Exhibit 99.1

 

WPH Salem, LLC

 

Combined Financial Statements

 

As of and for the Years Ended December 31, 2016 and 2015

 

With Independent Auditor’s Report

 

 

WPH SALEM, LLC

 

AUDITED COMBINED FINANCIAL STATEMENTS

aS OF AND For the YEARs ENDED December 31, 2016 and 2015

 

TABLE OF CONTENTS

 

	Page
Independent Auditor’s Report	1-2
Combined Financial Statements:
Combined Balance Sheets	3
Combined Statements of Operations and Member’s Equity	4
Combined Statements of Cash Flows	5
Notes to the Combined Financial Statements	6-10
Supplementary Information:
Schedule I - Combining Balance Sheet	11-12
Schedule II - Combining Statement of Income  and Member’s Equity	13-14

 

 

 

Independent Auditor’s Report

 

To Summit Healthcare REIT,

Meridian Senior Living/The Affinity Group

Hickory, North Carolina

 

We have audited the accompanying combined financial statements of WPH Salem, LLC, (a Delaware corporation) which comprise the combined balance sheets as of December 31, 2016 and 2015, and the related combined statements of operations and member’s equity, and cash flows for the years 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 the combined 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 combined 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 combined 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 combined financial statements are free of material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the combined 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 combined financial statements in order 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 combined financial statements.

 

730 13^th Avenue Drive SE ♦ Hickory, NC 28602 ♦ 828-327-2727 ♦ Fax 828-328-2324

13 South Center Street ♦ Taylorsville, NC 28681 ♦ 828-632-9025 ♦ Fax 828-632-9085

PO Box 5729 ♦ Statesville, NC 28687 ♦ 1710 Wilkesboro Hwy ♦ Statesville, NC 28625 ♦ 704-872-8923 ♦ Fax 704-872-4982

800-948-0585 ♦ www.martinstarnes.com

 

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Opinion

 

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of WPH Salem, LLC, as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

 

Report on Combining Information

 

Our audits were conducted for the purpose of forming an opinion on the combined financial statements as a whole. The Combining Balance Sheet and Combining Statement of Income and Member’s Equity on Schedules I and II are presented for the purpose of additional analysis of the combined financial statements rather than to present the financial position, results of operations, and cash flows of the individual companies, and are not a required part of the combined financial statements. Such information is the responsibility of management and was derived from, and relates directly to, the underlying accounting and other records used to prepare the combined financial statements. The combining information has been subjected to the auditing procedures applied in the audit of the combined financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the combined financial statements or to the combined financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining information is fairly stated in all material respects in relation to the combined financial statements as a whole.

 

/s/ Martin Starnes & Associates, CPAs, P.A.

Martin Starnes & Associates, CPAs, P.A.

Hickory, NC

March 8, 2017

 

 

WPH SALEM, LLC

 

COMBINED BALANCE SHEETS

DECEMBER 31, 2016 AND 2015

 

		2016				2015
Assets:
Current assets:
Cash and cash equivalents		$	55,190			$	215,860
Resident trust fund cash, restricted			76,275				68,488
Tenant receivables, net of allowance of $73,806 and $41,027, respectively			1,024,270				816,312
Due from affiliates			41,309				41,309
Accounts receivable, other			134,211				60,756
Escrow deposits			630,412				574,784
Security deposits			722,218				722,218
Inventory			7,014				12,584
Prepaid expenses			134,672				159,650
Total current assets			2,825,571				2,671,961
Non-current assets:
Property and equipment, net			808,417				908,987
Total non-current assets			808,417				908,987
Total assets		$	3,633,988			$	3,580,948
Liabilities and Member's Equity:
Liabilities:
Current liabilities:
Accounts payable		$	1,543,404			$	720,142
Due to affiliates			-				6,023
Accrued liabilities			337,912				229,035
Resident trust funds payable			76,275				68,488
Deferred revenues			204,075				152,784
Total liabilities			2,161,666				1,176,472
Member's Equity:
Member's capital			1,472,322				2,404,476
Total member's equity			1,472,322				2,404,476
Total liabilities and member's equity		$	3,633,988			$	3,580,948

 

See accompanying notes and auditor's report.

 

  

WPH SALEM, LLC

 

COMBINED STATEMENTS OF OPERATIONS AND MEMBER'S EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

		2016				2015
Revenues:
Assisted living revenue		$	9,759,618			$	9,786,214
Other income			42,154				26,668
Total revenues			9,801,772				9,812,882
Operating Expenses:
Salaries and wages			3,223,200				3,081,477
Payroll taxes			308,361				315,563
Employee benefits			274,945				270,889
Food costs			591,655				597,700
Utilities			556,356				539,504
Supplies			173,935				174,292
Repairs and maintenance			158,041				162,209
Insurance			199,247				176,466
Property taxes			338,112				256,382
Professional/consulting fees			395,421				359,737
General and administrative expenses			722,237				419,243
Advertising and marketing			35,223				21,942
Travel and entertainment			23,694				14,228
Management service fee			496,091				483,814
Total operating expenses			7,496,518				6,873,446
Capital Related Expenses:
Depreciation and amortization			148,908				136,766
Rent/lease building			2,983,365				2,915,174
Total capital related expenses			3,132,273				3,051,940
Net loss			(827,019	)			(112,504	)
Member's equity, beginning of year			2,404,476				2,601,980
Contributions by member			-				15,000
Distributions to member			(105,135	)			(100,000	)
Member's equity, end of year		$	1,472,322			$	2,404,476

 

See accompanying notes and auditor's report.

 

  

WPH SALEM, LLC

 

COMBINED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

		2016				2015
Cash Flows from Operating Activities:
Net loss		$	(827,019	)		$	(112,504	)
Adjustments to Reconcile Net Loss to Net Cash and Cash Equivalents Provided by Operating Activities:
Depreciation and Amortization			148,908				136,766
Provision for bad debts			32,779				(90,067	)
Changes in assets and liabilities:
Resident trust fund cash, restricted			(7,787	)			(40,406	)
Tenant receivables			(240,737	)			(214,737	)
Due to/from affiliates			(6,023	)			121,916
Accounts receivable, other			(73,455	)			(54,618	)
Escrow Deposits			(55,628	)			(43,383	)
Security deposits			-				33,200
Inventory			5,570				71
Prepaid expenses			24,978				12,513
Accounts payable			823,262				508,789
Accrued liabilities			108,877				(91,418	)
Resident trust fund payable			7,787				31,354
Deferred revenues			51,291				11,737
Net cash and cash equivalents provided (used) by operating activities			(7,197	)			209,213
Cash Flows from Investing Activities:
Purchase of property and equipment			(48,338	)			(197,886	)
Net cash and cash equivalents used by investing activities			(48,338	)			(197,886	)
Cash Flows from Financing Activities:
Capital contributed			-				15,000
Distributions to member			(105,135	)			(100,000	)
Net cash and cash equivalents used by financing activities			(105,135	)			(85,000	)
Net change in cash and cash equivalents			(160,670	)			(73,673	)
Cash and cash equivalents, beginning of year			215,860				289,533
Cash and cash equivalents, end of year		$	55,190			$	215,860

 

See accompanying notes and auditor's report.

 

  

WPH SALEM, LLC

 

NOTES TO THE COMBINED FINANCIAL STATEMENTS

For the YEARs ENDED December 31, 2016 and 2015

 

1.

Nature of Business and Summary of Significant Accounting Policies

 

Nature of Business. WPH Salem, LLC (the “Company”) is a single-member LLC organized under the laws of the State of Delaware. The Company operates a group of five assisted living facilities (OPCOs) operating out of Hickory, North Carolina. Three of the OPCOs (Hamlet AL Holdings LLC, Carteret-Newport AL Holdings LLC and Shelby AL Holdings LLC) are single-member LLCs organized under the laws of the State of North Carolina. Two of the OPCOs (MW Aledo Operating LLC and Danby House LLC) are single-member LLCs organized under the laws of the State of Delaware. Four of the OPCOS operate in North Carolina. Aledo operates in Illinois. The Company primarily serves elderly Medicaid residents who need assistance with basic living activities.

 

A Summary of the Significant Accounting Policies follows:

 

Principles of Combining: The combined financial statements include the accounts of the five OPCOs which operate under one master lease. The single-member parent company, HOB I, LLC, a limited liability company which is the sole member, is not included in the combined financial statements. All significant intercompany accounts and transactions between the OPCOs have been eliminated in combination.

 

Principles of Accounting and Use of Estimates: The Company's accounting policy is to prepare its financial statements in conformity with accounting principles generally accepted in the United States of America except for the matter more fully discussed above in Nature of Business. The Company uses the accrual method for reporting. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures at the date of the financial statements, and reported amounts of revenues and expenses during the reporting periods. Accordingly, actual results could differ from the estimates and assumptions used in the financial statements and related notes.

 

Listed below are certain significant estimates and assumptions used in the preparation of the financial statements. It is possible that a change in these estimates will occur in the near term.

 

Accounts Receivable Allowances: The Company evaluates the adequacy of the allowance for credit losses based on historical loss experience and adverse situations that may affect a customer’s ability to pay. This evaluation is inherently subjective, as it requires estimates that are susceptible to revision as more information becomes available. Management reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

 

  

WPH SALEM, LLC

 

NOTES TO THE COMBINED FINANCIAL STATEMENTS

For the YEARs ENDED December 31, 2016 and 2015

 

Useful Lives for Depreciation and Amortization: The Company estimates the useful lives of the individual assets when the assets are placed in service. If events and circumstances indicate that property and equipment should be reviewed for possible impairment, the Company will record an impairment charge to the extent that the carrying value of the assets exceed their fair values as determined by valuation techniques appropriate in the circumstances.

 

Revenue Recognition: Revenue from the rental units is recognized in the month that it is earned, which is when the respective unit is occupied. Tenant leases are for 12 months or less. Services are recognized upon delivery of the services provided.

 

Reclassifications of a General Nature: Certain amounts in the prior period presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income.

 

Cash and Cash Equivalents: Each of the five OPCO’s maintains a separate cash account and performs individual reconciliations. Each account is insured by the federal limits. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

 

Resident Trust Fund, Restricted: Represents residents personal funds held by the Company on behalf of the residents. The Company records a corresponding Resident Trust Funds Payable.

 

Escrow Deposits: Refundable escrow deposits for capital expenditures, property insurance, and property taxes are required under provisions of the Master Lease Agreement for each of the facilities (OPCOs) to secure the full, faithful, and punctual performance of lessees (OPCOs). These deposits, in the form of additional lease payments, are due and payable, in arrears. At December 31, 2016 and 2015, the Company held accumulated escrow deposits of $630,412 and $574,784, respectively.

 

Security Deposits: Represents funds held by the landlord, pursuant to the Master Lease Agreement for capital reserve funds and utility deposits held by the utility company. At December 31, 2016 and 2015, capital reserve funds were $709,502 and utility deposits were $12,716.

 

Tenant Receivables: Accounting principles generally accepted in the United States of America require the Company to value its accounts receivable at the net realizable value by providing a valuation allowance based on its assessment of the current status of the individual accounts. The Company evaluates the adequacy of the allowance for credit losses based on historical loss experience and adverse situations that may affect a customer’s ability to pay. This evaluation is inherently subjective, as it requires estimates that are susceptible to revision as more information becomes available. Management reviews accounts receivable on a periodic basis to determine if any receivables will potentially be uncollectible. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Allowance for doubtful accounts was $73,806 and $41,027 at December 31, 2016 and 2015, respectively.

 

  

WPH SALEM, LLC

 

NOTES TO THE COMBINED FINANCIAL STATEMENTS

For the YEARs ENDED December 31, 2016 and 2015

 

Inventories: Inventories, consisting primarily of food for consumption by the residents, are stated at the lower of cost (average cost) or market (net realizable value).

 

Property and Equipment: Property and equipment are carried at cost. Maintenance, repairs, and minor renewals are charged to expense as incurred, while expenditures which substantially increase useful lives are capitalized. Depreciation is computed on the straight-line method. Depreciable lives consists of computer equipment for 3 years; furniture and fixtures for 7 years; leasehold improvements for 10 years or the term of the lease, whichever is less; and other equipment for 5 years.

 

Income Taxes: No income tax provision has been included in these financial statements since income or loss of the Company is required to be reported by the member on its income tax return.

 

The Financial Accounting Standards Board issued guidance on accounting for uncertainty in income taxes. Management evaluates the Company’s tax positions and concluded that the Company has taken no uncertain tax positions that require adjustments to the financial statements to comply with the provisions of this guidance.

 

Advertising: Advertising costs are expensed as incurred. Advertising expense amounted to $35,223 for the year ended December 31, 2016 and $21,942 for the year ended December 31, 2015.

 

Deferred Revenues: Deferred revenues consist of income received from assisted living residents who have prepaid their respective assisted living fee one month in advance.

 

2.     Property and Equipment

 

The carrying amounts of property and equipment consist of the following at December 31:

 

		2016				2015
Furniture, fixtures, and equipment		$	192,315			$	187,854
Other equipment			116,049				90,049
Leasehold improvements			961,766				943,891
Property and equipment			1,270,130				1,221,794
Less accumulated depreciation and amortization			(461,713	)			(312,807	)
Property and equipment, net		$	808,417			$	908,987

 

 

WPH SALEM, LLC

 

NOTES TO THE COMBINED FINANCIAL STATEMENTS

For the YEARs ENDED December 31, 2016 and 2015

 

Depreciation and amortization expense was $148,908 and $136,766 for the years ended December 31, 2016 and 2015, respectively.

 

3.

Capital Structure

 

Member’s equity represents the undistributed earnings of the Company.

 

4.

Commitments and Contingencies

 

Facility Leases. The Company leases its facilities from an unrelated third-party landlord under non-cancellable operating leases with terms extending through December 31, 2030. The leases are structured as triple net leases requiring the individual OPCOs to pay all executory costs including taxes, insurance, utilities and maintenance.

 

Future minimum lease payments under the above leases as of December 31, 2016 are as follows:

 

Year Lease		Ending Payments
2017		$	3,033,155
2018			3,097,302
2019			3,162,810
2020			3,229,709
2021			3,229,709
			15,752,685
Thereafter			29,024,380
Total		$	44,777,065

 

Total rental expenses for the above operating leases for the years ended December 31, 2016 and 2015 were $2,983,365 and $2,915,174, respectively.

 

Concentration of Revenue Risk. The Company provides its services to residents of North Carolina who are Medicaid recipients. The Company faces a concentration of revenue risks resulting from its dependence on the North Carolina Medicaid system. Revenue received under the North Carolina Medicaid Program is subject to audit and retroactive adjustment by the fiscal intermediary. The Company provides estimates for potential adjustments by the fiscal intermediary which may or may not occur in the future years. Adjustments that are significantly different from the applicable estimates are reflected as an increase or decrease in resident services revenue in the year the adjustments are finalized. The Company derived approximately 53% of its revenues from Medicaid for the year ended December 31, 2016.

 

  

WPH SALEM, LLC

 

NOTES TO THE COMBINED FINANCIAL STATEMENTS

For the YEARs ENDED December 31, 2016 and 2015

 

5.

Related Party Transactions

 

Management Fees. The Company has a management agreement with a related party, due to common ownership, to operate the facilities (OPCOs). Management fees paid for the years ended December 31, 2016 and 2015 totaled $496,091 and $483,814, respectively.

 

Medical Supply Vendor. The Company purchases medical supplies from a vendor in which an executive of the management company is a principle. For the years ended December 31, 2016 and 2015, the Company purchased medical supplies totaling approximately $25,400 and $26,800, respectively. At December 31, 2016 and 2015, the Company had outstanding accounts payable due the related party of approximately $11,800 and $6,500.

 

6.

Subsequent Events

 

Management has evaluated events through March 8, 2017, the date the combined financial statements were available to be issued. There are no subsequent events as of March 8, 2017.

 

 

	Schedule I
WPH SALEM, LLC	Page 1 of 2

 

COMBINING BALANCE SHEET

DECEMBER 31, 2016

 

		Carteret				Hamlet				Shelby				Aledo				Danby				Eliminating Entries				Combined
Assets:
Current assets:
Cash and cash equivalents		$	11,089			$	518			$	895			$	38,621			$	4,067			$	-			$	55,190
Resident trust fund cash, restricted			9,345				24,046				10,834				-				32,050				-				76,275
Tenant receivables			45,051				111,269				77,969				436,027				353,954				-				1,024,270
Due from affiliates			295,537				-				267,888				40,000				1,309				(563,425	)			41,309
Accounts receivable, other			103,460				-				-				21,986				8,765				-				134,211
Escrow deposits			99,355				138,323				62,766				137,486				192,482				-				630,412
Security deposits			102,387				139,706				95,625				166,250				218,250				-				722,218
Inventory			1,873				1,720				1,322				-				2,099				-				7,014
Prepaid expenses			29,581				16,238				27,804				45,384				15,665				-				134,672
Total current assets			697,678				431,820				545,103				885,754				828,641				(563,425	)			2,825,571
Non-current assets:
Property and equipment, net			247,408				100,437				311,765				47,860				100,947				-				808,417
Total non-current assets			247,408				100,437				311,765				47,860				100,947				-				808,417
Total assets		$	945,086			$	532,257			$	856,868			$	933,614			$	929,588			$	(563,425	)		$	3,633,988
Liabilities and Member's Equity:
Liabilities:
Current liabilities:
Accounts payable		$	318,040			$	423,592			$	333,318			$	57,143			$	411,311			$	-			$	1,543,404
Due to affiliates			-				478,094				85,331				-				-				(563,425	)			-
Accrued liabilities			57,104				24,389				34,581				164,473				57,365				-				337,912
Resident trust funds payable			9,345				24,046				10,834				-				32,050				-				76,275
Deferred revenues			82,772				9,643				6,699				66,067				38,894				-				204,075
Total current liabilities			467,261				959,764				470,763				287,683				539,620				(563,425	)			2,161,666
Total liabilities			467,261				959,764				470,763				287,683				539,620				(563,425	)			2,161,666
Member's Equity:
Member's capital			477,825				(427,507	)			386,105				645,931				389,968				-				1,472,322
Total member's equity (deficit)			477,825				(427,507	)			386,105				645,931				389,968				-				1,472,322
Total liabilities and member's equity		$	945,086			$	532,257			$	856,868			$	933,614			$	929,588			$	(563,425	)		$	3,633,988

 

 

	Schedule I
WPH SALEM, LLC	Page 2 of 2

 

COMBINING BALANCE SHEET

DECEMBER 31, 2015

  

		Carteret				Hamlet				Shelby				Aledo				Danby				Eliminating Entries				Combined
Assets:
Current assets:
Cash and cash equivalents		$	42,318			$	11,019			$	831			$	140,172			$	21,520			$	-			$	215,860
Resident trust fund cash, restricted			14,824				32,867				6,725				-				14,072				-				68,488
Tenant receivables			5,390				45,315				88,829				300,195				376,583				-				816,312
Due from affiliates			178,967				-				262,000				40,000				1,309				(440,967	)			41,309
Accounts receivable other			8,600				-				39,813				10,471				1,872				-				60,756
Escrow deposits			112,957				116,813				73,068				115,327				156,619				-				574,784
Security deposits			102,387				139,706				95,625				166,250				218,250				-				722,218
Inventory			2,981				2,500				4,500				-				2,603				-				12,584
Prepaid expenses			21,118				13,029				22,330				53,185				49,988				-				159,650
Total current assets			489,542				361,249				593,721				825,600				842,816				(440,967	)			2,671,961
Non-current assets:
Property and equipment, net			278,782				111,410				355,588				42,104				121,103				-				908,987
Total non-current assets			278,782				111,410				355,588				42,104				121,103				-				908,987
Total assets		$	768,324			$	472,659			$	949,309			$	867,704			$	963,919			$	(440,967	)		$	3,580,948
Liabilities and Members' Equity:
Liabilities:
Current liabilities:
Accounts payable		$	177,624			$	262,680			$	185,052			$	30,821			$	63,965			$	-			$	720,142
Due to affiliates			6,023				385,239				55,728				-				-				(440,967	)			6,023
Accrued liabilities			55,279				40,615				49,040				16,117				67,984				-				229,035
Resident trust funds payable			14,824				32,867				6,725				-				14,072				-				68,488
Deferred revenues			36,767				-				-				116,017				-				-				152,784
Total current liabilities			290,517				721,401				296,545				162,955				146,021				(440,967	)			1,176,472
Total liabilities			290,517				721,401				296,545				162,955				146,021				(440,967	)			1,176,472
Members' Equity:
Members' capital			477,807				(248,742	)			652,764				704,749				817,898				-				2,404,476
Total members' equity (deficit)			477,807				(248,742	)			652,764				704,749				817,898				-				2,404,476
Total liabilities and members' equity		$	768,324			$	472,659			$	949,309			$	867,704			$	963,919			$	(440,967	)		$	3,580,948

 

 

	Schedule II
WPH SALEM, LLC	Page 1 of 2

 

COMBINING STATEMENT OF INCOME AND MEMBER'S EQUITY (DEFICIT)

FOR THE YEAR ENDED DECEMBER 31, 2016

 

		Carteret				Hamlet				Shelby				Aledo				Danby				Combined
Revenues:
Assisted living revenue		$	1,628,200			$	1,408,351			$	1,495,350			$	2,373,358			$	2,854,359			$	9,759,618
Other income			7,158				4,535				4,781				19,951				5,729				42,154
Total revenues			1,635,358				1,412,886				1,500,131				2,393,309				2,860,088				9,801,772
Operating Expenses:
Salaries and wages			535,839				410,299				614,350				593,022				1,069,690				3,223,200
Payroll taxes			52,563				40,704				59,407				50,862				104,825				308,361
Employee benefits			14,055				17,480				30,335				117,326				95,749				274,945
Food costs			108,513				115,899				98,903				120,116				148,224				591,655
Utilities			114,470				78,511				95,680				131,002				136,693				556,356
Supplies			30,270				25,441				31,359				42,707				44,158				173,935
Repairs and maintenance			36,567				23,851				27,599				47,403				22,621				158,041
Insurance			48,372				26,170				41,243				36,859				46,603				199,247
Property taxes			45,147				38,348				23,474				157,801				73,342				338,112
Professional/consulting fees			64,397				85,249				112,797				35,794				97,184				395,421
General and administrative expenses			62,225				43,904				98,626				172,203				345,279				722,237
Advertising and marketing			7,325				3,141				4,187				16,645				3,925				35,223
Travel and entertainment			5,180				6,254				3,216				7,091				1,953				23,694
Management service fee			82,186				75,468				74,892				119,111				144,434				496,091
Total operating expenses			1,207,109				990,719				1,316,068				1,647,942				2,334,680				7,496,518
Capital Related Expenses:
Depreciation and amortization			44,470				20,036				48,566				13,963				21,873				148,908
Rent/lease building			383,761				580,896				402,156				685,087				931,465				2,983,365
Total capital related expenses			428,231				600,932				450,722				699,050				953,338				3,132,273
Net income (loss)			18				(178,765	)			(266,659	)			46,317				(427,930	)			(827,019	)
Member's equity, beginning of year			477,807				(248,742	)			652,764				704,749				817,898				2,404,476
Distributions to member			-				-				-				(105,135	)			-				(105,135	)
Member's equity (deficit), end of year		$	477,825			$	(427,507	)		$	386,105			$	645,931			$	389,968			$	1,472,322

 

 

	Schedule II
WPH SALEM, LLC	Page 2 of 2

 

COMBINING STATEMENT OF INCOME AND MEMBER'S EQUITY (DEFICIT)

FOR THE YEAR ENDED DECEMBER 31, 2015

 

		Carteret				Hamlet				Shelby				Aledo				Danby				Combined
Revenues:
Assisted living revenue		$	1,607,792			$	1,242,711			$	1,675,620			$	2,398,335			$	2,861,756			$	9,786,214
Other income			556				627				525				24,768				192				26,668
Total revenues			1,608,348				1,243,338				1,676,145				2,423,103				2,861,948				9,812,882
Operating Expenses:
Salaries and wages			539,630				411,100				549,178				594,818				986,751				3,081,477
Payroll taxes			59,778				46,006				59,779				59,403				90,597				315,563
Employee benefits			28,755				21,071				32,358				94,100				94,605				270,889
Food costs			111,470				109,819				109,037				115,873				151,501				597,700
Utilities			100,042				80,801				84,121				141,299				133,241				539,504
Supplies			29,394				17,630				30,424				45,198				51,646				174,292
Repairs and maintenance			24,419				23,666				29,729				30,157				54,238				162,209
Insurance			47,084				24,615				37,803				33,111				33,853				176,466
Property taxes			15,053				19,162				22,940				123,032				76,195				256,382
Professional/consulting fees			68,187				89,329				119,160				23,894				59,167				359,737
General and administrative expenses			56,769				65,074				60,121				81,989				155,290				419,243
Advertising and marketing			5,226				1,301				1,557				10,039				3,819				21,942
Travel and entertainment			2,518				2,042				1,187				6,457				2,024				14,228
Management service fee			80,193				60,889				81,818				122,053				138,861				483,814
Total operating expenses			1,168,518				972,505				1,219,212				1,481,423				2,031,788				6,873,446
Capital Related Expenses:
Depreciation and amortization			43,004				20,190				44,170				9,686				19,716				136,766
Rent/lease building			375,316				568,113				393,306				671,654				906,785				2,915,174
Total capital related expenses			418,320				588,303				437,476				681,340				926,501				3,051,940
Net income (loss)			21,510				(317,470	)			19,457				260,340				(96,341	)			(112,504	)
Member's equity, beginning of year			456,297				68,728				633,307				544,409				899,239				2,601,980
Contributions by member			-				-				-				-				15,000				15,000
Distributions to member			-				-				-				(100,000	)			-				(100,000	)
Member's equity (deficit), end of year		$	477,807			$	(248,742	)		$	652,764			$	704,749			$	817,898			$	2,404,476