UPD HOLDING CORP. The following management discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim consolidated financial statements and related notes which are included in Item 1 of this Quarterly Report on Form 10-Q, and with our audited financial statements included in our Form 10-K for the fiscal year endedJune 30, 2021 , filed with theSecurities and Exchange Commission onOctober 13, 2021 . This discussion and analysis provide information that management believes is relevant to an assessment and understanding of our results of operations and financial condition for the periods presented. The following selected financial information is derived from our historical consolidated financial statements and should be read in conjunction with such consolidated financial statements and notes thereto set forth elsewhere herein and the "Forward- Looking Statements" explanation included herein. RESULTS OF OPERATIONS
Results of Operations for the Three Months Ended
Below is a summary of the results of operations for the three months endedSeptember 30, 2021 , and 2020. For the Three Months Ended September 30, % 2021 2020 $ Change Change Revenue: Net revenue $ - $ - $ - 0.00 % Operating expenses Professional fees 57,817 45,616 12,201 26.75 % General and administrative 240,161 2,480 237,681 9583.91 % Total operating costs and expenses 297,978 48,096 249,882 9610.66 % Operating loss 297,978 48,096 249,882 9610.66 % Interest expense, net (27,659 ) (5,859 ) (21,800 ) 372.08 %
Loss on change in fair value of derivative liability (38,943 )
- (38,943 ) -0.00 % Net loss$ (364,580 ) $ (53,955 ) $ (310,625 ) -9238.58 % Revenue and Cost of Revenue
We generated no revenue for the three months ended
Professional Fees We incurred professional fees of$57,817 and$45,616 for the three months endedSeptember 30, 2021 , andSeptember 30, 2020 , respectively. Our professional fees increased by$12,201 for the three months endedSeptember 30, 2021 , compared to the same period in 2020. The increase is primarily attributable to accounting and legal fees.
As funding permits, we expect to incur higher professional fees associated with on-going development of our brand, customers, and other relationship development.
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General and Administrative Expenses
For the three months endedSeptember 30, 2021 , andSeptember 30, 2020 , we incurred general and administrative expenses of$240,161 and$2,480 , respectively, representing an increase of$237,681 for the three months endedSeptember 30, 2021 , compared to the same period in 2020. The$237,681 increase in general and administrative expenses is primarily attributable to incurring rent expense and related facilities costs totaling approximately$69,584 ; approximately$51,786 in payroll expenses; approximately$11,388 in insurance expense and approximately$86,590 in consulting fees, none of which were incurred during the three months endedSeptember 30, 2020 . We expect our expenses to increase over the next several periods should we be successful in our new business plan, which will primarily consist of facilities costs, management and other salaries, travel, and other corporate overhead.
Interest Expense Interest expense was$27,659 and$5,859 for the three months endedSeptember 30, 2021 , andSeptember 30, 2020 , respectively, representing an increase of$21,800 . The increase is primarily the result of the incurrence of new debt obligations totaling$544,000 .
Change in Fair Value of Derivative Liabilities
As ofSeptember 30, 2021 , the Company did not have enough authorized and unissued shares of common stock to settle all its convertible debt obligations. As a result, the Company recognized obligations to issue a total of 4,367,807 shares of common stock upon convertible debt conversion to derivative liabilities in the accompanying consolidated balance sheets. For the three months endedSeptember 30, 2021 , the Company recognized a loss on the change in the fair value of derivative liabilities of$38,943 . The Company had derivative liability obligations of$276,906 as ofSeptember 30, 2021 .
Liquidity and Capital Resources
As ofSeptember 30, 2021 , we had a working capital deficit of approximately$1,244,902 . Over the next twelve months, we have estimated that in order to maintain reporting company status as defined under the Securities Exchange Act of 1934, we will require cash for general and administrative expenses primarily consisting of facilities costs payroll expenses and professional fees, which include accounting, legal and other professional fees, as well as filing fees. We believe we will be able to meet these costs by raising additional funds through various financing sources, including the sale of our common or preferred stock and the procurement of commercial debt financing, and through our operations which are expected to commence during the second quarter of fiscal 2022. However, no assurance can be given that we will be able to raise additional capital, when needed or at all, or that such capital, if available, will be on acceptable terms. Further, we have recently entered the rehabilitation services industry and may not be able to operate our facilities at levels sufficient to meet our on-going obligations. For the three months endedSeptember 30, 2021 , our operational cash flows primarily consisted of incurring expenses in the normal course of business at levels commensurate with its funding levels and resulting inabilities to commence commercially viable operations. Net cash used in operating activities was$335,677 during the three months endedSeptember 30, 2021 and consisted of a net loss of$364,580 and net change in operating assets and liabilities of$35,624 , which was offset by non-cash items of$64,527 . The primary non-cash items for the three months endedSeptember 30, 2021 , consisted of amortization of debt discount of$11,067 and non-cash warrant amortization of$5,500 and change in derivative liabilities of$38,943 . The significant change in operating assets and liabilities was an increase in accounts payable and accrued liabilities. We expect these operational cash uses to increase as we begin our operations in the first half of fiscal 2022. 18 Table of Contents Our investing activities consisted of acquiring property and equipment totaling approximately$56,807 . We expect to make additional capital expenditures as its rehabilitation facilities increase operations.
During the three months ended
Off-Balance Sheet Arrangements
During the three months endedSeptember 30, 2021 , and the year endedJune 30, 2020 , we did not engage in any off-balance sheet arrangements as set forth in Item 303(a)(4) of the Regulation S-K. Critical Accounting Policies The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with US GAAP. The preparation of these financial statements requires our management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These items are monitored and analyzed by our management for changes in facts and circumstances, and material changes in these estimates could occur in the future. Business Combinations Business combinations are accounted for at fair value. Acquisition costs are expensed as incurred and recorded in general and administrative expenses; previously held equity interests are valued at fair value upon the acquisition of a controlling interest; restructuring costs associated with a business combination are expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date affect income tax expense. Measurement period adjustments are made in the period in which the amounts are determined, and the current period income effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. All changes that do not qualify as measurement period adjustments are also included in current period earnings. The accounting for business combinations requires estimates and judgment as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair value for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management's estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements could result in a possible impairment of goodwill or the recognition of additional consideration which would be expensed. The fair value of contingent consideration is re-measured each period based on relevant information and changes to the fair value are included in the operating results for the period.Goodwill
Goodwill represents the excess of fair value over identifiable tangible and intangible net assets acquired in business combinations.Goodwill is not amortized, instead goodwill is reviewed for impairment at least annually, or on an interim basis between annual tests when events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less
than its carrying value. 19 Table of Contents
Embedded Conversion Features and Other Equity-linked Instruments (Derivative Liabilities)
The Company classifies all of its embedded debt conversion features, and other derivative financial instruments as equity if the contracts (1) require physical settlement or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) contracts that contain reset provisions. The Company assesses classification of its equity-linked instruments at each reporting date to determine whether a change in classification between equity and liabilities (assets) is required. As ofSeptember 30, 2021 , the Company did not have enough authorized and unissued shares to settle all outstanding equity-linked instruments resulting in the reclassification of certain instruments to liability. The Company reclassifies outstanding instruments based on allocating the unissued shares to contracts with the earliest inception date resulting in the contracts with the latest inception date being recognized as liabilities first. The Company accounts for contracts convertible into common stock in excess of its authorized capital as derivative as liabilities. The derivative liabilities are re-measured at fair value with the changes in the value reported as a component of other income (expense) in the accompanying consolidated results of operations. The derivative liabilities are measured at fair value using a Black Scholes option pricing model. The model is based on assumptions including quoted market prices and estimated volatility factors based on historical quoted market prices for the Company's common stock and are classified within Level 3 of the fair value hierarchy as established by US GAAP. As ofSeptember 30, 2021 , all derivative liability contracts are convertible into a fixed number of shares of common stock. DESCRIPTION OF OUR CURRENT BUSINESS - REHABILITATION SERVICESVBH Garden Grove VBH Garden Grove intends to identify substance use disorder treatment facilities located inCalifornia to provide patient solutions that are able to economically accept select insurance payors to facilitate a broader patient base for Vital.VBH Garden Grove has identified various potential license holders and facilities located inSouthern California and is in the due diligence phase for transaction consideration; however, there are no binding transactions for any licenses or facilities inCalifornia as ofOctober 13, 2021 .
Business of
Vital's operational plans are contingent upon whether we are able to:
· Obtain sufficient debt or equity financing to operate
facilities.
· Secure leases for the substance abuse facilities.
· Secure and have approved the required state licenses to operate the substance
abuse facilities.
· Meet applicable zoning requirements.
Upon our acquisition of Vital we became a health and wellness company with a focus in the drug and alcohol rehabilitation services industry. Vital intends to operateU.S. facilities focusing on substance abuse treatment and offer various programs that help provide a continuum of care to its patients. We intend to become a national operator of clinical and transitional housing services for clients affected by substance use disorders and co-occurring disorders. Our treatment plans will be based on an individualized approach and will be customized to meet each client's specific needs. The facilities we intend to operate have access to Medically Monitored Withdrawal Management Services (MMWM), a Partial Hospitalization Program (PHP), an Intensive Outpatient Program (IOP), and an Outpatient Program (OP). Clients who participate in the PHP, IOP, and OP treatment programs will be eligible for housing through sober living accommodations that will be designed to give a client the ability to participate in his or her daily affairs and work and to have access to daily on-campus treatment at convenient times and locations. We intend that most of our treatment facilities will be enrolled in Medicare or Medicaid and will bill and accept payments from those governmental programs. In most cases, it takes between 45 and 90 days for a Medicaid application to be processed and either accepted or denied by the state Medicaid office. However, depending on the circumstances and the state in which one resides, the application process could be shorter or longer. Most facilities that accept Medicaid generally provide programs with some degree of medical care and substance rehabilitation, including group and individual therapy, 12-step meetings, and other recovery activities, on a 24 hours per day basis in a highly structured setting. Short-term programs may last between 3 and 6 weeks and be followed by outpatient therapy. Long-term programs often last between 6 and 12 months and focus on re-socializing patients as they prepare to re-enter their communities. Intensive outpatient services (IOPs) typically offer at least 9 hours of therapy per week in sets of three 3-hour sessions, and some studies have found them to be similar to residential and inpatient programs in both
services and effectiveness. 20 Table of Contents
Partial hospitalization programs (PHPs) provide care for people who need a more comprehensive level of treatment than standard or intensive outpatient. These programs typically consist of approximately 20 hours a week of treatment and may include vocational and educational counseling, family therapy, medically supervised use of medications, and treatment of co-occurring disorders. IOPs may also offer these services, but the time commitment of a PHP typically is greater.
We will offer both IOP and PHP services at our facilities and accept Medicare and Medicaid payor-qualified patients and clients.
VSL Frankfort intends to offer sober-designated living quarters for individuals who are in recovery. Operations for VSL Frankfort are intended to commence once VBH Kentucky obtains the operating entitlements for its outpatient substance use treatment facility inFrankfort, Kentucky . Until such time, VSL Frankfort's operations will be limited to planning and preparation.
All of our plans reflected above and below are contingent upon receiving adequate debt and/or equity financing of which there are no assurances we will be successful in obtaining.
Our Future Services and Solutions
We intend to provide quality, comprehensive, and compassionate care to adults struggling with alcohol and/or drug abuse and dependence as well as co-occurring mental health issues. We will maintain a research-based, disciplined treatment plan for all patients with schedules designed to engage the patient in an enriched recovery experience. Our purpose and passion are to empower the individual, their families, and the broader community through the promotion of optimal wellness of the mind, body, and spirit. We plan to offer the following types of therapy: motivational interviewing, cognitive behavioral therapy, rational emotive behavior therapy, dialectical behavioral therapy, solution-focused therapy, eye movement desensitization and reprocessing, and systematic family intervention. Our variety of therapy settings includes individual, group, and family therapies, recovery-oriented challenge therapies, expressive therapies (with a focus on music and art),
and
trauma therapies.
We also intend to provide Medicated-Assisted Treatment ("MAT"), which is the use
of FDA-approved medications, in combination with counseling and behavioral
therapies, to provide a "whole-patient" approach to the treatment of substance
use disorders. We believe that it is particularly effective for treating certain
conditions such as opioid use disorder, alcohol use disorder, and tobacco use
disorder. The use of MAT has been shown to significantly reduce overdoses from
opioids and to improve long-term abstinence.
Considering the high level of co-occurring substance abuse, mental health, and
medical conditions, we will offer patients a spectrum of psychiatric, medical,
and wellness-focused services based upon individual needs as assessed through
comprehensive evaluations at admission and throughout participation in the
program. To maximize the likelihood of long-term recovery, all program levels
will provide patients access to the following services: assessment of individual
substance abuse, mental health, medical history, and physical condition promptly
upon admission; psychiatric evaluations; psychological evaluations, and services
based on patient needs; follow-up appointments with physicians and
psychiatrists; medication monitoring; educational classes regarding health
risks, nutrition, smoking cessation, HIV awareness, life skills, healthy
nutritional programs, and dietary plans; access to fitness facilities;
interactive wellness activities; and structured daily schedules designed for
restorative sleep patterns.
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We plan to emphasize clinical treatment, as well as the therapeutic value of
overall physical and nutritional wellness. We are committed to providing fresh
and nutritious meals throughout a patient's stay in order to promote healthy
routines, beginning with diet and exercise. Our facilities will offer
comprehensive work-out facilities either on-site or within walking distance, as
well as various exercise classes and other amenities. We will support long-term
recovery for patients through research-based methodologies and individualized
treatment planning while utilizing 12-step programs, which are a set of guiding
principles outlining a course of action for recovery.
We plan to have a differentiated ability to manage dual diagnosis cases and
coordinate treatment of individuals suffering from the common combination of
mental illness and substance abuse simultaneously. These patients participate in
education and discussion-oriented groups designed to provide information
regarding the psychiatric disorders that co-occur with chemical dependency.
We plan to have a strong emphasis on tracking patient satisfaction scores in
order to measure our patient and staff interaction and overall outcome and
reputation. In addition to patient satisfaction surveys that we will receive
after a patient's discharge, we also will solicit feedback during a patient's
stay at our inpatient facilities. This allows us to further tailor an
individual's treatment plan to emphasize the programs that have been more
impactful to a particular patient.
We believe in tracking clinical outcomes. We intend to track and measure patient outcomes in order to drive continual improvement in our programs.
We plan offer a full spectrum of treatment services to patients based upon individual needs that are assessed through comprehensive evaluations at admission and throughout their participation in the program. The assignment and frequency of services will correspond to individualized treatment plans within the context of the level of care and treatment intensity level.
· Detoxification ("detox"). Detoxification is usually conducted at an inpatient
facility for patients with physical or psychological dependence. Detoxification
services are designed to clear toxins out of the body so that the body can
safely adjust and heal itself after being dependent upon a substance. Patients
are medically monitored 24 hours per day, seven days per week, by experienced
medical professionals who work to alleviate withdrawal symptoms through
medication, as appropriate. We plan to provide detoxification services for
several substances including alcohol, sedatives, and opiates.
· Residential Treatment. Residential care is a structured treatment approach
designed to prepare patients to return to the general community with a sober
lifestyle, increased functionality, and improved overall wellness. Treatment is
provided on a 24 hours per day, seven days per week basis, and services
generally include a minimum of two individual therapy sessions per week,
regular group therapy, family therapy, didactic and psycho-educational groups,
exercise (if cleared by medical staff), case management, and recreational
activities. Medical and psychiatric care will be available to all patients, as
needed, through our planned contracted professional physician groups.
· Partial Hospitalization. Partial hospitalization is a structured program
providing care a minimum of 20 hours per week. This program is designed for
patients who are stable enough physically and psychologically to participate in
everyday activities but who still require a degree of medical monitoring.
Services include a minimum of weekly individual therapy, regular group therapy,
family education and family therapy, didactic and psycho-educational groups,
exercise (if cleared by medical staff), case management, and off-site recovery
meetings and activities. Medical and psychiatric care will be available to all
patients, as needed, through our planned contracted professional physician
groups.
· Intensive Outpatient Services. Less intensive than the aforementioned levels of
care, intensive outpatient services are comprised of a structured program
providing care three days per week for three hours per day at a minimum.
Designed as a "step down" from partial hospitalization, this program reinforces
progress and assists in the attainment of sobriety, reduction of detrimental
behaviors, and improved overall wellness of patients while they integrate and
interact in the community. Services include weekly individual therapy, group
therapy, family education and family therapy, didactic and psycho-educational
groups, case management, off-site recovery meetings and activities, and
intensive transitional and aftercare planning.
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· Outpatient Services. Traditional outpatient services are delivered in regularly
scheduled sessions, usually less the nine hours per week. Outpatient services
include professionally directed screening, assessment, therapy, and other
services designed to support successful transition to the community and
long-term recovery. These services are tailored to a person's specific needs
and stage of recovery and may involve many modalities, including motivational
enhancement, family therapy, educational groups, occupational and recreational
therapy, psychotherapy, and pharmacotherapy.
· Ancillary Services. In addition to our inpatient and outpatient treatment
services, we intend to provide medical monitoring for adherence to addiction
treatment, clinical diagnostic laboratory services, and physician services to
our patients through our contracted laboratories and professional physician
groups. We believe toxicological monitoring of patients is an important
component of substance abuse treatment. Patients are evaluated for illicit
substances upon admission and thereafter on a random basis and as otherwise
determined to be medically necessary by the treating physician.
· Sober Living Facilities. We plan to provide sober living arrangements that
serve as an interim environment for patients transitioning from inpatient
treatment centers to lower levels of care and eventually back to their former
living arrangements. Sober living facilities enable us to utilize existing beds
for patients requiring higher levels of care, while still providing housing for
patients completing outpatient treatment programs. We provide sober living
arrangements to patients through our owned and leased properties in
Nevada ,Mississippi , andFlorida . We plan to continue using sober living facilities as a complement to our outpatient services. Business Strategies Vital plans to hire highly trained and experienced clinical staff to deploy research-based treatment programs with structured curricula for detoxification, inpatient treatment, partial hospitalization, and intensive outpatient care. By keeping the majority of its treatment facilities and housing on campuses that are conveniently located within walking distance to traditional community services, we are striving to create so-called 'sober cities' inthe United States that will nurture its clients' development at all stages from detox to long-term self-sufficiency. By applying a tailored treatment program based on the individual needs of each patient, many of whom require treatment for a co-occurring mental health disorder such as depression, bipolar disorder, or schizophrenia, we believe we will offer the level of quality care and service necessary for our patients to achieve and maintain sobriety. Development of our business and theVital Behavioral Health and Vital Sober Livingnational brands is contingent upon our ability to raise sufficient funds to fund hiring clinical experts, leasing facilities, and hiring professional staff, and national sales and marketing programs. We will engage the following strategies:
· Clinical excellence and outcomes-driven treatment. Our operations require us to
comply with the national standard for quality and sustainable outcomes in
addiction treatment and to ongoing measurement and transparency regarding
patient outcomes. In addition to measurement of patient outcomes and
satisfaction with treatment, we plan to advance utilization of modern,
evidence-based interventions that address addiction as a chronic brain disease,
as supported by the science.
· Improve census over time at existing facilities. We plan to connect with
potential patients through a multi-faceted program that involves education
about the disease of addiction and the development of relationships with
healthcare professionals, digital marketing, as well as such traditional
channels as television, radio and print advertising. We plan to will take a
consultative, empathetic approach in operating our admissions department to
allow our personnel to effectively identify and enroll patients who may benefit
from our treatment service offerings.
· Target complementary growth opportunities. We plan to pursue growth
opportunities that are complementary to our business, including providing
laboratory services to other substance abuse treatment providers and expanding
other ancillary services.
· Develop outpatient operations. We plan to selectively pursue opportunities to
add outpatient centers to complement our broader network of inpatient treatment
facilities. We believe expanding our reach by developing or acquiring premium
outpatient facilities of a quality consistent with our inpatient services will
further enhance our brand and our ability to provide a more comprehensive suite
of services across the spectrum of care.
23 Table of Contents
· Opportunistically diversify our portfolio of treatment facilities. We intend to
selectively seek acquisition opportunities to expand and diversify our
geographic presence, service offerings, and the portion of the population that
can access our services based on their individual healthcare coverage We
believe that most mental health and substance abuse treatment companies in
operation are small, regional operations and this high level of fragmentation
presents us with the opportunity to acquire facilities or small providers and
create economies of scale and enhanced patient care. All of the above plans are
contingent upon adequate funding of which there are no assurances. Sales and Marketing
We intend to use a multi-faceted approach to reach potential patients suffering from the disease of addiction and co-occurring psychiatric disorders. This multi-pronged approach will include:
· National Marketing Force. We intend to deploy and manage a team of
representatives that will focus on developing relationships with hospitals,
other treatment facilities, psychiatrists, therapists, social workers,
employers, unions, alumni, and employee assistance programs. Our sales
representatives will educate these various constituents about the disease of
addiction and the variety of treatment services that we provide.
· Multi-Media Marketing. Through comprehensive online directories of treatment
providers, treatment provider reviews, user content that discusses the disease
of addiction, treatment and recovery, as well as discussion forums and
professional communities, our future addiction-related websites will serve
families and individuals who are struggling with addiction and seeking
treatment options. Additionally, we plan to pursue advertising opportunities in
television commercials, radio spots, newspaper articles, medical journals, and
other print media that promote our facilities and have the intent to build our
integrated, national brand.
· Recommendations by Alumni. We anticipate receiving new patients who are
directly referred to our facilities by our satisfied and supportive alumni, as
well as their friends and families. As our national brand continues to grow and
our business continues to increase, we believe our alumni will become an increasingly important source of business for us.
The extent that we are able to implement the foregoing or even able to implement any of the foregoing sales and marketing plans are contingent upon adequate funding, of which there are no assurances.
Admissions Center Operations We intend to maintain a 24-hours per day, seven days per week, remote admissions center. Our centralized admissions center initially will be provided by a third-party provider that will focus on outreach and enrolling patients. As part of its role, the admissions center team will conduct benefits verification, handle initial communication with insurance companies, complete patient intake screenings, consult with our clinicians where necessary regarding a potential patient's specific medical or psychological condition, begin the pre-certification process for treatment authorization, help each patient choose a proper treatment facility for his or her clinical and financial needs, and assist patients with arrangements and logistics. Professional Groups We plan to become affiliated with groups of physicians and mid-level service providers that may provide certain professional services to our patients through professional services agreements with certain of our treatment facilities (the "Professional Groups"). Under the professional services agreements, the Professional Groups may provide a physician to serve as medical director for the applicable facility. The Professional Groups may either bill the payor for their services directly or be compensated by the treatment facility based on fair
market value hourly rates. 24 Table of Contents Competition Our competitors have greater assets, revenues, operational resources and financial resources than we do. The market for mental health and substance abuse treatment facilities is highly fragmented with approximately 12,000 different companies providing services to the adult and adolescent population, of which only 30% are operated by for-profit organizations (Source: DHHS, 2020 Data on Substance Abuse Treatment Facilities). Our inpatient treatment facilities will compete with several national competitors and many regional and local competitors. Some of our competitors are government entities that are supported by tax revenue, and others are non-profit entities that are primarily supported by endowments and charitable contributions. We do not receive financial support from these sources. Some larger companies in our industry compete with us on a national scale and offer substance use treatment services among other behavioral healthcare services. To a lesser extent, we also compete with other providers of substance use treatment services, including other inpatient behavioral healthcare facilities and general acute care hospitals. We believe the primary competitive factors affecting our business include:
· quality of clinical programs and services;
· reputation and brand recognition;
· overall aesthetics of the facilities;
· amenities offered to patients;
· relationships with payors and referral sources;
· sales and marketing capabilities;
· information systems and proprietary data analytics;
· senior management experience; and
· national scope of operations.
Revenues
We plan to generate revenues through ourVital Behavioral Health operations from behavioral health treatment services at our inpatient and outpatient treatment facilities, which will be derived from personally funded patients (i.e., private payor), insurance companies (e.g.,United Healthcare andBlue Cross and Blue Shield ), and government program payors (e.g., Medicaid and Medicare) that act as the primary payment or reimbursement source of funds for our patient services. We also plan to generate revenues through our Vital Sober Living operations as a landlord through the provision of sober living residences that are supported by ourVital Behavioral Health patient services. Initially, we expect that our revenue-producing operations will commence inFrankfort, Kentucky .
RESULTS OF OPERATIONS
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