Exhibit 99.1

 

WPH SALEM, LLC

 

COMBINED FINANCIAL STATEMENTS

AND INDEPENDENT AUDITOR’S REPORT

 

DECEMBER 31, 2017

 

 

TABLE OF CONTENTS

 

	Page No.
INDEPENDENT AUDITOR’S REPORT	1-2
COMBINED FINANCIAL STATEMENTS
Combined Balance Sheets	3 - 4
Combined Statements of Operations and Member’s Equity	5
Combined Statements of Cash Flows	6
Notes to the Combined Financial Statements	7 - 13
SUPPLEMENTARY INFORMATION
Schedule I – Combining Balance Sheets	14 - 16
Schedule II – Combining Statements of Operations and Member’s Equity	17 - 18

 

  

 10500 Little Patuxent Parkway

Suite 770

Columbia, Maryland 21044

(410) 884-0220

(301) 596-5451

Fax: (301) 596-5471

 

Independent Auditor’s Report

 

To the Management of

WPH Salem, LLC

Hickory, NC

 

We have audited the accompanying combined financial statements of WPH Salem, LLC (a Delaware corporation), which comprise the combined balance sheet as of December 31, 2017 and the related combined statements of operations and member’s equity, and cash flows for the year then ended, and the related notes to the combined financial statements.

 

Management’s Responsibility for the Financial Statements

 

Management is responsible for the preparation and fair presentation of these 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 the 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 audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free from 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.

 

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

  

Members Of The American Institute Of Certified Public Accountants

Columbia, MD              Largo, MD              Washington, D.C.

 

  

WPH Salem, LLC

Independent Auditor’s Report

Page 2

 

Opinion

 

In our opinion, the combined 2017 financial statements referred to above present fairly, in all material respects, the financial position of WPH Salem, LLC as of December 31, 2017, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

 

Prior Period Financial Statements

 

The combined financial statements of WPH Salem, LLC as of December 31, 2016, were audited by other auditors whose report dated March 8, 2017, expressed an unmodified opinion on those statements.

 

As part of our audit of the 2017 combined financial statements, we also audited the adjustments described in Note G that were applied to restate the 2016 combined financial statements. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2016 combined financial statements of WPH Salem, LLC other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2016 combined financial statements as a whole.

 

Supplementary Information

 

Our audit was conducted for the purpose of forming an opinion on the combined financial statements as a whole. The combining information presented in Schedules I and II is presented for purposes 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 it is 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.

  

 

 

Columbia, Maryland

March 1, 2018

 

  

WPH SALEM, LLC

COMBINED BALANCE SHEETS

DECEMBER 31, 2017 AND 2016

 

		2017				2016 (Restated)
ASSETS
CURRENT ASSETS
Cash		$	202,962			$	55,190
Resident trust fund cash, restricted			96,957				76,275
Tenant receivables, net			419,328				1,024,270
Due from affiliates			-				41,309
Accounts receivable, other			1,941				134,211
Escrow deposits			753,468				630,412
Inventory			7,662				7,014
Prepaid expenses			124,264				134,672
Other current assets			139				-
Total Current Assets			1,606,721				2,103,353
PROPERTY AND EQUIPMENT, NET			803,319				808,417
OTHER ASSETS
Security deposits			722,218				722,218
TOTAL ASSETS		$	3,132,258			$	3,633,988

  

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

 

 

WPH SALEM, LLC

 COMBINED BALANCE SHEETS

DECEMBER 31, 2017 AND 2016

(continued)

 

						2016
		2017				(Restated)
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES
Cash overdraft		$	80,204			$	-
Accounts payable			1,155,861				1,543,404
Accrued expenses			408,871				337,912
Resident trust funds payable			96,957				76,275
Deferred revenue			112,411				204,075
Total Current Liabilities			1,854,304				2,161,666
LONG-TERM LIABILITIES
Deferred rent			1,741,863				1,414,563
Total Liabilities			3,596,167				3,576,229
MEMBER'S EQUITY (DEFICIT)
Member's equity (deficit)			(463,909	)			57,759
TOTAL LIABILITIES AND MEMBER'S EQUITY		$	3,132,258			$	3,633,988

 

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

 

 

WPH SALEM, LLC

COMBINED STATEMENTS OF OPERATIONS AND MEMBER'S EQUITY

YEARS ENDED DECEMBER 31, 2017 AND 2016

 

		2017				2016 (Restated)
REVENUE
Assisted living revenue, net of contractual allowances		$	9,969,868			$	9,759,618
Other income			139,061				42,154
Total Revenue			10,108,929				9,801,772
OPERATING EXPENSES
Salaries			3,218,187				3,223,200
Payroll taxes			291,453				308,361
Employee benefits			214,058				274,945
Food costs			548,446				591,655
Utilities			545,173				556,356
Supplies			182,989				173,935
Repairs and maintenance			162,709				158,041
Insurance			204,193				199,247
Property taxes			294,618				338,112
Professional/consulting fees			371,850				395,421
General and administrative expenses			279,122				337,156
Bad debt expense			905,369				385,081
Advertising and marketing			51,937				35,223
Travel and entertainment			28,979				23,694
Management service fee			501,729				496,091
Total Operating Expenses			7,800,812				7,496,518
CAPITAL RELATED EXPENSES
Depreciation and amortization			155,065				148,908
Rent			3,373,748				3,373,747
Total Capital Related Expenses			3,528,813				3,522,655
NET LOSS			(1,220,696	)			(1,217,401	)
MEMBER'S EQUITY, beginning of year			57,759				2,404,476
Prior period adjustment			-				(1,024,181	)
MEMBER'S EQUITY, beginning of year (restated)			57,759				1,380,295
Contributions from members			1,396,268				-
Distributions to members			(697,240	)			(105,135	)
MEMBER'S EQUITY, end of year		$	(463,909	)		$	57,759

  

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

 

 

WPH SALEM, LLC

COMBINED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2017 AND 2016

 

		2017				2016 (Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(1,220,696	)		$	(1,217,401	)
Adjustments to reconcile change in net loss to change in net cash used for operating activities:
Depreciation and amortization			155,065				148,908
Provision for bad debts			905,369				32,779
Decrease (increase) in assets:
Resident trust fund cash, restricted			(20,682	)			(7,787	)
Tenant receivables			(300,427	)			(240,737	)
Due from affiliates			41,309				(6,023	)
Accounts receivable, other			132,270				(73,455	)
Escrow deposits			(123,056	)			(55,628	)
Inventory			(648	)			5,570
Prepaid expenses			10,408				24,978
Other current assets			(139	)			-
Increase (decrease) in liabilities:
Cash overdraft			80,204				-
Accounts payable			(387,543	)			823,262
Accrued expenses			70,959				108,877
Resident trust fund payable			20,682				7,787
Deferred revenue			(91,664	)			51,291
Deferred rent			327,300				390,382
Net Cash Used for Operating Activities			(401,289	)			(7,197	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment			(149,967	)			(48,338	)
Net Cash Used for Investing Activities			(149,967	)			(48,338	)
CASH FLOWS FROM FINANCING ACTIVITIES
Contributions from members			1,396,268				-
Distributions to members			(697,240	)			(105,135	)
Net Cash Provided by (Used for) Financing Activities			699,028				(105,135	)
NET INCREASE (DECREASE) IN CASH			147,772				(160,670	)
CASH, beginning of year			55,190				215,860
CASH, end of year		$	202,962			$	55,190

 

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

 

  

WPH SALEM, LLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

 

NOTE A – NATURE OF THE ORGANIZATION

 

WPH Salem, LLC (the “Company”) is an LLC taxed as a partnership 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 and Aledo, Illinois. 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.

 

NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Combination

 

The combined financial statements include the accounts of the five OPCOs which operate under one master lease. All significant intercompany accounts and transactions between the OPCOs have been eliminated in combination.

 

Basis of Accounting

 

The combined financial statements were prepared using the accrual basis of accounting. Therefore, revenue and related assets are recognized when earned and expenses and related liabilities are recognized as the obligations are incurred.

 

Assisted Living Revenue and Tenant Receivables

 

Tenant receivables are reported at estimated net realizable amounts from tenants. Tenant receivables from Medicaid are carried at a net amount determined by the original charge for the service provided, less an estimate made for contractual adjustments provided to Medicaid. Tenant receivables are reduced by an allowance for doubtful accounts, which is determined by identifying troubled accounts and by historical experience. The Company generally does not charge interest on past due accounts. Tenant receivables are written off against the allowance for doubtful accounts when deemed uncollectible. The allowance for doubtful accounts was $861,496 and $73,807 as of December 31, 2017 and 2016, respectively.

 

 

WPH SALEM, LLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(continued)

 

NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Assisted Living Revenue and Tenant Receivables (continued)

 

The Company has agreements with Medicaid that provide for payments to the OPCOs at amounts different from its established rates. Payment arrangements include predetermined fee schedules and discount charges. Contractual adjustments under the Medicaid third-party reimbursement agreements represent the different between the Company’s billings at the established rates and the amounts reimbursed by Medicaid. Contractual allowances and discounts are deducted from assisted living revenue. Assisted living revenue is therefore reported at the estimated net realizable amount from tenants and Medicaid for services rendered, including retroactive adjustments under reimbursement agreements.

 

Use of Estimates

 

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 and disclosures. Accordingly, actual results could differ from those estimates.

 

Resident Trust Fund Cash, Restricted

 

The Company holds resident personal funds on behalf of the residents. A corresponding Resident Trust Funds Payable is established with respect to these balances.

 

Escrow Deposits

 

Under the provisions of the Master Lease Agreement, refundable escrow deposits for capital expenditures, property insurance, and property taxes are required for each of the OPCOs to secure full, faithful, and punctual performance of the lessees. These deposits are due and payable in arrears.

 

Inventory

 

Inventory consists of food for residents and is stated at the lower of cost or market.

 

Security Deposits

 

Security deposits consist of funds held by the landlord in accordance with the Master Lease Agreement for capital reserve funds and utility deposits held by the related utility company.

 

 

WPH SALEM, LLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(continued)

 

NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Property and Equipment

 

Property and equipment are stated at cost. Purchases and improvements greater than $500 and a useful life of one year are charged to the property accounts, while maintenance and repairs, which do not improve or extend life of the respective assets, are expensed as incurred. Depreciation is provided using the straight-line method over estimated useful lives of the assets, ranging from three to ten years. Leasehold improvements are amortized on a straight-line basis over the useful life of the asset or lease term, whichever is less. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in operations.

 

Whenever events or changes in circumstances indicate that the related carrying amount of an asset may not be recovered, management, using its best estimates and projections, reviews for impairment the carrying value of long-lived identifiable assets to be held and used in the future. Any impairment losses identified are recognized when determined.

 

Deferred Rent

 

The Company records rent expense including incentives on a straight-line basis over the terms of its leases. Deferred rental liability is recorded as the difference in rent expense recognized on a straight-line basis and cash payments.

 

Advertising

 

Advertising costs are expensed as incurred. Advertising expense totaled $51,937 and $35,223 for the years ended December 31, 2017 and 2016, respectively.

 

Income Taxes

 

The Company and all related OPCOs included in these combined financial statements are single member limited liability companies whereby all of the elements of income and deductions are included in the tax returns of their member. Therefore, no income tax provision or liability for federal and state purposes related to the entities are recorded in these combined financial statements.

 

 

WPH SALEM, LLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(continued)

 

NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Income Taxes (continued)

 

The Company has adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes, with no cumulative effect adjustment required. The Company believes that its income tax filing positions and deductions will be sustained upon examination, and accordingly, has not recorded any reserves, or related accruals for interest and penalties as of December 31, 2017 or 2016, for uncertain tax positions. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. The Company has adopted a policy under which, if required to be recognized in the future, it will classify interest related to the underpayment of income taxes as a component of interest expense, and will classify any related penalties under general and administrative expenses in the combined statement of income.

 

With few exceptions, the Company is no longer subject to U.S. federal, state, and local income tax examinations by tax authorities for tax returns filed for years beginning before January 1, 2014.

 

Reclassifications

 

Certain amounts in the 2016 financial statements have been reclassified to conform to the 2017 presentation.

 

NOTE C – PROPERTY AND EQUIPMENT

 

Property and equipment consist of the following as of December 31:

 

		2017				2016
Furniture, fixtures, and equipment		$	194,505			$	192,315
Other equipment			161,395				116,048
Leasehold improvements			1,064,196				961,766
			1,420,096				1,270,129
Less: accumulated depreciation and amortization			(616,777	)			(461,712	)
Property and Equipment, Net		$	803,319			$	808,417

 

Depreciation and amortization expense for the years ended December 31, 2017 and 2016 totaled $155,065 and $148,908, respectively.

 

  

WPH SALEM, LLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(continued)

 

NOTE D – LEASE OBLIGATIONS

 

The Company leases facilities under various lease agreements with unrelated third-party landlords. These non-cancellable lease agreements have terms extending through December 31, 2030. The leases are structured as triple net leases whereby the individual OPCOs are required to pay all executory costs, including taxes, insurance, utilities and maintenance.

 

The following is a schedule of the future minimum lease payments at December 31, 2017:

 

Year ending December 31,		Amount
2018		$	3,110,871
2019			3,176,659
2020			3,243,852
2021			3,312,459
2022			3,382,527
Thereafter			27,441,402
		$	43,667,770

 

Rent expense for the years ended December 31, 2017 and 2016 totaled $3,373,748 and $3,373,747 respectively.

 

NOTE E – CONCENTRATION OF RISK

 

Cash

 

The Company places its cash and temporary cash investments with high credit quality institutions. The Company, at times, could have deposits in excess of federally insured limits. Management does not believe the Company is exposed to any risk, which might affect the financial position of the Company.

 

Medicaid

 

The Company provides services to residents of North Carolina who are Medicaid recipients. Accordingly, the company is subject to a concentration of revenue risks related to the North Carolina Medicaid Program. 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 future years. Adjustments that significantly differ from the applicable estimates are reflected as an increase or decrease in resident services revenue in the year the adjustments are finalized.

 

  

WPH SALEM, LLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(continued)

 

 

NOTE E – CONCENTRATION OF RISK (continued)

 

The Company derived approximately 54% and 53% of its revenues from Medicaid for the years ended December 31, 2017 and 2016, respectively. Approximately 74% and 59% of gross tenant receivables at December 31, 2017 and 2016, respectively, are due from Medicaid. Management does not believe there are significant credit risks associated with amounts due from Medicaid.

 

NOTE F – RELATED PARTY TRANSACTIONS

 

The Company has management agreements with related parties with common ownership to operate the OPCOs. Management fees expensed under these agreements totaled $501,729 and $496,091 for the years ended December 31, 2017 and 2016, respectively.

 

The Company purchases medical supplies from a vendor in which an executive of one of the aforementioned management companies is a principal. For the years ended December 31, 2017 and 2016, the Company purchased medical supplies totaling approximately $27,053 and $25,400, respectively. As of December 31, 2017 and 2016, the Company had outstanding accounts payable due to the related party of approximately $26,762 and $11,800, respectively.

 

NOTE G - PRIOR PERIOD ADJUSTMENT

 

The Company discovered that previously issued financial statements included certain errors related to the fact that it had not previously recognized rental expense on a straight line basis in accordance with Financial Accounting Standards Board Accounting Standards Codification 842: Leases. The errors in accounting required restatements of the 2016 combined financial statements.

 

As a result of this adjustment, members equity as of December 31, 2015 was reduced by $1,024,181. In addition, deferred rent liability as of December 31, 2016 was increased by $1,414,563. Also as a result of this adjustment, rent expense for the year ended December 31, 2016 was increased by $458,573, resulting in a corresponding decrease in members equity as of December 31, 2016.

 

NOTE H – PROFESSIONAL LIABILITY INSURANCE

 

The Company maintains claims-made basis professional liability insurance with a per-claim limit of $1,000,000 and aggregate annual limit of $3,000,000 with a commercial carrier. The Company is liable for a deductible up to $25,000 for each claim.

 

 

WPH SALEM, LLC

NOTES TO THE COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

(continued)

 

 

NOTE I – SUBSEQUENT EVENTS

 

In preparing these combined financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through March 1, 2018, the date the combined financial statements were available to be issued. There were no additional events or transactions that were discovered during the evaluation that required further recognition or disclosure.

 

  

SUPPLEMENTARY INFORMATION

 

 

WPH SALEM, LLC

SCHEDULE I - COMBINING BALANCE SHEETS

DECEMBER 31, 2017

 

		Carteret				Hamlet				Shelby				Aledo				Danby				Eliminations				Combined
ASSETS
CURRENT ASSETS
Cash		$	10,913			$	-			$	-			$	192,049			$	-			$	-			$	202,962
Resident trust fund cash, restricted			6,186				9,902				26,820				-				54,049				-				96,957
Tenant receivables, net			3,502				78,265				108,270				66,252				163,039				-				419,328
Accounts receivable, other			-				5				-				-				1,936				-				1,941
Escrow deposits			124,218				150,178				68,708				158,083				252,281				-				753,468
Inventory			1,875				1,344				1,840				-				2,603				-				7,662
Prepaid expenses			30,037				21,898				45,367				6,573				20,389				-				124,264
Other current assets			139				-				-				-				-				-				139
Total Current Assets			176,870				261,592				251,005				422,957				494,297				-				1,606,721
PROPERTY AND EQUIPMENT, NET			208,704				99,127				304,323				55,780				135,385				-				803,319
OTHER ASSETS
Security deposits			102,387				139,706				95,625				166,250				218,250				-				722,218
TOTAL ASSETS		$	487,961			$	500,425			$	650,953			$	644,987			$	847,932			$	-			$	3,132,258
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES
Cash overdraft		$	-			$	38,158			$	20,536			$	-			$	21,510			$	-			$	80,204
Accounts payable			247,894				257,171				323,531				32,962				294,303				-				1,155,861
Accrued expenses			75,336				39,194				48,311				139,224				106,806				-				408,871
Resident trust funds payable			6,186				9,902				26,820				-				54,049				-				96,957
Deferred revenue			24,470				4,814				4,917				61,342				16,868				-				112,411
Total Current Liabilities			353,886				349,239				424,115				233,528				493,536				-				1,854,304
LONG-TERM LIABILITIES
Deferred rent			230,637				349,113				241,692				487,790				432,631								1,741,863
Total Liabilities			584,523				698,352				665,807				721,318				926,167				-				3,596,167
MEMBER'S EQUITY
Member's equity (deficit)			(96,562	)			(197,927	)			(14,854	)			(76,331	)			(78,235	)			-				(463,909	)
TOTAL LIABILITIES AND MEMBER'S EQUITY		$	487,961			$	500,425			$	650,953			$	644,987			$	847,932			$	-			$	3,132,258

  

 

WPH SALEM, LLC

SCHEDULE I - COMBINING BALANCE SHEETS

DECEMBER 31, 2016 (RESTATED)

 

		Carteret				Hamlet				Shelby				Aledo				Danby				Eliminations				Combined
ASSETS
Cash		$	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, net			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
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			595,291				292,114				449,478				719,504				610,391				(563,425	)			2,103,353
PROPERTY AND EQUIPMENT, NET			247,408				100,437				311,765				47,860				100,947				-				808,417
OTHER ASSETS
Security deposits			102,387				139,706				95,625				166,250				218,250				-				722,218
TOTAL ASSETS		$	945,086			$	532,257			$	856,868			$	933,614			$	929,588			$	(563,425	)		$	3,633,988
LIABILITIES AND MEMBER'S EQUITY
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 expenses			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 revenue			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
LONG-TERM LIABILITIES
Deferred rent			188,357				285,114				197,385				422,061				321,646				-				1,414,563
Total Liabilities			655,618				1,244,878				668,148				709,744				861,266				(563,425	)			3,576,229
MEMBER'S EQUITY
Member's equity (deficit)			289,468				(712,621	)			188,720				223,870				68,322				-				57,759
TOTAL LIABILITIES AND MEMBER'S EQUITY		$	945,086			$	532,257			$	856,868			$	933,614			$	929,588			$	(563,425	)		$	3,633,988

   

 

WPH SALEM, LLC

SCHEDULE II - COMBINING STATEMENTS OF OPERATIONS AND MEMBER'S EQUITY

YEAR ENDED DECEMBER 31, 2017

 

		Carteret				Hamlet				Shelby				Aledo				Danby				Combined
REVENUE
Assisted living revenue, net of contractual allowances		$	1,633,527			$	1,325,960			$	1,648,340			$	2,374,744			$	2,987,297			$	9,969,868
Other income			13,064				7,854				76,765				20,893				20,485				139,061
Total Revenue			1,646,591				1,333,814				1,725,105				2,395,637				3,007,782				10,108,929
OPERATING EXPENSES
Salaries			551,119				421,967				605,329				585,269				1,054,503				3,218,187
Payroll taxes			49,473				38,372				54,773				49,749				99,086				291,453
Employee benefits			22,913				18,572				31,504				88,433				52,636				214,058
Food costs			106,155				87,551				92,184				121,840				140,716				548,446
Utilities			117,115				98,740				105,354				122,244				101,720				545,173
Supplies			31,799				28,394				40,976				32,352				49,468				182,989
Repairs and maintenance			27,738				32,231				40,938				28,897				32,905				162,709
Insurance			47,061				25,281				41,455				41,790				48,606				204,193
Property taxes			31,567				39,037				23,738				123,032				77,244				294,618
Professional/consulting fees			59,634				81,726				105,095				32,240				93,155				371,850
General and administrative expenses			57,819				35,168				62,131				47,576				76,428				279,122
Bad debt expense			16,466				90,407				44,572				482,494				271,430				905,369
Advertising and marketing			12,793				3,115				5,043				26,369				4,617				51,937
Travel and entertainment			3,728				5,377				1,475				14,900				3,499				28,979
Management service fee			81,326				68,662				83,781				116,614				151,346				501,729
Total Operating Expenses			1,216,706				1,074,600				1,338,348				1,913,799				2,257,359				7,800,812
CAPITAL RELATED EXPENSES
Depreciation and amortization			45,169				21,041				49,559				17,521				21,775				155,065
Rent			434,675				657,965				455,511				764,518				1,061,079				3,373,748
Total Capital Related Expenses			479,844				679,006				505,070				782,039				1,082,854				3,528,813
NET INCOME (LOSS)			(49,959	)			(419,792	)			(118,313	)			(300,201	)			(332,431	)			(1,220,696	)
MEMBER'S EQUITY, beginning of year			289,468				(712,621	)			188,720				223,870				68,322				57,759
Contributions from member			63,180				949,286				32,986				-				350,816				1,396,268
Distributions to member			(399,251	)			(14,800	)			(118,247	)			-				(164,942	)			(697,240	)
MEMBER'S EQUITY (DEFICIT), end of year		$	(96,562	)		$	(197,927	)		$	(14,854	)		$	(76,331	)		$	(78,235	)		$	(463,909	)

  

 

WPH SALEM, LLC

SCHEDULE II - COMBINING STATEMENTS OF OPERATIONS AND MEMBER'S EQUITY (DEFICIT)

YEAR ENDED DECEMBER 31, 2017 (RESTATED)

 

		Carteret				Hamlet				Shelby				Aledo				Danby				Combined
REVENUE
Assisted living revenue, net of contractual allowances		$	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 Revenue			1,635,358				1,412,886				1,500,131				2,393,309				2,860,088				9,801,772
OPERATING EXPENSES
Salaries			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			45,878				29,775				49,859				148,273				63,371				337,156
Bad debt expense			16,347				14,129				48,767				23,930				281,908				385,081
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			434,675				657,965				455,511				764,518				1,061,078				3,373,747
Total Capital Related Expenses			479,145				678,001				504,077				778,481				1,082,951				3,522,655
NET LOSS			(50,896	)			(255,834	)			(320,014	)			(33,114	)			(557,543	)			(1,217,401	)
MEMBER'S EQUITY, beginning of year			477,807				(248,742	)			652,764				704,749				817,898				2,404,476
Prior period adjustment			(137,443	)			(208,045	)			(144,030	)			(342,630	)			(192,033	)			(1,024,181	)
MEMBER'S EQUITY, beginning of year (restated)			340,364				(456,787	)			508,734				362,119				625,865				1,380,295
Distributions to member			-				-				-				(105,135	)			-				(105,135	)
MEMBER'S EQUITY (DEFICIT), end of year		$	289,468			$	(712,621	)		$	188,720			$	223,870			$	68,322			$	57,759