Nutex Health Inc 8-K/A, filed Dec 15, 2021
Nutex Health Inc. (NUTX)
About this 8-K/A
Nutex Health Inc filed this 8-K/A on December 15, 2021, reporting on events of October 21, 2021.
Items reported
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 15, 2021
(Exact name of registrant as specified in its charter)
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Securities registered pursuant to Section 12(b) of the Act:
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| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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This Form 8-K/A amends the Original Form 8-K to include the historical audited and unaudited interim combined financial statements of Procare and the unaudited pro forma condensed combined financial information required by Items 9.01(a) and 9.01(b) of Form 8-K that were excluded from the Original Form 8-K in reliance on the instructions to such items and to file the Amendment.
Item 9.01 Financial Statements and Exhibits
(a) Financial statements of businesses acquired
The audited financial statements of Procare, which comprise the statements of financial position as of December 31, 2020, and the unaudited interim statements of financial position as of September 30, 2021, and the related combined statements of income, comprehensive income, changes in equity and cash flows for the year and period then ended, and the related notes to the combined financial statements, are filed herewith as Exhibits 99.2 and 99.3.
(b) Pro forma financial information
The unaudited pro forma condensed financial information of the Company and Procare is filed as Exhibit 99.4 to this Form 8-K/A.
(d) Exhibits
Reference is made to the Exhibit Index following the signature page of this Current Report on Form 8-K, which is incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: December 15, 2021
Clinigence Holdings, Inc.
By: /s/ Michael Bowen
Michael Bowen
Chief Financial Officer
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EXHIBIT INDEX
| Exhibit Number | Description |
| 2.1+ | Agreement and Plan of Merger by and among the Company, Procare, Merger Sub, Majority Stockholder and Minority Stockholder. |
| 99.1+ | Clinigence Press Release dated October 21, 2021announcing the Closing. |
| 99.2 | Audited financial statements of Procare as of December 31, 2020, and for the year then ended. |
| 99.3 | Unaudited financial statements of Procare as of September 30, 2021 and for the period then ended. |
| 99.4 | Unaudited pro forma condensed combined financial information of the Company and Procare. |
| 99.5++ | Audited financial statements of Clinigence Holdings, Inc. as of December 31, 2020, and unaudited financial statements of Clinigence Holdings, Inc. for the nine months ended September 30, 2021. |
* A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request
+ Previously filed with the Original Form 8-K.
++ Previously filed on Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2021.
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PROCARE HEALTH, INC.
INDEPENDENT AUDITOR'S REPORT AND
FINANCIAL STATEMENTS
December 31, 2020
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PROCARE HEALTH, INC.
TABLE OF CONTENTS
| Page | |
| INDEPENDENT AUDITOR'S REPORT | 3 |
| FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020 | 4 |
| Balance Sheet | 5 |
| State of Income Retained Earnings | 6 |
| Statement of Changes in Stockholders' equity | 7 |
| Statement of Cash Flows | 8 |
| NOTES TO FINANCIAL STATEMENTS | 9 |
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BUU D NGUYEN CPA INC
CERTIFIED PUBLIC ACCOUNTING 14180 BROOKHURST ST
GARDEN GROVE CA 92846 TEL (714) 530-3602
e-mail: buunguyen cpa@yahoo.com
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors ProCare Health, Inc Garden Grove, California
Report on the Financial Statements
We have audited the accompanying financial statements of ProCare Health, Inc. (A California Corporation) which comprise the balance sheet as of December 31, 2020, and the related statements of income and retained earnings, changes in stockholders' equity, and cash flows for the year then ended and the related notes to the financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
Continue next page
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continuation
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence is sufficient and appropriate to provide a basis for our audit opm10n.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ProCare Health, Inc. as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
/s/ Buu D Nguyen
BUU D NGUYEN CPA INC
Garden Grove, California August 18, 2021
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FINANCIAL STATEMENTS
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PROCARE HEALTH, INC.
BALANCE SHEET
December 31, 2020
| ASSETS | ||||
| CURRENT ASSETS | ||||
| Cash | $ | 246,376 | ||
| Accounts receivable | 56,909 | |||
| Total Current Assets | 303,285 | |||
| PROPERTY AND EQUIPMENT, at cost | ||||
| Computers | 11,444 | |||
| 11,444 | ||||
| Less accumulated depreciation Net Property and Equipment | (3,363 | ) | ||
| 8,081 | ||||
| OTHER ASSETS | ||||
| Investments | 770,000 | |||
| Total Other Assets | 770,000 | |||
| TOTAL ASSETS | $ | 1,081,366 | ||
| LIABILITIES AND STOCKHOLDER'S EQUITY | ||||
| CURRENT LIABILITIES | ||||
| Account payable | $ | 5,611 | ||
| Loan payable - PPP | 51,872 | |||
| Income tax payable | 173,848 | |||
| Total Current Liabilities | 231,331 | |||
| STOCKHOLDERS' EQUITY | ||||
| Common stock | 25,000 | |||
| Retained earnings | 825,035 | |||
| Total Stockholder's equity | 850,035 | |||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,081,366 | ||
See accompanying notes and auditor’s report.
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PROCARE HEALTH, INC.
Statement of Income and Retained Earnings
For the Year Ended December 31, 2020
| REVENUE | ||||
| Management service | $ | 1,769,262 | ||
| Stop loss insurance income | 157,080 | |||
| Other income | 240,302 | |||
| Total Revenue | 2,166,644 | |||
| DIRECT EXPENSES | ||||
| Claim expenses | 7,716 | |||
| Contractors | 351,797 | |||
| Software subscriptions | 155,448 | |||
| Stop loss insurance | 30,862 | |||
| Total Direct Expenses | 545,823 | |||
| GROSS MARGIN | 1,620,821 | |||
| GENERAL AND ADMINISTRATIVE EXPENSES | ||||
| Answering service | 11,863 | |||
| Credentialing | 5,450 | |||
| Consulting fees | 116,620 | |||
| Depreciation | 2,102 | |||
| Donation | 70,000 | |||
| Insurance | 22,680 | |||
| Internet expense | 21,508 | |||
| Legal and accounting | 46,624 | |||
| Office supplies | 244,738 | |||
| Payroll expenses | 575,369 | |||
| Payroll taxes | 37,738 | |||
| Repairs and maintenance | 15,794 | |||
| Total G&A Expenses | 1,170,486 | |||
| INCOME(LOSS) BEFORE PROVISION FOR INCOME TAXES | 450,335 | |||
| PROVISION FOR INCOME TAXES | (126,020 | ) | ||
| NET INCOME | 324,315 | |||
| RETAINED EARNINGS, BEGINNING OF YEAR | 675,720 | |||
| Distribution | (175,000 | } | ||
| RETAINED EARNINGS, END OF YEAR | $ | 825,035 | ||
See accompanying notes and auditor’s report
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PROCARE HEALTH, INC.
Statement of Changes in Stockholders' Equity
For the Year Ended December 31, 2020
| Common Stock | ||||||||||||||||||||
| Shares | Amount | Additional Paid-in Capital | Retained Earnings | Total Stockholders' Equity | ||||||||||||||||
| Balance on December 31, 2019 25000 | 25,000 | 25000 | 675,720 | 700,720 | ||||||||||||||||
| Distribution | (175,000 | ) | (175,000 | ) | ||||||||||||||||
| Net income | — | — | — | 324,315 | 324,315 | |||||||||||||||
| Balance on December 31, 2020, | 25000 | 25000 | 825,035 | 850,035 | ||||||||||||||||
See accompanying notes and auditor’s report
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PROCARE HEALTH, INC.
Statement of Cash Flows
For the Year Ended December 31, 2020
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| Net income | $ | 324,315 | |
| Adjustment to reconcile net income to net cash | |||
| provided by (used by) operating activities | |||
(Increase)/ Decrease in operating assets |
|||
| Depreciation | 2,102 | ||
| Accounts receivable | 3,067 | ||
| Investment
|
|||
| Increase/ (Decrease) in operating liabilities | |||
| Accounts payable | 5,611 | ||
| Loan payable PPP | 51,872 | ||
| Income taxes payable | 30,690 | ||
| Net cash provided by operating activities | 417,657 | ||
CASH FLOW FROM INVESTING ACTIVITIES |
|||
| Acquisition of equipment | (2,751 | ) | |
| Net cash provided (used) by investing activities | (2,751 | ) | |
CASH FLOW FROM FINANCING ACTIVITIES |
|||
| Distribution to stockholder | (175,000 | ) | |
| Net cash provided (used) by financing activities | (175,000 | ) | |
| Net increase (decrease) in cash | 239,906 | ||
| Cash at Beginning of year | 6,470 | ||
| Cash at End of year | $ | 246,376 | |
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PROCARE HEALTH, INC.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020
1. NATURE OF OPERATIONS
PROCARE HEALTH, INC (the "Company") is a management service organization (MSO)that provides administrative infrastructure and technology for risk bearing Independent Physicians Association ("IPA") operated in Southern California and Northern California. The company was incorporated in the State of California on September 1, 2011. The Company enable the physician organizations to succeed in the assumption of financial and population risk, to improve the organization's performance in health care delivery and to provide actionable health care data analytics. ProCare Health, Inc provides claims administration, compliance, credentialing, quality management, utilization management, contracting, healthcare provider relations, member services, care management, coding optimization and financial reporting services to the California Department of Managed Health Care (DMHC). The Company markets and sells the services of its member physicians to HMO' s and then administers the financial, informational and risk management aspects associated with each contract.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies of PROCARE HEALTH (the Company) is presented to assist in the understanding of the Company's financial statements. The financial statements and notes are representations of the Company's management, who are responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are primary cash and cash equivalents.
The Company deposits its cash in accounts with a major financial institution, which are insured by the Federal Deposit Insurance Corporation (FDIC) up to legal limits. At times, cash and cash equivalents may be more than FDIC-insured limits. The Company places its cash deposits with high-credit, quality financial institutions and, by policy, limits its credit exposure. The Company has not experienced any losses in such amounts and believes it is not exposed to significant credit risk
SEE ACCOMPANYING AUDITOR 'S REPORT
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PROCARE HEALTH, INC.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Cash and cash equivalents
The Company has highly liquid instruments with a demand account as cash equivalents. As of December 31, 2020, the cash, and cash equivalents in the amount of $246,376 included in the balance sheet were held in a financial institution the form of a checking account.
Use of estimates
The Company prepares financial statements in conformity with generally accepted accounting principles that require management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the accounting period. Actual results could differ from such estimates.
Trade accounts receivable
Trade accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Changes in the valuation allowance have not been material to the financial statements. Account receivable was $56,909 on December 31, 2020.
Property and Equipment
The Company has fixed assets identified as of December 31, 2020, in the amount of $11,444 being depreciated for 5 years.
Revenue recognition and contract provisions
The Company contracts with the Independent Physicians Association ("IPA") for a negotiated fixed fee based on the IPA monthly collected revenues from the health plans to provide business services for administrative assistance and operational support for billing, payroll, and marketing.
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PROCARE HEALTH, INC.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income tax
The Company has no uncertain tax positions that qualify for recognition or disclosure in the financial statements. The income tax returns of the company for 2018, 2019, 2020 are subject to examination by Internal Revenue Service and Franchise Tax Board, generally for three (3) years after they have been filed
The income tax provision for the year ended December 31, 2020, consist of the following:
| 2020 | ||||
| Federal | $ | 86,210 | ||
| State | 39,810 | |||
| $ | 126,020 | |||
The income tax provision amounts shown on the statement of income and retained earnings differ from the amounts that would result from applying statutory tax rates to income before income taxes primarily because of the marginal tax rates used to compute deferred taxes, pennanent differences between determining income for financial statement purposes and computing taxable income, and the effect of state and local taxes.
3. RESTRICTED ACCOUNT
There is no Restricted Account identified as of December 31, 2020
4. COMMON STOCKS
On December 31, 2020, the Company has authorized 25,000 shares, at $1.00 par value.
5. SUBSEQUENT EVENTS
Date of Management Review- The company has evaluated subsequent events through August 18, 2021, the date of which the Company's audited financial statements were available to be issued. Through that date, management has determined that the Company did not have any material recognizable or non-recognizable subsequent events.
End of Independent Auditor's Report
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PROCARE HEALTH, INC..
ACCOUNTANT'S COMPILATION REPORT AND
FINANCIAL STATEMENTS
September 30, 2021
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PROCARE HEALTH, INC.
TABLE OF CONTENTS
| ACCOUNTANT'S COMPILATION REPORT | 3 |
| FINANCIAL STATEMENTS FOR THE NINE MONTH ENDED SEPTEMBER 30, 2021, | 4 |
| Balance Sheet | 5 |
| Statement of Income and Retained Earnings | 6 |
| Statement of Changes in Stockholders' equity | 7 |
| Statement of Cash Flows | 8 |
| NOTES TO FINANCIAL STATEMENTS | 9 |
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BUU D NGUYEN CPA INC
CERTIFIED PUBLIC ACCOUNTING 14180 BROOKHURST ST
GARDEN GROVE CA 92846 TEL (714) 530-3602
e-mail: buunguyen cpa@yahoo.com
ACCOUNTANT'S COMPILATION REPORT
To the Board of Directors ProCare Health, Inc Garden Grove, California
Management is responsible for the accompanying financial statements of ProCare Health, Inc., which comprise the balance sheet as of September 30, 2021, and the related statement of income and retained earnings for nine months ended September 30, 2021, in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting Review Services promulgated by the Accounting Review Services Committee of the AICPA. We did not audit or review the financial statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on these financial statements.
/s/ Buu D. Nguyen
BUU D NGUYEN CPA INC
BUU D NGUYEN, CPA
Garden Grove, California November 11, 2021
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FINANCIAL STATEMENTS
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BALANCE SHEET
September 30, 2021
| ASSETS | ||||
| CURRENT ASSETS | ||||
| Cash | $ | 81,316 | ||
| Accounts receivable | 284,847 | |||
| Total Current Assets | 366,163 | |||
| PROPERTY AND EQUIPMENT, at cost | ||||
| Computers | 11,933 | |||
| 11,933 | ||||
| Less accumulated depreciation | (4,741 | ) | ||
| Net Property and Equipment | 7,192 | |||
| OTHER ASSETS | ||||
| Investments | 925,000 | |||
| Total Other Assets | 925,000 | |||
| TOTAL ASSETS | $ | 1,298,355 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
| CURRENT LIABILITIES | ||||
| Accounts payable | $ | 95,236 | ||
| Income taxes payable | 220,640 | |||
| Total Current Liabilities | 315,876 | |||
| STOCKHOLDERS' EQUITY | ||||
| Common stock | 25,000 | |||
| Retained earnings | 957,479 | |||
| Total Stockholders' equity | 982,479 | |||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,298,355 | ||
See accompanying notes and accountant's compilation report.
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PROCARE HEALTH, INC.
Statement of Income and Retained Earnings
For Nine Months Ended September 30, 2021
| REVENUE | ||||
| Management services | $ | 1,681,048 | ||
| Stop loss insurance income | 162,532 | |||
| Other income | 214,000 | |||
| Total Revenue | 2,057,580 | |||
| DIRECT EXPENSES | ||||
| Claim expenses | 7,398 | |||
| Contractors | 197,735 | |||
| Software subscriptions | 201,632 | |||
| Stop loss insurance | 42,534 | |||
| Total Direct Expenses | 449,299 | |||
| GROSS MARGIN | 1,608,281 | |||
| GENERAL AND ADMINISTRATIVE EXPENSES | ||||
| Answering service | 11,098 | |||
| Credentialing | 4,675 | |||
| Consulting fees | 221,970 | |||
| Depreciation | 1,378 | |||
| Insurance | 36,115 | |||
| Internet expense | 10,791 | |||
| Legal and accounting | 143,232 | |||
| Office supplies | 250,219 | |||
| Payroll expenses | 496,296 | |||
| Payroll taxes | 56,260 | |||
| Repairs and maintenance | 2,105 | |||
| Total G&A Expenses | 1,234,139 | |||
| INCOME(LOSS) BEFORE PROVISION FOR INCOME TAXES | 374,142 | |||
| PROVISION FOR INCOME TAXES | (104,698 | ) | ||
| NET INCOME | 269,444 | |||
| RETAINED EARNINGS, BEGINNING OF YEAR | 825,035 | |||
| Distribution | (137,000 | ) | ||
| RETAINED EARNINGS, END OF PERIOD | $ | 957,479 | ||
See accompanying notes and accountant's compilation report. Page4
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PROCARE HEALTH, INC.
Statement of Changes in Stockholders' Equity
For the Nine Months Ended September 30, 2021
| Common Stock | |||||||||||||||||||
| Shares | Amount | Additional Paid-in Capital | Retained Earnings | Total Stockholders' Equity | |||||||||||||||
| Balance at December 31, 2020 | 25000 | $ | 25,000 | $ | — | $ | 825,035 | $ | 850,035 | ||||||||||
| Distribution | (137,000 | (137,000 | ) | ||||||||||||||||
| Net income | — | — | 269 444 | 269.444 | |||||||||||||||
| Balance at September 30, 2021 | 25000 | $ | 25,000 | $ | 957,479 | $ | 982,479 | ||||||||||||
See accompanying notes and accountant's compilation report.
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PROCARE HEALTH, INC.
Statement of Cash Flows
For the Nine months Ended September 30, 2021
| CASH FLOW FROM OPERATING ACTIVITIES | ||||
| Net income | 269,444 | |||
| Adjustment to reconcile net income to net cash provided by(used by) operating activities | ||||
| (Increase)/ Decrease in operating assets | ||||
| Depreciation | 1,378 | |||
| Accounts Receivable | (227,938 | ) | ||
| Investments | (155,000 | ) | ||
| Increase /(Decrease) in operating liabilities | ||||
| Accounts payable | 89,625 | |||
| Loan payable PPP | (51,872 | ) | ||
| Income taxes payable | 46,792 | |||
| Net cash used by Operating Activities | (27,571 | ) | ||
| CASH FLOW FROM INVESTING ACTIVITIES | ||||
| Acquisition of equipment | (489 | ) | ||
| Net cash provided (used) by investing activities | (489 | ) | ||
| CASH FLOW FROM FINANCING ACTIVITIES | ||||
| Distribution to stockholder | (137,000 | ) | ||
| Net cash provided (used) by financing activities | (137,000 | ) | ||
| Net increase (decrease) in cash | (165,060 | ) | ||
| Cash at Beginning of year | 246,376 | |||
| Cash at End of period | 81,316 |
See accompanying notes and accountant's compilation report.
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NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2021
1. NATURE OF OPERATIONS
PROCARE HEALTH, INC. (the "Company") is an Independent Physicians Association ("IPA") incorporated in the State of California on September 1,2011. The Company is a risk bearing organization, as defined and registered through the California Department of Managed Health Care (DMHC) and engaged in providing professional services under Health Management Organization ("HMO") health plan contracts through a network of providers that consists of primary care and specialty care physicians. The Company contracts with these providers through a variety of capitation and fee for service arrangements to provide a full scope of services for all health care needs of the HMO members. The Company markets and sells the services of its member physicians to HMO' s and then administers the financial, informational and risk management aspects associated with each contract.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies of PROCARE HEALTH, INC. (the Company) is presented to assist in the understanding of the Company's financial statements. The financial statements and notes are representations of the Company's management, who are responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are primary cash and cash equivalents.
The Company deposits its cash in accounts with a major financial institution, which are insured by the Federal Deposit Insurance Corporation (FDIC) up to legal limits. At times, cash and cash equivalents may be more than FDIC-insured limits. The Company places its cash deposits with high-credit, quality financial institutions and, by policy, limits its credit exposure. The Company has not experienced any losses in such amounts and believes it is not exposed to significant credit risk
SEE ACCOMPANYING ACCOUNTANT'S COMPILATION REPORT
| 9 |
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2021
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Cash and cash equivalents
The Company has highly liquid instruments with a demand account as cash equivalents. As of September 30, 2021, the cash, and cash equivalents in the amount of $81,316 included in the balance sheet were held in a financial institution the form of a checking account.
Use of estimates
The Company prepares financial statements in conformity with generally accepted accounting principles that require management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the accounting period. Actual results could differ from such estimates.
Trade accounts receivable
Trade accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Changes in the valuation allowance have not been material to the financial statements. Account receivable was $284,847 on September 30. 2021.
Property and Equipment .
The Company has fixed assets identified as of September 30, 2021, in the amount of $11,933 being depreciated for 5 years.
Revenue recognition and contract provisions
The Company contracts with Independent Physicians Association ("IPA" ) for a negotiated fixed fee based on the IPA monthly collected revenues from the health plans to provide business services for administrative assistance and operational support for billing, payroll and marketing.
SEE ACCOMPANYING ACCOUNTANT'S COMPILATION REPORT
| 10 |
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2021
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income tax
The Company has no uncertain tax positions that qualify for recognition or disclosure in the financial statements. The income tax returns of the company for 2018, 2019, 2020 are subject to examination by Internal Revenue Service and Franchise Tax Board, generally for three (3) years after they have been filed
The income tax provision for the period ended September 30,2021 consist of the following:
| 2021 | ||||
| Federal | $ | 71,624 | ||
| State | 33,074 | |||
| $ | 104,698 | |||
The income tax provision amounts shown on the statement of income and retained earnings differ from the amounts that would result from applying statutory tax rates to income before income taxes primarily because of the marginal tax rates used to compute deferred taxes, permanent differences between determining income for financial statement purposes and computing taxable income, and the effect of state and local taxes
3. RESTRICTED ACCOUNT
There is no Restricted Account identified as of September 30, 2021
4. COMMON STOCKS
On September 30, 2021, the Company has authorized 25,000 shares, at $1.00 par value.
5. SUBSEQUENT EVENTS
Date of Management Review-The company has evaluated subsequent events through November 11, 2021, the date of which the Company's audited financial statements were available to be issued. Through that date, management has determined that the Company did not have any material recognizable or non-recognizable subsequent events.
End of Accountant's Compilation Report
SEE ACCOMPANYING ACCOUNTANT'S COMPILATION REPORT
| 11 |
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The accompanying unaudited pro forma condensed combined financial statements present the pro forma consolidated financial position and results of operations of the combined company based upon the historical financial statements of Clinigence Holdings, Inc. (Clinigence), and Procare Health, Inc. (Procare), after giving effect to the and Procare Merger and adjustments described in the following footnotes, and are intended to reflect the impact of this Merger on Clinigence on a pro forma basis.
The unaudited pro forma condensed combined balance sheet reflects the Merger of Procare as if it has been consummated on September 30, 2021 and includes pro forma adjustments for preliminary valuations of certain tangible and intangible assets by Clinigence’s management as of the Merger date of October 1, 2021. These adjustments are subject to further revision upon the related intangible asset valuations and fair value determinations.
The unaudited pro forma condensed combined statement of operations for the nine months ended September r 30, 2029 combines Clinigence’s historical results for the nine months ended September 30, 2021 with Procare’s historical results for the nine months ended September 30, 2021. The unaudited pro forma statement of operations gives effect of the Merger as if it had taken place on October 1, 2021.
The accompanying unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not reflect the realization of potential cost savings, revenue synergies or any potential restructuring costs. Certain cost savings and revenue synergies may result from the Mergers. However, there can be no assurance that these cost savings or revenue synergies will be achieved. Cost savings, if achieved, could result from, among other things, the reduction of overhead, distribution and other operating expenses, changes in corporate infrastructure, the elimination of duplicative facilities and the leveraging of consolidated annual external purchases. Revenue synergies, if achieved, could result from, among other things, the cross-selling of Clinigence services through Procare. The pro forma information is not necessarily indicative of what the financial position or results of operations actually would have been had the Mergers been completed at the date indicated. In addition, the unaudited pro forma combined financial information does not purport to project the future financial position or operating results of the combined company after effective date of the Merge
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| CLINGENCE HOLDINGS INC. | ||||||||||||||||||
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||||||||||||
| AS OF SEPTEMBER 30, 2020 | ||||||||||||||||||
| CLINIGENCE HOLDINGS, INC. | PROCARE | PRO FORMA ADJUSTMENTS | NOTES | PRO FORMA COMBINED | ||||||||||||||
| Current Assets | ||||||||||||||||||
| Cash | $ | 6,011,442 | $ | 81,316 | $ | 6,092,758 | ||||||||||||
| Stock subscriptions receivable | 4,770,000 | 4,770,000 | ||||||||||||||||
| Accounts receivable | 432,349 | 284,847 | 717,196 | |||||||||||||||
| Prepaid expenses | 393,938 | — | 393,938 | |||||||||||||||
| Total current assets | $ | 11,607,729 | $ | 366,163 | $ | 11,973,892 | ||||||||||||
| Long-term assets | — | |||||||||||||||||
| Investments | 925,000 | 925,000 | ||||||||||||||||
| Right of use asset, net | 108,842 | 108,842 | ||||||||||||||||
| Investment in ACMG | 7,578,171 | 7,578,171 | ||||||||||||||||
| Property and equipment, net | 9,398 | 7,192 | 16,590 | |||||||||||||||
| Intangible assets, net | 9,269,694 | 2,090,760 | (b) | 11,360,454 | ||||||||||||||
| Goodwill | 54,697,684 | 784,174 | (e) | 55,481,858 | ||||||||||||||
| Deposits | 0 | — | ||||||||||||||||
| Other non-current assets | 0 | — | ||||||||||||||||
| Total assets | $ | 83,271,518 | $ | 1,298,355 | 2,874,934 | $ | 87,444,807 | |||||||||||
| Current liabilities | ||||||||||||||||||
| Accounts payable and accrued expenses | $ | 3,330,337 | 95,236 | 3,425,573 | ||||||||||||||
| Customer deposits | 25,326 | 25,326 | ||||||||||||||||
| Accrued interest on notes payable | 181,935 | 181,935 | ||||||||||||||||
| Amounts due to related parties | 128,176 | 128,176 | ||||||||||||||||
| Lease liability - current | 45,440 | 45,440 | ||||||||||||||||
| Income taxes payable | 220,640 | (220,640 | ) | (c) | — | |||||||||||||
| Deferred revenue | 45,022 | 45,022 | ||||||||||||||||
| Current portion of convertible notes | 1,965,155 | 1,965,155 | ||||||||||||||||
| Current portion of notes payable | 813,127 | 813,127 | ||||||||||||||||
| Total current liabilities | $ | 6,534,518 | $ | 315,876 | (220,640 | ) | $ | 6,629,754 | ||||||||||
| Long-term liabilities | ||||||||||||||||||
| Lease liability - long term | 67,882 | 67,882 | ||||||||||||||||
| Deferred tax liability | 2,429,500 | 522,690 | (f) | 2,952,190 | ||||||||||||||
| Notes Payable | 300,000 | 300,000 | ||||||||||||||||
| Total liabilities | $ | 9,331,900 | $ | 315,876 | 302,050 | $ | 9,949,826 | |||||||||||
| Common Stock $.001 par value (pre-merger 45,595,316 post-merger 46,354,352) | 45,595 | 25,000 | (24,241 | ) | (a) | 46,354 | ||||||||||||
| APIC | 101,187,532 | 3,769,496 | (c) (d) | 104,957,028 | ||||||||||||||
| Retained earnings (deficit) | (27,305,852 | ) | 957,479 | (1,172,371 | ) | (c) (d) (g) | (27,520,744 | ) | ||||||||||
| Total stockholders' equity | 73,927,275 | 982,479 | 2,572,884 | 77,482,638 | ||||||||||||||
| Noncontrolling interest | 12,343 | 12,343 | ||||||||||||||||
| Total liabilities and stockholders' equity | $ | 83,271,518 | $ | 1,298,355 | 2,874,934 | $ | 87,444,807 | |||||||||||
| See accompanying notes to the unaudited pro forma condensed consolidated financial information. | ||||||||||||||||||
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CLINIGENCE HOLDINGS, INC. | ||||||||||||||||||||
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| NINE MONTHS ENDED SEPTEMBER 30, 2021 | ||||||||||||||||||||
| CLINIGENCE HOLDINGS, INC. | PROCARE | PRO FORMA ADJUSTMENTS | NOTES | PRO FORMA COMBINED | ||||||||||||||||
| Revenue | $ | 12,873,604 | $ | 2,057,580 | $ | — | $ | 14,931,184 | ||||||||||||
| Cost of sales | 10,156,087 | 449,299 | — | 10,605,386 | ||||||||||||||||
| Gross profit (loss) | $ | 2,717,517 | 1,608,281 | $ | — | $ | 4,325,798 | |||||||||||||
| Operating expenses | ||||||||||||||||||||
| General and administrative expenses | 7,950,353 | 1,234,139 | — | 9,184,492 | ||||||||||||||||
| Research and Development | 208,615 | — | 208,615 | |||||||||||||||||
| Sales and Marketing | 21,154 | — | 21,154 | |||||||||||||||||
| Depreciation and Amortization | 448,306 | — | 110,194 | (d) | 558,500 | |||||||||||||||
| Total operating expenses | $ | 8,628,428 | $ | 1,234,139 | $ | 110,194 | $ | 9,972,761 | ||||||||||||
| Income (Loss) from operations | $ | (5,910,911 | ) | $ | 374,142 | $ | (110,194 | ) | $ | (5,646,963 | ) | |||||||||
| Other income (expenses) | — | |||||||||||||||||||
| Income (loss) from earnings from equity investment | 444,171 | — | 444,171 | |||||||||||||||||
| Income from forgiveness of debt | 314,807 | — | 314,807 | |||||||||||||||||
| Interest income | 629 | — | — | 629 | ||||||||||||||||
| Interest expense, net | (3,923,246 | ) | — | — | (3,923,246 | ) | ||||||||||||||
| Total other income (expenses) | $ | (3,163,639 | ) | $ | — | $ | — | $ | (3,163,639 | ) | ||||||||||
| Net income (loss) | $ | (9,074,550 | ) | $ | 374,142 | (110,194 | ) | $ | (8,810,602 | ) | ||||||||||
| Net income attributable to noncontrolling interest | $ | 12,343 | $ | 0 | $ | — | $ | 12,343 | ||||||||||||
| Tax provision | 104,698 | (104,698 | ) | (g) | — | |||||||||||||||
| Net income (loss) attributable to Clinigence Holdings Inc. | $ | (9,086,893 | ) | $ | 269,444 | $ | (5,496 | ) | $ | (8,822,945 | ) | |||||||||
| Basic and fully diluted income (loss) per common share: | ||||||||||||||||||||
| Continuing operations | $ | (0.27 | ) | $ | (0.26 | ) | ||||||||||||||
| Discontinued operations | 0.00 | 0.00 | ||||||||||||||||||
| Net income (loss) per common share | $ | (.27 | ) | $ | (.26 | ) | ||||||||||||||
| Weighted average common shares outstanding - basic and fully diluted | 33,746,690 | 33,749,470 | ||||||||||||||||||
| See accompanying notes to the unaudited pro forma condensed consolidated financial information. | ||||||||||||||||||||
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1. Basis of Presentation
The unaudited pro forma condensed combined financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, management believes that the disclosures are adequate to make the information presented not misleading.
The accompanying unaudited pro forma condensed combined financial statements present the pro forma consolidated financial position and results of operations of the combined company based upon the historical financial statements of Clinigence and Procare, after giving effect to the Merger and adjustments described in the following footnotes and are intended to reflect the impact of this Merger on Clinigence on a pro forma basis.
The unaudited pro forma condensed combined balance sheet reflects the Merger as if it had been consummated on October 1, 2021 and includes pro forma adjustments for preliminary valuations of certain intangible assets by Clinigence management as of the Merger date of October 1, 2021. These adjustments are subject to further revision upon finalization of the related intangible asset valuations and fair value determinations.
The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2021 combines Clinigence’s historical results for the nine months ended September 30, 2021 with Procare’s historical results for the nine months ended September 30, 2021. The unaudited pro forma statement of operations gives effect of the Merger as if it had taken place on October 1, 2021.
The accompanying unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not reflect the realization of potential cost savings, revenue synergies or any potential restructuring costs.
2. Merger of Procare
On October 15, 2021, Clinigence entered into a Merger agreement to acquire all of the shares of Procare, with Procare continuing after the Merger as a direct wholly-owned subsidiary of Clinigence. The Merger, which became effective on October 15, 2021 (the “Effective Date”), is accounted for under the Acquisition method of accounting.
Clinigence issued an aggregate of 759,036 shares of its common stock in consideration for 100% of the outstanding shares of Procare. 607,229 shares were issued in consideration and 151,807 shares were issued as contingent consideration. Based on the closing price of Clinigence’s common stock of $4.00 on October 15, 2021 and a preliminary independent valuation the contingent consideration the aggregate purchase price was $2,874,933.
The pro forma condensed combined balance sheet has been adjusted to reflect the allocation by Clinigence management of the Procare purchase price to identifiable intangible net assets acquired and the excess purchase price to goodwill. The purchase price allocation is based upon a total purchase price of $2,874,933. This amount is derived from the issuance of 607,229 shares of Clinigence common stock at a price of $4.00 on October 15, 2021 and a preliminary independent valuation the contingent consideration of $446,018.
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The purchase price of the Merger is as follows:
| Fair value of Clinigence common stock issued upon closing | $ | 2,428,915 | ||
| Contingent consideration | 446,018 | |||
| Total purchase price | $ | 2,874,933 |
Under the acquisition method of accounting, the total purchase price is allocated to Procare’s net intangible assets based on a preliminary independent valuation report of the fair values at the date of the completion of the Merger. The following table summarizes the allocation of the purchase price for Procare.
| Tangible Assets | $ | 57,479 | ||
| Acquired identifiable intangibles: | ||||
| Management contracts | $ | 1,864,530 | ||
| Tradename/Trademarks | $ | 226,230 | ||
| Goodwill | $ | 726,694 | ||
| Total purchase price | $ | 2,874,933 |
$2,090,759 has been allocated to Procare’s identifiable intangible assets acquired.
3. Pro Forma Adjustments and Assumptions
Pro forma adjustments are necessary to reflect the estimated purchase price and to reflect the amounts related to Procare’s net tangible and intangible assets at an amount equal to the preliminary valuation reports of their fair values. The historical consolidated financial information has been adjusted to give effect to pro forma events that are directly attributable to the Merger.
The pro forma adjustments reflecting the completion of the Mergers are based upon the acquisition method of accounting in accordance with Section 805 of the FASB Codification ASC 805) and upon the assumptions set forth in the notes to the unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined balance sheet has been adjusted to reflect the preliminary allocation of the purchase price to identifiable net assets acquired, including an amount for goodwill representing the difference between the purchase price and the fair value of the identifiable net assets. The estimated purchase price was calculated based upon $4.00, the closing price of Clinigence’s common stock on October 15, 2021.
The final allocation of the purchase price is dependent upon the final valuation reports. Accordingly, the pro forma purchase price adjustments reflected in the following unaudited pro forma combined financial statements are preliminary and have been made solely for the purpose of preparing these statements.
The pro forma adjustments are based upon available information and certain assumptions that Clinigence believes are reasonable under the circumstances. A final valuation report determination of the fair value of the assets acquired and liabilities assumed may differ materially from the preliminary valuation report determinations. This final valuation will be based on the actual fair values of tangible and intangible assets and liabilities assumed of Procare and that are acquired as of the effective date of the Merger. The final valuation may change the purchase price allocation, which could affect the fair value assigned to the assets acquired and liabilities assumed and could result in a change to the unaudited pro forma combined financial statements.
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The unaudited pro forma condensed combined financial statements incorporate the following pro forma assumptions and adjustments:
| (a) | The shareholders of Procare exchanged their shares of Procare common stock for 759,036 shares of the Company’s common stock par value .001 per share. (See note 2 for more details.) |
| (b) | The book value is the fair value of all assets and liabilities of Procare with the exception of the carrying value of Procare’s intangible assets which have a preliminary estimated fair value of $2,090,759. (See note 2 for more details.) |
| (c) | Elimination of Income tax payable and tax provision |
| (d) | To record estimated amortization on identifiable intangible assets acquired. |
| (e) | Goodwill recognized as a result of the Merger (See notes 2 for more details.) |
| (f) | To record estimated Deferred Tax Liability on identifiable intangible assets acquired. |
| (g) | Elimination of Provision for income tax. |
4. Pro Forma Net Loss per Share
Shares used to calculate unaudited pro forma combined basic and diluted net loss per share are based on the sum of the following:
| a) | The number of Clinigence weighted-average shares used in computing historical net loss per share, basic and diluted; and |
| b) | The number of Clinigence common shares issued to the former Procare shareholders as consideration for the Merger. |
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