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Advanzeon Solutions, Inc. – ‘10-Q’ for 9/30/20

On:  Friday, 10/8/21, at 10:02am ET   ·   For:  9/30/20   ·   Accession #:  1731122-21-1675   ·   File #:  1-09927

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

10/08/21  Advanzeon Solutions, Inc.         10-Q        9/30/20    5:454K                                   Electro Filings LLC/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                    HTML    238K 
 2: EX-31.1     Certification -- §302 - SOA'02                      HTML     11K 
 3: EX-31.2     Certification -- §302 - SOA'02                      HTML     11K 
 4: EX-32.1     Certification -- §906 - SOA'02                      HTML      7K 
 5: EX-32.2     Certification -- §906 - SOA'02                      HTML      7K 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2020

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 September 15, 2021, the registrant had outstanding 119,907,316 shares of its $0.01 par value Common Stock.

ADVANZEON SOLUTIONS, INC

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ADVANZEON SOLUTIONS, INC. ( PARENT COMPANY DEBTOR-IN-POSSESSION)

CONSOLIDATED BALANCE SHEETS 

September 30, 2020 (unaudited) and December 31, 2019

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

ADVANZEON SOLUTIONS, INC. ( PARENT COMPANY DEBTOR-IN-POSSESSION)

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine-Month Periods Ended September 30, 2020 and 2019 (unaudited)

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

ADVANZEON SOLUTIONS, INC. ( PARENT COMPANY DEBTOR-IN-POSSESSION)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY

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

ADVANZEON SOLUTIONS, INC. ( PARENT COMPANY DEBTOR-IN-POSSESSION)

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine-Month Periods Ended September 30, 2020 and 2019 (unaudited)

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

ADVANZEON SOLUTIONS, INC. ( PARENT COMPANY DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF THE COMPANY’S BUSINESS AND BASIS OF PRESENTATION

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”).

On September 4, 2020, in a matter entitled Dr. Jerry Katzman v. Comprehensive Care Corporation n/k/a/ Advanzeon Solutions, Inc. a receiver was appointed for Advanzeon Solution, Inc. ( the “Company”). The order granting the Plaintiff’s motion for appointment of a receiver was issued in the Circuit Court of the 13^th Judicial Circuit in and for Hillsborough County Florida, Case number 12-002570-Division L. The name of the receiver is Burton W. Wiand.

On September 7, 2020, the Company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Florida, Tampa Division, Case number 8:20-bk-6764. Also, on September 7, 2020, the Company filed a Notice of Case Under Chapter 11 of the United States Bankruptcy Code and Notice of Automatic Stay with the Circuit Court of the 13^th Judicial District in and for Hillsborough County, Florida.

The Company will continue to operate its business as “debtor-in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

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, 2019, 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, 2020 and 2019.

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, 2019, filed April 9, 2020. The results of operations for the three and nine-month periods ended September 30, 2020 and 2019 are not necessarily indicative of operating results for the full year.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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., 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.

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.

Outside Service Company - During the applicable period, the Company, from time to time, utilized the services of Administrative Service Company, Inc., an independent corporate entity, for purposes of paying its account payables, including payroll. The CEO of the Company also served as President of Administrative Service Company, Inc. No fees were paid to Administrative Service Company, nor its principals, officers or directors. Administrative Service Company accounts to the Company, monthly, for all funds it receives and disburses.

Revenue Recognition - In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, “Revenue from Contracts with Customers”, the Company recognizes revenue when obligations under the terms of a contract with the customer are satisfied. Generally, this occurs upon shipment of the CPAP to their customer or when the test is performed.

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

Leasehold Improvement - Leasehold improvement (Note 5) is stated at cost less accumulated amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives ranging from 2 to 12 years. 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, 2020 and December 31, 2019 are as follows:

During the nine-month period ended September 30, 2020, there have been 12 additional convertible notes issued totaling $628,540. During the nine-month period ended September 30, 2020, 56 convertible notes totaling $3,802,213 plus accrued interest was converted to stock.

Cost of Revenues - Costs of services consist of supplies and operating expenses. Supplies are recognized in the period in which a patient 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 2020 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 2017 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.

Concentration of Credit Risk - The Company maintains its cash and cash equivalents with a financial institution which management believes to be of high credit quality. Their accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 in coverage. The Company had an uninsured cash balance of $595,340 as of September 30, 2020 and no uninsured cash balances as of December 31, 2019.

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.

3. CURRENT ASSETS

Cash and Restricted Cash - On April 23, 2020, the Company’s wholly owned subsidiary, Pharmacy Value Management Solutions, Inc. (‘PVMS”) received a loan in the principal amount of $1,243,840 from Mechanics Bank (the “Bank”) pursuant to the Paycheck Protection Program “PPP”. On May 22, 2020, the Bank notified PVMS that the loan was in default as a result of false statements made in the loan application. PVMS disputes the Bank’s claim and believes that it made no false statements in it’s PPP loan application. The statements relate to the number of employees and the monthly payroll amounts. As a result, PVMS’ account with Mechanics Bank has been frozen with a balance of $845,340. Both PVMS and the Bank are seeking guidance from the Small Business Administration as to how to resolve this dispute. Until resolved, it is likely that this account will remain frozen.

Cash and restricted cash consists of the following at September 30, 2020 and December 31, 2019:

Other current assets consists of the following at September 30, 2020 and December 31, 2019:

4. PROPERTY AND EQUIPMENT

Property and equipment, net, consists of the following at September 30, 2020 and December 31, 2019:

Depreciation expense for the nine-month periods ended September 30, 2020 and 2019 is $934 and $225, respectively. A laptop was acquired in January of 2020.

5. LEASEHOLD IMPROVEMENT

Leasehold improvement, net, consists of the following at September 30, 2020 and December 31, 2019:

Amortization expense for the nine-month periods ended September 30, 2020 and 2019 is $0 and $299, respectively.

6. RELATED PARTY LOANS PAYABLE

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, 2020 and December 31, 2019, there are the following related party notes payable:

7. DEBT

As of September 30, 2020 and December 31, 2019, the balance was as follows:

During the nine-month period ended September 30, 2020, there have been 12 additional convertible notes issued totaling $628,540. There have been 56 convertible notes totaling $3,802,213 converted to stock.

On April 23, 2020, the Company’s wholly owned subsidiary, Pharmacy Value Management Solutions, Inc. (‘PVMS”) received a loan in the principal amount of $1,243,840 from Mechanics Bank (the “Bank”) pursuant to the PPP. On May 22, 2020, the Bank notified PVMS that the loan was in default as a result of false statements made in the loan application. PVMS disputes the Bank’s claim and believes that it made no false statements in its PPP loan application. The statements relate to the number of employees and the monthly payroll amounts. As a result, PVMS’ account with Mechanics Bank has been frozen with a balance of $845,340. Both PVMS and the Bank are seeking guidance from the Small Business Administration as to how to resolve this dispute. Until resolved, it is likely that this account will remain frozen.

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

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

All debts issued during the nine-month period ended September 30, 2020 are short-term in nature and have a stated interest rate of 10%.

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

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

8. CONTINGENT LIABILITY

Contingent liability consisted of 3 items:

As of September 30, 2020 and December 31, 2019, the balance of this indebtedness is as follows:

9. OTHER ACCRUED LIABILITIES

As of September 30, 2020 and December 31, 2019, the balance of other accrued liabilities is as follows:

10. RIGHT OF USE ASSETS

The Company entered into two leases, one for office space and one for an automobile lease that are classified as right of use assets and lease liabilities. The Company pays the lease payments on a residential unit in California that is used as an office/residential unit for certain of its marketing personnel. The lease is on a month-to month basis. The Company has occupied this unit for the past approximately 1-1/2 year period and intends to do so for the foreseeable future. The lease for the Company’s office space expire in 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 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 $339,833 for the office leases and $29,037 for the automobile leasing that are being amortized over the life of the leases. 

As of September 30, 2020, 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 $54,660 and $62,135 for the nine-month periods ended September 30, 2020 and 2019, respectively.

11. RIGHT OF USE LEASE LIABILITIES

As disclosed in Note 10, the Company entered into two leases for office space prior to the quarter ended September 30, 2020 that are classified as right of use assets and lease liabilities.

As of September 30, 2020, 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, 2020:

Total maturities of lease liabilities as of September 30, 2020 are as follows:

12. COMMON STOCK

During the nine-month period ended September 30, 2020, the Company issued 45,855,182 shares of its common stock as follows:

On April 01, 2020, the Company issued 3,262,500 shares of its common stock to a board of director member who elected to convert director’s fees and salary totaling $652,500. The stock was issued at $0.20 per share.

On April 01, 2020, the Company issued 1,087,500 shares of its common stock to a board of director member who elected to convert director’s fees and salary totaling $217,500. The stock was issued at $0.20 per share.

On April 01, 2020, the Company issued 1,087,500 shares of its common stock to a board of director member who elected to convert director’s fees and salary totaling $217,500. The stock was issued at $0.20 per share.

On April 21, 2020, the Company issued 14,584,350 shares of its common stock to existing note holders who elected to convert promissory notes plus accrued and unpaid interest totaling $2,916,869. The stock was issued at $0.20 per share.

On April 21, 2020, the Company issued 1,327,252 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $265,450. The stock was issued at $0.20 per share.

On April 21, 2020, the Company issued 2,156,515 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $431,303. The stock was issued at $0.20 per share.

On May 15, 2020, the Company issued 1,263,745 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $139,012. The stock was issued at $0.11 per share.

On May 15, 2020, the Company issued 4,284,565 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $471,302. The stock was issued at $0.11 per share.

On May 15, 2020, the Company issued 7,210,168 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $793,118. The stock was issued at $0.11 per share.

On May 18, 2020, the Company issued 700,751 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $77,083. The stock was issued at $0.11 per share.

On May 21, 2020, the Company issued 502,434 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $55,268. The stock was issued at $0.11 per share. 

On May 25, 2020, the Company issued 319,627 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $35,159. The stock was issued at $0.11 per share.

On May 25, 2020, the Company issued 333,824 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $36,721. The stock was issued at $0.11 per share.

On May 26, 2020, the Company issued 781,206 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $85,933. The stock was issued at $0.11 per share.

On May 28, 2020, the Company issued 884,555 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $97,301. The stock was issued at $0.11 per share.

On May 29, 2020, the Company issued 937,116 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $103,083. The stock was issued at $0.11 per share.

On June 1, 2020, the Company issued 1,024,189 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $112,661. The stocks was issued at $0.11 per share.

On June 05, 2020, the Company issued 668,797 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $73,568. The stock was issued at $0.11 per share.

On June 05, 2020, the Company issued 603,987 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $66,439. The stock was issued at $0.11 per share.

On June 12, 2020, the Company issued 1,564,245 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $172,067. The stock was issued at $0.11 per share.

On June 18, 2020, the Company issued 504,957 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $55,545. The stock was issued at $0.11 per share.

On July 02, 2020, the Company issued 765,399 shares of its common stock to an existing note holder who elected to convert promissory notes plus accrued and unpaid interest totaling $84,194. The stock was issued at $0.11 per share.

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.

13. LEGAL PROCEEDINGS

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. A final judgment in favor of the Plaintiff was entered on 02/01/2021 in the amount of $130,355.39. On 03/03/2021 the Company filed a Notice of Appeal of the judgment with the Second District Court of Appeal. The appeal is pending.

Except as disclosed above and in Part II Item 1, all of the legal proceedings for the nine-month period ended September 30, 2020, are disclosed in our annual report on Form10-K filed on April 9, 2020. 

14. SUBSEQUENT EVENTS

In accordance with ASC Topic 855, “Subsequent Events”, the Company evaluated subsequent events through November 9, 2020, 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 $60,000 of convertible-promissory notes. All of the debt matures in 2021 and has a stated interest rate of 12% and is unsecured. Concurrent with the issuance of debt, the Company has issued 50,000 warrants at an average exercise price of $0.04. At the time of issuance, all warrants had a three or five year term.

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, 2019.

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.

SMS 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.

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

During the three-month period ending September 30, 2020, the majority of our revenue continued to be received from patient referrals from only certain of the clinics operated by Concentra Health Services. During this period and as a result of the Coronavirus pandemic, the Federal Motor Carrier Safety Administration (“FMCSA”), which had previously suspended the requirement that interstate commercial drivers have a prescribed DOT medical exam from a certified medical examiner, extended the medical exam suspension from September 30, 2020 until the end of the year. This action by the FMCSA, coupled with the effect of the pandemic, caused a significant number of clinics that we rely upon for referrals to either continue to be closed, close anew or operate with reduced staffing and reduced capacity. All of the foregoing resulted in fewer patients. Additionally, many commercial drivers, who, but for the aforesaid medical exam suspension, would have gone to the Concentra clinics for their required medical exam, continue to elect to wait until the suspension expires. All of those events materially reduced our referral resources. We did continue to receive revenue from certain Concentra referrals, other clinic referrals and some of our in-house accounts, such as PG&E, the Veteran’s organization with whom we contract, and others, but this patient flow was materially reduced, as well. However, we expect to see increased revenue from these accounts in the fourth quarter.

During this period, we added a companion product to our CPAP treatment program, a branded sanitizer device. We also have beta tested our WatchPat One device. The WatchPat One device shortens the turnaround time for our home sleep test results by as much as five days. As we anticipate a large surge of drivers going forward, we believe this shortened turnaround time will be a significant, positive decision for our current clients and our new clients to use our services. During the period we continued with our beta testing program with Sleep Cycle. The results have been very positive and we anticipate a full-fledged joint marketing launch to Sleep Cycle customers by mid-year 2021.

We continued our effort to increase our presence with various unions. We successfully entered into an agreement with a large group of Teamsters, whose healthcare benefits are substantially paid for by the group. We also established a relationship with a large third-party payer for a number of other union trust funds and labor unions. Their main account is a large national delivery service. We expect to see revenue from this relationship in the fourth quarter. As clinics reopen we expect to see increased revenue from this source and from our new and existing accounts in the fourth quarter. Other relationships that we have established are not expected to come online until the first part of 2021.

Sources of Revenue

Three-month periods ended September 30, 2020 and 2019

A quantitative summary of our revenues by source category for the three-month periods ended September 30, 2020 and 2019:

Results of Operations

OSA services increased to $127,070 in 2020 from $68,173 in 2019. The increase was primarily the result of the Concentra account. Last year, on May 14, 2019, we reached an agreement with Concentra whereby Concentra engaged the Company, and the Company accepted the engagement, to serve as one of Concentra’s preferred national sleep apnea services provider. The launch was initiated during the fourth quarter of 2019.

Cost of revenues increased to $69,599 in 2020 from $2,394 in 2019. In 2019, the Company received a credit of $34,417 as a settlement.

General and administrative expense

General and administrative expense in total for the three month periods ended September 30, 2020 and 2019 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, 2020 and 2019 is as follows:

Parent Company Level (Debtor-In-Possession)

Explanations of variations by line item follow:

Professional fees increased by $231,761. There is an increase in consulting service expenses of $118,250 due to new consulting service expense in the three-month period ended September 30, 2020 compared to the three-month period ended September 30, 2019. Legal fees increased by $77,647 in order to continue with various lawsuits and with the bankruptcy proceeding. Accounting Fees increased by $22,869 due to services for special projects, some of which are related to the bankruptcy proceeding. Audit fees and filings increased by approximately $4,000 due to an amended filing of it’s 10K.

Travel expense stayed relatively the same.

Board of Directors fees decreased by $37,500. As of July 1, 2020, the Company has stopped paying Board of Director fees.

Rent expense decreased by 25,255 due to office lease moving to subsidiary level as of January 01, 2020. The same will show as an increase on the subsidiary level.

Other general and administrative expense increased by $72,749. This increase is mainly due to an increase in payroll related expenses of $99,551. The Company accrued CEO wages in the amount of $66,095 during the three-month period ended September 30, 2020 and the second quarter’s accrued CEO wages of $33,456 was moved from subsidiary level to parent level. The same will show as an decrease on the subsidiary level. TCA commissions decreased $24,013 due to moving the expense to subsidiary level. The same will show as an increase on the subsidiary level.

PVMS Subsidiary Level

Explanations of variations by line item follow:

Payroll related expenses decreased by $2,290. The second quarter accrued CEO wages of $33,456 was moved to the parent level. The same will show as an increase on the parent level. The company had 4 employees in the three-month period ended September 30, 2020 that were not included in the comparable period in 2019.

Travel expense decreased by $54,214 due to the COVID-19 pandemic. Many clinics have been closed and those that are open have reduced staffs and we have been requested to not conduct any in person visits.

Professional fees decreased by $28,709. The decrease is mainly due to the Company no longer using 2 consultants in the three-month period ended September 30, 2020 that were used in the comparable period in 2019.

Marketing costs increased by $9,174. In July 2020, the company hired a new marketing firm.

Office supplies decreased by $11,564 due to office supplies were fully stocked going into the new year of 2020.

Rent expense increased by $17,174 due to rent expense moving from parent level to subsidiary level as of January 01, 2020. The same will show as a decrease on the parent level.

Other general and administrative expense increased by $20,676. TCA commissions increased $23,488 due to moving the expense to subsidiary level. The same will show as an decrease on the parent level. Payroll tax expenses increased by $4,776 due to an increase in wages. There is a decrease in automobile expenses of $3,154 due to the COVID-19 pandemic. Other miscellaneous items decreased by $5,000.

Interest expense

Interest expense in total for the three-month periods ended September 30, 2020 and 2019 was as follows:

A breakdown of the interest expense for the three-month periods ended September 30, 2020 and 2019 is as follows:

Sources of Revenue

Nine-month periods ended September 30, 2020 and 2019

A quantitative summary of our revenues by source category for the nine-month periods ended September 30, 2020 and 2019:

Results of Operations

OSA services increased to $358,062 in 2020 from $226,549 in 2019. The increase was primarily the result of the Concentra account. Last year, on May 14, 2019, we reached an agreement with Concentra whereby Concentra engaged the Company, and the Company accepted the engagement, to serve as one of Concentra’s preferred national sleep apnea services provider. The launch was initiated during the fourth quarter of 2019.

Cost of revenues increased to $199,508 in 2020 from $110,211 in 2019 due to an increase in sales.

General and administrative expense

General and administrative expense in total for the nine-month periods ended September 30, 2020 and 2019 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 as September 30, 2020 and 2019 is as follows:

Parent Company Level (Debtor-In-Possession)

Explanations of variations by line item follow:

Professional fees increased $430,365. The increase is mainly due to new consulting service expenses of $354,750 in the nine-month period ended September 30, 2020 compared to the nine-month period ended September 30, 2019. Legal fees increased by $132,671 in order to continue with various lawsuits and with the bankruptcy proceeding. Audit fees decreased by $53,467 due to the fact that the 2015 - 2017 10-K was filed in January 2019. Other professional fees decreased by approximately $4,000.

Travel expense decreased $3,748 due to the COVID-19 pandemic. Many clinics have been closed and those that are open have reduced staffs and we have been requested to not conduct any in person visits.

Board of Directors fees decreased $17,500. As of July 1, 2020, The Company has stopped paying Board of Director fees.

Rent expense decreased $76,532 due to rent expense moving from parent level to subsidiary level as of January 01, 2020. The same will show as an increase on the subsidiary level.

Other general and administrative expense increased by $95,432. D&O Insurance expense increased by $25,324 due to a new D&O insurance that started in June 2019. Payroll related expenses increased by $99,551. The Company accrued CEO wages in the amount of $66,095 during the three-month period ended September 30, 2020 and the second quarter accrued CEO wages of $33,456 were moved from subsidiary level to the parent level. The same will show as an decrease on the subsidiary level. TCA commissions decreased $23,263 due to moving the expense to subsidiary level. The same will show as an increase on the subsidiary level. Taxes decreased by $6,137. Delaware taxes were properly accrued for 2019 and property taxes for 2018 was paid in 2019.

PVMS Subsidiary Level

Explanations of variations by line item follow:

Payroll related expenses increased $205,141. The Company hired 4 employees during the nine months ended September 30, 2020 that were not included in the comparable period in 2019. The Company paid the CEO $32,699 and accrued wages in the amount of $33,456 during the six months ended June 30, 2020. The second quarter accrued wages of $33,456 were moved from subsidiary level to the parent level in September 2020. The same will show as an increase on the parent level.

Travel expense decreased $70,313 due to the COVID-19 pandemic. Many clinics have been closed and those that are open have reduced staffs and we have been requested to not conduct any in person visits.

Professional Fees stayed relatively the same.

Marketing costs increased by $26,537. The Company hired an advertising firm in the 3rd quarter of 2019 to work on the company’s website and other marketing responsibilities and is still with the Company as of June 30, 2020. In July 2020, The Company hired a new marketing firm.

Office supplies decreased by $25,064 due to office supplies were fully stocked going into the new year of 2020.

Rent expense increased $60,106 due to rent expense moving from parent level to subsidiary level as of January 01, 2020. The same will show as a decrease on the parent level.

Other general and administrative expense increased by $38,857 due to a fraudulent charge of $9,500 and an increase in payroll taxes of $15,540 because of an increase in wages. TCA commissions increased $23,488 due to moving the expense to subsidiary level. The same will show as an decrease on the parent level. Automobile expenses decreased $6,233 due to the COVID-19 pandemic. Bad debt expense decreased $3,510 due to a decrease in bad debt in the nine-month period ended September 30, 2020 than in the comparable period in 2019.

Interest expense

Interest expense in total for the six nine-month periods ended September 30, 2020 and 2019 was as follows:

A breakdown of the interest expense for the nine-month periods ended September 30, 2020 and 2019 is as follows:

Financial Condition

Liquidity and Capital Resources

During the nine-month period ended September 30, 2020, we funded our operations from revenues and $628,540 in private borrowings. As a result of the coronavirus pandemic some of our traditional sources of private borrowing have not been accessible. We have had to obtain private borrowing on terms less favorable than we were able to prior to the pandemic. We will continue to fund our operations from these sources until we are able to produce operating revenue sufficient to cover our cost structure. In the event we are not able to secure such funding, our operations will be adversely affected.

Short Term: We funded our operations with revenues from sales and private borrowings.

On April 23, 2020, the Company’s wholly owned subsidiary, Pharmacy Value Management Solutions, Inc. (‘PVMS”) received a loan in the principal amount of $1,243,840 from Mechanics Bank (the “Bank”) pursuant to the Paycheck Protection Program. On May 22, 2020, the Bank notified PVMS that the loan was in default as a result of false statements made in the loan application. PVMS disputes the Bank’s claim and believes that it made no false statements in its PPP loan application. The statements relate to the number of employees and the monthly payroll amounts. As a result, PVMS’ account with Mechanics Bank has been frozen with a balance of $845,340. Both PVMS and the Bank are seeking guidance from the Small Business Administration as to how to resolve this dispute. Until resolved, it is likely that this account will remain frozen.

During the period we continued toward our goal to be able to uplist our Common Stock to another trading platform. Among the actions is our attempt to reduce our stockholder’s deficiency by, among, other things, being able to convert a large portion of our corporate debt to equity. For the nine months ended September 30, 2020, $3,802,213 of debt plus accrued interest was converted into 40,417,682 shares of Common Stock. All of the holders of the converted debt agreed, subject to several different conditions, to a one year lock-up from publicly offering the shares. The primary condition being to not publicly sell the shares until the earlier of (i) one year from the date of the exchange, or (ii) until the shares are tradable on the NASDAQ or comparable national exchange. The other condition for a block of 14,584,350 shares received in an exchange has the lock-up as the earlier of one year or such time as our Common Stock has an average trading volume of no less than 500,000 shares for 30 consecutive trading days.

Subsequent Events

Subsequent to September 30, 2020, we issued convertible promissory notes in the total principal amount of $60,000. All of the debt matures in 2021 and has a stated interest rate of 12% and is unsecured.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings

With the exception of the matter set forth below, all of the legal proceedings for the nine-month period ended September 30, 2020, are disclosed in our annual report on Form 10-K filed on April 9, 2020. On September 4, 2020, in a matter entitled Dr. Jerry Katzman v. Comprehensive Care Corporation n/k/a/ Advanzeon Solutions, Inc. a receiver was appointed for Advanzeon Solution, Inc. ( the “Company”). The order granting the Plaintiff’s motion for appointment of a receiver was issued in the Circuit Court of the 13^th Judicial Circuit in and for Hillsborough County Florida, Case number 12-002570-Division L. The name of the receiver is Burton W. Wiand.

On September 7, 2020, the Company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Florida, Tampa Division, Case number 8:20-bk-6764. Also, on September 7, 2020, the Company filed a Notice of Case Under Chapter 11 of the United States Bankruptcy Code and Notice of Automatic Stay with the Circuit Court of the 13^th Judicial District in and for Hillsborough County, Florida.

The Company will continue to operate its business as “debtor-in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

Subject to certain exceptions under the Bankruptcy Code, the filing of the Company’s Chapter 11 petition automatically stayed the continuation of most legal proceedings or filing of other actions against the Company or on behalf of the Company for their property to recover, collect, or secure a claim arising prior to the Petition Date or to exercise control over property of the Company, unless or until the Bankruptcy Court modifies or lifts the automatic stay as to any such claim. Notwithstanding the general application of the automatic stay described above, government authorities may determine to continue actions brought under their regulatory or [policy] powers.

Item 1A. Risk Factors

See the Risk Factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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

With the exception of the matter set forth below, the sale of unregistered securities for the nine-month period ended September 30, 2020 were disclosed in our annual report on Form 10-K filed on April 9, 2020.

On April 15, 2020, we issued a convertible promissory note (the “Note”) in the principle amount of $109,180 with an original issue discount of $6,180. The Note matures on October 15, 2021, and the interest rate is 10%. This Note may not be prepaid in whole or in part except as follows. Should the Note be prepaid within the first ninety days from the date of issuance, the prepayment percentage is one hundred and twenty-five (125%) per cent of the outstanding principal and any accrued and unpaid interest. For the next ninety days the Note may be prepaid and the prepayment percentage is one hundred thirty (130%) per cent of the outstanding principal and any accrued and unpaid interest. Thereafter, the Note may not be prepaid.

On April 21, 2020, we issued a total of 14,584,350 shares of our common stock in exchange for $2,916,869 of our Senior Debt and accrued interest to seven holders of the Debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On April 21, 2020, we issued a total of 1,327,252 shares of our common stock in exchange for $265,450 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On April 21, 2020, we issued a total of 2,156,515 shares of our common stock in exchange for $431,303 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On May 13, 2020, we issued a convertible promissory note in the principle amount of $50,000 to an accredited investor. The interest rate was 12%. The Holder of the note has the right to convert all or a portion of the principle and any accrued interest into shares of our common stock at a per share price equal to the lesser of (i) 15% below the average daily closing price of our common stock for the immediately preceding twenty (20) business days or (ii) $0.11. The principal amount and any accrued but unpaid interest under the note shall be due and payable on the earliest to occur (i) the date which is twelve months from the effective date of the note or (ii) the receipt by the Company of payment on its account receivable owed to it by Universal Health Care, Inc. and Universal Health Care Insurance Company, which accounts receivable is currently being processed in the matter of The Receivership of Universal Health Care, Inc., a Florida corporation and The Receivership of Universal Health Care Insurance Company, Inc., a Florida corporation under case numbers 2013-CA and 2013-CA, respectively. The Company also granted to the purchaser a five-year warrant to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.15 per share.

On May 15, 2020, we issued a total 1,263,745 shares of our common stock in exchange for $139,012 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On May 15, 2020, we issued a total 4,284,565 shares of our common stock in exchange for $471,302 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On May 15, 2020, we issued a total 7,210,168 shares of our common stock in exchange for $793,118 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On May 18, 2020, we issued a total 700,751 shares of our common stock in exchange for $77,083 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On May 21, 2020, we issued a total 502,434 shares of our common stock in exchange for $55,268 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On May 22, 2020, we issued a convertible promissory note in the principle amount of $25,000 to an accredited investor. The interest rate was 12%. The Holder of the note has the right to convert all or a portion of the principle and any accrued interest into shares of our common stock at a per share price equal to the lesser of (i) 15% below the average daily closing price of our common stock for the immediately preceding twenty (20) business days or (ii) $0.11. The principal amount and any accrued but unpaid interest under the note shall be due and payable on the earliest to occur (i) the date which is twelve months from the effective date of the note or (ii) the receipt by the Company of payment on its account receivable owed to it by Universal Health Care, Inc. and Universal Health Care Insurance Company, which accounts receivable is currently being processed in the matter of The Receivership of Universal Health Care, Inc., a Florida corporation and The Receivership of Universal Health Care Insurance Company, Inc., a Florida corporation under case numbers 2013-CA and 2013-CA, respectively. The Company also granted to the purchaser a five-year warrant to purchase 50,000 shares of the Company’s common stock at an exercise price of $0.15 per share.

On May 25, 2020, we issued a total 319,627 shares of our common stock in exchange for $35,159 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On May 25, 2020, we issued a total 333,824 shares of our common stock in exchange for $36,721 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On May 26, 2020, we issued a convertible promissory note in the principle amount of $100,000 to an accredited investor. The interest rate was 12%. The Holder of the note has the right to convert all or a portion of the principle and any accrued interest into shares of our common stock at a per share price equal to the lesser of (i) 15% below the average daily closing price of our common stock for the immediately preceding twenty (20) business days or (ii) $0.11. The principal amount and any accrued but unpaid interest under the note shall be due and payable on the earliest to occur (i) the date which is twelve months from the effective date of the note or (ii) the receipt by the Company of payment on its account receivable owed to it by Universal Health Care, Inc. and Universal Health Care Insurance Company, which accounts receivable is currently being processed in the matter of The Receivership of Universal Health Care, Inc., a Florida corporation and The Receivership of Universal Health Care Insurance Company, Inc., a Florida corporation under case numbers 2013-CA and 2013-CA, respectively. The Company also granted to the purchaser a five-year warrant to purchase 200,000 shares of the Company’s common stock at an exercise price of $0.15 per share.

 On May 26, 2020, we issued a total 781,206 shares of our common stock in exchange for $85,933 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On May 28, 2020, we issued a total 884,555 shares of our common stock in exchange for $97,301 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On May 29, 2020, we issued a total 937,116 shares of our common stock in exchange for $103,083 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On June 1, 2020, we issued a convertible promissory note (the “Note”)in the principle amount of $56,180 with an original issue discount of $3,180. The Note matures on June 1, 2021, and the interest rate is 10%. This Note may not be prepaid in whole or in part except as follows. Should the Note be prepaid within the first ninety days from the date of issuance, the prepayment percentage is one hundred and twenty-five (125%) per cent of the outstanding principal and any accrued and unpaid interest. For the next ninety days the Note may be prepaid and the prepayment percentage is one hundred thirty (130%) per cent of the outstanding principal and any accrued and unpaid interest. Thereafter, the Note may not be prepaid.

On June 1, 2020, we issued a total 1,024,189 shares of our common stock in exchange for $112,661 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On June 5, 2020, we issued a total 668,797 shares of our common stock in exchange for $73,568 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On June 5, 2020, we issued a total 603,987 shares of our common stock in exchange for $66,438 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On June 12, 2020, we issued a total 1,564,245 shares of our common stock in exchange for $172,067 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On June 18, 2020, we issued a total 504,957 shares of our common stock in exchange for $55,545 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On June 21, 2020, we issued a convertible promissory note in the principle amount of $25,000 to an accredited investor. The interest rate was 12%. The Holder of the note has the right to convert all or a portion of the principle and any accrued interest into shares of our common stock at a per share price equal to the lesser of (i) 15% below the average daily closing price of our common stock for the immediately preceding twenty (20) business days or (ii) $0.11. The principal amount and any accrued but unpaid interest under the note shall be due and payable on the earliest to occur (i) the date which is twelve months from the effective date of the note or (ii) the receipt by the Company of payment on its account receivable owed to it by Universal Health Care, Inc. and Universal Health Care Insurance Company, which accounts receivable is currently being processed in the matter of The Receivership of Universal Health Care, Inc., a Florida corporation and The Receivership of Universal Health Care Insurance Company, Inc., a Florida corporation under case numbers 2013-CA and 2013-CA, respectively. The Company also granted to the purchaser a five-year warrant to purchase 50,000 shares of the Company’s common stock at an exercise price of $0.15 per share.

On July 02, 2020, we issued a total 765,399 shares of our common stock in exchange for $84,194 of our convertible debt and accrued interest to the holder of the debt. We relied on Section 3(a) (9) of the Securities Act of 1933, as amended.

On July 22, 2020, we issued a convertible promissory note (the “Note”)in the principle amount of $56,180 with an original issue discount of $3,180. The Note matures on July 1, 2021, and the interest rate is 22 %. This Note may not be prepaid in whole or in part except as follows. Should the Note be prepaid within the first ninety days from the date of issuance, the prepayment percentage is one hundred and twenty-five (125%) per cent of the outstanding principal and any accrued and unpaid interest. For the next ninety days the Note may be prepaid and the prepayment percentage is one hundred thirty (130%) per cent of the outstanding principal and any accrued and unpaid interest. Thereafter, the Note may not be prepaid.

On September 30, 2020, we issued a convertible promissory note in the principle amount of $25,000 to an accredited investor. The interest rate was 12%. The Holder of the note has the right to convert all or a portion of the principle and any accrued interest into shares of our common stock at a per share price equal to the lesser of (i) 15% below the average daily closing price of our common stock for the immediately preceding twenty (20) business days or (ii) $0.04. The principal amount and any accrued but unpaid interest under the note shall be due and payable on the earliest to occur (i) the date which is twelve months from the effective date of the note or (ii) the receipt by the Company of payment on its account receivable owed to it by Universal Health Care, Inc. and Universal Health Care Insurance Company, which accounts receivable is currently being processed in the matter of The Receivership of Universal Health Care, Inc., a Florida corporation and The Receivership of Universal Health Care Insurance Company, Inc., a Florida corporation under case numbers 2013-CA and 2013-CA, respectively. The Company also granted to the purchaser a five-year warrant to purchase 50,000 shares of the Company’s common stock at an exercise price of $0.04 per share.

All of the convertible promissory notes listed above were issued to accredited investors, as that term is defined under the Section 501 of Regulation D, promulgated under the Securities Act of 1933, as amended. The warrants issued in connection with the promissory notes all have a cashless exercise feature.

On March 22, 2020, we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On March 31, 2020, we issued 169,551 warrants to our Chief Executive Officer in lieu of 2020 first quarter salary. The warrants have a term of five years and an exercise price of $0.39 per warrant.

On April 14, 2020, we issued 96,058 warrants to a promissory note holder, an accredited investor, in lieu of interest. The warrants have a term of five years and an exercise price of $0.19 per warrant. The warrant has a cashless feature.

On April 19, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On April 21, 2020, we issued 101,599 warrants to a promissory note holder in exchange of their notes, principal amount plus accrued and unpaid interest. The warrants have a term of five years and an exercise price of $0.25 per warrant.

On April 21, 2020, we issued 230,630 warrants to a promissory note holder in exchange of their notes, principal amount plus accrued and unpaid interest. The warrants have a term of five years and an exercise price of $0.25 per warrant.

On April 21, 2020, we issued 146,811 warrants to a promissory note holder in exchange of their notes, principal amount plus accrued and unpaid interest. The warrants have a term of five years and an exercise price of $0.25 per warrant.

On April 21, 2020, we issued 1,589,044 warrants to a promissory note holder in exchange of their notes, principal amount plus accrued and unpaid interest. The warrants have a term of five years and an exercise price of $0.25 per warrant.

On April 21, 2020, we issued 368,804 warrants to a promissory note holder in exchange of their notes, principal amount plus accrued and unpaid interest. The warrants have a term of five years and an exercise price of $0.25 per warrant.

On April 21, 2020, we issued 1,589,044 warrants to a promissory note holder in exchange of their notes, principal amount plus accrued and unpaid interest. The warrants have a term of five years and an exercise price of $0.25 per warrant.

On April 21, 2020, we issued 1,095,253 warrants to a promissory note holder in exchange of their notes, principal amount plus accrued and unpaid interest. The warrants have a term of five years and an exercise price of $0.25 per warrant.

On April 25, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On May 1, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On May 1, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On May 10, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On May 11, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On May 19, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 3, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 6, 2020 we issued 50,000 warrants to a member of our Dental Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 8, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 8, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 10, 2020, we issued 200,000 warrants to our consultant. The warrants have a term of three years and an exercise price of $0.35 per warrant.

On June 11, 2020 we issued 50,000 warrants to a member of our Dental Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 14, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 20, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 22, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 24, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 24, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 27, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 30, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On June 30, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On July 01, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On July 01, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On July 01, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On July 01, 2020 we issued 50,000 warrants to a member of our Dental Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On July 06, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On July 25, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On August 19, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On August 31, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

On September 25, 2020 we issued 50,000 warrants to a member of our Medical Advisory Board, an accredited investor. The warrants have a term of three years and an exercise price of $0.25 per warrant.

We relied on Section 4 (2) of the Securities Act of 1933, as amended and or Section 501 of Regulation D promulgated under said Act as the exemption from registration under the Act.

Item 3. Defualts upon Senior Securites

None.

Item 4. Mine Safety Disclousures

None.

Item 4T. Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; (iii) provide reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and (iv) provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because changes in conditions may occur or the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2020. This evaluation was based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, Internal Control-Integrated Framework. Based upon such assessment, our CFO concluded that, as of September 30, 2020, our internal controls over financial reporting were not optimally effective in the specific areas described in the paragraphs below.

As of September 30, 2020, our CFO identified the following specific material weaknesses in the Company’s internal controls over its financial reporting processes:

As a result of our retaining the services of an Outside Accountant in January 2018 and appointing an internal Company employee to interface with the Outside Accountant, we have instituted the following policies and procedures designed to address the material weaknesses cited above.

The Company plans to further augment its addressing of material weaknesses, on an as-needed basis, by hiring additional accounting personnel once its initial corrective steps have been fully implemented, tested and found to be effective.

Item 5. Other Information

None.

Item 6. Exhibits

Documents filed as part of this Report.

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.

32

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Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing		Date		Other Filings
		10/15/21
Filed on:		10/8/21
		9/15/21
		7/1/21
		6/1/21
		11/9/20
For Period end:		9/30/20		NT 10-Q
		9/25/20
		9/7/20
		9/4/20		8-K
		8/31/20
		8/19/20		10-Q
		7/25/20
		7/22/20
		7/6/20
		7/2/20
		7/1/20
		6/30/20		10-Q,  NT 10-Q
		6/27/20
		6/24/20		UPLOAD
		6/22/20
		6/21/20
		6/20/20
		6/18/20
		6/14/20
		6/12/20
		6/11/20
		6/10/20
		6/8/20
		6/6/20
		6/5/20
		6/3/20
		6/1/20
		5/29/20
		5/28/20
		5/26/20		4
		5/25/20
		5/22/20
		5/21/20
		5/19/20		10-Q
		5/18/20
		5/15/20		4
		5/13/20		3,  NT 10-Q
		5/11/20
		5/10/20
		5/1/20
		4/25/20
		4/23/20		8-K
		4/21/20
		4/19/20
		4/15/20		4
		4/14/20		4
		4/9/20		10-K
		4/1/20
		3/31/20		10-Q,  10-Q/A,  4,  NT 10-Q
		3/22/20
		1/1/20
		12/31/19		10-K,  10-K/A,  4,  NT 10-K
		9/30/19		10-Q,  4
		6/30/19		10-Q
		5/14/19
		3/31/19		10-Q
		3/29/19
		3/21/19
		12/31/18		10-K,  NT 10-K
				List all Filings

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Filing Submission 0001731122-21-001675   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

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