Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: June 30, 2018

Commission File Number : 000-53012

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Delaware		90-0687379
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)

709 S. Harbor City Boulevard, Melbourne, Florida 32901

(Address of principal executive offices)

(321) 725-0090

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 pursuant to Section 13(a) of the Exchange Act. ☐

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

As of August 13, 2018, there were 32,480,522 shares outstanding of the registrant’s Common Stock.

TABLE OF CONTENT

PART I. FINANCIAL INFORMATION

ITEM 1	Financial Statements	3

	Condensed consolidated balance sheets as of June 30, 2018 (unaudited) and December 31, 2017	3

	Condensed consolidated statements of operations for the three and six months ended June 30, 2018 and 2017 (unaudited)	4

	Condensed consolidated statement of stockholders’ equity for the six months ended June 30, 2018 (unaudited)	5

	Condensed consolidated statements of cash flows for the six months ended June 30, 2018 and 2017 (unaudited)	6

	Notes to condensed consolidated financial statements (unaudited)	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	29

ITEM 4.	Controls and Procedures	29

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	29
ITEM 1A.	Risk Factors	29
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
ITEM 3.	Defaults Upon Senior Securities	29
ITEM 4.	Mine Safety Disclosures	29
ITEM 5.	Other Information	29
ITEM 6.	Exhibits	30
	SIGNATURES	31

Item 1. Financial Statements

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

		June 30,			December 31,
		2018			2017
		(unaudited)
ASSETS
Current assets
Cash (amounts related to VIE of $572,446 and $702,476)	$	8,411,528		$	2,015,534
Accounts receivable, net (amounts related to VIE of $4,533,012 and $4,420,605)		10,451,686			8,699,714
Employee loans (amounts related to VIE of $856,828 and $652,125)		1,640,827			1,316,684
Prepaid and other current assets (amounts related to VIE of $454,829 and $425,725)		670,263			515,356
Total current assets		21,174,304			12,547,288

Property, plant and equipment, net (amounts related to VIE of $88,001 and $264,150)		2,457,021			2,295,163

Total other assets (amounts related to VIE of $22,005 and $921,470)		3,789,672			3,908,781

Total assets	$	27,420,997		$	18,751,232


LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses (amounts related to VIE of $1,005,919 and $1,479,075)	$	2,759,754		$	2,379,404
Accounts payable, related party (amount related to VIE of $0 and $251,588)		251,588			251,588
Tax payable		254,791			223,899
Line of credit, short term (amount related to VIE of $440,024)		440,024			440,024
Notes payable, current portion (amount related to VIE of $24,975 and $0)		42,670			29,552
Unearned revenue		27,612			44,607
Deferred rent, short term portion (amount related to VIE of $0 and $45,203)		40,857			105,171
Total current liabilities		3,817,296			3,474,245

Long term liabilities:
Deposits held		41,930			41,930
Line of credit, long term		1,100,000			1,100,000
Notes payable, long term portion (amount related to VIE of $89,490 and $0)		140,615			60,146
Deferred rent, long term portion (amount related to VIE of $2,009,735 and $2,510,406)		2,696,302			2,589,568
Total long term liabilities		3,978,847			3,791,644

Total liabilities		7,796,143			7,265,889

Redeemable common stock(Note 6)		7,500,000			—

Equity
Preferred stock, $0.01 par value; 1,000,000 shares authorized, Nil issued and outstanding		—			—
Common stock, $0.001 par value; 100,000,000 shares authorized, 32,480,522 and 27,356,838 shares issued; 32,480,522 and 27,167,818 shares outstanding as of June 30, 2018 and December 31, 2017, respectively		32,481			27,357
Additional paid in capital		25,074,577			25,185,487
Treasury stock, 0 and 189,020 common shares, at cost, respectively		—			(249,265	)
Accumulated deficit		(13,278,131	)		(13,989,018	)
Total stockholders' equity attributable to First Choice Healthcare Solutions, Inc.		11,828,927			10,974,561
Non-controlling interest (note 10)		295,927			510,782
Total equity		12,124,854			11,485,343

Total liabilities and equity	$	27,420,997		$	18,751,232

See the accompanying notes to these unaudited condensed consolidated financial statements

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	For the three months ended June 30,						For the six months ended June 30,
	2018			2017			2018			2017
Revenues:
Patient service revenue	$	9,108,898		$	7,870,271		$	17,590,570		$	15,277,257
Allowance for bad debts		(283,443	)		(239,354	)		(562,005	)		(504,350	)
Net patient service revenue		8,825,455			7,630,917			17,028,565			14,772,907
Rental Revenue		596,897			583,774			1,179,684			1,162,137
Total Revenue		9,422,352			8,214,691			18,208,249			15,935,044

Operating expenses:
Salaries and benefits		4,735,940			4,004,159			9,065,225			7,720,534
Other operating expenses		2,702,864			2,631,823			5,335,650			5,161,006
General and administrative		1,324,950			1,606,111			2,678,786			2,779,945
Depreciation and amortization		198,908			193,424			400,820			382,912
Total operating expenses		8,962,662			8,435,517			17,480,481			16,044,397

Net income (loss) from operations		459,690			(220,826	)		727,768			(109,353	)

Other income (expense):
Gain on sale of equipment		17,400			—			17,400			—
Miscellaneous income		41,884			53,696			82,206			103,798
Interest expense, net		(37,219	)		(30,107	)		(60,731	)		(62,181	)
Total other income		22,065			23,589			38,875			41,617

Net income (loss) before provision for income taxes		481,755			(197,237	)		766,643			(67,736	)

Income taxes (benefit)		—			—			—			—

Net income (loss)		481,755			(197,237	)		766,643			(67,736	)

Non-controlling interest (note 10)		(50,206	)		65,662			(55,756	)		138,680

NET INCOME (LOSS) ATTRIBUTABLE TO FIRST CHOICE HEALTHCARE SOLUTIONS, INC.	$	431,549		$	(131,575	)	$	710,887		$	70,944

Net income (loss) per common share, basic	$	0.01		$	(0.00	)	$	0.02		$	0.00

Net income (loss) per common share, diluted	$	0.01		$	(0.00	)	$	0.02		$	0.00

Weighted average number of common shares outstanding, basic		32,378,940			26,843,848			30,505,275			26,549,810

Weighted average number of common shares outstanding, diluted		33,178,940			26,843,848			31,305,275			27,349,810

See the accompanying notes to these unaudited condensed consolidated financial statements

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2018

							Additional
	Common stock						Paid in			Treasury Stock						Accumulated			Non-controlling
	Shares			Amount			Capital			Shares			Amount			Deficit			Interest			Total
Balance, December 31, 2017		27,356,838		$	27,357		$	25,185,487			189,020		$	(249,265	)	$	(13,989,018	)	$	510,782		$	11,485,343
Common stock previously issued and canceled		(71,667	)		(72	)		(67,929	)		—			—			—			—			(68,001	)
Common stock issued for services rendered		34,371			35			44,541			—			—			—			—			44,576
Common stock previously issued returned to treasury and canceled		(189,020	)		(189	)		(249,076	)		(189,020	)		249,265			—			—			—
Sale of common sock		5,000,000			5,000			7,495,000			—			—			—			—			7,500,000
Reclassify put option in connection to sale of common stock to temporary equity		—			—			(7,500,000	)		—			—			—			—			(7,500,000	)
Acquisition of 25% interest in Crane Creek Surgery Center		—			—			(129,389	)		—			—			—			(270,611	)		(400,000	)
Stock based compensation		350,000			350			295,943			—			—			—			—			296,293
Net income		—			—			—			—			—			710,887			55,756			766,643
Balance, June 30, 2018 (unaudited)		32,480,522		$	32,481		$	25,074,577			—		$	—		$	(13,278,131	)	$	295,927		$	12,124,854

See the accompanying notes to these unaudited condensed consolidated financial statements

FIRST CHOICE HEALTHCARE SOLUTIONS, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the six months ended June 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss)	$	766,643		$	(67,736	)
Adjustments to reconcile net income to cash used in operating activities:
Depreciation and amortization		400,820			382,912
Allowance for bad debt		562,005			504,350
Stock based compensation		272,868			325,021
Gain on sale of equipment		(17,400	)		—
Changes in operating assets and liabilities:
Accounts receivable		(2,313,977	)		(1,823,255	)
Prepaid expenses and other current assets		(154,907	)		(98,287	)
Employee loans		(324,143	)		(345,591	)
Other assets		(55,625	)		—
Accounts payable and accrued expenses		380,350			138,085
Income taxes payable		24,754			—
Deferred rent		42,420			103,743
Unearned income		(16,995	)		17,101
Net cash used in operating activities		(433,187	)		(863,657	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment		17,400			—
Purchase of 25% interest in Crane Creek Surgical Center		(400,000	)		—
Purchase of equipment		(381,806	)		(197,588	)
Net cash used in investing activities		(764,406	)		(197,588	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock		7,500,000			—
Proceeds from notes payable		120,754			22,113
Purchase of treasury stock		—			(49,954	)
Payments on notes payable		(27,167	)		(262,546	)
Net cash provided by (used in) financing activities		7,593,587			(290,387	)

Net increase (decrease) in cash		6,395,994			(1,351,632	)
Cash beginning of period		2,015,534			4,593,638

Cash end of period	$	8,411,528		$	3,242,006

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	57,733		$	62,181

See the accompanying notes to these unaudited condensed consolidated financial statements

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

NOTE 1 — BASIS OF PRESENTATION

First Choice Healthcare Solutions, Inc. (“FCHS,” “the Company,” “we,” “our” or “us”) is actively engaged in implementing a defined growth strategy aimed at building a network of localized, integrated healthcare services platforms comprised of non-physician-owned medical centers of excellence, which concentrate on treating patients in the following specialties: Orthopaedics, Spine Surgery, Interventional Pain Medicine and related diagnostic and ancillary services in key high growth markets.

The unaudited condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries: First Choice Medical Group of Brevard LLC, Marina Towers, LLC, FCID Medical Inc., TBC Holdings of Melbourne, Inc., CCSC Holdings, Inc. and Crane Creek Surgical Partners, LLC., along with the VIE, The B.A.C.K. Center. All significant intercompany balances and transactions, including those involving the VIE, have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of June 30, 2018 and for the three and six months ended June 30, 2018 and 2017. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the operating results for the full year ending December 31, 2018 or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the Company as of December 31, 2017 and for the year then ended, which were filed with the Securities and Exchange Commission on Form 10-K on April 2, 2018.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of the financial statements in conformity with U. S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant estimates include the recoverability and useful lives of long-lived assets, provision against bad debt, the fair value of the Company’s stock, and stock-based compensation. Actual results may differ from these estimates.

Revenue recognition

The Company recognizes revenue when: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts.

The Company recognizes, significant patient service revenue at the time the services are rendered, even though it does not assess the patient’s ability to pay. Therefore, The Company’s interim and annual periods reports disclose both, its policy for assessing and disclosing the timing and amount of uncollectable patient service revenue recognized as doubtful. Qualitative and quantitative information about significant changes in the allowance for doubtful accounts related to patient accounts receivable are disclosed in the Company’s reports. These estimates are based upon the history and identified trends for each of our payers.

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

Patient service revenue

Patient service revenue, net of contractual allowance and discounts, consists of net patient fees received from insurance companies, third party payors (including federal and state agencies), hospitals and patients themselves based mainly upon established contractual billing rates, less allowances for contractual adjustments and discounts. Patient service revenue is recorded in the period in which the services are provided.

Rental Revenue

In addition to housing our corporate headquarters and First Choice Medical Group, the building leases 38,334 square feet of commercial office space to non-affiliated tenants. Our corporate headquarters and FCID Holdings offices currently utilize 4,274 square feet on the fifth floor of Marina Towers; and First Choice Medical Group, including its MRI center and Physical Therapy center, currently occupies 21,902 square feet on the ground, first and second floors.

Concentrations of credit risk

The Company’s financial instruments that are exposed to a concentration of customer risk and accounts receivable risk. Occasionally, the Company’s cash in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed by senior management. Revenues and accounts receivable are concentrated between two major payers with the approximate risk level outlined below.

Concentration of Risk
Revenue Concentration:
	Three months ended June 30,
	2018		2017
Medicare	34.5	%	33.5	%
Commercial Payor 1	16.5	%	20.5	%
Commercial Payor 2	11.2	%	—	%

	Six Months ended June 30,
	2018		2017
Medicare	35.2	%	34.0	%
Commercial Payor 1	16.2	%	19.7	%
Commercial Payor 2	10.4	%	10.0	%

Receivable Concentration:
	June 30,		June 30,
	2018		2017
Medicare	24.0	%	34.6	%
Commercial Payor 1	10.6	%	15.5	%
Commercial Payor 2	13.4	%	12.5	%

Accounts receivable

Accounts receivables are carried at their estimated collectible amounts net of doubtful accounts. The Company analyzes its history and identifies trends for each major payer sources of revenue to estimate the appropriate allowance for doubtful accounts and provision for bad debts. Management regularly reviews data about these major payer sources of revenue in evaluating the sufficiency of the allowance for doubtful accounts.

Patient Receivables: Accounts receivables from services provided to patients who have third-party coverage, the Company analyzes contractually due amounts and provides an allowance for bad debts, if necessary. The Company records a provision for bad debts in the period of service on the basis of past experience or when indications are the patients are unable or unwilling to pay the portion of their bill for which they are responsible. The difference between the standard rates (or the discounted rates if negotiated) and the amounts collected after all reasonable collection efforts have been exhausted, is charged off against the allowance for doubtful accounts.

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

Rental Receivables: Accounts receivables from rental activities are periodically evaluated for collectability in determining the appropriate allowance for bad debts.

In the year ended 2017, the Company changed its estimates of the allowance for doubtful accounts related to its customers, primarily based on historical experience of write-offs of outstanding accounts receivable. The result of this change in estimate resulted in an increase compared to the year ended December 31, 2016 to the allowance for doubtful accounts by approximately $3.2 million in the year ended 2017. As of June 30, 2018, and December 31, 2017, the Company’s allowance for doubtful accounts was $7,987,946 and $7,238,615, respectively.

Net (loss) income per share

Basic net (loss) income per common share is based upon the weighted-average number of common shares outstanding. Diluted net income per common share is based on the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding and computed as follows:

	Three months ended June 30,					Six months ended June 30,
	2018		2017			2018		2017
Numerator:
Net income (loss) attributable to First Choice Healthcare Solutions, Inc.	$	431,549	$	(131,575	)	$	710,887	$	70,944

Denominator:
Weighted-average common shares, basic		32,378,940		26,843,848			30,505,275		26,549,810
Weighted-average common shares, diluted		33,178,940		26,843,848			31,305,275		27,349,810

Basic:	$	0.01	$	(0.00	)	$	0.02	$	0.00
Diluted:	$	0.01	$	(0.00	)	$	0.02	$	0.00

Potentially dilutive common shares from convertible debt, options and warrants are determined by applying the treasury stock method to the assumed exercise of warrants and share options are were excluded from the computation of the diluted net income per share because their inclusion would be anti-dilutive. In addition, there were no vested restrict stock for periods presented. Potentially dilutive securities excluded from the basic and diluted net income (loss) per share are as follows:

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017
Convertible line of credit		—		800,000		—		—
Warrants to purchase common stock		1,875,000		1,875,000		1,875,000		1,875,000
Options to purchase common stock		3,000,000		3,000,000		3,000,000		3,000,000
Restricted stock awards		1,201,910		660,000		1,201,910		660,000
		6,076,910		6,335,000		6,076,910		5,535,000

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

Stock-based compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the condensed consolidated statements of operations, as if such amounts were paid in cash. Upon exercise of a common stock equivalent, the Company issues new shares of common stock out of its authorized shares.

Segment information

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The information disclosed herein represents all the material financial information related to the Company’s principal operating segments. (See Note 11 – Segment Reporting).

Treasury Stock

The Company uses the cost method when it purchases its own common stock as treasury shares and displays treasury stock as a reduction of shareholders' equity. As of June 30, 2018, the Company canceled all of its outstanding treasury stock.

Reclassifications

Certain reclassifications have been made to prior period’s data to conform to the current year’s presentation. These reclassifications had no impact on reported income or losses.

Litigation, Claims and Assessments

From time to time, we may become involved in lawsuits and legal proceedings which arise in the ordinary course of business including potential disputes with patients. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Our contracts with hospitals generally require us to indemnify them and their affiliates for losses resulting from negligence of our physicians. Currently, we have no pending litigation that is deemed to be material to the consolidated financial statements.

Recent accounting pronouncements

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers” to supersede previous revenue recognition guidance under current U.S. GAAP. The guidance presents a single five-step model for comprehensive revenue recognition that requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Two options are available for implementation of the standard which is either the retrospective approach or cumulative effect adjustment approach. The guidance becomes effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. The Company adopted ASU 2014-09 using the modified retrospective transition method in the first quarter of 2018 and such adoption did not have a material impact on the condensed consolidated financial statements.

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

In February 2016, the FASB issued ASU 2016-02—Leases (Topic 842), requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases except for short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. The effective date of the new standard for public companies is for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition and requires application of the new guidance at the beginning of the earliest comparative period presented. The Company is evaluating the effect that the updated standard will have on its financial statements and related disclosures.

In August 2016, the FASB issued ASU 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance for eight specific cash flow issues with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. The effective date for ASU 2016-15 is for annual periods beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2016-15 in the first quarter of 2018 and such adoption did not have a material impact on the Company.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350). The amendments in this update simplify the test for goodwill impairment by eliminating Step 2 from the impairment test, which required the entity to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining fair value of assets acquired and liabilities assumed in a business combination. The amendments in this update are effective for public companies for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We are evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805); Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business to help companies evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company adopted ASU 2017-01 in the first quarter of 2018 and such adoption did not have a material impact on the Company.

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments.

As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value because of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception.

Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently reviewing the impact of adoption of ASU 2017-11 on its financial statements.

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

In June 2018, the FASB issued ASU 2018-07, Stock Compensation (Topic 718); Improvements to Non-employer Share-Based Payment Accounting. The amendment aligns the accounting for share based payments issued to employees and non-employees. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those periods. The Company is currently reviewing the impact of the adoption of ASU 2018-07 on its financial statements.

Subsequent events

The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements, except as disclosed.

NOTE 3 – LIQUIDITY

The Company incurred various non-recurring expenses in 2017 and 2018 in connection with the planned development of its Healthcare Services Business. Management believes continued growth in 2018 will support improved liquidity.

The Company believes that the current cash balance and line of credit (See Note4), along with continued execution of its business development plan, will allow the Company to further improve its working capital; and currently anticipates that it will have sufficient capital resources to meet projected cash flow requirements through the date at least one year from the filing of this report.

However, to execute the Company’s business development plan, which there can be no assurance we will achieve, the Company may need to raise additional funds through public or private equity offerings, debt financings, corporate collaborations or other means and potentially reduce operating expenditures. If the Company is unable to secure additional capital, it may be required to curtail its business development initiatives and take additional measures to reduce costs to conserve its cash.

NOTE 4 — LINES OF CREDIT

Line of credit, CT Capital

FCMG - Brevard entered into a Loan and Security Agreement (the “Loan Agreement”) with CT Capital, Ltd., d/b/a CT Capital, LP, a Florida limited liability partnership (the “Lender”). Under the Loan Agreement, the Lender committed to make an accounts receivable line of credit in the maximum aggregate amount of $2,500,000 to FCMG - Brevard with an interest rate of 6% per annum (the “Loan”). Interest is due and payable monthly. The Lender may convert up to $2,000,000 of the outstanding principal amount or interest on the Loan into common stock of the Company at a conversion price of $0.75 per share.

On December 27, 2017, the Loan Agreement with CT Capital, Ltd. (“Lender”) was amended to extend the Maturity Date to December 31, 2019 and further provide that neither the Company nor Lender shall effectuate any conversion of the Loan to the extent that after giving effect to any such conversion, the Lender would beneficially own in excess of 9.99% of the number of shares of our Company’s shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of the Loan by the Lender.

The obligations of the Company under the Loan Agreement, as amended, are guaranteed by certain affiliates of the Company, including a personal guarantee issued by the Company’s Chief Executive Officer.

As of June 30, 2018, and December 31, 2017, the outstanding balance was $1,100,000 and the remaining principal amount the Lender can convert into common stock is $600,000, subject to the limitations set forth above. The balance available on the line of credit is $1,400,000 as of June 30, 2018.

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

Line of credit, Florida Business Bank

The B.A.C.K. Center is a party to a Promissory Note with Florida Business Bank, a Florida banking corporation. Under the Loan Agreement, the Lender committed to make an accounts receivable line of credit in the maximum aggregate amount of $1,383,000 (as amended), with an interest rate of Prime floating plus 1.0%, as published in The Wall Street Journal , with a floor of 2.75% per annum (as amended). The agreement annually renews on June 30, 2018.

Interest shall be due and payable monthly, and principal is due on demand. The outstanding principal balance plus all accrued but unpaid interest shall be due on demand (the “Maturity Date”). Upon default, the interest may be adjusted to the highest rate permissible by law.

The Loan is secured by all assets of The B.A.C.K. Center now owned or hereafter acquired. The assets constitute the collateral for the repayment of the Loan.

The Loan Agreement also includes covenants, representations, warranties, indemnities and events of default that are customary for facilities of this type. The advance rate is defined as: 60% of eligible accounts receivables. Eligible receivables include all Medicare and Medicaid receivables less than 90 days old multiplied by a factor of 0.25, plus all other receivables less than 90 days old multiplied by a factor of 0.50. As of June 30, 2018, The B.A.C.K. Center had not violated the loan covenants.

The obligations of The B.A.C.K Center under the Loan Agreement are guaranteed by the shareholders of The B.A.C.K. Center. The Loan Agreement is also guaranteed in the amount of $950,000 by related parties of The B.A.C.K. Center. As of June 30, 2018, and December 31, 2017, the outstanding balance on the Loan was $440,024 and $440,024, respectively.

NOTE 5— NOTES PAYABLE

Notes payable as of June 30, 2018 and December 31, 2017 are comprised of the following:

	June 30, 2018			December 31, 2017
Note Payable, GE Arm	$	—		$	12,536
Capital Leases- Equipment		183,285			77,162
		183,285			89,698
Less current portion		(46,981	)		(29,552	)
Long term portion	$	136,304		$	60,146

Capital leases — equipment

On February 6, 2017, the Company entered into a capital lease agreement to acquire equipment with 48 monthly payments of $611 payable through January 6, 2021 with an effective interest rate of 14.561% per annum. The Company may elect to acquire the leased equipment at a nominal amount at the end of the lease.

In June 22, 2017, the Company entered into a lease agreement to acquire equipment with 60 monthly payments of $1,223 payable through June 2021 with an effective interest rate of 5.00% per annum. The Company may elect to acquire the leased equipment at a nominal amount at the end of the lease.

On January 29, 2018 the Company entered into a lease agreement to acquire equipment with 60 monthly payments of $2,081 payable through December 2018 with an effective interest rate of 10.2% per annum. The Company may elect to acquire the leased equipment at a nominal amount at the end of the lease.

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

Aggregate principal maturities of long-term debt as of June 30, 2018 :

	Amount
Year ended December 31, 2018	$	23,491
Year ended December 31, 2019		46,981
Year ended December 31, 2020		44,361
Year ended December 31, 2021		39,655
Year ended December 31, 2022 and thereafter		28,797
Total	$	183,285

NOTE 6 — TEMPORARY EQUITY

On February 6, 2018, the Company and Steward Health Care System LLC (“Steward”) entered into a Stock Purchase Agreement (the “Purchase Agreement”). Pursuant to the terms of the Purchase Agreement, Steward will acquire from the Company 5,000,000 shares of common stock of the Company for cash consideration of $7,500,000. As a result of the transaction, Steward owned 15.5% of all of the issued and outstanding shares of common stock of the Company.

The Company has agreed that, upon demand from Steward after the six month anniversary of the Closing Date, the Company shall use its reasonable best efforts to prepare and file with the Securities and Exchange Commission, a registration statement and such other documents as may be necessary in the advice of counsel for the Company, and use its commercially reasonable efforts to have such registration statement declared effective in order to comply with the provisions of the Securities Act of 1933, as amended, so as to permit the registered resale of the common shares.

In addition, the Company has agreed that, on or after April 1, 2022, upon ninety (90) days prior written notice, Steward may sell fifty percent (50%) of the common stock to the Company one-time during each of the following two (2) calendar years thereafter at a price equal to the purchase price under the Purchase Agreement pro-rated for the number of shares being purchased. Notwithstanding the foregoing, the put option shall automatically terminate and be of no further force and effect in the event the market capitalization (as defined in the Purchase Agreement) of the Company is equal to or more than $100,000,000 at any time after the date of the Purchase Agreement.

Due to the nature of the put agreement as described above, the Company has classified the net proceeds from the sale of the Company’s common stock as temporary equity.

NOTE 7 — CAPITAL STOCK

Common stock

During the six months ended June 30, 2018, the Company issued 350,000 shares of stock for employee stock compensation that was granted in 2017.

During the six months ended June 30, 2018, the Company issued an aggregate of 34,371 shares of its common stock to service providers at an aggregate fair value of $44,576.

During the six months ended June 30, 2018 the Company returned to authorized and cancelled 189,020 previously acquired common stock treasury shares with a carrying value of $249,265.

During the six months ended June 30, 2018, the Company cancelled 71,667 shares of common stock previously issued to a service provider.

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

NOTE 8 — STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK UNITS

Options

The following table presents information related to stock options at June 30, 2018:

Options Outstanding
Exercise Price		Number of Options		Weighted Average Remaining Life in Years		Exercisable Number of Options
$	1.35		3,000,000		5.50		—

Transactions involving stock options issued are summarized as follows:

	Number of Shares		Weighted Average Price Per Share
Outstanding at December 31, 2017:		3,000,000		1.35
Granted		—		—
Exercised		—		—
Expired		—		—
Outstanding at June 30, 2018		3,000,000	$	1.35

The aggregate intrinsic value of all outstanding options of $0 represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s stock price of $1.26 as of June 30, 2018, which would have been received by the option holders had those option holders exercised their options as of that date.

Restricted Stock Units (“RSU”)

Transactions involving restricted stock units issued are summarized as follows:

Restricted share units as of December 31, 2017				921,100
Granted				352,477
Forfeited				(71,667)
Unvested restricted shares as of June 30, 2018				1,201,910

During the six months ended June 30, 2018, the Company granted 352,477 performance-based, restricted stock units vesting up to five years depending on the grant. The estimated fair value of the granted restricted stock units of $385,500 is being recognized over the vesting periods.

As of June 30, 2018, stock-based compensation related to restricted stock awards of $741,903 remains unamortized and is expected to be amortized over the weighted average remaining period of 3.37 years.

The Company previously issued 1,875,000 warrants in 2011, which will expire on December 23, 2018. As of June 30, 2018, the aggregate intrinsic value of all warrants outstanding and exercisable was zero.

NOTE 9 — VARIABLE INTEREST ENTITY

Brevard Orthopaedic Spine & Pain Clinic, Inc.

The Company has determined that The B.A.C.K. Center is a VIE . In evaluating whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, the Company considers the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and the Company’s decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders. This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important.

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

In determining whether the Company has the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, the Company evaluates all its economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s structure, including: the entity’s capital structure, contractual rights to earnings (losses), subordination of our interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have potential to be economically significant.

The evaluation of each of these factors in reaching a conclusion about the potential significance of the Company’s economic interests is a matter that requires the exercise of professional judgment. The assets of The B.A.C.K. Center can only be used to settle obligations of the VIE, additionally, creditors of The B.A.C.K. Center do not have recourse against the general credit of the primary beneficiary.

The tables below summarize the assets and liabilities associated with The B.A.C.K. Center as of June 30, 2018 and December 31, 2017:

	June 30, 2018			December 31, 2017
Current assets:
Cash	$	572,446		$	238,402
Accounts receivable, net		4,533,012			3,526,789
Other current assets		944,829			765,236
Total current assets		6,050,287			4,530,427
Property and equipment, net		216,891			73,791
Other assets		22,005			22,005
Total assets	$	6,289,183		$	4,626,223
Current liabilities:
Accounts payable and accrued liabilities	$	1,005,919		$	628,304
Due to First Choice Healthcare Solutions, Inc.		2,857,725			1,700,210
Other current liabilities		440,024			485,432
Total current liabilities		4,303,668			2,813,946
Long term debt		2,124,201			1,950,963
Total liabilities		6,427,869			4,764,909
Non-controlling interest		(138,686	)		(138,686	)
Total liabilities and deficit	$	6,289,183		$	4,626,223

Total revenues from The B.A.C.K. Center were $4,262,907 and $8,237,500 for the three and six months ended June 30, 2018. Related expenses consisted primarily of salaries and benefits of $2,056,463 and $3,833,460, other operating expense of $923,357 and $1,862,150, general and administrative expenses of $647,370 and $1,265,707, depreciation of $2,500 and $12,690, interest and financing costs of $16,072 and $20,882; and other income of $40,249 and $78,802 for the three and six months ended June 30, 2018. (See Note 11 – Segment Reporting)

Total revenues from The B.A.C.K. Center were $3,539,460 and $6,970,115 for the three and six months ended June 30, 2017. Related expenses consisted primarily of salaries and benefits of $1,814,747 and $3,533,464, other operating expense of $820,023 and $1,676,505, general and administrative expenses of $740,940 and $1,379,738, depreciation of $6,238 and $12,400, interest and financing costs of $4,481 and $8,385; and other income of $45,667 and $91,351 for the three and six months ended June 30, 2017, respectively. (See Note 11 – Segment Reporting)

Crane Creek Surgery Center

In 2015, the Company had determined that Crane Creek is a VIE . In evaluating whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, the Company considers the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and the Company’s decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders.

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important.

The assets of Crane Creek can only be used to settle obligations of the VIE, additionally, creditors of the Crane Creek do not have recourse against the general credit of the primary beneficiary.

On January 31, 2018 (effective January 1, 2018), the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with HMA Blue Chip Investments, LLC (“Blue Chip”). Pursuant to the terms of the Purchase Agreement, the Company acquired from Blue Chip 24.05 Class B Units of membership interest in the Center for cash consideration of $400,000 (the “Transaction”), representing a 25% ownership interest in the Center. As a result of the Transaction, the Company holds a 65% ownership interest in the Center.

Termination and Assignment Agreement

On January 31, 2018 (effective January 1, 2018), the Company entered into a Termination and Assignment Agreement (the “Termination Agreement”) with Crane Creek Surgical Partners, LLC (the “Center”) and BCS-Management, LLC (“BCS”).

Pursuant to the terms of the Termination Agreement, the Center and BCS will terminate their respective rights and obligations under that certain Amended and Restated Management Services Agreement dated as of September 1, 2013 (the “Management Agreement”). Each of the Center and BCS has agreed to release the other and certain other persons from any and all claims arising out of or relating to the Management Agreement, except for claims arising out of the Termination Agreement and claims made by third parties against either party.

In addition, pursuant to the terms of the Termination Agreement, BCS will assign, grant, convey and transfer to the Company all of BCS’s right, title and interest in and to the Management Agreement, including but not limited to the right to accept management fees as set forth in the Management Agreement, and the Company will assume all of BCS’s duties and obligations under the Management Agreement. Until June 30, 2018, BCS will provide the Center business office, financial, accounting and other related services necessary to assist the transition of the operation of the Center to the Company.

As a result of the Purchase agreement described above, Crane Creek Surgical Partners, LLC became a majority-owned subsidiary of the Company effective January 1, 2018.

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

The tables below summarize the assets and liabilities associated with the Crane Creek as of December 31, 2017 (as a VIE):

	December 31. 2017
Current assets:
Cash	$	464,074
Accounts receivable, net		893,817
Other current assets		151,040
Total current assets		1,508,931
Property and equipment, net		396,136
Goodwill		899,465
Total assets	$	2,804,532
Current liabilities:
Accounts payable and accrued liabilities	$	852,208
Capital leases, short term		12,001
Other current liabilities		251,588
Total current liabilities		1,115,797
Capital leases, long term		47,049
Deferred rent		559,239
Total liabilities		1,722,085

Equity-First Choice Healthcare Solutions, Inc.		432,979
Non-controlling interest		649,468
Total liabilities and deficit	$	2,804,532

Total revenues from Crane Creek were $1,248,252 and $2,438,677 for the three and six months ended June 30, 2017. Related expenses consisted primarily of salaries and benefits of $293,208 and $591,507, practice supplies and operating expenses of $875,132 and $1,727,254, general and administrative expenses of $168,009 and $304,363, depreciation of $28,145 and $56,294, interest expense of $473 and $1,339 and miscellaneous income of $7,279 and $10,947 for the three and six months ended June 30, 2017, respectively. (See Note 11 – Segment Reporting)

NOTE 10 — NON-CONTROLLING INTEREST

A reconciliation of The B.A.C.K. Center non-controlling income attributable to the Company:

Net income attributable to non-controlling interest for the three months ended June 30, 2018:

Net income	$	570,224
Average Non-controlling interest percentage of profit/losses		-0-	%
Net income attributable to the non-controlling interest	$	-0-

Net income attributable to non-controlling interest for the three months ended June 30, 2017:

Net income	$	118,537
Average Non-controlling interest percentage of profit/losses		-0-	%
Net income attributable to the non-controlling interest	$	-0-

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

Net income attributable to non-controlling interest for the six months ended June 30, 2018:

Net income	$	1,157,516
Average Non-controlling interest percentage of profit/losses		-0-	%
Net income attributable to the non-controlling interest	$	-0-

Net income attributable to non-controlling interest for the six months ended June 30, 2017:

Net income	$	289,379
Average Non-controlling interest percentage of profit/losses		-0-	%
Net income attributable to the non-controlling interest	$	-0-

The following table summarizes the changes in non-controlling interest for the three months ended June 30, 2018:

Balance, December 31, 2017	$	(138,686	)
Transfer (to) from the non-controlling interest as a result of change in ownership		-
Net income attributable to the non-controlling interest		-
Balance, June 30, 2018	$	(138,686)

A reconciliation of the Crane Creek non-controlling income attributable to the Company:

Net income attributable to the non-controlling interest for the three months ended June 30, 2018:

Net income	$	143,446
Average Non-controlling interest percentage of profit/losses		35	%
Net income/loss attributable to the non-controlling interest	$	50,206

Net loss attributable to non-controlling interest for the three months ended June 30, 2017:

Net income	$	(109,435)
Average Non-controlling interest percentage of profit/losses		35	%
Net income/loss attributable to the non-controlling interest	$	(38,302)

Net income attributable to the non-controlling interest for six months ended June 30, 2018:

Net income	$	159,304
Average Non-controlling interest percentage of profit/losses		35	%
Net income/loss attributable to the non-controlling interest	$	55,756

Net loss attributable to non-controlling interest for the six months ended June 30, 2017:

Net income	$	(239,133)
Average Non-controlling interest percentage of profit/losses		35	%
Net income/loss attributable to the non-controlling interest	$	(83,697)

The following table summarizes the changes in non-controlling interest for the six months ended June 30, 2018 :

Balance, December 31, 2017	$	649,468
Transfer (to) from the non-controlling interest as a result of change in ownership		(270,611	)
Net income attributable to the non-controlling interest		55,756
Balance, June 30, 2018	$	434,613

Effective January 1, 2018, the Company acquired a 25% interest in Crane Creek for a purchase price of $400,000. The excess payment of $129,389 over book value of $270,611 was adjusted to the Company’s additional paid in capital.

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

NOTE 11 — SEGMENT REPORTING

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. The Company has three reportable segments: FCID Medical, Inc., The B.A.C.K. Center and CCSC Holdings, Inc. (“CCSC”).

All reportable segments derive revenue for medical services provided to patients; and The B.A.C.K Center additionally derives revenue for subleasing space within its building and medical services provided to patients. With the aforementioned sale and leaseback of Marina Towers on June 30, 2016, the Company will no longer report segmented rental revenue received from third-party Marina Tower tenants under the segment heading “Marina Towers.” Rather, the Company has consolidated rental revenue received from third-party tenants of Marina Towers under the “Corporate” segment for both the 2017 and 2016 comparable reporting periods; and will continue to do so hereafter.

Information concerning the operations of the Company’s reportable segments is as follows:

Summary Statement of Operations for the three months ended June 30, 2018:

	FCID			Brevard									Intercompany
	Medical			Orthopaedic			CCSC			Corporate			Eliminations			Total
Revenue:
Net Patient Service Revenue	$	3,451,891		$	3,911,651		$	1,461,913		$	—		$	—		$	8,825,455
Rental revenue		—			351,256			—			436,382			(190,741	)		596,897
Total Revenue		3,451,891			4,262,907			1,461,913			436,382			(190,741	)		9,422,352

Operating expenses:
Salaries & benefits		1,968,283			2,056,463			311,893			399,301						4,735,940
Other operating expenses		709,824			923,357			835,721			410,779			(176,817	)		2,702,864
General and administrative		286,778			647,370			117,957			286,769			(13,924	)		1,324,950
Depreciation and amortization		87,004			2,500			23,412			85,992			—			198,908
Total operating expenses		3,051,889			3,629,690			1,288,983			1,182,841			(190,741	)		8,962,662

Net income (loss) from operations:		400,002			633,217			172,930			(746,459	)		—			459,690

Gain on sale of equipment		—			—			17,400			—			—			17,400
Interest expense, net		(17,314	)		(16,072	)		(699	)		(3,134	)		—			(37,219	)
Miscellaneous income		—			40,249			885			750			—			41,884

Net Income (Loss) before income taxes:		382,688			657,394			190,516			(748,843	)		—			481,755

Income taxes		—			—			—			—			—			—

Net income (Loss)		382,688			657,394			190,516			(748,843	)		—			481,755

Non-controlling interest		—			—			(50,206	)		—			—			(50,206	)

Net income (loss) attributable to First Choice Healthcare Solutions	$	382,688		$	657,394		$	140,310		$	(748,843	)	$	—		$	431,549

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

Summary Statement of Operations for the three months ended June 30, 2017:

	FCID			Brevard									Intercompany
	Medical			Orthopaedic			CCSC			Corporate			Eliminations			Total
Revenue:
Net Patient Service Revenue	$	3,186,892		$	3,195,773		$	1,248,252		$	—		$	—		$	7,630,917
Rental revenue		—			343,687						443,267			(203,180	)		583,774
Total Revenue		3,186,892			3,539,460			1,248,252			443,267			(203,180	)		8,214,691

Operating expenses:
Salaries & benefits		1,658,421			1,814,747			293,208			237,783			—			4,004,159
Other operating expenses		704,940			820,023			875,132			420,076			(188,348	)		2,631,823
General and administrative		204,266			740,940			168,009			507,728			(14,832	)		1,606,111
Depreciation and amortization		73,480			6,238			28,145			85,561			—			193,424
Total operating expenses		2,641,107			3,381,948			1,364,494			1,251,148			(203,180	)		8,435,517

Net income (loss) from operations:		545,785			157,512			(116,242	)		(807,881	)		—			(220,826	)

Interest expense, net		(24,743	)		(4,481	)		(473	)		(410	)		—			(30,107	)
Miscellaneous income		—			45,667			7,279			750			—			53,696

Net Income (loss) before income taxes:		521,042			198,698			(109,436	)		(807,541	)		—			(197,237	)

Income taxes		—									—			—			—

Net income (loss)		521,042			198,698			(109,436	)		(807,541	)		—			(197,237	)

Non-controlling interest		—			—			65,662			—			—			65,662

Net income (loss) attributable to First Choice Healthcare Solutions	$	521,042		$	198,698		$	(43,774	)	$	(807,541	)	$	—		$	(131,575	)

Summary Statement of Operations for the six months ended June 30, 2018:

	FCID			Brevard									Intercompany
	Medical			Orthopaedic			CCSC			Corporate			Eliminations			Total
Revenue:
Net Patient Service Revenue	$	6,815,540		$	7,545,742		$	2,667,283		$	—		$	—		$	17,028,565
Rental revenue		—			691,758						866,526			(378,600	)		1,179,684
Total Revenue		6,815,540			8,237,500			2,667,283			866,526			(378,600	)		18,208,249

Operating expenses:
Salaries & benefits		3,897,085			3,833,460			578,359			756,321						9,065,225
Other operating expenses		1,387,074			1,862,150			1,622,240			815,148			(350,962	)		5,335,650
General and administrative		552,207			1,265,707			189,142			699,368			(27,638	)		2,678,786
Depreciation and amortization		167,055			12,690			49,416			171,659			—			400,820
Total operating expenses		6,003,421			6,974,007			2,439,157			2,442,496			(378,600	)		17,480,481

Net income (loss) from operations:		812,119			1,263,493			228,126			(1,575,970	)		—			727,768

Gain on sale of equipment		—			—			17,400			—			—			17,400
Interest expense, net		(34,628	)		(20,882	)		(2,180	)		(3,041	)		—			(60,731	)
Miscellaneous income		—			78,802			1,904			1,500			—			82,206

Net Income (Loss) before income taxes:		777,491			1,321,413			245,250			(1,577,511	)		—			766,643

Income taxes		—			—			—			—			—			—

Net income (Loss)		777,491			1,321,413			245,250			(1,577,511	)		—			766,643

Non-controlling interest		—			—			(55,756	)		—			—			(55,756	)

Net income (loss) attributable to First Choice Healthcare Solutions	$	777,491		$	1,321,413		$	189,494		$	(1,577,511	)	$	—		$	710,887

FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018

Summary Statement of Operations for the six months ended June 30, 2017:

	FCID			Brevard									Intercompany
	Medical			Orthopaedic			CCSC			Corporate			Eliminations			Total
Revenue:
Net Patient Service Revenue	$	6,047,878		$	6,286,352		$	2,438,677		$	—		$	—		$	14,772,907
Rental revenue		—			683,763						875,117			(396,743	)		1,162,137
Total Revenue		6,047,878			6,970,115			2,438,677			875,117			(396,743	)		15,935,044

Operating expenses:
Salaries & benefits		3,118,656			3,533,464			591,507			476,907						7,720,534
Other operating expenses		1,296,091			1,676,505			1,727,254			828,937			(367,781	)		5,161,006
General and administrative		364,576			1,379,738			304,363			760,230			(28,962	)		2,779,945
Depreciation and amortization		143,221			12,400			56,294			170,997			—			382,912
Total operating expenses		4,922,544			6,602,107			2,679,418			2,237,071			(396,743	)		16,044,397

Net income (loss) from operations:		1,125,334			368,008			(240,741	)		(1,361,954	)		—			(109,353	)

Interest expense, net		(52,301	)		(8,385	)		(1,339	)		(156	)		—			(62,181	)
Miscellaneous income		—			91,351			10,947			1,500			—			103,798

Net Income (Loss) before income taxes:		1,073,033			450,974			(231,133	)		(1,360,610	)		—			(67,736	)

Income taxes		—									—			—			—

Net income (Loss)		1,073,033			450,974			(231,133	)		(1,360,610	)		—			(67,736	)

Non-controlling interest		—			—			138,680			—			—			138,680

Net income (loss) attributable to First Choice Healthcare Solutions	$	1,073,033		$	450,974		$	(92,453	)	$	(1,360,610	)	$	—		$	70,944

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934 (“Exchange Act”). Forward-looking statements reflect the current view about future events. When used in this quarterly report on Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Such statements, include, but are not limited to, statements contained in this quarterly report on Form 10-Q relating to our business strategy, our future operating results, and our liquidity and capital resources outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward–looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assurance of future performance. We caution you therefore against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, the execution of our strategy to grow our business by hiring additional physicians to create Medical Centers of Excellence that fit our defined criteria; evolving healthcare laws and regulations; changes in the rates or methods of third-party reimbursements for medical services; accelerated pace of consolidation in the hospital industry; changes in our medical technology as it relates to our services and procedures; any failures in our information technology systems to protect the privacy and security of protected information and other similar cyber security risks; our ability to raise capital to fund continuing operations; and other factors relating to our industry, our operations and results of operations and any new Medical Centers of Excellence that we may open. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Overview

The implementation of our business plan, thus far, has allowed us to confirm that by integrating the synergistic mix of Orthopaedic, Spine Surgery and Interventional Pain specialties with related diagnostic and ancillary services and state-of-the-art equipment and technologies across legacy brick-and-mortar boundaries, we are able to effectively:

	●	provide patients with direct and convenient access to musculoskeletal and rehabilitative care via our best-in-class team of surgeons, physicians and care specialists, and wide array of ancillary and diagnostic services, which includes, but is not limited to, magnetic resonance imaging (“MRI”), X-ray, durable medical equipment (“DME”) and physical/occupational therapy (“PT/OT”);

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

	●	advance the quality and cost effectiveness of our patients’ healthcare, thereby achieving faster recoveries at materially reduced costs; and

	●	achieve strong, sustainable financial performance that serves to create long-term value for our stockholders.

Managing over 100,000 patient visits each year, our flagship system (“Melbourne System”) serves Florida’s high growth Space Coast region and is comprised of the following well established Medical Centers of Excellence: First Choice Medical Group (“FCMG”), The B.A.C.K. Center (“TBC”) and Crane Creek Surgery Center (“CCSC”).

Results of Operations

Three Months Year Ended June 30, 2018 as Compared to Three Months Ended June 30, 2017

The following is a discussion of the results of operations for the year ended June 30, 2018 compared to the three months ended June 30, 2017.

Revenues

Total revenue was $9,422,352 for the three months ended June 30, 2018, increasing 15% from $8,214,691 in the same period, prior year. Net patient service revenue, less provision for bad debts of $283,443, accounted for $8,825,455 of total revenue in 2018, and rental revenue was $596,897. This compared to net patient service revenue of $7,630,917 and rental revenue of $583,774 for the three months ended June 30, 2017. The increase primarily was attributable to First Choice Medical Group (“FCMG”) increase by $264,999 or 8%, Brevard Orthopedic Spine & Pain Clinic, Inc. (“The B.A.C.K. Center”) increase by $715,878 or 22% and Crane Creek Surgical Center (“Center”) increase by $213,661 or 17% for the same period last year, after factoring provision for doubtful accounts. Rental revenue increased by $13,123, totaling $596,897 and $583,774 for the three months ended June 30, 2018 and 2017, respectively.

Operating Expenses

Operating expenses include the following:

	Three Months Ended June 30, 2018		Three Months Ended June 30, 2017
Salaries and benefits	$	4,735,940	$	4,004,159
Other operating expenses		2,702,864		2,631,823
General and administrative		1,324,950		1,606,111
Depreciation and amortization		198,908		193,424
Total operating expenses	$	8,962,662	$	8,435,517

The major components of operating expenses include practice salaries and benefits, practice supplies and other operating costs, depreciation and general and administrative expenses, which included legal, accounting and professional fees associated with being a public entity.

Salaries and benefits increased 18.3% to $4,735,940 for the three months ended June 30, 2018, compared to $4,004,159 for the three months ended June 30, 2017. The increase was primarily due to the addition of physicians, physician assistants and physical therapy professional personnel in the later part of 2017 and first quarter of 2018. Other operating expenses increased 2.7%.to $2,702,864 from $2,631,823 due to the increase in patient service volume from 2017 to 2018 stemming from the addition of new personnel and one-time expenses related to setting up new physical therapy locations.

General and administrative and other operating expenses was $1,324,950 for the three months ended June 30, 2018 as compared to $1,606,111 for the three months ended June 30, 2017, primarily to decreases in professional service fees relating to investor relations initiatives our strategic partnership with Steward Health Care and taking controlling interest in the Crane Creek Surgery Center.

Depreciation and amortization increased 2.8% from $193,424 reported for the three months ended June 30, 2017 to $198,908 reported for the three months ended June 30, 2018. The increase is primarily due to increased depreciation expense relating to the Company’s expansion of ancillary services.

Net Income (Loss) from Operations

Net income from operations for the three months ended June 30, 2018 totaled $459,690, which compared to a loss from operations of $(220,826) for the prior year. The increase is a result of the increased revenue, net with increased operating expenses discussed above.

Interest Expense

Interest expense increased 23.6% to $37,219 for the three months ended June 30, 2018, which compared to interest expense of $30,107 for the three months ended June 30, 2017. The increase primarily is due to added capital leases and other debt as compared to the same period last year.

Net Income attributable to FCHS Shareholders

As a result of all the above, we reported net income of $431,549 for the three months ended June 30, 2018 as compared to net loss from $(131,575) reported for the same year period in the prior year.

Segment Results

Summary Statement of Operations for the three months ended June 30, 2018 as compared to the three months ended June 30, 2017 are detailed in Note 11 of the accompanying unaudited condensed financial statements.

Six Months Year Ended June 30, 2018 as Compared to Six Months Ended June 30, 2017

The following is a discussion of the results of operations for the six months ended June 30, 2018 compared to the six months ended June 30, 2017.

Revenues

Total revenue was $18,208,249 for the six months ended June 30, 2018, increasing 14% from $15,935,044 in the same period, prior year. Net patient service revenue, less provision for bad debts of $562,005, accounted for $17,028,565 of total revenue in 2018, and rental revenue was $1,179,684. This compared to net patient service revenue of $14,772,907 and rental revenue of $1,162,137 for the six months ended June 30, 2017. The increase primarily was attributable to FCMG increase by $767,662 or 13%, The B.A.C.K. Center increase by $1,259,390 or 20% and Center increase by $228,606 or 9% for the same period last year, after factoring provision for doubtful accounts. Rental revenue increased by $17,547, totaling $1,179,684 and $1,162,137 for the six months ended June 30, 2018 and 2017, respectively.

Operating Expenses

Operating expenses include the following:

	Six Months Ended June 30, 2018		Six Months Ended June 30, 2017
Salaries and benefits	$	9,065,225	$	7,720,534
Other operating expenses		5,335,650		5,161,006
General and administrative		2,678,786		2,779,945
Depreciation and amortization		400,820		382,912
Total operating expenses	$	17,480,481	$	16,044,397

Salaries and benefits increased 17.4% to $9,065,225 for the six months ended June 30, 2018, compared to $7,720,534 for the six months ended June 30, 2017. The increase was primarily due to the addition of physicians, physician assistants and physical therapy professional personnel in the later part of 2017 and the first quarter of 2018. Other operating expenses increased 3.4% to $5,335,650 from $5,161,006 due to the increase in patient service volume from 2017 to 2018 stemming from the addition of new personnel and one-time expenses related to setting up new physical therapy locations.

General and administrative and other operating expenses was $2,678,786 for the six months ended June 30, 2018 as compared to $2,779,945 for the six months ended June 30, 2017, primarily to decreases in professional service fees relating to our strategic partnership with Steward Health Care and taking controlling interest in the Crane Creek Surgery Center.

Depreciation and amortization increased 5% from $382,912 reported for the six months ended June 30, 2017 to $400,820 reported for the six months ended June 30, 2018. The increase is primarily due to increased depreciation expense relating to the Company’s expansion of ancillary services.

Net Income (Loss) from Operations

Net income from operations for the six months ended June 30, 2018 totaled $727,768, which compared to a loss from operations of $(109,353) for the prior year. The increase is a result of the increased revenue, net with increased operating expenses discussed above.

Interest Expense

Interest expense declined 2% to $60,731 for the six months ended June 30, 2018, which compared to interest expense of $62,181 for the six months ended June 30, 2017. The decrease primarily is due to a reduction in overall debt as compared to the same period last year.

Net Income attributable to FCHS Shareholders

As a result of all the above, we reported net income of $710,887 for the six months ended June 30, 2018 as compared to net income from $70,944 reported for the same year period in the prior year.

Segment Results

Liquidity and Capital Resources

As of June 30, 2018, we had cash of $8,411,528 and accounts receivables, net totaling $10,451,686. This compared to cash of $3,242,006 and accounts receivable, net of $10,855,735 for the same period in 2017.

The Company believes that the current cash balance and line of credit available as of June 30, 2018, along with continued execution of its business development plan, will allow the Company to further improve its working capital; and currently anticipates that it will have sufficient capital resources to meet projected cash flow requirements through the date at least one year from the filing of this report.

However, in order to execute the Company’s business development plan, which there can be no assurance we will achieve, the Company may need to raise additional funds through public or private equity offerings, debt financings, corporate collaborations or other means and potentially reduce operating expenditures. If the Company is unable to secure additional capital, it may be required to curtail its business development initiatives and take additional measures to reduce costs to conserve its cash.

Net cash used in our operating activities for the six months ended June 30, 2018 totaled $433,187, which compared to net cash used in our operations for the six months ended June 30, 2017 of $863,657. The decrease in cash used for the six months ended June 30, 2018 was due primarily to our 2018 net income as compared to a net loss in 2017 and our net increase in our operating liabilities of $430,529 as compared to a net increase of $258,929 for the six months ended June 30, 2017 partially offset by our growth in accounts receivables.

Net cash flows used in investing activities was $764,406 for the six months ended June 30, 2018, compared to $197,588 provided by investing activities for the six months ended June 30, 2017. Investing activities for 2018 was comprised of $400,000 to acquire an additional 25% interest in Crane Creek, $381,806 to purchase equipment and proceeds from sale of equipment of $17,400 as compared to $197,588 to purchase equipment in same period, prior year.

Net cash provided in financing activities was $7,593,587 for six months ended June 30, 2018, compared to net cash used in financing activities of $290,387 for the six months ended June 30, 2017. The cash flows used in our financing activities were the result of:

	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017
Proceeds from sale of common stock	$	7,500,000		$	—
Proceeds from note payable		120,754			22,113
Purchase of treasury stock		—			(49,954	)
Payments on notes payable		(27,167	)		(262,546	)
Net cash provided by (used in) financing activities	$	7,593,587		$	(290,387	)

Our aim is to distinguish our Medical Centers of Excellence from our competition by earning our Centers’ reputations as premier destinations for clinically superior, patient-centric care which is coordinated across our patients’ entire care continuums. By doing so, we deliver more meaningful and collaborative doctor-patient experiences, provide more accurate diagnoses resulting from care coordination, effective treatment plans, faster recoveries, and materially reduced costs.

Our strategic focus is to grow and partner with Steward Healthcare to expand our orthopaedic and spine care delivery platform into Steward’s 36 nationwide hospital systems. Currently we are utilizing two Steward facilities and are in the process of evaluating the next hospital to implement our targeted delivery platform.

On February 6, 2018, the Company entered into a strategic partnership with Steward Health Care System (“Steward”). As part of the strategic partnership, Steward made an investment into the Company in the amount of $7.5 million for 5 million shares, allowing the Company to continue to expand its business model and geographic footprint nationally. On March 1, 2018, the Company issued five (5) million shares of common stock in exchange for cash proceeds of $7.5 million.

Our business model is centered on our team of employed and contracted physicians constituting a “group practice” under The Ethics in Patient Referral Act of 1989, as amended (more commonly known as the Stark Law), thereby permitting us to optimize revenue generation from both physicians and ancillary services, while also providing our employed care providers with the ability to utilize our on-site diagnostic and ancillary services. Physician-owned practices, on the other hand, may be subject to prevailing federal regulations (e.g., The Ethics in Patient Referral Act of 1989, as amended; more commonly known as the “Stark Law”), which may limit their ability to refer patients for certain healthcare services provided by entities in which a physician-owner(s) has a financial interest.

Our growth will be fueled by hiring best-in-class Orthopaedic physicians currently practicing in our target expansion markets. We will identify physicians in those markets that are seeking an alternative to owning and operating their own private practices or being employed by local hospitals. As necessary we will add diagnostic and ancillary services, to include an ambulatory surgery center, MRI, X-Ray, DME and PT/OT will also be added to these platforms.

We believe that our centralized system of operations will continue to allow us to achieve measurable cost and productivity efficiencies as we expand the number of centers and platforms we own and operate. We have specifically designed our centralized back office system to alleviate staff physicians from business administrative responsibilities associated with operating a medical practice or clinic, enabling them to focus strictly on caring for our patients (allowing “Doctors to be Doctors”). This is extremely attractive to physicians who own and manage their own private practices or clinics and devote valuable time and resources towards addressing business concerns – time and resources that might otherwise be spent on treating their patients.

There can be no assurance that our cash flow will increase in the near future from anticipated new business activities, or that revenues generated from our existing operations will be sufficient to allow us to continue to pursue new customer programs or profitable ventures.

Inflation

Our opinion is that inflation has not had, and is not expected to have, a material effect on our operations.

Off-Balance Sheet Arrangements

At June 30, 2018, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

New Accounting Pronouncements

We do not expect recent accounting pronouncements will have a material impact on our condensed consolidated financial position, results of operations or cash flows. See Footnote 2 in the accompanying condensed consolidated financial statements for additional information.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

Item 1A. Risk Factors

There have been no material changes to the Risk Factors reported in Item 1A of our Annual Report on Form 10-K/A for the year ended December 31, 2017.

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

None

Item 3. Defaults upon Senior Securities

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of our Company.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

31.1		Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*
31.2		Certification by the Principal Accounting Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*
32.1		Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2		Certification by the Principal Accounting Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

* Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

	FIRST CHOICE HEALTHCARE SOLUTIONS, INC.

Dated: August 14, 2018	By:	/s/ Christian C. Romandetti
		Christian C. Romandetti
		Chief Executive Officer (Principal Executive Officer)

Dated: August 14, 2018	By:	/s/ Phillip J. Keller
		Phillip J. Keller
		Chief Financial Officer (Principal Accounting Officer)

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