted accounting principles (“GAAP”) to measure any eligible financial instruments or other items at fair market value at this time. Accordingly, the Company measures all of its assets and liabilities on the historical cost basis of accounting, except as otherwise required by GAAP.

Inter-company accounts and transactions have been eliminated in consolidation. Certain minor reclassifications of prior period amounts have been made to conform to the current period presentation.

Use of Estimates - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts. Actual results could differ from these estimates. Estimates involved in the determination of an allowance for doubtful accounts receivable are considered by management as particularly susceptible to material change in the next year. Other significant estimates relate to stock-based compensation, warrants and beneficial conversion features.

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts Receivable - Accounts receivable is carried at its estimated collectible value. Since customer credit is generally extended on a short-term basis, accounts receivable does not bear interest and are uncollateralized. We manage credit risk and determine necessary allowances by evaluating customers’ credit worthiness before extending credit and periodically for collectability, based primarily on customers’ past credit history and current financial conditions and general economic conditions, results of prior collection efforts, the relative strength of our relationship therewith and, in the event of a dispute, its legal position and the estimated cost of proposed collection proceedings. Management has not established a policy for when to charge off uncollectible accounts receivable or to use external collection agencies and makes such decisions on a case-by-case basis. The maximum losses that the Company would incur if a customer failed to pay would be limited to the carrying value of the receivable.

Revenue Recognition- The Company is on an accrual basis and revenue is recognized when billed, which is approximately when the testing service is performed or CPAP machine is shipped.

Property and Equipment - Property and equipment, as described in Note 4, is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives ranging from 2 to 12 years.

Leasehold Improvement - Leasehold improvement, as described in Note 5, is stated at cost less accumulated amortization. Leasehold improvements are amortized over the shorter of the lease term or the asset’s useful life.

Fair Value Measurements - The carrying amounts of cash, accounts receivable and accounts payable approximate their estimated fair value due to the short-term nature of these instruments. Since our other financial liabilities are not traded in an open market, we generally use a present value technique, which is a level 3 input, as defined in GAAP, to measure the estimated fair value of these financial instruments, except for valuing stock options and warrants (see below). The rate used for discounting expected cash flows is a risk-free rate adjusted for systematic and unsystematic risk.

The carrying amounts of long-term debt and estimated fair values of the attached warrants at September 30, 2019 and December 31, 2018 are as follows:

During the nine month period ended September 30, 2019, there have been 47 additional convertible notes issued totaling $2,100,250 and one note paid off totaling $25,000.

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cost of Revenues- Costs of services consist of supplies and operating expenses. Supplies are recognized in the period in which a patient actually receives the supplies.

Right of Use Assets and Lease Liabilities - During the quarter ended March 31, 2019, the Company implemented Accounting Standards Update 2016-02, Leases. Under the new guidance, a lessee must record a liability for lease payments (referred to as the lease liability) and an asset for the right to use the leased asset during the lease term (referred to at the right of use asset) for all leases, regardless of whether they are designated as finance or operating leases. This election requires the lessee to recognize lease expense on a straight-line basis over the lease term. The right of use assets and corresponding right of use liabilities have been recorded using the present value of the leases. See Notes 10 and 11 within the financial statement for additional disclosure on leases.

Income Taxes - We are subject to the income tax jurisdictions of the U.S. and multiple state tax jurisdictions. However, our provisions for income taxes for 2018 and 2019 include only state income taxes.

Management has evaluated our tax positions taken or to be taken on income tax returns that remain subject to examination (i.e., tax years 2016 and thereafter federally), and has concluded that there have been no uncertain tax positions (as defined in GAAP) taken that require recognition or disclosure in the consolidated financial statements. In the event of any income tax-related interest or penalties are incurred, they would be included in general and administrative expense.

Stock Options and Warrants - We grant stock options and warrants to our employees, non-employee directors, note holders and certain consultants allowing them to purchase our common stock pursuant to approved terms. The estimated value of the warrants issued with debt instruments is recorded as a discount on notes payable and amortized as interest expense over the term of the notes using the effective interest method.

 
Other current assets consists of the following at September 30, 2019 and December 31, 2018:

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and equipment, net, consists of the following at September 30, 2019 and December 31, 2018:

Depreciation expense for the nine month periods ended September 30, 2019 and 2018 is $225 and $0, respectively. A computer was acquired in February of 2019.

Leasehold improvement, net, consists of the following at September 30, 2019 and December 31, 2018:

Amortization expense for the nine month periods ended September 30, 2019 and 2018 is $299 and $449, respectively.

The Company has received financing from Management of the Company as well as from members of our Board of Directors. These individuals are deemed to be related parties to the Company and their indebtedness must be disclosed separately.

As of September 30, 2019 and December 31, 2018, there are the following related party notes payable:

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2019 and December 31, 2018, the balance was as follows:

During the nine month period ended September 30, 2019, there have been 47 additional convertible-promissory notes totaling $2,100,250. One $25,000 convertible promissory note was repaid with interest of $6,960 during the third quarter 2019. One previous $50,000 convertible-promissory note was converted into stock during the year ended December 31, 2018.

Break-out of debt between the parent company and our subsidiary PVMS is as follows:

At PVMS, the total of notes issued year-to-date and their dollar values were as follows:

All debt are short-term in nature, one-year maturity date. All debt issued has a stated interest rate of 12% per year.

Contingent liability consisted of 3 items:

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2019 and December 31, 2018, the balance of this indebtedness is as follows:

As of September 30, 2019 and December 31, 2018, the balance of other accrued liabilities is as follows:

The Company entered into two leases for office space and one automobile lease prior to the end of the quarter ended September 30, 2019 that are classified as right of use assets and lease liabilities. The lease for the Company’s office spaces expire in April 2020 and June 2022. The lease for the automobile expires in June 2021. As the implicit interest rate is not readily identifiable in the leases, the Company calculated the present a value of the leases using the average commercial real estate interest rate of 5.50% at the commencement of the office leases and the interest of 2.99% for the automobile lease. Applying the commercial rate, the Company calculated the present value of $361,223 for the office leases and $29,037 for the automobile leasing, that are being amortized over the life of the leases.

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2019, the right of use assets associated with future operating leases are as follows:

Total amortization expense related to the right of use assets under the lease agreements was $62,135 and $0 for the nine month periods ended September 30, 2019 and 2018, respectively.

As disclosed in Note 10, the Company entered into two leases for office space and automobile lease prior to the quarter ended September 30, 2019 that are classified as right of use assets and lease liabilities.

As of September 30, 2019, the lease liabilities associated with future payments due under the leases are as follows:

The following is a schedule of future minimum lease payments under the right of use lease agreements together with the present value of the net minimum lease payments as of September 30, 2019:

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Total maturities of lease liabilities as of September 30, 2019 are as follows:

During the nine month period ended September 30, 2019, the Company issued 700,000 shares of its common stock as follows:

On March 21, 2019, the Company issued 200,000 shares of its common stock to its Securities Exchange Commission counsel, who elected to take common stock in the Company as partial payment of its legal fees. The total value shares were valued at $0.08 per share on the total value of $16,000.

Additionally, on March 29, 2019, the Company issued 500,000 shares of its common stock to an existing shareholder and warrant holder, who elected to exercise his warrants to purchase 500,000 shares of the Company's common stock for $15,000. The warrants were issued during May of 2017 for $0.03 per share.

During the nine month period ended September 30, 2018, the Company issued 2,000,000 shares of common stock for a legal settlement. The shares were issued at a value of $0.12 per share or for a total value of $240,000. In addition, the Company issued 1,597,971 shares for the conversion of a promissory note of $50,000 and accrued interest of $1,231. The stock was issued at a value of $0.03 per share. The Company relied on Section 4(a)(2) of the Securities Act of 1933, as amended, as the exemption from registration under the Act.

The Company previously reported that the litigation between Rotech Healthcare, Inc. and Pharmacy Value Management Solutions, Inc. settled. The Company rejected the draft settlement terms and continues to aggressively defend this litigation.

Except as disclosed above and in Item 1, all of the legal proceedings for the nine-month period ended September 30, 2019, are disclosed in our annual report on Form10-K for the year ended December 31, 2018, filed on May 24, 2019.

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In accordance with ASC Topic 855, “Subsequent Events”, the Company evaluated subsequent events through November 13, 2019, the date these financial statements were available to be issued. During its evaluation, the following subsequent events were identified:

Issuance of debt and warrants

Subsequent to the balance sheet date, the Company has issued $139,000 of convertible-promissory notes. All of the debt matures in 2020 and has a stated interest rate of 12% and is unsecured. Concurrent with the issuance of debt, the Company has issued 4,128,000 warrants at an average exercise price of $0.15 At the time of issuance, all warrants had a three or five year term.

Stock issued for services

 The Company issued 4,300,000 shares of restricted common stock to the investment banker, D. H. Blair Investment Banking Corp. The services were valued at $473,000 or $0.11 per share.

ADVANZEON SOLUTIONS, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following information should be read in conjunction with the financial statements and notes thereto and in conjunction with Managements’ Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

This report includes forward-looking statements, the realization of which may be affected by certain important factors discussed previously above under Item 1A, “Risk Factors.”

Overview

The Company through its wholly owned subsidiary Pharmacy Value Management Solutions, Inc. administers and operates a medically driven sleep apnea program branded SleepMaster Solutions™ (“SMS”). Management believes that SMS is the largest provider of these combined services in the nation. We are in all 50 states and provide a turnkey solution designed to effectively keep drivers on the road with no down time, compliant with DOT regulations, improve their health, and significantly decrease legal liability risk for the employer. We are vertically integrated, and we provide a “Program” of services that addresses all the needs of a corporate transportation system, union or other driver-related organizations. We believe we are the only company capable of providing the full range of needed services in a timely manner.

Our services start with the identification of the target population and the potential risk the client currently has. We can do this through our SMS Program, which includes the ability to screen every driver to identify if signs and symptoms of sleep apnea are present. We can then take this data and provide the employer with a list of those drivers that should be tested and the statistical likelihood of the percentage of those drivers who will test positive for obstructive sleep apnea (OSA). Together with the employer/union, SMS provides a realistic time frame, actual total cost, and process for testing all drivers who need to be tested. For those drivers testing positive for OSA, we then provide the appropriate treatment such that the driver will meet the DOT requirements and remain on the road. We monitor 365 days per year driver’s usage of the treatment device according to DOT standards and we report that usage to all stakeholders as required/permitted. We utilize mathematical algorithms to determine if the driver is predicatively meeting the annual DOT requirements for usage. Using those predictive algorithms, we reach out to those drivers and provide case management, encouragement designed to solve problems such that the driver increases usage, if necessary, and remains compliant.

PVMS constructed its model based upon the foregoing principles. The SMS Program includes all processes attended in sleep apnea screening, testing, treatment, monitoring and overall management of commercial drivers’ as well as their employers’ needs. We have successfully established relationships with national health care clinic providers, all with certified medical examiner (“CME”) status. These clinics total almost 1,000 throughout the U.S. We also have both formal and informal relationships with employers; municipalities; a significant veteran’s group; union and non-union driving organizations; suppliers of home sleep testing equipment and a variety of OSA treatment devices; and, a national network of telemedicine sleep specialists covering all 50 states. We have an internal medical team for governance and protocol purposes and a customer service department that interfaces directly with our drivers. We also have a marketing team that regularly interfaces with our existing accounts and markets our services to potential new accounts. Our services are performed utilizing a best medical practices model and an efficient, cost-effective delivery system. We obtain the required equipment on a per order basis from a durable medical equipment distributor.

ADVANZEON SOLUTIONS, INC.

Revenue is recognized when billed, which is approximately when the testing service is performed, or CPAP machine is shipped.

During the nine-month period ending September 30, 2019, we continued to work with Concentra Health Services, Inc. toward the implementation of the program whereby the Company will serve as one of three of Concentra’s preferred national sleep apnea services providers. Concentra did not roll out this service until the middle of October. At the time of the roll out we were informed by Concentra that they anticipated the roll out would start slow and progressively build as their centers get used to the new process. As a result, our revenue for the period was not what we had expected. During the period the Company did see revenues coming from other third-party payor accounts that had been established in prior periods. These accounts include unions, municipalities, school districts and small to mid-size corporations-all authorizing the Company to bill them directly for providing our sleep apnea services to their members/employees. Subsequent to the period we announced the establishment of a relationship with All Aboard America, a part of All Aboard America Holdings, Inc., the fourth largest motor coach operator in North America. The Company will screen, test and treat all of its drivers and employees for sleep apnea via our SMS program. We expect to see an increase in our revenues during the fourth quarter as a result of our existing relationships and other potential accounts we are currently working to establish.

Three month periods ended September 30, 2019 and 2018

Sources of Revenue

A quantitative summary of our revenues by source category for the three month periods ended September 30, 2019 and 2018:

Results of Operations

OSA services decreased to $68,173 in 2019 from $99,083 in 2018. The decrease was primarily the result of the timing of the Concentra launch. Earlier in the year, May 14, 2019, we reached an agreement with Concentra whereby Concentra engaged the Company, and the Company accepted the engagement, to serve as Concentra’s preferred national sleep apnea services provider. The launch by Concentra of this program, which included notifying all of the Concentra clinics of same, was delayed so that same launched much later than anticipated. Pending the launch, we were asked by Concentra, albeit informally, to cease activities in terms of having our regional representative’s visit the various Concentra clinics promoting our sleep apnea services to said clinics. We honored that request, and in so honoring the request, our sales were diminished. The launch occurred in mid-October and we were informed by Concentra that they anticipated the roll out would start slowly and progressively build as their centers get used to the new process. Nonetheless, as a result of the Concentra launch and the Pinnacle agreement, as described below, we expect to see an increase in revenue during the fourth quarter of 2019.

Cost of revenues decreased from $46,028 in 2018 to $2,394 in 2019 due to a decrease in sales and a settlement agreement from a previous supplier reducing the cost of sales by $34,400.

ADVANZEON SOLUTIONS, INC.

General and administrative expense

General and administrative expense in total for the three month periods ended September 30, 2019 and 2018 was as follows:

We evaluate expenses at the Parent company level as well as at our PVMS subsidiary. Expenses at the Parent company level include overhead and the cost of being a public entity. Expenses at PVMS are solely related to the OSA services segment. A breakdown of these expenses for the three month periods ended September 30, 2019 and 2018 is as follows:

Parent Company Level

 
Explanations of variations by line item follow:

Travel expense decreased by $1,500 due to main operations moving to the subsidiary level.

Professional fees decreased by $15,406. The decrease is a result of a $18,000 decrease in legal fees in the three month period ended September 30, 2019 compared to the three month period ended September 30, 2018.

Rent expense has stayed relatively the same.

Other general and administrative expense increased by $4,658. This increase was due to a new D&O Insurance expense of $16,000 while storage, travel, and marketing decreased by $9,000. Other miscellaneous items decreased by $2,300.

ADVANZEON SOLUTIONS, INC.

PVMS Subsidiary Level

Explanations of variations by line item follow:

Payroll related expenses decreased $12,059. The Company no longer used 4 subcontractors in the three months ended September 30, 2019 that were used in the comparable period in 2018.

Travel expense stayed relatively the same.

Professional Fees increased $31,904. This increase is due to the new consulting services expense in the total of $31,500. In January 2019, we hired a law firm to begin litigation against our former accountants.

Marketing costs increased by $2,445 due to the increased visits to potential clinics in building up new clientele. In August 2019, we hired a new advertising firm.

Office supplies stayed relatively the same.

Rent expense increased by $5,541. The California office lease began mid-way through the three months period ended June 30, 2018. As of May 2019, the California office lease was renewed for a new monthly rate of $4,000. We pay the California lease payments on a residential unit that we use as an office for our account managers, sales and marketing staff. The unit is also used as a temporary residence for one of our national account managers while developing the West Coast market.

Other general and administrative expense stayed relatively the same.

Interest expense

Interest expense in total for the three month periods ended September 30, 2019 and 2018 was as follows:

ADVANZEON SOLUTIONS, INC.

A breakdown of the interest expense for the three month periods ended September 30, 2019 and 2018 is as follows: