UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LONG TERM CARE OPERATIONS 360, INC. |
(Exact name of Registrant as specified in its charter) |
Nevada |
|
8059 |
|
42-2578051 |
(State or other jurisdiction of
|
|
(Primary Standard Industrial Classification Code) |
|
(I.R.S. Employer Identification No.) |
5522 New Peachtree Rd., Suite 122
Chamblee, GA 30341
Telephone: (833) LTC-0360
(Address and Telephone Number of Registrant’s Principal
Executive Offices and Principal Place of Business)
Nevada Agency and Transfer Company
50 West Liberty Street, Suite 880, Reno, NV 89501
Telephone: (775) 322-0626
(Name, Address, and Telephone Number for Agent of Service)
Copies to:
BRUNSON CHANDLER & JONES, PLLC
Walker Center
175 S. Main Street, Suite 1410, Salt Lake City, UT 84111
Attn: Lance Brunson, Esq.
Telephone: (801) 303-5737
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box: ☒
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
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.
Large accelerated filer |
☐ |
Accelerated Filer |
☐ |
Non-accelerated filer |
☒ |
Smaller reporting company |
☒ |
|
|
Emerging growth company |
☐ |
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 to Section 7(a)(2)(B) of the Securities Act. ☐
|
Calculation of Registration Fee
Title of Each Class of Securities to be Registered |
|
Amount to be Registered (1) |
|
|
Proposed Maximum Aggregate Price Per Share |
|
|
Proposed Maximum Aggregate Offering Price |
|
|
Amount of Registration Fee |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common Stock, par value $0.0001 (2) |
|
|
10,000,000 |
|
|
$ | 1.00 | (3) |
|
$ | 10,000,000 |
|
|
$ | 1,091.00 |
|
Common Stock, par value $0.0001 (4) |
|
|
1,100,000 |
|
|
$ | 0.75 | (5) |
|
$ | 825,000 |
|
|
$ | 90.01 |
|
Total |
|
|
11,100,000 |
|
|
|
|
|
|
$ | 10,825,000 |
|
|
$ | 1,181.01 |
|
____________________
|
(1) |
In accordance with Rule 416(a), this registration statement shall also cover an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions. |
|
(2) |
Shares of newly issued common stock to be offered by the registrant in the Primary Offering (as hereinafter defined). |
|
(3) |
Based on the bona fide estimate of the maximum offering price in the Primary Offering in accordance with Rule 457(a). |
|
(4) |
Shares of common stock issued and outstanding to be sold by the selling stockholders as part of a Secondary Offering (as hereinafter defined). |
|
(5) |
This offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock has not traded since November 11, 2020, and is not listed on any national exchange, and in accordance with Rule 457, the offering price was determined by factors such as the lack of liquidity (since there is no present market for our stock) and the high level of risk inherent in this sort of offering. The selling stockholders may sell shares of our common stock at a fixed price of $0.75 per share until our shares are either listed on a national securities exchange or quoted on the OTC Bulletin Board, OTCQX, or OTCQB, after which the shares offered hereunder may be sold by the selling stockholders from time to time in the open market, through privately negotiated transactions, or via a combination of these methods, at market prices prevailing at the time of sale or at negotiated prices. |
i |
|
The offering price of the common stock has been arbitrarily determined and bears no relationship to any objective criterion of value. The price does not bear any relationship to our assets, book value, historical earnings or net worth. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE (LONG TERM CARE OPERATIONS 360, INC.) MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND WE ARE NOT SOLICITING AN OFFER TO BUY OR SELL THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED _______________, 2021
Long Term Care Operations 360, Inc.
10,000,000 Shares of Common Stock Being Offered by the Company in the Primary Offering
1,100,000 Shares of Common Stock Being Offered by the Selling Security Holders in the Secondary Offering
This prospectus relates to the sale of 10,000,000 shares of common stock, par value $0.0001, of Long Term Care Operations 360, Inc. (referred to herein as the “Company” or “Long Term Care Operations 360”), by the Company on a best efforts basis (the “Primary Offering”). The Company anticipates that public offering price will be between $0.50 and $1.00 per share. The Primary Offering terminates 12 months after commencement on _____________, 2022. The Company is offering the shares on a self-underwritten, “best efforts” basis directly through its CEO, Sameer Shah. The total proceeds from the Primary Offering will not be escrowed or segregated but will be available to the Company immediately. There is no minimum amount of common shares required to be purchased, and, therefore, the total proceeds received by the Company might not be enough to sustain continued operations, or a market may not develop. No commission or other compensation related to the sale of the shares will be paid. For more information, see the section titled “Plan of Distribution” and “Use of Proceeds” herein.
In addition, there are 1,100,000 shares of common stock being registered by twelve Selling Security Holders (the “Secondary Offering”), consisting of 1,100,000 issued and outstanding shares of Common Stock held by the Selling Security Holders. The Selling Security Holders will be offering their shares of common stock at a price of $0.75 per share until our shares are either listed on a national securities exchange or quoted on the OTC Bulletin Board, OTCQX, or OTCQB, and thereafter at prevailing market prices or privately negotiated prices. The Company will not receive any of the proceeds from the sale of shares being sold by the Selling Security Holders. The existence of this Secondary Offering makes it less likely that we will sell all of the shares offered in the Primary Offering. No underwriting arrangements have been entered into by any of the Selling Security Holders. The Selling Security Holders and any intermediaries through whom such securities are sold may be deemed “underwriters” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”) with respect to the securities offered, and any profits realized or commissions received may be deemed underwriting compensation. For more information regarding the Selling Security Holders, see the section titled “Selling Security Holders” herein.
Our common stock is quoted on the OTC Link LLC alternative trading system (“OTC Link”), operated by OTC Markets Group, Inc., under the symbol “LTCO”. As of May 10, 2021, the last reported sale price for our common stock was $131.25 per share on November 11, 2020, as reported by OTCMarkets.com. Prior to this offering, there has been a limited market for our securities, and our common stock has not traded since November 11, 2020. While our common stock is quoted on the OTC Link, there has been negligible trading volume. There is no guarantee that an active trading market for our common stock will develop. We are not a “blank check company,” and we have no plans or intentions to engage in a business combination following this offering.
This offering is highly speculative, and these securities involve a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. See “Risk Factors” beginning on page 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is _______________, 2021.
ii |
|
|
|
Page |
|
|
|
|
|
|
2 |
|
|
|
4 |
|
|
|
25 |
|
|
|
25 |
|
|
|
27 |
|
|
|
27 |
|
|
|
28 |
|
|
|
28 |
|
|
|
28 |
|
|
|
29 |
|
|
Management’s Discussion and Analysis of Financial Condition and Results of Operation |
|
30 |
|
|
35 |
|
|
|
40 |
|
|
Directors, Executive Officers, Promoters, and Control Persons |
|
40 |
|
|
42 |
|
|
Security Ownership of Certain Beneficial Owners and Management |
|
44 |
|
|
45 |
|
|
|
47 |
|
|
|
47 |
|
|
|
48 |
|
|
|
49 |
|
|
|
50 |
|
|
|
50 |
|
|
|
50 |
|
|
|
F-1 |
|
|
|
51 |
|
|
Disclosure of SEC Position on Indemnification for Securities Act Liabilities |
|
51 |
|
|
51 |
|
|
|
52 |
|
|
|
53 |
|
|
|
54 |
|
|
1 |
|
Table of Contents |
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. The Selling Security Holders are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.
Except as otherwise indicated, as used in this prospectus, references to the “Company,” “we,” “us,” or “our” refer to Long Term Care Operations 360, Inc.
The following summary highlights selected information contained in this prospectus, and it may not contain all of the information that is important to you. Before making an investment decision, you should read the entire prospectus carefully, including “Risk Factors” and our financial statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus.
Corporate Background
Long Term Care Operations 360, Inc. (the “Company” or “Long Term Care Operations 360”), formerly known as Bella Costa Designs Inc. and China Crawfish, Ltd., was incorporated in the State of Nevada on September 15, 2014. The Company abandoned its prior operations in China and was inactive from March of 2019 to March of 2020, when the District Court for Clark County, Nevada, appointed a custodian for the Company.
On September 21, 2020, a change of control occurred and new officers and directors of the Company were appointed, and on November 24, 2020, the Company acquired (the “Acquisition”) all the assets of Prudent Senior Services of America, Inc, a Georgia corporation (the “Seller”), including each of its five subsidiaries, Prudent Senior Services of Georgia, Inc, a Georgia corporation; Nemicare, Inc, a Georgia corporation; Golden Sun NEMT, LLC, a Georgia limited liability company; Golden Sun Health Services, Corp, a Georgia corporation; and AHSTY NEMT Inc, a Georgia corporation. In consideration of the Acquisition, the Company issued 52,350,000 shares of Company common stock to the Seller’s shareholders, and after the Acquisition, the Company had outstanding approximately 59,567,397 shares of Company common stock.
The Company is now engaged in providing adult care services in a facility setting, skilled and unskilled nursing services in a home health setting, providing non-emergency medical and adult care transportation services, and providing technology solutions to senior care facilities.
Where You Can Find Us
The mailing address is currently 5522 New Peachtree Rd., Suite 122, Chamblee, Georgia, 30341. Our telephone number is 1-833-LTC-0360.
2 |
|
Table of Contents |
Summary of the Offering
Securities being registered by the Selling Security Holders pursuant to the Secondary Offering: |
|
1,100,000 shares of common stock |
|
|
|
Secondary Offering price: |
|
At a price of $0.75 per share until our shares are either listed on a national securities exchange or quoted on the OTC Bulletin Board, OTCQX, or OTCQB, and thereafter at prevailing market prices or prices negotiated in private transactions |
|
|
|
Secondary Offering period: |
|
From the date of this prospectus until _____, 2022 |
|
|
|
Newly issued common stock being registered pursuant to the Primary Offering: |
|
10,000,000 shares of common stock |
|
|
|
Primary Offering price: |
|
$[__] per share |
|
|
|
Primary Offering period: |
|
From the date of this prospectus until _____, 2022 |
|
|
|
Number of shares outstanding after the offering: |
|
69,567,431 shares of common stock |
|
|
|
Market for the common stock: |
|
Our common stock is quoted on the OTC Link alternative trading system under the symbol “LTCO”. As of May 10, 2021, the last reported sale price for our common stock was $131.25 per share. Prior to this offering, there has been a limited market for our securities. While our common stock is quoted on the OTC Link, there has been negligible trading volume. |
|
|
|
|
|
There is no assurance that a trading market will develop, or, if developed, that it will be sustained. Consequently, purchasers of our common stock may find it difficult to resell the securities offered herein should the purchasers desire to do so when eligible for public resale. |
|
|
|
|
|
Our officers and directors are not purchasing shares in this offering. |
|
|
|
Use of proceeds: |
|
We estimate that we will receive approximately $7,500,000 in gross proceeds if we sell all of the shares in the Primary Offering and assuming a $0.75 per share Primary Offering Price, which is the midpoint of the price range set forth on the cover page of this prospectus, and we will receive estimated net proceeds (after paying offering expenses) of approximately $7,464,000 if we sell all of those shares. We will receive none of the proceeds from the sale of shares by the Selling Security Holders. See “Use of Proceeds” for a more detailed explanation of how the proceeds from the Primary Offering will be used. |
|
|
|
Risk Factors: |
|
See “Risk Factors‚” and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our common stock. |
|
|
|
Subscriptions: |
|
Subscriptions are to be made payable to: |
|
|
|
|
|
Long Term Care Operations 360, Inc. 5522 New Peachtree Rd., Suite 122 Chamblee, GA 30341 |
3 |
|
Table of Contents |
You should carefully consider the risks described below before investing in our securities. Additional risks not presently known to us or that our management currently deems immaterial also may impair our business operations. If any of the risks described below were to occur, our business, financial condition, operating results, and cash flows could be materially adversely affected. In such an event, the trading price of our common stock could decline, and you could lose all or part of your investment. In assessing these risks, you should also refer to the other information contained in this Prospectus, including our consolidated financial statements and related notes. The risks discussed below include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements.
Risks Related to our Financial Condition and Capital Requirements
We have experienced recurring losses from operations and negative cash flows from operating activities.
We have historically experienced recurring losses from operations and negative cash flows from operating activities. We incurred a net loss of approximately $13,749 for the fiscal year ended October 31, 2020, and a net loss of $109,579 for the year ended October 31, 2019, and our operational subsidiary, which we acquired in November of 2020, incurred a net loss of $468,443 for the fiscal year ended October 31, 2020, and a net loss of $38,293 for the fiscal year ended October 31, 2019. As of January 31, 2021, on a consolidated basis we have an accumulated deficit of $394,556.
We may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our financial condition. Our prior losses have had, an adverse effect on our financial condition. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, expand our business, diversify our product offerings or continue our operations. A decline in the value of our company could cause you to lose all or part of your investment.
If we are not able to successfully execute on our future operating plans, our financial condition and results of operation may be materially adversely affected, and we may not be able to continue as a going concern.
It is critical that we meet our revenue goals and increase sales going forward as our operating plan already reflects prior significant cost containment measures and may make it difficult to achieve top-line growth if further significant reductions become necessary. If we do not meet our sales goals, our available cash and working capital will decrease and our financial condition will be negatively impacted.
We may need additional financing in the future, which may not be available when needed or may be costly and We may need additional capital to fund our operations and capital expenditures plans, to pursue expansion of our healthcare services, and to pursue any development, investment and acquisition opportunities, and we may not be able to obtain it on terms acceptable to us, or at all.
Execution on our strategy, completing our capital expenditure plans, pursuing expansion of our healthcare services to residents and seniors living outside our communities, and pursuing any other development, investment and acquisition opportunities that we may identify may require additional capital. Financing may not be available to us or may be available to us only on terms that are not favorable. In addition, certain of our outstanding indebtedness and long-term leases restrict, among other things, our ability to incur additional debt. If we are unable to raise additional funds or obtain them on terms acceptable to us, we may have to delay or abandon some or all of our plans or opportunities. Further, if additional funds are raised through the issuance of additional equity securities, the percentage ownership of our stockholders would be diluted. Any newly issued equity securities may have rights, preferences or privileges senior to those of our common stock.
4 |
|
Table of Contents |
If we are unable to continue as a going concern, our securities will have little or no value.
Although our audited financial statements for the year ended October 31, 2020, were prepared under the assumption that we would continue our operations as a going concern, the report of our independent registered public accounting firm that accompanies our financial statements for the year ended October 31, 2020, contains a going concern qualification in which such firm expressed substantial doubt about our ability to continue as a going concern, based on the financial statements at that time. Specifically, as noted above, we have experienced recurring losses from operations and negative cash flows from operating activities. These prior losses have had an adverse effect on our financial condition. In addition, as noted above, continued operations and our ability to continue as a going concern may be dependent on our ability to obtain additional financing in the near future and thereafter, and there are no assurances that such financing will be available to us at all or will be available in sufficient amounts or on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we are unable to generate additional funds in the future through sales of our products, financings or from other sources or transactions, we will exhaust our resources and will be unable to continue operations. If we cannot continue as a going concern, our shareholders would likely lose most or all of their investment in us.
We have a limited operating history.
The Company, while incorporated in 2014, began carrying on its current senior care business in late 2018. We are therefore subject to many of the risks common to early-stage enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial, and other resources. There is no assurance that we will be successful in achieving a return on shareholders’ investment.
We may incur significant debt to finance our operations.
There is no assurance that we will not incur debt in the future, that we will have sufficient funds to repay our indebtedness, or that we will not default on our debt, jeopardizing our business viability. Furthermore, we may not be able to borrow or raise additional capital in the future to meet the Company’s needs or to otherwise provide the capital necessary to conduct our business.
Risk Factors Relating to Our Business and Industry
Under our Medicaid contracts, we assume all of the risk that the cost of providing services will exceed our compensation.
Over 90% of the revenue of our operational subsidiary acquired in November 2020, for each of the fiscal years ended October 31, 2019 and 2020, is derived from capitation agreements with government payors in which we receive fixed-price-per-participating-member-per-month (“PMPM”) fees. While there are variations in payment specific to each agreement, we generally contract with government payors to receive a fixed per member, per month fee to provide transportation, meals and daycare services a participant may require while assuming financial responsibility for the totality of our participants’ daycare expenses. This type of contract is often referred to as an “at-risk” or a “capitation” contract. To the extent that our participants require more care than is anticipated and/or the cost of care increases, aggregate fixed capitated payments may be insufficient to cover the costs associated with treatment. If medical costs and expenses exceed the underlying capitation payment received, we may not be able to correspondingly increase our capitation payments received, and we could suffer losses with respect to such agreements.
5 |
|
Table of Contents |
Our revenues and operations are dependent upon a limited number of government payors, particularly Medicaid.
Our operations are dependent on a limited number of government payors, particularly Medicaid, with whom we directly contract to provide services to participants. For at least the next fiscal quarter, a majority of our revenues will continue to be derived primarily from Medicaid payments through the State of Georgia, which may terminate their contracts with us upon the occurrence of certain events. The sudden loss of our government contracts or the renegotiation of our contracts could adversely affect our operating results. In the ordinary course of business, we engage in active discussions and renegotiations with government payors in respect of the services we provide and the terms of our agreements. As the State of Georgia responds to market dynamics and financial pressures, and as Georgia and other government payors make strategic budgetary decisions in respect of the programs in which they participate, government payors may seek to renegotiate or terminate their agreements with us. Any reduction in the governmental budgetary appropriations to pay for our services, whether as a result of fiscal constraints due to recession, emergency situations such as the COVID-19 pandemic, changes in policy or otherwise, could result in a reduction in our capitated fee payments and possibly loss of contracts. These discussions could result in reductions to the fees and changes to the scope of services contemplated by our original contract and consequently could negatively impact our revenues, business and prospects.
Because we rely on state Medicaid agencies for a significant portion of our current revenues, we depend on federal funding, as well as the financial condition of the State of Georgia. Government-funded daycare programs face a number of risks, including higher than expected health care costs and lack of predictability of tax basis and budget needs. If the financial condition of the State of Georgia declines, our credit risk could increase.
Reductions in Medicaid reimbursement rates or changes in the rules governing Medicaid programs could have a material adverse effect on our financial condition and results of operations.
We currently derive a majority of our revenues through the Medicaid program, which accounted for over 90% of operational subsidiary’s revenues for the fiscal years ended October 31, 2019 and 2020. As a result, our operations are dependent on government funding levels for Medicaid programs. Any changes that limit or reduce general Medicaid funding, such as reductions in or limitations of reimbursement amounts or rates under programs, reductions in funding of programs, expansion of benefits, services or treatments under programs without adequate funding, could have a material adverse effect on our business, results of operations, financial condition and cash flows.
The Medicaid programs and their respective reimbursement rates, payment structures and rules are subject to frequent change. These include statutory and regulatory changes, rate adjustments (including retroactive adjustments), administrative or executive orders and government funding restrictions, all of which may materially adversely affect the Medicaid at which we are compensated for our services. Budget pressures can lead federal and state governments to reduce or place limits on reimbursement rates and payment structures under Medicaid. Implementation of these and other types of measures has in the past and could in the future result in substantial reductions in our revenue and operating margins. We cannot predict what deficit reduction, other payment reduction or budget enforcement initiatives may be proposed by Congress, whether Congress will attempt to restructure or suspend sequestration or the impact sequestration, other payment reductions or budget enforcement initiatives may have on our business.
Reductions in reimbursement rates could have a material, adverse effect on our financial condition and results of operations or even result in rates that are insufficient to cover our operating expenses. For example, our external provider costs are driven by rates set by Medicaid, which are outside of our control and may be negotiated in a manner unfavorable to us. Additionally, any delay or default by state governments in funding our capitated payments could materially and adversely affect our business, financial condition and results of operations.
Recent legislative, judicial and executive efforts to enact further healthcare reform legislation have caused the future state of reforms under the Affordable Care Act (the “ACA”) and many core aspects of the current U.S. healthcare system to be unclear. While specific changes and their timing are not yet apparent, enacted reforms and future legislative, regulatory, judicial, or executive changes, particularly any changes to the Medicaid program, could have a material adverse effect on our business, results of operations, financial condition and cash flows.
6 |
|
Table of Contents |
Non-renewal or termination of capitation agreements with government payors could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Under most of our capitation agreements with government payors, the state is generally permitted to adjust certain terms of the agreements from time to time. If a government payor exercises its right to adjust certain terms of the agreements, we are generally allowed a period of time to object to such adjustment. If we enter into capitation contracts with unfavorable economic terms, or a capitation contract is adjusted to include unfavorable terms, we could suffer losses with respect to such contract. In addition, some states in which we operate undergo periodic reconciliations with respect to enrollments that present a risk to our business, results of operations, financial condition and cash flows.
Our contracts with government payors may be terminated to the extent that state or federal funds are not appropriated at sufficient levels to fund our Medicaid contracts or Medicaid programs in general. Government payors may terminate, suspend or cancel our contracts, in whole or in part, for cause in the event of our noncompliance with the terms, conditions or responsibilities under the contracts, or if we are debarred or suspended from providing services by state or federal government authorities. If any of our contracts with government payors are terminated or if the government payors seek to renegotiate their contract rates with us, we may suffer a significant loss of revenue, which may adversely affect our operating results.
The impact of ongoing healthcare reform efforts on our business cannot accurately be predicted.
The healthcare industry in the United States is subject to fundamental changes due to ongoing healthcare reform efforts and related political, economic and regulatory influences. Notably, the Affordable Care Act resulted in expanded healthcare coverage to millions of previously uninsured people beginning in 2014 and has resulted in significant changes to the United States healthcare system. To help fund this expansion, the Affordable Care Act outlines certain reductions for Medicare reimbursed services, including skilled nursing, home health, hospice and outpatient therapy services, as well as certain other changes to Medicare payment methodologies. This comprehensive healthcare legislation has resulted and will continue to result in extensive rulemaking by regulatory authorities, and also may be altered, amended, repealed or replaced. It is difficult to predict the full impact of the Affordable Care Act due to the complexity of the law and implementing regulations, as well our inability to foresee how CMS and other participants in the healthcare industry will respond to the choices available to them under the law. We also cannot accurately predict whether any new or pending legislative proposals will be adopted or, if adopted, what effect, if any, these proposals would have on our business. Similarly, while we can anticipate that some of the rulemaking that will be promulgated by regulatory authorities will affect us and the manner in which we are reimbursed by the federal reimbursement programs, we cannot accurately predict today the impact of those regulations on our business. The provisions of the legislation and other regulations implementing the provisions of the Affordable Care Act or any amended or replacement legislation may increase our costs, adversely affect our revenues, expose us to expanded liability or require us to revise the ways in which we conduct our business.
In addition to its impact on the delivery and payment for healthcare, the Affordable Care Act and the implementing regulations have resulted and may continue to result in increases to our costs to provide healthcare benefits to our employees. We also may be required to make additional employee-related changes to our business as a result of provisions in the Affordable Care Act or any amended or replacement legislation impacting the provision of health insurance by employers, which could result in additional expense and adversely affect our results of operations and cash flow.
General economic factors could adversely affect our financial performance and other aspects of our business.
General economic conditions, such as inflation, the consumer price index, commodity costs, fuel and other energy costs, costs of salaries, wages, benefits and insurance, interest rates, and tax rates, affect our facility operating, facility lease, general and administrative and other expenses, and we have no control or limited ability to control such factors. In addition, current global economic conditions and uncertainties, the potential for failures or realignments of financial institutions, and the related impact on available credit may affect us and our business partners, landlords, counterparties and residents or prospective residents in an adverse manner including, but not limited to, reducing access to liquid funds or credit, increasing the cost of credit, limiting our ability to manage interest rate risk, increasing the risk that certain of our business partners, landlords or counterparties would be unable to fulfill their obligations to us, and other impacts which we are unable to fully anticipate.
7 |
|
Table of Contents |
A pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide, including the ongoing outbreak of COVID-19, could adversely affect our business.
The severity, magnitude and duration of the current COVID-19 pandemic is uncertain and rapidly changing. Because of our business model, the full impact of the COVID-19 pandemic may not be fully reflected in our results of operations and overall financial condition until future periods. Additionally, any future pandemic, epidemic or outbreak of an infectious disease may adversely affect our business if one of the geographies we serve is affected by the outbreak, particularly at the onset of any such outbreak before response protocols have been developed. Specifically, if our participants fall ill due to an outbreak, we may experience a high level of unexpected deaths, increased costs, and other effects, including a loss of revenue, negative publicity, litigation and inquiries from government regulators.
Adverse market conditions resulting from the spread of the virus that causes COVID-19 could materially and adversely affect our business and the value of our common stock. Numerous state and local jurisdictions, including all markets where we operate, have imposed, and others in the future may impose, travel bans and restrictions, “shelter-in-place” orders or shutdowns, quarantines, curfews, executive orders and similar government orders and restrictions for their residents to control the spread of the virus that causes COVID-19. Such orders or restrictions have resulted in largely remote operations at our headquarters and centers, work stoppages among some vendors and suppliers, slowdowns and delays, travel restrictions and cancellation of events and have restricted the ability of our front-line outreach teams to host and attend community events, among other effects, thereby significantly impacting our operations. In addition, the COVID-19 virus disproportionately impacts older adults, especially those with chronic illnesses, which describes many of our participants.
The COVID-19 pandemic has significantly and temporarily increased demand for our telehealth and in-home offerings. The telehealth market is relatively new, and it is uncertain whether it will achieve and sustain high levels of demand, consumer acceptance and market adoption. Although our pivot to telehealth services has been a useful tool for providing remote care during the COVID-19 pandemic, the COVID-19 pandemic has limited our ability to provide in-person care. If our participants do not perceive the benefits of telehealth services, or if our services are not competitive, it could have a material adverse effect on our business, financial condition or results of operations. Similarly, individual and healthcare industry concerns or negative publicity regarding participant confidentiality and privacy in the context of telehealth could limit market acceptance of such healthcare services. In addition, some of our participants may lack access to telehealth devices, such as cell phones and/or computers, or may be unable to use the telehealth technology on their own. Because some of our participants may not be comfortable with a team member coming to their home to deliver face-to-face care or entering with a device to assist with using our telehealth services, participants may be reluctant to seek necessary care given their inability to use telehealth services, coupled with preference to stay at home due to the risks of the COVID-19 pandemic. This could have the effect of deferring healthcare costs that we will need to incur at later periods and may also affect the health of participants who defer treatment, which may cause our costs to increase in the future. Further, as a result of the COVID-19 pandemic, we may experience slowed growth or a decline in new participants.
Due to the COVID-19 pandemic, we may not be able to document the health conditions of our participants as completely as we have in the past. Medicaid pays capitation using a “risk adjustment model,” which compensates providers based on the health status (acuity) of each individual participant. Participants with higher RAF scores necessitate larger capitated payments, and those with lower RAF scores necessitate smaller capitated payments. Medicaid requires that a participant’s health issues be documented annually regardless of the permanence of the underlying causes. Historically, this documentation was required to be completed during an in-person visit with a participant, but Medicaid is now allowing documentation of conditions identified during qualifying telehealth visits with participants. However, given the disruption caused by the COVID-19 pandemic and the limitations relating to assessing the health needs of our participants through telehealth services described above, it is unclear whether we will be able to document the health conditions of our participants as comprehensively as we have historically, which may adversely impact our revenue in future periods.
We expect increased COVID-19 related expenses to continue, which continuation would have a material adverse effect on our business, results of operations, financial condition and cash flows. The extent and continued impact of the COVID-19 pandemic on our business will depend on certain developments, including: the duration and spread of the outbreak; government responses to the pandemic, including responses to state budget shortfalls; the impact on our participants and enrollment; the availability, effectiveness and receipt of vaccines by our participants and our employees; the impact on participant, industry or employee events; and the effect on our supply chains, all of which are uncertain and cannot be predicted. Because of our business model, the full impact of the COVID-19 pandemic may not be fully reflected in our results of operations and overall financial condition until future periods.
8 |
|
Table of Contents |
Delays in obtaining regulatory approvals could hinder our plans to continue to expand our healthcare services, which could negatively impact our anticipated revenues, results of operations and cash flow.
We plan to continue to expand our healthcare services to additional residents and seniors living outside of our communities. In the current environment, it is difficult to obtain certain required regulatory approvals. Delays in obtaining required regulatory approvals could impede our ability to expand such services in accordance with our plans, which could negatively impact our anticipated revenues, results of operations and cash flow.
The geographic concentration of our communities could leave us vulnerable to an economic downturn, regulatory changes or acts of nature in those areas, which could negatively impact our revenues, results of operations and cash flow.
We currently operate in the State of Georgia. As a result of this concentration, the conditions of local economies and real estate markets, changes in governmental rules and regulations, particularly with respect to assisted living and memory care communities, acts of nature and other factors that may result in a decrease in demand for senior living services in these states could have an adverse effect on our revenues, results of operations and cash flow. In addition, given the location of our communities, we are particularly susceptible to revenue loss, cost increase or damage caused by severe weather conditions or natural disasters such as hurricanes, wildfires, earthquakes or tornados. Any significant loss due to a natural disaster may not be covered by insurance and may lead to an increase in the cost of insurance.
If we are unable to attract new participants, our revenue growth will be adversely affected.
To increase our revenue, our business strategy is to expand the number of centers and participants in our network. In order to support such growth, we must continue to recruit and retain a sufficient number of new participants both within our existing centers and in new centers. Our ability to do so depends in large part on the success of our sales and marketing efforts, which are subject to various federal and state laws and regulations that impact marketing. If potential or existing participants prefer another daycare provider model of one of our competitors, we may not be able to effectively implement our growth strategy, which depends on our ability to attract new participants. Participant enrollment for Medicaid is ongoing each month and require the state of Georgia to verify eligibility, a process which can result in delays in enrollment. Our inability to identify and recruit new eligible participants and retain existing participants would harm our ability to execute our growth strategy and may have a material adverse effect on our business operations and financial position.
Our execution of our strategy may not be successful, and initiatives undertaken to execute on our strategic priorities may adversely affect our business, financial condition, results of operations, cash flow and the price of our common stock.
The success of our strategy depends on our ability to successfully identify and implement initiatives to execute on our strategic priorities, as well as factors outside of our control. Such initiatives may not be successful in achieving our expectations or may require more time and resources than expected to implement. There can be no assurance that our strategy or initiatives undertaken to execute on our strategic priorities will be successful and, as a result, such initiatives may adversely affect our business, financial condition, results of operations, cash flow and the price of our common stock.
9 |
|
Table of Contents |
Significant legal actions and liability claims against us could subject us to increased operating costs and substantial uninsured liabilities, which may adversely affect our financial condition and results of operations.
We have not been and are currently not involved in litigation and claims. We maintain general liability and professional liability insurance policies in amounts and with coverage and deductibles we believe are adequate, based on the nature and risks of our business, historical experience and industry standards. Our current policies are written on a claims-made basis and provide for deductibles for each claim. Accordingly, we are, in effect, self-insured for claims that are less than the deductible amounts and for claims or portions of claims that are not covered by such policies. If we experience a greater number of losses than we anticipate, or if certain claims are not ultimately covered by insurance, our results of operations and financial condition could be adversely affected.
The senior living and healthcare services businesses entail an inherent risk of liability, particularly given the demographics of our residents and patients, including age and health, and the services we provide. In recent years, other participants in our industry, have been subject to an increasing number of claims and lawsuits alleging that our services have resulted in resident injury or other adverse effects. Many of these lawsuits involve large damage claims and significant legal costs. Many states continue to consider tort reform and how it will apply to the senior living industry. We may continue to be faced with the threat of large jury verdicts in jurisdictions that do not find favor with large senior living or healthcare providers.
If a successful claim is made against us and it is not covered by our insurance or exceeds the policy limits, our financial condition and results of operations could be materially and adversely affected. In some states, state law may prohibit or limit insurance coverage for the risk of punitive damages arising from professional liability and general liability claims and/or litigation. As a result, we may be liable for punitive damage awards in these states that either are not covered or are in excess of our insurance policy limits. Also, our insurance policies’ deductibles, or self-insured retention, are accrued based on an actuarial projection of future liabilities. If these projections are inaccurate and if there is an unexpectedly large number of successful claims that result in liabilities in excess of our self-insured retention, our operating results could be negatively affected. Claims against us, regardless of their merit or eventual outcome, also could have a material adverse effect on our ability to attract residents or expand our business and could require our management to devote time to matters unrelated to the day-to-day operation of our business. We also have to renew our policies every year and negotiate acceptable terms for coverage, exposing us to the volatility of the insurance markets, including the possibility of rate increases. There can be no assurance that we will be able to obtain liability insurance in the future or, if available, that such coverage will be available on acceptable terms.
We face periodic and routine reviews, audits and investigations by government agencies, and any adverse findings could negatively impact our business, financial condition, results of operations and cash flow.
The senior living and healthcare industries are continuously subject to scrutiny by governmental regulators, which could result in reviews, audits, investigations, enforcement actions or litigation related to regulatory compliance matters. In addition, we are subject to various government reviews, audits and investigations to verify our compliance with Medicaid programs and other applicable laws and regulations. Medicaid has engaged a number of third-party firms, including Recovery Audit Contractors (RAC), Zone Program Integrity Contractors (ZPIC), and Unified Program Integrity Contractors (UPIC), to conduct extensive reviews of claims data to evaluate the appropriateness of billings submitted for payment. Audit contractors may identify overpayments based on coverage requirements, billing and coding rules or other risk areas. In addition to identifying overpayments, audit contractors can refer suspected violations of law to government enforcement authorities. An adverse determination of government reviews, audits and investigations may result in citations, sanctions and other criminal or civil fines and penalties, the refund of overpayments, payment suspensions, termination of participation in Medicare and Medicaid programs, and/or damage to the Company’s business reputation. Our costs to respond to and defend any such audits, reviews and investigations may be significant and are likely to increase in the current enforcement environment, and any resulting sanctions or criminal, civil or regulatory penalties could have a material adverse effect on our business, financial condition, results of operations and cash flow.
The cost and difficulty of complying with increasing and evolving regulation and enforcement could have an adverse effect on our business, results of operations and cash flow.
The regulatory environment surrounding the senior living industry continues to evolve and intensify in the amount and type of laws and regulations affecting it, many of which vary from state to state. In addition, many senior living communities are subject to regulation and licensing by state and local health and social service agencies and other regulatory authorities. In several of the states there are different levels of care that can be provided based on the level of licensure. In addition, in several of the states in which we operate or intend to operate, assisted living and memory care communities, home health and hospice agencies and/or skilled nursing facilities require a certificate of need before the community or agency can be opened or the services at an existing community can be expanded. These requirements, and the increased enforcement thereof, could affect our ability to expand into new markets, to expand our services and communities in existing markets and, if any of our presently licensed communities were to operate outside of its licensing authority, may subject us to penalties including closure of the community.
10 |
|
Table of Contents |
Federal, state and local officials are increasingly focusing their efforts on enforcement of these laws and regulations. This is particularly true for large for-profit, multi-community providers like us. Future regulatory developments as well as mandatory increases in the scope and severity of deficiencies determined by survey or inspection officials could cause our operations to suffer. We are unable to predict the future course of federal, state and local legislation or regulation. If regulatory requirements increase, whether through enactment of new laws or regulations or changes in the enforcement of existing rules, our business, results of operations and cash flow could be adversely affected.
The intensified regulatory and enforcement environment impacts providers like us because of the increase in the number of inspections or surveys by governmental authorities and consequent citations for failure to comply with regulatory requirements. We also expend considerable resources to respond to federal and state investigations or other enforcement action. From time to time in the ordinary course of business, we receive deficiency reports from state and federal regulatory bodies resulting from such inspections or surveys. Although most inspection deficiencies are resolved through a plan of corrective action, the reviewing agency may have the authority to take further action against a licensed or certified facility, which could result in the imposition of fines, imposition of a provisional or conditional license, suspension or revocation of a license, suspension or denial of admissions, loss of certification as a provider under federal reimbursement programs or imposition of other sanctions, including criminal penalties. Furthermore, certain states may allow citations in one community to impact other communities in the state. Revocation of a license at a given community could therefore impact our ability to obtain new licenses or to renew existing licenses at other communities, which may also cause us to default under our debt and lease documents and/or trigger cross-defaults. The failure to comply with applicable legal and regulatory requirements could result in a material adverse effect to our business as a whole.
There are various extremely complex federal and state laws governing a wide array of referral relationships and arrangements and prohibiting fraud by healthcare providers, including those in the senior living industry, and governmental agencies are devoting increasing attention and resources to such anti-fraud initiatives. Some examples are the Health Insurance Portability and Accountability Act of 1996, or HIPAA, the Balanced Budget Act of 1997, and the False Claims Act, which gives private individuals the ability to bring an action on behalf of the federal government. The violation of any of these laws or regulations may result in the imposition of fines or other penalties that could increase our costs and otherwise jeopardize our business. Under the Deficit Reduction Act of 2005, or DRA 2005, every entity that receives at least $5.0 million annually in Medicaid payments must have established written policies for all employees, contractors or agents, providing detailed information about false claims, false statements and whistleblower protections under certain federal laws, including the federal False Claims Act, and similar state laws. Failure to comply with this compliance requirement may potentially give rise to potential liability. DRA 2005 also creates an incentive for states to enact false claims laws that are comparable to the federal False Claims Act.
Additionally, since we provide services and operate communities that participate in federal and/or state healthcare reimbursement programs, we are subject to federal and state laws that prohibit anyone from presenting, or causing to be presented, claims for reimbursement which are false, fraudulent or are for items or services that were not provided as claimed. Similar state laws vary from state to state. Violation of any of these laws can result in loss of licensure, citations, sanctions and other criminal or civil fines and penalties, the refund of overpayments, payment suspensions, or termination of participation in Medicare and Medicaid programs, which may also cause us to default under our debt and lease documents and/or trigger cross-defaults.
We are also subject to certain federal and state laws that regulate financial arrangements by healthcare providers, such as the Federal Anti-Kickback Law, the Stark laws and certain state referral laws. Authorities have interpreted the Federal Anti-Kickback Law very broadly to apply to many practices and relationships between healthcare providers and sources of patient referral. If we were to violate the Federal Anti-Kickback Law, we may face criminal penalties and civil sanctions, including fines and possible exclusion from government reimbursement programs, which may also cause us to default under our debt and lease documents and/or trigger cross-defaults. Adverse consequences may also result if we violate federal Stark laws related to certain Medicare and Medicaid physician referrals. While we endeavor to comply with all laws that regulate the licensure and operation of our business, it is difficult to predict how our revenues could be affected if we were subject to an action alleging such violations.
11 |
|
Table of Contents |
If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and participant satisfaction or adequately address competitive challenges.
We may experience, rapid growth and organizational change, which will place significant demands on our management and our operational and financial resources. Our organizational structure may become more complex as we expand our operational, financial and management controls, as well as our reporting systems and procedures as a public company. We may require significant capital expenditures and the allocation of valuable management resources to grow and evolve in these areas. We must effectively increase our headcount, ensure our personnel have the necessary licenses and competencies and continue to effectively train and manage our employees. We will be unable to manage our business effectively if we are unable to alleviate the strain on resources caused by growth in a timely and successful manner. If we fail to effectively manage our anticipated growth and change or fail to ensure that the level of care and services provided by our employees complies with regulatory and contractual requirements, the quality of our services may suffer, which could negatively affect our brand and reputation, harm our ability to attract and retain participants and employees and lead to the need for corrective actions.
In addition, as we expand our business, it is important that we continue to maintain high levels of patient service and satisfaction. As our participant base continues to grow, we will need to expand our services and personnel to provide personalized participant care. If we are not able to continue to provide high quality healthcare that meets Medicaid requirements and generates high levels of participant satisfaction, our reputation, as well as our business, results of operations and financial condition would be adversely affected.
The adult daycare/healthcare industry is highly competitive.
We compete directly with national, regional and local providers of adult daycare and operators of healthcare facilities. We also compete directly with payors and other alternate managed care programs for participants. There are many other companies and individuals currently providing daycare and healthcare services, many of which have been in business longer and/or have substantially more resources than us. Given the regulatory environment, there may be high barriers to entry for Medicare providers; however, since there are relatively modest capital expenditures required for providing daycare and healthcare services, there are less substantial financial barriers to entry in the daycare and healthcare industry generally. Other companies could enter the daycare and healthcare industry in the future and divert some or all of our business. Our ability to compete successfully varies from location to location and depends on a number of factors, including the number of payors who run competitive programs in the local market, our local reputation for quality participant care, the commitment and expertise of our medical staff or contracted health care providers, our local service offerings and community programs, the cost of care in each locality, and the physical appearance, location and condition of our centers. If we are unable to attract participants to our centers our revenue and profitability will be adversely affected. Some of our competitors may have greater brand recognition and be more established in their respective communities than us, and they may have greater financial and other resources than we have. Further, our current or potential competitors may be acquired by third parties with greater available resources. Competing providers may also offer different programs or services than we do, which, combined with the foregoing factors, may result in our competitors being more attractive to our current participants, potential participants and referral sources. Furthermore, while we budget for routine capital expenditures at our centers to keep them competitive in their respective markets, to the extent that competitive forces cause those expenditures to increase in the future, our financial condition may be negatively affected. areas. As we expand into new geographies, we may encounter competitors with stronger local community relationships or brand recognition, which could give those competitors an advantage in attracting new participants. Individual physicians, physician groups and companies in other daycare and healthcare industry segments, some of which have greater financial, marketing and staffing resources, may become competitors in providing health care services, and this competition may have a material adverse effect on our business operations and financial position.
12 |
|
Table of Contents |
Our presence is currently limited to Georgia and we may not be able to successfully establish a presence in new geographic markets.
We currently operate in Georgia. As a result, our exposure to many of the risks described herein are not mitigated by a diversification of geographic focus. To continue to expand our operations to other regions of the United States, we will have to devote resources to identifying and exploring such perceived opportunities. Thereafter, we will have to, among other things, recruit and retain qualified personnel, acquire necessary operational licenses and governmental approvals, develop new centers and establish new relationships or contracts with healthcare and service providers. In addition, we will be required to comply with laws and regulations of states that may differ from the ones in which we currently operate, and we could face competitors with greater knowledge of such local markets. We anticipate that further geographic expansion will require us to make a substantial investment of management time, capital and/or other resources. There can be no assurance that we will be able to continue to successfully expand our operations in any new geographic markets.
Our overall business results may suffer from an economic downturn.
During periods of high unemployment, including as a result of the COVID-19 pandemic, governmental entities often experience budget deficits as a result of increased costs and lower than expected tax collections. These budget deficits at federal, state and local government entities have decreased, and may continue to decrease, spending for health and human service programs, including Medicaid, and similar programs, which represent nearly all of the payor sources for our adult daycare centers.
We may be subject to legal proceedings, enforcement actions and litigation, malpractice and privacy disputes, which are costly to defend and could materially harm our business and results of operations.
We may be party to lawsuits and legal proceedings in the normal course of business. These matters are often expensive and disruptive to normal business operations. We may face allegations, lawsuits and regulatory inquiries, requests for information, audits and investigations regarding care and services provided to participants, the False Claims Act (FCA), data privacy, security, labor and employment, consumer protection or intellectual property. We may also face allegations or litigation related to our acquisitions, securities issuances or business practices, including public disclosures about our business. Litigation and regulatory proceedings may be protracted and expensive, and the results are difficult to predict. Certain of these matters may include speculative claims for substantial or indeterminate amounts of damages and include claims for injunctive relief. Additionally, our litigation costs could be significant. Adverse outcomes with respect to litigation or any of these legal proceedings may result in significant settlement costs or judgments, penalties, fines and sanctions. In the event of compliance issues, sanctions could include civil monetary penalties, corrective action plans, monitoring, contract termination or Medicaid agencies suspending or restricting enrollment with us, which could negatively impact our geographical expansion and revenue growth. We may also become subject to periodic audits, which would likely increase our regulatory compliance costs and may require us to change our business practices, which could negatively impact our revenue growth. Managing legal proceedings, regulatory inquiries, litigation and audits, even if we achieve favorable outcomes, is time-consuming and diverts management’s attention from our business.
The results of regulatory proceedings, investigations, inquiries, litigation, claims, and audits cannot be predicted with certainty, and determining reserves for pending litigation and other legal, regulatory and audit matters requires significant judgment. There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our reputation, business, financial condition, results of operations and the market price of our common stock.
13 |
|
Table of Contents |
We also may be subject to lawsuits under the FCA and comparable state laws for submitting allegedly fraudulent, inadequately supported or otherwise inappropriate bills for services to the Medicare and Medicaid programs. These lawsuits, which may be initiated by government authorities as well as private party relators, can involve significant monetary damages, fines, attorney fees and the award of bounties to private plaintiffs who successfully bring these suits, as well as to the government programs. In recent years, government oversight and law enforcement have become increasingly active and aggressive in investigating and taking legal action against potential fraud and abuse.
Furthermore, our business exposes us to potential medical malpractice, professional negligence or other related actions or claims that are inherent in the provision of healthcare services. The number of claims of this nature may increase on account of the impact of the COVID-19 pandemic. These claims, with or without merit, could cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business, harm our reputation and adversely affect our ability to attract and retain participants, any of which could have a material adverse effect on our business, financial condition and results of operations.
Although we maintain third-party professional liability insurance coverage, it is possible that claims against us may exceed the coverage limits of our insurance policies. Even if any professional liability loss is covered by an insurance policy, these policies typically have substantial deductibles for which we are responsible. Professional liability claims in excess of applicable insurance coverage could have a material adverse effect on our business, financial condition and results of operations. In addition, any professional liability claim brought against us, with or without merit, could result in an increase of our professional liability insurance premiums. Insurance coverage varies in cost and can be difficult to obtain, and we cannot guarantee that we will be able to obtain insurance coverage in the future on terms acceptable to us or at all. If our costs of insurance and claims increase, then our earnings could decline.
Our business depends on our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems.
Our business is highly dependent on maintaining effective information systems as well as the integrity and timeliness of the data we use to serve our participants, support our care teams and operate our business. Because of the large amount of data that we collect and manage, it is possible that hardware or software failures or errors in our systems could result in data loss or corruption or cause the information that we collect to be incomplete or contain significant inaccuracies. If our data were found to be inaccurate or unreliable due to fraud or other error, or if we, or any of the third-party service providers we engage, were to fail to maintain information systems and data integrity effectively, we could experience operational disruptions that may impact our participants and providers and hinder our ability to provide services, retain and attract participants, manage our participant risk profiles, establish reserves, report financial results timely and accurately and maintain regulatory compliance, among other things.
Our information technology strategy and execution are critical to our continued success. We must continue to invest in long-term solutions that will enable us to anticipate participant needs and expectations, enhance the participant experience, act as a differentiator in the market and protect against cybersecurity risks and threats. Our success is dependent, in large part, on maintaining the effectiveness of existing technology systems and continuing to deliver technology systems that support our business processes in a cost-efficient and resource-efficient manner, including through maintaining relationships with third-party providers of technology. Increasing regulatory and legislative changes will place additional demands on our information technology infrastructure that could have a direct impact on resources available for other projects tied to our strategic initiatives. In addition, recent trends toward greater participant engagement in health care require new and enhanced technologies, including more sophisticated applications for mobile devices. Connectivity among technologies is becoming increasingly important. Our failure to effectively invest in and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems could adversely affect our results of operations, financial position and cash flow.
14 |
|
Table of Contents |
A failure to accurately estimate incurred but not reported medical expenses or the risk scores of our participants could adversely affect our results of operations.
External provider costs include estimates of future medical claims that have been incurred by the participant but for which the provider has not yet billed. These claim estimates are made utilizing actuarial methods and are continually evaluated and adjusted by management, based upon our historical claims experience and other factors, including an independent assessment by a nationally recognized actuarial firm. Positive or negative adjustments, if necessary, are made when the assumptions used to determine our claims liability change and when actual claim costs are ultimately determined.
Due to certain uncertainties associated with the factors used in these estimates and changes in the patterns and rates of medical utilization, materially different amounts could be reported in our financial statements for a particular period under different conditions or using different, but still reasonable, assumptions. It is possible that our estimates of this type of claim may be excessive or inadequate in the future and we may be obligated to repay certain amounts to Medicaid. In such event, our results of operations could be adversely impacted. Further, the inability to estimate these claims accurately may also affect our ability to take timely corrective actions, further exacerbating the extent of any adverse effect on our results of operations.
In addition, our operational and financial results will experience some variability depending upon the time of year in which they are measured. For example, during the winter month participation of our clients typically declines due to illness or other personal reasons of our members.
State and federal efforts to reduce healthcare spending could adversely affect our financial condition and results of operations.
Most of our participants are qualified for coverage under Medicaid and nearly all our revenue is derived from government payors. Medicaid is a joint federal and state funded program for healthcare services for the low income as well as certain higher-income individuals who qualify for nursing home level of care. Under broad federal criteria, states establish rules for eligibility, services and payment. Medicaid spending has increased rapidly in recent years, becoming a significant component of state budgets. This, combined with slower state revenue growth, has led both the federal government and many states to institute measures aimed at controlling the growth of Medicaid spending, and in some instances reducing aggregate Medicaid spending. Due to budget constraints, including those resulting from the COVID-19 pandemic, we may experience negative Medicaid capitated rate payment pressure from the state of Georgia where we operate.
In addition, as part of past attempts to repeal, replace or modify the ACA and as a means to reduce the federal budget deficit, there have in recent years been congressional efforts to move Medicaid from an open-ended program with coverage and benefits set by the federal government to one in which states receive a fixed amount of federal funds, either through block grants or per capita caps, and have more flexibility to determine benefits, eligibility or provider payments. If those changes are implemented, we cannot predict whether the amount of fixed federal funding to the states will be based on current payment amounts, or if it will be based on lower payment amounts, which would negatively impact those states that expanded their Medicaid programs in response to the ACA. We expect state and federal efforts to reduce healthcare spending to continue for the foreseeable future.
Increased competition for, or a shortage of, personnel, and wage pressures resulting from increased competition, low unemployment levels, minimum wage increases, changes in overtime laws, and union activity may have an adverse effect on our business, results of operations and cash flow.
Our success depends on our ability to retain and attract qualified management and other personnel who are responsible for the day-to-day operations of each of our communities. Each community has an Executive Director responsible for the overall day-to-day operations of the community, including quality of care and service, social services and financial performance. Depending upon the size of the community, each Executive Director is supported by key leaders, a Health and Wellness Director (or nursing director) and/or a Sales Director. The Health and Wellness Director or nursing director is directly responsible for day-to-day care of residents. The Sales Director oversees the community’s sales, marketing and community outreach programs. Other key positions supporting each community may include individuals responsible for food service, healthcare services, activities, housekeeping, and maintenance.
15 |
|
Table of Contents |
We compete with various healthcare service providers, other senior living providers and hospitality and food services companies in retaining and attracting qualified personnel. Increased competition for, or a shortage of, nurses, therapists or other personnel, low levels of unemployment, or general inflationary pressures have required and may require in the future that we enhance our pay and benefits package to compete effectively for such personnel. In addition, we have experienced and may continue to experience wage pressures due to minimum wage increases mandated by state and local laws and the proposed increase to the salary thresholds for overtime exemptions under the Fair Labor Standards Act, which the Department of Labor is currently contemplating. It is unclear what rule changes the Department of Labor will adopt. If such rule changes result in higher operating costs, we may not be able to offset the added costs resulting from competitive, inflationary or regulatory pressures by increasing the rates we charge to our residents or our service charges, which would negatively impact our results of operations and cash flow.
Turnover rates of our personnel and the magnitude of the shortage of nurses, therapists or other personnel varies substantially from market to market. If we fail to attract and retain qualified personnel, our ability to conduct our business operations effectively, our overall operating results and cash flow could be harmed.
In addition, efforts by labor unions to unionize any of our community personnel could divert management attention, lead to increases in our labor costs and/or reduce our flexibility with respect to certain workplace rules. If we experience an increase in organizing activity, if onerous collective bargaining agreement terms are imposed upon us, or if we otherwise experience an increase in our staffing and labor costs, our results of operations and cash flow would be negatively affected.
Significant changes in our personnel, and more could occur in the future. Changes to operations, policies and procedures, which can often occur with the appointment of new personnel, can create uncertainty, may negatively impact our ability to execute quickly and effectively, and may ultimately be unsuccessful. In addition, transition periods are often difficult as the new Company personnel gain detailed knowledge of our operations, and friction can result from changes in strategy and management style. Employee turnover inherently causes some loss of institutional knowledge, which can negatively affect strategy and execution. Until we integrate new personnel, and unless they are able to succeed in their positions, we may be unable to successfully manage and grow our business, and our financial condition and profitability may suffer.
Further, to the extent we experience additional personnel turnover, our operations, financial condition and employee morale could be negatively impacted. If we are unable to attract and retain qualified management and sales personnel, our business could suffer. Moreover, our operations could be negatively affected if employees are quarantined as the result of exposure to a contagious illness such as COVID-19.
The transition of management or unexpected departure of our key officers could harm our business.
We are dependent on the efforts of our senior management, including Sameer Shah, our CEO, and Wooiyi Yin, our CFO. The transition of management, the unforeseen loss or limited availability of the services of any of our executive leaders, or our inability to recruit and retain qualified personnel in the future, could, at least temporarily, have an adverse effect on our business, results of operations and financial condition and be negatively perceived in the capital markets.
Competition for healthcare staff, and other personnel or other factors could increase our labor costs and adversely affect our revenue, profitability and cash flows.
Our operations are dependent on the efforts, abilities and experience of our daycare staff and other personnel. We compete with healthcare providers, primarily hospitals and other healthcare facilities, in attracting nurses and medical staff to support our centers, and recruiting and retaining qualified management and support personnel responsible for the daily operations of each of our centers. In some markets, the lack of availability of clinical personnel, such as nurses and mental health professionals, has become a significant operating issue facing all healthcare providers, which situation has been further exacerbated by the COVID-19 pandemic. This shortage may require us to continue to enhance wages and benefits to recruit and retain qualified personnel or to contract for more expensive temporary personnel. We also depend on the available labor pool of semi-skilled and unskilled workers in each of the markets in which we operate.
16 |
|
Table of Contents |
Management cannot guarantee that its relationship with the Company does not create conflicts of interest.
The relationship of management to the Company could create conflicts of interest. While management has a fiduciary duty to the Company, it also determines its compensation from the Company. Management’s compensation from the Company has not been determined pursuant to arm’s-length negotiation.
We are required to indemnify our directors and officers.
The Articles of Incorporation and Bylaws provide that we will indemnify its officers and directors to the maximum extent permitted by Nevada law, provided that the officer or director acted in bad faith or breached his or her duty to us or our stockholders, that the officer or director acted in bad faith, or that it is more likely than not that it will ultimately be determined that the officer or director has not met the standards of conduct which make it permissible for under Nevada law for the Company to indemnify the officer or director. If we were called upon to indemnify an officer or director, then the portion of its assets expended for such purpose would reduce the amount otherwise available for the Company’s business.
Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.
We may become party to litigation claims and legal proceedings. Litigation involves significant risks, uncertainties and costs, including distraction of management attention away from our business operations. We evaluate litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we establish reserves and disclose the relevant litigation claims or legal proceedings, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from those envisioned by our current assessments and estimates. Our policies and procedures require strict compliance by our employees and agents with all U.S. and local laws and regulations applicable to our business operations, including those prohibiting improper payments to government officials. Nonetheless, our policies and procedures may not ensure full compliance by our employees and agents with all applicable legal requirements. Improper conduct by our employees or agents could damage our reputation or lead to litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines, as well as disgorgement of profits.
Climate change may negatively affect our business.
There is growing concern that a gradual increase in global average temperatures may cause an adverse change in weather patterns around the globe resulting in an increase in the frequency and severity of natural disasters. Increased frequency or duration of extreme weather conditions may disrupt the productivity of our facilities, the operation of our supply chain or impact demand for our products. In addition, the increasing concern over climate change may result in more regional, federal and global legal and regulatory requirements and could result in increased transportation and supplier costs we incur. As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations.
17 |
|
Table of Contents |
Changes in our effective tax rate may impact our results of operations.
We are subject to taxes in the U.S. and other jurisdictions. Tax rates in these jurisdictions may be subject to significant change due to economic and/or political conditions. A number of other factors may also impact our future effective tax rate including:
|
• |
the jurisdictions in which profits are determined to be earned and taxed; |
|
• |
the resolution of issues arising from tax audits with various tax authorities; |
|
• |
changes in valuation of our deferred tax assets and liabilities; |
|
• |
increases in expenses not deductible for tax purposes, including write-offs of acquired intangibles and impairment of goodwill in connection with acquisitions; |
|
• |
changes in availability of tax credits, tax holidays, and tax deductions; |
|
• |
changes in share-based compensation; and |
|
• |
changes in tax laws or the interpretation of such tax laws and changes in generally accepted accounting principles. |
In December 2017, enacted legislation in the United States significantly revised the Internal Revenue Code. The enacted federal income tax law, among other things, contained significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21% beginning in 2018, limitation of the tax deduction for interest expense to 30% of adjusted earnings, limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, one time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits (including reducing the business tax credit for certain clinical testing expenses incurred in the testing of certain drugs for rare diseases or conditions).
Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal tax law remains uncertain and our business and financial condition could be adversely affected. In addition, it is uncertain if and to what extent various states will conform to the newly enacted federal tax law. The impact of this tax reform on holders of our common stock is also uncertain and could be adverse. We urge shareholders to consult with their legal and tax advisors with respect to this legislation and the potential tax consequences of investing in or holding our common stock.
Global economic, political, social and other conditions, including the COVID-19 pandemic, may continue to adversely impact our business and results of operations.
The healthcare and hospitality industries, and particularly those companies operating in the senior care space like us, can be affected by macro-economic factors, including changes in national, regional, and local economic conditions, unemployment levels and consumer spending patterns, which together may impact the willingness of consumers to purchase our products as they adjust their discretionary spending. Adverse economic conditions may adversely affect the ability of our distributors to obtain the credit necessary to fund their working capital needs, which could negatively impact their ability or desire to continue to purchase products from us in the same frequencies and volumes as they have done in the past. If we experience similar adverse economic conditions in the future, sales of our products could be adversely affected, collectability of accounts receivable may be compromised and we may face obsolescence issues with our inventory, any of which could have a material adverse impact on our operating results and financial condition.
Additionally, while the extent of the impact on our business and financial condition is unknown at this time, we have been negatively affected by COVID-19 and actions taken to address and limit the spread of COVID-19, such as travel restrictions, congregation limitations, and similar limitations affecting the supply of labor, demand for our facilities and services, and the movement of raw materials and finished products used in our business.
Overall, the Company does not yet know the full extent of potential delays or impacts on its business, financing activities, or the global economy as a whole. However, these effects could have a material impact on the Company’s liquidity, capital resources, operations and business and those of third parties on which we rely.
18 |
|
Table of Contents |
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.
The United States generally accepted accounting principles and related pronouncements, implementation guidelines and interpretations with regard to a wide variety of matters that are relevant to our business, such as, but not limited to, stock-based compensation, trade spend and promotions, and income taxes are highly complex and involve many subjective assumptions, estimates and judgments by our management. Changes to these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported results.
If we are unable to maintain effective disclosure controls and procedures and internal control over financial reporting, our stock price and investor confidence could be materially and adversely affected.
We are required to maintain both disclosure controls and procedures and internal control over financial reporting that are effective. Because of their inherent limitations, internal control over financial reporting, however well designed and operated, can only provide reasonable, and not absolute, assurance that the controls will prevent or detect misstatements. Because of these and other inherent limitations of control systems, there is only the reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions. The failure of controls by design deficiencies or absence of adequate controls could result in a material adverse effect on our business and financial results, which could also negatively impact our stock price and investor confidence.
Risks Related to Our Intellectual Property
If we fail to protect our trade secrets, we may be unable to successfully market our products and compete effectively.
We rely on trade secrecy laws, confidentiality procedures and contractual provisions to protect our intellectual property rights in connection with our software. Failure to protect our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our trade secrets, could result in the expenditure of significant financial and managerial resources. We regard our intellectual property, particularly our trade secrets in connection with our software and IT systems, as crucial to our business and our success. However, the steps taken by us to protect these proprietary rights may not be adequate and may not prevent third parties from infringing or misappropriating our trade secrets or similar proprietary rights. In addition, other parties may seek to assert infringement claims against us, and we may have to pursue litigation against other parties to assert our rights. Any such claim or litigation could be costly. In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands, profitably exploit our products or recoup our associated research and development costs.
Failure to maintain the security and functionality of our information systems, or to prevent a cybersecurity attack or breach, could adversely affect our business, reputation and relationships with our residents, patients and employees and subject us to remediation costs, government inquiries and liabilities under data and consumer protection laws, any of which could materially and adversely impact our revenues, results of operations, cash flow and liquidity.
We are dependent on the proper function and availability of our information systems, including hardware, software, applications and electronic data storage, to store, process and transmit our business information, including proprietary business information and personally identifiable information of our residents, patients and employees. Though we have taken steps to protect the cybersecurity and physical security of our information systems, there can be no assurance that our security measures and disaster recovery plan will prevent damage to, or interruption or breach of, our information systems.
Because the techniques used to obtain unauthorized access to systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventive measures. In addition, components of our information systems that we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise the security or functionality of our information systems. Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud or other forms of deceiving our employees or contractors such as email phishing attacks. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our cybersecurity or to investigate and remediate any cybersecurity vulnerabilities, attacks or incidents.
19 |
|
Table of Contents |
In addition, we rely on software support of third parties to secure and maintain our information systems. Our inability, or the inability of these third parties, to continue to maintain and upgrade our information systems could disrupt or reduce the efficiency of our operations. Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems could disrupt or reduce the efficiency of our operations.
Failure to maintain the security and functionality of our information systems, or to prevent a cybersecurity attack or other unauthorized access to our information systems, could expose us to a number of adverse consequences, many of which are not insurable, including: (i) interruptions to our business, (ii) the theft, destruction, loss, misappropriation, or release of sensitive information, including proprietary business information and personally identifiable information of our residents, patients and employees, (iii) significant remediation costs; (iv) negative publicity which could damage our reputation and our relationships with our residents, patients, employees and referral sources, (v) litigation and potential liability under privacy, security and consumer protection laws or other applicable laws, and (vi) government inquiries which may result in sanctions and other criminal or civil fines or penalties. Any of the foregoing could materially and adversely impact our revenues, results of operations, cash flow and liquidity.
Security breaches, loss of data and other disruptions have in the past and could in the future compromise sensitive information related to our business or our participants, or prevent us from accessing critical information and expose us to liability, and could adversely affect our business and our reputation.
In the ordinary course of our business, we create, receive, maintain, transmit, collect, store, use, disclose, share and process (collectively, “Process”) sensitive data, including protected health information (“PHI”) and other types of personal data or personally identifiable information (collectively, “PII” and, together with PHI, “PHI/PII”) relating to our employees, participants and others. We also Process and contract with third-party service providers to Process sensitive information, including PHI/PII, confidential information and other proprietary business information. We manage and maintain PHI/PII and other sensitive data and information using our on-premise systems, and we plan to implement cloud-based computing center systems in the future. Third-party service providers that serve our participants may Process PHI/PII data either in their own on-site systems, at managed or co-located data centers, or in the cloud.
We are highly dependent on information technology networks and systems, including the internet, to securely Process PHI/PII and other sensitive data and information. Security breaches of this infrastructure, whether ours or of our third-party service providers, including physical or electronic break-ins, computer viruses, ransomware, attacks by hackers and similar breaches, and employee or contractor error, negligence or malfeasance, have occurred in the past, and have in the past and could in the future, create system disruptions, shutdowns or unauthorized access, acquisition, use, disclosure or modifications of such data or information, and could cause PHI/PII to be accessed, acquired, used, disclosed or modified without authorization, to be made publicly available, or to be further accessed, acquired, used or disclosed.
We use third-party service providers for important aspects of the Processing of employee and participant PHI/PII and other confidential and sensitive data and information, and therefore rely on third parties to manage functions that have material cybersecurity risks. Because of the sensitivity of the PHI/PII and other sensitive data and information that we and our service providers Process, the security of our technology platform and other aspects of our services, including those provided or facilitated by our third-party service providers, are important to our operations and business strategy. We have implemented certain administrative, physical and technological safeguards to address these risks; however, such policies and procedures may not address certain HIPAA requirements or address situations that could lead to increased privacy or security risks, and agreements with contractors and other third-party service providers who handle this PHI/PII and other sensitive data and information for us. However, some PACE organizations that we have acquired in the past or may acquire in the future may not have implemented such agreements with their third-party service providers, which may expose us to legal claims or proceedings, liability, and penalties. The organizations that we have acquired, or may acquire, may not have in place all of the required agreements, and to the extent we terminate contracts with such third-party service providers, we may not be able to ensure that the relevant PHI/PII of our participants is maintained in compliance with HIPAA. The training that we provide to our workforce and measures taken to protect our systems, the systems of our contractors or third-party service providers, or more generally the PHI/PII or other sensitive data or information that we or our contractors or third-party service providers Process may not adequately protect us from the risks associated with Processing sensitive data and information. We may be required to expend significant capital and other resources to protect against security breaches, to safeguard the privacy, security, and confidentiality of PHI/PII and other sensitive data and information, to investigate, contain, remediate, and mitigate actual or potential security breaches, and/or to report security breaches to participants, employees, regulators, media, credit bureaus, and other third parties in accordance with applicable law and to offer complimentary credit monitoring, identity theft protection, and similar services to participants and/or employees where required by law or otherwise appropriate.
20 |
|
Table of Contents |
Despite our implementation of security measures, cyber-attacks are becoming more sophisticated, and frequent, and we or our third-party service providers may be unable to anticipate these techniques or to implement adequate protective measures against them or to prevent additional attacks. Our information technology networks and systems used in our business, as well as those of our service providers, may experience an increase in attempted cyber-attacks, seeking to take advantage of shifts to employees working remotely using their household or personal internet networks and to leverage fears promulgated by the COVID-19 pandemic. The success of any of these attempts could substantially impact our platform, and the privacy, security, or confidentiality of the PHI/PII and other sensitive data and information contained therein or otherwise Processed in the ordinary course of our business operations, and could ultimately harm our reputation and our business. In addition, any actual or perceived security incident or breach may cause us to incur increased expenses to improve our security controls and to remediate security vulnerabilities. We exercise limited control over our third-party service providers and, in the case of some third-party service providers, may not have evaluated the adequacy of their security measures, which increases our vulnerability to problems with services they provide.
A security breach, security incident, or privacy violation that leads to unauthorized use, disclosure, access, acquisition, loss or modification of, or that prevents access to or otherwise impacts the confidentiality, security, or integrity of, participant or employee information, including PHI/PII that we or our third-party service providers Process, could harm our reputation, compel us to comply with breach notification laws, cause us to incur significant costs for investigation, containment, remediation, mitigation, fines, penalties, settlements, notification to individuals, regulators, media, credit bureaus, and other third parties, complimentary credit monitoring, identity theft protection, training and similar services to participants and/or employees where required by law or otherwise appropriate, for measures intended to repair or replace systems or technology and to prevent future occurrences. We may also be subject to potential increases in insurance premiums, resulting in increased costs or loss of revenue.
If we or our third-party service providers are unable to prevent or mitigate security breaches, security incidents or privacy violations in the future, or if we or our third-party service providers are unable to implement satisfactory remedial measures with respect to known or future security incidents, or if it is perceived that we have been unable to do so, our operations could be disrupted, we may be unable to provide access to our systems, and we could suffer a loss of participants, loss of reputation, adverse impacts on participant and investor confidence, financial loss, governmental investigations or other actions, regulatory or contractual penalties, and other claims and liability. In addition, security breaches and incidents and other compromise or inappropriate access to, or acquisition or processing of, PHI/PII or other sensitive data or information can be difficult to detect, and any delay in identifying such breaches or incidents or in providing timely notification of such incidents may lead to increased harm and increased penalties.
Any such security breach or incident or interruption of our systems or those of any of our third-party service providers could compromise our networks or data security processes, and PHI/PII or other sensitive data and information could be made inaccessible or could be compromised, used, accessed, or acquired by unauthorized parties, publicly disclosed, lost or stolen. Any such interruption in access, compromise, use, improper access, acquisition, disclosure or other loss of information could result in legal claims or proceedings and/or liability or penalties under laws and regulations that protect the privacy, confidentiality, or security of PHI/PII, including, without limitation, the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (the “HITECH Act”), and their implementing regulations (collectively, “HIPAA”), other state PHI/PII privacy, security, or consumer protection laws, and state breach notification laws. Unauthorized access, loss or dissemination of PHI/PII could also disrupt our operations, including our ability to perform our services, access, collect, process, and prepare company financial information, provide information about our current and future services and engage in other participant and clinician education and outreach efforts.
Any such incident could also result in the compromise of our proprietary information, which could adversely affect our business and competitive position. While we maintain insurance covering certain security and privacy damages and claim expenses, we may not carry insurance or maintain coverage sufficient to compensate for all liability and in any event, insurance coverage would not address the reputational damage that could result from a security incident.
The perception that we do not adequately protect the privacy of information of our participants could inhibit our growth and damage our reputation.
21 |
|
Table of Contents |
We may be involved in lawsuits or proceedings to protect or enforce our intellectual property rights or to defend against infringement claims, which could be expensive and time consuming.
Litigation may be necessary in the future to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others. Interference proceedings conducted by a patent and trademark office may be necessary to determine the priority of inventions with respect to our patent applications. Litigation or interference proceedings could result in substantial costs and diversion of resources and management attention. In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology. An adverse determination of any litigation or defense proceedings could put one or more of our patients at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not being issued. In addition, we may be enjoined from marketing one or more of our products if a court finds that such products infringe the intellectual property rights of a third party.
During litigation, we may not be able to prevent the confidentiality of certain of our proprietary rights because of the substantial amount of discovery required in connection with intellectual property litigation. In addition, during the course of litigation, there could be public announcements of the results of hearings, motions or other interim.
Risk Factors Related to Our Common Stock and This Offering
The price of our common stock may be volatile, and a shareholder’s investment in our common stock could suffer a decline in value.
There has been significant volatility in the volume and market price of our common stock, and this volatility may continue in the future. In addition, factors such as quarterly variations in our operating results, litigation involving us, general trends relating to the senior care industry, actions by governmental agencies, national economic and stock market considerations as well as other events and circumstances beyond our control, including the effects of the COVID-19 outbreak, could have a significant impact on the future market price of our common stock and the relative volatility of such market price.
A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. If we are unable to raise the funds required for all of our planned operations and key initiatives, we may be forced to allocate funds from other planned uses, which may negatively impact our business and operations, including our ability to develop new products and continue our current operations.
22 |
|
Table of Contents |
Any future equity or debt issuances by us may have dilutive or adverse effects on our existing shareholders.
From time to time, we may issue additional shares of common stock or convertible securities. The issuance of these securities could dilute our shareholders’ ownership in our company and may include terms that give new investors rights that are superior to those of our current shareholders. Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our common stock and in any event may have a dilutive impact on our shareholders’ ownership interest, which could cause the market price of our common stock to decline.
Our common stock is traded on the OTC Link ATS, which may have an unfavorable impact on our stock price and liquidity.
Our stock is traded on the OTC Link Alternative Trading System (ATS) operated by OTC Markets Group, Inc. The OTC Link ATS is a significantly more limited market than the national securities exchanges such as the New York Stock Exchange, or Nasdaq stock exchange, and there are lower financial or qualitative standards that a company must meet to have its stock quoted on the OTC Link ATS. The OTC Link ATS is an inter-dealer quotation system much less regulated than the major exchanges, and trading in our common stock may be subject to abuses, volatility and shorting, which may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. The Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require a broker-dealer to have reasonable grounds for believing an investment is suitable for that customer when recommending an investment to a customer. FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for some customers and may make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may result in a limited ability to buy and sell our stock. We currently do not meet applicable listing standards of a market senior to the OTC Link ATS, and we may never apply or qualify for future listing on Nasdaq or a senior market or national securities exchange.
Our common shares are subject to the “Penny Stock” rules of the SEC, and the trading market in our securities will likely be limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
|
• |
That a broker or dealer approve a person’s account for transactions in penny stocks; and |
|
• |
The broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quality of the penny stock to be purchased. |
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
|
• |
Obtain financial information and investment experience objectives of the person; and |
|
• |
Make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. |
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:
|
• |
Sets forth the basis on which the broker or dealer made the suitability determination; and |
|
• |
That the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
23 |
|
Table of Contents |
We do not intend to pay any cash dividends on our shares of common stock in the near future, so our shareholders will not be able to receive a return on their shares unless they sell their shares.
We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend. Unless we pay dividends, our shareholders will not be able to receive a return on their shares unless they sell such shares.
A small group of Company officers and directors hold a majority of the control of the Company.
As of May 10, 2021, the Company’s executive officers and directors beneficially owned approximately 86.6% of the Company’s outstanding common stock. By virtue of such stock ownership, the principal shareholders are able to control the election of the members of the Company’s Board of Directors and to generally exercise control over the affairs of the Company. Such concentration of ownership could also have the effect of delaying, deterring or preventing a change in control of the Company that might otherwise be beneficial to stockholders. There can be no assurance that conflicts of interest will not arise with respect to such directors or that such conflicts will be resolved in a manner favorable to the Company.
The offering price of $[ ] per share of common stock was arbitrarily determined by the Company and is unrelated to specific investment criteria, such as the assets or past results of the Company’s operations. In determining the offering price, the Company considered such factors as the prospects, if any, of similar companies, the previous experience of management, the Company’s anticipated results of operations, and the likelihood of acceptance of this offering. Please review any financial or other information contained in this offering with qualified persons to determine its suitability as an investment before purchasing any shares in this offering.
There has been no independent valuation of the stock, which means that the stock may be worth less than the purchase price.
The per share purchase price has been determined by us without independent valuation of the shares. We established the offering price based on management’s estimate of the value of the shares. This valuation is highly speculative and arbitrary. There is no relation to the market value, book value, or any other established criteria. We did not obtain an independent appraisal opinion on the valuation of the shares. The shares may have a value significantly less than the offering price and the shares may never obtain a value equal to or greater than the offering price.
Even if a market develops for our shares, our shares may be thinly traded with wide share price fluctuations, low share prices and minimal liquidity.
If an established market for our shares develops, the share price may be volatile with wide fluctuations in response to several factors, including: potential investors’ anticipated feeling regarding our results of operations; increased competition; and our ability or inability to generate future revenues. In addition, our share price may be affected by factors that are unrelated or disproportionate to our operating performance. Our share price might be affected by general economic, political, and market conditions, such as recessions, interest rates, commodity prices, or international currency fluctuations. Additionally, stocks traded on the OTC Link are usually thinly traded, highly volatile and not followed by analysts. These factors, which are not under our control, may have a material effect on our share price.
24 |
|
Table of Contents |
Because our Primary Offering does not have a minimum offering amount, we may not raise enough funds to continue operations.
Because our Primary Offering lacks a minimum offering amount, no minimum amount of funds are assured, and we may only receive proceeds sufficient to fund operations for a short amount of time. We may then have to cease operations, and investors could then lose their entire investment.
Because the Selling Shareholders are selling their shares, we are less likely to sell all of the Primary Offering shares.
Investors interested in purchasing our stock in the Primary Offering may purchase stock directly from the Selling Shareholders. Additionally, the Selling Shareholders may sell their shares at market prices or other prices lower than the Primary Offering price per share of $[ ] once the Company’s shares are quoted for trading on the over-the-counter markets. Therefore, the existence of the Selling Shareholders’ secondary offering makes it less likely that we will sell all of the shares available in the Primary Offering.
Purchasers of our stock will experience dilution.
At January 31, 2021, we had a net tangible book value of approximately $0.001 per share of our common stock. If you purchase our common stock from us in our Primary Offering, you will experience immediate and substantial dilution to the extent of the difference between the public offering price per share of our common stock (assuming a $0.75 per share public offering price, which is the midpoint of the price range set forth on the cover page of this prospectus) and the pro forma net tangible book value per share of our common stock immediately after the offering of $0.108 per share (assuming all 10,000,000 shares in the Primary Offering are sold at $0.75 per share, which is the midpoint of the price range set forth on the cover page of this prospectus). See the “Dilution” section below for a more detailed explanation.
This prospectus relates to the sale of 10,000,000 shares of common stock, par value $0.0001, of the Company at a price of $0.75 per share (or the midpoint between the range of $0.50 and $1.00 per share) on a best efforts basis. This offering (the “Primary Offering”) terminates 24 months after commencement of this offering. The Company is offering the shares on a self-underwritten “best efforts” basis directly through its CEO and director, Sameer Shah. There is no minimum amount of common shares required to be purchased, and the total proceeds received by the Company might not be enough to begin operations or a market may not develop. No commission or other compensation related to the sale of the shares will be paid. For more information, see the section titled “Plan of Distribution” and “Use of Proceeds” herein.
In addition, there are 1,100,000 shares being registered by twelve Selling Security Holders. These shares were issued to the Selling Security Holders as consideration for the Company’s acquisition of Prudent Senior Services of America, Inc, a Georgia corporation, in November of 2020. The Selling Security Holders will be offering the shares of common stock being covered by this prospectus at a price of $0.75 per share until our shares are either listed on a national securities exchange or quoted on the OTC Bulletin Board, OTCQX, or OTCQB, and thereafter at prevailing market prices or privately negotiated prices (the “Secondary Offering”). The Company will not receive any of the proceeds from the sale of shares being sold by the Selling Security Holders in the Secondary Offering. The existence of this Secondary Offering makes it less likely that we will sell all of the shares offered in the Primary Offering. No underwriting arrangements have been entered into by any of the Selling Security Holders. The Selling Security Holders and any intermediaries through whom such securities are sold may be deemed “underwriters” within the meaning of the Securities Act with respect to the securities offered, and any profits realized or commissions received may be deemed “underwriting compensation.”
We estimate the net proceeds to us from this offering will be approximately $7,464,000, based on an assumed initial offering price of $0.75 per share, which is the midpoint of the price range set forth on the cover of this prospectus, after deducting estimated offering expenses payable by us. We will not receive any proceeds from sales of our common stock by the Selling Security Holders.
25 |
|
Table of Contents |
We anticipate that the net proceeds of $7,464,000 of the Offering will be used primarily to execute our business plan as follows: $6,000,000 for expansion of care centers (either through organic development or by acquisition of existing care centers, none of which acquisition candidates have yet been located), $100,000 for advertising and marketing costs, $600,000 for staffing and personnel costs, $299,000 for general working capital, $200,000 for medical supply inventory, and $200,000 for equipment purchases or leases including for vehicles to be used in our transportation operations. Additionally, proceeds will be used for IT system and software development, paying other general and administrative expenses associated with this offering, and paying general and administrative expenses associated with being a public company, such as accounting, auditing, transfer agent, EDGAR filing, and legal expenses. The precise amounts that the Company will devote to its programs will vary depending on numerous factors, including but not limited to, the progress and success of its various operations. In the event that we sell less than the maximum shares offered in the Primary Offering, our first priority is to pay fees associated with registration of our stock and developing our information technology systems and software, purchasing medical supply inventory and equipment, and then increasing our staffing and expanding our care facilities. The following table summarizes how we anticipate using the gross proceeds of the Primary Offering, depending upon whether we sell 100%, 75%, 50%, or 25% of the shares being offered in the Primary Offering:
|
|
If 25% of Shares Sold |
|
|
If 50% of Shares Sold |
|
|
If 75% of Shares Sold |
|
|
If 100% of Shares Sold |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross Proceeds |
|
$ | 1,875,000 |
|
|
$ | 3,750,000 |
|
|
$ | 5,625,000 |
|
|
$ | 7,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected Offering Expenses |
|
|
36,000 |
|
|
|
36,000 |
|
|
|
36,000 |
|
|
|
36,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Proceeds |
|
|
1,839,000 |
|
|
|
3,714,000 |
|
|
|
5,589,000 |
|
|
|
7,464,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public Company Costs |
|
$ | 50,000 |
|
|
$ | 50,000 |
|
|
$ | 50,000 |
|
|
$ | 50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory (Medical Supplies) |
|
|
50,000 |
|
|
|
100,000 |
|
|
|
150,000 |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment |
|
|
50,000 |
|
|
|
100,000 |
|
|
|
150,000 |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IT System Development |
|
|
15,000 |
|
|
|
15,000 |
|
|
|
15,000 |
|
|
|
15,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Development or Acquisition(s) of Additional Care Centers |
|
|
1,400,000 |
|
|
|
3,000,000 |
|
|
|
4,500,000 |
|
|
|
6,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and Marketing |
|
|
25,000 |
|
|
|
50,000 |
|
|
|
75,000 |
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staffing |
|
|
150,000 |
|
|
|
300,000 |
|
|
|
450,000 |
|
|
|
600,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Working Capital |
|
|
99,000 |
|
|
|
99,000 |
|
|
|
199,000 |
|
|
|
299,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ | 1,839,000 |
|
|
|
3,714,000 |
|
|
|
5,589,000 |
|
|
|
7,464,000 |
|
26 |
|
Table of Contents |
The Company anticipates that the estimated $7,500,000 gross proceeds from the offering would enable it to purchase medical supply inventory and equipment, expand existing operations, expand into additional care center locations, and fund its other capital needs for the next two fiscal years. In the event that the offering is not completed, the Company will likely be required to seek additional financing as the Company needs a minimum of approximately $1,000,000 in gross proceeds to implement its business plan and support its operations over the next twenty-four months. There can be no assurance that additional financing will be available when needed, and, if available, that it will be on terms acceptable to the Company.
DETERMINATION OF OFFERING PRICE
The Selling Security Holders will be offering the shares of common stock being covered by this prospectus at a price of $0.75 per share until our shares are either listed on a national securities exchange or quoted on the OTC Bulletin Board, OTCQX, or OTCQB, and thereafter at prevailing market prices or privately negotiated prices. The shares for sale by the Company in the Primary Offering of 10,000,000 shares will be sold at estimated price between $0.50 and $1.00. In determining the public offering price of the Primary Offering shares, we considered several factors including:
|
· |
Our start-up status; |
|
· |
Prevailing market conditions, including the history and prospects for the industry in which we compete; |
|
· |
Our future prospects; and |
|
· |
Our capital structure. |
Therefore, the public offering price of the shares does not necessarily bear any relationship to established valuation criteria and may not be indicative of prices that may prevail at any time or from time to time in the public market for the common stock. You cannot be sure that a public market for any of our securities will develop and continue or that the securities will ever trade at a price at or higher than the offering price in this offering. Such offering price does not have any relationship to any established criteria of value, such as book value or earnings per share. Because we have no significant operating history, the price of our common stock is not based on past earnings, nor is the price of our common stock indicative of the current market value of the assets owned by us. No valuation or appraisal has been prepared for our business and potential business expansion. Our common stock is presently not traded on any market or securities exchange and we have not applied for listing or quotation on any public market. You cannot be sure that a public market for any of our securities will develop and continue, or that the securities will ever trade at a price at or higher than the offering price in this offering.
We have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the Board of Directors. There are no contractual restrictions on our ability to declare or pay dividends. Consequently, you will only realize an economic gain on your investment in our common stock if the price appreciates. You should not purchase our common stock expecting to receive cash dividends. Since we do not anticipate paying dividends, and if we are not successful in establishing an orderly public trading market for our shares, then you may not have any manner to liquidate or receive any payment on your investment. Therefore, our failure to pay dividends may cause you to not see any return on your investment even if we are successful in our business operations. In addition, because we may not pay dividends in the foreseeable future, we may have trouble raising additional funds which could affect our ability to expand our business operations.
27 |
|
Table of Contents |
Market Information
While there is no established public trading market for our common stock, our common stock is quoted on the OTC Link alternative trading system operated by OTC Markets Group, Inc., at the “Pink” level under the symbol “LTCO”.
The market price of our common stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market and other factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected performance.
Holders
We had 30 shareholders of record of our common stock as of May 10, 2021.
Securities Authorized for Issuance under Equity Compensation Plans
We do not have any compensation plan under which equity securities are authorized for issuance.
Dividends
Please see “Dividend Policy” above.
Information included or incorporated by reference in this prospectus may contain forward-looking statements. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology.
This prospectus contains forward-looking statements, including statements regarding, among other things, (a) our projected sales and profitability, (b) our production and technology, (c) the regulation to which we are subject, (d) anticipated trends in our industry and (e) our needs for working capital. These statements may be found under “Management’s Discussion and Analysis or Plan of Operations” and “Business,” as well as in this Prospectus generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this Prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this prospectus will in fact occur.
Except as otherwise required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in the prospectus, whether as a result of new information, future events, changed circumstances or any other reason after the date of this prospectus.
We had a net tangible book value as of January 31, 2021, of approximately $0.001 per share of our common stock. If you invest in our common stock, you will experience immediate and substantial dilution to the extent of the difference between the public offering price per share of our common stock, and the pro forma net tangible book value per share of our common stock immediately after the offering.
28 |
|
Table of Contents |
Most of the Company’s current shareholders acquired shares at a cost substantially less than $0.50 per share, whereas outside investors purchasing shares in the offering will pay a price of $[ ] per share. Further, the net tangible book value per share after the offering but prior to any new offerings is expected to be approximately $0.108 per share, assuming all 10,000,000 shares being offered by the Company are sold at $0.75 per share, which the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated offering expenses payable by us. Therefore, outside investors participating in this offering will incur immediate substantial dilution of their investment insofar as it refers to the resulting per share net tangible book value of the Company’s common stock after completion of this Offering. The following table illustrates dilution to investors on an approximate dollar per share basis, depending upon whether we sell 100%, 75%, 50%, or 25% of the shares being offered in the Primary Offering, and assuming the shares are sold at $0.75 per share, which the midpoint of the price range set forth on the cover page of this prospectus:
Percentage of Offering Shares Sold |
|
|
100% |
|
|
75% |
|
|
50% |
|
|
25% |
||||
Offering price per share |
|
$ | 0.75 |
|
|
|
0.75 |
|
|
|
0.75 |
|
|
|
0.75 |
|
Net tangible book value per share before offering |
|
$ | 0.001 |
|
|
|
0.001 |
|
|
|
0.001 |
|
|
|
0.001 |
|
Increase per share attributable to investors |
|
$ | 0.107 |
|
|
|
0.083 |
|
|
|
0.057 |
|
|
|
0.030 |
|
Pro forma net tangible book value per share after offering |
|
$ | 0.108 |
|
|
|
0.085 |
|
|
|
0.059 |
|
|
|
0.031 |
|
Dilution per share to investors |
|
$ | 0.642 |
|
|
|
0.665 |
|
|
|
0.691 |
|
|
|
0.719 |
|
The following table sets forth the shares beneficially owned, as of May 10, 2021, by the selling security holders identified below (the “Selling Security Holders”) prior to the offering contemplated by this prospectus, the number of shares each Selling Security Holder is offering pursuant to this prospectus and the number of shares which each Selling Security Holder would own beneficially if all offered shares under this prospectus are sold.
Beneficial ownership is determined in accordance with Securities and Exchange Commission rules. Under these rules, a person is deemed to be a beneficial owner of a security if that person or his/her spouse has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
None of the Selling Security Holders is a registered broker-dealer or an affiliate of a registered broker-dealer.
Of the Company’s 59,567,431 shares outstanding prior to the offerings, 52,350,000 shares were originally issued to the twelve Selling Security Holders as consideration for the Company’s acquisition of Prudent Senior Services of America, Inc, a Georgia corporation, in November of 2020.
The percentages below are calculated based on 59,567,431 shares of our common stock issued and outstanding as of May 10, 2021, and an additional 10,000,000 shares being issued in the Primary Offering.
Name of Selling Security Holder |
|
Number of Shares Owned by the Selling Security Holder |
|
|
Number of Shares Offered by the Selling Security Holder |
|
|
Number of Shares Held After the Offerings |
|
|
Percentage of Total Outstanding Shares After the Offerings |
|
||||
PBDI Trust (1) |
|
|
23,800,000 |
|
|
|
100,000 |
|
|
|
23,700,000 |
|
|
|
34.1 | % |
A Happy Mutiara Trust (2) |
|
|
12,900,000 |
|
|
|
50,000 |
|
|
|
12,850,000 |
|
|
|
18.5 | % |
W Happy Mutiara Trust (2) |
|
|
12,900,000 |
|
|
|
50,000 |
|
|
|
12,850,000 |
|
|
|
18.5 | % |
Zhengmao Yeh |
|
|
2,900,000 |
|
|
|
100,000 |
|
|
|
2,800,000 |
|
|
|
4.0 | % |
Fang Hu |
|
|
500,000 |
|
|
|
100,000 |
|
|
|
400,000 |
|
|
|
0.6 | % |
Difei Li |
|
|
200,000 |
|
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 | % |
Sormit Yin |
|
|
200,000 |
|
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 | % |
Yvonne Tan |
|
|
200,000 |
|
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 | % |
Ivy Tyroko |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 |
|
|
|
0 | % |
Wooitak Tan |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 |
|
|
|
0 | % |
Andrew Yin |
|
|
250,000 |
|
|
|
100,000 |
|
|
|
150,000 |
|
|
|
0 | % |
Henry Yin |
|
|
300,000 |
|
|
|
100,000 |
|
|
|
200,000 |
|
|
|
0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
54,350,000 |
|
|
|
1,100,000 |
|
|
|
53,250,000 |
|
|
|
76.5 | % |
(1) |
Sam Shah, our CEO, President and Chairman of the Board of Directors, is deemed to be the beneficial owner of the shares held in the name of the PBDI Trust. Mr. Shah also owns 2,000,000 additional shares held in his individual name. |
(2) |
Wooiyi Yin, our CFO, Treasurer and member of the Board of Directors, is deemed to be the beneficial owner of the shares held in the name of the A Happy Mutiara Trust and the W Happy Mutiara Trust. |
We may require the Selling Security Holders to suspend the sales of the securities offered by this prospectus upon the occurrence of any event that makes any statement in this prospectus, or the related registration statement, untrue in any material respect, or that requires the changing of statements in these documents in order to make statements in those documents not misleading. We will file a post-effective amendment to this registration statement to reflect any material changes to this prospectus.
29 |
|
Table of Contents |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FISCAL CONDITION AND RESULTS OF OPERATION
The following discussion of our plan of operation should be read in conjunction with the financial statements and related notes that appear elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in “Risk Factors” beginning on page 18 of this prospectus. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.
Corporate Background
Long Term Care Operations 360, Inc., formerly known as Bella Costa Designs Inc. and China Crawfish, Ltd., was incorporated in the State of Nevada on September 15, 2014. The Company abandoned its prior operations in China and was inactive from March of 2019, to March of 2020, when the District Court for Clark County, Nevada, appointed a custodian for the Company.
On September 21, 2020, a change of control occurred and new officers and directors of the Company were appointed, and on November 24, 2020, the Company acquired (the “Acquisition”) all the assets of Prudent Senior Services of America, Inc, a Georgia corporation (the “Seller”), including each of its five subsidiaries, Prudent Senior Services of Georgia, Inc, a Georgia corporation (“Prudent Senior Services of Georgia”); Nemicare, Inc, a Georgia corporation (“Nemicare”); Golden Sun NEMT, LLC, a Georgia limited liability company (“Golden Sun NEMT”); Golden Sun Health Services, Corp, a Georgia corporation (“Golden Sun Health”); and AHSTY NEMT Inc, a Georgia corporation (“AHSTY NEMT”). In consideration of the Acquisition, the Company issued 52,350,000 shares of Company common stock to the Seller’s shareholders, and after the Acquisition, the Company had outstanding approximately 59,567,397 shares of Company common stock and is now focused on providing services in the adult care industry.
30 |
|
Table of Contents |
Operational Overview
The Company is engaged in providing adult care services in a facility setting, skilled and unskilled nursing services in a home health setting, providing non-emergency medical and adult care transportation services, and providing technology solutions to senior care facilities through its various operational subsidiaries.
The Company’s operations are conducted through its subsidiaries: Prudent Senior Services of Georgia, which is the entity licensed with the State of Georgia to operate adult day health facilities, and which operates the current adult day health center; Nemicare, which holds and sells software platform to senior care services providers; Golden Sun Health, which provides skilled and unskilled nursing services; and Golden Sun NEMT and AHSTY NEMT, which provide transportation services in connection with adult care and senior needs. The below organization chart depicts our operations followed by a description below of our various divisions:
Prudent Senior Services of Georgia
Prudent Senior Services of Georgia is our license authority, which holds the state license in Georgia that allows the Company to operate adult day health centers in the state. The license is subject to meeting state compliance regulations and requirements. The State of Georgia, Department of Community Health, conducts an unannounced visit to each center once a year to make sure we are in compliance. The current adult day health center provides senior care services from 8 am to 4 pm, Monday through Saturday. During that time, adults are provided nutritious meals and snacks, along with age-appropriate structured weekly lesson plans and age-appropriate activities. Our adult day health center’s objective and mission is to provide a program of social, recreational, and health activities and services in a group setting that promotes good health, healthy relationships and contentment.
Nemicare
Nemicare’s software platform brings together existing electronic information from siloed applications into a web-based application. The data is then presented in a way that clinicians can view and access information by streamlining their everyday processes. Nemicare’s software, together with existing data and content, automates the scanning of paper and provides an electronic platform for the end user to complete future documentation and content with automation of workflow communication and information. The platform is both interoperable, extendable and designed to work with Microsoft Azure cloud technologies. This platform provides customers with a fast, flexible platform that is responsive to changing business dynamics.
31 |
|
Table of Contents |
Golden Sun Health
Golden Sun Health is our home health services division that serves clients by providing the services of trained professional nurses, nurse’s aides, medication management counselors, home health caregivers and home caregivers based on the needs of the client.
These are the home health care services that Golden Sun Health Services currently provides:
|
· |
Skilled and Unskilled Nursing |
|
· |
Nursing Aide |
|
· |
Home Medication Management |
|
· |
Personal Assistance Services |
Golden Sun NEMT & AHSTY NEMT
Golden Sun NEMT & AHSTY NEMT are standard and certified healthcare service providers with a niche centered around providing non-emergency transportation currently based in Atlanta, Georgia, with a goal to expand into other cities located in or near the Atlanta metro area, like Chamblee, Norcross, and Duluth and all the way to Savannah.
Golden Sun NEMT provides highly essential non-emergency medical transportation services for disadvantaged Medicaid recipients, for the elderly, for those who have disabilities or the other transportation issues, including those with low incomes who have no viable form of transportation to access healthcare services when the need arises.
Employees
As of April 30, 2021, the Company had approximately 25 fulltime employees and 50 parttime employees.
Where You Can Find our Reports
Any person or entity may read and copy our reports with the Commission at the Commission’s Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Room by calling the Commission toll free at 1-800-SEC-0330. The Commission also maintains an Internet site at http://www.sec.gov where reports, proxies and other disclosure statements on public companies may be viewed by the public.
Results of Operations for the Year Ended October 31, 2020, Compared to the Year Ended October 31, 2019
During the fiscal years ending October 31, 2020 and 2019, the Company was inactive, and subsequent to the 2020 fiscal year end (in November 2020), the Company acquired all of the assets of Prudent Senior Services of America, Inc, a Georgia corporation (“PSS”), including each of its five subsidiaries described elsewhere herein. As a result of its inactivity, the Company generated no revenue during the fiscal years ending October 31, 2020 and 2019, had minimal expenses associated with being a public company during those years ($13,749 during the fiscal year ending October 31, 2020, and $109,579 during the fiscal year ending October 31, 2019), and had no assets.
During the fiscal years ending October 31, 2020 and 2019, PSS (and its consolidated subsidiaries) generated total revenues of $2,122,525 and $1,793,951, respectively, consisting of (i) capitation services income of $1,761,495 and $1,251,698; (ii) product sales income of $91,478 and $170,609; (iii) transportation income of $177,072 and $371,644; and (iv) management fee income of $92,480 and $0. Capitation services income increased in the fiscal year ending October 31, 2020, as compared to the fiscal year ending October 31, 2019, primarily as a result of adding tele-health services during Covid-19 related shutdowns in the fiscal year ending October 31, 2020, as compared to the prior fiscal year. Product sales income decreased in the fiscal year ending October 31, 2020, as compared to the fiscal year ending October 31, 2019, primarily as a result of the Company focusing on its efforts to complete the merger and become a public entity in the fiscal year ending October 31, 2020, as compared to the prior fiscal year. Transportation income decreased in the fiscal year ending October 31, 2020, as compared to the fiscal year ending October 31, 2019, primarily as a result of Covid-19 and the shutdown of operations at the day centers in the fiscal year ending October 31, 2020, as compared to the prior fiscal year. Rental income was generated in the 2020 fiscal year but not in the 2019 fiscal year because of a newly signed lease agreement to rent out the building acquired in the 2020 fiscal year. Management fee income was generated in the 2020 fiscal year but not in the 2019 fiscal year because the Company began to develop its planned operations of helping manage the other adult day centers.
32 |
|
Table of Contents |
PSS’s cost of services was $323,845 in the fiscal year ending October 31, 2019, but declined to $264,985 in the fiscal year ending October 31, 2020. As a result, PSS had gross profit of $1,857,540 in the most recent fiscal year ending October 31, 2020, as compared to gross profit of $1,470,106 in the fiscal year ending October 31, 2019.
PSS’s sales and marketing expenses and depreciation expenses increased in the most recent fiscal year, from $3,947 and $72,262, respectively, during the prior 2019 fiscal year, to $18,787 and $92,771, respectively, in the fiscal year ending October 31, 2020, primarily as a result of expanding operations in the most recent fiscal year, increased marketing efforts of its day centers and Acquiring more transportation vehicles and its building. Similarly, PSS’s general and administrative expenses increased to $2,181,142 in the fiscal year ending October 31, 2020, as compared to general and administrative expenses of $1,400,671 in the fiscal year ending October 31, 2019, primarily as a result of increased rent and payroll related expenses. As a result of these operational expense increases, PSS’s operating loss for the most recent fiscal year ending October 31, 2020, was $435,160, as compared to an operating loss of $6,774 during the fiscal year ending October 31, 2019.
PSS’s total other expense increased from $31,519 in the fiscal year ending October 31, 2019, to $33,283 in the fiscal year ending October 31, 2020, primarily as a result of an increase of interest expense from $31,519 in the prior fiscal year to $33,387 in the fiscal year ending October 31, 2020.
PSS’s net loss increased from $38,293 in the fiscal year ending October 31, 2019, to $468,443 in the fiscal year ending October 31, 2020, primarily as a result of the increase in operating expenses in the October 31, 2020, fiscal year described above, partially offset by an increase in revenues and decrease in cost of services.
The Company does not know of any trends, demands, commitments, events or uncertainties that will result in, or that are reasonable likely to result in, our liquidity increasing or decreasing in any material way.
The Company does not know of any significant changes in expected sources and uses of cash.
The Company does not have any commitments or arrangements from any person to provide it with any equity capital.
Results of Operations for the Three Months Ending January 31, 2021, compared to the Three Months Ending January 31, 2020
On or about November 24, 2020, in connection with the acquisition of all of PSS’s assets by the Company, including PSS five operational subsidiaries, the Company issued 52,350,000 shares of Company common stock to PSS’s twelve shareholders. Since the Company and PSS were entities under common control prior to the acquisition, the transaction is accounted for as a restructuring transaction. The financial statements of the Company after completion of the transaction include the combined assets and liabilities of the Company and PSS, the historical operations of PSS, and the operations of both companies from and after November 24, 2020.
During the three months ending January 31, 2021 and 2020, the Company generated total revenues of $711,938 and $427,348, respectively, consisting of (i) capitation services income of $703,938 and $302,589; (ii) product sales income of $8,000 and $23,480; (iii) transportation income of $0 and $101,279. Capitation services income increased in the three months ending January 31, 2021, as compared to the three months ending January 31, 2020, primarily as a result of an increase in operations and day center participants in the three months ending January 31, 2021, as compared to the corresponding period in the prior fiscal year. Product sales income decreased in the three months ending January 31, 2021, as compared to the three months ending January 31, 2020, primarily as a result of management focusing on the merger and becoming a public reporting entity in the three months ending January 31, 2021, as compared to the corresponding period in the prior fiscal year. Transportation income decreased in the three months ending January 31, 2021, as compared to the three months ending January 31, 2020, primarily as a result of Covid-19 and the results of the day centers being closed in the three months ending January 31, 2021, as compared to the corresponding period in the prior fiscal year. Rental income was generated in the three months ending January 31, 2021, but not in the corresponding period in the prior fiscal year because of new rental lease agreements.
33 |
|
Table of Contents |
The Company’s cost of services increased from $20,866 in the three months ending January 31, 2020, to $44,378 in the three months ending January 31, 2021, as a result of increased adult care business in the three months ending January 31, 2021, as compared to the corresponding period in the prior fiscal year. The Company had gross profit of $667,560 in the three months ending January 31, 2021, as compared to gross profit of $406,482 in the three months ending January 31, 2020.
The Company’s sales and marketing expenses and depreciation expenses increased to $17,242 and $29,349, respectively, in the three months ending January 31, 2021, as compared to $2,023 and $21,135 in the three months ending January 31, 2020, primarily as a result of increased marketing efforts due to Covid-19 restrictions and the increased number of transportation vehicles. Similarly, the Company’s general and administrative expenses increased to $597,453 in the three months ending January 31, 2021, as compared to $448,865 in the three months ending January 31, 2020, primarily as a result of increased rent and payroll related expenses. As a result of these increases, the Company’s total operating expenses increased to $644,044 in the three months ending January 31, 2021, as compared to $472,023 in the three months ending January 31, 2020. The Company’s operating income for the three months ending January 31, 2021 was $23,516, as compared to an operating loss of $65,541 during the three months ending January 31, 2020.
The Company’s total other income increased to $10,057 during the three months ending January 31, 2021, as compared to total other expense of $6,697 during three months ending January 31, 2020, primarily as a result of receipt of Paycheck Protection Program loan forgiveness of $16,165 during the most fiscal quarter.
The Company’s net income increased to $33,573 in the three months ending January 31, 2021, from a net loss of $72,238 in the three months ending January 31, 2020, primarily as a result of the increase in revenues during the most recent fiscal quarter only partially offset by operating expense increases.
Liquidity and Capital Resources
The Company had net cash provided by operating activities of $34,249 for the three months ending January 31, 2021, compared to cash used of $72,149 for the three months ending January 31, 2020. The decrease in cash used in operating activities for the three months ending January 31, 2021, is primarily attributable to the forgiveness of a loan and the increase in accounts payable and accrued liabilities as well as the change between net income and net loss between the two fiscal years.
We had cash used in investing activities of $2,390 for the three months ending January 31, 2021, and $0 for the three months ending January 31, 2020.
We had cash provided by financing activities of $56,807 for the three months ending January 31, 2021, compared to cash provided by financing activities of $273,089 for the same period in 2019. This increase in cash is primarily attributable to advances from related parties, which was $292,390 during the three months ending January 31, 2020, but only $12,293 during the three months ending January 31, 2021.
As of January 31, 2021, the Company had cash and cash equivalents of $267,694.
Through January 31, 2021, the Company has primarily been funded by a related party, Circle of Love, as well as bank notes for fixed asset purchases and CARES Act and Paycheck Protection Program related loans.
The Company does not know of any trends, demands, commitments, events or uncertainties that will result in, or that are reasonable likely to result in, our liquidity increasing or decreasing in any material way.
The Company does not know of any significant changes in expected sources and uses of cash.
The Company does not have any commitments or arrangements from any person to provide it with any equity capital.
34 |
|
Table of Contents |
Going Concern
The consolidated financial statements included with this prospectus have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As reflected in the financial statements, the Company had a working capital deficit of $84,946 at January 31, 2021, and had net income of $33,573 for the three months ended January 31, 2021, which raises substantial doubt as to the Company’s ability to continue as a going concern for a period of one year from the issuance of the financial statements.
Off Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.
Long Term Care Operations 360, Inc., formerly known as Bella Costa Designs Inc. and China Crawfish, Ltd., was incorporated in the State of Nevada on September 15, 2014. The Company abandoned its prior operations in China, and on November 24, 2020, the Company acquired (the “Acquisition”) all the assets of Prudent Senior Services of America, Inc, a Georgia corporation, including each of its five subsidiaries: Prudent Senior Services of Georgia, Inc, a Georgia corporation; Nemicare, Inc, a Georgia corporation; Golden Sun NEMT, LLC, a Georgia limited liability company; Golden Sun Health Services, Corp, a Georgia corporation; and AHSTY NEMT Inc, a Georgia corporation.
35 |
|
Table of Contents |
The Company’s operations are conducted through its subsidiaries: Prudent Senior Services of Georgia, which is the entity licensed with the State of Georgia to operate adult day health facilities, and which operates the current adult day health center; Nemicare, which holds and sells software platform to senior care services providers; Golden Sun Health, which provides skilled and unskilled nursing services; and Golden Sun NEMT and AHSTY NEMT, which provide transportation services in connection with adult care and senior needs. The below organization chart depicts our operations followed by a description below of our various divisions:
Prudent Senior Services of Georgia
Prudent Senior Services of Georgia is our license authority, which holds the state license in Georgia that allows the Company to operate adult day health centers in the state. The license is subject to meeting state compliance regulations and requirements. The State of Georgia, Department of Community Health, conducts an unannounced visit to each center once a year to make sure we are in compliance. The current adult day health center provides senior care services from 8 am to 4 pm, Monday through Saturday. During that time adults are provided nutritious meals and snacks, along with age-appropriate structured weekly lesson plans and age-appropriate activities. Our adult day health center’s objective and mission is to provide a program of social, recreational, and health activities and services in a group setting that promotes good health, healthy relationships and contentment.
Prudent Senior Services of Georgia currently has one operating adult day health center located at 5522 New Peachtree Road, #129, Atlanta, Georgia, 30341, which location serves over 100 Medicaid members. The Company is also in the process of adding one more center by December 2021, located at 4845 Jimmy Carter Blvd., Norcross, Georgia, 30093.
Nemicare
Nemicare’s software platform brings together existing electronic information from siloed applications into a web-based application. The data is then presented in a way that clinicians can view and access information by streamlining their everyday processes. Nemicare’s software, together with existing data and content, automates the scanning of paper and provides an electronic platform for the end user to complete future documentation and content with automation of workflow communication and information. The platform is both interoperable, extendable and designed to work with Microsoft Azure cloud technologies. This platform provides customers with a fast, flexible platform that is responsive to changing business dynamics.
Nemicare is currently licensed to all Company operational subsidiaries as well as to other adult care providers.
36 |
|
Table of Contents |
Nemicare is a cloud-based care coordination software platform built specifically to deliver patient-centered care across the entire care continuum – from the Adult Day Health, to the Respite Care, and to the clients at home in the community. It provides “one patient - one view” visibility delivering data and content across multiple models of care, resulting in a comprehensive electronic medical record that enables healthcare professionals to make better clinical, operational and financial decisions, all in one easy-to-use web and mobile user experience.
Golden Sun Health
Golden Sun Health Services is a standard and certified healthcare service provider. Golden Sun Health is our home health services division that serves clients by providing the services of trained professional nurses, nurse’s aides, medication management counselors, home health caregivers and home caregivers based on the needs of the client.
These are the home health care services that Golden Sun Health Services currently provides:
|
· |
Skilled and Unskilled Nursing |
|
· |
Nursing Aide |
|
· |
Home Medication Management |
|
· |
Personal Assistance Services |
Golden Sun Health is serving 125+ Medicaid members in the metro Atlanta counties.
Golden Sun Health offers health care services such as preventive, curative, promotional, rehabilitative, or palliative healthcare / medical services in a systematic way to individuals, families or communities.
Our staff is well trained and equipped to service the market segments that require only home-based services. We are in the home healthcare services business to deliver excellent healthcare services to all those who patronize our services. We also ensure that in the line of carrying out our duties to our clients, we comply with the laws and health regulations in Georgia and the United States. Our employees are well trained and qualified to provide a wide range of home health care services.
Golden Sun Health operates 7 am to 7 pm, Monday to Sunday, seven days a week; our office facility is open around the clock to attend to clients. We have a standard medical call center that is manned by trained health workers. Our work force is well trained to operate within the framework of our organization’s corporate culture and also to meet the needs of all our customers. Golden Sun Health’s goal is to ensure that all its clients are are given first class treatment whenever they visit the Company’s facility.
Golden Sun Health uses the Company’s Nemicare software to enables us to manage a one-on-one relationship with our customers no matter how large the number of our customer base grows.
37 |
|
Table of Contents |
Golden Sun NEMT & AHSTY NEMT
Golden Sun NEMT & AHSTY NEMT are standard and certified healthcare service providers with a niche centered around providing non-emergency transportation based in Atlanta, Georgia, with a goal to expand into other cities in or near the Atlanta metro, like Chamblee, Norcross, and Duluth, and all the way to Savannah.
Golden Sun NEMT provides highly essential non-emergency medical transportation services for disadvantaged Medicaid recipients, for the elderly, for those who have disabilities or the other transportation issues, including those with low incomes who have no viable form of transportation to access healthcare services when the need arises.
Golden Sun NEMT & AHSTY NEMT currently has 12+ full size vans and 4 mini vans to handle transportation needs in metro Atlanta area. We are currently focused on serving Prudent Senior Services of Georgia and Golden Sun Health Medicaid members only at this time. We plan on expanding our services to other senior facilities and Medicaid members in the near future. We also have 15+ certified NEMT drivers to manage our daily operations.
Golden Sun NEMT & AHSTY NEMT similarly use the Company’s Nemicare software platform to help us to offer optimal scheduling, booking, dispatch and billing services.
Marketing and Distribution
Our marketing is currently made in coordination with State Medicare providers. We currently market mostly to Medicare clients, and focus very little on private pay clients.
Our market strategy addresses a stratified marketplace. It is estimated there are currently 5,000+ adult day care centers in the United States. A vast majority of those 90%+ are owned by small independent business owners. We believe our software substantially increases our margins and allows us to get reimbursed from state and federal authorities much more quickly than the manual methods incorporated by many other individual businesses and proprietorships operating adult care facilities. Our operational procedures ensure compliance and complements our software ensuring compliance with state and federal requirements. In addition, our software can be licensed as an individual unit and licensed outside of our organization as we choose. Operational and software solutions can be extended to other entrepreneurs operating in the space via a management agreement, allowing us to grow our revenue opportunities without significantly increasing capital distribution. We believe barriers to entry for new businesses in the adult care space are high, and business owners need previous experience to enter. We also believe it is capital extensive typically requiring significant dollar investments up front, and 2-5 years of necessary experience requirements before a startup care facility can receive its necessary operational licenses.
Industry Overview
Healthcare spending in the United States has grown at approximately 5% per year from 2013 to 2018, and in 2018 represented $3.6 trillion of annual spend, or 17.7% of U.S. GDP. The overall growth rate of healthcare spending is expected to accelerate due to the aging population. Furthermore, the government’s share of total healthcare spend through programs such as Medicare and Medicaid is expected to grow from approximately 37% today to more than 40% as early as 2025, indicating faster growth in government-sponsored healthcare than the overall market. There are 6000 senior daycare center across the United States. The industry market size is approximately $6.4 billion and expected to rise 25% over the next five years. Each senior daycare center has an average of 60 participants with daily participants of 351,900 using senior daycare services.
38 |
|
Table of Contents |
Our Growth Strategy
Increase participant enrollment and capacity within existing centers
Our sales and marketing teams intend to leverage our value proposition and strong participant satisfaction to promote our brand and attract new participants to our centers. The size of our centers depends on the size of the addressable population within each service area. We first determine whether we can fill a center’s expected participant census, then, as a center reaches its initial capacity, we plan to increase its size through pre-planned facility expansions. Once we have reached planned capacity, we intend to expand to other locations.
Build new daycare centers or lease existing market space
We plan to build new centers or lease from existing market space to enter new markets for our daycare centers into adjacent or new geographies. We are currently targeting an expansion to a new facility in Norcross, Georgia, by the end of calendar 2021.
The placement of our centers in attractive locations is critical to our success. We regularly conduct zip code level analyses and convene small focus groups with potential participants and caregivers to identify service areas with attractive concentrations of seniors eligible for our daycare services and select optimal sites for our centers. We prioritize service areas with populations that include more than 4,000 potential participants within a 60-minute drive of a center. Our approach to building new daycare centers or leasing space in favorable market areas is based on our experience-based specifications, with flexibility for future center expansion factored into the blueprints where possible.
Potential acquisitions
We believe we are the logical acquiror in a fragmented market made up of mostly small independent local operators. We are looking for potential acquisitions in new geographic markets along with existing markets that meet certain criteria. We maintain discipline in our approach in regards to purchase price for acquisitions. We consider many factors in determining the purchase price that include potential market expansion, healthcare employee base, demographics of our target market of seniors, daycare demand both future and present is also considered along with other factors before a decision is made to acquire a potential acquisition target. We work closely with key constituencies, including local governments, health systems and senior housing providers, to ensure participants continue to receive the high quality care we demand in our operations and that potential acquisition targets can achieve our important quality standards.
Reinvest in our technology
We are continuing to examine ways to improve and enhance our Nemicare software platform to improve efficiencies in our operations. Further, we are evaluating new medical device technology to use at our centers to help with our clients who are experiencing chronic pain without the use of medications. We believe placing new technologies at our centers to further meet the needs of our clients will help us to stand out in the daycare market and attract further participants to our centers. As we continue to evaluate new ways of bringing new technologies and efficiencies to our operations, we believe we will be able to attract new participants and potentially reduce medical costs.
Intellectual Property
We own the following intellectual property: the Long Term Care Operations 360® trademark and our software platform.
39 |
|
Table of Contents |
Seasonality
Our business experiences some variability depending upon the time of year. Medical costs will vary seasonally depending on a number of factors, but most significantly the weather. Certain illnesses, such as the influenza virus, are far more prevalent during colder months of the year, which typically results in an increase in medical expenses during these time periods. We therefore expect to see higher levels of per-participant medical costs in our fiscal second and third quarters (running from November through April). Medical costs also depend upon the number of business days in a period, and shorter periods will generally have lower medical costs. Business days can also create year-over-year comparability issues if a period in one year has a different number of business days compared to the same period in another. We also expect medical costs to be impacted by pandemics, such as the current COVID-19 pandemic, which likely will result in increased total medical costs which depend upon the severity of the infection, the duration of the infection and the availability of healthcare services for our participants.
Government Regulation
We are subject to regulations by federal, state, local and foreign regulators. The implementation, modification, interpretation and enforcement of these laws and regulations vary and can limit our ability to provide many of our services. Our ability to compete in our target markets depends, in part, upon favorable regulatory conditions and the favorable interpretations of existing laws and regulations.
The Company’s subsidiaries lease their operation centers and administrative offices under three different leases. Prudent Senior Services of Georgia, Inc. manages its operations from approximately 13,000 square feet of leased space located at 5522 New Peachtree Road in Atlanta, Georgia (where the company’s current adult day center is co-located), and it also leases 6,000 square foot of space at the St. John Baptist Church campus at 2415 East DeRenne Avenue in Savannah, Georgia. All Company operations, except for Golden Sun Health’s, are managed from this Atlanta location. Golden Sun Health manages its operations from approximately 2,000 square feet of leased space located in an office building at 3069 Amwiler Road in Peachtree Corners, Georgia.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
Set forth below are the names, ages and present principal occupations or employment, and material occupations, positions, offices or employments of our current Directors and executive officers.
The following sets forth information about our directors and executive officers as of the date of this Memorandum:
|
Name |
|
Age |
|
Position |
|
Sameer Shah |
|
45 |
|
Chief Executive Officer, President and Chairman of the Board of Directors |
|
Wooiyi Yin |
|
61 |
|
Chief Financial Officer, Treasurer and Director |
Sameer (Sam) Shah has served as the Chief Executive Officer, President, and Chairman of the Board of Directors of the Company since September 21, 2020, and he has been the President and member of the Board of Directors of PSS since April 2019. Prior to founding PSS, Sam served as the Chief Executive Officer of Nemicare. With extensive knowledge of the technology industry and healthcare operations, Sam saw an opportunity to create a web-based application that delivers data and content across multiple long-term care models. Mr. Shah also served as Chief Executive Officer of SAI Care corporation, a long-term healthcare facility from October 2016 to March 2019. Sam has also served in various executive positions within public and private sectors for companies such as IBM, AIG, SAS, Change Desk and Snaptym from 1998 to 2016. Driven by the positive feedback of families directly affected by his work in the senior care industry, Sam is determined to continue searching for innovative ways to merge technology and healthcare operations to create an ecosystem that reduces healthcare costs while improving quality of care. Sam holds an Executive MBA degree from Georgia State University.
40 |
|
Table of Contents |
Wooiyi (Wei) Yin has served as our Chief Financial Officer, Treasurer and as a member of the Board of Directors of the Company since September 21, 2020, and Mrs. Yin is currently the director of Prudent Senior Services of Georgia, Inc.’s New Peachtree location—an Adult Day Health center which provides a daily get-away for seniors to thrive and have meaningful exchanges among their peers. Mrs. Yin not only helped to start this organization, as well as our transportation subsidiaries, and is actively involved in civic engagement for the Pan Asian community in Atlanta. Mrs. Yin’s organizational development skills are well known across non-profit sectors as well as local businesses. She is able to leverage her significant regulatory experience as compliance adviser to various healthcare agencies, from software platform to other facilities. Currently, Wooiyi plans to expand her creative service vision in developing senior service sectors that can benefit other communities like she has impacted her own. Mrs. Yin holds a BA in Mathematics from Agnes Scott College and a MA in Mathematics / Computer Science from Emory University
Directors are generally elected at an annual shareholders’ meeting and hold office until the next annual shareholders’ meeting, or until their successors are elected and qualified. Executive officers are elected by directors and serve at the board’s discretion.
The Company believes that its directors are qualified to serve as directors due to their experience in the capital markets and senior assisted living industries, and their general business knowledge.
The Company does not have an independent director, as that term is defined in Section 803 of the NYSE Company Guide. The Company does not have a financial expert.
Board Composition
Our By-Laws provide that the Board of Directors shall consist of not less than one nor more than fifteen directors. Each director of the Company serves until his successor is elected and qualified, subject to removal by the Company’s majority shareholders. Each officer shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined by the Board of Directors, and shall hold his office until his successor is elected and qualified, or until his earlier resignation or removal.
No Committees of the Board of Directors; No Financial Expert
We do not presently have a separately constituted audit committee, compensation committee, nominating committee, executive committee or any other committees of our Board of Directors. Nor do we have an audit committee or financial expert. Management has determined not to establish an audit committee at present because our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. As such, our entire Board of Directors acts as our audit committee. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Section 407 of the Sarbanes-Oxley Act of 2002 and Item 407(d) of Regulation S-K is beyond our limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in our financial statements at this stage of our development.
Auditor
Our independent registered public accounting firm is:
Pinnacle Accountancy Group of Utah (a dba of Heaton & Company, PLLC)
North 1438 U.S. 89 Alternate
Suite #120
Farmington, UT 84025
Phone: (801) 447-9572
Code of Ethics
The Company currently does not have a Code of Ethics.
41 |
|
Table of Contents |
Potential Conflicts of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors.
Director Independence
Our board of directors has undertaken a review of the independence of each director and considered whether any director has a material relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities. As a result of this review, our board of directors determined that our directors do not meet the independence requirements, according to the applicable rules and regulations of the SEC.
Involvement in Legal Proceedings
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. Other than disclosed herein, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.
Compensation of Executives
The following table summarizes the compensation earned by the Company’s principal executive officers during the two years ended October 31, 2020 and 2019.
Summary Compensation Table
Name and |
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
All Other |
|
|
|
|
||||||
Principal |
|
Fiscal |
|
Salary |
|
|
Bonus |
|
|
Awards |
|
|
Awards |
|
|
Compensation |
|
|
Total |
|
||||||
Position |
|
Year |
|
|
(1) |
|
|
(2) |
|
|
|
(3) |
|
|
|
(4) |
|
|
|
(5) |
|
|
($) |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sam Shah |
|
2020 |
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
CEO & President |
|
2019 |
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wooiyi Yin |
|
2020 |
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
CFO and Treasurer |
|
2019 |
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
|
$ | - |
|
__________
(1) |
The dollar value of salary (cash and non-cash) earned. |
(2) |
The dollar value of bonus (cash and non-cash) earned. |
(3) |
The value of the shares of restricted stock issued as compensation for services computed in accordance with ASC 718 on the date of grant. |
(4) |
The value of all stock options computed in accordance with ASC 718 on the date of grant. |
(5) |
All other compensation received that could not be properly reported in any other column of the table. |
42 |
|
Table of Contents |
The Company did not compensate Mr. Shah or Mrs. Yin during the fiscal years ending October 31, 2020, and October 31, 2019. However, the operational subsidiaries of Prudent Senior Services of America, Inc, which were acquired by the Company in November of 2020, (i) paid both Mr. Shah and Mrs. Yin salary of $139,000 and $150,000 during the fiscal years ending October 31, 2019 and 2020; and (ii) reimbursed both Mr. Shah and Mrs. Yin $1,200 for gym memberships during the fiscal year ending October 31, 2020.
Long-Term Incentive Plans. The Company does not provide its officers or employees with pension, stock appreciation rights, long-term incentive or other plans, nor does it provide non-qualified deferred compensation to its officers or employees, and therefore, the Summary Compensation Table above does not include columns for nonequity incentive plan compensation and nonqualified deferred compensation earnings, since there were none.
Employee Pension, Profit Sharing or other Retirement Plans. The Company does not have a defined benefit, pension plan, profit sharing or other retirement plan, although it may adopt one or more of such plans in the future.
Compensation Committee Interlocks and Insider Participation. During the year ended October 31, 2020, none of the Company’s officers was also a member of the compensation committee or a director of another entity, which other entity had one of its executive officers serving as one of the Company’s directors.
Outstanding Equity Awards
Our directors and officers do not have unexercised options, stock that has not vested, or equity incentive plan awards.
Compensation of Directors
Director Compensation Table
|
|
Fiscal |
|
Fees Earned or Paid in Cash |
|
|
Stock Awards |
|
|
Option Awards |
|
|
All Other Compensation |
|
|
Total |
|
|||||
Name |
|
Year |
|
(1) |
|
|
(3) |
|
|
(4) |
|
|
(5) |
|
|
($) |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sam Shah |
|
2020 |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Chief Executive Officer & Director |
|
2019 |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wooiyi Yin |
|
2020 |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
|
|
|
|
Secretary and Director |
|
2019 |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
__________
(1) |
The dollar value of salary (cash and non-cash) earned. |
(2) |
The dollar value of bonus (cash and non-cash) earned. |
(3) |
The value of the shares of restricted stock issued as compensation for services computed in accordance with ASC 718 on the date of grant. |
(4) |
The value of all stock options computed in accordance with ASC 718 on the date of grant. |
(5) |
All other compensation received that could not be properly reported in any other column of the table. |
Mr. Shah, and Ms. Yin were not compensated for their services as directors of the Company.
43 |
|
Table of Contents |
Employment Contracts, Termination of Employment, Change-in-Control Arrangements
On February 1, 2021, the Company entered into employment agreements with Mr. Shah and Mrs. Yin for their employment as executive officers of the Company. Pursuant to both of those employment agreements, the Company agreed to compensate each of them in the amount $20,834 a month, $12,500 of which would be paid in cash, and the balance of which would be accrued, with an initial term through June 31, 2022.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists, as of May 10, 2021, the number of shares of voting capital stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding class of stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using beneficial ownership concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 59,567,431 shares of our common stock issued and outstanding as of May 10, 2021. We do not have any other outstanding options, warrants exercisable for, or other securities convertible into shares of our common stock within the next 60 days. Unless otherwise indicated, the address of each person listed below is care of Long Term Care Operations 360, Inc., 5522 New Peachtree Rd., Suite 122, Chamblee, Georgia, 30341.
Name of Beneficial Owner |
|
Title of Class |
|
Amount and Nature of Beneficial Ownership |
|
|
Percent of Class |
|
||
Sameer Shah (1) |
|
Common Stock |
|
|
25,800,000 | (2) |
|
|
43.3 | % |
Wooiyi Yin (3) |
|
Common Stock |
|
|
25,800,000 | (4) |
|
|
43.3 | % |
All Officers and Directors as a Group |
|
Common Stock |
|
|
51,600,000 |
|
|
|
86.6 | % |
(1) Chief Executive Officer and Director.
(2) Includes 2,000,000 shares held in Mr. Shah’s name, and 23,800,000 shares held in the name of Mr. Shah’s trust, the PBDI Trust. Mr. Shah has voting power over shares held in the name of the trust and is therefore deemed to be the beneficial owner of shares held in the name of the trust.
(3) Chief Financial Officer and Director.
(4) Includes 12,900,000 shares held in the name of Mrs. Yin’s trust, the W Happy Mutiara Trust; and 12,900,000 shares held in the name of the trust of Mrs. Yin’s late husband, Alfred Yin (in the name of the A Happy Mutiara Trust). Mrs. Yin has voting power over shares held in the name of both trusts and is therefore deemed to be the beneficial owner of shares held in the name of the trusts.
44 |
|
Table of Contents |
The Primary Offering shares will be sold in a “direct public offering” through our officer and director, Sameer Shah, who may be considered an underwriter as that term is defined in Section 2(a) (11). Mr. Shah will not receive any commission in connection with the sale of shares, although we may reimburse him for expenses incurred in connection with the offer and sale of the shares. Mr. Shah intends to sell the shares being registered according to the following plan of distribution:
|
• |
Shares will be offered to friends, family, and business associates and contacts of Mr. Shah. |
Mr. Shah will be relying on, and complying with, Rule 3a4-1(a)(4)(ii) of the Exchange Act as a “safe harbor” from registration as a broker-dealer in connection with the offer and sales of the shares. In order to rely on such “safe harbor” provisions provided by Rule 3a4-1(a) (4) (ii), he must be in compliance with all of the following:
|
• |
he must not be subject to a statutory disqualification; |
|
• |
he must not be compensated in connection with such selling participation by payment of commissions or other payments based either directly or indirectly on such transactions; |
|
• |
he must not be an associated person of a broker-dealer; |
|
• |
he must primarily perform, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of the Company otherwise than in connection with transactions in securities; and |
|
• |
he must perform substantial duties for the issuer after the close of the offering not connected with transactions in securities, and not have been associated with a broker or dealer for the preceding 12 months, and not participate in selling an offering of securities for any issuer more than once every 12 months. |
Mr. Shah will comply with the guidelines enumerated in Rule 3a4-1(a)(4)(ii). Neither Mr. Shah, nor any of his affiliates, will be purchasing shares in the offering.
You may purchase shares by completing and manually executing a simple subscription agreement and delivering it with your payment in full for all shares, which you wish to purchase, to our offices. A copy of the form of that subscription agreement is attached as an exhibit to our registration statement of which this Prospectus is a part. Your subscription shall not become effective until accepted by us and approved by our counsel. Acceptance will be based upon confirmation that you have purchased the shares in a state providing for an exemption from registration. Our subscription process is as follows:
|
• |
prospectus, with subscription agreement, is delivered by the Company to each offeree; |
|
• |
the subscription is completed by the offeree, and submitted with check back to the Company where the subscription and a copy of the check is faxed to counsel for review; |
|
• |
each subscription is reviewed by counsel for the Company to confirm the subscribing party completed the form, and to confirm the state of acceptance; |
|
• |
once approved by counsel, the subscription is accepted by Mr. McGuire, and the funds deposited into an account labeled: Long Term Care Operations 360, Inc. within four (4) days of acceptance; |
|
• |
subscriptions not accepted are returned with all funds sent with the subscription within three business days of the Company’s receipt of the subscription, without interest or deduction of any kind. |
Funds will be deposited to the following:
Long Term Care Operations 360, Inc.
________________________
________________________
________________________
45 |
|
Table of Contents |
The Selling Security Holders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of our common stock on any stock exchange, market or trading facility on which the shares are traded or quoted or in private transactions. These sales will be at a fixed price of $0.75 per share until our shares are either listed on a national securities exchange or quoted on the OTC Bulletin Board, OTCQX, or OTCQB, and thereafter at prevailing market prices or prices negotiated in private transactions. The Selling Security Holders may use any one or more of the following methods when selling shares:
|
· |
ordinary brokerage transactions and transactions in which the broker-dealer solicits Investors; |
|
· |
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
|
· |
purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
|
· |
an exchange distribution in accordance with the rules of the applicable exchange; |
|
· |
privately negotiated transactions; |
|
· |
to cover short sales made after the date that this prospectus is declared effective by the Commission; |
|
· |
broker-dealers may agree with the Selling Security Holders to sell a specified number of such shares at a stipulated price per share; |
|
· |
a combination of any such methods of sale; and |
|
· |
any other method permitted pursuant to applicable law. |
The Selling Security Holders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. For more information, see the section titled “Rule 144” herein on page 33.
Broker-dealers engaged by the Selling Security Holders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Security Holders, or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser, in amounts to be negotiated. The Selling Security Holders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.
The Selling Security Holders may from time to time pledge or grant a security interest in some or all of the shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of our common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 462(c) or other applicable provision of the Securities Act of 1933 amending the list of selling security holders to include the pledgee, transferee or other successors in interest as selling security holders under this prospectus.
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver to the prospective purchaser a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the prospective purchaser and receive the purchaser’s written agreement to the transaction. Furthermore, subsequent to a transaction in a penny stock, the broker-dealer will be required to deliver monthly or quarterly statements containing specific information about the penny stock. It is anticipated that our common stock will be traded on the OTCQB at a price of less than $5.00. In this event, broker-dealers would be required to comply with the disclosure requirements mandated by the penny stock rules. These disclosure requirements will likely make it more difficult for investors in this offering to sell their common stock in the secondary market.
Upon our being notified in writing by a Selling Security Holder that any material arrangement has been entered into with a broker-dealer for the sale of our common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a post-effective amendment to this prospectus will be filed, if required, pursuant to Rule 462(c) under the Securities Act, disclosing (i) the name of each such Selling Security Holder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of our common stock were sold, (iv)the commissions paid or discounts or concessions allowed to such broker-dealer(s). In addition, upon our being notified in writing by a Selling Security Holder that a donee or pledgee intends to sell more than 500 shares of our common stock, a post-effective amendment to this prospectus will be filed if then required in accordance with applicable securities law.
46 |
|
Table of Contents |
Prior to any involvement of any broker-dealer in the offering, such broker-dealer must seek and obtain clearance of the underwriting compensation and arrangements from FINRA.
The Selling Security Holders also may transfer the shares of our common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The Selling Security Holders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Securities will be paid by the Selling Security Holder and/or the purchasers. Each Selling Security Holder has represented and warranted to us that it acquired the securities subject to this prospectus in the ordinary course of such Selling Security Holder’s business and, at the time of its purchase of such securities such Selling Security Holder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.
We have advised each Selling Security Holder that it may not use shares registered on this prospectus to cover short sales of our common stock made prior to the date on which this prospectus shall have been declared effective by the Commission. If a Selling Security Holder uses this prospectus for any sale of our common stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Security Holders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations there under promulgated, including, without limitation, Regulation M, as applicable to such Selling Security Holders in connection with resales of their respective shares under this prospectus.
We are required to pay all fees and expenses incident to the registration of the shares. We have agreed to indemnify the Selling Security Holders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
All sales by the Company to the public through the direct Primary Offering will be issued directly from the Company to the subscriber as a proceeds-generating offering for the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended October 31, 2020, a related not-for-profit entity, Circle of Love (related by virtue of having the same directors and management) advanced the Company $68,814. During the three months ended January 31, 2021, a related not-for-profit entity, Circle of Love (related by virtue of having the same directors and management) advanced the Company $12,293.
The following description of our capital stock is a summary and is qualified in its entirety by the provisions of our Articles of Incorporation, which has been filed as an exhibit to our registration statement of which this Prospectus is a part.
Common Stock
We are authorized to issue 200,000,000 shares of common stock, par value $0.0001, of which 59,567,431 shares are issued and outstanding as of May 10, 2021. Each holder of shares of our common stock is entitled to one vote for each share held of record on all matters submitted to the vote of stockholders, including the election of Directors. The holders of shares of common stock have no preemptive, conversion, subscription or cumulative voting rights. There is no provision in our Articles of Incorporation or By-laws that would delay, defer, or prevent a change in control of our Company.
47 |
|
Table of Contents |
Preferred Stock
We are currently authorized to issue 10,000,000 shares of preferred stock, par value $0.0001, none of which have been designated or issued. Our Board of Directors has the authority to designate the rights and preferences of each series of preferred stock without action by our stockholders, and then to issue shares of preferred stock. As a result, preferred shares could be issued quickly and easily, negatively affecting the rights of holders of common shares and could be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult. Because we may issue preferred stock in order to raise capital for our operations, your ownership interest may be diluted which would result in your percentage of ownership in us decreasing.
Warrants and Options
Currently, there are no warrants or options outstanding.
Security Holders
As of May 10, 2021, there were 59,567,431 common shares issued and outstanding, which were held by 30 stockholders of record. We do not know the number of our beneficial shareholders or shareholders holding shares through their broker(s) in “street name.”
Non-cumulative Voting
Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in such event, the holders of the remaining shares will not be able to elect any of our directors.
Transfer Agent
We have engaged VStock Transfer, LLC as the Company’s transfer agent to serve as agent for shares of our common stock. Our transfer agent’s contact information is as follows:
VStock Transfer, LLC
18 Lafayette Place
Woodmere, NY 11598
Phone: (212) 828-8436
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there was no public market for our common stock. We cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock. Sales of substantial amounts of our common stock in the public market could adversely affect the market prices of our common stock and could impair our future ability to raise capital through the sale of our equity securities.
We have outstanding an aggregate of 59,567,431 shares of our common stock as of May 10, 2021 (prior to the Primary Offering and Secondary Offering). All of the 10,000,000 and 1,100,000 shares to be registered in this offering (in both the Primary Offering and Secondary Offering respectively) will be freely tradable without restriction or further registration under the Securities Act, unless those shares are purchased by our affiliates, as that term is defined in Rule 144 under the Securities Act.
48 |
|
Table of Contents |
The remaining 58,467,431 shares of common stock outstanding after this offering will be restricted as a result of applicable securities laws. Restricted securities may be sold in the public market only if they have been registered or if they qualify for an exemption from registration under Rule 144 promulgated under the Securities Act of 1933, as amended, or another available exemption from registration.
Rule 144
Rule 144 allows for the public resale of restricted and control securities if a number of conditions are met. Meeting the conditions includes holding the shares for a certain period of time, having adequate current information, looking into a trading volume formula, and filing a notice of the proposed sale with the SEC.
In general, a person who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, a sale, (ii) we are subject to the Exchange Act periodic reporting requirements and have filed all required reports for a least 90 days before the sale, and (iii) we are not and have never been a shell company (a company having no or nominal operations and either (1) no or nominal assets, (2) assets consisting solely of cash and cash equivalents, or (3) assets consisting of any amount of cash and cash equivalents and nominal other assets). If we ever become a shell company, Rule 144 would be unavailable until one year following the date we cease to be a shell company and file Form 10 information with the SEC ceasing to be a shell company, provided that we are then subject to the reporting requirements of section 13 or 15(d) of the Exchange Act and have filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that we were required to file such reports and materials), other than Form 8-K reports.
Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following:
- |
1% of the number of shares of our common stock then outstanding, which would equal approximately 69,567,431 shares, based on the number of shares of our common stock outstanding as of May 10, 2021 (59,567,431), and assuming the 10,000,000 shares being registered in the Primary Offering are issued and sold sold; or |
- |
The average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
At the expiration of the one-year holding period, a person who was not one of our affiliates at any time during the three months preceding a sale would be entitled to sell an unlimited number of shares of our common stock without restriction. A person who was one of our affiliates at any time during the three months preceding a sale would remain subject to the volume restrictions described above.
Sales under the Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.
We know of no existing or pending legal proceedings against us, nor are we involved as a plaintiff in any proceeding or pending litigation. There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
49 |
|
Table of Contents |
Except as disclosed herein, no expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the registrant or its subsidiary. Nor was any such person connected with the Company or any of its parents, or subsidiaries, as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.
The financial statements of Long Term Care Operations 360, Inc. as of October 31, 2020 and 2018, have been included herein in reliance on the reports of (i) Pinnacle Accountancy Group of Utah (a dba of Heaton & Company, PLLC), an independent registered public accounting firm, given on the authority of those firms as experts in auditing and accounting. The legal opinion rendered by Brunson Chandler & Jones, PLLC, regarding our common stock to be registered on Form S-1 is as set forth in its opinion letter included in this prospectus. The address of Brunson Chandler & Jones, PLLC, is Walker Center, 175 S. Main Street, Suite 1410, Salt Lake City, Utah, 84111.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
During the two most recent fiscal years ended October 31, 2019, and October 31, 2020, there have been no changes in or disagreements with our independent registered public accounting firm on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of the Former Accounting Firm would have caused them to make reference thereto in their report on the financial statements.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1 under the Securities Act with the SEC for the securities offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules which are part of the registration statement. For additional information about our securities, and us we refer you to the registration statement and the accompanying exhibits and schedules. Statements contained in this prospectus regarding the contents of any contract or any other documents to which we refer are not necessarily complete. In each instance, reference is made to the copy of the contract or document filed as an exhibit to the registration statement, and each statement is qualified in all respects by that reference. Copies of the registration statement and the accompanying exhibits and schedules may be inspected without charge (and copies may be obtained at prescribed rates) at the public reference facility of the SEC at Room 1024, 100 F Street, N.E. Washington, D.C. 20549.
You can request copies of these documents upon payment of a duplicating fee by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further information on the operation of its public reference rooms. Our filings, including the registration statement, will also be available to you on the Internet web site maintained by the SEC at http://www.sec.gov.
Long Term Care Operations 360, Inc.
PROSPECTUS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Until _____________, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
The Date of This Prospectus is _______________, 2021
50 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC.
(Formerly China Crawfish, Ltd.)
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2021 and 2020
F-1 |
|
Unaudited Consolidated Balance Sheets – At January 31, 2021 and October 31, 2020 |
|
F-3 |
|
|
|
|
|
|
F-4 |
|
|
|
|
|
|
|
F-5 |
|
|
|
|
|
|
|
F-6 |
|
|
|
|
|
|
|
F-7 |
|
F-2 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC
(Formerly China Crawfish, Ltd.)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
January 31, 2021 |
|
|
October 31, 2020 |
|
||
|
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
CURRENT ASSETS |
|
|
|
|
|
|
||
Cash |
|
$ | 267,694 |
|
|
$ | 179,028 |
|
Accounts receivable, net of allowance for doubtful accounts |
|
|
48,451 |
|
|
|
7,181 |
|
Total Current Assets |
|
|
316,145 |
|
|
|
186,209 |
|
|
|
|
|
|
|
|
|
|
Security deposit |
|
|
4,000 |
|
|
|
4,000 |
|
Property and equipment, net of accumulated depreciation |
|
|
1,085,653 |
|
|
|
1,045,495 |
|
Operating lease right-of-use assets, net |
|
|
631,496 |
|
|
|
667,038 |
|
TOTAL ASSETS |
|
$ | 2,037,294 |
|
|
$ | 1,902,742 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accrued liabilities |
|
$ | 58,757 |
|
|
$ | 26,431 |
|
Advances payable - related entity |
|
|
81,107 |
|
|
|
68,814 |
|
Operating lease liabilities – current portion |
|
|
199,571 |
|
|
|
169,725 |
|
Loans payable - current portion |
|
|
48,573 |
|
|
|
39,546 |
|
Mortgage payable - current portion |
|
|
13,083 |
|
|
|
12,889 |
|
Total Current Liabilities |
|
|
401,091 |
|
|
|
317,405 |
|
|
|
|
|
|
|
|
|
|
Tenant security deposits |
|
|
7,100 |
|
|
|
7,100 |
|
Operating lease liabilities – net of current portion |
|
|
431,925 |
|
|
|
497,313 |
|
Loans payable - net of current portion |
|
|
689,729 |
|
|
|
600,246 |
|
Mortgage payable - net of current portion |
|
|
425,409 |
|
|
|
428,647 |
|
TOTAL LIABILITIES |
|
|
1,955,254 |
|
|
|
1,850,711 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Preferred stock; $0.0001 par value, 10,000,000 shares authorized; zero shares issued and outstanding |
|
|
- |
|
|
|
- |
|
Common stock; $0.0001 par value, 200,000,000 shares authorized; 59,567,431 and 7,217,431 shares issued and outstanding at January 31, 2021 and October 31, 2020, respectively |
|
5,957 |
|
|
|
722 |
|
|
Additional Paid-in Capital |
|
|
470,639 |
|
|
|
479,438 |
|
Accumulated Deficit |
|
|
(394,556 | ) |
|
|
(428,129 | ) |
Total Stockholders' Equity |
|
|
82,040 |
|
|
|
52,031 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ | 2,037,294 |
|
|
$ | 1,902,742 |
|
See accompanying notes to unaudited consolidated financial statements
F-3 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC
(Formerly China Crawfish, Ltd.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
For the Three Months Ended |
|
|||||
|
|
January 31, 2021 |
|
|
January 31, 2020 |
|
||
REVENUES |
|
|
|
|
|
|
||
Capitation services |
|
$ | 703,938 |
|
|
$ | 302,589 |
|
Product sales |
|
|
8,000 |
|
|
|
23,480 |
|
Transportation |
|
|
- |
|
|
|
101,279 |
|
TOTAL REVENUES |
|
|
711,938 |
|
|
|
427,348 |
|
|
|
|
|
|
|
|
|
|
COST OF SERVICES |
|
|
44,378 |
|
|
|
20,866 |
|
GROSS PROFIT |
|
|
667,560 |
|
|
|
406,482 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
17,242 |
|
|
|
2,023 |
|
Depreciation |
|
|
29,349 |
|
|
|
21,135 |
|
General and administrative |
|
|
597,453 |
|
|
|
448,865 |
|
Total Operating Expenses |
|
|
(644,044 | ) |
|
|
(472,023 | ) |
OPERATING INCOME (LOSS) |
|
|
23,516 |
|
|
|
(65,541 | ) |
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
Other income |
|
|
51 |
|
|
|
- |
|
Interest income |
|
|
57 |
|
|
|
6 |
|
Loan forgiveness income |
|
|
16,165 |
|
|
|
- |
|
Interest expense |
|
|
(6,216 | ) |
|
|
(6,703 | ) |
Total Other Income (Expense) |
|
|
10,057 |
|
|
|
(6,697 | ) |
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) BEFORE INCOME TAXES |
|
|
33,573 |
|
|
|
(72,238 | ) |
Provision for Income Taxes |
|
|
- |
|
|
|
- |
|
NET INCOME (LOSS) |
|
$ | 33,573 |
|
|
$ | (72,238 | ) |
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE |
|
$ | 0.00 |
|
|
$ | (0.02 | ) |
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING |
|
|
45,910,909 |
|
|
|
3,217,431 |
|
See accompanying notes to unaudited consolidated financial statements
F-4 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC
(Formerly China Crawfish, Ltd.)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Total |
|
|||||
|
|
Common Stock |
|
|
Paid-In |
|
|
Accumulated |
|
|
Stockholders' |
|
||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity (Deficit) |
|
|||||
Balance, October 31, 2020 |
|
|
7,217,380 |
|
|
$ | 722 |
|
|
$ | 479,438 |
|
|
$ | (428,129 | ) |
|
$ | 52,031 |
|
Common stock issued for acquisition of subsidiaries |
|
|
52,350,000 |
|
|
|
5,235 |
|
|
|
(8,799 | ) |
|
|
- |
|
|
|
(3,564 | ) |
Net loss for the period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
33,573 |
|
|
|
33,573 |
|
Balance, January 31, 2021 |
|
|
59,567,431 |
|
|
$ | 5,957 |
|
|
$ | 192,863 |
|
|
$ | (394,556 | ) |
|
$ | 82,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
Total |
|
||
|
|
Common Stock |
|
|
Paid-In |
|
|
Accumulated |
|
Stockholders' |
|
|||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity (Deficit) |
|
|||||
Balance, October 31, 2019 |
|
|
3,217,431 |
|
|
$ | 322 |
|
|
$ | 4,838 |
|
|
$ | 40,314 |
|
|
$ | 45,474 |
|
Net loss for the period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(72,238 | ) |
|
|
(72,238 | ) |
Balance, January 31, 2020 |
|
|
3,217,431 |
|
|
$ | 322 |
|
|
$ | 4,838 |
|
|
$ | (31,924 | ) |
|
$ | (26,764 | ) |
See accompanying notes to unaudited consolidated financial statements
F-5 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC
(Formerly China Crawfish, Ltd.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
See accompanying notes to unaudited consolidated financial statements
F-6 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC
(Formerly China Crawfish, Ltd.)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended January 31, 2021 and 2020
Note 1 - Organization and Operations
Long Term Care Operations 360, Inc.
Long Term Care Operations 360, Inc. (the “Company”) changed its name from China Crawfish, Ltd. on November 12, 2020. The Company was incorporated on September 15, 2014 under the laws of the State of Nevada. On November 24, 2020, the Company acquired all of the assets of Prudent Senior Services of America, Inc, including all of its wholly owned subsidiaries (“PSS”), pursuant to a purchase agreement. The Company is continuing the operations of PSS in the adult day health arena.
Note 2 - Significant and Critical Accounting Policies and Practices
The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company's financial condition and results and require management's most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company's significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.
The results for the three months ended January 31, 2021 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the consolidated financial statements and footnotes thereto included in PSS’s stand-alone audited consolidated financial statements for the years ended October 31, 2020 and 2019 within the Form S-1 filed on May 10, 2021 with the Securities and Exchange Commission.
The accompanying condensed financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at January 31, 2021 and for the related periods presented.
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP). The consolidated financial statements include the accounts of Long Term Care Operations 360, Inc. and its wholly-owned subsidiaries, Prudent Senior Services of Georgia, Inc, Golden Sun, Inc., Nemicare, Inc., Golden Sun NEMT, LLC and AHSTY NEMT LLC. All intercompany accounts and transactions have been eliminated in consolidation.
The Company elected October 31st as its fiscal year ending date.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).
These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
F-7 |
|
Table of Contents |
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company follows ASC 820, “Fair Value Measurement,” to measure and disclose the fair value of its financial instruments. ASC 820 establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 820 are described below:
Level 1 |
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
|
|
|
Level 2 |
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
|
|
|
Level 3 |
|
Pricing inputs that are generally observable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, receivables and accrued liabilities approximate their fair values because of the short maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Long-lived Assets
Long-lived assets are evaluated for impairment in accordance with ASC 360, “Property, Plant, and Equipment,” whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the assets, an impairment loss is recorded equal to the difference. No impairment charges were recorded in the three months ended January 31, 2021 or 2020.
F-8 |
|
Table of Contents |
Property, Plant and Equipment
We record property, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:
Building |
|
7 to 15 years |
Vehicles and equipment |
|
3 to 7 years |
Processing and laboratory |
|
5 to 15 years |
Furniture and fixtures |
|
2 to 3 years |
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. See Note 8 for a description of such transactions.
Commitment and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. As of January 31, 2021 and 2020, the Company does not have any commitments or contingencies.
On February 1, 2021, the Company entered into employment agreements with Mr. Shah and Mrs. Yin for their employment as executive officers of the Company. Pursuant to both of those employment agreements, the Company agreed to compensate each of them in the amount $20,834 a month, $12,500 of which would be paid in cash, and the balance of which would be accrued, with an initial term through June 31, 2022.
Revenue Recognition
In accordance with ASC 606-10, revenue is measured based on a consideration expected to receive, as specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.
The Company’s Adult Day Health (ADH) operating unit provides comprehensive health care services to participants on the basis of fixed or capitated fees per participant that are paid monthly by Medicaid and private pay sources. Medicaid capitation revenues are based on per-member, per-month capitation rates under the ADH program. Capitation payments are recognized as revenue in the period in which they relate.
Capitation revenues may be subject to adjustment as a result of examination by government agencies or contractors. The audit process and the resolution of significant related matters often are not finalized until several years after the services are rendered. Any adjustments resulting from these examinations are recorded in the period the Company is notified of them.
F-9 |
|
Table of Contents |
At times, the Company accepts participants into the program pending final authorization from Medicaid. If Medicaid coverage is later denied and there are no alternative resources available to pay for services, the participant is disenrolled. Any costs incurred on behalf of these participants were nominal in the three months ended January 31, 2021 and 2020.
Laws and regulations governing the Medicare program are complex and subject to change, as well as government review. Failure to comply with these laws can expose the entity to significant regulatory action, including fines, penalties, and exclusion from the Medicaid programs.
Advertising Costs
The Company’s purchased services and contracts expenses include media advertising. These advertising and marketing activities are expensed as incurred. Total advertising expenses were $17,242 and $2,023 for the three months ended January 31, 2021 and 2020, respectively.
Leases
Effective November 1, 2018, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The Company elected to exclude from its balance sheets recognition of leases having a term of 12 months or less (“short-term leases”). Lease expense is recognized on a straight-line basis over the lease term. If a Company lease does not provide an implicit rate, the Company develops an estimated incremental borrowing rate at the commencement date based on the estimated rate at which it would borrow, in the current economic environment, an amount equal to the lease payments over a similar term on a collateralized basis which is used to determine the present value of lease payments. The Company had no finance leases at January 31, 2021 and October 31, 2020.
Deferred Tax Assets and Income Tax Provision
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
F-10 |
|
Table of Contents |
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Earnings per Share
Earnings per share ("EPS") is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. Potentially dilutive securities are not included in the EPS computation if anti-dilutive.
There were no contingent shares issuance arrangements, stock options or warrants which were issuable and could have potential dilutive effect to the earnings per share for the period ended January 31, 2021 or 2020.
Coronavirus Pandemic (“COVID-19”)
In March 2020, the World Health Organization declared COVID-19 a pandemic. The global spread of COVID-19 has created significant volatility, uncertainty, and economic disruption. Governments in affected regions have implemented, and may continue to implement, safety precautions which include quarantines, travel restrictions, business closures, cancellations of public gatherings and other measures as they deem necessary. Many organizations and individuals, including the Company and its employees, are taking additional steps to avoid or reduce infection, including limiting travel and working from home. These measures are disrupting normal business operations both in and outside of affected areas and have had significant negative impacts on businesses and financial markets worldwide. We will continue to closely monitor the impact of COVID-19 on all aspects of our business, including the impacts to our employees, participants and suppliers; however, at this time, we are unable to estimate the ultimate impact the pandemic will have on our consolidated financial condition, results of operations or cash flows.
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption.
Note 3 – Going Concern
The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
F-11 |
|
Table of Contents |
As reflected in the consolidated financial statements, the Company had an accumulated deficit at January 31, 2021. However, it earned a small net income and provided a small amount of cash from operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company is generating revenue; however, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management intends to raise additional funds by way of a private or public offering and repay the advance from a related entity. While the Company believes in the viability of its operations and generation of sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.
The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 – Accounts Receivable
The Company provides adult day-care services to participants on the basis of capitated or fixed fees per participant that are paid monthly by Medicaid and private pay sources. The Company records accounts receivable at net realizable value, which includes an allowance for estimated uncollectible accounts. The allowance for uncollectible accounts reflects the Company’s best estimate of probable losses considering eligibility, historical experience, and existing economic conditions. Accounts are written off as bad debts when they are deemed uncollectible based upon individual credit evaluations and specific circumstances underlying the accounts.
The table below details the accounts receivable and allowance for doubtful accounts for the three months ended January 31, 2021 and the fiscal year ended October 31, 2020:
|
|
1/31/2021 |
|
|
10/31/2020 |
|
||
Accounts Receivable |
|
$ | 48,451 |
|
|
$ | 7,181 |
|
Allowance for Doubtful Accounts |
|
|
- |
|
|
|
- |
|
|
|
$ | 48,451 |
|
|
$ | 7,181 |
|
Note 5 – Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are recorded using the straight-line method over the estimated useful lives.
Property and equipment were comprised of the following as of January 31, 2021 and October 31, 2020:
|
|
January 31, 2021 |
|
|
October 31, 2020 |
|
||
Buildings |
|
$ | 776,938 |
|
|
$ | 776,938 |
|
Building Improvements |
|
|
20,682 |
|
|
|
18,292 |
|
Vehicles |
|
|
486,380 |
|
|
|
419,263 |
|
|
|
|
1,284,000 |
|
|
|
1,214,493 |
|
Less Accumulated Depreciation |
|
|
(198,347 | ) |
|
|
(168,998 | ) |
Total Property, Plant and Equipment |
|
$ | 1,085,653 |
|
|
$ | 1,045,495 |
|
F-12 |
|
Table of Contents |
Depreciation of $29,349 and $21,135 was recorded during the three months ended January 31, 2021 and 2020, respectively. Land is not depreciated, and construction in progress is not depreciated until ready for service. Costs of enhancements or modifications that substantially extend the capacity or useful life of an asset are capitalized and depreciated accordingly. Ordinary repairs and maintenance are expensed as incurred.
When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheets, and the resulting gain or loss, if any, is reflected in the consolidated statements of operations.
Note 6 – Operating Leases
In October 2018, the Company entered a 48-month office lease that commenced on October 1, 2018. The lease provides for approximately 2,000 square feet of office space. This office space serves as the offices of one of its subsidiaries., as well as the principal offices of the Company’s operating subsidiaries. The Company believes this space is more than it will need in the future as it anticipates a majority of its workforce will continue working remotely even after workplace and social distancing restrictions are lifted.
In January 2020, the Company entered a 51-month office lease that commenced on January 1, 2020. The lease provides for approximately 13,000 square feet of office space. This office space serves as a day center, as well as the principal offices of the Company and for the Company’s operating subsidiaries. The Company believes this space is more than it will need in the near future.
In January 2020, the Company entered a 60-month lease that commenced on January 1, 2020. The lease provides for approximately 8,000 square feet of space. This space will serve as a day center as the Company expands it services to new areas. The Company believes this space is adequate for a day center when it is available to be opened after workplace and social distancing restrictions are lifted.
Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.
The components of lease expense and supplemental cash flow information related to leases for the period are as follows:
|
|
Three Months Ended |
|
|||||
|
January 31, 2021 |
|
January 31, 2020 |
|
||||
Lease Cost |
|
|
|
|
|
|
||
Operating lease cost (included in general and administrative in the Company’s consolidated statement of operations) |
|
$ | 40,248 |
|
|
$ | 44,974 |
|
|
|
|
|
|
|
|
|
|
Other Information |
|
|
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities |
|
$ | 40,248 |
|
|
$ | 44,974 |
|
Weighted average remaining lease term – operating leases (in years) |
|
3.25 years |
|
|
4.07 years |
|
||
Average discount rate – operating leases |
|
|
5.00 | % |
|
|
5.00 | % |
F-13 |
|
The supplemental balance sheet information related to leases for the period is as follows:
|
|
January 31, 2021 |
|
|
January 31, 2020 |
|
||
Operating leases |
|
|
|
|
|
|
||
Long-term right-of-use assets |
|
$ | 631,496 |
|
|
$ | 667,038 |
|
|
|
|
|
|
|
|
|
|
Short-term operating lease liabilities |
|
$ | 199,571 |
|
|
$ | 169,725 |
|
Long-term operating lease liabilities |
|
|
431,925 |
|
|
|
497,313 |
|
Total operating lease liabilities |
|
$ | 631,496 |
|
|
$ | 667,038 |
|
Maturities of the Company’s undiscounted lease liabilities are as follows:
Year Ending |
|
Operating Leases |
|
|
2021 |
|
$ | 148,299 |
|
2022 |
|
|
216,608 |
|
2023 |
|
|
202,438 |
|
2024 |
|
|
115,206 |
|
2025 |
|
|
8,000 |
|
Total lease payments |
|
|
690,551 |
|
Less: Imputed interest/present value discount |
|
|
(59,055 | ) |
Present value of lease liabilities |
|
$ | 631,496 |
|
Lease expenses were $49,306 and $7,331 for the three months ended January 31, 2021 and 2020, respectively.
Note 7 – Long-Term Debt
Long-term debt consisted of the following as of January 31, 2021 and October 31, 2020:
Description |
|
1/31/2021 |
|
|
10/31/2020 |
|
||
Secured Term Loans |
|
$ | 738,302 |
|
|
$ | 639,792 |
|
Mortgage Loan |
|
|
438,492 |
|
|
|
441,536 |
|
Total Debt |
|
|
1,176,794 |
|
|
|
1,081,328 |
|
Less Current Portion |
|
|
61,656 |
|
|
|
52,435 |
|
Long-Term Debt |
|
$ | 1,115,138 |
|
|
$ | 1,028,893 |
|
On December 17, 2020, the Company entered into a new loan in the amount of $67,117 for the purchase of a vehicle. The loan has an interest rate of 5.24% and a term of 84 months. The monthly payment is $956.
On December 16, 2020, the Company issued an unsecured Promissory Note to the Small Business Administration in the principal amount of $58,926 (the “Note”) that matures on December 16, 2023 and bearing 1.00% per annum interest as part of the Covid-19 Cares Act. The total net proceeds the Company received was $58,926. The payment amount has not yet been determined.
On December 22, 2020, the Company received notice from the Small Business Administration that the Note was being forgiven in the amount of $16,165, which has been recorded as other income in the statements of operations.
Note 8 – Related Party Transactions
From time to time, a related entity advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.
During the three months ended January 31, 2021 and 2020, respectively, a related not-for-profit entity advanced the Company $12,293 and $292,390. Advances payable to related parties totaled $81,107 and $68,814 at January 31, 2021 and October 31, 2020, respectively.
Note 9 – Stockholder’s Equity
Shares Authorized
The Company is currently authorized to issue 10,000,000 shares of preferred stock, par value $0.0001, none of which have been designated or issued. Our Board of Directors has the authority to designate the rights and preferences of each series of preferred stock without action by our stockholders, and then to issue shares of preferred stock.
The Company is authorized to issue 200,000,000 shares of Common Stock, par value $0.0001 per share.
F-14 |
|
Table of Contents |
Common Stock
On November 12, 2020, the Company enacted a 25-to-1 reverse stock split of its shares of common stock. The split has been retroactively applied to all periods presented, and all stock references within these unaudited interim financial statements are post-split.
On November 24, 2020, the Company issued 52,350,000 shares of common stock for the acquisition of all of Prudent Senior Services of America, Inc’s (“PSSA”) assets, including each of its operational wholly-owned subsidiaries. The Company recognized an increase to the common stock account of $5,235 and a decrease to the additional paid-in capital account of $8,799 as part of this acquisition. This acquisition was treated as an asset purchase from a company under common control. PSSA will be the accounting survivor, and all operations of it and its subsidiaries will be merged into the Company.
As of January 31, 2021 and October 31, 2020, the Company had a total of 59,567,431 and 7,217,431, respectively, shares of common stock outstanding.
Note 10 – Subsequent Events
Management has evaluated subsequent events, in accordance with FASB ASC Topic 855, “Subsequent Events,” through the date these consolidated financial statements were issued and noted no material subsequent events requiring disclosure.
F-15 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC.
(FORMERLY KNOWN AS
CHINA CRAWFISH, LTD.)
FINANCIAL STATEMENTS
October 31, 2020 and 2019
F-16 |
|
F-17 |
|
Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Long Term Care Operations 360, Inc.
(formerly known as China Crawfish, Ltd.)
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Long Term Care Operations 360, Inc. (formerly known as China Crawfish, Ltd.) (the Company) as of October 31, 2020 and 2019, and the related statements of operations, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Considerations
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered losses since inception and has not achieved profitable operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Pinnacle Accountancy Group of Utah
We have served as the Company’s auditor since 2020.
Pinnacle Accountancy Group of Utah
(a dba of Heaton & Company, PLLC)
Farmington, Utah
May 10, 2021
F-18 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC.
(FORMERLY KNOWN AS CHINA CRAWFISH, LTD.)
See accompanying notes to audited financial statements
F-19 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC.
(FORMERLY KNOWN AS CHINA CRAWFISH, LTD.)
|
|
For the Years Ended |
|
|||||
|
|
October 31, 2020 |
|
|
October 31, 2019 |
|
||
REVENUES |
|
$ | - |
|
|
$ | - |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
General and administrative expenses |
|
|
13,749 |
|
|
|
109,579 |
|
Total Operating Expenses |
|
|
(13,749 | ) |
|
|
(109,579 | ) |
OPERATING LOSS |
|
|
(13,749 | ) |
|
|
(109,579 | ) |
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
Total Other Income (Expense) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
NET LOSS BEFORE INCOME TAXES |
|
|
(13,749 | ) |
|
|
(109,579 | ) |
Provision for Income Taxes |
|
|
- |
|
|
|
- |
|
NET LOSS |
|
$ | (13,749 | ) |
|
$ | (109,579 | ) |
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED LOSS PER SHARE |
|
$ | (0.00 | ) |
|
$ | (0.03 | ) |
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED |
|
|
3,851,311 |
|
|
|
3,217,431 |
|
See accompanying notes to audited financial statements
F-20 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC.
(FORMERLY KNOWN AS CHINA CRAWFISH, LTD.)
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Total |
|
|||||
|
|
Common Stock |
|
|
Paid-In |
|
|
Accumulated |
|
|
Stockholders' |
|
||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity (Deficit) |
|
|||||
Balance, October 31, 2018 |
|
|
3,217,431 |
|
|
$ | 322 |
|
|
$ | 183,263 |
|
|
$ | (76,282 | ) |
|
$ | 107,303 |
|
Net loss for the year |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(109,579 | ) |
|
|
(109,579 | ) |
Balance, October 31, 2019 |
|
|
3,217,431 |
|
|
|
322 |
|
|
|
183,263 |
|
|
|
(185,861 | ) |
|
|
(2,276 | ) |
Common stock issued for extinguishment of related party debt |
|
|
4,000,000 |
|
|
|
400 |
|
|
|
12,061 |
|
|
|
- |
|
|
|
12,461 |
|
Net loss for the year |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(13,749 | ) |
|
|
(13,749 | ) |
Balance, October 31, 2020 |
|
|
7,217,431 |
|
|
$ | 722 |
|
|
$ | 195,324 |
|
|
$ | (199,610 | ) |
|
$ | (3,564 | ) |
See accompanying notes to audited financial statements
F-21 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC.
(FORMERLY KNOWN AS CHINA CRAWFISH, LTD.)
See accompanying notes to audited financial statements
F-22 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC.
(FORMERLY KNOWN AS CHINA CRAWFISH, LTD.)
NOTES TO AUDITED FINANCIAL STATEMENTS
For the Years Ended October 31, 2020 and 2019
Note 1 - Organization and Operations
The Company, formerly known as Bella Costa Designs Inc, and then as China Crawfish, Ltd. (the “Company,” which is now known as Long Term Care Operations 360, Inc.), was incorporated on September 15, 2014 under the laws of the State of Nevada. On October 13, 2020, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of the State of Nevada effecting a name change from China Crawfish, Ltd. to Long Term Care Operations 360, Inc. On November 24, 2020, the Company acquired all of Prudent Senior Services of America, Inc’s assets, including its wholly-owned subsidiaries, in a share exchange agreement. The Company is continuing the operations of its new acquisition in the adult day health arena.
Note 2 - Significant and Critical Accounting Policies and Practices
The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.
Basis of Presentation
The accompanying financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The Company has elected October 31st as its fiscal year ending date.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).
These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
F-23 |
|
Table of Contents |
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company follows ASC 820, “Fair Value Measurement,” to measure and disclose the fair value of its financial instruments. ASC 820 establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 820 are described below:
Level 1 |
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
|
|
|
Level 2 |
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
|
|
|
Level 3 |
|
Pricing inputs that are generally observable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash and accounts payable approximate their fair values because of the short maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
F-24 |
|
Table of Contents |
Commitments and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. As of October 31, 2020 and 2019, the Company does not have any commitments or contingencies.
Revenue Recognition
Effective November 1, 2017, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 606-10, Revenue from Contracts with Customers (“ASC 606-10”). The adoption of ASC 606-10 had no impact on prior year or previously disclosed amounts. In accordance with ASC 606-10, revenue is measured based on a consideration expected to receive, as specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.
Deferred Tax Assets and Income Tax Provision
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
F-25 |
|
Table of Contents |
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Earnings per Share
Earnings per share ("EPS") is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.
There were no contingent shares issuance arrangements, stock options or warrants which were issuable and could have potential dilutive effect to the earnings per share for the periods ended October 31, 2020 or 2019.
Recently Issued Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.
Note 3 – Going Concern
The Company’s financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the financial statements, the Company had an accumulated deficit at October 31, 2020, a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management intends to raise additional funds by way of a private or public offering. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
F-26 |
|
Table of Contents |
Note 4 – Related Party Transactions
From time to time, a related party advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.
On January 10, 2018, a related entity of the former management loaned the Company $6,500. This amount was repaid during 2019.
During 2020, directors loaned the Company $12,461. On September 3, 2020, the Company issued 4,000,000 shares of common stock to these directors as repayment of these advances. The shares of common stock were valued at $12,461.
Note 5 – Stockholder’s Equity
Shares Authorized
The Company is currently authorized to issue 10,000,000 shares of preferred stock, par value $0.0001, none of which have been designated or issued. Our Board of Directors has the authority to designate the rights and preferences of each series of preferred stock without action by our stockholders, and then to issue shares of preferred stock.
The Company is authorized to issue 200,000,000 shares of Common Stock, par value $0.0001 per share.
Common Stock
On November 12, 2020, the Company enacted a 25 to 1 reverse-stock split of its shares of common stock. Pre-split shares issued and outstanding were 180,434,500 shares of common stock. Post-split shares issued and outstanding were 7,217,431 shares of common stock. The split has been applied retroactively to all references to common stock for all periods presented.
F-27 |
|
Table of Contents |
On September 3, 2020, the Company issued 4,000,000 shares of common stock to shareholders and directors for settlement of advances to the Company totaling $12,461. The shares of common stock were valued $12,461.
As of October 31, 2020 and 2019, the Company had a total of 7,217,431 and 3,217,431, respectively, shares of common stock outstanding.
Note 6 – Income taxes
The Company’s effective income tax rate for fiscal 2020 and fiscal 2019 are 27%, and 27%, respectively. Actual income tax expense differs from the amount computed by applying the applicable U.S. federal statutory corporate income tax rate of 21% in fiscal 2020 and 2019. There are no significant differences between the effective rate and statutory rate due to state taxes, nondeductible items, and prior-year true-ups.
As of October 31, 2020 and October 31, 2019, the Company had net operating loss carry-forwards for U.S. federal income tax purposes of approximately $195,000 and $183,000, respectively.
The valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. This is necessary due to the Company’s continued operating losses and the uncertainty of the Company’s ability to utilize all of the net operating loss carry-forwards before they will expire through the year 2040.
The Company is subject to income tax in the U.S. federal jurisdiction. The Company has not been audited by the U.S. Internal Revenue Service in connection with income taxes. The Company’s tax years beginning with the year ended October 31, 2017 through October 31, 2020 generally remain open to examination by the Internal Revenue Service until its net operating loss carryforwards are utilized and the applicable statutes of limitation have expired.
Note 7 – Subsequent Events
Management has evaluated subsequent events, in accordance with FASB ASC Topic 855, “Subsequent Events,” through the date these financial statements were issued and noted no material subsequent events other than the item disclosed herein.
On November 24, 2020, the Company completed an acquisition of all of the assets of Prudent Senior Services of America, Inc (PSSA), including all of its operational subsidiaries. PSSA will be the accounting survivor, and all operations of it and its subsidiaries will be merged into the Company. The Company issued 52,350,000 shares of common stock in connection with this combination.
F-28 |
|
Table of Contents |
PRUDENT SENIOR SERVICES OF AMERICA, INC
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2020 and 2019
F-29 |
|
F-30 |
|
Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Prudent Senior Services of America, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Prudent Senior Services of America, Inc. (the Company) as of October 31, 2020 and 2019, and the related consolidated statements of operations, changes in consolidated stockholders’ equity, and consolidated cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Considerations
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered losses since inception and has not achieved profitable operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Pinnacle Accountancy Group of Utah
We have served as the Company’s auditor since 2020.
Pinnacle Accountancy Group of Utah
(a dba of Heaton & Company, PLLC)
Farmington, Utah
May 10, 2021
F-31 |
|
Table of Contents |
PRUDENT SENIOR SERVICES OF AMERICA, INC
CONSOLIDATED BALANCE SHEETS
|
|
October 31, 2020 |
|
|
October 31, 2019 |
|
||
ASSETS |
|
|
|
|
|
|
||
CURRENT ASSETS |
|
|
|
|
|
|
||
Cash |
|
$ | 179,028 |
|
|
$ | 86,424 |
|
Accounts receivable, net of allowance for doubtful accounts |
|
|
7,181 |
|
|
|
9,182 |
|
Total Current Assets |
|
|
186,209 |
|
|
|
95,606 |
|
|
|
|
|
|
|
|
|
|
Security deposit |
|
|
4,000 |
|
|
|
- |
|
Property and equipment, net of accumulated depreciation |
|
|
1,045,495 |
|
|
|
343,036 |
|
Operating lease right-of-use assets, net |
|
|
667,038 |
|
|
|
77,017 |
|
TOTAL ASSETS |
|
$ | 1,902,742 |
|
|
$ | 515,659 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accrued liabilities |
|
$ | 26,431 |
|
|
$ | 36,946 |
|
Advance payable - related entity |
|
|
68,814 |
|
|
|
- |
|
Operating lease liabilities – current portion |
|
|
169,725 |
|
|
|
20,606 |
|
Loans payable - current portion |
|
|
39,546 |
|
|
|
70,391 |
|
Mortgage payable - current portion |
|
|
12,889 |
|
|
|
- |
|
Total Current Liabilities |
|
|
317,405 |
|
|
|
127,943 |
|
|
|
|
|
|
|
|
|
|
Tenant security deposits |
|
|
7,100 |
|
|
|
- |
|
Operating lease liabilities – net of current portion |
|
|
497,313 |
|
|
|
56,411 |
|
Loans payable - net of current portion |
|
|
600,246 |
|
|
|
285,831 |
|
Mortgage payable - net of current portion |
|
|
428,647 |
|
|
|
- |
|
TOTAL LIABILITIES |
|
|
1,850,711 |
|
|
|
470,185 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Common stock; $0.001 par value, 100,000,000 shares authorized; 65,710,000 and 5,160,000 shares issued and outstanding at October 31, 2020 and 2019, respectively |
|
|
65,710 |
|
|
|
5,160 |
|
Additional Paid-in Capital |
|
|
414,450 |
|
|
|
- |
|
Accumulated Deficit |
|
|
(428,129 | ) |
|
|
40,314 |
|
Total Stockholders' Equity |
|
|
52,031 |
|
|
|
45,474 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ | 1,902,742 |
|
|
$ | 515,659 |
|
See accompanying notes to audited consolidated financial statements
F-32 |
|
Table of Contents |
PRUDENT SENIOR SERVICES OF AMERICA, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
For the Year Ended |
|
|||||
|
|
October 31, 2020 |
|
|
October 31, 2019 |
|
||
|
|
|
|
|
|
|
||
REVENUES |
|
|
|
|
|
|
||
Capitation services income |
|
$ | 1,761,495 |
|
|
$ | 1,251,698 |
|
Product sales income |
|
|
91,478 |
|
|
|
170,609 |
|
Transportation income |
|
|
177,072 |
|
|
|
371,644 |
|
Management fee income |
|
|
92,480 |
|
|
|
- |
|
TOTAL REVENUES |
|
|
2,122,525 |
|
|
|
1,793,951 |
|
|
|
|
|
|
|
|
|
|
COST OF SERVICES |
|
|
264,985 |
|
|
|
323,845 |
|
GROSS PROFIT |
|
|
1,857,540 |
|
|
|
1,470,106 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
|
18,787 |
|
|
|
3,947 |
|
Depreciation expense |
|
|
92,771 |
|
|
|
72,262 |
|
General and administrative expenses |
|
|
2,181,142 |
|
|
|
1,400,671 |
|
Total Operating Expenses |
|
|
(2,292,700 | ) |
|
|
(1,476,880 | ) |
OPERATING LOSS |
|
|
(435,160 | ) |
|
|
(6,774 | ) |
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
Other Income |
|
|
92 |
|
|
|
- |
|
Interest income |
|
|
12 |
|
|
|
- |
|
Interest expense |
|
|
(33,387 | ) |
|
|
(31,519 | ) |
Total Other Income (Expense) |
|
|
(33,283 | ) |
|
|
(31,519 | ) |
|
|
|
|
|
|
|
|
|
NET LOSS BEFORE INCOME TAXES |
|
|
(468,443 | ) |
|
|
(38,293 | ) |
Provision for Income Taxes |
|
|
- |
|
|
|
- |
|
NET LOSS |
|
$ | (468,443 | ) |
|
$ | (38,293 | ) |
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED LOSS PER SHARE |
|
$ | (0.01 | ) |
|
$ | (0.01 | ) |
|
|
|
|
|
|
|
|
|
BASID AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING |
|
|
56,098,836 |
|
|
|
3,011,178 |
|
See accompanying notes to audited consolidated financial statements
F-33 |
|
Table of Contents |
PRUDENT SENIOR SERVICES OF AMERICA, INC
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Total |
|
|||||
|
|
Common Stock |
|
|
Paid-In |
|
|
Accumulated |
|
|
Stockholders' |
|
||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity |
|
|||||
Balance, October 31, 2018 |
|
|
- |
|
|
$ | - |
|
|
$ | - |
|
|
$ | 78,607 |
|
|
$ | 78,607 |
|
Common stock issued to founders for services |
|
|
5,160,000 |
|
|
|
5,160 |
|
|
|
- |
|
|
|
- |
|
|
|
5,160 |
|
Net loss for the year |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(38,293 | ) |
|
|
(38,293 | ) |
Balance, October 31, 2019 |
|
|
5,160,000 |
|
|
|
5,160 |
|
|
|
- |
|
|
|
40,314 |
|
|
|
45,474 |
|
Common stock issued in share exchange agreement – Nemicare |
|
|
20,000,000 |
|
|
|
20,000 |
|
|
|
(20,000 | ) |
|
|
- |
|
|
|
- |
|
Common stock issued in share exchange agreement - PSS Georgia |
|
|
20,000,000 |
|
|
|
20,000 |
|
|
|
(20,000 | ) |
|
|
- |
|
|
|
- |
|
Common stock issued in share exchange agreement - Golden Sun |
|
|
20,000,000 |
|
|
|
20,000 |
|
|
|
(20,000 | ) |
|
|
- |
|
|
|
- |
|
Common stock issued in share exchange agreement - AHSTY NEMT |
|
|
20,000 |
|
|
|
20 |
|
|
|
(20 | ) |
|
|
- |
|
|
|
- |
|
Common stock issued in share exchange agreement - Golden Sun NEMT |
|
|
55,000 |
|
|
|
55 |
|
|
|
(55 | ) |
|
|
- |
|
|
|
- |
|
Common stock issued for services |
|
|
41,000 |
|
|
|
41 |
|
|
|
40,959 |
|
|
|
- |
|
|
|
41,000 |
|
Common stock issued for cash |
|
|
434,000 |
|
|
|
434 |
|
|
|
433,566 |
|
|
|
- |
|
|
|
434,000 |
|
Net loss for the year |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(468,443 | ) |
|
|
(468,443 | ) |
Balance, October 31, 2020 |
|
|
65,710,000 |
|
|
$ | 65,710 |
|
|
$ | 414,450 |
|
|
$ | (428,129 | ) |
|
$ | 52,031 |
|
See accompanying notes to audited consolidated financial statements
F-34 |
|
Table of Contents |
PRUDENT SENIOR SERVICES OF AMERICA, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
See accompanying notes to audited consolidated financial statements
F-35 |
|
Table of Contents |
PRUDENT SENIOR SERVICES OF AMERICA, INC
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Organization and Operations
Prudent Senior Services of American, Inc.
Prudent Senior Services of America, Inc (the “Company”) was incorporated under the laws of the State of Georgia on December 13, 2019. The consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiaries, Prudent Senior Services of Georgia, Inc, Golden Sun, Inc., Nemicare, Inc., Golden Sun NEMT, LLC and AHSTY NEMT LLC, which were acquired in 2019 and 2020.
Note 2 - Significant and Critical Accounting Policies and Practices
The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP). The consolidated financial statements include the accounts of Prudent Senior Services of America, Inc and its wholly-owned subsidiaries, Prudent Senior Services of Georgia, Inc, Golden Sun, Inc., Nemicare, Inc., Golden Sun NEMT, LLC and AHSTY NEMT LLC. All intercompany accounts and transactions have been eliminated in consolidation.
The Company does not have any components of comprehensive income and, as of October 31, 2020 and 2019, comprehensive income is equal to net income reported in the statements of operations.
Fiscal Year-End
The Company elected October 31 as its fiscal year ending date.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).
These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
F-36 |
|
Table of Contents |
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company follows ASC 820, “Fair Value Measurement” to measure and disclose the fair value of its financial instruments. ASC 820 establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 820 are described below:
Level 1 |
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
|
|
|
Level 2 |
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
|
|
|
Level 3 |
|
Pricing inputs that are generally observable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accrued liabilities and notes payable approximate their fair values because of the short maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Long-lived Assets
Long-lived assets are evaluated for impairment in accordance with ASC 360, “Property, Plant, and Equipment”, whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the assets, an impairment loss is recorded equal to the difference. No impairment charges were recorded in the fiscal years ended October 31, 2020 or 2019.
F-37 |
|
Table of Contents |
Properties, Plant and Equipment
We record properties, plant and equipment at historical cost. We provide depreciation and amortization in amounts sufficient to match the cost of depreciable assets to operations over their estimated service lives or productive value. We capitalize expenditures for improvements that significantly extend the useful life of an asset. We charge expenditures for maintenance and repairs to operations when incurred. Depreciation is computed using the straight-line method over estimated useful lives as follows:
Building |
|
7 to 15 years |
Vehicles and equipment |
|
3 to 7 years |
Processing and laboratory |
|
5 to 15 years |
Furniture and fixtures |
|
2 to 3 years |
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. See Note 8 for a description of such transactions.
Commitment and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. As of October 31, 2020 and 2019, the Company does not have any commitments or contingencies.
Revenue Recognition
Effective November 1, 2017, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 606-10, Revenue from Contracts with Customers (“ASC 606-10”). The adoption of ASC 606-10 had no impact on prior year or previously disclosed amounts. In accordance with ASC 606-10, revenue is measured based on a consideration expected to receive, as specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.
The Company’s Adult Day Health (ADH) operating unit provides comprehensive health care services to participants on the basis of fixed or capitated fees per participant that are paid monthly by Medicaid and private pay sources. Two of the Company’s operating unit provides skilled and unskilled nursing services and transportation services in connection with adult care and senior needs. While another of the Company’s operating unit holds and sells a software platform to senior care services providers, Medicaid capitation revenues, which include the nursing and transportation services, are based on per-member, per-month capitation rates under the ADH program. Capitation payments are recognized as revenue in the period in which they relate. Product and management fees are recognized during the periods that services are provided.
Capitation revenues may be subject to adjustment as a result of examination by government agencies or contractors. The audit process and the resolution of significant related matters often are not finalized until several years after the services are rendered. Any adjustments resulting from these examinations are recorded in the period the Company is notified of them.
At times, the Company accepts participants into the program pending final authorization from Medicaid. If Medicaid coverage is later denied and there are no alternative resources available to pay for services, the participant is disenrolled. Any costs incurred on behalf of these participants were nominal in the fiscal years ended October 31, 2020 and 2019.
F-38 |
|
Table of Contents |
Laws and regulations governing the Medicaid program are complex and subject to change, as well as government review. Failure to comply with these laws can expose the entity to significant regulatory action, including fines, penalties, and exclusion from the Medicaid programs.
Advertising Costs
The Company’s purchased services and contracts expenses include media advertising. These advertising and marketing activities are expensed as incurred. Total advertising expenses were $18,787 and $3,947 for the fiscal years ended October 31, 2020 and 2019, respectively.
Leases
Effective November 1, 2018, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The adoption of ASC 842 on November 1, 2018 resulted in the recognition of operating lease right-of-use assets of $92,623, lease liabilities for operating leases of $92,623, and a zero cumulative-effect adjustment to accumulated deficit. The Company elected to exclude from its balance sheets recognition of leases having a term of 12 months or less (“short-term leases”). Lease expense is recognized on a straight-line basis over the lease term. If a Company lease does not provide an implicit rate, the Company develops an estimated incremental borrowing rate at the commencement date based on the estimated rate at which it would borrow, in the current economic environment, an amount equal to the lease payments over a similar term on a collateralized basis which is used to determine the present value of lease payments. The Company had no finance leases at October 31, 2020 and 2019.
Deferred Tax Assets and Income Tax Provision
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
F-39 |
|
Table of Contents |
Earnings per Share
Earnings per share ("EPS") is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.
There were no contingent shares issuance arrangements, stock options or warrants which were issuable and could have potential dilutive effect to the earnings per share for the period ended October 31, 2020.
Coronavirus Pandemic (“COVID-19”)
In March 2020, the World Health Organization declared COVID-19 a pandemic. The global spread of COVID-19 has created significant volatility, uncertainty, and economic disruption. Governments in affected regions have implemented, and may continue to implement, safety precautions which include quarantines, travel restrictions, business closures, cancellations of public gatherings and other measures as they deem necessary. Many organizations and individuals, including the Company and its employees, are taking additional steps to avoid or reduce infection, including limiting travel and working from home. These measures are disrupting normal business operations both in and outside of affected areas and have had significant negative impacts on businesses and financial markets worldwide. We will continue to closely monitor the impact of COVID-19 on all aspects of our business, including the impacts to our employees, participants and suppliers; however, at this time, we are unable to estimate the ultimate impact the pandemic will have on our consolidated financial condition, results of operations or cash flows.
On March 27, 2020, the bipartisan Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into legislation. The CARES Act provides for $100 billion to healthcare providers, including hospitals on the front lines of the COVID-19 pandemic.
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption.
Note 3 – Going Concern
The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the consolidated financial statements, the Company had an accumulated deficit at October 31, 2020, a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
F-40 |
|
Table of Contents |
The Company is generating sufficient revenue; however, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management intends to raise additional funds by way of a private or public offering. While the Company believes in the viability of its operations and generation of sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.
The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4 – Accounts Receivable
The Company provides adult day-care services to participants on the basis of capitated or fixed fees per participant that are paid monthly by Medicaid and private pay sources. The Company records accounts receivable at net realizable value, which includes an allowance for estimated uncollectible accounts. The allowance for uncollectible accounts reflects the Company’s best estimate of probable losses considering eligibility, historical experience, and existing economic conditions. Accounts are written off as bad debts when they are deemed uncollectible based upon individual credit evaluations and specific circumstances underlying the accounts.
The table below details the accounts receivable and allowance for doubtful accounts for the years ended October 31, 2020 and 2019:
|
|
10/31/2020 |
|
|
10/31/2019 |
|
||
Accounts Receivable |
|
$ | 7,181 |
|
|
$ | 9,182 |
|
Allowance for Doubtful Accounts |
|
|
- |
|
|
|
- |
|
|
|
$ | 7,181 |
|
|
$ | 9,182 |
|
Note 5 – Property and equipment
Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are recorded using the straight-line method over the estimated useful lives.
Property and equipment were comprised of the following as of October 31, 2020 and 2019:
|
|
October 31, 2020 |
|
|
October 31, 2019 |
|
||
Buildings |
|
$ | 776,938 |
|
|
$ | - |
|
Building Improvements |
|
|
18,292 |
|
|
|
- |
|
Vehicles |
|
|
419,263 |
|
|
|
419,263 |
|
|
|
|
1,214,493 |
|
|
|
419,263 |
|
Less Accumulated Depreciation |
|
|
(168,998 | ) |
|
|
(76,227 | ) |
Total Property, Plant and Equipment |
|
$ | 1,045,495 |
|
|
$ | 343,036 |
|
Depreciation of $92,771 and $76,262 was recorded during the fiscal years ended October 31, 2020 and 2019, respectively. Land is not depreciated, and construction in progress is not depreciated until ready for service. Costs of enhancements or modifications that substantially extend the capacity or useful life of an asset are capitalized and depreciated accordingly. Ordinary repairs and maintenance are expensed as incurred.
When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheets, and the resulting gain or loss, if any, is reflected in the consolidated statements of operations.
F-41 |
|
Table of Contents |
Note 6 – Operating Leases
In October 2018, the Company entered a 48-month office lease that commenced on October 1, 2018. The lease provides for approximately 2,000 square feet of office space. This office space serves as the offices of one of its subsidiaries., as well as the principal offices of the Company’s operating subsidiaries. The Company believes this space is more than it will need in the future as it anticipates a majority of its workforce will continue working remotely even after workplace and social distancing restrictions are lifted.
In January 2020, the Company entered a 51-month office lease that commenced on January 1, 2020. The lease provides for approximately 13,000 square feet of office space. This office space serves as a day center, as well as the principal offices of the Company and for the Company’s operating subsidiaries. The Company believes this space is more than it will need in the near future.
In January 2020, the Company entered a 60-month lease that commenced on January 1, 2020. The lease provides for approximately 8,000 square feet of space. This space will serve as a day center as the Company expands it services to new areas. The Company believes this space is adequate for a day center when it is available to be opened after workplace and social distancing restrictions are lifted.
Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.
The components of lease expense and supplemental cash flow information related to leases for the period are as follows:
|
|
Year Ended |
|
|||||
|
|
October 31, 2020 |
|
|
October 31, 2019 |
|
||
Lease Cost |
|
|
|
|
|
|
||
Operating lease cost (included in general and administrative in the Company’s consolidated statement of operations) |
|
$ | 138,135 |
|
|
$ | 18,000 |
|
|
|
|
|
|
|
|
|
|
Other Information |
|
|
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities for the year ended October 31, 2020 |
|
$ | 138,135 |
|
|
$ | 18,000 |
|
Weighted average remaining lease term – operating leases (in years) |
|
3.49 years |
|
|
2.92 years |
|
||
Average discount rate – operating leases |
|
|
5.00 | % |
|
|
5.00 | % |
F-42 |
|
The supplemental balance sheet information related to leases for the period is as follows:
|
|
October 31, 2020 |
|
|
October 31, 2019 |
|
||
Operating leases |
|
|
|
|
|
|
||
Long-term right-of-use assets |
|
$ | 667,038 |
|
|
$ | 77,017 |
|
|
|
|
|
|
|
|
|
|
Short-term operating lease liabilities |
|
$ | 169,725 |
|
|
$ | 20,606 |
|
Long-term operating lease liabilities |
|
|
497,313 |
|
|
|
56,411 |
|
Total operating lease liabilities |
|
$ | 667,038 |
|
|
$ | 77,017 |
|
Maturities of the Company’s undiscounted lease liabilities are as follows:
Year Ending |
|
Operating Leases |
|
|
2021 |
|
$ | 188,547 |
|
2022 |
|
|
216,608 |
|
2023 |
|
|
202,438 |
|
2024 |
|
|
115,206 |
|
2025 |
|
|
8,000 |
|
Total lease payments |
|
|
730,799 |
|
Less: Imputed interest/present value discount |
|
|
(63,761 | ) |
Present value of lease liabilities |
|
$ | 667,038 |
|
Lease expenses were $87,119 and $35,606 during the years ended October 31, 2020 and 2019, respectively.
Note 7 – Long-Term Debt
Long-term debt consisted of the following as of October 31, 2020 and 2019:
Description |
|
October 31, 2020 |
|
|
October 31, 2019 |
|
||
Secured Term Loans |
|
$ | 639,792 |
|
|
$ | 356,222 |
|
Mortgage Loan |
|
|
441,536 |
|
|
|
- |
|
Total Debt |
|
|
1,081,328 |
|
|
|
356,222 |
|
Less Current Portion |
|
|
52,435 |
|
|
|
70,391 |
|
Long-Term Debt |
|
$ | 1,028,893 |
|
|
$ | 285,831 |
|
During the 2019 fiscal year, the Company entered into nine loans payable to acquire vehicles. These loans are all secured by the vehicles. The interest rates range from 5.90% to 9.94% and had terms from 60 months to 75 months. The monthly payments on these loans totaled $7,037 per month.
On July 14, 2020, the Company acquired a building from a related not-for-profit entity at its historical cost and assumed the mortgage payable on the property. The outstanding balance of the mortgage was $444,448. The interest rate on this note is 6.0% and the monthly payment is $3,270. The note matures in February 2030 with a balloon payment due of approximately $290,000.
Aggregate maturities of the total debt outstanding at October 31, 2020, were as follows:
Year |
|
Amount |
|
|
2021 |
|
$ | 52,435 |
|
2022 |
|
|
56,665 |
|
2023 |
|
|
61,037 |
|
2024 |
|
|
43,649 |
|
2025 |
|
|
23,095 |
|
Thereafter |
|
|
844,447 |
|
Total |
|
$ | 1,081,328 |
|
F-43 |
|
Table of Contents |
Note 8 – Related Party Transactions
From time to time, a related entity advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.
During 2020 and 2019, respectively, a related not-for-profit entity advanced the Company $68,814 and $0.
Note 9 – Stockholder’s Equity
Shares Authorized
The Company is authorized to issue 100,000,000 shares of Common Stock, par value $0.0001 per share.
Common Stock
On April 1, 2019, the Company issued 5,160,000 shares of common stock to the officers and directors of the Company at $0.0001 per share, or a value of $5,160 as founder shares. The Company recognized $5,160 in compensation expense.
On December 27, 2019, the Company issued 60,000,000 shares of common stock in share exchange agreements for the acquisition of Prudent Senior Services of Georgia, Inc, Nemicare, Inc. and Golden Sun, Inc. These shares of common stock were valued at par of $0.0001 for a total of $60,000. This transaction is being treated as a merger of companies under common control. The Company will be the accounting survivor, and all operations of it and its subsidiaries will be merged into the Company.
On January 1, 2020, the Company issued 20,000 shares of common stock in a share exchange agreement for the acquisition of AHSTY NEMT, LLC. These shares of common stock were valued at par of $0.0001 for a total of $20. This transaction is being treated as a merger of companies under common control. The Company will be the accounting survivor, and all operations of it and its subsidiaries will be merged into the Company.
During the fiscal year of 2020, the Company issued 434,000 shares of common stock to nine individuals at $1.00 per share for $434,000 in cash.
On January 23, 2020, the Company issued 41,000 shares of common stock to three individuals for services rendered. These shares were valued at $1.00 per share and the Company recognized $41,000 in consulting expenses.
On June 1, 2020, the Company issued 55,000 shares of common stock in a share exchange agreement for the acquisition of Golden Sun NEMT, LLC. These shares of common stock were valued at par of $0.0001 for a total of $55. This transaction is being treated as a merger of companies under common control. The Company will be the accounting survivor, and all operations of it and its subsidiaries will be merged into the Company.
As of October 31, 2020, the Company had a total of 65,710,000 shares of common stock outstanding.
Note 10 – Earnings per share
Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding options, using the treasury stock method and the average market price of the Company’s common stock during the applicable period.
As of October 31, 2020 and 2019, there were zero common share equivalents, excluded from the calculation of diluted EPS.
F-44 |
|
Table of Contents |
The following table sets forth the computation of basic and diluted net loss per common unit for the years ended October 31, 2020 and 2019:
|
|
10/31/2020 |
|
|
10/31/2019 |
|
||
Net Loss |
|
$ | (468,443 | ) |
|
$ | (38,293 | ) |
Weighted Average Common Share Outstanding (Basic) |
|
|
56,098,836 |
|
|
|
3,011,178 |
|
Earnings Per Share - Basic |
|
$ | (0.01 | ) |
|
$ | (0.01 | ) |
|
|
|
|
|
|
|
|
|
Dilutive Shares |
|
|
- |
|
|
|
- |
|
Weighted Average Common Share Outstanding (Diluted) |
|
|
56,098,836 |
|
|
|
3,011,178 |
|
Earnings Per Share - Diluted |
|
$ | (0.01 | ) |
|
$ | (0.01 | ) |
Note 11 – Income taxes
The Company’s effective income tax rate for fiscal 2020 and fiscal 2019 are 27%, and 27%, respectively. Actual income tax expense differs from the amount computed by applying the applicable U.S. federal statutory corporate income tax rate of 21% in fiscal 2020 and 2019. The significant differences between the effective rate and statutory rate is due to state taxes, nondeductible items, and prior-year true-ups.
The effective tax rate of the Company’s provision (benefit) for income taxes differs from the federal statutory rate as follows:
Tax Reconciliations |
|
10/31/2020 |
|
|
10/31/2019 |
|
||
Tax at Statutory Rate |
|
$ | (126,480 | ) |
|
$ | (10,339 | ) |
Meals and Entertainment |
|
|
1,912 |
|
|
|
1,883 |
|
Depreciation |
|
|
25,048 |
|
|
|
19,511 |
|
Change in Valuation of Allowance |
|
|
99,520 |
|
|
|
(11,055 | ) |
Tax Provision |
|
$ | - |
|
|
$ | - |
|
The significant components of deferred tax assets and liabilities were as follows for the fiscal years ended October 31, 2020 and 2019:
Deferred Tax Assets |
|
10/31/2020 |
|
|
10/31/2019 |
|
||
(21% Federal, 6% Average Corporate Rate) |
|
|
|
|
||||
Net Operating Loss Carry-forwards |
|
$ | 150,456 |
|
|
$ | 58,648 |
|
Depreciation |
|
|
(31,310 | ) |
|
|
(39,022 | ) |
Valuation Allowance |
|
|
(119,146 | ) |
|
|
(19,626 | ) |
Deferred Tax Assets |
|
$ | - |
|
|
$ | - |
|
F-45 |
|
Table of Contents |
As of October 31, 2020 and October 31, 2019, the Company had net operating loss carry-forwards for U.S. federal income tax purposes of approximately $31,168,823 and $30,741,241, respectively.
The valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. This is necessary due to the Company’s continued operating losses and the uncertainty of the Company’s ability to utilize all of the net operating loss carry-forwards before they will expire through the year 2040.
The Company is subject to income tax in the U.S. federal jurisdiction. The Company has not been audited by the U.S. Internal Revenue Service in connection with income taxes. The Company’s tax years beginning with the year ended October 31, 2017 through October 31, 2020 generally remain open to examination by the Internal Revenue Service until its net operating loss carryforwards are utilized and the applicable statutes of limitation have expired.
Note 12 – Subsequent Events
Management has evaluated subsequent events, in accordance with FASB ASC Topic 855, “Subsequent Events,” through the date these consolidated financial statements were issued and noted no material subsequent events other than disclosed herein.
On November 24, 2020, all of the Company’s assets, including each of its operational subsidiaries, were acquired by Long Term Care Operations 360, Inc., and those operations and assets were merged into the operations of Long Term Care Operations 360, Inc.
F-46 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information and related notes present the historical condensed combined financial information of Long Term Care Operations 360, Inc. (hereinafter referred to as the “Company”, “we,” “our,” “us” and similar terms unless the context indicates otherwise) and Prudent Senior Services of America, Inc (“PSSA”) after giving effect to the Company’s acquisition of PSSA that was completed on November 24, 2020 (the “Acquisition Date”).
On November 24, 2020, the Company entered into a purchase agreement (the “Acquisition”) with PSSA, pursuant to which the Company acquired all of the assets of PSSA, including each of its subsidiaries, in consideration of the issuance of 52,350,000 shares of common stock of the Company to the shareholders of PSSA. PSSA has merged its assets and operations into the Company, and the Company has taken over the operations and business plan of PSSA.
Since the Company and PSSA were entities under common control prior to the Acquisition, the transaction is accounted for as a restructuring transaction. The Company has recast prior period financial statements to reflect the conveyance of PSSA’s common shares as if the restructuring transaction had occurred as of the earliest date presented of the financial statements.
The unaudited pro forma condensed combined financial information gives effect to the Acquisition based on the assumptions, reclassifications and adjustments described in the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined statements of operations for the years ended October 31, 2020 and 2019, have been prepared giving effect to the combination with PSSA as if the transaction had occurred on November 1, 2018, the beginning of the earliest period presented. The unaudited pro forma condensed combined balance sheet gives effect to combination with PSSA as if the transaction had occurred as of the earliest date presented of the financial statements.
The unaudited pro forma adjustments are not necessarily indicative of or intended to represent the results that would have been achieved had the transaction been consummated as of the dates indicated or that may be achieved in the future. The actual results reported by the combined company in periods following the merger may differ significantly from those reflected in these unaudited pro forma condensed combined financial information for a number of reasons, including cost saving synergies from operating efficiencies and the effect of the incremental costs incurred to integrate the two companies.
The unaudited pro forma condensed combined financial information should be read in conjunction with our historical consolidated financial statements and accompanying notes of both the Company and PSSA for the years ended October 31, 2020 and 2019, included with this Prospectus.
F-47 |
|
LONG TERM CARE OPERATIONS 360, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
October 31, 2020 and 2019
Unaudited Pro Forma Combined Statement of Operations for the Years Ended October 31, 2020 |
|
P-2 |
|
|
|
|
|
Unaudited Pro Forma Combined Statement of Operations for the Year Ended October 31, 2019 |
|
P-3 |
|
|
|
|
|
|
P-4 |
|
P-1 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC.
Unaudited Pro Forma Combined Statement of Operations
For the Year Ended October 31, 2020
(Unaudited)
P-2 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC.
Unaudited Pro Forma Combined Statement of Operations
For the Year Ended October 31, 2019
(Unaudited)
P-3 |
|
Table of Contents |
LONG TERM CARE OPERATIONS 360, INC.
Notes to Unaudited Pro Forma Combined and Consolidated Financial Statements
Note 1 – Pro Forma Adjustments
1) |
Represents the pro forma adjustment to record the acquisition of Prudent Senior Services of America, Inc and its wholly-owned subsidiaries and the issuance of 52,350,000 shares of common stock of Long Term Care Operations 360, Inc. and to remove the common stock and additional paid-in capital of Prudent Senior Services of America, Inc |
P-4 |
|
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Securities and Exchange Commission Registration Fee |
|
$ | 1,181.01 |
|
Transfer/Edgar Agent Fees |
|
|
5,000.00 |
|
Accounting Fees and Expenses |
|
|
15,000.00 |
|
Legal Fees |
|
|
15,000.00 |
|
Total |
|
$ | 36,181.40 |
|
All amounts are estimates other than the Commission’s registration fee. We are paying all expenses of the offering listed above.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to Section 78.7502 of the Nevada Revised Statutes, we have the power to indemnify any person made a party to any lawsuit by reason of being a director or officer of the Company, or serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Our articles of incorporation provide that the Company shall indemnify its directors and officers to the fullest extent permitted by Nevada law.
With regard to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the common shares being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case.
ITEM 15. RECENT SALE OF UNREGISTERED SECURITIES
On September 3, 2020, the Company issued the former custodian and director, Barbara Bauman, 4,000,000 shares of common stock for settlement of advances to the Company totaling $12,461. These shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as there was no general solicitation, and the transaction did not involve a public offering.
On November 24, 2020, the Company issued 52,350,000 shares of common stock to the twelve shareholders of Prudent Senior Services of America, Inc, a Georgia corporation (“PSSA”), in consideration of the Company’s purchase of all assets and operational subsidiaries of PSSA from PSSA. These shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as there was no general solicitation, and the transaction did not involve a public offering.
51 |
|
Table of Content |
* filed herewith
52 |
|
Table of Content |
The undersigned registrant hereby undertakes to:
(1) |
File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: |
|
(i) |
Include any prospectus required by Section 10(a)(3) of the Securities Act; |
|
|
|
|
(ii) |
Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; |
|
(iii) |
Include any additional or changed material information on the plan of distribution. |
(2) |
For determining liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement of the securities offered, and the offering of the securities at that time shall be deemed to be the initial bona fide offering. |
|
|
(3) |
File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. |
|
|
(4) |
For determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
|
(i) |
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
|
|
|
|
(ii) |
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
|
|
|
|
(iii) |
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
|
|
|
|
(iv) |
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
That, for the purpose of determining liability under the Securities Act to any purchaser:
Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
53 |
|
Table of Content |
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Chamblee, State of Georgia, on May 10, 2021.
|
Long Term Care Operations 360, Inc. |
|
|
|
|
|
|
|
By: |
/s/ Sameer Shah |
|
|
|
Sameer Shah |
|
|
|
President & CEO |
|
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
Name |
|
Title |
|
Date |
|
|
|
|
|
|
|
/s/ Sameer Shah |
|
President, Principal Executive Officer, and Member of the Board of Directors |
|
May 10, 2021 |
|
Sameer Shah |
|
|
|
|
|
|
|
|
|
|
|
/s/ Wooiyi Yin |
|
CFO, Principal Financial Officer, |
|
May 10, 2021 |
|
Wooiyi Yin |
|
Principal Accounting Officer, Member of the Board of Directors |
|
|
|
54 |
EXHIBIT 3.1
State Seal |
|
ROSS MILLER Secretary of State 204 North Carson Street, Suite 4 Carson City, Nevada 89701-4520 (775) 684-5708 Website: www.nvsos.gov |
|
Articles of Incorporation (PURSUANT TO NRS CHAPTER 78) |
USE BLACK INK ONLY- DO NOT HIGHLIGHT |
ABOVE SPACE IS FOR OFFICE USE ONLY |
1. Name of Corporation: |
BELLA COSTA DESIGNS INC. |
2. Registered Agent for Service of Process: (check only one box)
|
☐ Commercial Registered Agent: INCORP SERVICES, INC. |
||||
Name |
|||||
|
|||||
Noncommercial Registered Agent |
|
OR |
|
Office or Position with Entity |
|
(name and address below) |
|
|
|
(name and address below) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Noncommercial Registered Agent |
|
OR |
|
Name of Title of Office or Other Position with Entity |
|
|
|
|
|
|
|
|
|
Nevada |
|
|
|
Street Address |
|
City |
|
Zip Code |
|
|
|
|
|
|
|
|
|
Nevada |
|
|
|
Mailing Address (if different from street address) |
|
City |
|
Zip Code |
3. Authorized Stock: (number of shares corporation is authorized to issue) |
Number of shares with par value: |
75000000 |
Par value per share:
|
$ 0.0010 |
Number of shares without par value: |
0 |
4. Names and Addresses of the Board of Directors/Trustees: (each Director/Trustee must be a natural person at least 18 years of age; attach additional page if more than two directors/trustees) |
1) NELSON PEREZ Name 2360 CORPORATE CIRCLE HENDERSON NV 89074-7739 Street Address City State Zip Code
2) _______________________________________________________________________ Name _________________________________ _____________________ _______ _________ Street Address City State Zip Code |
5. Purpose: (optional; required only if Benefit Corporation status selected) |
The purpose of the corporation shall be:
ANY LEGAL PURPOSE |
6. Benefit Corporation: (see instructions) ☐ Yes |
8. Certificate of Acceptance of Appointment of Registered Agent: |
I hereby accept appointment as Registered Agent for the above named Entity.
X /s/ INCORP SERVICES, INC. 09/15/2014 Authorized Signature of Registered Agent or On Behalf or Registered Agent Entity Date |
This form must be accompanied by appropriate fees |
Nevada Secretary of State NRS 78 Articles Revised: 11-13-13 |
EXHIBIT 3.2
|
|
BARBARA K. CEGAVSKE Secretary of State 202 North Carson Street Carson City, Nevada 89701-4201 (775) 684-5708 Website: www.nvsos.gov |
|
Certificate of Amendment (PURSUANT TO NRS 78.385 AND 78.390) |
USE BLACK INK ONLY - DO NOT HIGHLIGHT |
|
ABOVE SPACE IS FOR OFFICE USE ONLY |
Certificate of Amendment to Articles of Incorporation For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
*If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
This form must be accompanied by appropriate fees. |
|
Nevada Secretary of State Amend Profit-After |
|
|
Revised: 1-5-15 |
Reset |
|
Bella Costa Designs Inc.
Exhibit A to Certificate of Amendment
On the effective day of this Certificate of Amendment (the “Effective Time”), every one (1) shares of Common Stock issued and outstanding immediately prior to the Effective Time (“Old Common Stock”) shall automatically be combined, without any action on the part of the holder thereof, into ten (10) validly issued, fully paid and non-assessable share of Common Stock (“New Common Stock”), subject to the treatment of fractional share interests as described below (the “Forward Stock Split”). No fractional shares of Common Stock shall be issued in connection with the Forward Stock Split. No stockholder of the Corporation shall transfer any fractional shares of Common Stock. The Corporation shall not recognize on its stock record books any purported transfer of any fractional share of Common Stock. A holder of Old Common Stock who otherwise would be entitled to receive fractional shares of New Common Stock because they hold a number of shares of Old Common Stock not evenly divisible by the Forward Stock Split ratio will be entitled to one share of New Common Stock, on the date of the Effective Time of the Forward Stock Split. Each certificate that immediately prior to the Effective Time represented shares of Old Common Stock (“Old Certificates”), shall thereafter represent that number of shares of New Common Stock into which the shares of Old Common Stock represented by the Old Certificate shall have been combined.
EXHIBIT 3.3
|
BARBARA K. CEGAVSKE
Secretary of State 202 North Carson Street Carson City, Nevada 89701-4201 (775) 684-5708 Website: www.nvsos.gov www.nvsilverflume .go
|
Filed in the Office of
Secretary of State State Of Nevada |
Business Number E0473412014-0 |
Filing Number 20200976208 |
|||
Filed On
10/13/2020 14:29:47 PM |
|||
Number of Pages
3 |
Profit Corporation: Certificate of Amendment (PURSUANT TO NRS 78.380 & 78.385/78.39o) Certificate to Accompany Restated Articles or Amended and Restated Articles (PURSUANT TO NRS 78.403) Officer's Statement (PURSUANT TO NRS 80.030) |
TYPE OR PRINT - USE DARK INK ONLY - DO NOT HIGHLIGHT
|
Profit Corporation:
Certificate of Amendment (PURSUANT TO NRS 18.380 & 78.385/78.390) Certificate to Accompany Restated Articles or Amended and Restated Articles (PURSUANT TO NRS 78.403) Officer's Statement (PURSUANT TO NRS 80.030) |
4. Effective date and Time: (Optional) |
|
|
Date: |
10/13/2020 |
|
Time: |
|
|
(must not be later than 90 days after the certificate is filed) |
6. Signature: (Required) |
X |
Sameer Shah |
|
Officer |
Signature of Officer, lncorporator or Authorized Signer |
Title |
|||
*If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations or restrictions on the voting power thereof. |
Please include any required or optional information in space below: (attach additional page(s) if necessary) |
|
|
|
Filed in the Office of
Secretary of State State Of Nevada |
Business Number E0473412014-0 |
Filing Number 20200976208 |
|||
Filed On
10/13/2020 14:29:47 PM |
|||
Number of Pages
3 |
EXHIBIT A
Amendment to Articles of Incorporation
Article 1 of the corporation’s articles of incorporation is amended as follows:
The name of the corporation shall be Long Term Care Operations 360, Inc.
Article 3 of the corporation’s articles of incorporation is amended as follows:
The corporation is authorized to issue two classes of stock, common stock and preferred stock, respectively. The number of shares of common stock authorized to be issued is 200,000,000 shares, par value $0.0001 per share, and the number of shares of preferred stock authorized to be issued is 10,000,000 shares, par value $0.0001 per share.
Subject to the provisions of Chapter 78 of the Nevada Revised Statutes, shares of preferred stock may be issued from time to time in one or more series. The Board of Directors shall determine the designation and rights of each series and the authorized number of shares of each series. The Board of Directors of the corporation is hereby authorized by resolution or resolutions to fix the voting rights, if any, designations, powers, preferences and the relative, participation, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, of any series of preferred stock, to fix the number of shares constituting such series, and to increase or decrease the number of shares of any such series (but not below the number of shares thereof then outstanding). If the number of shares of any series of preferred stock shall be decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.
A reverse stock split of 1 post-split share of common stock for each 25 shares of common stock outstanding or held in treasury immediately prior to such time, shall be effected upon announcement of such reverse stock split by the Financial Industry Regulatory Authority, rounded up to the nearest whole share, which reverse stock split shall automatically and without any action on the part of the holders thereof occur (the “Reverse Stock Split”). The par value of the common stock shall not be affected. This conversion shall apply to all shares of common stock. No fractional shares of common stock shall be issued upon the Reverse Stock Split or otherwise, and shares shall be rounded up to the nearest whole share. All certificates representing shares of common stock outstanding immediately prior to the filing of this amendment to the Articles of Incorporation shall immediately after this amendment represent instead the number of shares of common stock as provided above. Notwithstanding the foregoing, any holder of common stock may (but shall not be required to) surrender his, her or its stock certificate or certificates to the corporation, and upon such surrender the corporation will issue a certificate for the correct number of shares of common stock to which the holder is entitled under the provisions of this amendment. Shares of common stock that were outstanding prior to the filing of this amendment, and that are not outstanding after and as a result of the filing of this amendment, shall resume the status of authorized but unissued shares of common stock.
EXHIBIT 3.4
BYLAWS
OF
BELLA COSTA DESIGNS INC.
(the "Corporation")
ARTICLE I: MEETINGS OF SHAREHOLDERS
Section 1 - Annual Meetings
The annual meeting of the shareholders of the Corporation shall be held at the time fixed, from time to time, by the Board of Directors.
Section 2 - Special Meetings
Special meetings of the shareholders may be called by the Board of Directors or such person or persons authorized by the Board of Directors.
Section 3 - Place of Meetings
Meetings of shareholders shall be held at the registered office of the Corporation, or at such other places, within or without the State of Nevada as the Board of Directors may from time to time fix.
Section 4 - Notice of Meetings
A notice convening an annual or special meeting which specifies the place, day, and hour of the meeting, and the general nature of the business of the meeting, must be faxed, personally delivered or mailed postage prepaid to each shareholder of the Corporation entitled to vote at the meeting at the address of the shareholder as it appears on the stock transfer ledger of the Corporation, at least ten (10) days prior to the meeting. Accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting by, a shareholder will not invalidate the proceedings at that meeting.
Section 5 - Action Without a Meeting
Unless otherwise provided by law, any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting, without prior notice and without a vote if written consents are signed by shareholders representing a majority of the shares entitled to vote at such a meeting, except however, if a different proportion of voting power is required by law, the Articles of Incorporation or these Bylaws, than that proportion of written consents is required. Such written consents must be filed with the minutes of the proceedings of the shareholders of the Corporation.
Section 6 - Quorum
a) No business, other than the election of the chairman or the adjournment of the meeting, will be transacted at an annual or special meeting unless a quorum of shareholders, entitled to attend and vote, is present at the commencement of the meeting, but the quorum need not be present throughout the meeting.
b) Except as otherwise provided in these Bylaws, a quorum is two persons present and being, or representing by proxy, shareholders of the Corporation.
c) If within half an hour from the time appointed for an annual or special meeting a quorum is not present, the meeting shall stand adjourned to a day, time and place as determined by the chairman of the meeting.
1 |
|
Section 7 - Voting
Subject to a special voting rights or restrictions attached to a class of shares, each shareholder shall be entitled to one vote for each share of stock in his or her own name on the books of the corporation, whether represented in person or by proxy.
Section 8 - Motions
No motion proposed at an annual or special meeting need be seconded.
Section 9 - Equality of Votes
In the case of an equality of votes, the chairman of the meeting at which the vote takes place is not entitled to have a casting vote in addition to the vote or votes to which he may be entitled as a shareholder of proxy holder.
Section 10 - Dispute as to Entitlement to Vote
In a dispute as to the admission or rejection of a vote at an annual or special meeting, the decision of the chairman made in good faith is conclusive.
Section 11 - Proxy
a) Each shareholder entitled to vote at an annual or special meeting may do so either in person or by proxy. A form of proxy must be in writing under the hand of the appointer or of his or her attorney duly authorized in writing, or, if the appointer is a corporation, either under the seal of the corporation or under the hand of a duly authorized officer or attorney. A proxy holder need not be a shareholder of the Corporation.
b) A form of proxy and the power of attorney or other authority, if any, under which it is signed or a facsimiled copy thereof must be deposited at the registered office of the Corporation or at such other place as is specified for that purpose in the notice convening the meeting. In addition to any other method of depositing proxies provided for in these Bylaws, the
Directors may from time to time by resolution make regulations relating to the depositing of proxies at a place or places and fixing the time or times for depositing the proxies not exceeding 48 hours (excluding Saturdays, Sundays and holidays) preceding the meeting or adjourned meeting specified in the notice calling a meeting of shareholders.
ARTICLE II: BOARD OF DIRECTORS
Section 1 - Number, Term, Election and Qualifications
a) The first Board of Directors of the Corporation, and all subsequent Boards of the Corporation, shall consist of not less than one (1) and not more than nine (9) directors. The number of Directors may be fixed and changed from time to time by ordinary resolution of the shareholders of the Corporation.
b) The first Board of Directors shall hold office until the first annual meeting of shareholders and until their successors have been duly elected and qualified or until there is a decrease in the number of directors. Thereinafter, Directors will be elected at the annual meeting of shareholders and shall hold office until the annual meeting of the shareholders next succeeding his or her election, or until his or her prior death, resignation or removal. Any Director may resign at any time upon written notice of such resignation to the Corporation.
2 |
|
c) A casual vacancy occurring in the Board may be filled by the remaining Directors.
d) Between successive annual meetings, the Directors have the power to appoint one or more additional Directors but not more than 1/2 of the number of Directors fixed at the last shareholder meeting at which Directors were elected. A Director so appointed holds office only until the next following annual meeting of the Corporation, but is eligible for election at that meeting. So long as he or she is an additional Director, the number of Directors will be increased accordingly.
e) A Director is not required to hold a share in the capital of the Corporation as qualification for his or her office.
Section 2 - Duties, Powers and Remuneration
a) The Board of Directors shall be responsible for the control and management of the business and affairs, property and interests of the Corporation, and may exercise all powers of the Corporation, except for those powers conferred upon or reserved for the shareholders or any other persons as required under Nevada state law, the Corporation's Articles of Incorporation or by these Bylaws.
b) The remuneration of the Directors may from time to time be determined by the Directors or, if the Directors decide, by the shareholders.
Section 3 - Meetings of Directors
a) The President of the Corporation shall preside as chairman at every meeting of the Directors, or if the President is not present or is willing to act as chairman, the Directors present shall choose one of their number to be chairman of the meeting.
b) The Directors may meet together for the dispatch of business, and adjourn and otherwise regulate their meetings as they think fit. Questions arising at a meeting must be decided by a majority of votes. In case of an equality of votes the chairman does not have a second or casting vote. Meetings of the Board held at regular intervals may be held at the place and time upon the notice (if any) as the Board may by resolution from time to time determine.
c) A Director may participate in a meeting of the Board or of a committee of the Directors using conference telephones or other communications facilities by which all Directors participating in the meeting can hear each other and provided that all such Directors agree to such participation. A Director participating in a meeting in accordance with this Bylaw is deemed to be present at the meeting and to have so agreed. Such Director will be counted in the quorum and entitled to speak and vote at the meeting.
d) A Director may, and the Secretary on request of a Director shall, call a meeting of the Board. Reasonable notice of the meeting specifying the place, day and hour of the meeting must be given by mail, postage prepaid, addressed to each of the Directors and alternate Directors at his or her address as it appears on the books of the Corporation or by leaving it at his or her usual business or residential address or by telephone, facsimile or other method of transmitting legibly recorded messages. It is not necessary to give notice of a meeting of Directors to a Director immediately following a shareholder meeting at which the Director has been elected, or is the meeting of Directors at which the Director is appointed.
e) A Director of the Corporation may file with the Secretary a document executed by him waiving notice of a past, present or future meeting or meetings of the Directors being, or required to have been, sent to him and may at any time withdraw the waiver with respect to meetings held thereafter. After filing such waiver with respect to future meetings and until the waiver is withdrawn no notice of a meeting of Directors need be given to the Director. All meetings of the Directors so held will be deemed not to be improperly called or constituted by reason of notice not having been given to the Director.
3 |
|
f) The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors and if not so fixed is a majority of the Directors or, if the number of Directors is fixed at one, is one Director.
g) The continuing Directors may act notwithstanding a vacancy in their body but, if and so long as their number is reduced below the number fixed pursuant to these Bylaws as the necessary quorum of Directors, the continuing Directors may act for the purpose of increasing the number of Directors to that number, or of summoning a shareholder meeting of the Corporation, but for no other purpose.
h) All acts done by a meeting of the Directors, a committee of Directors, or a person acting as a Director, will, notwithstanding that it be afterwards discovered that there was some defect in the qualification, election or appointment of the Directors, shareholders of the committee or person acting as a Director, or that any of them were disqualified, be as valid as if the person had been duly elected or appointed and was qualified to be a Director.
i) A resolution consented to in writing, whether by facsimile or other method of transmitting legibly recorded messages, by all of the Directors is as valid as if it had been passed at a meeting of the Directors duly called and held. A resolution may be in two or more counterparts which together are deemed to constitute one resolution in writing. A resolution must be filed with the minutes of the proceedings of the directors and is effective on the date stated on it or on the latest date stated on a counterpart.
j) All Directors of the Corporation shall have equal voting power.
Section 4 - Removal
One or more or all the Directors of the Corporation may be removed with or without cause at any time by a vote of two-thirds of the shareholders entitled to vote thereon, at a special meeting of the shareholders called for that purpose.
Section 5 - Committees
a) The Directors may from time to time by resolution designate from among its members one or more committees, and alternate members thereof, as they deem desirable, each consisting of one or more members, with such powers and authority (to the extent permitted by law and these Bylaws) as may be provided in such resolution. Each such committee shall serve at the pleasure of the Board of Directors and unless otherwise stated by law, the Certificate of Incorporation of the Corporation or these Bylaws, shall be governed by the rules and regulations stated herein regarding the Board of Directors.
b) Each Committee shall keep regular minutes of its transactions, shall cause them to be recorded in the books kept for that purpose, and shall report them to the Board at such times as the Board may from time to time require. The Board has the power at any time to revoke or override the authority given to or acts done by any Committee.
4 |
|
ARTICLE III: OFFICERS
Section 1 - Number, Qualification, Election and Term of Office
a) The Corporation's officers shall have such titles and duties as shall be stated in these Bylaws or in a resolution of the Board of Directors which is not inconsistent with these Bylaws. The officers of the Corporation shall consist of a president, secretary, treasurer, and also may have one or more vice presidents, assistant secretaries and assistant treasurers and such other officers as the Board of Directors may from time to time deem advisable. Any officer may hold two or more offices in the Corporation, and may or may not also act as a Director.
b) The officers of the Corporation shall be elected by the Board of Directors at the regular annual meeting of the Board following the annual meeting of shareholders.
c) Each officer shall hold office until the annual meeting of the Board of Directors next succeeding his or her election, and until his or her successor shall have been duly elected and qualified, subject to earlier termination by his or her death, resignation or removal.
Section 2 - Resignation
Any officer may resign at any time by giving written notice of such resignation to the Corporation.
Section 3 - Removal
Any officer appointed by the Board of Directors may be removed by a majority vote of the Board, either with or without cause, and a successor appointed by the Board at any time, and any officer or assistant officer, if appointed by another officer, may likewise be removed by such officer.
Section 4 - Remuneration
The remuneration of the Officers of the Corporation may from time to time be determined by the Directors or, if the Directors decide, by the shareholders.
Section 5 - Conflict of Interest
Each officer of the Corporation who holds another office or possesses property whereby, whether directly or indirectly, duties or interests might be created in conflict with his or her duties or interests as an officer of the Corporation shall, in writing, disclose to the President the fact and the nature, character and extent of the conflict and abstain from voting with respect to any resolution in which the officer has a personal interest.
ARTICLE IV: SHARES OF STOCK
Section 1 - Certificate of Stock
a) The shares of the Corporation shall be represented by certificates or shall be uncertificated shares.
b) Certificated shares of the Corporation shall be signed, either manually or by facsimile, by officers or agents designated by the Corporation for such purposes, and shall certify the number of shares owned by the shareholder in the Corporation. Whenever any certificate is countersigned or otherwise authenticated by a transfer agent or transfer clerk, and by a registrar, then a facsimile of the signatures of the officers or agents, the transfer agent or transfer clerk or the registrar of the Corporation may be printed or lithographed upon the certificate in lieu of the actual signatures. If the Corporation uses facsimile signatures of its officers and agents on its stock certificates, it cannot act as registrar of its own stock, but its transfer agent and registrar may be identical if the institution acting in those dual capacities countersigns or otherwise authenticates any stock certificates in both capacities. If any officer who has signed or whose facsimile signature has been placed upon such certificate, shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue.
5 |
|
c) If the Corporation issued uncertificated shares as provided for in these Bylaws, within a reasonable time after the issuance or transfer of such uncertificated shares, and at least annually thereafter, the Corporation shall send the shareholder a written statement certifying the number of shares owned by such shareholder in the Corporation.
d) Except as otherwise provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series shall be identical.
e) If a share certificate:
(i) is worn out or defaced, the Directors shall, upon production to them of the certificate and upon such other terms, if any, as they may think fit, order the certificate to be cancelled and issue a new certificate;
(ii) is lost, stolen or destroyed, then upon proof being given to the satisfaction of the Directors and upon and indemnity, if any being given, as the Directors think adequate, the Directors shall issue a new certificate; or
(iii) represents more than one share and the registered owner surrenders it to the Corporation with a written request that the Corporation issue in his or her name two or more certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the certificate so surrendered, the Corporation shall cancel the certificate so surrendered and issue new certificates in accordance with such request.
Section 2 - Transfers of Shares
a) Transfers or registration of transfers of shares of the Corporation shall be made on the stock transfer books of the Corporation by the registered holder thereof, or by his or her attorney duly authorized by a written power of attorney; and in the case of shares represented by certificates, only after the surrender to the Corporation of the certificates representing such shares with such shares properly endorsed, with such evidence of the authenticity of such endorsement, transfer, authorization and other matters as the Corporation may reasonably require, and the payment of all stock transfer taxes due thereon.
b) The Corporation shall be entitled to treat the holder of record of any share or shares as the absolute owner thereof for all purposes and, accordingly, shall not be bound to recognize any legal, equitable or other claim to, or interest in, such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law.
Section 3 - Record Date
a) The Directors may fix in advance a date, which must not be more than 60 days permitted by the preceding the date of a meeting of shareholders or a class of shareholders, or of the payment of a dividend or of the proposed taking of any other proper action requiring the determination of shareholders as the record date for the determination of the shareholders entitled to notice of, or to attend and vote at, a meeting and an adjournment of the meeting, or entitled to receive payment of a dividend or for any other proper purpose and, in such case, notwithstanding anything in these Bylaws, only shareholders of records on the date so fixed will be deemed to be the shareholders for the purposes of this Bylaw.
b) Where no record date is so fixed for the determination of shareholders as provided in the preceding Bylaw, the date on which the notice is mailed or on which the resolution declaring the dividend is adopted, as the case may be, is the record date for such determination.
6 |
|
Section 4 - Fractional Shares
Notwithstanding anything else in these Bylaws, the Corporation, if the Directors so resolve, will not be required to issue fractional shares in connection with an amalgamation, consolidation, exchange or conversion. At the discretion of the Directors, fractional interests in shares may be rounded to the nearest whole number, with fractions of 1/2 being rounded to the next highest whole number, or may be purchased for cancellation by the Corporation for such consideration as the Directors determine. The Directors may determine the manner in which fractional interests in shares are to be transferred and delivered to the Corporation in exchange for consideration and a determination so made is binding upon all shareholders of the Corporation. In case shareholders having fractional interests in shares fail to deliver them to the Corporation in accordance with a determination made by the Directors, the Corporation may deposit with the Corporation's Registrar and Transfer Agent a sum sufficient to pay the consideration payable by the Corporation for the fractional interests in shares, such deposit to be set aside in trust for such shareholders. Such setting aside is deemed to be payment to such shareholders for the fractional interests in shares not so delivered which will thereupon not be considered as outstanding and such shareholders will not be considered to be shareholders of the Corporation with respect thereto and will have no right except to receive payment of the money so set aside and deposited upon delivery of the certificates for the shares held prior to the amalgamation, consolidation, exchange or conversion which result in fractional interests in shares.
ARTICLE V: DIVIDENDS
a) Dividends may be declared and paid out of any funds available therefor, as often, in such amounts, and at such time or times as the Board of Directors may determine and shares may be issued pro rata and without consideration to the Corporation's shareholders or to the shareholders of one or more classes or series.
b) Shares of one class or series may not be issued as a share dividend to shareholders of another class or series unless such issuance is in accordance with the Articles of Incorporation and:
(i) a majority of the current shareholders of the class or series to be issued approve the issue; or
(ii) there are no outstanding shares of the class or series of shares that are authorized to be issued as a dividend.
ARTICLE VI: BORROWING POWERS
a) The Directors may from time to time on behalf of the Corporation:
(i) borrow money in such manner and amount, on such security, from such sources and upon such terms and conditions as they think fit,
(ii) issue bonds, debentures and other debt obligations either outright or as security for liability or obligation of the Corporation or another person, and
(iii) mortgage, charge, whether by way of specific or floating charge, and give other security on the undertaking, or on the whole or a part of the property and assets of the Corporation (both present and future).
b) A bond, debenture or other debt obligation of the Corporation may be issued at a discount, premium or otherwise, and with a special privilege as to redemption, surrender, drawing, allotment of or conversion into or exchange for shares or other securities, attending and voting at shareholder meetings of the Corporation, appointment of Directors or otherwise, and may by its terms be assignable free from equities between the Corporation and the person to whom it was issued or a subsequent holder thereof, all as the Directors may determine.
7 |
|
ARTICLE VII: FISCAL YEAR
The fiscal year end of the Corporation shall be fixed, and shall be subject to change, by the Board of Directors from time to time, subject to applicable law.
ARTICLE VIII: CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be prescribed and altered, from time to time, by the Board of Directors. The use of a seal or stamp by the Corporation on corporate documents is not necessary and the lack thereof shall not in any way affect the legality of a corporate document.
ARTICLE IX: AMENDMENTS
Section 1 - By Shareholders
All Bylaws of the Corporation shall be subject to alteration or repeal, and new Bylaws may be made by a majority vote of the shareholders at any annual meeting or special meeting called for that purpose.
Section 2 - By Directors
The Board of Directors shall have the power to make, adopt, alter, amend and repeal, from time to time, Bylaws of the Corporation.
ARTICLE X: DISCLOSURE OF INTEREST OF DIRECTORS
a) A Director who is, in any way, directly or indirectly interested in an existing or proposed contract or transaction with the Corporation or who holds an office or possesses property whereby, directly or indirectly, a duty or interest might be created to conflict with his or her duty or interest as a Director, shall declare the nature and extent of his or her interest in such contract or transaction or of the conflict with his or her duty and interest as a Director, as the case may be.
b) A Director shall not vote in respect of a contract or transaction with the Corporation in which he is interested and if he does so his or her vote will not be counted, but he will be counted in the quorum present at the meeting at which the vote is taken. The foregoing prohibitions do not apply to:
(i) a contract or transaction relating to a loan to the Corporation, which a Director or a specified corporation or a specified firm in which he has an interest has guaranteed or joined in guaranteeing the repayment of the loan or part of the loan;
(ii) a contract or transaction made or to be made with or for the benefit of a holding corporation or a subsidiary corporation of which a Director is a director or officer;
(iii) a contract by a Director to subscribe for or underwrite shares or debentures to be issued by the Corporation or a subsidiary of the Corporation, or a contract, arrangement or transaction in which a Director is directly or indirectly interested if all the other Directors are also directly or indirectly interested in the contract, arrangement or transaction;
(iv) determining the remuneration of the Directors;
(v) purchasing and maintaining insurance to cover Directors against liability incurred by them as Directors; or
(vi) the indemnification of a Director by the Corporation.
8 |
|
c) A Director may hold an office or place of profit with the Corporation (other than the office of Auditor of the Corporation) in conjunction with his or her office of Director for the period and on the terms (as to remuneration or otherwise) as the Directors may determine. No Director or intended Director will be disqualified by his or her office from contracting with the Corporation either with regard to the tenure of any such other office or place of profit, or as vendor, purchaser or otherwise, and, no contract or transaction entered into by or on behalf of the Corporation in which a Director is interested is liable to be voided by reason thereof.
d) A Director or his or her firm may act in a professional capacity for the Corporation (except as Auditor of the Corporation), and he or his or her firm is entitled to remuneration for professional services as if he were not a Director.
e) A Director may be or become a director or other officer or employee of, or otherwise interested in, a corporation or firm in which the Corporation may be interested as a shareholder or otherwise, and the Director is not accountable to the Corporation for remuneration or other benefits received by him as director, officer or employee of, or from his or her interest in, the other corporation or firm, unless the shareholders otherwise direct.
ARTICLE XI: ANNUAL LIST OF OFFICERS, DIRECTORS AND REGISTERED AGENT
The Corporation shall, within sixty days after the filing of its Articles of Incorporation with the Secretary of State, and annually thereafter on or before the last day of the month in which the anniversary date of incorporation occurs each year, file with the Secretary of State a list of its president, secretary and treasurer and all of its Directors, along with the post office box or street address, either residence or business, and a designation of its resident agent in the state of Nevada. Such list shall be certified by an officer of the Corporation.
ARTICLE XII: INDEMNITY OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
a) The Directors shall cause the Corporation to indemnify a Director or former Director of the Corporation and the Directors may cause the Corporation to indemnify a director or former director of a corporation of which the Corporation is or was a shareholder and the heirs and personal representatives of any such person against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him or them including an amount paid to settle an action or satisfy a judgment inactive criminal or administrative action or proceeding to which he is or they are made a party by reason of his or her being or having been a Director of the Corporation or a director of such corporation, including an action brought by the Corporation or corporation. Each Director of the Corporation on being elected or appointed is deemed to have contracted with the Corporation on the terms of the foregoing indemnity.
b) The Directors may cause the Corporation to indemnify an officer, employee or agent of the Corporation or of a corporation of which the Corporation is or was a shareholder (notwithstanding that he is also a Director), and his or her heirs and personal representatives against all costs, charges and expenses incurred by him or them and resulting from his or her acting as an officer, employee or agent of the Corporation or corporation. In addition the Corporation shall indemnify the Secretary or an Assistance Secretary of the Corporation (if he is not a full time employee of the Corporation and notwithstanding that he is also a Director), and his or her respective heirs and legal representatives against all costs, charges and expenses incurred by him or them and arising out of the functions assigned to the Secretary by the Corporation Act or these Articles and each such Secretary and Assistant Secretary, on being appointed is deemed to have contracted with the Corporation on the terms of the foregoing indemnity.
c) The Directors may cause the Corporation to purchase and maintain insurance for the benefit of a person who is or was serving as a Director, officer, employee or agent of the Corporation or as a director, officer, employee or agent of a corporation of which the Corporation is or was a shareholder and his or her heirs or personal representatives against a liability incurred by him as a Director, officer, employee or agent.
9 |
|
CERTIFIED TO BE THE BYLAWS OF:
BELLA COSTA DESIGNS INC.
per:
By: /s/ NELSON PEREZ Nelson Perez, Secretary |
10 |
EXHIBIT 5.1
OPINION AND CONSENT OF BRUNSON CHANDLER & JONES, PLLC
May 10, 2021
Long Term Care Operations 360, Inc.
5522 New Peachtree Rd., Suite 122
Chamblee, GA 30341
Re: Long Term Care Operations 360, Inc., a Nevada corporation (the “Company”)
Ladies and Gentlemen:
We refer to the Company’s Registration Statement on Form S-1 under the Securities Act of 1933, (the “Registration Statement”), which will be filed with the Securities and Exchange Commission on or about the date hereof. The Registration Statement relates to the registration of 1,100,000 issued and outstanding shares of the Company’s $0.0001 par value common stock (the “Common Stock”) held by certain selling stockholders (the “Selling Stockholder Shares”), and an additional 10,000,000 shares of Common Stock to be registered as part of an offer for sale by the Company (the “Offering Shares”).
Assumptions
In rendering the opinion expressed below, we have assumed, with your permission and without independent verification or investigation:
1. That all signatures on documents we have examined in connection herewith are genuine and that all items submitted to us as original are authentic and all items submitted to us as copies conform with originals;
2. Except for the documents stated herein, there are no documents or agreements between the Company and/or any third parties which would expand or otherwise modify the respective rights and obligations of the parties as set forth in the documents referred to herein or which would have an effect on the opinion;
3. That as to all factual matters, each of the representations and warranties contained in the documents referred to herein is true, accurate and complete in all material respects, and the opinion expressed herein is given in reliance thereon.
We have examined the following documents in connection with this matter:
1. The Company’s Articles of Incorporation, as amended and restated;
2. The Company’s Bylaws;
3. The Registration Statement; and
4. Unanimous Consents of the Company’s Board of Directors.
We have also examined various other documents, books, records, instruments and certificates of public officials, directors, executive officers and agents of the Company, and have made such investigations as we have deemed reasonable, necessary or prudent under the circumstances. Also, in rendering this opinion, we have reviewed various statutes and judicial precedent as we have deemed relevant or necessary.
1 |
|
Conclusions
Based upon our examination mentioned above, and relying on the statements of fact contained in the documents that we have examined, we are of the following opinions:
1. Long Term Care Operations 360, Inc. is a corporation duly organized and validly existing under the laws of the State of Nevada.
2. The Selling Stockholder Shares covered by the Registration Statement have been duly authorized and are validly issued, fully paid and non-assessable.
3. The Offering Shares covered by the Registration Statement to be sold pursuant to the terms of the Registration Statement, when issued upon receipt by the Company of the agreed-upon consideration therefore, will be duly authorized and, upon the sale thereof, will be duly authorized validly issued, fully paid and non-assessable.
The opinions set forth above are subject to the following exceptions, limitations and qualifications: (i) the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the rights and remedies of creditors; (ii) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law, and the discretion of the court before which any proceeding therefor may be brought; and (iii) the unenforceability under certain circumstances under law or court decisions of provisions providing for the indemnification of or contribution to a party with respect to a liability where such indemnification or contribution is contrary to public policy. We expressly disclaim any obligation to update our opinions herein, regardless of whether changes in the facts or laws upon which this opinion are based come to our attention after the date hereof.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and the reference to our firm in the Prospectus in the Registration Statement under the caption “Experts.” In providing this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder, including Item 509 of Regulation S-K.
Very truly yours,
/s/ Brunson Chandler & Jones, PLLC
BRUNSON CHANDLER & JONES, PLLC
2 |
EXHIBIT 10.1
PURCHASE AGREEMENT
This Purchase Agreement (“Agreement”) is entered into effective the 24th day of November, 2020 (“Effective Date”), by and between Prudent Senior Services of America, Inc, a Georgia corporation (“Seller”), and Long Term Care Operations 360, Inc., a Nevada corporation (“Purchaser”). Purchaser and Seller agree as follows:
RECITALS:
I. |
Seller is the owner of the following subsidiaries (collectively the “Subsidiaries”): |
|
· |
Prudent Senior Services of Georgia, Inc, a Georgia corporation; |
|
|
|
|
· |
Nemicare, Inc, a Georgia corporation; |
|
|
|
|
· |
Golden Sun NEMT, LLC, a Georgia limited liability company; and |
|
|
|
|
· |
Golden Sun Health Services, Corp, a Georgia corporation. |
II. |
Subject to the terms and conditions of this Agreement, Purchaser wishes to purchase all of Seller’s assets, including the Subsidiaries, from Seller, and Seller wishes to sell, transfer, and convey such assets to Purchaser. |
NOW, THEREFORE, in consideration of the mutual promises and undertakings herein contained and a symbolic exchange of specie, acknowledges as adequate, the parties hereto hereby agree as follows:
PARTICULARS
1. PURCHASE OF THE ASSETS AND SUBSIDIARIES
Subject to the terms and conditions of this Agreement, Seller shall sell, transfer, convey, and assign to Purchaser (i) the Subsidiaries, pursuant to the form of Assignment Agreement attached hereto as Exhibit A, and (ii) all of its cash and other assets (the Subsidiaries, cash and other assets collectively the “Assets”), in consideration of Seller’s receipt, on or immediately following the closing date (the “Closing”), of the consideration set forth below.
1 |
|
2. DELIVERY AND PAYMENT
2.1 At the Closing, Purchaser will deliver to Seller the consideration described in Section 2.3 below.
2.2 At the Closing, Seller agrees to execute and deliver to Purchaser the executed assignment agreement required by Section 1, and Purchaser’s registrar and transfer agent shall issue stock certificate(s) representing the Shares (as defined below) to Seller or Seller’s assignees, which shall be sent to Seller or Seller’s assignees as directed by Seller.
2.3 Payment. The consideration for the sale of the Assets shall be Purchaser’s issuance to Seller at or immediately following Closing of 52,350,000 shares of the common stock of Purchaser, $0.0001 par value per share (the “Shares”), unencumbered and without restriction except for those required by the Securities Act of 1933, as amended (the “Securities Act”).
2.4 Closing. Subject to the terms and conditions of this Agreement, Purchaser and Seller will use commercially reasonable efforts to complete the purchase and sale of the Assets contemplated herein as soon as practicable and not more than 10 days from the date hereof barring exigencies beyond the control of the parties.
3. TRANSFER OF ASSETS
3.1 Asset Assignment. Seller hereby sells, assigns, transfers and conveys to Purchaser all right, title and interest it has in and to the Assets, including the Subsidiaries, including without limitation, all rights of Seller under any assignment agreement relating to the Assets.
4. SELLER’S REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants to the Purchaser as follows:
4.1 Authority. Seller is a corporation duly formed, validly existing, and in good standing under the laws of the State of Georgia. Seller has the full power and authority and has obtained all third party consents, approvals, and/or other authorizations required to enter into this Agreement and to carry out its obligations hereunder, including, without limitation, the assignment of the Assets to Purchaser.
4.2 Title and Contest. Seller owns all right, title, and interest to the Assets and Subsidiaries, including, without limitation, all shares, membership units or other equity interests of the Subsidiaries. There are no actions, suits, investigations, claims, or proceedings threatened, pending, or in progress against Seller relating in any way to the Assets or Subsidiaries. To Seller’s knowledge, there are no existing contracts, agreements, options, commitments, proposals, bids, offers, or rights with, to, or in any person to acquire any of the Assets or Subsidiaries.
4.3 Accredited Investor. Seller is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
4.4 Accuracy of Information. All of Seller’s books and records, and all of Seller’s information regarding the Assets and Subsidiaries provided to Purchase is accurate and complete, and Seller has not failed to disclose any material facts regarding the Assets and Subsidiaries to Purchaser.
2 |
|
5. PURCHASER’S REPRESENTATIONS AND WARRANTIES
Purchaser hereby represents and warrants to Seller as follows:
5.1 Authority. Purchaser is a corporation duly formed, validly existing, and in good standing under the laws of the State of Nevada. Purchaser has the full power and authority and has obtained all third party consents, approvals, and/or other authorizations required to enter into this Agreement and to carry out its obligations hereunder, including, without limitation, the purchase of the Assets and Subsidiaries from Seller.
5.2 Capitalization.
(a) The authorized capital of Purchaser consists, immediately prior to the Closing, of:
(i) 200,000,000 authorized shares of common stock, $0.0001 par value per share (the “Common Stock”), approximately 7,217,397 shares of which shall be considered issued and outstanding immediately prior to the Closing after the cancellation of other outstanding shares immediately prior to Closing. All of the outstanding shares of Common Stock have been duly authorized, are fully paid and nonassessable and were issued in compliance with all applicable federal and state securities laws. Purchaser holds no common stock in its treasury.
(ii) 10,000,000 authorized shares of preferred stock, none of which are issued and outstanding immediately prior to the Closing.
(b) Purchaser does not have a stock option plan or any shares of capital stock reserved for issuance in connection therewith.
(c) Except as set forth in Schedule 5.2(c) hereto, as of the Closing, there are no issued or outstanding debt securities, stock options, warrants, restricted stock, stock purchase rights or agreements to issue any equity or debt securities of Purchaser.
5.3 Valid Issuance of Shares. The Shares, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under applicable state and federal securities laws and liens or encumbrances created by or imposed by Seller. Assuming the accuracy of the representations of the Seller in Section 4 of this Agreement, the Shares will be issued in compliance with all applicable federal and state securities laws.
5.4 Liabilities. There are no liabilities, claims or other obligations for an amount in excess of $5,000 to which Purchaser is or may be subject relating to the operations or existence of Purchaser prior to the Closing.
3 |
|
6. COVENANTS
6.1 Non-Competition. Seller agrees that it will not, at any time while Purchaser or any successor of Purchaser is involved in the active exploitation of the Assets or Subsidiaries which are the subject of this Agreement, for five (5) years from the Closing hereunder, in any manner, direct or indirect, or in any capacity, be involved in any enterprise which deals or attempts to deal in any product designed and or held out to be formulated solely for a purpose to compete with the Purchaser’s present or contemplated business by either joining a competitive enterprise or planning or organizing any competitive business activity. Seller will not enter into any agreement which conflicts with its duties or obligations to the Purchaser.
Furthermore, Seller will not for five (5) years from the Closing hereunder, without the Purchaser’s express written consent, directly or indirectly, solicit or encourage any employee, agent, independent contractor, supplier, customer, consultant or any other person or company to terminate or alter a relationship with the Purchaser.
6.2 Survival. The covenants set forth in this Section 6 shall survive the termination of this Agreement indefinitely.
7. INDEMNIFICATION
Purchaser shall indemnify Seller and Seller’s representatives, officers, directors, shareholders, employees, agents, affiliates, predecessors, successors, and assigns (the “Seller Indemnitees”) from and against any and all costs, losses, liabilities, damages, litigation, claims, costs, and expenses, including reasonable attorneys’ fees and other expenses of investigation and defense (collectively, the “Damages”) to which the Seller Indemnitees may become subject or that are incurred in connection with, arising out of, resulting from, or are attributable to any material breach of the terms of this agreement or any certificate or other document delivered hereunder by Purchaser, including any material breach of any representation or warranty made by Purchaser, or the failure by Purchaser to perform materially any of the covenants or obligations contained herein or in any certificate or other document delivered hereunder. Purchaser shall indemnify the Seller Indemnitees from and against any and all Damages to which the Seller Indemnitees may become subject or that are incurred in connection with, arise out of, result from, or are attributable to the acts or omissions of Purchaser.
8. MISCELLANEOUS
8.1 Compliance with Laws. Notwithstanding anything contained in this Agreement to the contrary, the obligations of the Parties with respect to the consummation of the transactions contemplated by this Agreement shall be subject to all laws, present and future, of any government having jurisdiction over the Parties and this transaction, and to orders, regulations, directions or mandates of any such government.
4 |
|
8.2 Confidentiality of Terms. The Parties hereto will keep the terms of this Agreement confidential and will not now or hereafter divulge any of this information to any third party except:
(a) with the prior written consent of the other Party;
(b) as otherwise may be required by law or legal process;
(c) during the course of litigation, so long as the disclosure of such terms and conditions is restricted in the same manner as is the confidential information of other litigating parties;
(d) in confidence to its legal counsel, accountants, banks, and financing sources and their advisors solely in connection with complying with or administering its obligations with respect to this Agreement; or
(e) by Purchaser, to potential purchasers or licensees of the Assets or Subsidiaries;
8.3 Notices. All notices given hereunder will be given in writing (in English or with an English translation), and will be delivered to the address set forth on the signature page to this Agreement by personal delivery or delivery postage prepaid by an internationally-recognized express courier service. Notices are deemed given on the date of receipt if delivered personally or by express courier, or if delivery refused, the date of refusal. Notice given in any other manner will be deemed to have been given only if and when received at the address of the Party to be notified. Either Party may from time to time change its address for notices under this Agreement by giving the other Party written notice of such change.
8.4 Relationship of Parties. Nothing in this Agreement will be construed to create a partnership, joint venture, franchise, fiduciary, employment or agency relationship between the Parties. Neither Party has any express or implied authority to assume or create any obligations on behalf of the other or to bind the other to any contract, agreement or undertaking with any third party.
8.5 Severability. If any provision of this Agreement is found to be invalid or unenforceable, then the remainder of this Agreement will have full force and effect, and the invalid provision will be modified, or partially enforced, to the maximum extent permitted to effectuate the original objective.
8.6 Waiver. Failure by either Party to enforce any term of this Agreement will not be deemed a waiver of future enforcement of that or any other term in this Agreement or any other agreement that may be in place between the Parties.
8.7 Governing Law. This Agreement will be interpreted, construed, and enforced in all respects in accordance with the laws of the State of Nevada in the United States of America, without reference to its choice of law principles.
5 |
|
8.8 Entire Agreement. The Agreement, including its exhibits, constitutes the entire agreement between the Parties with respect to the subject matter hereof, and merges and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions. Neither of the Parties will be bound by any conditions, definitions, warranties, understandings, or representations with respect to the subject matter hereof other than as expressly provided herein. No oral explanation or oral information by either Party hereto will alter the meaning or interpretation of this Agreement. The terms and conditions of this Agreement will prevail notwithstanding any different, conflicting or additional terms and conditions that may appear on any letter, email or other communication or other writing not expressly incorporated into this Agreement.
8.9 Amendments. No amendments or modifications will be effective unless in writing signed by authorized representatives of both Parties.
8.10 Headings. The section headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.
8.11 Severability. Any of the provisions of this Agreement which are determined to be invalid or unenforceable in any jurisdiction shall be ineffective to the extent of such invalidity or unenforceability in such jurisdiction, without rendering invalid or unenforceable the remaining provisions hereof or affecting the validity or enforceability of any of the provisions of this Agreement in any other jurisdiction.
8.12 No Rights in Third Parties. The Agreement is not intended to confer any right or benefit on any third party (including, but not limited to, any employee or beneficiary of any Party), and no action may be commenced or prosecuted against a Party by any third party claiming as a third-party beneficiary of this Agreement or any of the transactions contemplated by this Agreement.
8.13 Counterparts. This Agreement shall become binding when any one or more counterparts hereof, individually or taken together, shall bear the signatures each of the Parties hereto. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against the Party whose signature appears thereon, but all of which taken together shall constitute but one and the same instrument.
{The remainder of this page intentionally left blank.}
{Signature page to follow.}
6 |
|
IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the Effective Date.
SELLER:
Prudent Senior Services of America, Inc
By: /s/ Sameer Shah
Name: Sameer Shah
Title: President
Address: 5522 New Peachtree Rd., # 122, Atlanta, GA 30341
PURCHASER:
Long Term Care Operations 360, Inc.
By: /s/ Sameer Shah
Name: Sameer Shah
Title: President
Address: 5522 New Peachtree Rd., # 122, Atlanta, GA 30341
7 |
|
EXHIBIT A
ASSIGNMENT FORM
8 |
|
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (the “Assignment”) is made effective as of the __ day of November, 2020, by and between Long Term Care Operations 360, Inc., a Nevada corporation (“Assignee”), and Prudent Senior Services of America, Inc, a Georgia limited liability company (“Assignor”).
R E C I T A L S
A. Pursuant to the Purchase Agreement (the “Purchase Agreement”) dated November __, 2020, by and between Assignor and Assignee, Seller is assigning the Assets and Subsidiaries (as such terms are defined in the Purchase Agreement) to Assignee.
B. Pursuant to the terms of the Purchase Agreement, Assignor has agreed to transfer to Assignee all of the Assets, and Assignor now desires to enter into this Assignment in order to transfer such rights, title and interest to Assignee.
NOW, THEREFORE, for and in consideration of the foregoing premises and the undertakings set forth below, Assignor hereby agrees as follows:
A G R E E M E N T
1. Assignor hereby grants, transfers, assigns and conveys to Assignee, absolutely and unconditionally, free and clear of all liens, encumbrances, mortgages or any other type of security interest, all of its rights, title and interest in and to all of the Assets.
2. Assignor transfers the Assets to Assignee, its successors and assigns, to have and to hold to and for its and their own use and benefit forever. Assignor, for itself and its successors and assigns, hereby covenants that, from time to time after delivery of this instrument, at Assignee’s request and without further consideration, Assignor will execute and deliver, or will cause to be executed and delivered, such other instruments of conveyance and transfer and take such other actions as Assignee reasonably may require (such as, but not limited to, assisting with the transfer of any business accounts, such as a telephone account) to more effectively vest in the Assignee the Assets and to put Assignee in possession of the Assets, and to do all other things and execute and deliver all other instruments and documents as may be required to effect the same.
3. This Assignment shall be construed in accordance with, and governed by, the laws of the State of Nevada, without regard to its conflict of laws doctrine.
[SIGNATURE PAGE FOLLOWS]
9 |
|
IN WITNESS WHEREOF, Assignor has executed this Assignment effective as of the date first written above.
ASSIGNOR: |
|||
|
|
|
|
|
Prudent Senior Services of America, Inc |
|
|
By: |
/s/ Sameer Shah |
||
|
Name: |
Sameer Shah |
|
Title: |
President |
||
10 |
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of the 1st day of February, 2021, between Long Term Care Operations 360, Inc., a Nevada corporation ("LTCO"), and Sameer Shah ("Employee").
1. Employment. LTCO hereby employs Employee and Employee hereby accepts employment upon the terms and conditions hereinafter set forth. Employee’s employment shall be as an employee at will, and LTCO and Employee shall both have the right to terminate Employee’s employment at any time, with or without cause. The at-will relationship remains in full force and effect notwithstanding any statements or promises to the contrary made by LTCO employees or set forth in any documents. This Agreement shall terminate as of the earlier of the following dates: (a) the death of Employee; or (b) shall automatically terminate on June 31, 2022.
2. Compensation. For services rendered by Employee under this Agreement, cash will be given on a monthly basis of $20,834. During the term of his employment, Employee shall also be entitled to participate in employee benefit plans or programs to the extent that his position, tenure, salary, age, health, and other qualifications make him eligible to participate, subject to the rules and regulations applicable thereto. In the event that the Company does not have sufficient financial resources to pay said compensation the Company at its election by the Board of Directors may defer up to forty percent (40%) of the monthly compensation or $7,500 leaving the employee a monthly salary of $12,500.
3. Duties. Employee will perform duty as Chief Executive Officer. Employee will also be subject at all times to the policies set by the Board of Directors of LTCO.
4. Confidentiality.
a. Employee acknowledges that the following items and information used in the business of LTCO are secret, confidential, unique, and valuable and were developed by LTCO at great cost and over a long period: (i) the whole or any portion or phase of any proprietary scientific, technical, and technological information, design, process, source code, software, procedure, formula, and improvement developed or used by LTCO; (ii) business strategies, business plans, reports, nonpublic financial statements and projections, and statistical information of LTCO; (iii) marketing and sales information and plans of LTCO; (iv) pricing policies of LTCO; (v) the identity of current and prospective clients of LTCO, including current and future lists of clients and prospective clients of LTCO; (vi) the terms of agreements and relationships with suppliers and clients of LTCO; (vii) other customer information of LTCO; and (viii) any other information designated as “confidential,” regardless of the form of such information or the manner in which it is conveyed (collectively, the "Confidential Information”). Employee will not use the Confidential Information for uses not authorized by LTCO, and Employee will consider the Confidential Information to be confidential and secret and will not disclose any of such Confidential Information to anyone other than those employees and advisors of LTCO who have a need to know such Confidential Information, and who are specifically instructed of the confidential nature of such Confidential Information and of their obligation to maintain confidentiality.
b. Upon the earlier of the termination of Employee’s employment by LTCO or a request by LTCO for the return of documents, disks, tapes, and other things containing such Confidential Information, Employee shall return to LTCO all documents and such other things containing any of the Confidential Information received from LTCO and shall make no further use of the Confidential Information for any purpose.
1 |
|
5. Inventions.
a. Employee may, during his employment, make, develop, or conceive inventions, discoveries, concepts, works of authorship, ideas, information and improvements, either patentable, copyrightable, or not, which relate to or are useful in the business or activities in which LTCO is or may become engaged, and which may or may not also constitute Confidential Information ("Inventions").
b. Employee agrees to disclose promptly to the executive officers of LTCO, any Inventions that he may make, develop, or conceive during the period of his employment by LTCO. All such Inventions shall be and remain the property of LTCO as a “work made for hire.” To the extent that any of such Inventions are deemed not to be works made for hire, Employee hereby assigns (and agrees to assign) to LTCO all Employee’s right, title, and interest in such Inventions and to execute all patent applications, copyright applications, assignments, and other documents, and to take all other steps necessary, to vest in LTCO the entire right, title, and interest in and to those Inventions and in and to any patents or copyrights obtainable therefor in the United States and foreign countries.
c. It is understood and agreed that LTCO shall have the royalty-free right to use, or to adapt and to develop in any way all Inventions conceived or made by Employee, whether or not patentable or copyrightable, including but not limited to processes, source code, software, methods, formulas, and techniques, as well as improvements thereof or know-how related thereto, or not to use them at all should it so choose.
d. Employee will not assert any rights to any inventions, discoveries, concepts, works of authorship, ideas, or improvements thereof or know-how related thereto, as having been made or acquired by Employee prior to being employed by LTCO or as not otherwise covered by the terms of this Agreement.
6. Noncompetition.
a. If Employee’s employment with LTCO is terminated by him or by LTCO for any reason, Employee agrees that for a period of two years from the date of termination, Employee will not, within the geographic area within which LTCO sells its products (the “Geographic Area”), directly or indirectly, individually or as an officer, director, employee, shareholder, consultant, contractor, partner, joint venture, agent, equity owner or in any capacity whatsoever, (i) engage in any business whose business is competitive with, the same as, or similar to LTCO’s business (a “Competing Business”) in the Geographic Area, (ii) hire, attempt to hire, or contact or solicit with respect to hiring any employee of LTCO, (iii) induce or attempt to induce any client or customer of LTCO to cease doing business with LTCO, or (iv) solicit sales from, market, or sell any products or services to any of LTCO’ clients or customers, unless such action, transaction, or arrangement is not in any way competitive with the products or services actually provided by LTCO to any such client or customer.
b. During the term of the noncompetition covenant of Subsection 6(a), the Employee will not use the Employee’s access to, knowledge of, or application of Confidential Information to perform any duty for any Competing Business; it being understood and agreed to that this Section 6(b) shall be in addition to and not be construed as a limitation upon the covenants in Section 6(a) hereof.
c. As used in this Section 6, “LTCO” shall include LTCO and any of its direct or indirect subsidiaries or affiliates.
2 |
|
7. Enforcement. Employee acknowledges that the geographic boundaries, scope of prohibited activities, and time duration and other restrictions set forth in Sections 4, 5, and 6 of this Agreement are reasonable and essential for the protection of the proprietary rights and the other legitimate business interests of LTCO.:
(2) Any covenant not to compete which restricts the right of any person to receive compensation for performance of skilled or unskilled labor for any employer shall be void.
Employee also agrees that upon any violation of such restrictions, LTCO would suffer immediate and irreparable injury which could not be remedied in an action at law. Employee therefore agrees that upon the breach or threatened breach of such provisions by Employee, LTCO shall have the right, in addition to any other remedy at law or equity, to obtain an immediate temporary restraining order, preliminary injunction, or other form of appropriate equitable relief.
8. Indemnification. LTCO hereby agrees to indemnify and hold harmless the employee from any and all losses, claims, damages, liabilities, costs, and expenses (and all other actions, suits, proceedings, or claims in respect thereof) and any legal or other expenses in giving testimony or furnishing documents in response to a subpoena or otherwise (including, without limitation, the cost of investigating, preparing or defending any such action, suit, proceeding, or claim, whether or not in connection with any action, suit, proceeding or claim for which it is a party), as and when incurred, directly or indirectly, caused by, relating to, based upon or arising out of the services pursuant to this agreement so long as consultant has not committed intentional or willful misconduct, in connection with the services which form the basis of the claim for indemnification. LTCO further agrees that the employee shall incur no liability on account of this agreement or any acts or omissions arising out of or relating to this agreement except for such intentional or willful misconduct. This paragraph shall survive the expiration or termination of this agreement. Further, the employee is not liable for any actions taken by others or outside the scope of this services agreement nor future actions of the company or related parties not in control of the employee at the time.
9. Survival. The provisions of Sections 4, 5, 6, 7, 8 and 9 shall survive the termination of this Agreement.
10. Choice of Law. This Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of Nevada.
3 |
|
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.
|
Long Term Care Operations 360, Inc., |
|
|
a Nevada corporation |
|||
By: |
/s/ Wooiyi Yin |
||
|
|
Wooyi Yin, Chief Operating Officer |
|
|
Employee: |
|
|
|
|
|
|
|
|
/s/ Sameer Shah |
|
|
|
Sameer Shah, Chief Executive Officer |
|
4 |
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of the 1st day of February, 2021, between Long Term Care Operations 360, Inc., a Nevada corporation ("LTCO"), and Wooyi Yin ("Employee").
1. Employment. LTCO hereby employs Employee and Employee hereby accepts employment upon the terms and conditions hereinafter set forth. Employee’s employment shall be as an employee at will, and LTCO and Employee shall both have the right to terminate Employee’s employment at any time, with or without cause. The at-will relationship remains in full force and effect notwithstanding any statements or promises to the contrary made by LTCO employees or set forth in any documents. This Agreement shall terminate as of the earlier of the following dates: (a) the death of Employee; or (b) shall automatically terminate on June 31, 2022.
2. Compensation. For services rendered by Employee under this Agreement, cash will be given on a monthly basis of $20,834. During the term of her employment, Employee shall also be entitled to participate in employee benefit plans or programs to the extent that his position, tenure, salary, age, health, and other qualifications make him eligible to participate, subject to the rules and regulations applicable thereto. In the event that the Company does not have sufficient financial resources to pay said compensation the Company at its election by the Board of Directors may defer up to forty percent (40%) of the monthly compensation or $7,500 leaving the employee a monthly salary of $12,500.
3. Duties. Employee will perform duty as Chief Operating Officer. Employee will also be subject at all times to the policies set by the Board of Directors of LTCO.
4. Confidentiality.
a. Employee acknowledges that the following items and information used in the business of LTCO are secret, confidential, unique, and valuable and were developed by LTCO at great cost and over a long period: (i) the whole or any portion or phase of any proprietary scientific, technical, and technological information, design, process, source code, software, procedure, formula, and improvement developed or used by LTCO; (ii) business strategies, business plans, reports, nonpublic financial statements and projections, and statistical information of LTCO; (iii) marketing and sales information and plans of LTCO; (iv) pricing policies of LTCO; (v) the identity of current and prospective clients of LTCO, including current and future lists of clients and prospective clients of LTCO; (vi) the terms of agreements and relationships with suppliers and clients of LTCO; (vii) other customer information of LTCO; and (viii) any other information designated as “confidential,” regardless of the form of such information or the manner in which it is conveyed (collectively, the "Confidential Information”). Employee will not use the Confidential Information for uses not authorized by LTCO, and Employee will consider the Confidential Information to be confidential and secret and will not disclose any of such Confidential Information to anyone other than those employees and advisors of LTCO who have a need to know such Confidential Information, and who are specifically instructed of the confidential nature of such Confidential Information and of their obligation to maintain confidentiality.
b. Upon the earlier of the termination of Employee’s employment by LTCO or a request by LTCO for the return of documents, disks, tapes, and other things containing such Confidential Information, Employee shall return to LTCO all documents and such other things containing any of the Confidential Information received from LTCO and shall make no further use of the Confidential Information for any purpose.
1 |
|
5. Inventions.
a. Employee may, during his employment, make, develop, or conceive inventions, discoveries, concepts, works of authorship, ideas, information and improvements, either patentable, copyrightable, or not, which relate to or are useful in the business or activities in which LTCO is or may become engaged, and which may or may not also constitute Confidential Information ("Inventions").
b. Employee agrees to disclose promptly to the executive officers of LTCO, any Inventions that he may make, develop, or conceive during the period of his employment by LTCO. All such Inventions shall be and remain the property of LTCO as a “work made for hire.” To the extent that any of such Inventions are deemed not to be works made for hire, Employee hereby assigns (and agrees to assign) to LTCO all Employee’s right, title, and interest in such Inventions and to execute all patent applications, copyright applications, assignments, and other documents, and to take all other steps necessary, to vest in LTCO the entire right, title, and interest in and to those Inventions and in and to any patents or copyrights obtainable therefor in the United States and foreign countries.
c. It is understood and agreed that LTCO shall have the royalty-free right to use, or to adapt and to develop in any way all Inventions conceived or made by Employee, whether or not patentable or copyrightable, including but not limited to processes, source code, software, methods, formulas, and techniques, as well as improvements thereof or know-how related thereto, or not to use them at all should it so choose.
d. Employee will not assert any rights to any inventions, discoveries, concepts, works of authorship, ideas, or improvements thereof or know-how related thereto, as having been made or acquired by Employee prior to being employed by LTCO or as not otherwise covered by the terms of this Agreement.
6. Noncompetition.
a. If Employee’s employment with LTCO is terminated by him or by LTCO for any reason, Employee agrees that for a period of two years from the date of termination, Employee will not, within the geographic area within which LTCO sells its products (the “Geographic Area”), directly or indirectly, individually or as an officer, director, employee, shareholder, consultant, contractor, partner, joint venture, agent, equity owner or in any capacity whatsoever, (i) engage in any business whose business is competitive with, the same as, or similar to LTCO’s business (a “Competing Business”) in the Geographic Area, (ii) hire, attempt to hire, or contact or solicit with respect to hiring any employee of LTCO, (iii) induce or attempt to induce any client or customer of LTCO to cease doing business with LTCO, or (iv) solicit sales from, market, or sell any products or services to any of LTCO’ clients or customers, unless such action, transaction, or arrangement is not in any way competitive with the products or services actually provided by LTCO to any such client or customer.
b. During the term of the noncompetition covenant of Subsection 6(a), the Employee will not use the Employee’s access to, knowledge of, or application of Confidential Information to perform any duty for any Competing Business; it being understood and agreed to that this Section 6(b) shall be in addition to and not be construed as a limitation upon the covenants in Section 6(a) hereof.
c. As used in this Section 6, “LTCO” shall include LTCO and any of its direct or indirect subsidiaries or affiliates.
2 |
|
7. Enforcement. Employee acknowledges that the geographic boundaries, scope of prohibited activities, and time duration and other restrictions set forth in Sections 4, 5, and 6 of this Agreement are reasonable and essential for the protection of the proprietary rights and the other legitimate business interests of LTCO.:
(2) Any covenant not to compete which restricts the right of any person to receive compensation for performance of skilled or unskilled labor for any employer shall be void.
Employee also agrees that upon any violation of such restrictions, LTCO would suffer immediate and irreparable injury which could not be remedied in an action at law. Employee therefore agrees that upon the breach or threatened breach of such provisions by Employee, LTCO shall have the right, in addition to any other remedy at law or equity, to obtain an immediate temporary restraining order, preliminary injunction, or other form of appropriate equitable relief.
8. Indemnification. LTCO hereby agrees to indemnify and hold harmless the employee from any and all losses, claims, damages, liabilities, costs, and expenses (and all other actions, suits, proceedings, or claims in respect thereof) and any legal or other expenses in giving testimony or furnishing documents in response to a subpoena or otherwise (including, without limitation, the cost of investigating, preparing or defending any such action, suit, proceeding, or claim, whether or not in connection with any action, suit, proceeding or claim for which it is a party), as and when incurred, directly or indirectly, caused by, relating to, based upon or arising out of the services pursuant to this agreement so long as consultant has not committed intentional or willful misconduct, in connection with the services which form the basis of the claim for indemnification. LTCO further agrees that the employee shall incur no liability on account of this agreement or any acts or omissions arising out of or relating to this agreement except for such intentional or willful misconduct. This paragraph shall survive the expiration or termination of this agreement. Further, the employee is not liable for any actions taken by others or outside the scope of this services agreement nor future actions of the company or related parties not in control of the employee at the time.
9. Survival. The provisions of Sections 4, 5, 6, 7, 8 and 9 shall survive the termination of this Agreement.
10. Choice of Law. This Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of Nevada.
3 |
|
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.
|
Long Term Care Operations 360, Inc., |
|
|
a Nevada corporation |
|||
By: |
/s/ Sameer Shah |
||
|
|
Sameer Shah, Chief Executive Officer |
|
|
Employee: |
|
|
|
|
|
|
|
/s/ Wooiyi Yin |
|
|
|
|
Wooyi Yin, Chief Operating Officer |
|
4 |
EXHIBIT 10.4
RENTAL AGREEMENT
STATE OF GEORGIA, DEKALB COUNTY
DATE OF THIS AGREEMENT: January 1st, 2020
PROPERTY ADDRESS: 5522 New Peachtree Road, Suite 129
MANAGEMENT: Circle of Love, Inc.
TENANTS: Prudent Senior Services of Georgia, Inc.
APPLIANCES INCLUDED: None
BEGINNING DATE: January 1st, 2020
TERMINATION DATE: March 31st, 2022
MONTHLY RENTAL: See attached rents roll. (Rents to be paid to Plaza del Sol)
SECURITY DEPOSIT: __________________a
Attached hereto is the sole and entire rental agreement between the aforementioned management and Tenant, and both parties acknowledge receipt of completed copies. No oral statements shall be binding. No modification of this agreement shall be binding unless attached hereto and signed by all parties.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THESE PRESENTS TO BE SIGNED IN PERSON OR BY PERSON DULY AUTHORIZED, THE DAY AND YEAR.
/S/ Wooiyi Yin |
/S/ Alfred Yin |
|
|
Management |
Tenants |
|
☒ Received EPA Mold Guide
☒ Received “Lead disclosure”
☒ Tenants have tenant insurance
This is page 1 |
MANAGEMENT INITIALS: /S/ WY |
TENANT INITIALS: /S/ AY |
|
RENTAL AGREEMENT
In consideration of the agreement of aforementioned Tenant, the Management hereby rents them the dwelling located at the aforementioned Property Address (“the premises”) for the period commencing on the aforementioned Beginning Date, and the monthly thereafter until the aforementioned Termination Date, at which time this Agreement is terminated. Tenants consideration of Management permitting them to occupy the premises, hereby agrees to the following terms:
1. RENT: Rent shall be the aforementioned “Monthly Rental” per month, payable in full and in advance, without notice or demand, upon the 5th day of each calendar month to the Management at the following address: 3780 Old Norcross Road, Suite 103-226, Duluth, GA 30096, or at such other place as may be designated by Management from time to time. Rent checks received in advance will be deposited only on the due date.
2. LATE FEES: Time is of the essence of this agreement. If the rent is not paid by the fifth day of the month, a penalty of $50.00 shall be paid by Tenant to Management, and a further penalty of $5.00 per day thereafter until the rent is paid shall be paid by Tenant to Management as additional rent. In the event any check given by Tenant to Management is returned by the bank unpaid, Tenant shall pay a $45.00 return check fee to Management for each such check in addition to the aforementioned daily late fees.
3. UTILITIES: Tenant shall be responsible for the payment of all utilities and services.
4. USE: The premises shall be used solely as a residence and shall be occupied only by the persons named in Tenant’s application to rent. Occupancy by guests staying over seven days will be in violation of this provision. No pets of any kind shall be brought on the premises without prior written consent of Management. Tenant shall not have a waterbed on the premises without prior written consent of the Management. Tenants shall comply with all statutes, ordinances and requirements of all subdivision, municipal, states and county authorities now in foreon, or which may hereafter be in force pertaining to the use of the premise.
5. MAINTENANCE, REPAIRS OR ALTERATIONS: Tenant acknowledges that the premises are in good order and repair, and Tenant accepts the premises “as is”, unless otherwise indicated herein. Tenant shall at his own expense, and at all times, maintain the premises in a clean and sanitary manner including all equipment, appliances, furniture and furnishings therein and shall surrender the same, at termination hereof, in a good condition as received, normal wear and tear expected. Tenant shall be responsible for damages caused by his negligence and that of his family, or invitees, or guests. Tenant shall not paint, paper or otherwise redecorate or make alterations to the premises without prior written consent of the Management. Tenant shall mow, irrigate and maintain any surrounding grounds, including lawns and shrubbery and gutters, and keep the same clear of rubbish, weeds, or leaves if such grounds are part of the premises and are exclusively for the use of the Tenant. In the event that Tenant fails to maintain lawns or shrubbery which are a part of premises, Management, after attempting to notify Tenant, may, but is not required to, maintain lawn and/or shrubbery by using a professional yard maintenance company. The costs of such yard maintenance will be paid by the Tenant.
6. RIGHT OF ACCESS: Management may enter the premises without notice to Tenant for inspection and maintenance during reasonable hours. In case of emergency, management may enter at any time.
7. INDEMNIFICATION: Management shall not be liable for any damage or injury to the Tenant, or any property, occurring on the premises, or any part thereof, unless such damage is the proximate result of the negligence or unlawful act of the Management. Tenant does hereby indemnify, release, and save harmless management and management agents from and against any and all suits, actions, claims, judgments, and expenses arising out of or relating to any life, bodily or personal injury, property damage, or other demand, claim or action of any nature arising out of or related to this lease or the use of this premises.
8. ESCALATION CLAUSE: The Management shall reserve the right to increase the rent during the term of this lease upon a 30 day written notice to the Tenant. The Tenant shall approve or reject this proposal in writing within seven days of receipt. Upon rejection, the Management may, at its option, cause the Termination Date to be accelerated to a date not less than 30 days following the date of rejection as stated in writing.
9. POSSESSION: If management is unable to deliver possession of the premises at the commencement hereof, Management shall not be liable for any damages caused hereby, nor shall this agreement be void or voidable, but Tenant shall not be liable for any rent until possession is delivered. Tenant may terminate this agreement if possession is not delivered within 14 days of the start of the term hereof.
10. DEFAULT: If Tenant shall fail to pay rent when due, or fail to perform any terms hereof, the Management, at its option, may terminate all rights of Tenant there under, unless Tenant, within three days after notice thereof, shall cure such default. If Tenant abandons or vacates the property, while in default of the payment of rent, Management may consider any property left on the premises to be abandoned and may dispose of the same in any manner allowed by law, without responsibility or liability therefore. In the event the Management reasonably believes that such abandoned property has no value, it may be discarded. All property on the premises in hereby subject to a lien in favor of Management for payment of all sums due hereunder, to the maximum extent allowed by law. In the event of a default by Tenant, Management may elect to a) continue the lease in effect and enforces all his rights and remedies hereunder, including the right to recover the rent as it comes due, or b) at any time, terminate all of Tenants rights hereunder and recover from Tenant all damages he may incur by reason of the breach of the lease, including the cost of recovering the premises, and including the worth at the time of such termination, or at the time of an award if suit be instituted to enforce this provision, of the amount by which the unpaid rent of the balance of the term exceeds the amount of such rental loss which the Tenant proves could be reasonably avoided.
11. DESTRUCTION OF OR DAMAGE TO THE PREMISES: If the premises are totally destroyed or so substantially damaged as to be untenantable by storm, fire, earthquake, flooding or other casualty, this lease shall terminate as of the date of such destruction or damage, and rental shall be accounted for as between management and Tenant as of that date. If the leased premises should be damaged (but not rendered wholly untenantable) to the extent that management shall decide not to rebuild or repair, the term of this lease shall end and the rent be prorated up to the time of the damage.
12. SECURITY: The security deposit set forth, if any, shall secure the performance of Tenant’s obligations hereunder. Management may, but shall not be obligated to apply all or portion of said deposit on account of Tenant’s obligations hereunder, and may, but is not obligated to, maintain such funds in an interest bearing account. Any interest accruing shall become the property of Management or Agent for Management. Any balance remaining upon termination shall be returned to Tenant. Tenant shall not apply the Security Deposit in payment of the last month’s rent, unless prior written consent has been given by the Management. Nothing in this agreement shall preclude the Management from retaining the security deposit for nonpayment of rent or of fees, for abandonment of the premises (abandonment fee shall be equal to one month’s rent), for nonpayment of utility charges, for repair work or cleaning contracted for by the Tenant with third party, for unpaid pet fees, or for actual damages caused by the Tenant’s breach.
13. ASSIGNMENT AND SUBLETTING: Tenant may not sub-let dwelling or assign this lease without the written consent of Management.
14. ATTORNEY’S FEE: In any legal action to enforce the terms hereof or relating to the demised property, the prevailing party shall be entitled to all costs incurred in connection with such actions, including a reasonable attorney’s fees.
This is page 2 |
MANAGEMENT INITIALS: /S/ WY |
TENANT INITIALS: /S/ AY |
|
15. WAIVER: No failure of Management to enforce any term hereof shall be deemed a waiver, nor shall any acceptance of a partial payment of rent for any payment marked “payment in full” be deemed a waiver of Management’s right to the full amount thereof.
16. NOTICE: Any notice which either party may or is required to give, may be given by mailing the same, postage paid, to Tenant at the premises, or to Management in care of 3780 Old Norcross Road, Suite 103-226, Duluth, GA 30096 or at such other places as may be designated in writing by the parties from time to time. Real Estate Services is authorized to act on behalf of owner with respect to this agreement, to manage the premises, and is management’s designated agent for service of process with respect to any matter arising under this agreement.
17. HOLDING OVER: If the Tenant should hold over on the premises after expiration of the term of this lease and with the consent of Management, the possession shall not be construed as a renewal for the same term, but shall be construed as a month to month tenancy in accordance with the terms hereof as applicable. Either party must give to the other a minimum sixty day written notice of intention to terminate tenancy during such month to month tenancy, and such notices shall become effective on the last day of the month in which it is received. There shall be no renewal of this lease by operation of law.
18. EVICTION: If the rent called for under this agreement has not been received by the fifth day of the month in which it is due, than Management or his agent shall have the right to assert all legal and contractual remedies to enforce this lease and, without limitation to any other remedy, may take out Dispossessory Warrant and have Tenant, his or her family and possessions evicted from the premises.
19. SECURITY DEPOSIT: The aforementioned security deposit will be returned to Tenant within thirty days after dwelling is vacated. IF: a) lease term has expired or agreement has been terminated by all parties , and b) all monies due Management by Tenant have been paid, and c) dwelling is not damaged beyond normal wear and tear, and d) dwelling is returned in clean, ready-to-rent condition.
20. EARLY TERMINATION: Tenant may terminate this agreement prior to previously stated TERMINATION DATE by doing all the following a) Giving Management ninety days written notice, with such notice becoming effective only on the last day of the month in which it is received. b) Paying all monies due through new date of termination, c) Paying an amount equal to the Security Deposit as an Early Termination Fee, d) Returning dwelling in a clean, ready-to-rent condition and e) Paying a pro-rated portion of expenses for repairing and cleaning based on the ratio of the number of months then remaining in the term to the number of months originally in the initial terms.
21. APPLIANCES: The stove, and any window air conditioners, and/or any other appliances, if any, delivered with the property are for the convenient of the Tenant, but are not guaranteed to operate for the duration of this agreement. Tenant may repair them at Tenants expense if Tenant so desire and Tenant agrees to return same at end of lease in same condition as at beginning of lease. Items of personally delivered with the property are listed previously as “Appliances Included”
22. REPAIRS: Management will make necessary repairs to the dwelling and systems including electrical, plumbing, heating and hot water heating with reasonable promptness after receipt of written notice from Tenant. Tenant agrees to bear the first $50.00 of the cost of these repairs during each calendar month. Management will bear all costs above the first $50.00 for repairs.
If any damages, beyond normal wear and tear, is caused by Tenant or his guest, Tenant agrees to pay management the cost of repair with the next rent payment or upon termination of this agreement, whichever comes first.
23. FROZEN OR BROKEN WATER PIPES: During cool weather, Tenant agrees to maintain sufficient heat in dwelling and leave faucets dripping to prevent frozen or broken water pipes. Damage to plumbing, the dwelling, and/or personal property from frozen or broken water pipes will not be considered norm wear and tear, and will be the responsibility of the Tenant.
24. MAIL: Mail delivery to the premises is not guaranteed, and any boxes requested by the US Postal Service are not the responsibility of Management.
25. RENTERS INSURANCE: The Management of the property can not maintain insurance for Tenants personal property or belongings. Tenants are encouraged to obtain Renters Insurance prior to taking occupancy.
26. KEROSENE HEATERS OR APPLIANCES: The Tenant agrees not to use any form of Kerosene space heater in the dwelling.
27. TELEPHONES: Availability of telephones or Cable TV service to the premises is not guaranteed, and any installation or repair charges are the responsibility of the Tenants.
28. SMOKE DETECTORS: The Tenant acknowledges the presence of a working smoke detector on each level of the premises, and agrees to test the detector weekly for proper operation and further agrees to replace batteries when necessary. Tenant agrees to notify Management immediately in writing if any unit fails to operate properly during any test. Tenant acknowledges that he understands how to test and operate the smoke detector(s) in this property.
29. LOCKS: Tenant is prohibited from adding locks to, changing or in any way altering locks installed on the doors on the premises without the prior written consent of the management. If the addition or changing of such locks is consented to, the Tenant shall provide management with keys to such locks.
30. NO ESTATE IN LAND: This lease shall create the relationship of landlord and tenant between management and Tenant: no estate shall pass out the management: Tenant has only usufruct and not an estate for years.
31. SEVERABILITY: In the event that any part of this lease be construed as unenforceable, the remaining parts of this lease shall be in full force and effect as though the unenforceable part or parts were not written into the lease.
32. PEST CONTROL: Pest control is the responsibility of the Tenant.
33. GENDER: In all references herein to Tenant, the use of the singular number is intended to include the appropriate number as the text of this lease require. Each Tenant shall always be jointly and severally liable for the performance of every agreement, and promise made herein.
In Witness Whereof, the parties hereto have caused these presents to be signed in person or by a person duly authorized, the day and year above written.
This is page 3 |
MANAGEMENT INITIALS: /S/ WY |
TENANT INITIALS: /S/ AY |
EXHIBIT 10.5
Amwiler Office, LLC
RENTAL AGREEMENT
STATE OF GEORGIA, GWINNETT COUNTY
DATE OF THIS AGREEMENT: 10/1/2018
PROPERTY ADDRESS: 3069 Amwiler Road, Suite 4, Peachtree Corners, GA 30071
MANAGEMENT: Larry Bentley
TENANTS: Golden Sun Health Services, LLC
APPLIANCES INCLUDED: None
INITIAL TERM: 48 MONTHS
BEGINNING DATE: 10/1/2018 a
TERMINATION DATE: 09/30/2022 a
MONTHLY RENTAL: __$1500.00_Paid 5 months in advance Aug-Dec 2018 & Jan 2019_
$2000.00 in 2020, $3000.00 in 2021_________
SECURITY DEPOSIT: $1500.00
Attached hereto is the sole and entire rental agreement between the aforementioned management and Tenant, and both parties acknowledge receipt of completed copies. No oral statements shall be binding. No modification of this agreement shall be binding unless attached hereto and signed by all parties.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THESE PRESENTS TO BE SIGNED IN PERSON OR BY PERSON DULY AUTHORIZED, THE DAY AND YEAR.
/s/ Larry Bentley |
|
/s/ Alfred Yin |
|
Management |
|
Tenants |
|
[ ] Tenants have received a mold guide and prevention documents ____________________________
This is page 1 MANAGEMENT INITIALS: TENANT INITIALS:
|
RENTAL AGREEMENT
In consideration of the agreement of aforementioned Tenant, the Management hereby rents them the dwelling located at the aforementioned Property Address (“the premises”) for the period commencing on the aforementioned Beginning Date, and the monthly thereafter until the aforementioned Termination Date, at which time this Agreement is terminated. Tenants consideration of Management permitting them to occupy the premises, hereby agrees to the following terms:
1. RENT: Rent shall be the aforementioned “Monthly Rental” per month, payable in full and in advance, without notice or demand, upon the 5th day of each calendar month to the Management at the following address: 4880 Lower Roswell Road,#165-226, Marietta, GA 30068, or at such other place as may be designated by Management from time to time. Rent checks received in advance will be deposited only on the due date.
2. LATE FEES: Time is of the essence of this agreement. If the rent is not paid by the fifth day of the month, a penalty of $50.00 shall be paid by Tenant to Management, and a further penalty of $5.00 per day thereafter until the rent is paid shall be paid by Tenant to Management as additional rent. In the event any check given by Tenant to Management is returned by the bank unpaid, Tenant shall pay a $45.00 return check fee to Management for each such check in addition to the aforementioned daily late fees.
3. UTILITIES: Tenant shall be responsible for the payment of all utilities and services.
4. USE: The premises shall be used solely as a residence and shall be occupied only by the persons named in Tenant’s application to rent. Occupancy by guests staying over seven days will be in violation of this provision. No pets of any kind shall be brought on the premises without prior written consent of Management. Tenant shall not have a waterbed on the premises without prior written consent of the Management. Tenants shall comply with all statutes, ordinances and requirements of all subdivision, municipal, states and county authorities now in foreon, or which may hereafter be in force pertaining to the use of the premise.
5. MAINTENANCE, REPAIRS OR ALTERATIONS: Tenant acknowledges that the premises are in good order and repair, and Tenant accepts the premises “as is”, unless otherwise indicated herein. Tenant shall at his own expense, and at all times, maintain the premises in a clean and sanitary manner including all equipment, appliances, furniture and furnishings therein and shall surrender the same, at termination hereof, in a good condition as received, normal wear and tear exepted. Tenant shall be responsible for damages caused by his negligence and that of his family, or invitees, or guests. Tenant shall not paint, paper or otherwise redecorate or make alterations to the premises without prior written consent of the Management. Tenant shall mow, irrigate and maintain any surrounding grounds, including lawns and shrubbery and gutters, and keep the same clear of rubbish, weeds, or leaves if such grounds are part of the premises and are exclusively for the use of the Tenant. In the event that Tenant fails to maintain lawns or shubbery which are a part of premises, Management, after attempting to notify Tenant, may, but is not required to, maintain lawn and/or shubbery by using a professional yard maintenance company. The costs of such yard maintenance will be paid by the Tenant.
This is page 2 MANAGEMENT INITIALS: TENANT INITIALS:
|
6. RIGHT OF ACCESS: Management may enter the premises without notice to Tenant for inspection and maintenance during reasonable hours. In case of emergency, management may enter at any time.
7. INDEMNIFICATION: Management shall not be liable for any damage or injury to the Tenant, or any property, occurring on the premises, or any part thereof, unless such damage is the proximate result of the negligence or unlawful act of the Management. Tenant does hereby indemnify, release, and save harmless management and management agents from and against any and all suits, actions, claims, judgments, and expenses arising out of or relating to any life, bodily or personal injury, property damage, or other demand, claim or action of any nature arising out of or related to this lease or the use of this premises.
8. ESCALATION CLAUSE: The Management shall reserve the right to increase the rent during the term of this lease upon a 30 day written notice to the Tenant. The Tenant shall approve or reject this proposal in writing within seven days of receipt. Upon rejection, the Management may, at its option, cause the Termination Date to be accelerated to a date not less than 30 days following the date of rejection as stated in writing.
9. POSSESSION: If management is unable to deliver possession of the premises at the commencement hereof, Management shall not be liable for any damages caused hereby, nor shall this agreement be void or voidable, but Tenant shall not be liable for any rent until possession is delivered. Tenant may terminate this agreement if possession is not delivered within 14 days of the start of the term hereof.
10. DEFAULT: If Tenant shall fail to pay rent when due, or fail to perform any terms hereof, the Management, at its option, may terminate all rights of Tenant there under, unless Tenant, within three days after notice thereof, shall cure such default. If Tenant abandons or vacates the property, while in default of the payment of rent, Management may consider any property left on the premises to be abandoned and may dispose of the same in any manner allowed by law, without responsibility or liability therefore. In the event the Management reasonably believes that such abandoned property has no value, it may be discarded. All property on the premises in hereby subject to a lien in favor of Management for payment of all sums due hereunder, to the maximum extent allowed by law. In the event of a default by Tenant, Management may elect to a) continue the lease in effect and enforces all his rights and remedies hereunder, including the right to recover the rent as it comes due, or b) at any time, terminate all of Tenants rights hereunder and recover from Tenant all damages he may incur by reason of the breach of the lease, including the cost of recovering the premises, and including the worth at the time of such termination, or at the time of an award if suit be instituted to enforce this provision, of the amount by which the unpaid rent of the balance of the term exceeds the amount of such rental loss which the Tenant proves could be reasonably avoided.
11. DESTRUCTION OF OR DAMAGE TO THE PREMISES: If the premises are totally destroyed or so substantially damaged as to be untenantable by storm, fire, earthquake, flooding or other casualty, this lease shall terminate as of the date of such destruction or damage, and rental shall be accounted for as between management and Tenant as of that date. If the leased premises should be damaged (but not rendered wholly untenantable) to the extent that management shall decide not to rebuild or repair, the term of this lease shall end and the rent be prorated up to the time of the damage.
12. SECURITY: The security deposit set forth, if any, shall secure the performance of Tenant’s obligations hereunder. Management may, but shall not be obligated to apply all or portion of said deposit on account of Tenant’s obligations hereunder, and may, but is not obligated to, maintain such funds in an interest bearing account. Any interest accruing shall become the property of Management or Agent for Management. Any balance remaining upon termination shall be returned to Tenant. Tenant shall not apply the Security Deposit in payment of the last month’s rent, unless prior written consent has been given by the Management. Nothing in this agreement shall preclude the Management from retaining the security deposit for nonpayment of rent or of fees, for abandonment of the premises (abandonment fee shall be equal to one month’s rent), for nonpayment of utility charges, for repair work or cleaning contracted for by the Tenant with third party, for unpaid pet fees, or for actual damages caused by the Tenant’s breach.
13. ASSIGNMENT AND SUBLETTING: Tenant may not sub-let dwelling or assign this lease without the written consent of Management.
14. ATTORNEY’S FEE: In any legal action to enforce the terms hereof or relating to the demised property, the prevailing party shall be entitled to all costs incurred in connection with such actions, including a reasonable attorney’s fees.
This is page 3 MANAGEMENT INITIALS: TENANT INITIALS:
|
15. WAIVER: No failure of Management to enforce any term hereof shall be deemed a waiver, nor shall any acceptance of a partial payment of rent for any payment marked “payment in full” be deemed a waiver of Management’s right to the full amount thereof.
16. NOTICE: Any notice which either party may or is required to give, may be given by mailing the same, postage paid, to Tenant at the premises, or to Management in care of 4880 Lower Roswell Road,#165-228, Marietta, GA 30068 or at such other places as may be designated in writing by the parties from time to time. Real Estate Services is authorized to act on behalf of owner with respect to this agreement, to manage the premises, and is management’s designated agent for service of process with respect to any matter arising under this agreement.
17. HOLDING OVER: If the Tenant should hold over on the premises after expiration of the term of this lease and with the consent of Management, the possession shall not be construed as a renewal for the same term, but shall be construed as a month to month tenancy in accordance with the terms hereof as applicable. Either party must give to the other a minimum sixty day written notice of intention to terminate tenancy during such month to month tenancy, and such notices shall become effective on the last day of the month in which it is received. There shall be no renewal of this lease by operation of law.
18. EVICTION: If the rent called for under this agreement has not been received by the fifth day of the month in which it is due, than Management or his agent shall have the right to assert all legal and contractual remedies to enforce this lease and, without limitation to any other remedy, may take out Dispossessory Warrant and have Tenant, his or her family and possessions evicted from the premises.
19. SECURITY DEPOSIT: The aforementioned security deposit will be returned to Tenant within thirty days after dwelling is vacated. IF: a) lease term has expired or agreement has been terminated by all parties , and b) all monies due Management by Tenant have been paid, and c) dwelling is not damaged beyond normal wear and tear, and d) dwelling is returned in clean, ready-to-rent condition.
20. EARLY TERMINATION: Tenant may terminate this agreement prior to previously stated TERMINATION DATE by doing all the following a) Giving Management ninety days written notice, with such notice becoming effective only on the last day of the month in which it is received. b) Paying all monies due through new date of termination, c) Paying an amount equal to the Security Deposit as an Early Termination Fee, d) Returning dwelling in a clean, ready-to-rent condition and e) Paying a pro-rated portion of expenses for repairing and cleaning based on the ratio of the number of months then remaining in the term to the number of months originally in the initial terms.
21. APPLIANCES: The stove, and any window air conditioners, and/or any other appliances, if any, delivered with the property are for the convenient of the Tenant, but are not guaranteed to operate for the duration of this agreement. Tenant may repair them at Tenants expense if Tenant so desire and Tenant agrees to return same at end of lease in same condition as at beginning of lease. Items of personalty delivered with the property are listed previously as “Appliances Included”
22. REPAIRS: Management will make necessary repairs to the dwelling and systems including electrical, plumbing, heating and hot water heating with reasonable promptness after receipt of written notice from Tenant. Tenant agrees to bear the first $50.00 of the cost of these repairs during each calendar month. Management will bear all costs above the first $50.00 for repairs.
If any damages, beyond normal wear and tear, is caused by Tenant or his guest, Tenant agrees to pay management the cost of repair with the next rent payment or upon termination of this agreement, whichever comes first.
This is page 4 MANAGEMENT INITIALS: TENANT INITIALS:
|
23. FROZEN OR BROKEN WATER PIPES: During cool weather, Tenant agrees to maintain sufficient heat in dwelling and leave faucets dripping to prevent frozen or broken water pipes. Damage to plumbing, the dwelling, and/or personal property from frozen or broken water pipes will not be considered norm wear and tear, and will be the responsibility of the Tenant.
24. MAIL: Mail delivery to the premises is not guaranteed, and any boxes requested by the US Postal Service are not the responsibility of Management.
25. RENTERS INSURANCE: The Management of the property can not maintain insurance for Tenants personal property or belongings. Tenants are encouraged to obtain Renters Insurance prior to taking occupancy.
26. KEROSENE HEATERS OR APPLIANCES: The Tenant agrees not to use any form of Kerosene space heater in the dwelling.
27. TELEPHONES: Availability of telephones or Cable TV service to the premises is not guaranteed, and any installation or repair charges are the responsibility of the Tenants.
28. SMOKE DETECTORS: The Tenant acknowledges the presence of a working smoke detector on each level of the premises, and agrees to test the detector weekly for proper operation and further agrees to replace batteries when necessary. Tenant agrees to notify Management immediately in writing if any unit fails to operate properly during any test. Tenant acknowledges that he understands how to test and operate the smoke detector(s) in this property.
29. LOCKS: Tenant is prohibited from adding locks to, changing or in any way altering locks installed on the doors on the premises without the prior written consent of the management. If the addition or changing of such locks is consented to, the Tenant shall provide management with keys to such locks.
30. NO ESTATE IN LAND: This lease shall create the relationship of landlord and tenant between management and Tenant: no estate shall pass out the management: Tenant has only usufruct and not an estate for years.
31. SEVERABILITY: In the event that any part of this lease be construed as unenforceable, the remaining parts of this lease shall be in full force and effect as though the unenforceable part or parts were not written into the lease.
32. PEST CONTROL: Pest control is the responsibility of the Tenant.
33. GENDER: In all references herein to Tenant, the use of the singular number is intended to include the appropriate number as the text of this lease require. Each Tenant shall always be jointly and severally liable for the performance of every agreement, and promise made herein.
In Witness Whereof, the parties hereto have caused these presents to be signed in person or by a person duly authorized, the day and year above written.
This is page 5 MANAGEMENT INITIALS: TENANT INITIALS:
EXHIBIT 10.6
LEASE AGREEMENT
THIS LEASE AGREEMENT (alternatively referred to as either the "Lease" or the "Agreement") is made effective as of the 15th day of January, 2020 by and between ST. JOHN BAPTIST "THE MIGHTY FORTRESS", INC., A Georgia non-profit corporation ("Landlord") and Prudent Senior Services of Georgia, a Georgia corporation ("Tenant").
FOR AND IN CONSIDERATION of the mutual covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:
SECTION 1
DEMISE OF PREMISES AND TERM
1.1 Premises. Landlord, in consideration of the lease payments provided in this Agreement, leases to Tenant certain property containing 8,000 square feet, located at 2415 E Derenne Avenue, Savannah, Georgia 31406, and being that real property more particularly described on Exhibit "A" (the "Property"), together with all improvements located thereon, as shown crosshatched in red on the Floor Plan attached hereto as Exhibit "B" (hereinafter referred to collectively as the "Premises").
1.2 Term and Renewal Term. The term of this Lease shall commence on January 15, 2020 (hereinafter referred to as the "Occupancy Date") and shall terminate at midnight five (5) years thereafter on January 28, 2025 (hereinafter referred to as the "Initial Term"), unless terminated prior thereto pursuant to the terms hereof. However, if the Occupancy Date is not the first day of a calendar month, the Initial Term shall be extended by adding the remainder of the calendar month following the Occupancy Date.
As long as this Lease is in full force and effect, and Tenant is not in default in the performance of its covenants under this Lease, and subject to the conditions hereinafter set forth, Tenant is hereby granted an option (the "Renewal Option") to renew the Lease for two successive period of five (5) additional year(s) (the "Renewal Term"). The Renewal Term shall commence at the expiration of the Initial Term. Tenant shall exercise its option to renew by delivering written notice of such election to Landlord at least three (3) months prior to the expiration of the Initial Term of this Lease. Once Tenant has delivered notice of such exercise to Landlord, Tenant shall have irrevocably exercised the Renewal Option and Tenant may not withdraw the exercise of a Renewal Option, once made. If Tenant fails to give the aforesaid notice within the time permitted, Tenant's Renewal Option shall automatically terminate, and Tenant shall have waived forever its right to extend the term of this Lease.
The renewal of this Lease shall be upon the same terms and conditions of this Lease, except (i) the Base Rent during the Renewal Term shall be as indicated in the Lease Payments section below, after the five year initial period the base rent will be increased to the consumer price index at the end of the five year period to adjust for inflation. (ii) Tenant shall not have the right to assign its renewal rights to any sublessee of the Premises or assignee of the Lease, nor may any such sublessee or assignee exercise or enjoy the benefit of such renewal rights written consent of the Landlord which would not be unreasonably withheld;
(iii) the Premises will be provided in their then-existing condition (on an "as is" basis in the broadest sense of the term) at the time the Renewal Term commences;
(iv) their shall not be any rent abatement period and Tenant shall not be entitled to any cash payment or allowance of any nature or amount whatsoever.
If Tenant maintains possession of the Premises for any period after the termination of this Lease ("Holdover Period"), Tenant shall pay to Landlord a lease payment for the Holdover Period at 150% of the Rent rate in effect for the month during which termination of the Lease becomes effective. Such holdover shall constitute a month to month extension of the Lease terminable by Landlord by thirty (30) days prior written notice to Tenant.
1 |
|
1.3 Removal of Fixtures. Landlord shall have the right to require Tenant to remove any or all fixtures and equipment installed by or for Tenant upon the termination or expiration of the Lease. Tenant may (if not in default hereunder) prior to the expiration of this Lease or any renewal thereof, remove all fixtures and equipment which it has placed in the Premises after the date hereof, provided Tenant restores the Premises to their condition at the installation thereof. All fixtures and equipment not removed shall become the property of Landlord upon termination or expiration of this Lease.
SECTION 2
RENT
2.1 Base Rent. Tenant shall pay to Landlord rental for the Initial Term and Renewal Term hereof according to the following schedule:
Initial Term: |
|
|
|
|
|
Months |
|
Monthly Rental |
|
|
|
1-12 (Jan. 15, 2020-Jan. 31, 2022) |
|
$2,250.00 |
13-24 (Feb. 1, 2021-Jan. 31, 2022) |
|
$4,000.00 |
25-36 (Jan. 1, 2022-Dec.31, 2022) |
|
$4,000.00 |
37-48 (Jan. 1, 2020-Dec. 31, 2021) |
|
$4,000.00 |
49-60 (Jan.1, 2021-Dec.31, 2022) |
|
$4,000.00 |
|
|
|
Renewal Term: |
|
|
|
|
|
Months |
|
Monthly Rental |
|
|
|
61-72 (Jan. 1, 2023-Dec. 31, 2023) |
|
$4,000.00 |
73-84 (Jan. 1, 2024-Dec. 31, 2024) |
|
$4,000.00 |
85-96 (Jan. 1, 2025-Dec.31, 2025) |
|
$4,000.00 |
Said monthly rental shall be due, in advance, on the FIRST day of each month commencing on the Occupancy Date (hereinafter referred to as the "Rent"). However, if the Occupancy
2 |
|
Date is not the first day of a calendar month, Tenant shall, on or before that date, pay the first full month's rent and as Rent for the balance of the first partial month a percentage of the rent specified for the first full calendar month. This percentage shall be determined by a fraction, the numerator of which is the number of days from the Occupancy Date to the end of the calendar month in which that date falls, and the denominator of which is the total number of days in the month. Such payments shall be made to Landlord at:
St. John Baptist Church, "The Mighty
Fortress", Inc. Attn: George P. Lee, HI
522-528 Hartridge Street
Savannah, GA 31401
or such address as may be changed from time to time by Landlord.
2.3. Insurance., The Tenant shall be required to carry commercial liability insurance on the premise in the amount set forth in Section 7 of this lease.
2.4 Personal Property Taxes. Tenant shall pay all taxes assessed on Tenant's personal property on the Premises. If Landlord has paid any such tax in the first instance, as required by the applicable taxing authority, then Tenant shall pay Landlord Tenant's share of such taxes allocable to Tenant's personal property within thirty (30) days after Landlord submits to Tenant copies of said tax bills for the applicable tax year.
2.5 Utilities. Tenant shall pay sixteen percent (20%) of all utility charges for the Premises, including but not limited to electricity, water and sewer, and gas.
2.6 Late Payments. Tenant shall pay a late charge equal to ten percent (10%) of the required monthly payment for each monthly payment that is not received within 10 days after the due date of such late payment.
3 |
|
2.7 Security Deposit. Tenant has concurrently with the execution of this Lease deposited with Landlord the sum of Four Thousand and No/100 Dollars ($4,000.00) (the "Security Deposit") as security for the full performance of every provision of this Lease by Tenant. Landlord shall apply all or any part of the Security Deposit to cure any default by Tenant hereunder, and Tenant shall promptly restore to the Security Deposit all amounts so applied upon invoice within ten (10) days. If Tenant shall fully perform each provision of this Lease, any portion of the Security Deposit which has not been appropriated by Landlord in accordance with the provisions hereof shall be returned to Tenant without interest within thirty (30) days after the expiration of the full-stated term of the Lease.
SECTION 3
USE
3.1 Use. Tenant shall use, occupy, and operate in the Premises solely as an adult daycare center and for no other purpose whatsoever. Tenant covenants to continuously operate upon the whole of the Premises during business hours of 9:00 am to 5:00 pm, Monday through Friday, or such other hours that may be deemed necessary by the Tenant. Tenant shall not, without Landlord's prior written consent, keep anything within the Premises, or use the Premises for any purpose which increases the insurance premium cost or invalidates any insurance policy carried on the Premises, and Tenant shall pay as rent the amount of such increase promptly upon demand by Landlord. The Premises shall not be used for any illegal purposes or in violation of any valid regulation of any governmental body, nor in any manner to create any nuisance or trespass, nor in any manner to vitiate the insurance or increase the rate of insurance on the Premises.
3.2 Rules and Regulations. Tenant shall observe faithfully and comply strictly with the Rules and Regulations attached hereto and made a part hereof by this reference, and with all other Rules and Regulations that Landlord may from time-to-time reasonably adopt for the safety, operation, care, and cleanliness of the Premises or the preservation of good order therein.
3.3 Compliance with Laws. Tenant shall comply, solely at its own expense, with all statutes, regulations, rules, ordinances, and orders of any governmental body, department, or agency thereof which apply to or result from Tenant's use or occupancy of the Premises. In addition to the foregoing, Tenant shall not cause any Hazardous Materials to be generated, treated, stored, used, installed or disposed of in, on, under or about the Premises or permit any Hazardous Materials to be generated, treated, stored, used, installed or disposed of in or on the Premises, except to the extent consistent with customary and reasonable business practices of typical tenants for uses of the Premises as set forth above in this Lease Agreement that do not endanger the health of any persons on or about the Premises and provided Tenant complies with all legal requirements applicable to such Hazardous Materials. Tenant shall not suffer or permit the Premises, or any part thereof, to be used in any manner, or anything to be done therein, or suffer or permit anything to be brought into or kept therein, which would in any way (a) violate any of the provisions of any mortgage to which this Lease is subordinate, (b) violate any legal requirements of any governmental authority, (c) make void or voidable any fire or liability insurance policy then in force with respect to the Premises, (d) make unobtainable from reputable insurance companies authorized to do business in the state where the Premises are located at standard rates any fire insurance with extended coverage or liability or other insurance normally carried with respect to the listed use and required to be furnished by Landlord under the terms of any mortgage to which this Lease is subordinate, (e) cause or, in Landlord's reasonable opinion, be likely to cause physical damage to the Premises or any part thereof, (t) constitute a public or private nuisance, (g) impair, in Landlord's reasonable opinion, the appearance, character or reputation of the Premises; or (h) cause Tenant to default in any of its other obligations under this Lease.
4 |
|
SECTION 4
ALTERATION, REPAIR, AND MAINTENANCE
4.1 Alterations by Tenant. Tenant shall not make any alterations to (including but not limited to alterations to the exterior, the storefront, signs, and/or utility lines or systems within or serving the Premises) nor secure any fixture or apparatus to the Premises without Landlord's prior written approval. The Tenant will be allowed to have an exterior sign of which approval by landlord would not be unreasonably withheld and sign design and layout will be provided to Landlord for approval before such sign would be allowed. . All alterations, fixtures, betterments, and improvements made to or installed upon the Premises shall remain upon the Premises and shall become Landlord's property upon the expiration or earlier termination of this Lease, unless Landlord shall require Tenant to restore the Premises to its original condition. Landlord has approved Tenant's plans to construct an office and two bathrooms on the Premises, as depicted on that architectural schematic attached hereto as Exhibit "C" and made a part hereof by this reference.
4.2 Repairs by Landlord. Landlord shall keep the foundation, roof, exterior walls, and structural portions of the Premises (except for plate glass windows, doors, door closure devices, and other exterior openings, window and door frames, molding, locks, hardware, and special store fronts) in reasonable repair, provided that Tenant shall give Landlord written notice of the necessity for some repair as same affects the Premises. Landlord shall not be required to make any repairs caused by the act or negligence of Tenant or its agents, employees, subtenants, licensees, or concessionaires.
4.3 Repairs by Tenant. Except for those repairs required by Landlord as stated above, Tenant shall be responsible for all other maintenance and repairs to the Premises. Without limiting the foregoing, Tenant shall keep the interior of the Premises, together with the storefront and all doors of the Premises, and all electrical, plumbing, and any other mechanical installations serving the Premises or located therein, whether or not in or under the floor slab or on the roof of the Premises, in good working order and repair, at its expense. Tenant agrees to employ a suitable contractor approved by Landlord to perform Tenant's obligations for maintenance of the heating, cooling, and ventilating units of the Premises, including at least semiannual inspections and cleaning of the system together with such servicing as each such inspection discloses or as shall be reasonably required by Landlord.
5 |
|
Tenant shall promptly repair, at its expense, any damage to the Premises caused by bringing into the Premises any property for Tenant's use, or by the installation or removal or such property regardless of fault or by whom such damage may be caused, unless caused solely by the affirmative acts of negligence of Landlord, its agents, or employees. In the event Tenant fails to make such repairs, Landlord may, at its option (but need not), make same, and Tenant agrees to pay Landlord as additional rent the cost thereof promptly upon demand by Landlord. Tenant shall not overload the floor slab, electric wiring, or utilities serving the Premises and shall install at Tenant's sole expense, after first obtaining Landlord's written approval, any additional electric wiring that may be required in connection with Tenant's apparatus, equipment, or fixtures.
Tenant shall keep the Premises in good, clean, and habitable condition and at its expense free of insects, rodents, vermin, and other pests. If Tenant does not make a required repair within ten (10) days after it receives Landlord's written notice, Landlord may make the repair without liability to Tenant for resulting loss or damage to Tenant's stock or business. In that case, Tenant shall pay to Landlord, upon demand and as additional rent under this Lease, the cost of repairs plus 15% per annum interest. Such interest shall accrue continuously from the date of payment by Landlord until repayment by Tenant.
4.4 Liens. Neither Tenant nor anyone claiming through the Tenant shall have the right to file mechanics' liens or any other kind of lien on the Premises. Further, Tenant agrees to give actual advance notice to any contractors, subcontractors, or suppliers of goods, labor, or services that such liens will not be valid.
Tenant hereby indemnifies Landlord against and shall keep the Premises free from liens for any work performed, materials furnished, or obligations incurred by the Tenant. Should liens or claims be filed against the Premises by reason of Tenant's acts or omissions, Tenant shall cause same to be discharged by bond or otherwise within ten (10) days after filing.
4.5 Acceptance of Premises. Tenant accepts the Premises in their present condition as suited for the use intended by Tenant. All improvements to the Premises made by Tenant shall be approved by Landlord prior to commencement as provided above. Landlord has approved Tenant's plans to construct an office and two bathrooms on the Premises, as depicted on that architectural schematic attached hereto as Exhibit "C" and made a part hereof by this reference.
4.6 Notice of Defects. Tenant shall report to Landlord within a reasonable time any defective conditions within the Premises that are known to it and that Landlord is required to repair, and Tenant's negligent failure to so report shall make Tenant responsible for damages resulting from such defective condition.
4.7 Signs and Displays. Tenant shall have the right to add at its costs an exterior sign with the approval of the Landlord in writing. Tenant shall obtain any necessary permits for any sign, awning, or advertising visible from the exterior of the Premises. Landlord shall have the exclusive right to use the roof, and Tenant shall not affix any sign or aerial to the roof of the Premises. ln addition, the provisions regulating signage contained in Exhibit "D'" attached hereto are incorporated herein by reference.
6 |
|
SECTIONS
DAMAGE, DESTRUCTION, OR CONDEMNATION
5.1 Casualty. Except as otherwise provided herein, if the Premises are damaged by fire or other insured casualty and such damage does not equal or exceed forty percent (40%) of the replacement cost thereof, the damage shall be promptly repaired by Landlord to the extent of the insurance proceeds available therefore. Tenant shall restore Tenant's improvements thereto immediately upon the completion of Landlord's work or simultaneously with such work to the extent practicable. Until repairs to the Premises are completed by Landlord, Rent shall be abated in proportion to the part of the Premises, if any, which is unusable by Tenant in the conduct of its business, but if the damage is due to the fault or neglect of Tenant or its employees, agents, or invitees , there shall be no abatement of rent. If: (a) the Premises is damaged to the extent of more than forty percent (40%) of the replacement cost thereof; or (b) the building in which the Premises is located is damaged by fire or other insured casualty· to the extent of twenty-five percent (25%) or more of the replacement cost thereof; or (c) any damage to the Premises cannot, in Landlord's sole discretion, be repaired within ninety (90) days of the date of such damage; or (d) the Premises is damaged or destroyed during the last thirty percent (30%) of the term hereof, then Landlord may at its sole discretion terminate this Lease by written notice to Tenant.
If Landlord should elect or be obligated pursuant to this Section 5.1 to repair or rebuild because of any damage or destruction, Landlord' s obligation shall be limited to the basic building and any other work or improvements which may have been originally performed or installed at Landlord's expense. If the cost of performing Landlord' s obligations exceeds the actual proceeds of insurance paid or payable to Landlord on account of such casualty, Landlord may terminate this Lease unless Tenant, within fifteen (15) days after demand therefore, deposits with Landlord a sum of money sufficient to pay the difference between the cost of repair and the proceeds of insurance available for such purpose. Tenant shall replace all work and improvements originally installed or performed by Tenant at its expense.
Upon the termination of this Lease pursuant to the provisions of this Section 5.1, the parties shall be released thereby without further obligations to the other party coincident with the surrender of possession of the Premises to Landlord, except for items which have theretofore accrued and be then unpaid. In the event of such termination, all of Tenant's insurance proceeds covering Tenant's leasehold improvements, but excluding proceeds for trade fixtures, merchandise, signs, and other personal property, shall be disbursed and paid to Landlord.
5.2 Condemnation. If the whole of the Premises, or so much thereof as to render the balance unusable by Tenant, shall be taken under power of eminent domain, or otherwise transferred in lieu thereof, or if any part of the Property is taken and its continued operation as a commercial property is not, in Landlord's sole discretion, economical, this Lease shall automatically terminate as of the date possession is taken by the condemning authority. No award for any total or partial taking shall be apportioned, and Tenant hereby unconditionally assigns to Landlord any award which may be made in such taking or condemnation. In the event of a partial taking which does not result in the termination of this Lease, Rent shall be apportioned according to the part of the Premises remaining usable by Tenant.
7 |
|
SECTION 6
INDEMNIFICATION
6.1 Indemnification. Tenant hereby agrees to indemnify and hold Landlord harmless from any and all claims, damages, liabilities, or expenses arising out of (a) Tenant's use of the Premises, (b) any and all claims arising from any breach or default in the performance of any obligation of Tenant, (c) any act, omission, or negligence of Tenant, its agents, or employees. Tenant further releases Landlord from liability for any damages sustained by Tenant due to the Premises or any part thereof or any appurtenances thereto becoming out of repair, or due to the happening of any accident, including but not limited to any damage caused by water, snow, windstorm, tornado, hurricane, gas steam, electrical wiring, sprinkler system, plumbing, heating, and air conditioning apparatus, and from any acts or omission of co-tenants or other occupants of the Property. Landlord shall not be liable for any damage to or loss of Tenant's personal property, inventory, fixtures, or improvements, from any cause whatsoever except the affirmative acts of proven negligence of Landlord, and then only to the extent not covered by insurance to be obtained by Tenant in accordance with Section 7 hereof.
SECTION?
INSURANCE
7.1 Liability Insurance. Tenant shall maintain at its sole expense throughout the Initial Term and the Renewal Term general commercial liability insurance covering the Premises in an amount of One Million Dollars ($1,000,000.00) for injury or death to any one person and Two Million Dollars ($2,000,000.00) for injury and/or death to any number of persons in any one accident and property damage insurance in an about of One Million Dollars ($1,000,000.00) in companies satisfactory to Landlord. Tenant shall also keep in force fire and extended coverage insurance for the full replacement value of Tenant's improvements and Tenant's property, including, but not limited to, inventory, trade fixtures, furnishings, and other personal property. Tenant will cause such insurance policies to name Landlord as an additional insured and to be written so as to provide that the insurer waives all right of recovery by way of subrogation against Landlord in connection with any loss or damage covered by the policy. In addition, Tenant shall keep in force workman's compensation or similar insurance to the extent required by law. Tenant shall deliver said policies or certificates thereof to Landlord within ten (10) days of the commencement of the term. Should Tenant fail to effect the insurance called for herein, Landlord may, at its sole option, procure said insurance and pay the requisite premiums, in which event, Tenant shall pay all sums so expended to Landlord, as additional rent following invoice. The policies shall provide that Landlord will be given fifteen (15) days prior written notice before the policy or policies in question shall be altered or cancelled.
7.2 Waiver of Subrogation. Landlord and Tenant each waive any and all rights to recover against the other, or against the officers, directors, shareholders, partners, joint ventures, employees, agents, customers, invitees, or business visitors of such other party for any loss or damage to such waiving party arising from any cause covered by any property insurance required to be carried pursuant to this Lease or any other property insurance actually carried by such party. Landlord and Tenant, from time to time, will cause their respective insurers to issue appropriate waiver of subrogation rights endorsements to all property insurance policies carried in connection with the Premises or the contents of either.
8 |
|
SECTIONS
DEFAULT: REMEDIES OF LANDLORD
8.1 Default and Remedies.
a. The occurrence of any of the following shall constitute an "Event of Default" under this Lease by Tenant:
i. The Rent or other sum due under this Lease is not paid when due (hereinafter referred to as a "Monetary Default");
ii. Tenant fails to fulfill or perform, or violates any other obligation or term of this Lease (hereinafter referred to as a "Nonmonetary Default").
b. Upon the occurrence of an Event of Default, if such Event of Default is not cured within ten (10) days for a Monetary Default or thirty (30) days for a Nonmonetary Default, after written notice of such Event of Default by Landlord to Tenant, Tenant shall be in default under this Lease and Landlord shall have the option to do and perform any one or more of the following in addition to, and not in limitation of, any other remedy or right permitted by law or in equity:
i. Landlord may take possession of the Premises without further notice, and without prejudicing Landlord's rights to damages.
ii. Landlord may elect to cure any default and the cost of such action shall be added to Tenant's financial obligations under this Agreement.
iii. Landlord may terminate this Lease prior to the normal ending thereof by lapse of time or otherwise and collect rent for the period prior to termination thereof.
iv.Landlord, as Tenant's agent, without terminating the Lease, may at Landlord's option enter upon and rent Premises or any part thereof at the best price obtainable by reasonable effort, without advertisement and by private negotiations and for any term Landlord deems proper. Tenant shall be liable to Landlord for the deficiency, if any, between Tenant's rent hereunder and the price obtained by Landlord on reletting.
v. Landlord shall have all other rights and remedies available at law or in equity.
c. Tenant shall pay all reasonable costs, damages, and expenses suffered by Landlord by reason of Tenant's defaults.
d. In the event that Landlord fails to perform or violates any obligation or term of this Lease and fails to cure said default within thirty (30) days after written notice of such Event of Default by Tenant to Landlord, Landlord shall be in default under this Lease and Tenant shall have all rights and remedies available at law or in equity.
9 |
|
8.2 Bankruptcy. If Landlord shall not be permitted to terminate this Lease as hereinabove provided because of the provisions of Title 11 of the United States Code relating to Bankruptcy, as amended ("Bankruptcy Code"), then Tenant as a debtor in possession or any trustee for Tenant agrees promptly, within no more than fifteen (15) days upon request by Landlord to the Bankruptcy Court, to assume or reject this Lease and Tenant on behalf of itself and any trustee agrees not to seek or request any extension or adjournment of any application to assume or reject this Lease by Landlord with such Court. In such event, Tenant or any trustee for Tenant may only assume this Lease if (A) it cures or provides adequate assurance that the trustees will promptly cure any default hereunder, (B) compensates or provides for any actual pecuniary loss to Landlord resulting from Tenant' s defaults, and (C) provides adequate assurance or performance during the fully-stated term hereof of all of the terms, covenants, and provisions of this Lease to be performed by Tenant. In no event after the assumption of this Lease shall any then-existing default remain uncured for a period in excess of the earlier of ten (10) days or the time period set forth herein. Adequate assurance of performance of this Lease as set forth hereinabove shall include, without limitation, adequate assurance (1) of the source of Rent reserved hereunder, and (2) the assumption of this Lease will not breach any provision hereunder. In the event of a filing of a petition under the Bankruptcy Code, Landlord shall have no obligation to provide Tenant with any services or utilities as herein required, unless Tenant shall have paid and be current in all payments of Operating Costs, utilities, or other charges therefore.
SECTION 9
TRANSFERS, ASSIGNMENTS, AND SUBLETTING
9.1 Assignment and Subletting. Tenant may not assign or sublease any interest in the Premises or permit the use of Premises by any party other than Tenant without the prior written consent of Landlord which will not be unreasonably withheld. Consent to one assignment or sublease shall not destroy or waive this provision, and all later assignments and subleases shall likewise be made only upon prior written consent of Landlord. Subtenants or assignees shall become liable directly to Landlord for all obligations of Tenant hereunder, without relieving Tenant's liability.
SECTION 10
SUCCESSION TO LANDLORD'S INTEREST
10.1 Attornment. Tenant shall be bound to any of Landlord's successors under all the terms, covenants, and conditions of this Lease for the balance of the remaining term.
10.2 Subordination. This Lease shall be subordinate to the lien of any mortgage or security deed or the lien resulting from any other method of financing or refinancing now or hereafter in any buildings hereafter placed upon the land of which the Premises are a part, and to any and all advances to be made under such mortgages, and all renewals, modifications, extensions, and replacements thereof. The aforesaid provisions shall be self- operative, and no further instrument of subordination shall be required to evidence such subordination. Tenant covenants and agrees to execute and deliver, upon demand, such further instrument or instruments subordinating this Lease on the foregoing basis to the lien of any such mortgage or mortgages as shall be desired by Landlord and any mortgagees or proposed mortgagees, and hereby irrevocably appoints Landlord the attorney-in-fact of Tenant to execute and deliver such instrument or instruments within ten (10) days after written notice to do so.
10 |
|
SECTION 11
SURRENDER OF THE PREMISES
11.1 At the expiration of earlier termination of this Lease, Tenant shall surrender the Premises to Landlord broom clean and in the same condition as when tendered by Landlord, reasonable wear and tear and insured casualty excepted. Tenant shall promptly repair any damage to the Premises caused by the removal of any furniture, trade fixtures, or other personal property placed in the Premises.
SECTION 12
MISCELLANEOUS
12.1 Attorneys' Fees and Homestead. Tenant shall pay reasonable attorneys' fees incurred by Landlord in the enforcement of any of the terms, covenants, or provisions hereof. Tenant waives all homestead rights and exemptions which it may have under any law as against any obligation owing under this Lease. Tenant hereby assigns to Landlord its homestead and exemption.
12.2 Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the charges herein stipulated shall be deemed to be other than on account of the earliest stipulated charges, nor shall any endorsement or statement on any check or letter companying any check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of any amounts due hereunder or to pursue any other remedy provided herein.
12.3 Time of Essence. TIME IS OF THE ESSENCE OF THIS LEASE.
12.4 Severability. If any portion of this Lease shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this Lease is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.
12.5 Brokers. Tenant indemnifies Landlord against any claims for brokerage commissions in connection herewith.
12.6 Waiver. No waiver by Landlord of any provision of this Lease shall be deemed to be a waiver of any other provision hereof or of any subsequent breach by Tenant of the same provision. Landlord' s consent to or approval of any act by Tenant shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act. No agreement by Landlord to accept Tenant's surrender of the Premises shall be valid unless written.
12.7 Right of Entry. Representatives of Landlord shall have the right to enter the Premises to make inspections, make repairs, provide necessary services, or show the unit to prospective buyers, mortgagees, tenants or workmen during normal business hours and after reasonable notice to Tenant. Landlord may place and maintain "For Sale" signs on the Premises at any time and "For Rent" signs during the last ninety (90) days of the Lease. Notwithstanding the foregoing, as provided by law, in the case of an emergency, Landlord may enter the Premises without Tenant's consent.
11 |
|
12.8 Headings, Captions, and References. The section captions contained in this Lease are for convenience and do not in any way limit or amplify any term or provision hereof. The use of the terms "hereof," "hereunder," and "herein" shall refer to this Lease as a whole, except where noted otherwise.
12.9 Survival of Obligations. The provisions of this Lease with respect to any obligation of Tenant to pay any sum owing in order to perform any act after the expiration or other termination of this Lease shall survive the expiration or other termination of this Lease.
12.10 Jury Trial. TENANT AND LANDLORD BOTH WAIVE A TRIAL BY WRY OR ANY OR ALL ISSUES ARISING IN ANY ACTION OR PROCEEDING BETWEEN THE PARTIES HERETO OR THEIR SUCCESSORS, UNDER OR CONNECTED WITH THIS LEASE OR ANY OF ITS PROVISIONS.
12.11 Notices. Any notice required by this Lease shall be in writing and shall be deemed to be given if delivered personally or mailed by registered or certified mail, return receipt requested, or by a nationally recognized commercial overnight carrier, or by telecopy. Provided, however, the time period in which a response to any notice, demand or request must be given shall commence on the date of receipt by the addressee thereof. Rejection or other refusal to accept or inability to deliver because of changed address of which no notice has been given shall constitute receipt of the notice, demand or request sent. Any such notice, demand or request shall be sent to the respective addresses set forth below (or such other addresses as the party receiving the notice shall have earlier provided to the other party):
As to Landlord: |
|
As to Tenant: |
|
|
|
St. John Baptist Church Attn: George P. Lee, III 522-528 Hartridge Street |
|
Prudent Senior Services of Georgia 5522 New Peachtree Road, Suite 129 Chamblee, GA 30341 |
Savannah, GA 31401 |
|
|
Such addresses may be changed from time to time by either party providing notice as set forth above.
12.12 Representations. Tenant acknowledges that neither Landlord nor Landlord's agents, employees, or contractors have made any representations or promises with respect to the Premises or this Lease, except as expressly set forth herein.
12.13 Exculpation. Tenant agrees that it shall look solely to Landlord's interest in the Premises for the satisfaction of any claim, judgment, decree, decision or ruling lawfully requiring the payment of money by Landlord, and no other real or personal property or assets of Landlord, its members, officers, directors, agents, employees, partners, owners, successors, assigns, or legal representatives shall be subject to satisfaction of any of the foregoing nor liable for any claim against or obligation of Landlord.
12 |
|
12.14 Governing Law. The laws of the State of Georgia shall govern the interpretation, validity, performance, and enforcement of this Lease. Both parties hereby submit to the jurisdiction of the applicable local court in the county where the Premises is located.
12.15 Entire Agreement/Amendment. This Lease contains the entire agreement of the parties, and there are no other promises or conditions in any other agreement whether oral or written. The Lease may be modified or amended in writing, if the writing is signed by the party obligated under the amendment.
12.16 Termination by Landlord. Notwithstanding anything herein to the contrary, Landlord may not terminate this Lease at any time unless Tenant violates the terms of the Lease.
12.17 Cumulative Rights. The rights of the parties under this Lease are cumulative, and shall not be construed as exclusive unless otherwise required by law.
12.18 Failure to Exercise a Power Granted. No failure of Landlord to exercise any power give Landlord hereunder, or to insist upon strict compliance by Tenant of any obligation hereunder, and no custom or practice of the parties at variance with the terms hereof shall constitute a waiver of Landlord's right to demand exact compliance with the terms hereof.
12.19 Damage or Theft of Personal Property. Tenant agrees that all personal property brought into the Premises shall be at the risk of the Tenant only and that the Landlord shall not be liable for theft thereof or any damages thereto occasioned from any act or omission of Landlord, its employees or patrons, or other occupants of the Premises or any other person related to the operation and maintenance of the Premises.
12.20 Definitions. "Landlord" as used in this Lease shall include first party, its representatives, assigns and successors in title to Premises. All the parties agree that in the event the Landlord shall sell or transfer its interest in the title to the demised Property, it shall be relieved of any and all of its obligations under this Lease, but only if the purchaser of the Premises assumes in writing all obligations of the Landlord hereunder. "Tenant" shall include second party, its successors and assigns, and if this Lease shall be validly assigned or subletted, shall include also Tenant's assignees or sub-lessees, as to the Premises covered by such assignment. "Landlord" and "Tenant" include male and female, singular and plural, corporation, partnership or individual, as may fit the particular parties.
13 |
|
IN WITNESS WHEREOF, the parties have executed this Lease Agreement to be effective as of the date first shown above.
TENANT: |
|||
|
|
|
|
|
Prudent Senior Services, a Georgia Corporation |
|
|
|
|
|
|
|
Prudent Senior Services |
|
|
By: | /s/ Wooiyi Yin | ||
|
Its: |
Secretary |
|
Execution Date: |
LANDLORD: |
|||
|
|
|
|
|
St. John Baptist Church "The Mighty Fortress", Inc., a Georgia corporation |
|
|
By: |
George P. Lee, III |
||
|
Its: |
Pastor/CEO | |
Bennett K Martin for Dr. George P. Lee III Chairman of Trustry Ministry St John Baptist Church | |||
|
|
|
|
|
Execution Date: January 28, 2020 |
|
14 |
|
EXHIBIT "A"
All that certain lot, tract, or parcel of land, situate, lying, and being in the City of Savannah, Chatham County, Georgia, known and designated as Lot Number Twenty (20), Golf Course Tract, as shown on a map recorded in Subdivision Map Book A, page 2 of the Chatham County, Georgia records, and bounded on the North by DeRenne Avenue; on the East by lands nor or formerly of Bonna Bella Improvement Company; on the South by Lot Number Nineteen (19), said subdivision, and on the West by Lot Number Twenty-One (21), said subdivision; and now being in Cook Ward. EXCEPTING this conveyance however the northeast comer of said Lot Number Twenty (20), which comer is more particularly described as follows: Commencing at a point at the northeast comer of said Lot Twenty (20) and running thence in a westerly direction along the southern right of way line of DeRenne Avenue a distance of one hundred ten (110) feet, thence running southerly and parallel to the eastern boundary line of Lot Twenty (20) a distance of two hundred twenty-five (225) feet, thence in an easterly direction and parallel to DeRenne Avenue a distance of one hundred ten (110) feet to the eastern boundary line of Lot Twenty (20), thence running in a northerly direction along the eastern boundary line of Lot Twenty (20) a distance of two hundred twenty-five (225) feet to the point of beginning.
PIN 2-0138-01-058.
15 |
EXHIBIT 10.7
LONG TERM CARE OPERATIONS 360, INC.
SUBSCRIPTION AGREEMENT
Long Term Care Operations 360, Inc.
5522 New Peachtree Rd., Suite 122
Chamblee, GA 30341
RE: Long Term Care Operations 360, Inc. Common Stock
Ladies and Gentlemen:
The undersigned investor in this Subscription Agreement hereby acknowledges receipt of the Prospectus, dated __________________, 2021, of Long Term Care Operations 360, Inc., a Nevada corporation (the “Company”), and subscribes for the following number of shares upon the terms and conditions set forth in the Prospectus.
The Investor agrees that this Subscription Agreement is subject to availability and acceptance by the Company.
The Investor hereby subscribes for ____________ shares of the Company’s common stock (“Common Stock”) at $_____ per share, for an aggregate purchase price of $____________.
Payment of $____________ as payment in full of the purchase price is being made via check directly to the Company.
If this subscription is rejected by the Company, in whole or in part, for any reason, all funds will be returned within three business days of the Company’s receipt of such funds, without interest or deduction of any kind.
Purchaser Information:
Printed Name: |
|
____________________________ |
|
|
|
Signature: |
|
____________________________ |
|
|
|
Date: |
|
____________________________ |
|
|
|
Address: |
|
____________________________ |
|
|
|
|
|
____________________________ |
|
|
|
|
|
____________________________ |
The foregoing Subscription is hereby accepted in full on behalf of Long Term Care Operations 360, Inc.
Date: ___________________
LONG TERM CARE OPERATIONS 360, INC.: |
|
|
|
|
|
By: |
|
|
Name: |
Sameer Shah |
|
Title: |
President & CEO |
|
EXHIBIT 23.1
To Whom It May Concern:
We hereby consent to the use in the registration statement of Long Term Care Operations 360, Inc. (formerly known as China Crawfish, Ltd.), on Form S-1, filed on May 10, 2021, of our Report of Independent Registered Public Accounting Firm, dated May 10, 2021, on the balance sheet of Long Term Care Operations 360, Inc. (formerly known as China Crawfish, Ltd.) as of October 31, 2020 and 2019, and the related statements of operations and changes in stockholders equity and cash flows for the year then ended and the related notes, which appear in the Form S1.
We also consent to the references to us under the headings “Experts” in such form S-1.
/s/ Pinnacle Accountancy Group of Utah
Pinnacle Accountancy Group of Utah
(a dba of Heaton & Company, PLLC)
Farmington, UT
May 10, 2021
EXHIBIT 23.2
To Whom It May Concern:
We hereby consent to the use in the registration statement of Long Term Care Operations 360, Inc. (formerly known as China Crawfish, Ltd.), on Form S-1, filed on May 10, 2021, of our Report of Independent Registered Public Accounting Firm, dated May 10, 2021, on the consolidated balance sheet of Prudent Senior Services of America, Inc. as of October 31, 2020 and 2019, and the related consolidated statements of operations and changes in consolidated stockholders equity and consolidated cash flows for the year then ended and the related notes, which appear in the Form S1.
We also consent to the references to us under the headings “Experts” in such form S-1.
/s/ Pinnacle Accountancy Group of Utah
Pinnacle Accountancy Group of Utah
(a dba of Heaton & Company, PLLC)
Farmington, UT
May 10, 2021