UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-Q








(Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended March 31, 2010Oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Transition Period From to





Commission file number: 333-140567













TRINITYCARE SENIOR LIVING, INC.


(Exact name of registrant as specified in its charter)





Nevada

71-0822436(State or other jurisdiction of
incorporation or organization)

(I.R.S.Employer
Identification No.)













227 East Edgewood Avenue


Friendswood, TX 77546


(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)





(281) 482-9700


(ISSUER TELEPHONE NUMBER)





(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)








Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.  Yes þ     No o








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








Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
Smaller reporting company  þ


(Do not check if a smaller reporting company)








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








There were 11,873,884 shares of the Registrant’s common stock outstanding at May 5, 2010.




1








Form 10-Q


For the Quarterly Period Ended March 31, 2010





TABLE OF CONTENTS





PagePART I. FINANCIAL INFORMATIONItem 1.


Consolidated Financial StatementsConsolidated Balance Sheets at March 31, 2010 (unaudited) and December 31, 2009


3Consolidated Statements of Income for the three months ended March 31, 2010 and 2009 (unaudited)


4Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited)


5Notes to Consolidated Financial Statements


6Item 2.


Management’s Discussion and Analysis of Financial Condition and Results of Operations


18Item 3.


Quantitative and Qualitative Disclosure About Market Risk


30Item 4T.


Controls and Procedures


30PART II. OTHER INFORMATIONItem 1.


Legal Proceedings


31Item 1A.


Risk Factors


31Item 2.


Unregistered Sales of Equity Securities and Use of Proceeds


31Item 3.


Defaults Upon Senior Securities


31Item 4.


Submission of Matters to a Vote of Security Holders


31Item 5.


Other Information


31Item 6.


Exhibits


31SignaturesExhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2








CAUTIONARY STATEMENT














EXCEPT FOR THE HISTORICAL FINANCIAL INFORMATION CONTAINED HEREIN, THE MATTERS DISCUSSED IN THIS REPORT ON FORM 10-Q (AS WELL AS DOCUMENTS INCORPORATED HEREIN BY REFERENCE) MAY BE CONSIDERED “FORWARD-LOOKING” STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS INCLUDE DECLARATIONS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF ENTORIAN TECHNOLOGIES INC. AND ITS MANAGEMENT, AND MAY BE EVIDENCED BY WORDS SUCH AS WE “EXPECT,” “ANTICIPATE,” “TARGET,” “PROJECT,” “BELIEVE,” “GOALS,” “ESTIMATE,” “POTENTIAL,” “PREDICT,” “MAY,” “MIGHT,” “COULD,” “INTEND,”
VARIATIONS OF THESE TYPES OF WORDS AND SIMILAR EXPRESSIONS. YOU ARE CAUTIONED THAT ANY FORWARD-LOOKING STATEMENTS ARE NOT GUARANTIES OF FUTURE PERFORMANCE AND INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE INDICATED BY THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO THESE DIFFERENCES INCLUDE THOSE DISCUSSED UNDER “RISK FACTORS” AND ELSEWHERE IN THIS REPORT. ENTORIAN TECHNOLOGIES INC. DISCLAIMS ANY INTENTION OR OBLIGATION TO
UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

















2





TrinityCare Senior Living, Inc. and Subsidiaries


Balance Sheets





March 31,


December 31,2010


2009(unaudited)ASSETSCash

$
153,614


$
310,119Accounts receivable


56,090



96,269Prepaid expenses


415,501



408,585Total Current Assets


625,205



814,973Property and equipment


17,098,734



17,092,195Accumulated depreciation


(2,736,585
)


(2,590,874
)Net property and equipment


14,362,149



14,501,321Loan costs


238,760



233,716Accumulated amortization


(16,671
)


(13,058
)Net loan costs


222,089



220,658Project development costs


154,630



151,032Deposits and reserves


158,326



155,326Total other assets


535,045



527,016Total Assets

$
15,522,399


$
15,843,310LIABILITIESAccounts payable

$
518,779


$
479,042Accrued expenses


572,292



528,461Deferred revenue


363,272



547,091Line of credit


76,701



76,972Current portion of long-term debt


6,405,153



6,200,167Total Current Liabilities


7,936,197



7,831,733Mortgage


11,239,029



11,515,270Notes payable and other debt


1,535,340



1,432,402Derivative liability


296,256



299,091Total Long-Term Liabilities


13,070,625



13,246,763Total Liabilities


21,006,822



21,078,496Commitments and contingencies


-



-EQUITY (DEFICIT)Preferred stock, $.001 par, 20,000,000 authorized:Preferred stock A:  2,500 and 2,500 issued and outstanding


3



3Preferred stock B:  3,000 and 3,000 issued and outstanding


3



3Common stock:  $.001 par, 480,000,000 authorized;11,873,884 and 11,578,284 issued and outstanding


11,874



11,578Additional paid in capital


4,567,176



4,467,471Accumulated Deficit


(9,062,865
)


(8,851,421
)Total TrinityCare Senior Living, Inc.'s Stockholders’ Equity (Deficit)


(4,483,809
)


(4,372,366
)Noncontrolling interest


(1,000,614
)


(862,820
)Total Equity (Deficit)


(5,484,423
)


(5,235,186
)Total Liabilities and Equity

$
15,522,399


$
15,843,310





The accompanying notes are an integral part of these consolidated financial statements







3





TrinityCare Senior Living, Inc. and Subsidiaries


Statements of Operation


For the Three Months Ended March 31,


(unaudited)





March 31,2010


2009Revenues:Resident revenue

$
1,683,246


$
1,524,124Publication revenue


32,635



22,877Total Revenues


1,715,881



1,547,001Direct CostsDirect labor


459,600



564,163Direct costs of operations


146,991



169,131Total Direct Costs


606,591



733,294Gross Profit


1,109,290



813,707Operating Costs:Selling, marketing and advertising


35,920



47,096Publishing


26,730



35,015Payroll expenses


442,503



132,956General and administrative


94,420



69,308Professional


83,164



72,759Insurance


50,470



45,087Rent and facility


239,388



244,899Depreciation


145,710



155,062Total operating expenses


1,118,305



802,182Operating income (loss)


(9,015
)


11,525Interest expense


289,058



257,471Loan origination fees


-



-Gain on derivative


(2,835
)


-Net loss before noncontrolling interest


(295,238
)


(245,946
)Noncontrolling interest in net loss


83,794Net Loss

$
(211,444
)

$
(245,946
)Loss per share, basic and diluted

$
(0.02
)

$
(0.03
)Basic and diluted weighted average number of common shares


11,578,284



7,825,148




The accompanying notes are an integral part of these consolidated financial statements


4





TrinityCare Senior Living, Inc and Subsidiaries


Statements of Cash Flows


For the Three Months Ended March 31,


(unaudited)




March 31,2010



2009Cash Flows from Operating Activities:Net (loss)

$
(295,238
)

$
(245,946
)Adjustments to reconcile net income (loss)to net cash used for operating activities:Depreciation and amortization


149,324



155,063Loss on derivate


(2,835
)


-(Increase) decrease in assetsAccounts receivable


99,802



(39,472
)Prepaid expenses


(6,916
)


(43,723
)Deposits and reserves


(3,000
)


116,501Increase (Decrease) in liabilitiesAccounts payable


(73,887
)


(21,214
)Accrued expenses


43,833



(131,741
)Deferred revenue


(183,819
)


94,022Net cash provided by (used in) for operating activities


(272,736
)


(116,510
)Cash flows from investing activities:Purchase of property and equipment


(6,539
)


(11,812
)Project development costs


(3,598
)


(31,096
)Net cash provided by (used in) for investing activities:


(10,137
)


(42,908
)Cash flows from financing activities:Proceeds from stock sales


100,000Loan costs


(5,044
)


(10,000
)Repayment of mortgages


(71,255
)


(66,729
)Proceeds from loans


102,938



50,000Repayment of loans


(271
)


(8,016
)Contributions from subsidiary members


-



63,750Net cash provided by (Used in) financing activities


126,368



29,005Net decrease in cash


(156,505
)


(130,413
)Cash,
beginning of period


310,119



546,164Cash,
end of period

$
153,614


$
415,751SUPPLEMENTAL CAS FLOW INFORMATION:Interest paid

$
301,576


$
257,471Taxes paid

$
-


$
-




The accompanying notes are an integral part of these consolidated financial statements








5





TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009














NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES








Organization





TrinityCare Senior Living, Inc (“TCSL”) (“The Company”) is the majority owner of a group of senior living facilities.  TCSL is the holding company for the consolidated group.





Originally the senior care facilities operated under the name of PremierCare Senior Living (1999).  The name was changed to TrinityCare Senior Living, LLC (Louisiana), then in 2005 changed to TrinityCare Senior Living, a Texas LLC (“TrinityCare LLC”).





On January 15, 2009, TCSL was formed as the continuing entity resulting from the merger with J-Kan, Inc, a publicly traded company.  TCSL remained as the surviving entity as the acquired, while J-Kan, Inc. was the accounting acquirer.  As a result of the merger, the former members of TrinityCare LLC (the “TrinityCare
Equity-holders”) own a majority of the voting stock of J-Kan, Inc.





Upon the completion of the business merger, changes were made to the Board of Directors; fiscal year end was changed from July 31 to December 31; reincorporated in the State of Nevada; adopted the Nevada Articles of Incorporation; and effected a 1:30 common share reduction and amended the par value of shares from $0.01 to $0.001.   Effective
February 16, 2009, J-Kan, Inc. changed its name to TrinityCare Senior Living, Inc.





The effects of the Reverse Stock Split have been reflected retroactively in the accompanying consolidated financial statements and notes thereto for all periods presented.





Nature of Business





TrinityCare Senior Living partners with churches and developers to develop, own and manage quality senior living facilities that enrich the faith of the residents, and provide single structure, state-of-the art independent living, assisted living, memory care and adult day care facilities.





The company is a rapidly growing business, with three successful facilities in Texas and Tennessee, with expansion into Louisiana and the Southeastern part of the United States. It offers community living services, including meals, housekeeping, laundry, transportation, social, spiritual and recreational activity, and medication assistance,
health care monitoring, as well as access to health screenings, such as blood pressure checks; periodic special services, including influenza inoculations; dietary health management programs; and ongoing exercise and fitness classes.








The company also offers coordination with physician care, ambulation assistance, bathing, dressing, eating, grooming, and personal hygiene services; maintenance services; and special memory care services, such as services for residents with certain forms of dementia or Alzheimer's disease.















6





TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009











NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)








Principles of Consolidation





The consolidated financial statements include the accounts of the Company and its subsidiaries.  All significant intercompany accounts and transactions have been eliminated.  The consolidated companies are:





Date ofCompany Name
Organization
Purpose of EntityTrinityCare Senior Living, Inc.

Holding CompanyTrinityCare Senior Living, LLC
Formed during 1999, as PremierCare Senior Living, LLC;  re-organized July 13, 2005 as TrinityCare Senior Living, LLC
Management CompanyTrinityCare Senior Living of Knoxville, LLC
October 25, 2004
Facility – in operationTrinityCare Senior Living of Pearland, LLC
January 12, 2000
Facility- in operationT C Senior Living of Port Lavaca, LLC
January 24, 2005
Facility – in operationTrinityCare Terrace Senior Living, LLC
June 24, 2009
Facility – under development





Management believes that there is only one business segment.





Basis of Accounting





The Company’s policy is to prepare its financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.  Revenues are recognized in the period in which services are provided and earned.  Expenses are recognized in the period in which
they are incurred.





In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of (a) the result of operations for the three month periods ended March 31, 2010 and 2009; (b) the financial position at March 31, 2010 and 2009, and (c) cash flows for the three month period ended March 31, 2010 and 2009,
have been made.





The unaudited financial statement and notes are presented as permitted by Form 10-Q. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with accounting principals generally accepted in the United States of America have been omitted. The accompanying unaudited financial
statements should be read in conjunction with the financial statements for the years ended December 31, 2009 and 2008 and notes thereto in the Company’s annual report on for the year ended December 31, 2009, filed with the Securities and Exchange Commission in form 10K, filed March 24, 2010.  Operating results for the three months ended March 31, 2010 and 2009 are not necessarily indicative of the results that may be expected for the entire year.







7





TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009











NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)








Use of Estimates





The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.  Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates.








Financial Instruments





The Company’s balance sheets include the following financial instruments: cash, accounts receivable, accounts payable, accrued expense, mortgages and notes payable. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these
instruments and their expected realization. The carrying values of the mortgages and notes payable approximates fair value based on borrowing rates currently available to the Company for instruments with similar terms and remaining maturities.








Cash and Cash Equivalents





For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.  The majority of cash is maintained with a major financial institution in the United States.   Deposits with this bank may exceed
the amount of insurance provided on such deposits.  Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk.








Accounts Receivable





Accounts receivable consist of amounts due for credit issued to resident customers for facility rentals.   Revenue for service is recognized when service is performed.  An allowance for doubtful accounts is considered to be established for any amounts that may not be recoverable, which is based on an analysis of the
Company’s customer credit worthiness, and current economic trends.  Bad debts are charged when a receivable is considered uncollectible.  Based on management’s review of accounts receivable, no allowance for doubtful accounts was considered necessary.   Receivables are determined to be past due, based on payment terms of original invoices.  The Company does not typically charge interest on past due receivables.




8





TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009








NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)








Property and Equipment





Property and equipment is stated at cost.  Depreciation of property and equipment is computed on the straight-line basis over the estimated useful lives of the assets, which range from five to thirty-one and one half years.





In accordance with Accounting Codification Standards, Topic No. 360 (previous guidance SFAS No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets"), long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not
be recoverable.  When required impairment losses on assets to be held and used are recognized based on the fair value of the asset.  The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required.  If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value
of the asset.  When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets.  The Company did not recognize any impairment losses for any periods presented.








Advertising and Promotions





The Company follows the policy of charging advertising, marketing and promotions to expense as incurred.  Advertising expense was $35,920 and $47,096 for the three month period ended March 31, 2010 and 2009, respectively, the majority of which includes the cost of marketing staff for all of the facilities.








Stock-Based Compensation





FASB Accounting Codification Standards Topic 825, “Compensation – Stock Compensation” (previous guidance Statement of Accounting Standards SFAS No. 123R, “Share-Based Payment”)  requires all share-based payments to employees, including grants of employee stock options to be recognized as compensation
expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).








Earnings (Loss) per Share





The Company follows Accounting Codification Standards, Topic No. 260 (previous guidance SFAS No. 128, “Earnings Per Share.”).  Basic earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares outstanding during the year. Diluted earnings (loss) per share
calculations are determined by dividing net income (loss) by the weighted average number of shares.








Direct and Indirect Labor Costs





The Company, in conformity with industry practice, only includes Direct Care labor costs in Direct Labor.   Direct Care includes those staff members dealing directly with patient care, the Care Service Manager and the activity staff.  All other costs are classified as indirect labor.  Some 2009 labor costs
were reallocated to conform to this definition.














9





TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009











NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)








Fair Value Measurements





The Company follows accounting guidance relating to fair value measurements. This guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:





Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.





Level 2 – inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.





Level 3 – unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.





The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the unobservable inputs.





The fair value of the Company’s notes payable and derivative liability approximates stated value. The notes payable fair value is based on Level 2 inputs and the derivative liability fair value based on Level 3 inputs. See note 6.





Variable Interest Entities





We hold a minority equity interest in ventures established to develop or acquire and own senior living communities. Those ventures are generally limited liability companies. Our equity interest in these ventures generally ranges from 20% to 80%.





Accounting Codification Standards, Topic No. 810 (previous guidance FIN No. 46R, “Consolidation of Variable Interest Entities” addresses the consolidation of entities to which the usual condition (ownership of a majority voting interest) of consolidation does not apply.  This interpretation focuses on controlling financial
interests that may be achieved through arrangements that do not involve voting interest.  If an enterprise holds a majority of the variable interests of an entity, it would be considered the primary beneficiary.  The primary beneficiary is generally required to consolidate assets, liabilities and non-controlling interests.








We review all of our ventures to determine if they are variable interest entities (“VIEs”). If a venture meets the requirements and is a VIE, we must then determine if we are the primary beneficiary of the VIE. Estimates are required for the computation and probability of estimated cash flows, expected losses and expected residual
returns of the VIE to determine if we are the primary beneficiary of the VIE and therefore required to consolidate the venture.  The entities included in these consolidated statements have been identified as VIE’s requiring consolidation.





Nature and Classification of the Non-Controlling Interest in the Consolidated Financial Statements:





TrinityCare Senior Living, Inc. is the controlling interest of the affiliated group, since it maintains an investment in each of the operating facilities.   TCSL has a varying ownership investment in each entity, as of  March 31, 2010 and 2009, as follows:





2010


2009TrinityCare Senior Living of Pearland, LLC


27.7
%


22.5
%TrinityCare Senior Living of Knoxville, LLC


15.2
%


15.2
%T C Senior Living of Port Lavaca, LLC


44.7
%


44.7
%TrinityCare Terrace Senior Living, LLC


66.5
%


-
%





A non controlling interest is the portion of the equity in a subsidiary not attributable, directly or indirectly, to a parent.  A non controlling interest, minority interest, is the ownership held by owners other than the consolidating parent.   The non controlling interest is reported in the consolidated statement
of financial position separately from the parent's equity, within the equity section of the balance sheet.  The minority interest in the current year’s income (loss) is segregated from the earnings (loss) attributable to the controlling parent.  Non controlling interest in the consolidating subsidiaries is increased by equity contributions and proportionate share of the subsidiaries earnings and is reduced by dividends, distributions and proportionate share of the subsidiaries incurred
losses.





The Company accounts for the non-controlling interest in its two subsidiaries under ASC 810-10-45-16, Non-controlling Interest in a Subsidiary.  This standard defines a non-controlling interest, previously called a minority interest, as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. The
standard requires, among other items, that a non-controlling interest be included in the consolidated statement of financial position within equity separate from the parent's equity; consolidated net income to be reported at amounts inclusive of both the parent's and non-controlling interest’s shares and, separately, the amounts of consolidated net income attributable to the parent and non-controlling interest all on the consolidated statement of operations; and if a subsidiary is deconsolidated,  any
retained  non-controlling equity  investment  in the former subsidiary  be  measured at fair value and a gain or loss be  recognized  in net income  based  on  such  fair  value.  Additionally, the standard defines a non-controlling interest as a financial instrument issued by a subsidiary that is classified as equity in the subsidiary's financial statements.  A financial
instrument issued by a subsidiary that is classified as a liability in the subsidiary's financial statements based on the guidance in other standards is not a controlling interest because it is not an ownership interest.










10








TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009





NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Deferred Offering Costs:





The Company may incur legal and accounting fees, as well as due diligence fees related to the preparation of our pending financing.  Such costs are initially deferred until the offering is completed, at which time they are recorded as a reduction of gross proceeds from the offering, or expensed to operations if the offering is unsuccessful.





Income Taxes:







The Company accounts for income taxes in accordance with the Financial Accounting Standards Board ASC 740, Income Taxes.  Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  A valuation allowance is recorded and deducted from deferred tax assets when the deferred tax assets are not expected to be realized based on currently available evidence.  The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the enactment date.




No tax provision is provided in the financial statements for non controlling interest in operations undertaken in Limited Liability Companies, as the gross gains and losses are allocated to the holders directly, and it is the non controlling interest which bears (or receives) the tax costs (benefits) of said gains and losses.





Reclassifications





Certain amounts reflected in the accompanying consolidated financial statements for the year ended December 31, 2008 have been reclassified to conform to current year presentation.





NOTE 2:  PROPERTY AND EQUIPMENT





Property and equipment consist of:





March 31,


December 31,2010


2009Machinery & Equipment

$
513,639


$
511,196Landscaping


327,390



326,750Furniture & Fixtures


648,611



645,805Building


14,311,923



14,311,923Vehicles


132,328



132,328Office Equipment


59,843



59,193Land


1,105,000



1,105,000total property and equipment


17,098,734



17,092,195Accumulated depreciation


(2,736,585
)


(2,590,874
)property and equipment, net

$
14,362,149


$
14,501,321Depreciation of property and equipment was $145,710 and $155,062 for the three March 31, 2010 and 2009, respectively .








NOTE 3:  DEBT








March 31,


December 31,2010


2009Line of credit payable to bank collateralized by corporate assets.  Total line is $80,000, as of March 31, 2010 $3,299 (2009 - $3,028) is available.


(1
)

$
76,701


$
76,972Current Portion of Long-Term Debt





$
6,405,153


$
6,200,167Current Portion of Long-Term Debt includes $32,000 to an officer and director of the company.








At March 31, 2010 and December 31, 2009, long-term debt consisted of:





Mortgage and notes payable to banks collateralized by real estate, due in monthly installmentsMarch 31,
2010

December 31,
2009Knoxville
(2
)

$
5,987,593


$
6,043,166Pearland
(3
)


6,281,164



6,296,845Port Lavaca
(4
)


5,375,425



5,375,42617,644,182



17,715,437Less current portion




6,405,153



6,200,167$
11,239,029


$
11,515,270











11








TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009











NOTE 3:  DEBT  (CONTINUED)


March  31,
2010

December 31,
2009Long-term debt payable to individuals:Long-term debt payable to individuals:TCSL

(5
)

$
47,082

$
49,264Knoxville installment

(6
)


4,050


5,429Knoxville

(7
)


200,000


200,000Port Lavaca

(8
)


200,000


200,000TCSL, payable to member

(9
)


579,613


498,113Terrace

(10
)


50,000


50,000TCSL

(11
)


473,417


448,418TCSL

(12
)


32,000


32,000less: debt discount being amortized over term of debt





(50,822)


(50,822)$
1,535,340

$
1,432,402Total Long-Term Debt




$
12,774,369

$
12,947,672Notes to debt instruments:(1
)
Line of credit with Wells Fargo Bank bearing interest at Prime plus 7.25% expiring April, 2010.(2
)
Note payable due Citizens National Bank of Sevierville bearing interest at 7% and due on July 13, 2013.(3
)
Note payable due Davis-Penn Mortgage Co. bearing interest at 5.75% and due on June 1, 2043.(4
)
Interest only note payable due Trustmark National Bank bearing interest at 2.75% above LIBOR and due on June 30, 2010. The Company has an option to extend this note for an additional 42 months said extension to be amortized over 25 years.(5
)
Note payable to Citizens National Bank of Sevierville bearing interest at 6.95% and due on November 11, 2011.(6
)
Installment loan, collateralized by equipment(7
)
Note payable to individual bearing interest of 10% and due on December 31, 2012.(8
)
Note payable to individual bearing interest of 10% and due on December 31, 2012.(9
)
Note payable to an Officer, Director and Shareholder, for loans to the Company bearing interest at applicable federal rates.(10
)
Short term note, unsecured, due April 28, 2009.  In lieu of interest, lender to receive a 1% interest in each of TrinityCare Senior Living of Katy, LLC.; TrinityCare Terrace Senior Living, LLC.; and TrinityCare Senior Living of Crossville, LLC.   The Company recognized the intrinsic value of the interest at 8.25%.(11
)
Note payable to Founders Bank bearing interest of 6.50% due July 1, 2010.  The loan is guaranteed by both the Company's President and an individual who is a Company Shareholder.(12
)
Note payable to an Officer, Director and Shareholder, for loans to the Company bearing interest at 12% due February 12, 2010. March 31,
2010


December 31,
2009Long-term debt maturities:2011


384,720



301,8982012


451,091



651,0912013


513,554



513,5542014 thereafter


11,425,004



11,481,129$
12,774,369


$
12,947,672
 
 Interest paid during the three month period ended March 31, 2010 and 2009 amounted to $289,058 and $257,471, respectively.





Interest paid during the three month period ended March 31, 2010 and 2009 amounted to $289,058 and $257,471, respectively.








12





TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009











NOTE 4:  COMMITMENTS AND CONTINGENCIES





The Company leases an office space under an operating lease with Donald W. Sapaugh, individually on a fair market basis. This lease required monthly payments of $4,000 per month for a period of seven years beginning November 1, 2003.  The Company is required to pay all costs such as property taxes, maintenance, and insurance on the
property under lease. The building is approximately 2,200 square feet of office space, and over 500 square feet of storage, for a total cost of $1.48 per square foot per month.





Rent expense was $12,000 and $12,000 for the three months ended March 31, 2010 and 2009, respectively.





At March 31, 2010, the minimum lease payments under the terms of the lease agreement were as follows:





For the year ending December 31,2010


28,0002011


-2012


-2013 and thereafter


-$
28,000





In the ordinary course of business, the Company could be exposed to a risk of liability as a result of the personal services that are provided in the Senior Living facilities. The Company attempts to limit its exposure to liability through contractual agreements with its customers and insurance coverage.





From time to time the Company may be a party to litigation matters involving claims against the Company.  Management believes that there are no current matters that would have a material adverse effect on the Company’s financial position or results of operations.  During the first quarter of 2010 and prior, there
were no legal proceedings to which the Company was a party that would have a material adverse effect on the Company’s financial position or results of its operations.








NOTE 5:  RECENT ACCOUNTING PRONOUNCEMENTS





Current Adoption of New Accounting Pronouncements





Effective October 15, 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) new Accounting Standard Codification (“ASC” or “Codification”) as the single source of authoritative accounting guidance under the Generally Accepted Accounting Principles Topic.  The ASC does not
create new accounting and reporting guidance, rather it reorganizes U.S. GAAP pronouncements into approximately 90 topics within a consistent structure.  All guidance in the ASC carries an equal level of authority.  Relevant portions of authoritative content, issued by the U.S. Securities and Exchange Commission (“SEC”) for SEC reporting entities, have been included in the ASC.  After the effective date of the Codification, all non-grandfathered, non-SEC accounting literature
not included in the ASC was superseded and deemed non-authoritative.  Adoption of the Codification also changed how the U.S. GAAP is referenced in financial statements.





Effective June 15, 2009, the Company adopted new guidance to the Subsequent Events - ASC Topic 855.  The Subsequent Events Topic establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  In particular,
the Subsequent Events Topic sets forth the period after the balance sheet date during which management of an SEC reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date of its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet
date.  Entities are required to disclose the date through which subsequent events were evaluated as well as the date the financial statements were issued or available to be issued.  Adoption of this guidance did not have any impact on the financial statements presented.













13


TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009











NOTE 5:  RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)





In its 2009 financial statements, the Company adopted new guidance to the “Business Combinations Topic” of the FASB ASC Topic 805, which was originally effective for fiscal years ending after November 1, 2008 .  This guidance establishes principles and requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree, recognizes and measures the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.  The adoption of this guidance had no impact on the financial statements presented.





In April 2009, the FASB issued additional guidance under the “Fair Value Measurements and Disclosures Topic” of the ASC.  This topic relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales.  This additional guidance requires the entity
to (i) evaluate certain factors to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability when compared with normal market activity, (ii) consider whether the preceding indicates that transactions or quoted prices are not determinative of fair value and, if so, whether a significant adjustment thereof is necessary to estimate fair value, and (iii) ignore the intent to hold the asset or liability when estimating fair value.  This additional
guidance also provides guidance in determining whether a transaction is orderly (or not orderly) when there has been a significant decrease in the volume and level of activity for the asset or liability, based on the weight of available evidence.  The Company adopted this additional guidance in its 2009 financial statements .  The adoption of this additional guidance did not have any impact on the financial statements presented.





In April 2009, the FASB issued additional guidance under the “Financial Instruments Topic” of the ASC.  This topic requires disclosure of the carrying amount and the fair value of all financial instruments for interim and annual financial statements of SEC-reporting entities (even if the financial instrument is not recognized
in the balance sheet), including the methods and significant assumptions used to estimate the fair values and any changes in such methods and assumptions.  This topic also requires disclosures in summarized financial information in interim financial statements.  The Company adopted this additional guidance in its 2009 financial statements .  The adoption of this additional guidance did not have any impact on the financial statements presented.





In April 2009, the FASB issued additional guidance under the “Investments – Debt and Equity Securities Topic” of the ASC.  This topic requires the entity to consider (i) whether the entire amortized cost basis of the security will be recovered (based on the present value of expected cash flows), and (ii) its intent
to sell the security.  Based on the factors described in the preceding sentence, this topic also explains the process for determining the other than temporary impairment (“OTTI”) to be recognized in “other comprehensive income” (generally, the impairment charge for other than a credit loss) and in earnings.  This topic does not change existing recognition or measurement guidance related to OTTI of equity securities.  Certain transition rules apply to debt
securities held at the beginning of the interim period of adoption when an OTTI was previously recognized.  The Company adopted this additional guidance in its 2009 financial statements.  The adoption of this additional guidance did not have any impact on the financial statements presented.













14





TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009











NOTE 5:  RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)





In December 2007, the FASB issued guidance as codified in ASC 810-10, Consolidation — Non-controlling Interests (previously SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements — Amendments of ARB No. 51).  ASC 810-10 states that accounting and reporting for minority interests will be recharacterized
as non-controlling interests and classified as a component of equity.  ASC 810-10 also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners.  SFAS No. 160 was effective for fiscal years beginning after December 15, 2008, which for the Company is its fiscal ending December 31, 2009.





In March 2008, the FASB issued guidance as codified in ASC 815-10, Derivatives and Hedging (previously SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities — an Amendment of FASB Statement No. 133”).  ASC 815-10 requires entities with derivative instruments to disclose information that should
enable financial-statement users to understand how and why the entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under ASC 815-10 and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash.  ASC 815-10 was effective for fiscal years and interim periods beginning after November 15, 2008,which was its financial statements for the 2009 fiscal year.





In June 2008, the FASB issued FASB ASC 815-40, “Derivatives and Hedging,” that provides guidance on how to determine if certain instruments (or embedded features) are considered indexed to a company’s own stock, including instruments similar to warrants to purchase the company’s stock.  FASB ASC 815-40 requires
companies to use a two-step approach to evaluate an instrument’s contingent exercise provisions and settlement provisions in determining whether the instrument is considered to be indexed to its own stock and therefore exempt from the application of FASB ASC 815.  Although FASB ASC 815-40 was effective for fiscal years beginning after December 15, 2008, any outstanding instrument at the date of adoption will require a retrospective application of the accounting through a cumulative effect adjustment
to retained earnings upon adoption.  This pronouncement had no effect upon the Company’s 2009 financial statements.





The FASB recently amended its guidance surrounding an entity’s analysis to determine whether any of its variable interests constitute controlling financial interests in a variable interest entity.  This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following
characteristics: (a) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance; and (b) the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.  Additionally, an enterprise is required to assess whether it has an implicit financial responsibility
to ensure that a variable interest entity operates as designed when determining whether it has the power to direct the activities of the variable interest entity that most significantly impact the entity’s economic performance.  The amended guidance also requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.  The amended guidance is effective for the first annual reporting period that begins after November 15, 2009.  The
Company will re-evaluate any interests in variable interest entities for the period beginning on January 1, 2010 to determine that the entities are reflected properly in the financial statements as investments or consolidated entities.  The Company does not expect the adoption of this guidance to have a material impact on either its financial position or results of operations for the fiscal year ending December 31, 2010.





NOTE 6:  EQUITY





Common Stock





On July 15, 2009 our board of directors and our stockholder holding a majority of our voting shares authorized the amendment to the Articles of Incorporation of the company, increasing the number of common shares the company is authorized to issue from 3,333,333 to 480,000,000.  A definitive proxy statement was filed on Form 14C
on August 3, 2009.





We were authorized to issue 100,000,000 shares of common stock with $0.01 par value per share.  As part of the reorganization and reincorporation which was effective on February 16, 2009, the Directors authorized a 1:30 reduction in the authorized common shares, thus reducing the number of common shares authorized to 3,333,333 and
amended the par value to $.001.    The number of shares outstanding has been adjusted for the effect of the reverse stock-split on prior periods presented.   Common share capital was reduced, and Additional Paid in Capital was increased to reflect the economic change in par value of our common shares from $0.01 to $0.001.





Common stock holders and holders of the Series B preferred shares shall exclusively posses all voting power. Each holder of shares of common stock shall be entitled to one vote for each share held by such holders. Common stockholders do not have pre-emptive rights to purchase any unissued stock of any class or series.




15





TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009











NOTE 6:  EQUITY (CONTINUED)





Preferred Stock





The Nevada Articles of Incorporation authorize the issuance of up to 20,000,000 shares of serial preferred stock, without any action on the part of the stockholders. Shares of our serial preferred stock with voting rights could be issued and would then represent an additional class of stock required for shareholder approval of a transaction.
If the board of directors determined to issue an additional class of voting preferred stock it could dilute the voting rights of the holders of common stock and have preference over the common stock as to dividends or distributions in liquidation of the Company.





Shares of preferred stock may be issued in one or more additional series (see below for series detail). The board of directors may determine, in whole or in part, the preferences, voting powers, qualifications and special or relative rights or privileges of any such series before the issuance of any shares of that series. The board of directors
shall determine the number of shares constituting each series of Preferred Stock and each series shall have a distinguishing designation. Each share of each series of serial preferred stock shall have the same relative powers, preferences and rights as, and shall be identical in all respects with, all the other shares of the Corporation of the same series, except the times from which dividends on shares which may be issued from time to time of any such series may begin to accrue.  Preferred stockholders
have liquidation preference over common stockholders.  Preferred stockholders do not have pre-emptive rights to purchase any unissued stock of any class or series.





Preferred share capital was reduced, and Additional Paid in Capital was increased to reflect the economic change in par value of our preferred shares from $0.01 to $0.001.





Preferred stock, series A:





Each share of preferred stock series A is convertible into 10 common shares, convertible at the option of the shareholder.  There were 2,500 shares of preferred stock series A shares outstanding at March 31, 2010 and December 31, 2009. The company has been notified that these shares are in process of being converted to common stock.





Preferred stock, series B:




On February 16, 2009 an employment agreement was entered into with Mr. Donald W. Sapaugh the President, CEO and Chairman of the Board. The agreement provides that Mr. Sapaugh shall be compensated at the rate of $150,000 per year plus a bonus up to a maximum of 100% of salary, payable in cash or stock, based upon the achievement of the performance
objectives defined by the Board of Directors.   In addition the employment agreement provides to Mr. Sapaugh 3,000 shares of preferred stock, series B. The preferred stock has the following rights and privileges:




1)  Super voting rights:                                            Except as otherwise required by law, the shares
of the outstanding Preferred series B stock shall have the number of votes equal to twice the number of votes of all outstanding shares of capital stock,  such that the holders of the outstanding shares of Preferred series B shall always constitute a 67% majority of the voting rights of the Corporation .





2)  No other rights: The preferred series B shares have no other rights, including but not limited to no conversion rights; no dividend rights; and no liquidation priority rights.





Options and Warrants and Derivative Liability





Prior to TCSL’s merger, the Company entered into an agreement with an investor in a subsidiary.  The terms of the agreement allow the holder to make a direct purchase of the holding company (TCSL) common stock.  The term of the investment of $100,000 shall be exercisable until May 15, 2011.  The investment
shall equal stock valued at $300,000.  The calculation for the number of shares issued in exchange for the $100,000 investment shall equal the closing price of the publicly traded stock over the previous 20 trading days.  The investor has agreed to a Lock Up / Leak Out agreement, whereby the investor will limit any sale of stock to 10% of the original holdings within any month.



















16





TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009








NOTE 6:  EQUITY (CONTINUED)





The above option was valued to estimate the value of the common stock’s discount option.  The option value calculated resulted in an amount in excess of the stock value less the purchase price.  The option is valued at $296,256 in excess of the $100,000 option price, and therefore recorded as a liability.





The following assumptions were used in the valuation calculation:





Dividend rate


0.000
%Risk-free interest rate


0.16
%Expected lives


1.12Expected price volatility


446.953
%Forfeiture Rate


0.000
%







Stock Purchase Agreement





Prior to the business combination Mr. Jerry Neel, Jr. invested $50,000 into TrinityCare Senior Living, LLC and was awarded a commensurate ownership percentage. As part of his investment he was given a “Look Back” provision, whereby the stock valuation at the anniversary of the issuance of shares (February 16, 2009) on a trailing
90 day basis must exceed $1.50 per share. The Look Back provision expired on February 16, 2010. The maximum number of shares to be issued to Mr. Neel cannot exceed 300,000 and may be zero. Pursuant to this agreement the company issued 95,600 to Mr. Neel on March 31, 2010.





Shares issued for cash





During the three month period ended March 31, 2010 the Company issued 200,000 shares for a cash consideration of $100,000 ($0.50 per share).








NOTE 7:  RELATED PARTY TRANSACTIONS





As more fully set out in Note 3, to these financial statements, the Company is indebted to some of our officers and directors (Note 3 items (9).   One of our officers and directors has guaranteed a line of credit from our bankers, as indicated in Note 3, item (11).





The Company leases an office space under an operating lease with Donald W. Sapaugh, our CEO and significant shareholder, individually on a fair market basis. This lease required monthly payments of $4,000 per month for a period of seven years beginning November 1, 2003.  The Company is required to pay all costs such as property taxes,
maintenance, and insurance on the property under lease. The building is approximately 2,200 square feet of office space, and over 500 square feet of storage, for a total cost of $1.48 per square foot per month.








The amounts and terms of the above transaction may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.













17





TrinityCare Senior Living, Inc. and Subsidiaries





Notes to Consolidated Financial Statements





As of March 31, 2010 and 2009











NOTE 8:  SUBSEQUENT EVENTS





Management has reviewed material subsequent events per the requirements of topic 855 and have determined that there are none to report.










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








The following discussion should be read together with the information contained in our consolidated financial statements, including the related notes, and other financial information appearing elsewhere herein. This management’s discussion and analysis contains certain forward-looking statements that involve risks
and uncertainties. Although we believe the expectations reflected in such forward looking statements are based on reasonable assumptions, there can be no assurance that our expectations will be realized. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors including, but not limited to, our ability to raise funds; our ability to achieve the anticipated savings from our cost-savings program; the outcome of the SEC’s investigation;
the outcome of the Trinity OIG investigation and qui tam proceeding; our ability to continue to recognize income from refinancing and sales of communities by ventures; risk of changes in our critical accounting estimates; risk of further write-downs or impairments of our assets; risk of future fundings of guarantees and other support arrangements to some of our ventures, lenders to the ventures or third party owners; risk of declining occupancies in existing communities or slower than expected leasing of new
communities; development and construction risks; risks associated with past or any future acquisition; compliance with government regulations; risk of new legislation or regulatory developments; business conditions; competition; changes in interest rates; unanticipated expenses; market factors that could affect the value of our properties; the risks of further downturns in general economic conditions; availability of financing for development. We assume no obligation to update or supplement forward-looking statements
that become untrue because of subsequent events.





Unless the context suggests otherwise, references herein to “TrinityCare,” the “Company,” “we,” “us,” and “our” mean TrinityCare Senior Living, Inc. and its consolidated subsidiaries.





Financial information provided in this Form 10-Q for periods subsequent to March 31, 2010  is preliminary and remains subject to audit by H. J. & Associates . As such, this information is not final or complete, and remains subject to change, possibly materially.





OVERVIEW







We are a Nevada corporation and a provider of senior living services in the United States, operating in Texas and Tennessee.  We partner with churches and developers to develop, own and manage quality senior living facilities that enrich the faith of the residents, and provide single structure, state-of-the art independent living,
assisted living, memory care and adult day care facilities.





At March 31, 2010, we operated 3 communities in the United States, with a total resident licensed capacity of 230. Because we have combined some of our units into suites, we had 226 units available for occupancy at March 31, 2010.  Our properties in Knoxville, Tennessee and Port Lavaca, Texas obtained their certificate of occupancy
in June and July of 2007 respectively. The total occupancy of all 3 projects as of March 31, 2010 (including deposits of future residents) was 203 out of 226 total units available or 89.82%. When the opportunity presents itself, and to accommodate resident requests, the Company will combine two single bedroom units, by converting one of the bedrooms into a living room. This will result, from time to time, in a change in the number of units in a particular facility.(thus the total available units are lower than
the maximum of 230 units, and the occupancy is somewhat higher).





Of the 3 communities that we operated at March 31,2010, TrinityCare Senior Living, Inc. was a minority unit holder in each. In addition, at March 31, 2010, the company has a number of potential projects in Texas, Louisiana, Tennessee and Florida where the company believes expansion by at least three facilities, will be consummated during 2010
..





Throughout our history, we have advocated a resident-centered approach to senior living and offered a broad range of service and care options to meet the needs of our residents. In all of our communities, we offer independent living services, which include housing, meals, transportation, activities and housekeeping, we also offer assisted
living services, which offer basic care and services for seniors who need assistance with some activities of daily living. Our facilities also offer coordination with physician care, ambulation assistance, bathing, dressing, eating, grooming, and personal hygiene services; maintenance services; and special memory care services, such as services for residents with certain forms of Dementia or Alzheimer's disease.  In two facilities the memory care needs of our residents are specifically designated in
a locked unit in order to more effectively manage those residents struggling with Alzheimer’s disease or advanced Dementia. Our facilities are primarily designed for assisted living residents, with minimal rooms allocated for independent living.











18





General Business Description, Operating History and Change in Control




Corporate History







TrinityCare Senior Living, Inc (“TCSL”) (“The Company”) is the majority owner of a group of senior living facilities.  TCSL is the holding company for the consolidated group.





Originally  the senior care facilities operated under the name of PremierCare Senior Living (1999).  The name was changed to TrinityCare Senior Living, LLC (Louisiana), then in 2005 changed to TrinityCare Senior Living, a Texas LLC (“TrinityCare LLC”).





On January 15, 2009, TCSL was formed as the continuing entity resulting from the merger with J-Kan, Inc, a publicly traded company.  TCSL remained as the surviving entity as the acquired, while J-Kan, Inc. was the accounting acquirer.  As a result of the merger, the former members of TrinityCare LLC (the “TrinityCare
Equity-holders”) own a majority of the voting stock of J-Kan, Inc.





Upon the completion of the business merger, changes were made to the Board of Directors; fiscal year end was changed from July 31 to December 31; reincorporated in the State of Nevada; adopted the Nevada Articles of Incorporation; and effected a 1:30 common share reduction and amended the par value of shares from $.01 to $.001.   Effective
February 16, 2009, J-Kan, Inc. changed its name to TrinityCare Senior Living, Inc.





Overview of the Business





We began operations in 1999 as PremierCare Senior Living, LLC in Louisiana. The founder was Donald W. Sapaugh, and his partner was Steve May, CPA, who resided in Louisiana. In early 2000 the company entered into a relationship with First Baptist Church of Pearland, Texas whereby 7.05 acres were transferred to the company in exchange for equity
(valuation was $705,000 and equity issued was 15%). The capital model at that time has not changed. The project is Trinity Oaks, and the entity is TrinityCare Senior Living of Pearland, LLC, which is managed by TrinityCare Senior Living, LLC.





In 2001, we changed our name from PremierCare to TrinityCare, but remained domiciled in Louisiana until 2005 when it we were re-domiciled to Texas as a limited liability company.





In 2006 the company began construction of two new facilities in Port Lavaca, Texas and Knoxville, Tennessee. The project in Port Lavaca is Trinity Shores and operates under TC Senior Living of Port Lavaca, LLC. The project in Knoxville is Trinity Hills and operates as TrinityCare Senior Living of Knoxville, LLC.





Port Lavaca opened in the summer of 2007 as did Knoxville.





The company currently owns a minority equity position in each of these:


Trinity Oaks                                27.7%


Trinity Shores                            44.7%


Trinity Hills                                15.2%





A church owns the following percentages:


Trinity Oaks                                15.0%


Trinity Shores                            10.0%


Trinity Hills                                17.8%





Investors own the balance of the equity:


Trinity Oaks                                57.3%


Trinity Shores                            45.3%


Trinity Hills                                67.0%





In February, 2009 all of the membership units in the company were exchanged for stock in a public company, via a business combination (Plan of Merger and Reorganization), thus creating TrinityCare Senior Living, Inc. a Nevada corporation (TCSR.OTCBB) which is publicly traded, and owns 100% of the company (TrinityCare Senior Living, LLC). The
strategy of the company has not changed as it develops, manages and owns faith based, affordable senior living communities which partners with churches and land developers. Land is contributed in exchange for equity in limited liability companies which will operate each community.





We partner with churches and developers to develop, own and manage quality senior living facilities that enrich the faith of the residents, and provide single structure, state-of-the art independent living, assisted living, memory care and adult day care facilities.





19





We have senior living facilities located in Texas and Tennessee, and intend to expand into Louisiana and the Southeastern part of the United States. Our senior living facilities offer community living services, including meals, housekeeping, laundry, transportation, social, spiritual and recreational activity, medication assistance,
health care monitoring, as well as access to health screenings, such as blood pressure checks; periodic special services, including influenza inoculations; dietary health management programs; and ongoing exercise and fitness classes.





Our facilities also offer coordination with physician care, ambulation assistance, bathing, dressing, eating, grooming, and personal hygiene services; maintenance services; and special memory care services, such as services for residents with certain forms of Dementia or Alzheimer's disease.





Our Communities





We operate three communities in the United States, with a total resident licensed capacity of 230. Because we have combined some of our units into suites, we had 226 units available for occupancy at March 31, 2010 .  Our properties in Knoxville, Tennessee and Port Lavaca, Texas obtained their certificate of occupancy in June
and July of 2007 respectively. The total occupancy of all 3 projects as of March 31, 2010 (including deposits of future residents) was 203 out of 226 total units available or 89.82%, which is slightly higher than the national averages reported by NIC of 87%.  In all of these facilities, some units have been combined to offer the resident additional bedrooms (thus the total available units are lower, and the occupancy is somewhat higher).







Our existing communities are located at:





TrinityCare Senior Living of Pearland, LLC


3033 Pearland Parkway


Pearland, Texas 77581


(Houston Metropolitan Area)


d/b/a – Trinity Oaks


Approximately 80 Unit Community





TC Senior Living of Port Lavaca, LLC


201 Trinity Shores Drive


Port Lavaca, Texas 77979


d/b/a – Trinity Shores


Approximately 63 Unit Community





TrinityCare Senior Living of Knoxville, LLC


4611 Asheville Highway


Knoxville, Tennessee 37914


d/b/a – Trinity Hills


Approximately 87 Unit Community





Of the three communities that we operate, we are a minority unit holder in each:


Trinity Oaks                                27.7%


Trinity Shores                             44.7%


Trinity Hills                                15.2%





Throughout our history, we have advocated a resident-centered approach to senior living and offered a broad range of service and care options to meet the needs of our residents. In all of our communities, we offer independent living services, which include housing, meals, transportation, activities and housekeeping, we also offer assisted
living services, which offer basic care and services for seniors who need assistance with some activities of daily living. In two facilities the memory care needs of our residents are specifically designated in a locked unit in order to more effectively manage those residents struggling with Alzheimer’s disease or advanced Dementia. Our facilities are primarily designed for assisted living residents, with minimal rooms allocated for independent living. Below are the specific levels of care for each facility:





Trinity Oaks – Independent Living, Assisted Living, early Dementia/Alzheimer’s


Trinity Shores – Independent Living, Assisted Living, Locked Memory Care


Trinity Hills – Independent Living, Assisted Living, Locked Memory Care, Adult Day Care




In addition to the three communities listed above, we are in the process of developing new projects in Texas (Pearland and Katy), Tennessee (Seymour and Crossville) and Louisiana (Covington and Shreveport) for a total of six additional facilities.




We have had in excess of 100 inquiries from potential churches and land developers nationwide during the last twelve months. Our expansion strategy is focused on the Southeastern United States. This target area has a greater unmet need than the rest of the United States, stronger ties to the faith-based community, and construction costs
are lower than the balance of the United States. Regulation of assisted living facilities is limited and thus expansion can occur much more rapidly.




20





Our Customers




Our clients are senior adults. The average age of our residents is 75 years of age for Independent Living and 83 years of age for Assisted Living.





Our Approach and Services





In our target market, the faith of the resident is a significant factor in their life and as such, we have chosen to embrace this as a cornerstone of our community model of care and residential living. While most all competing facilities embrace a particular resident’s desire to practice their faith, few observe this as a central theme.
Our facilities, when partnering with a local church as the land contributor, will have a unique model whereby the faith based activities are paramount. In all facilities, irrespective of the land contributor/partner, we will create a ministerial advisory board comprised of all churches within the community, and they will be encouraged to actively participate in providing ministry involvement, activities, support as well as recruitment of staff and promotion to future residents.





In each of our senior living communities we offer assisted living and independent living. In most of our communities, as part of the assisted Living environment we have a separate secure area designed for caring for those with Dementia or Alzheimer’s Disease, which we call “The Lighthouse”.  In some communities,
we will offer an Adult Day Care option, which is called Seniors Day Out ©.





Assisted Living





With over 16 different definitions nationwide (based upon licensing standards), the definition of “assisted living” is somewhat confusing. Assisted living residences are a new housing and health care alternative combining independence with personal care in a warm, dignified, community setting. Assisted Living Federation of
America (“ALFA”) defines an assisted living residence as a special combination of housing, personalized supportive services and health care designed to meet the needs, both scheduled and unscheduled, of those who need help with activities of daily living.





We have a 10-point philosophy of care:




1.  Offering cost-effective quality care that is personalized for individual needs.






2.  Fostering independence for each resident.






3.  Treating each resident with dignity and respect.






4.  Promoting the individuality of each resident.






5.  Allowing each resident a choice of care and lifestyle.






6.  Protecting each resident's right to privacy.






7.  Nurturing the spirit of each resident.






8.  Involving family and friends, as appropriate, in care planning and implementation.






9.  Providing a safe, residential environment.






10.  Making the assisted living residence a valuable community asset.






Currently, more than 1.0 million Americans live in an estimated 30,000 assisted living residences.  Assisted living residents can be young or old, affluent or low income, frail or disabled. A typical resident is a woman in her eighties who is either widowed or single. Residents may suffer mild forms of Alzheimer's disease or
other memory disorders, but must have ambulation and reasonable cognition. Residents may also need help with incontinence or general mobility. It is estimated that over 6.7 million seniors in America need assistance with daily living, and by 2020 this number is expected to double, as recently reported at the National Investment Center for Senior Housing annual symposium in September 2009.




Upon a resident’s move-in to one of our assisted living communities, we assess each resident, generally with input from a resident’s family and physician, and develop an individualized service plan for the resident. This individual service plan includes the selection of resident accommodations and a determination of the appropriate
level of care and service for such resident. The service plan is periodically reviewed and updated by us and communicated to the resident and the resident’s family or responsible party.





21





We offer a choice of care levels in our assisted living communities based on the frequency and level of assistance and care that a resident needs or prefers. Most of our assisted living communities also offer a Lighthouse Program, which provides specially designed accommodations, service and care to support cognitively impaired residents,
including residents with Alzheimer’s disease and dementia in a safe, secure environment. By offering a full range of services, we are better able to accommodate residents’ changing needs as they age and develop further physical or cognitive frailties. Monthly resident fee schedules are generally revised annually. Fees for additional care are revised when a change in care arises.




Services provided in assisted living residences usually include:






·  Three meals per day served in a common dining area.






·  Housekeeping services.






·  Transportation.






·  Assistance with eating, bathing, dressing, toileting and walking.






·  Access to health and medical services.






·  24-hour security and staff availability.






·  Emergency call systems for each resident’s room or apartment.






·  Health promotion and exercise programs.






·  Medication management.






·  Personal laundry services.






·  Social, religious, and recreational activities.






Costs vary with the residence, room size, and the types of services needed by the residents. Across the nation, daily basic fees are generally less than the cost of home health services and nursing home care, with the average cost per unit per month at approximately $2,900 per month in a TrinityCare facility.






Residents or their families generally pay the cost of care from their own financial resources, with the majority of the cost covered by social security insurance payments to the resident. Depending on the nature of an individual's health insurance program or long-term care insurance policy, costs may be reimbursed. In addition, some
residences have their own financial assistance programs. Government payments for assisted living residences have been limited.






22





Independent Living






Independent living refers to a multi-residence housing facility intended for the elderly. The usual pattern is that each person or couple in the facility has an apartment-style room or suite of rooms (a two bedroom unit). Additional facilities are also provided, including meal service three times daily, gathering places for activities
and recreation, day rooms, some healthcare services such as physician visitations, transportation, as well as housekeeping and maintenance. All expenses are included in a monthly fee for the resident’s rental. The average cost per unit per month is approximately $2,300 per month in a TrinityCare facility.






Alzheimer’s/Memory Impaired Assisted Living Unit






Alzheimer's disease (“AD”) is the most common form of Dementia among older people.  AD is a brain disorder that seriously affects a person's ability to carry out daily activities and involves the parts of the brain that control thought, memory, and language.  The causes of AD remain unknown, and no cure
has been discovered.






AD is named after Dr. Alois Alzheimer, a German doctor. In 1906, Dr. Alzheimer noticed changes in the brain tissue of a woman who had died of an unusual mental illness. He found abnormal clumps (now called amyloid plaques) and tangled bundles of fibers (now called neurofibrillary tangles). Today, these plaques and tangles in the brain
are considered hallmarks of AD.






Scientists also have found other brain changes in people with AD. There is a loss of nerve cells in areas of the brain that are vital to memory and other mental abilities. There are also lower levels of chemicals in the brain that carry complex messages back and forth between nerve cells. AD may disrupt normal thinking and memory by
blocking these messages between nerve cells.






Scientists believe that up to 4 million Americans suffer from AD. The disease usually begins after age 60, and the risk of developing AD increases with age. While younger people also may suffer from AD, it is much less common. About 3 percent of men and women ages 65 to 74 have AD, and nearly half of those age 85 and older may have the
disease. It is important to note, however, that AD is not a normal part of aging. The average cost per unit per month is approximately $3,200 per month in a TrinityCare facility. Alzheimer’s care is provided at two of the existing TrinityCare facilities and will be provided at all newly developed facilities.






Adult Day Care




Our adult day care program is called Seniors’ Day Out ©, and is currently operating at Trinity Hills in partnership with the East Tennessee Alzheimer’s Association. It is a distinct part of this facility encompassing 1,200 to 2,500 square feet of resident space. It includes a day room, an office, activity area, a TV/resting
room, and two bathrooms. Seniors Day Out © also has a separate, secure courtyard and access to bathing and beauty shop services. This program is currently being re-evaluated for effectiveness, in coordination with the East Tennessee Alzheimer’s Association, and the company anticipates temporarily suspending services while under evaluation.





The Seniors Day Out © program is available for families caring for a senior adult on a daily basis.  The program will be available weekdays generally from 8am until 5pm, and no programming will be available on weekends or holidays. The participants in the program will not be residents of our facilities, as their primary
residence is with their family.




Staffing for the program consists of not less than two caregivers who are trained in caring for senior adults as required by the license in the state of Tennessee, one of whom will be the Program Director. The facility activity staff will assist the two caregivers with activities.




The cost of the program will range from $55.00 to $80.00 per day based upon the level of care and number of hours that the individual spends in the program on a daily basis. The staff will create an individual care plan for each participant. Daily activities will include breakfast, lunch and snacks (dinner if needed), self-care programs
including blood pressure checks, modified low impact exercise programs, medication reminders, and other activities of daily living. In addition, the participants will be offered outside field trips, above ground gardening, devotionals, movies and various similar activities.




The company is evaluating the Senior’s Day Out © program to determine its effectiveness for expansion within the company’s owned and managed facilities.




23




Industry Background




The current market capitalization in the assisted living area is in excess of $6 Billion, with a Price/Book of 1.6, and a collective dividend yield historically in excess of 7%, as summarized in Yahoo Long Term Care (Healthcare Sector) Industry reporting.




According to the National Investment Center for Seniors Housing (“NIC”):




As of September 30, 2009, the total number of outstanding property loans for assisted living companies included:





OutstandingProperty Type

Permanent
$ Million


Short-term
$ Million


Total
$ MillionIndependent Living


6,143



7,332



13,794Assisted Living


7,138



6,446



13,738Nursing Homes


490



3,773



4,263CCRCs


324



790



1,179Total


14,095



18,341



32,974




As indicated above, the default rate is very low.




Loan performance as of September 30, 2009 for the sector was:





Performing - (Loans not in foreclosure, delinquency, or restructuring, although may include loans not in payment default, but not in compliance with non-payment financial covenants OR loans that are otherwise on a lender's "watch list" for possible deteriorating performance.)
98.5%Restructured - (Loans where basic terms, such as interest rate, maturity date, collateral or guaranty have been restructured as a result of actual or anticipated delinquency, but where loan is performing according to restructured terms.)
0.6%Delinquent - (Includes all loans in process of foreclosure, or loans 2 or more scheduled payments past due.)
0.9%Foreclosed - (Loans where title to the property has been acquired during the year through foreclosure.)
0.0%







The NIC has reported that occupancy rates for facilities open for 24 months or longer (as of September 30, 2009) were:








Property Type

Mean Occupancy
(%)


Number of Properties


Number of Units
(*Beds)Independent Living


86.5



507



71,574Assisted Living


88



1,421



102,896Nursing Homes


84



908



109,329CCRC's (continuing care retirement communities)


88



171



62,648Independent Units in CCRCs


88



164



43,541Assisted Living Units in CCRCs


90



136



8,547Skilled Nursing Beds in CCRCs


86.5



146



10,560







24





NIC further reported that the capitalization rates for facilities, as of September 30, 2009, was as follows:






Property Type

Low
(%)


Average
(Mean)
(%)


High
(%)


Number of
Property
Transactions
InvolvedIndependent Living


8



8.8



9.5



12Assisted Living


8.5



9.6



13



37Nursing Homes


9.5



10.5



11.5



6CCRCs


9.5



10.5



11.5



6






Our market is expanding:






·
39.5 Million Americans are over the age of 65, representing 12.8% of the total population, and growing rapidly






·
In the year 2050, the population of those over the age of 65 in the United States will exceed 85 million




·
Beginning in 2011, the population 65 and older will grow faster than the total population in every single state.





·
In 2030, when all of the baby boomers will be 65 and older, nearly one in five U.S. residents is expected to be 65 and older





·
Current expenditures by seniors for housing exceeds $285 billion, and is expected to exceed $500 billion in 2030





·
83% of all Americans consider themselves to be Protestant or Catholic, and of those over the age of 65 only 10% consider themselves to be “secular”. The south and southeast part of the United States represent the highest percentage of those who consider their faith important.






Competition




We have no direct competitors who develop, manage and own faith based senior living facilities. While there are a number of companies which own and operate independent living, assisted living, memory care and skilled nursing facilities, few partner with churches and fewer develop these in an “aging in place” setting. Below
are a few companies who would be considered indirect competitors:




Sunrise Senior Living (NYSE:SRZ)




Sunrise Senior Living, Inc. provides senior living services in the United States, Canada, the United Kingdom, and Germany. It offers independent living services, which include housing, meals, transportation, activities, and housekeeping, as well as licensed skilled nursing services for residents who require 24-hour skilled nursing care;
and determination of the appropriate level of care and service for such resident. The company’s assisted living communities also offer a Reminiscence Neighborhood that provides specially designed accommodations, service, and care to support cognitively impaired residents, including residents with Alzheimer’s disease and other forms of memory loss. In addition, it provides a medication management program, which includes the storage of medications, the distribution of medications as directed by the
resident’s physician, and compliance monitoring. Further, the company also develops senior living communities for ventures in which it retains an ownership interest and for third parties. Its hospice services include supervision of the patient’s medical needs; pastoral care and religious services; bereavement services; and other services comprising physician care, infusion therapy, and physical and speech therapy. As of December 31, 2009, the company operated 384 communities, including 335 communities
in the United States, 15 communities in Canada, 27 communities in the United Kingdom, and 7 communities in Germany, with a total unit capacity of 40,400 units. Sunrise Senior Living, Inc. was founded in 1981 and is headquartered in McLean, Virginia.




Brookdale Senior Living, Inc. (NYSE:BKD)




Brookdale Senior Living Inc., together with its subsidiaries, operates senior living communities in the United States. It owns and operates retirement centers, assisted living facilities, and continuing care retirement communities. The company’s retirement centers provide various education, wellness, therapy, home health, and other
ancillary services primarily to middle and upper income seniors 70 years and older. These centers also offer residents with basic services, such as meal service, 24-hour emergency response, housekeeping, concierge services, transportation, and recreational activities. Its assisted living facilities offer housing and 24-hour assistance with activities of daily living to mid-acuity frail and elderly residents. Brookdale’s continuing care retirement communities provide various living arrangements and services
to accommodate various levels of physical ability and health. As of September 30, 2009, it operated 547, including 85 retirement center communities with 15,255 units/beds, 405 assisted living communities with 20,804 units/beds, 35 continuing care retirement communities with 11,777 units/beds and 22 communities with 4,432 units/beds where they provide management services for third parties.  The company operates in 35 states and has the ability to serve approximately 52,000 residents.




Capital Senior Living Corporation (NYSE:CSU)




Capital Senior Living Corporation, together with its subsidiaries, operates senior living communities in the United States. The company provides senior living services to the elderly, including independent living, assisted living, skilled nursing, continuing care retirement community, and home care services. It offers community living
services, including meals, housekeeping, laundry, staffing, transportation, social and recreational activity, and health care monitoring, as well as access to health screenings, such as blood pressure checks; periodic special services, including influenza inoculations; dietary and similar programs; and ongoing exercise and fitness classes. The company also offers ambulation, bathing, dressing, eating, grooming, and personal hygiene services; social and recreational activity and maintenance services; special care
services, such as services for residents with certain forms of Dementia; restorative nursing and rehabilitation services, including, physical, occupational, speech, and medical social; and physician, dentistry, and podiatry services. As of December 31, 2008, the company operated 64 senior living communities in 23 states with an aggregate capacity of approximately 9,500 residents, including 38 senior living communities which the company either owned or in which the company had an ownership interest, 25 senior
living communities that the company leased and one senior living community it managed for a third party. As of December 31, 2008, the company also operated one home care agency.




Assisted Living Concepts, Inc. (NYSE:ALC)




Assisted Living Concepts, Inc., together with its subsidiaries, operates assisted living residences for the senior living industry in the United States. It offers general services consisting of meals, activities, laundry, and housekeeping; support services, including assistance with medication, monitoring health status, coordination
of transportation, and coordination with physician offices; and personal care, such as dressing, grooming, and bathing. The company also arranges access to additional services from third-party providers, including physical therapy, occupational and respiratory therapy, home health, hospice, and pharmacy services. As of December 31, 2008, it operated 216 assisted living residences in 20 states in the United States totaling 9,154 units.




Five Star Quality Care, Inc. (AMEX:FVE)




Five Star Quality Care, Inc. operates senior living communities, including independent living and congregate care communities, assisted living communities, and nursing homes in the United States. The company provides independent living, assisted living, nursing and healthcare, physical therapy, occupational therapy, speech language pathology,
onsite pharmacy, radiology, laboratory, telemetry, hemodialysis, and orthotics/prosthetics services. As of December 31, 2009, the company leased, owned, and operated 217 senior living communities with 22,905 living units, including 170 primarily independent and assisted living communities with 18,627 living units and 47 skilled nursing facilities with 4,278 units. The company also operated 5 institutional pharmacies, 2 rehabilitation hospitals, and 13 outpatient clinics. Five Star Quality Care, Inc. was founded
in 2000 and is based in Newton, Massachusetts.




25





Our Competitive Edge




We partner with churches and land developers to develop, own and manage quality senior living facilities that enrich the faith of the residents, and provide single structure, state-of-the art independent living, assisted living, memory care and adult day care facilities.




Our model utilizes contributed land to reduce the initial capital cost of a project. A local church or developer contributes the land in exchange for a minority equity position in a newly formed subsidiary entity and we secure senior debt with a local bank or HUD 232/Multifamily financing. Historically, we have solicited investment from
individuals who are minority equity partners in each of our existing three facilities.







The company currently owns a minority equity position in each of these:


Trinity Oaks                                27.7%


Trinity Shores                            44.7%


Trinity Hills                                15.2%





A church owns the following percentages:


Trinity Oaks                                15.0%


Trinity Shores                            10.0%


Trinity Hills                                17.8%





Investors own the balance of the equity:


Trinity Oaks                                57.3%


Trinity Shores                            45.3%


Trinity Hills                                67.0%




We have developed a model community, which consists of 82 units, is expandable to 94 units, and can be reduced to 63 units without compromising the integrity of the model. We believe that this unique model allows for economies of scale in expansion, and greater operational efficiencies. This model is one story, thus challenges for its
residents on mobility are greatly eliminated.




In each target market, we retain an independent third party to conduct a feasibility study to determine the “absorption rate” (the percentage of residents necessary to achieve stabilized occupancy as a percentage of the total available residents needing our services within the community). We focus our developments in areas
where the absorption rate is significantly below the nationally accepted standards, thus enhancing the opportunity for success.





Intellectual Property




Seniors In Touch ©




We have patented a family communication system (USPTO 11/708,744 Senior Citizen Communication System) – Seniors In Touch © which allows for the resident to communicate via a digital online gated community with family and friends, without having to understand the Internet. Seniors In Touch © is owned by Seniors In Touch,
LLC, an entity in which we have 55% ownership, and 45% of which is owned by our technology partner.





Seniors In Touch © is currently being beta tested and we expect it to be available on or about April 1, 2010.





Senior Standard ©




The Senior Standard© is our monthly publication. Current distribution is in excess of approximately 500,000 per year, or approximately 40,000 per month. It is supported by local advertisers. Our sales staff is compensated by the number of advertisements
they sell, and the paper is distributed to churches, country clubs, restaurants, convenience stores, car dealerships, hair salons, small businesses, doctors offices, hospitals, hotels, and other community service environments. This newspaper contains articles about senior living, as well as monthly information about the specific senior living communities which we own and manage.




Sales, Marketing and Support




We have full time staff who provide for the sales, marketing and support of each facility. In each community, we employ a full time Marketing Director who manages this process. Much of the marketing activities are directly related to the networking with the local churches to achieve stabilized occupancy.




26





Employees




Currently we have approximately 100 employees who are located in Texas or Tennessee. None of our facilities are unionized, and we expect this trend to continue as few, if any of our competition has experienced unionization.  We consider our relationship with our employees to be good.








Facilities





Our existing assisted living communities are located at:





TrinityCare Senior Living of Pearland, LLC


3033 Pearland Parkway


Pearland, Texas 77581


(Houston Metropolitan Area)


d/b/a – Trinity Oaks


Approximately 80 Unit Community





TC Senior Living of Port Lavaca, LLC


201 Trinity Shores Drive


Port Lavaca, Texas 77979


d/b/a – Trinity Shores


Approximately 63 Unit Community





TrinityCare Senior Living of Knoxville, LLC


4611 Asheville Highway


Knoxville, Tennessee 37914


d/b/a – Trinity Hills


Approximately 87 Unit Community





Future and planned developments:


- Pearland, Texas


- Brazoria, Texas


- Covington, Louisiana


- Shreveport, Louisiana


- Crossville, Tennessee


- Katy, Texas


- Seymour, Tennessee








The census data as of March 31, 2010 is as follows:





Total units in service


226

Certain units have been combined to allow for multi-room use (combination of studios to two bedroom units)Occupancy

203 units (88.5%)

Two of the three facilities have occupancy greater than 95% of available units in service.








27





Unrealized Net Book Value:








Each of the facilities currently owned and managed by TrinityCare Senior Living have a market value greater than the Net Book Value. While this value cannot be optimized in a financial presentation, below indicates the most recent Appraised Value versus the Net Book Value of Fixed Assets:





As of March 31, 2010
TrinityCare Senior Living of Pearland
TrinityCare Senior Living of Knoxville
TC Senior Living of Port Lavaca
TotalNet Book Value of Fixed Assets
$4,600,857
$5,884,383
$3,865,077
$14,350,317Appraised Value
$9,540,000
$9,500,000
$6,800,000
$25,840,000Unrealized Book Value
$4,939,143
$3,615,617
$2,934,923
$11,489,683Debt
$6,281,164
$6,286,643
$6,005,938
$18,573,745Net Unrealized Equity
$3,258,836
$3,213,357
$794,062
$7,266,255





TrinityCare Senior Living of Pearland: Appraisal by Integra Realty Resources 9/27/2007





TrinityCare Senior Living of Knoxville: Appraisal by HealthTrust, LLC 1/29/2008





TC Senior Living of Port Lavaca: Appraisal by Health Care Advisory Group 11/9/2007









28





Results of Operations





For the three months ended March 31, 2010 and 2009





Revenues





For the three months ended March 31, 2010 and 2009 we generated revenues of $1,683,246 and $1,524,124, respectively from our resident operations, an increase of $159,122 or approximately 10% from the prior period.   The increase was due to increases capacity and fulfilling rooms through new residents.





Our direct costs for the three months ended March 31, 2010 were $606,591 a decrease of $126,703 from the direct costs incurred during the first quarter of 2009 of $733,294.  The increase was the result of additional labor costs for new facilities partially offset by cost containment, on going efficiencies and maturation of
the facilities operations.  We are proud of our reduction in costs during a period of increased occupancy did not cause any impairment in the service offered to our residents.





Gross Profit for the three months ended March 31, 2010 was $1,109,290 an increase of $295,583 over the 2009 Gross Profit of $813,707. The 2010 Gross Profit percentage of 75% was consistent with the 75% Gross Profit percentage earned during 2009.





Additionally, we received $32,635 and $22,877 for the three months ended March 31, 2010 and 2009, from advertising revenue from our Senior Standard monthly publication.   The small increase in publication revenue is believed to be a slight improvement of the general effect
of the economic conditions on advertising.








Operating Expenses





Operating costs were incurred in the amounts of $1,118,305 and $802,182 for the three months ended March 31, 2010 and 2009.  Increases in payroll expenses of $201,583 due to increased staffing for future growth accounted for most of the increase in operating expenses.





Our operating loss of $9,015 for the three months ended March 31, 2009 compared unfavorably with our operating income of $11,525 for the three months ended March 31, 2009.  Although we were able to increase revenues by $168,880 and manage the growth in our direct costs, limiting the increase to just $41,509 our operating costs rose
by $387,651.








Other Income and Expenses





Interest expense for the three months ended March 31, 2010 and 2009 was $289,058 and $257,471 an increase of $31,587 primarily due to increase in borrowings ameliorated to some extent by a reduction in interest rates.





The gain on derivatives for the three months ended March 31, 2010 of $2,835 (2009 - $nil) arose from the warrants granted during the first quarter of 2009.







Liquidity and Capital Resources








We had total assets of $15,522,399 and total liabilities of $21,006,822 as of March 31, 2010. We had total negative working capital of $7,310,992 as of March 31, 2010.





We had Accounts Payable and Accrued Liabilities of $1,091,071 at March 31, 2010 compared to $1,007,503 at December 31, 2009.  Deferred Revenue of $363,272 at March 31, 2010 was  less than the Deferred Revenue of $547,091 at December 31, 2009, primarily due to residents prepaying their fees, at the end of 2009,  in
anticipation of a fee increase.





We had net cash used by operating activities of $272,736  (2009–  $116,510), an increase that is attributable to increases in deferred revenue, accrued liabilities and deposits and reserves.  The loss on derivatives also contributed to the increase in cash provided from operations.





We had $10,137 of net cash used by investing activities for the three months ended March 31, 2010, which included $6,539 of fixed asset additions and $3,598 of new project costs.





Our cash flows from financing activities during the three months ended March 31, 2010  netted out to $126,368.  Significant components included a $71,255 payment on mortgages, cash payments of $54,000 for preferred distribution to non controlling members of our subsidiaries offset by $102,938 proceeds from new borrowings.  During
the three months ended March 31, 2010 we issued 200,000 common shares for a cash consideration of $100,000.








The Company is currently financing its operations through revenue generated.  Future growth and new expansion projects will be dependent on the success of sales of stock through a private offering, and our ability to arrange debt financing for our new projects.  Future expansion is also dependent on the credit markets for
real estate mortgages and development loans, to help fund our expansion plans.  If we are unable to increase revenues from operations, to raise additional capital from conventional sources and/or additional sales of stock in the future, we may be forced to curtail or cease our operations. In the future, we may be required to seek additional capital by selling debt or equity securities. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders.
We provide no assurance that financing will be available in amounts or on terms acceptable to us, or at all.










29






Recent Accounting Pronouncements





The Financial Accounting Standards Board and other standard-setting bodies issued new or modifications to, or interpretations of, existing accounting standards during the year. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified
principles will have a material impact on the corporation’s reported financial position or operations in the near term.  These recently issued pronouncements have been addressed in the footnotes to the financial statements.







Critical Accounting Policies





The Company’s significant accounting policies are presented in the Company’s notes to financial statements for the period ended March 31, 2010 and fiscal year ended December 31, 2009, which are contained in the Company’s 2009 Annual Report on Form 10-K. The significant accounting policies that are most critical and
aid in fully understanding and evaluating the reported financial results include the following:





The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America. These principals require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates.





In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets," long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable.  When
required impairment losses on assets to be held and used are recognized based on the fair value of the asset.  The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required.  If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset.  When fair
values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets.  We did not recognize any impairment losses for any periods presented.







Off-Balance Sheet Arrangements





We have no off-balance sheet arrangements.








Item 3.
Quantitative and Qualitative Disclosure About Market Risk








This item is not required for a smaller reporting company.


Item 4.
Controls and Procedures








Disclosure Controls and Procedures








Disclosure controls and procedures (as defined in Rules  13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC
rules and forms.  Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the chief executive officer and principal accounting officer, to allow timely decisions regarding required disclosures.





As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  In designing
and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.  Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives.  Additionally, in evaluating and implementing possible
controls and procedures, management is required to apply its reasonable judgment.  Based on the evaluation described above, our management, including our principal executive officer and principal accounting officer, have concluded that, as of March 31, 2009, our disclosure controls and procedures were effective, except for those events discussed below.





Lack of Effective Corporate Governance Policies and Procedures. We do not have effective policies regarding the independence of or directors and do not have independent directors. The lack of independent directors means that there is no effective review, authorization, or oversight of management or management’s actions by persons that
were not involved in approving or executing those actions. We have no conflicts of interest policies and there is no provision for the review and approval of transactions between the Company and interested members of management.





Lack of Effective Policies Regarding the General Accounting System. We do not have any documented processes for the input, accumulation, or testing of financial data that would provide assurance that all transactions are accurately and timely recorded or that the financial reports will be prepared on a periodic basis.





Management has determined that the Company does not have the financial resources or personnel to address any of the material weaknesses identified or to conduct a more robust evaluation of its controls. As resources become available, management will develop and implement remedial actions to address the material weaknesses it has identified.





Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. generally accepted accounting principles.







Internal Control Over Financial Reporting





There were no changes in internal control over financial reporting that occurred during the first quarter of 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.










30





Part II. Other Information









Item 1.
Legal Proceedings








From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations.
We may become involved in material legal proceedings in the future.








Item 1A.
Risk Factors








This Quarterly Report on Form 10-K  contains forward-looking statements that involve risks and uncertainties. Although we believe the expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that our expectations will be realized. Our actual results could differ materially
from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to:





·
changes in our anticipated cash flow and liquidity;·
our ability to maintain adequate liquidity to operate our business and execute our restructuring;





·
our ability to raise funds from capital sources;·
our ability to comply with the terms of our Bank Credit Facility and the amendments to it or to obtain any necessary further extension of the waivers for compliance with the financial covenants;





·
business conditions and market factors that could affect the value of our properties;·
our ability to continue to recognize income from refinancing and sales of communities by ventures;





·
risk of changes in our critical accounting estimates;·
risk of further write-downs or impairments of our assets;





·
risk of future obligations to fund guarantees and other support arrangements to some of our ventures, lenders to the ventures or third party owners;·
risk of declining occupancies in existing communities or slower than expected leasing of new communities;





·
development and construction risks;·
risks associated with past or any future acquisitions;





·
our ability to comply with government regulations;·
risk of new legislation or regulatory developments;





·
competition and our response to pricing and promotional activities of our competitors;·
changes in interest rates;





·
unanticipated expenses;·
the downturns in general economic conditions including, but not limited to, financial market performance, consumer credit availability, interest rates, inflation, energy prices, unemployment and consumer sentiment about the economy in general;





·
risks associated with the ownership and operation of assisted living and independent living communities; and·
other risk factors contained in this Form 10-Q.





We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Unless the context suggests otherwise, references herein to “TrinityCare,” the “Company,” “we,” “us” and “our” mean TrinityCare Senior Living, Inc. and our consolidated
subsidiaries.


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





(1)
March 31, 2010 we issued 200,000 unregistered common shares for a cash subscription of $100,000.  The Company relied upon the exemption under Section 4(2) of the Securities Act(2)
March 31, 2010 we issued 95,600 unregistered common shares pursuant to a look back provision associated with our merger with J-Kan.







(1)

None




Item 3.
Defaults Upon Senior Securities




None





Item 4.
Submission of Matters to a Vote of Security Holders




None





Item 5.
Other Information




None





Item 6.
Exhibits





The exhibits required by this Item are set forth on the Index of Exhibits attached hereto.







31





Signatures





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized, on this 13th day of May 2010.





TRINITYCARE SENIOR LIVING, INC.


(Registrant)





/s/  Donald W. Sapaugh, Chief Executive Officer/s/ Joe M. Wiley, Chief Financial Officer
































32





INDEX OF EXHIBITS





Incorporated by ReferenceExhibit





Filing Date

ExhibitNumber

Description

Form

with SEC

Number31
.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

N/A

N/A

N/A31
.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

N/A

N/A

N/A32
.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

N/A

N/A

N/A32
.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

N/A

N/A

N/A








*

Filed herewith.






































33





Exhibit 31.1- Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002








I, Donald W. Sapaugh, certify that:








1.                      I have reviewed this Quarterly Report on Form 10-Q of TrinityCare Senior Living, Inc.;





2.                      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;





3.                      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;





4.                      The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:





a.                      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;





b.                      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;





c.                      Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and





d.                      Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and





5.                      The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):





a.                      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and





b.                      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.











Date: May 13, 2010




/s/ Donald W. Sapaugh


Donald W. Sapaugh, Chief Executive Officer





34





Exhibit 31.2- Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002








I, Joe M. Wiley certify that:





1.                      I have reviewed this Quarterly Report on Form 10-Q of TrinityCare Senior Living, Inc.;





2.                      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;





3.                      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;





4.                      The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:





a.                      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;





b.                      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;





c.                      Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and





d.                      Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and





5.                      The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):





a.                      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and





b.                      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.





Date: May 13, 2010




/s/ Joe M. Wiley


Joe M. Wiley, Chief Financial Officer









35





Exhibit 32.1- Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002








The undersigned, the Chief Executive Officer of TrinityCare Senior Living, Inc. (the “Company”), hereby certifies that, to his knowledge on the date hereof:





(a) this Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2009 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and





(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.





Date: May 13, 2010








/s/ Donald W. Sapaugh


Donald W. Sapaugh, Chief Executive Officer







36








Exhibit 32.1- Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002








The undersigned, the Chief Financial Officer of TrinityCare Senior Living, Inc. (the “Company”), hereby certifies that, to his knowledge on the date hereof:





(a) this Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2009 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and





(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.











Date: May 13, 2010




/s/ Joe M. Wiley


Joe M. Wiley, Chief Financial Officer




37