UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10–Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedSeptember 30, 2017March 31, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from [ ] to [ ]
Commission file number:000-55768
HealthLynked Corp. |
(Exact name of registrant as specified in its charter) |
Nevada | 47-1634127 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1265 Creekside Parkway, Suite 302, Naples FL 34108 | ||
(Address of principal executive offices) |
(800) 928-7144 | ||
(Registrant’s telephone number, including area code) |
(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act: None.
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 period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | Smaller reporting company | ☒ | |
Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No☒
As of November 14, 2017,May 13, 2022, there were 72,167,469238,983,761 shares of the issuer’s common stock, par value $0.0001, outstanding.
TABLE OF CONTENTS
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash | $ | 16,175 | $ | 58,716 | ||||
Accounts receivable, net | 118,581 | 146,874 | ||||||
Prepaid expenses | 23,712 | 43,545 | ||||||
Deferred offering costs | 134,422 | --- | ||||||
Total Current Assets | 292,890 | 249,135 | ||||||
Property, plant and equipment, net of accumulated depreciation of $722,407 and $704,785 as of September 30, 2017 and December 31, 2016, respectively | 66,452 | 70,836 | ||||||
Deposits | 9,540 | 9,540 | ||||||
Total Assets | $ | 368,882 | $ | 329,511 | ||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 287,086 | $ | 148,474 | ||||
Capital lease, current portion | 18,348 | 18,348 | ||||||
Due to related party, current portion | 620,611 | 311,792 | ||||||
Notes payable, net of original issue discount and debt discount of $19,226 and $-0- as of September 30, 2017 and December 31, 2016, respectively | 50,352 | --- | ||||||
Convertible notes payable, net of original issue discount and debt discount of $157,612 and $114,332 as of September 30, 2017 and December 31, 2016, respectively | 696,388 | 485,668 | ||||||
Derivative financial instruments | 156,412 | --- | ||||||
Total Current Liabilities | 1,829,197 | 964,282 | ||||||
Long-Term Liabilities | ||||||||
Capital leases, long-term portion | 25,993 | 39,754 | ||||||
Due to related party, long-term portion | 253,242 | 237,157 | ||||||
Total Liabilities | 2,108,432 | 1,241,193 | ||||||
Shareholders’ Deficit | ||||||||
Common stock, par value $0.0001 per share, 230,000,000 shares authorized, 70,676,254 and 65,753,640 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 7,068 | 6,575 | ||||||
Common stock issuable, $0.0001 par value; 10,313 and 80,643 shares as of September 30, 2017 and December 31, 2016, respectively | 3,124 | 6,451 | ||||||
Additional paid-in capital | 2,333,224 | 1,199,511 | ||||||
Accumulated deficit | (4,082,966 | ) | (2,124,219 | ) | ||||
Total Shareholders’ Deficit | (1,739,550 | ) | (911,682 | ) | ||||
Total Liabilities and Shareholders’ Deficit | $ | 368,882 | $ | 329,511 |
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
ASSETS | (Unaudited) | |||||||
Current Assets | ||||||||
Cash | $ | 1,926,714 | $ | 3,291,646 | ||||
Accounts receivable, net of allowance for doubtful accounts of $13,972 and $13,972 as of March 31, 2022 and December 31, 2021, respectively | 78,127 | 86,287 | ||||||
Inventory | 155,153 | 134,930 | ||||||
Prepaid expenses and other | 85,695 | 137,630 | ||||||
Total Current Assets | 2,245,689 | 3,650,493 | ||||||
Property, plant and equipment, net of accumulated depreciation of $308,480 and $283,512 as of March 31, 2022 and December 31, 2021, respectively | 347,528 | 350,482 | ||||||
Intangible assets, net of accumulated amortization of $1,052,338 and $873,417 as of March 31, 2022 and December 31, 2021, respectively | 4,701,200 | 4,880,121 | ||||||
Goodwill | 1,148,105 | 1,148,105 | ||||||
Right of use lease assets | 499,144 | 526,730 | ||||||
Deferred equity compensation and deposits | 130,188 | 138,625 | ||||||
Total Assets | $ | 9,071,854 | $ | 10,694,556 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 760,390 | $ | 790,843 | ||||
Contract liabilities | 33,348 | 72,838 | ||||||
Lease liability, current portion | 294,442 | 288,966 | ||||||
Due to related party, current portion | 300,600 | 300,600 | ||||||
Liability-classified equity instruments, current portion | 35,625 | 61,250 | ||||||
Contingent acquisition consideration, current portion | 317,757 | 403,466 | ||||||
Total Current Liabilities | 1,742,162 | 1,917,963 | ||||||
Long-Term Liabilities | ||||||||
Government and vendor notes payable, long term portion | 450,000 | 450,000 | ||||||
Liability-classified equity instruments, long term portion | 101,250 | 101,250 | ||||||
Contingent acquisition consideration, long term portion | 429,611 | 782,224 | ||||||
Lease liability, long term portion | 204,762 | 239,225 | ||||||
Total Liabilities | 2,927,785 | 3,490,662 | ||||||
Shareholders’ Equity | ||||||||
Common stock, par value $0.0001 per share, 500,000,000 shares authorized, 238,033,117 and 237,893,473 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | 23,803 | 23,789 | ||||||
Series B convertible preferred stock, par value $0.001 per share, 20,000,000 shares authorized, 2,750,000 and 2,750,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | 2,750 | 2,750 | ||||||
Common stock issuable, $0.0001 par value; 938,191 and 719,366 shares as of March 31, 2022 and December 31, 2021, respectively | 318,040 | 282,347 | ||||||
Additional paid-in capital | 39,172,788 | 39,100,197 | ||||||
Accumulated deficit | (33,373,312 | ) | (32,205,189 | ) | ||||
Total Shareholders’ Equity | 6,144,069 | 7,203,894 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 9,071,854 | $ | 10,694,556 |
See the accompanying notes to these Unaudited Condensed Consolidated Financial Statements
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenue | ||||||||||||||||
Patient service revenue, net | $ | 480,723 | $ | 499,448 | $ | 1,473,639 | $ | 1,515,293 | ||||||||
Operating Expenses | ||||||||||||||||
Salaries and benefits | 506,206 | 432,949 | 1,469,211 | 1,134,073 | ||||||||||||
General and administrative | 480,614 | 513,404 | 1,369,018 | 1,148,564 | ||||||||||||
Depreciation and amortization | 6,056 | 5,718 | 17,623 | 15,804 | ||||||||||||
Total Operating Expenses | 992,876 | 952,071 | 2,855,852 | 2,298,441 | ||||||||||||
(Loss) income from operations | (512,153 | ) | (452,623 | ) | (1,382,213 | ) | (783,148 | ) | ||||||||
Other Income (Expenses) | ||||||||||||||||
Loss on extinguishment of debt | (290,581 | ) | --- | (290,581 | ) | --- | ||||||||||
Financing cost | (32,324 | ) | --- | (32,324 | ) | --- | ||||||||||
Amortization of original issue and debt discounts on notes payable and convertible notes | (63,552 | ) | (100,187 | ) | (194,120 | ) | (100,187 | ) | ||||||||
Proceeds from settlement of lawsuit | 38,236 | 38,236 | ||||||||||||||
Change in fair value of derivative financial instrument | 5,412 | --- | 5,412 | --- | ||||||||||||
Interest expense | (27,124 | ) | (13,409 | ) | (64,921 | ) | (24,391 | ) | ||||||||
Total other expenses | (408,169 | ) | (75,360 | ) | (576,534 | ) | (86,342 | ) | ||||||||
Net loss before provision for income taxes | (920,322 | ) | (527,983 | ) | (1,958,747 | ) | (869,490 | ) | ||||||||
Provision for income taxes | --- | --- | --- | --- | ||||||||||||
Net loss | $ | (920,322 | ) | $ | (527,983 | ) | $ | (1,958,747 | ) | $ | (869,490 | ) | ||||
Net loss per share, basic and diluted: | ||||||||||||||||
Basic | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.01 | ) | ||||
Fully diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.01 | ) | ||||
Weighted average number of common shares: | ||||||||||||||||
Basic | 69,625,763 | 64,215,769 | 68,805,330 | 61,984,252 | ||||||||||||
Fully diluted | 69,625,763 | 64,215,769 | 68,805,330 | 61,984,252 |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Revenue | ||||||||
Patient service revenue, net | $ | 1,375,685 | $ | 1,514,376 | ||||
Subscription, consulting and event revenue | 84,218 | 87,655 | ||||||
Product revenue | 146,969 | 182,663 | ||||||
Total revenue | 1,606,872 | 1,784,694 | ||||||
Operating Expenses and Costs | ||||||||
Practice salaries and benefits | 718,073 | 663,937 | ||||||
Other practice operating expenses | 562,651 | 730,784 | ||||||
Medicare shared savings expenses | 227,729 | 211,507 | ||||||
Cost of product revenue | 160,811 | 168,596 | ||||||
Selling, general and administrative expenses | 1,335,140 | 1,366,137 | ||||||
Depreciation and amortization | 203,890 | 211,658 | ||||||
Total Operating Expenses and Costs | 3,208,294 | 3,352,619 | ||||||
Loss from operations | (1,601,422 | ) | (1,567,925 | ) | ||||
Other Income (Expenses) | ||||||||
Loss on extinguishment of debt | — | (5,589,994 | ) | |||||
Change in fair value of debt | — | (19,246 | ) | |||||
Change in fair value of contingent acquisition consideration | 438,322 | (635,700 | ) | |||||
Interest expense | (5,023 | ) | (10,588 | ) | ||||
Total other income (expenses) | 433,299 | (6,255,528 | ) | |||||
Net loss before provision for income taxes | (1,168,123 | ) | (7,823,453 | ) | ||||
Provision for income taxes | — | — | ||||||
Net loss | $ | (1,168,123 | ) | $ | (7,823,453 | ) | ||
Deemed dividend - amortization of beneficial conversion feature and down round adjustment to warrants | (88,393 | ) | (88,393 | ) | ||||
Net loss to common shareholders | $ | (1,256,516 | ) | $ | (7,911,846 | ) | ||
Net loss per share to common shareholders, basic and diluted: | ||||||||
Basic | $ | (0.01 | ) | $ | (0.04 | ) | ||
Fully diluted | $ | (0.01 | ) | $ | (0.04 | ) | ||
Weighted average number of common shares: | ||||||||
Basic | 238,008,478 | 213,279,052 | ||||||
Fully diluted | 238,008,478 | 213,279,052 |
See the accompanying notes to these Unaudited Condensed Consolidated Financial Statements
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICITEQUITY (DEFICIT)
NINETHREE MONTHS ENDED SEPTEMBER 30, 2017MARCH 31, 2022 AND MARCH 31, 2021
(UNAUDITED)
Number of Shares | Common | Additional | Total | |||||||||||||||||||||
Common | Common | Stock | Paid-in | Accumulated | Shareholders’ | |||||||||||||||||||
Stock | Stock | Issuable | Capital | Deficit | Deficit | |||||||||||||||||||
(#) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||
Balance at December 31, 2016 | 65,753,640 | 6,575 | 6,451 | 1,199,511 | (2,124,219 | ) | (911,682 | ) | ||||||||||||||||
Sale of common stock | 4,469,514 | 448 | --- | 547,908 | --- | 548,356 | ||||||||||||||||||
Fair value of warrants allocated to proceeds of convertible notes payable | --- | --- | --- | 73,696 | --- | 73,696 | ||||||||||||||||||
Fair value of warrants issued pursuant to Amended Investment Agreement | --- | --- | --- | 153,625 | --- | 153,625 | ||||||||||||||||||
Fair value of warrants issued to extend convertible notes payable | --- | --- | --- | 290,581 | --- | 290,581 | ||||||||||||||||||
Consultant fees payable with common shares and warrants | 276,850 | 28 | (3,327 | ) | 52,083 | --- | 48,784 | |||||||||||||||||
Shares and options issued pursuant to employee equity incentive plan | 176,250 | 17 | --- | 15,820 | --- | 15,837 | ||||||||||||||||||
Net loss | --- | --- | --- | --- | (1,958,747 | ) | (1,958,747 | ) | ||||||||||||||||
Balance at September 30, 2017 | 70,676,254 | 7,068 | 3,124 | 2,333,224 | (4,082,966 | ) | (1,739,550 | ) |
Number of Shares | Common | Additional | Total Shareholders’ | |||||||||||||||||||||||||||||
Common | Preferred | Common | Preferred | Stock | Paid-in | Accumulated | Equity | |||||||||||||||||||||||||
Stock | Stock | Stock | Stock | Issuable | Capital | Deficit | (Deficit) | |||||||||||||||||||||||||
(#) | (#) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||
Balance at December 31, 2021 | 237,893,473 | 2,750,000 | 23,789 | 2,750 | 282,347 | 39,100,197 | (32,205,189 | ) | 7,203,894 | |||||||||||||||||||||||
Consultant and director fees payable with common shares and warrants | 5,250 | — | 1 | — | 73,470 | 8,044 | — | 81,515 | ||||||||||||||||||||||||
Shares and options issued to employees | 133,000 | — | 13 | — | (37,777 | ) | 64,547 | — | 26,783 | |||||||||||||||||||||||
Exercise of stock options | 1,394 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (1,168,123 | ) | (1,168,123 | ) | ||||||||||||||||||||||
Balance at March 31, 2022 | 238,033,117 | 2,750,000 | 23,803 | 2,750 | 318,040 | 39,172,788 | (33,373,312 | ) | 6,144,069 | |||||||||||||||||||||||
Balance at December 31, 2020 | 187,967,881 | 2,750,000 | 18,797 | 2,750 | 262,273 | 22,851,098 | (21,784,910 | ) | 1,350,008 | |||||||||||||||||||||||
Sales of common stock | 14,793,864 | — | 1,479 | — | 2,981,367 | — | 2,982,846 | |||||||||||||||||||||||||
Fair value of warrants allocated to proceeds of common stock | — | — | — | — | 1,406,515 | — | 1,406,515 | |||||||||||||||||||||||||
Conversion of convertible notes payable to common stock | 13,538,494 | — | 1,354 | — | 4,060,194 | — | 4,061,548 | |||||||||||||||||||||||||
Fair value of warrants issued in connection with conversion and retirement of convertible notes payable | — | — | — | — | — | 3,201,138 | — | 3,201,138 | ||||||||||||||||||||||||
Fair value of warrants issued for professional services | — | — | — | — | — | 32,426 | — | 32,426 | ||||||||||||||||||||||||
Consultant and director fees payable with common shares and warrants | 475,000 | — | 48 | — | 114,500 | 122,781 | — | 237,329 | ||||||||||||||||||||||||
Shares and options issued pursuant to employee equity incentive plan | 240,310 | — | 24 | — | (14,956 | ) | 52,337 | — | 37,405 | |||||||||||||||||||||||
Exercise of stock warrants | 9,047,332 | — | 905 | — | 62,500 | 613,316 | — | 676,721 | ||||||||||||||||||||||||
Exercise of stock options | 12,500 | — | 1 | — | 3,149 | — | 3,150 | |||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (7,823,453 | ) | (7,823,453 | ) | ||||||||||||||||||||||
Balance at March 31, 2021 | 226,075,381 | 2,750,000 | 22,608 | 2,750 | 424,317 | 35,324,321 | (29,608,363 | ) | 6,165,633 |
See the accompanying notes to these Unaudited Condensed Consolidated Financial Statements
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (1,958,747 | ) | $ | (869,490 | ) | ||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||
Depreciation | 17,622 | 15,804 | ||||||
Stock based compensation, including amortization of prepaid fees | 83,823 | 120,037 | ||||||
Amortization of original issue discount and debt discount on convertible notes | 194,120 | 100,188 | ||||||
Financing cost | 32,324 | --- | ||||||
Change in fair value of derivative financial instrument | (5,412 | ) | --- | |||||
Loss on extinguishment of debt | 290,581 | --- | ||||||
Non-cash expenses | --- | 75,000 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 28,293 | 107,607 | ||||||
Prepaid expenses and deposits | 19,832 | 36,261 | ||||||
Accounts payable and accrued expenses | 138,613 | (93,834 | ) | |||||
Due to related party, current portion | 27,627 | 11,986 | ||||||
Net cash used in operating activities | (1,131,324 | ) | (496,441 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Acquisition of property and equipment | (13,238 | ) | (12,611 | ) | ||||
Net cash used in investing activities | (13,238 | ) | (12,611 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Proceeds from sale of common stock | 548,356 | 374,000 | ||||||
Proceeds from issuance of convertible notes | 229,500 | 475,000 | ||||||
Proceeds from related party loans | 308,470 | 176,500 | ||||||
Repayment of related party loans | (11,192 | ) | (123,273 | ) | ||||
Proceeds from issuance of notes payable | 75,010 | --- | ||||||
Repayment of notes payable and bank loans | (34,362 | ) | (84,980 | ) | ||||
Payments on capital leases | (13,761 | ) | (13,761 | ) | ||||
Net cash provided by financing activities | 1,102,021 | 803,486 | ||||||
Net increase (decrease) in cash | (42,541 | ) | 294,434 | |||||
Cash, beginning of period | 58,716 | 29,779 | ||||||
Cash, end of period | $ | 16,175 | $ | 324,213 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the period for interest | $ | 1,002 | $ | 3,438 | ||||
Cash paid during the period for income tax | $ | --- | $ | --- | ||||
Schedule of non-cash investing and financing activities: | ||||||||
Fair value of warrants issued to extend maturity date of convertible notes payable, recognized as discount against convertible notes payable | $ | 7,506 | $ | --- | ||||
Fair value of warrants issued pursuant to Amended Investment Agreement | $ | 153,625 | $ | --- | ||||
Fair value of warrants, beneficial conversion feature and original issue discount allocated to proceeds of convertible notes payable | $ | 66,190 | $ | 272,957 | ||||
Initial derivative liabilities, beneficial conversion features and original issue discounts allocated to proceeds of convertible notes payable | $ | 153,625 | --- | |||||
Common stock issuable issued during period | $ | 6,451 | $ | 45,000 | ||||
Common stock issued for preferred stock conversion | $ | --- | $ | 295 |
See the accompanying notes to these Unaudited Condensed Consolidated Financial Statements
(UNAUDITED)
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (1,168,123 | ) | $ | (7,823,453 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 203,890 | 211,658 | ||||||
Stock based compensation, including amortization of deferred equity compensation | 116,735 | 307,160 | ||||||
Loss on extinguishment of debt | — | 5,589,994 | ||||||
Change in fair value of debt | — | 19,246 | ||||||
Change in fair value of contingent acquisition consideration | (438,322 | ) | 635,700 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 8,160 | (38,152 | ) | |||||
Inventory | (20,223 | ) | (16,202 | ) | ||||
Prepaid expenses and deposits | 26,310 | 4,032 | ||||||
ROU lease assets | 33,309 | 24,234 | ||||||
Accounts payable and accrued expenses | (30,455 | ) | (83,854 | ) | ||||
Lease liability | (34,710 | ) | (24,956 | ) | ||||
Contract liabilities | (39,489 | ) | (22,366 | ) | ||||
Net cash used in operating activities | (1,342,918 | ) | (1,216,959 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Acquisition of property and equipment | (22,014 | ) | (7,399 | ) | ||||
Net cash used in investing activities | (22,014 | ) | (7,399 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Proceeds from sale of common stock | — | 4,389,361 | ||||||
Proceeds from exercise of options and warrants | — | 65,650 | ||||||
Repayment of vendor loans payable | — | (51,109 | ) | |||||
Net cash provided by financing activities | — | 4,403,902 | ||||||
Net increase (decrease) in cash | (1,364,932 | ) | 3,179,544 | |||||
Cash, beginning of period | 3,291,646 | 162,184 | ||||||
Cash, end of period | $ | 1,926,714 | $ | 3,341,728 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the period for interest | $ | — | $ | 232 | ||||
Cash paid during the period for income tax | $ | — | $ | — | ||||
Schedule of non-cash investing and financing activities: | ||||||||
Common stock issuable issued during period | $ | 37,778 | $ | 66,161 | ||||
Incremental fair value of warrants modified to extend maturity date of convertible notes payable | $ | — | $ | 126,502 | ||||
Conversion of convertible note payable to common shares | $ | — | $ | 4,061,549 | ||||
Fair value of warrants issued in connection with conversion of convertible notes payable | $ | — | $ | 3,074,637 | ||||
Accrued liabilities relieved upon cashless exercise of warrants | $ | — | $ | 614,221 | ||||
Fair value of liability-classified equity instruments cancelled (net of earned) | $ | 25,625 | $ | — |
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016MARCH 31, 2022
(UNAUDITED)
NOTE 1 - BUSINESS AND BUSINESS PRESENTATION
HealthLynked Corporation, a Nevada corporationCorp. (the “Company” or “HLYK”) filed its Articleswas incorporated in the State of IncorporationNevada on August 4, 2014. On September 3,2, 2014, HLYKthe Company filed Amended and Restated Articles of Incorporation clarifying thatwith the Secretary of State of Nevada setting the total number of authorized shares at 250,000,000 shares, which included up to 230,000,000 shares of common stock and 20,000,000 shares of “blank check” preferred stock. On February 5, 2018, the Company filed an Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State of Nevada to increase the number of authorized shares of 250,000,000 shares are broken up between 230,000,000 common sharesstock to 500,000,000 shares.
We currently operate in four distinct divisions: the Health Services Division, the Digital Healthcare Division, the ACO/MSO (Accountable Care Organization / Managed Service Organization) Division, and 20,000,000 preferred shares.
On September 5, 2014, HLYK entered into a share exchange agreement (the “Share Exchange Agreement”) withthe Medical Distribution Division. The Health Services division is comprised of the operations of (i) Naples Women’s Center LLC (“NWC”), a Florida Limited Liability Company (“LLC”), acquiring 100% of the LLC membership units of NWC through the issuance of 50,000,000 shares of HLYK common stock to the members of NWC (the “Restructuring”).
NWC is a multi-specialty medical group including OB/GYN (both Obstetrics and Gynecology), and General Practice, located(ii) Naples Center for Functional Medicine (“NCFM”), a Functional Medical Practice engaged in Naples, Florida.
HLYKimproving the health of its patients through individualized and integrative health care, and (iii) Bridging the Gap Physical Therapy (“BTG”), a physical therapy practice in Bonita Springs, FL that provides hands-on functional manual therapy techniques to speed patients’ recovery and manage pain without pain medication or surgery. The Digital Healthcare division develops and operates an online personal medical information and record archive system, the “HealthLynked Network”,Network,” which enables patients and doctors to keep track of medical information via the Internet in a cloud basedcloud-based system. Patients completeThe ACO/MSO Division is comprised of the operations of Cura Health Management LLC (“CHM”) and its subsidiary ACO Health Partners LLC (“AHP”), which were acquired by the Company on May 18, 2020. CHM and AHP operate an Accountable Care Organization (“ACO”) and Managed Service Organization (“MSO”) that assists physician practices in providing coordinated and more efficient care to patients via the Medicare Shared Savings Program (“MSSP”) as administered by the Centers for Medicare and Medicaid Services (the “CMS”), which rewards providers for efficiency in patient care. The Medical Distribution Division is comprised of the operations of MedOffice Direct LLC (“MOD”), a detailed online personalvirtual distributor of discounted medical history including past surgical history, medications, allergies,supplies selling to both consumers and family history. Once this information is entered patients and their treating physicians are able to updatemedical practices throughout the information as needed to provide a comprehensive medical history.United States acquired by the Company on October 19, 2020.
These unaudited condensed consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the GAAP.accounting principles generally accepted in the United States of America (“GAAP”). These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 20162021 and 2015,2020, respectively, which are included in Amendment #2 to the Company’s Registration Statement on Form S-110-K, filed with the United States Securities and Exchange Commission on March 23, 2017.31, 2022. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the three and nine months ended September 30, 2017March 31, 2022 are not necessarily indicative of results for the entire year ending December 31, 2017.2022.
On a consolidated basis, the Company’s operations are comprised of the parent company, HealthLynked Corp., and its six subsidiaries: NWC, NCFM, BTG, CHM, AHP and MOD. All significant intercompany transactions and balances have been eliminated upon consolidation. In addition, certain amounts in the prior periods’ consolidated financial statements have been reclassified to conform to the current period presentation.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the presentation of the accompanying condensed consolidated financial statements follows:
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).GAAP.
All amounts referred to in the notes to the condensed consolidated financial statements are in United States Dollars ($) unless stated otherwise.
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with generally accepted accounting principlesGAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Significant estimates include assumptions about fair valuation of acquired intangible assets, cash flow and fair value assumptions associated with measurements of contingent acquisition consideration and impairment of intangible assets and goodwill, valuation of inventory, collection of accounts receivable, the valuation and recognition of stock-based compensation expense, valuation allowance for deferred tax assets, borrowing rate consideration for right-of-use (“ROU”) lease assets including related lease liability and useful life of fixed assets.
Revenue Recognition
Patient service revenue
Patient service revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient care. These amounts are due from patients and third-party payors (including health insurers and government programs) and include variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations. Generally, the Company bills patients and third-party payors within days after the services are performed and/or the patient is discharged from the facility. Revenue is recognized as performance obligations are satisfied.
Performance obligations are determined based on the nature of the services provided by the Company. Revenue for performance obligations satisfied over time is recognized based on actual charges incurred in relation to total expected charges. The Company believes that this method provides a faithful depiction of the transfer of services over the term of the performance obligation based on the inputs needed to satisfy the obligation. Revenue for performance obligations satisfied at a point in time is recognized when goods or services are provided, and the Company does not believe it is required to provide additional goods or services to the patient.
The Company determines the transaction price based on standard charges for goods and services provided, reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients in accordance with the Company’s policy, and/or implicit price concessions provided to uninsured patients. The Company determines its estimates of contractual adjustments and discounts based on contractual agreements, its discount policies, and historical experience. The Company determines its estimate of implicit price concessions based on its historical collection experience with this class of patients.
Agreements with third-party payors typically provide for payments at amounts less than established charges. A summary of the payment arrangements with major third-party payors follows:
Medicare: Certain inpatient acute care services are paid at prospectively determined rates per discharge based on clinical, diagnostic and other factors. Certain services are paid based on cost-reimbursement methodologies subject to certain limits. Physician services are paid based upon established fee schedules. Outpatient services are paid using prospectively determined rates. |
● | Medicaid: Reimbursements for Medicaid services are generally paid at prospectively determined rates per discharge, per occasion of service, or per covered member. |
● | Other: Payment agreements with certain commercial insurance carriers, health maintenance organizations, and preferred provider organizations provide for payment using prospectively determined rates per discharge, discounts from established charges, and prospectively determined daily rates. |
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016MARCH 31, 2022
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Laws and regulations concerning government programs, including Medicare and Medicaid, are complex and subject to varying interpretation. As a result of investigations by governmental agencies, various health care organizations have received requests for information and notices regarding alleged noncompliance with those laws and regulations, which, in some instances, have resulted in organizations entering into significant settlement agreements. Compliance with such laws and regulations may also be subject to future government review and interpretation as well as significant regulatory action, including fines, penalties, and potential exclusion from the related programs. There can be no assurance that regulatory authorities will not challenge the Company’s compliance with these laws and regulations, and it is not possible to determine the impact, if any, such claims or penalties would have upon the Company. In addition, the contracts the Company has with commercial payors also provide for retroactive audit and review of claims.
Settlements with third-party payors for retroactive adjustments due to audits, reviews or investigations are considered variable consideration and are included in the determination of the estimated transaction price for providing patient care. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved. Estimated settlements are adjusted in future periods as adjustments become known, or as years are settled or are no longer subject to such audits, reviews, and investigations.
The Company also provides services to uninsured patients, and offers those uninsured patients a discount, either by policy or law, from standard charges. The Company estimates the transaction price for patients with deductibles and coinsurance and from those who are uninsured based on historical experience and current market conditions. The initial estimate of the transaction price is determined by reducing the standard charge by any contractual adjustments, discounts, and implicit price concessions. Subsequent changes to the estimate of the transaction price are generally recorded as adjustments to patient service revenue in the period of the change. Patient services provided by NCFM and BTG are provided on a cash basis and not submitted through third party insurance providers. Contract liabilities related to prepaid BTG patient service revenue were $22,461 and $42,530 as of March 31, 2022 and December 31, 2021, respectively.
Medicare Shared Savings Revenue
The Company earns Medicare shared savings revenue based on performance of the population of patient lives for which it is accountable as an ACO against benchmarks established by the MSSP. Because the MSSP, which was formed in 2012, is relatively new and has limited historical experience, the Company cannot accurately predict the amount of shared savings that will be determined by CMS. Such amounts are determined annually when the Company is notified by CMS of the amount of shared savings earned. Accordingly, the Company recognizes Medicare shared savings revenue in the period in which the CMS notifies the Company of the exact amount of shared savings to be paid, which historically has occurred during the fiscal quarter ended September 30 for the program year ended December 31 of the previous year. Based on the ACO operating agreements, the Company bears all costs of the ACO operations until revenue is recognized. At that point, the Company shares in up to 100% of the revenue to recover its costs incurred. Because of the timing of recognition of Medicare shared savings revenue, no Medicare shared savings revenue was recognized in the three months ended March 31, 2022 and 2021.
Consulting and Event Revenue
Also pursuant to ASC 606, the Company recognizes service revenue as services are provided, with any unearned but paid amounts recorded as a contract liability at each balance sheet date. Contract liabilities related to consulting revenue were $-0- and $25,000 as of March 31, 2022 and December 31, 2021, respectively. Event revenue, comprised of admission fees for summit events, is recognized when an event is held.
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Product Revenue
Revenue Recognition
is derived from the distribution of medical products that are sourced from a third party. The Company recognizes revenue at a point in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”)time when title transfers to customers and the Company has no further obligation to provide services related to such products, which requiresoccurs when the product ships. The Company is the principal in its revenue transactions and as a result revenue is recorded on a gross basis. The Company has determined that four basic criteria must be met beforeit controls the ability to direct the use of the product provided prior to transfer to a customer, is primarily responsible for fulfilling the promise to provide the product to its customer, has discretion in establishing prices, and ultimately controls the transfer of the product to the customer. Shipping and handling costs billed to customers are recorded in revenue. Contract liabilities related to product revenue can be recognized: (1) persuasive evidencewere $10,887 and $5,308 as of an arrangement exists; (2) deliveryMarch 31, 2022 and December 31, 2021, respectively. There were no contract assets as of March 31, 2022 or December 31, 2021.
Sales are made inclusive of sales tax, where such sales tax is applicable. Sales tax is applicable on sales made in the state of Florida, where the Company has occurred; (3)physical nexus. The Company has determined that it does not have economic nexus in any other states. The Company does not sell products outside of the selling price is fixedUnited States.
The Company maintains a return policy that allows customers to return a product within a specified period of time prior to and determinable; and (4) collectability is reasonably assured. Determinationsubsequent to the expiration date of criteria (3) and (4) arethe product. The Company analyzes the need for a product return allowance at the end of each period based on management’s judgments regardingeligible products. Product return allowance was $9,526 and $14,834 and as of March 31, 2022 and December 31, 2021, respectively.
Contract Liabilities
Contract liabilities represent payments from customers for consulting services, patient services and medical products that precede the fixed natureCompany’s service or product fulfillment performance obligation. The Company’s contract liabilities balance was $33,348 and $72,838 as of March 31, 2022 and December 31, 2021, respectively.
Provider shared savings expense
Provider shared savings expense represents payments made to the ACO’s participating providers. The pool of provider shared savings expense paid to all participating providers, as well as the amounts paid to each individual participating provider from the pool, is determined by ACO management. Shared Savings expense is recognized in the period in which the size of the selling pricespayment pool is determined, which typically corresponds to the period in which the shared saving payment is received from CMS and shared savings revenue is recognized. This typically occurs in the second half of the products deliveredyear following the completion of the program year. Because of the timing of recognition of Medicare shared savings revenue, there was no Medicare shared savings revenue or related provider shared savings expense recognized in the three months ended March 31, 2022 and the collectability of those amounts. Patient service revenues are recognized at the time of service for the net amount expected to be collected. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments2021.
Cash and Cash Equivalents
For financial statement purposes, the Company considers all highly-liquidhighly liquid investments with original maturities of three months or less to be cash and cash equivalents. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of March 31, 2022 and December 31, 2021, the Company had $1,666,580 and $2,957,040 in excess of the FDIC insured limit, respectively.
Accounts Receivable
Trade receivables are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis; thus trade receivables do not bear interest. Trade accounts receivable are periodically evaluated for collectability based on past collectability of the insurance companies, government agencies, and customers’ accounts receivable during the related period which generally approximates 45%48% of total billings. Trade accounts receivable are recorded at this net amount. As of September 30, 2017March 31, 2022 and December 31, 2016,2021, the Company’s gross patient services accounts receivable were $269,501$174,493 and $333,804,$193,363, respectively, and net patient services accounts receivable were $118,581$76,890 and $146,874,$86,287, respectively, based upon net reporting of accounts receivable. As of March 31, 2022 and December 31, 2021, the Company’s allowance of doubtful accounts was $13,972 and $13,972, respectively.
Capital
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Leases
Upon transition under ASU 2016-02, the Company elected the suite of practical expedients as a package applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases. For new leases, the Company will determine if an arrangement is or contains a lease at inception. Leases are included as ROU assets within other assets and ROU liabilities within accrued expenses and other liabilities and within other long-term liabilities on the Company’s consolidated balance sheets.
Costs associated with capitalized leases
ROU assets and liabilities are capitalized and depreciated ratablyrecognized at commencement date based on the present value of lease payments over the term of the related useful life of the asset and/or the capital lease term. The Company’s leases do not provide an implicit rate. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company adopted ASU 2016-02 in the first quarter of 2019. See Note 7 for more complete details on balances as of the reporting periods presented herein. The adoption had no material impact on cash provided by or used in operating, investing or financing activities on the Company’s consolidated statements of cash flows.
Inventory
Inventory consisting of supplements, is stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. Outdated inventory is directly charged to cost of goods sold.
Goodwill and Intangible Assets
Goodwill is recognized as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is not amortized, but rather tested for impairment on an annual basis and more often if circumstances require. Impairment losses are recognized whenever the implied fair value of goodwill is less than its carrying value.
The Company recognizes an acquired intangible apart from goodwill whenever the intangible arises from contractual or other legal rights, or whenever it can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related depreciationcontract, asset or liability. Such intangibles are amortized over their estimated useful lives unless the estimated useful life is determined to be indefinite. Amortizable intangible assets are being amortized primarily over useful lives of five years. The straight-line method of amortization is used as it has been determined to approximate the use pattern of the assets. Impairment losses are recognized if the carrying amount of an intangible that is subject to amortization is not recoverable from expected future cash flows and its carrying amount exceeds its fair value.
The Company also maintains intangible assets with indefinite lives, which are not amortized. These intangibles are tested for impairment on an annual basis and more often if circumstances require. Impairment losses are recognized whenever the implied fair value of these assets is less than their carrying value. No impairment charges were recognized in the three months ended September 30, 2017March 31, 2022 and 2016 was $4,587 and $4,587, respectively. The related depreciation for the nine months ended September 30, 2017 and 2016 was $13,761 and $13,761, respectively. Accumulated depreciation of capitalized leases was $299,151 and $285,390 at September 30, 2017 and December 31, 2016, respectively.2021.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. There are no patients/customers that represent 10% or more of the Company’s revenue or accounts receivable. Generally, the Company’s cash and cash equivalents are in checking accounts. The Company relies on a sole supplier for the fulfillment of all of its product sales made through MOD.
Property and Equipment
Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For consolidated financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 5 to 7 years. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized.
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. There was no impairment as of September 30, 2017 and December 31, 2016.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Convertible Notes
Convertible notes are regarded as compound instruments, consisting of a liability component and an equity component. The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized as additional paid-in capital and included in equity, net of income tax effects, and is not subsequently remeasured. After initial measurement, they are carried at amortized cost using the effective interest method.
Derivative Financial Instruments
The Company reviews Convertible notes for which the terms of convertiblematurity date has been extended and that qualify for debt equity instruments and other financing arrangements to determine whether thereextinguishment treatment are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the extinguishment date and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument liabilities exceed the total proceeds received, an immediate charge to income is recognized, in order to initially record the derivative instrument liabilities at their fair value. The discount from the face value of convertible debt instruments resulting from allocating some or all of the proceeds to the derivative instruments is amortized over the life of the instrument through periodic charges to income.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessedrevalued at the end of each reporting period. If reclassification is required,period, with the fair valuechange recorded to the statement of operations under “Change in Fair Value of Debt.”
Government Notes Payable
During 2020, the Company and certain of its subsidiaries received loans under the Paycheck Protection Program (the “PPP”). The PPP loans, administered by the U.S. Small Business Administration (the “SBA”), were issued under the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. Pursuant to the terms of the derivative instrument,PPP, principal amounts may be forgiven if loan proceeds are used for qualifying expenses as of the determination date, is reclassified. Any previous charges or credits to income for changesdescribed in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheetCARES Act, including costs such as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.payroll, benefits, employer payroll taxes, rent and utilities. The Company does not use derivative instrumentsaccounts for forgiveness of government loans pursuant to hedge exposuresFASB ASC 470, “Debt,” (“ASC 470”). Pursuant to cash flow, market, or foreign currency risks.ASC 470, loan forgiveness is recognized in earnings as a gain on extinguishment of debt when the debt is legally released by the lender.
Fair Value of Assets and Liabilities
Fair value is the price that would be received from the sale of an asset or paid to transfer a liability (i.e. an exit price) in the principal or most advantageous market in an orderly transaction between market participants. In determining fair value, the accounting standards have established a three-level hierarchy that distinguishes between (i) market data obtained or developed from independent sources (i.e., observable data inputs) and (ii) a reporting entity’s own data and assumptions that market participants would use in pricing an asset or liability (i.e., unobservable data inputs). Financial assets and financial liabilities measured and reported at fair value are classified in one of the following categories, in order of priority of observability and objectivity of pricing inputs:
● | Level 1 –Fair value based on quoted prices in active markets for identical assets or liabilities; |
● | Level 2 – Fair value based on significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market |
● | Level 3 – Fair value based on prices or valuation techniques that require significant unobservable data inputs. Inputs would normally be a reporting entity’s own data and judgments about assumptions that market participants would use in pricing the asset or |
The fair value measurement level for an asset or liability is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs.
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016MARCH 31, 2022
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company utilizes a binomial lattice option pricing model to estimate the fair value of options, warrants, beneficial conversion features and other Level 3 financial assets and liabilities. The Company believes that the binomial lattice model results in the best estimate of fair value because it embodies all of the requisite assumptions (including the underlying price, exercise price, term, volatility, and risk-free interest-rate) necessary to fairly value these instruments and, unlike less sophisticated models like the Black-Scholes model, it also accommodates assumptions regarding investor exercise behavior and other market conditions that market participants would likely consider in negotiating the transfer of such an instruments.
Stock-Based Compensation
The Company accounts for stock basedstock-based compensation to employees and nonemployees under ASC 718 “Compensation – Stock Compensation” using the fair value basedvalue-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges itits equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granteda binomial lattice pricing model to non-employees and use the Black-Scholes model for measuringestimate the fair value of options. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date)options and is recognized over the vesting periods.warrants granted.
Income Taxes
The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse and are considered immaterial. No income tax has been provided for the three months ended March 31, 2022 and 2021, since the Company has sustained a loss for both periods. Due to the uncertainty of the utilization and recoverability of the loss carry-forwards and other deferred tax assets, management has determined a full valuation allowance for the deferred tax assets, since it is more likely than not that the deferred tax assets will not be realizable.
Recurring Fair Value Measurements
The carrying value of the Company’s financial assets and financial liabilities is their cost, which may differ from fair value. The carrying value of cash held as demand deposits, money market and certificates of deposit, marketable investments, accounts receivable, short-term borrowings, accounts payable, accrued liabilities, and derivative financial instruments approximated their fair value.
Deemed Dividend
The Company incurs a deemed dividend on Series B Convertible Preferred Voting Stock (the “Series B Preferred”). As the intrinsic price per share of the Series B Preferred was less than the deemed fair value of the Company’s common stock on the date of issuance of the Series B Preferred, the Series B Preferred contains a beneficial conversion feature as described in FASB ASC 470-20, “Debt with Conversion and Other Options.” The difference in the stated conversion price and estimated fair value of the common stock is accounted for as a beneficial conversion feature and affects income or loss available to common stockholders for purposes of earnings per share available to common stockholders. The Company incurs further deemed dividends on certain of its warrants containing a down round provision equal to the difference in fair value of the warrants before and after the triggering of the down round adjustment.
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net Income (Loss)Loss per Share
Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. During the three months ended March 31, 2022 and nine month periods ended September 30, 2017 and 2016,2021, the Company reported a net loss and excluded all outstanding stock options, warrants and other dilutive securities from the calculation of diluted net loss per common share because inclusion of these securities would have been anti-dilutive. As of September 30, 2017March 31, 2022 and 2016,December 31, 2021, potentially dilutive securities were comprised of (i) 19,566,38959,366,992 and 10,576,38959,796,992 warrants outstanding, respectively, (ii) 2,349,9963,306,250 and 1,600,0003,456,250 stock options outstanding, respectively, (iii) 8,675,180232,036 and 7,375,000 shares issuable upon conversion of convertible notes, respectively, and (iv) 528,750 and 940,000302,050 unissued shares subject to future vesting requirements granted pursuant to the Company’s Employee Incentive Plan. Plan, and (iv) up to 13,750,000 and 13,750,000 shares of common stock issuable upon conversion of Series B Preferred.
Common stock awards
The Company grants common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided or the fair value of the awards granted, whichever is more reliably measurable. The fair value measurement date of these awards is generally the date the performance of services is complete. The fair value of the awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the settlement of services provided by non-employees is recorded on the consolidated statement of comprehensive loss in the same manner and charged to the same account as if such settlements had been made in cash. From time to time, the Company also issues stock awards settleable in a variable number of common shares. Such awards are classified as liabilities until such time as the number of shares underlying the grant is determinable.
Warrants
In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes pricing model as of the measurement date. The Company uses a binomial lattice pricing model to estimate the fair value of compensation options and warrants. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense over the requisite service period, or at the date of issuance, if there is not a service period. Certain of the Company’s warrants include a so-called down round provision. The Company accounts for such provisions pursuant to ASU No. 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity and Derivatives and Hedging, which calls for the recognition of a deemed dividend in the amount of the incremental fair value of the warrant due to the down round when triggered, warrants granted in connection with ongoing arrangements are more fully described in Note 13, Shareholders’ Equity.
Business Segments
The Company uses the “management approach” to identify its reportable segments. The management approach designates the internal organization used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. Using the management approach, the Company determined that it has four operating segments: Health Services (multi-specialty medical group including the NWC OB/GYN practice, the NCFM practice acquired in April 2019 and the BTG physical therapy practice launched in 2020), Digital Healthcare (develops and markets the “HealthLynked Network,” an online personal medical information and record archive system), ACO/MSO (comprised of the ACO/MSO business acquired with CHM in May 2020, which assists physician practices in providing coordinated and more efficient care to patients via the MSSP), and Medical Distribution (comprised of the operations of MOD, a virtual distributor of discounted medical supplies selling to both consumers and medical practices acquired by the Company on October 19, 2020).
Recent
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting Pronouncements
In September 2017,March 2020, the FASB issued ASU 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840),2020-03, “Codification Improvements to Financial Instruments”: The amendments in this update are to clarify, correct errors in, or make minor improvements to a variety of ASC topics. The changes in ASU 2020-03 are not expected to have a significant effect on current accounting practices. The ASU improves various financial instrument topics in the Codification to increase stakeholder awareness of the amendments and Leases (Topic 842).to expedite the improvement process by making the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. The ASU is effective date for ASU 2017-13 issmaller reporting companies for fiscal years beginning after December 15, 2018. We are2022 with early application permitted. The Company is currently evaluating the impact the adoption of adopting ASU 2017-13this guidance may have on our unauditedits consolidated financial statements.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In January 2017,August 2020, the FASB issued ASU 2017-04, Intangibles-Goodwill2020-06 Debt—Debt with Conversion and Other (Topic 350)Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity’s own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021 and early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the impact that this standard will have on its consolidated financial statements.
In October 2021, the FASB issued guidance which requires companies to apply Topic 606, Revenue from Contracts with Customers, which simplifiesto recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. Public entities must adopt the goodwill impairment test. The effective date for ASU 2017-04 isnew guidance for fiscal years beginning after December 15, 2019. Early2022 and interim periods within those fiscal years, with early adoption permitted. The Company is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact and timing of adopting ASU 2017-04 on our unaudited condensed consolidated financial statements.adoption of this guidance.
Recently Adopted Pronouncements
In January 2017,December 2019, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying2019-12 Simplifying the Definition of a Business. This new standard clarifiesAccounting for Income Taxes, which eliminates the definition of a business and provides a screenneed for an organization to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all ofanalyze whether the fair value of the gross assets acquired (or disposed of) is concentratedfollowing apply in a single identifiable asset or a group of similar identifiable assets,given period: (1) exception to the setincremental approach for intra-period tax allocation; (2) exceptions to accounting for basis differences when there are ownership changes in foreign investments; and (3) exceptions in interim period income tax accounting for year-to-date losses that exceed anticipated losses. ASU No. 2019-12 is not a business. This new standard will be effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company adopted this standard in the Companyyear ended December 31, 2021. The adoption did not have a material effect on January 1, 2018; however, early adoption is permitted with prospective application to any business development transaction. We are currently evaluating the impact of adopting ASU 2017-04 on our unaudited condensedCompany’s consolidated financial statements.
The Company applied ASU 2015-03: Interest – Imputation of Interest, which simplifies the presentation of debt issuance costs, and netted debt issue costs previously reported as assets with the related liability for presentation purposes.
OnIn May 28, 2014,2021, the Financial Accounting Standards Board (FASB)(“FASB”) issued Accounting Standards Update (ASU) 2014-09, Revenue from ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts with Customers.in Entity’s Own Equity (Subtopic 815-40). ASU 2021-04 clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The standard will eliminateASU provides guidance to clarify whether an issuer should account for a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as (1) an adjustment to equity and, if so, the transaction-related earnings per share effects, if any, or (2) an expense and, industry-specific revenue recognition guidance under current U.S. GAAPif so, the manner and replace it with a principle-based approachpattern of recognition. ASU 2021-04 is effective for determining revenue recognition.annual periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company intends to adopt this guidance for the year ended December 31, 2017. The Company has not yet evaluatedis currently evaluating the impact the adoptionthat this standard will have on its results of operations upon adoption.
In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements-Going Concern. The amendments in this update apply to all reporting entities and require an entity’s management, in connection with preparingconsolidated financial statements for each annual and interim reporting period, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). This ASU is effective for annual periods ending after December 15, 2016.statements. The Company adopted this standard for the year ended December 31, 2016. Based2022. The adoption did not have a material effect on the results of our analysis, no additional disclosures were required.Company’s consolidated financial statements.
The Company has evaluated recentNo other new accounting pronouncements were issued byor became effective in the FASB (including its Emerging Issues Task Force), the AICPA and the SEC and we have not identified anyperiod that wouldhad, or are expected to have, a material impact on the Company’s financial position, or statements.our consolidated Financial Statements.
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 3 – LIQUIDITY AND GOING CONCERN MATTERS AND LIQUIDITYANALYSIS
Liquidity and Going Concern
As
During the second quarter of September 30, 2017,2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This update provided U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. Under this standard, the Company hadis required to evaluate whether there is substantial doubt about its ability to continue as a working capital deficit of $1,536,307 and accumulated deficit $4,082,966. For the nine months ended September 30, 2017, the Company had a net loss of $1,958,747 and net cash used by operating activities of $1,131,324. Net cash used in investing activities was $13,238. Net cash provided by financing activities was $1,102,021, resulting principally from $548,356 from the proceeds of the sale of 4,469,514 shares of common stock, $308,470 proceeds from related party loans and $229,500 net proceeds from the issuance of convertible notes. Subsequent to September 30, 2017, the Company received additional $150,000 net proceeds from the sale of a convertible promissory note and $200,000 from the sale of 1,000,000 common shares with an attached five-year warrant to purchase 666,666 shares ofgoing concern each reporting period, including interim periods. In evaluating the Company’s common stock at an exercise price of $0.30 per share (see Note 14).
The Company’s cash balanceability to continue as a going concern, management considered the conditions and revenues generated are not currently sufficient and cannot be projected to cover its operating expenses for the next twelve months from the date of this report. These mattersevents that could raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans include attemptingconcern within 12 months after the Company’s financial statements were issued (May 16, 2022). Management considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows and the Company’s obligations due before May 16, 2023.
The Company is subject to improve its business profitabilitya number of risks, including uncertainty related to product development and its ability to generate sufficientgeneration of revenues and positive cash flow from its Digital Healthcare division and a dependence on outside sources of capital. The attainment of profitable operations is dependent on future events, including obtaining adequate financing to fulfill the Company’s growth and operating activities and generating a level of revenues adequate to support the Company’s cost structure.
The Company has experienced net losses and cash outflows from operating activities since inception. As of March 31, 2022, the Company had cash balances of $1,926,714, working capital of $503,527 and an accumulated deficit of $33,373,312. For the three months ended March 31, 2022, the Company had a net loss of $1,168,123, net cash used by operating activities of $1,342,918, and no cash provided by financing activities. The Company expects to continue to incur net losses and have significant cash outflows for at least the next 12 months.
Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its needs on a timely basis, obtainingobligations and concluded that, without additional working capitalfunding, the Company will not have sufficient funds through equity and debt financing arrangements, and restructuring on-going operations to eliminate inefficiencies to raise cash balance in order to meet its anticipated cash requirements for the next twelve monthsobligations within one year from the date the condensed consolidated financial statements were issued.
On April 20, 2021, the Company filed a shelf registration statement on form S-3 that was declared effective by the Securities and Exchange Commission on April 26, 2021 (the “Shelf Registration”). The Shelf Registration registered for resale up to $50,000,000 of this report.the Company’s common stock. During August 2021, the Company sold 3,703,704 common shares and 1,851,852 five-year warrants with an exercise price of $0.65 to an institutional investor at an offering price of $0.54 per share pursuant to the Shelf Registration, generating gross proceeds of $2,000,000. The Company may still make sales of common stock up to an additional $48,000,000 under the Shelf Registration. Management intends to alleviate the conditions described above by raising additional capital from the Shelf Registration. However, there can beis no assurance that thesemanagement’s plans and arrangements will be sufficientsuccessful. The Company’s ability to fundobtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, the Company’s ongoingperformance and investor sentiment with respect to the Company and its industry.
Without raising additional capital, expenditures, working capital,either via the Shelf Registration or from other sources, there is substantial doubt about the Company’s ability to continue as a going concern through May 16, 2023. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of presentation contemplates the recovery of the Company’s assets and other requirements. Management intendsthe satisfaction of liabilities in the normal course of business.
COVID-19
A novel strain of coronavirus, COVID-19, that was first identified in China in December 2019, has surfaced in several regions across the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The outbreak of the pandemic is materially adversely affecting the Company’s employees, patients, communities and business operations, as well as the U.S. economy and financial markets. The further spread of COVID-19, and the requirement to make every efforttake action to identifylimit the spread of the illness, may impact our ability to carry out our business as usual and develop sources of funds.may materially adversely impact global economic conditions, our business and financial condition, including our potential to conduct financings on terms acceptable to us, if at all. The outcome of these mattersextent to which COVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted at this time. There can be no assurance that any additional financings will be availablewith confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. In response to COVID-19, the Company on satisfactory termsimplemented additional safety measures in its patient services locations and conditions, if at all.its corporate headquarters.
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 3 – GOING CONCERN MATTERS AND LIQUIDITY (CONTINUED)
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital and achieve profitable operations. The accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
During the year ended DecemberMARCH 31, 2016, HLYK (i) received proceeds of $374,000 from the sale of 6,167,500 shares of common stock, (ii) received net proceeds of $475,000 from the issuance of convertible promissory notes with a combined face value of $600,000, and (iii) entered into an Investment Agreement (the “Investment Agreement”) pursuant to which the investor has agreed to purchase up to $3,000,000 of HLYK common stock over a three-year period starting upon registration of the underlying shares, with such shares put to the investor by the Company pursuant to a specified formula that limits the number of shares able to be put to the investor to the number equal to the average trading volume of the Company’s common shares for the ten consecutive trading days prior to the put notice being issued. During the nine months ended September 30, 2017, the Company received $15,356 from the proceeds of the sale of 57,016 shares pursuant to the Investment Agreement.2022
(UNAUDITED)
The Company intends that the cost of implementing its development and sales efforts related to the HealthLynked Network, as well as maintaining its existing and expanding overhead and administrative costs, will be funded principally by cash received by the Company from the put rights associated with the Investment Agreement and supplemented by other funding mechanisms, including loans from related parties and convertible notes. The Company expects to repay its outstanding convertible notes – of which $111,000 face value matures on January 22, 2018, $53,000 on April 15, 2018, $35,000 on June 15, 2018, $550,000 on July 7, 2018, and $50,000 on July 11, 2018, and $55,000 on September 11, 2018 – from outside funding sources, including but not limited to amounts available upon the exercise of the put rights granted to the Company under the Investment Agreement, sales of equity, loans from related parties and others or through the conversion of the notes into equity. No assurances can be given that the Company will be able to access sufficient outside capital in a timely fashion in order to repay the convertible notes before they mature. If necessary funds are not available, the Company’s business and operations would be materially adversely affected and in such event, the Company would attempt to reduce costs and adjust its business plan.
NOTE 4 – DEFERRED OFFERING COSTSPREPAID EXPENSES AND OTHER
Prepaid and other expenses as of March 31, 2022 and December 31, 2021 were as follows:
On July 7, 2016, the Company entered into the Investment Agreement with an accredited investor, pursuant to which an accredited investor agreed to invest up to $3,000,000 to purchase
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Insurance prepayments | $ | 17,733 | $ | 25,020 | ||||
Other expense prepayments | 31,837 | 50,860 | ||||||
Rent deposits | 49,125 | 49,125 | ||||||
Deferred equity compensation | 117,188 | 151,250 | ||||||
Total prepaid expenses and other | 215,883 | 276,255 | ||||||
Less: long term portion | (130,188 | ) | (138,625 | ) | ||||
Prepaid expenses and other, current portion | $ | 85,695 | $ | 137,630 |
Deferred equity compensation reflects common stock grants made in 2021 from the Company’s common stock, par value of $.0001 per share. The purchase price2021 Equity Incentive Plan that vest over a four-year period and that are settleable for such shares shall be 80% of the lowest volume weighted average price of the Company’s common stock during the five consecutive trading days prior to the date on which written notice is sent by the Company to the investor stating thea fixed dollar amount rather than a fixed number of shares that the Company is selling to the investor, subject to certain discounts and adjustments. Further, for each $50,000 that the investor tenders to the Company for the purchase of shares of common stock, the investor was to be granted warrants for the purchase of an equivalent number of shares of common stock.shares. The warrants were to expire five (5) years from their respectiveoriginal grant dates and have an exercise price equal to 130% of the weighted average purchase price for the respective “$50,000 increment.”
On March 22, 2017, the Company and the investor entered into an Amended Investment Agreement (the “Amended Investment Agreement”) whereby the parties agreed to modify the terms of the Investment Agreement by providing that in lieu of granting the investor warrants for each $50,000 that the investor tenders to the Company, the Company granted to the investor warrants to purchase an aggregate of 7,000,000 shares of common stock. The warrants have the following fixed exercise prices: (i) 4,000,000 shares at $0.25 per share; (ii) 2,000,000 shares at $0.50 per share; and (iii) 1,000,000 shares at $1.00 per share. The warrants also contain a “cashless exercise” provision and the shares underlying the warrants will not be registered. Thedate fair value of the warrantsequity compensation was calculated using$165,000. Amortization in the Black-Scholes pricing model at $56,635, with the following assumptions: risk-free interest rate of 1.95%three months ended March 31, 2022 and 2021 was $9,063 and $-0-, expected life of 5 years, volatility of 40%, and expected dividend yield of zero.
On June 7, 2017,respectively. At inception, the Company also granted warrants to purchase 200,000 shares at $0.25 per share, 100,000 shares at $0.50 per share and 50,000 shares at $1.00 per share to an advisor asrecorded a fee in connection with the Amended Investment Agreement. The fair value of the warrants was calculated using the Black-Scholes pricing model at $96,990, with the following assumptions: risk-free interest rate of 1.74%, expected life of 5 years, volatility of 40%, and expected dividend yield of zero.
corresponding liability captioned “Liability-classified equity instruments.”
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 4 – DEFERRED OFFERING COSTS (CONTINUED)
This fair value of the warrants was recorded as a deferred offering cost and will be amortized over the period during which the Company can access the financing, which begins the day after a registration statement registering shares underlying the Investment Agreement is declared effective by the United States Securities and Exchange Commission (the “SEC”), and ends 3 years from that date. On May 15, 2017, the SEC declared effective a registration statement registering shares underlying the Investment Agreement. During the three and nine months ended September 30, 2017, the Company recognized $12,802 and $19,203, respectively, in general and administrative expense related to the cost of the warrants.
NOTE 5 – PROPERTY, PLANT, AND EQUIPMENT
Property, plant and equipment at September 30, 2017as of March 31, 2022 and December 31, 2016 are2021 were as follows:
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
(audited) | ||||||||
Capital Lease equipment | $ | 343,492 | $ | 343,492 | ||||
Telephone equipment | 12,308 | 12,308 | ||||||
Furniture, Transport and Office equipment | 433,059 | 419,821 | ||||||
Total Property, plant and equipment | 788,859 | 775,621 | ||||||
Less: accumulated depreciation | (722,407 | ) | (704,785 | ) | ||||
Property, plant and equipment, net | $ | 66,452 | $ | 70,836 |
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Medical equipment | $ | 493,854 | $ | 484,126 | ||||
Furniture, office equipment and leasehold improvements | 162,154 | 149,868 | ||||||
Total property, plant and equipment | 656,008 | 633,994 | ||||||
Less: accumulated depreciation | (308,480 | ) | (283,512 | ) | ||||
Property, plant and equipment, net | $ | 347,528 | $ | 350,482 |
Depreciation expense during the three months ended September 30, 2017March 31, 2022 and 20162021 was $6,055$24,969 and $5,718,$26,896, respectively. Depreciation
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 6 – INTANGIBLE ASSETS AND GOODWILL
Intangible assets as of March 31, 2022 and December 31, 2021 were as follows:
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
NCFM: Medical database | $ | 1,101,538 | $ | 1,101,538 | ||||
NCFM: Website | 41,000 | 41,000 | ||||||
CHM: ACO physician contracts | 1,073,000 | 1,073,000 | ||||||
MOD: Website | 3,538,000 | 3,538,000 | ||||||
Total intangible assets | 5,753,538 | 5,753,538 | ||||||
Less: accumulated amortization | (1,052,338 | ) | (873,417 | ) | ||||
Intangible assets, net | $ | 4,701,200 | $ | 4,880,121 |
Goodwill and intangible assets arose from the acquisitions of NCFM in April 2019, CHM in May 2020, and MOD in October 2020. The NCFM medical database is assumed to have an indefinite life and is not amortized and the website is being amortized on a straight-line basis over its estimated useful life of five years. The CHM ACO physician contracts are assumed to have an indefinite life and are not amortized. The MOD website is being amortized on a straight-line basis over its estimated useful life of five years.
Goodwill represents the excess of consideration transferred over the fair value of the net identifiable assets acquired related to the acquisition of CHM and MOD and amounts to $1,148,105 as of March 31, 2022 and December 31, 2021.
Amortization expense duringin the ninethree months ended September 30, 2017March 31, 2022 and 20162021 was $17,622$178,921 and $15,804,$184,762, respectively. No impairment charges were recognized related to goodwill and intangible assets in the three months ended March 31, 2022 and 2021.
NOTE 7 – LEASES
The Company has separate operating leases for office space related to its NWC, NCFM and BTG practices, two separate leases relating to its corporate headquarters, and a copier lease that expire in July 2023, May 2022, March 2023, November 2023, November 2023 and January 2027, respectively. As of March 31, 2022, the Company’s weighted-average remaining lease term relating to its operating leases was 1.9 years, with a weighted-average discount rate of 18.39%.
The table below summarizes the Company’s lease-related assets and liabilities as of March 31, 2022 and December 31, 2021:
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Lease assets | $ | 499,144 | $ | 526,730 | ||||
Lease liabilities | ||||||||
Lease liabilities (short term) | $ | 294,442 | $ | 288,966 | ||||
Lease liabilities (long term) | 204,762 | 239,225 | ||||||
Total lease liabilities | $ | 499,204 | $ | 528,191 |
Lease expense was $101,394 and $65,511 in the three months ended March 31, 2022 and 2021, respectively.
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 67 – LEASES (CONTINUED)
Maturities of operating lease liabilities were as follows as of March 31, 2022:
2022 (April to December) | $ | 284,905 | ||
2023 | 285,721 | |||
2024 | 11,877 | |||
2025 | 11,877 | |||
2026 | 11,877 | |||
2027 | 990 | |||
Total lease payments | 607,247 | |||
Less interest | (108,043 | ) | ||
Present value of lease liabilities | $ | 499,204 |
NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Amounts related to accounts payable and accrued expenses as of March 31, 2022 and December 31, 2021 were as follows:
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Trade accounts payable | $ | 356,832 | $ | 306,220 | ||||
Accrued payroll liabilities | 66,282 | 172,500 | ||||||
Accrued operating expenses | 286,345 | 265,411 | ||||||
Accrued interest | 50,931 | 46,712 | ||||||
$ | 760,390 | $ | 790,843 |
NOTE 9 – CONTRACT LIABILITIES
Amounts related to contract liabilities as of March 31, 2022 and December 31, 2021 were as follows:
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Patient services paid but not provided | $ | 22,461 | $ | 42,530 | ||||
Consulting services paid but not provided | — | 25,000 | ||||||
Unshipped products | 10,887 | 5,308 | ||||||
$ | 33,348 | $ | 72,838 |
Contract liabilities relate to contracted consulting services at CHM for which payment has been made but services have not yet been rendered as of the measurement date, physical therapy services purchased as a prepaid bundle for which services have not yet been provided, and MOD products that have been ordered and paid for by the customer, but which have not been shipped as of the measurement date. The Company typically satisfies its performance obligations related to such contracts upon completion of service or shipment of product. Payment is typically made in the period prior to the services being provided.
NOTE 10 – AMOUNTS DUE TO RELATED PARTY AND RELATED PARTY TRANSACTIONS
Amounts due to related parties as of September 30, 2017March 31, 2022 and December 31, 20162021 were comprised of deferred compensation payable to the following:Company’s founder and CEO, Dr. Michael Dent, in the amount of $300,600.
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
(audited) | ||||||||
Current portion: | ||||||||
Notes payable and accrued interest, Dr. Michael Dent | $ | 320,011 | $ | --- | ||||
Deferred compensation, Dr. Michael Dent | 300,600 | 300,600 | ||||||
Due to MedOffice Direct | --- | 11,192 | ||||||
Total current portion | 620,611 | 311,792 | ||||||
Long term portion: | ||||||||
Notes payable and accrued interest, Dr. Michael Dent | 253,242 | 237,157 | ||||||
Total due to related parties | $ | 873,853 | $ | 548,949 |
During the three months ended March 31, 2022 and 2021, the Company paid Dr. Dent’s spouse $22,308 and $33,462, respectively, in consulting fees pursuant to a consulting agreement.
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 11 – GOVERNMENT AND VENDOR NOTES PAYABLE
SEPTEMBER
During May and June 2020, the Company and certain of its subsidiaries received an aggregate of $621,069 in loans under the PPP. The Company also acquired a PPP loan in the MOD acquisition with an inception date of April 3, 2020 and a face value of $11,757. The PPP loans, administered by SBA, were issued under the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. The loans bore interest at 1% per annum and were scheduled to mature in May and June 2022. Principal and interest payments were deferred for the first nine months of the loans. Pursuant to the terms of the PPP, principal amounts may be forgiven if loan proceeds are used for qualifying expenses as described in the CARES Act, including costs such as payroll, benefits, employer payroll taxes, rent and utilities. The entirety of the PPP loans outstanding, comprised of $632,826 principal and $6,503 accrued interest, was forgiven in May 2021.
During June, July and August 2020, the Company and its subsidiaries received an aggregate of $450,000 in Disaster Relief Loans from the SBA. The loans bear interest at 3.75% per annum and mature 30 2017 AND 2016
(UNAUDITED)
NOTE 6 – DUE TO RELATED PARTY (CONTINUED)
Dr. Michael Dent
Prioryears from issuance. Mandatory principal and interest payments were originally scheduled to August 2014, NWC was ownedbegin 12 months from the inception date of each loan and controlledwere subsequently extended by the Company’s Chief Executive Officer, Dr. Michael Dent (“DMD”). DMD first provided an upSBA until 30 months from the inception date. Installment payments are now scheduled to $175,000 unsecuredbegin in December 2022.
In connection with the October 19, 2020 acquisition of MOD, the Company acquired a note payable to the CompanyMOD’s primary product vendor with a 0% interest rate. During 2013 the limit on the unsecured Note Payable was increased up to $500,000 and during 2014 it was increased to $750,000 with a maturity dateremaining principal balance of December 31, 2017. During January 2017, the note was again amended to extend the maturity date until December 31, 2018, to accrue interest on outstanding balances after January 1, 2017 at a rate of 10% per annum, and to fix interest accrued on balances between January 1, 2015 and December 31, 2016 at an amount equal to $22,108 (the “$750k DMD Note”). All principal and interest is due at maturity$79,002 as of the $750k DMD Note. Interest accrued on the $750k DMD Note as of September 30, 2017acquisition date and December 31, 2016 was $38,192 and $22,108, respectively.
During the nine months ended September 30, 2017, the Company borrowed $308,500 from Dr. Dent under unsecured promissory notes as follows:
Inception Date | Maturity Date | Interest Rate | Amount | |||||||
January 12, 2017 | January 13, 2018 | 10 | % | $ | 35,000 | |||||
January 18, 2017 | January 19, 2018 | 10 | % | 20,000 | ||||||
January 24, 2017 | January 15, 2018 | 10 | % | 50,000 | ||||||
February 9, 2017 | February 10, 2018 | 10 | % | 30,000 | ||||||
April 20, 2017 | April 21, 2018 | 15 | % | 10,000 | ||||||
June 15, 2017 | June 16, 2018 | 10 | % | 32,500 | ||||||
August 17, 2017 | August 18, 2018 | 10 | % | 20,000 | ||||||
August 24, 2017 | August 25, 2018 | 10 | % | 37,500 | ||||||
September 7, 2017 | September 8, 2018 | 10 | % | 35,000 | ||||||
September 21, 2017 | September 22, 2018 | 10 | % | 26,500 | ||||||
September 29, 2017 | September 30, 2018 | 10 | % | 12,000 | ||||||
$ | 308,500 |
Interest accrued on the 2017 DMD Notes as of September 30, 2017 and December 31, 2016 was $11,511 and -0-, respectively.
MedOffice Direct
During 2016, MedOffice Direct (“MOD”), a company majority-owned by the Company’s CEO and largest shareholder, Dr. Michael Dent, paid a direct obligation of the Company in the amount of $25,000. The Company also paid direct obligations of MOD totaling $13,808 in 2016, resulting in an amount payable to MOD of $11,192$51,109 as of December 31, 2016. This amount2020. The vendor note was paid in full in January 2017.during the first quarter of 2021.
During the nine months ended September 30, 2017, the Company entered into an agreement with MOD pursuant to which the Company will pay rent to MOD in the amount of $2,040 per month for office space in MOD’s facility used by the CompanyInterest accrued on government and its employees. The agreement is effective from January 1, 2017 through July 31, 2018. During the three and nine months ended September 30, 2017, the Company recognized rent expense related to the marketing agreement in the amount of $6,120 and $18,360, respectively, pursuant to this agreement and had prepaid an additional $4,929 toward future rentvendor notes payable as of September 30, 2017.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 7 – CAPITAL LEASE
Capital lease obligations as of September 30, 2017March 31, 2022 and December 31, 2016 are comprised of2021 was $28,942 and $24,723, respectively. Interest expense on the following:
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
(audited) | ||||||||
Note payable, New Everbank Lease | $ | 44,341 | $ | 58,102 | ||||
Less: note payable, New Everbank Lease (Capital leases), current portion | (18,348 | ) | (18,348 | ) | ||||
Notes payable, bank loans and capital leases, long-term portion | $ | 25,993 | $ | 39,754 |
In March 2015,loans was $4,219 and $7,605 for the Company entered into a capital equipment finance lease for Ultra Sound equipment with Everbank. There was no interest on this lease. The monthly payment is $1,529 for 60 months ending in March 2020. As of September 30, 2017, the Company owed Everbank $48,928 pursuant to this capital lease. During the ninethree months ended September 30, 2017March 31, 2022 and 2016, the Company made payments on capital leases of $13,761 and $13,761,2021, respectively.
Future minimum payments to which the Company is obligated pursuant to the capital leases as of September 30, 2017 are as follows:
2017 (October to December) | $ | 4,587 | ||
2018 | 18,348 | |||
2019 | 18,348 | |||
2020 | 3,058 | |||
2021 | --- | |||
Total | $ | 44,341 |
NOTE 8 – NOTES PAYABLE
On July 11, 2017, the Company entered into a Merchant Cash Advance Factoring Agreement (“MCA”) with Power Up Lending Group, Ltd. (the “PULG”) pursuant to which the Company received an advance of $26,000 before closing fees. The Company is required to repay the advance, which acts like an ordinary note payable, at the rate of $1,372 per week until the balance of $34,580 has been repaid. At inception, the Company recognized a note payable in the amount of $34,580 and a discount against the note payable of $9,550. The discount is being amortized over the life of the instrument. During each of the three and nine month periods ending September 30, 2017, the Company recognized amortization of the discount in the amount of $4,227. As of September 30, 2017, the net carrying value of the instrument was $14,162.
On August 9, 2017, the Company entered into a second MCA with PULG pursuant to which the Company received an advance of $51,000 before closing fees. The Company is required to repay the advance, which acts like an ordinary note payable, at the rate of $2,752 per week until the balance of $69,360 has been repaid. At inception, the Company recognized a note payable in the amount of $69,360 and a discount against the note payable of $19,380. The discount is being amortized over the life of the instrument. During each of the three and nine month periods ending September 30, 2017, the Company recognized amortization of the discount in the amount of $5,477. As of September 30, 2017, the net carrying value of the instrument was $36,190.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 9 –CONVERTIBLE12 – CONVERTIBLE NOTES PAYABLE
ConvertibleThe Company had no convertible notes payable as of September 30, 2017 andMarch 31, 2022 or December 31, 2016 are2021.
On January 6, 2021, the holder of the Company’s four remaining fixed rate convertible promissory notes with a face value of $1,038,500 – comprised of the following:
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
(audited) | ||||||||
Face Value | ||||||||
$550k Note - July 2016 | $ | 550,000 | $ | 550,000 | ||||
$50k Note - July 2016 | 50,000 | 50,000 | ||||||
$111k Note - May 2017 | 111,000 | --- | ||||||
$53k Note - July 2017 | 53,000 | --- | ||||||
$35k Note - September 2017 | 35,000 | --- | ||||||
$55k Note - September 2017 | 55,000 | --- | ||||||
854,000 | 600,000 | |||||||
Unamortized Discount | ||||||||
$550k Note - July 2016 | $ | --- | $ | (96,631 | ) | |||
$50k Note - July 2016 | --- | (17,701 | ) | |||||
$111k Note - May 2017 | (35,917 | ) | --- | |||||
$53k Note - July 2017 | (37,423 | ) | --- | |||||
$35k Note - September 2017 | (32,135 | ) | --- | |||||
$55k Note - September 2017 | (52,137 | ) | --- | |||||
(157,612 | ) | (114,332 | ) | |||||
Net Book Value | ||||||||
$550k Note - July 2016 | $ | 550,000 | $ | 453,369 | ||||
$50k Note - July 2016 | 50,000 | 32,299 | ||||||
$111k Note - May 2017 | 75,083 | --- | ||||||
$53k Note - July 2017 | 15,577 | --- | ||||||
$35k Note - September 2017 | 2,865 | --- | ||||||
$55k Note - September 2017 | 2,863 | --- | ||||||
Convertible notes payable, net of original issue discount and debt discount | $ | 696,388 | $ | 485,668 |
Convertible Notes Payable ($550,000) – July 2016
On July 7, 2016, the Company entered into a $550,000 6% fixed convertible secured promissory note with an investor with a face value of $550,000dated July 7, 2016 (the “$550k Note”). The $550k Note is convertible into shares of the Company’s common stock at the discretion of the note holder at a fixed price of $0.08 per share, and is secured by all of the Company’s assets. The Company received $500,000 net proceeds from the note after, a $50,000 original issue discount. At inception, the investors were also granted10% fixed convertible commitment fee promissory note dated July 7, 2016 (the “$50k Note”), $81,000 of principal remaining on a five-year warrant to purchase 6,111,111 shares of the Company’s common stock at an exercise price of $0.09 per share. The fair value of the warrants was calculated using the Black-Scholes pricing model at $157,812, with the following assumptions: risk-free interest rate of 0.97%, expected life of 5 years, volatility of 40%$111,000 10% fixed convertible secured promissory note dated May 22, 2017 (the “$111k Note”), and expected dividend yield of zero. The net proceeds from the issuance ofa $357,500 10% fixed convertible note dated April 15, 2019 (the “$357.5k Note” and together with the $550k Note, being $500,000 after the original issue discount, were then allocated to the warrants$50k Note and the convertible note instrument based on their relative fair values, of which $111,479 was allocated to$111k Note, the warrants and $388,521 to the convertible note. The intrinsic value of the embedded conversion feature of the $550k Note was then calculated as $161,479. The original issue discount, warrants and embedded conversion feature were then allocated and recorded as discounts against the carrying value of the $550k Note.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 9 –CONVERTIBLE NOTES PAYABLE (CONTINUED)
The final allocation of the proceeds at inception was as follows:
Original issue discount | $ | 50,000 | ||
Warrants | 111,479 | |||
Embedded conversion feature | 161,479 | |||
Convertible note | 227,042 | |||
Face value of convertible note | $ | 550,000 |
The $550k Note was originally schedule to mature on April 11, 2017. During February 2017, the holder of the $550k Note“Remaining Notes”) – agreed to extend the maturity date until July 7, 2017 in exchange for a five-year warranton the Remaining Notes to purchase 500,000 shares of HLYK common stock at an exercise price of $0.15 per share. The fair value of the warrants of $7,506 was recorded as an additional discount against the $550k Note and was amortized over the new remaining life of the $550k Note. The fair value of the warrant was calculated using the Black-Scholes pricing model at $7,506, with the following assumptions: risk-free interest rate of 1.89%, expected life of 5 years, volatility of 40%, and expected dividend yield of zero. The issuance of the warrants inJanuary 14, 2021. In exchange for the maturity extension, was treated as a modificationthe Company agreed to extend the expiration date of 3,508,333 existing debt pursuant to the guidance of ASC 470-50 “Debt – Modifications and Extinguishments” (“ASC 470-50”).
On August 8, 2017, in exchange for a five-year warrant to purchase 1,000,000 shares of HLYK common stock at an exercise price of $0.30 per share,warrants held by the holder of the $550k Note agreed to (i) further extend the maturity date of the $550k Note(the “Extended Warrants”) from dates between July 2021 and March 2022 until July 7, 2018, and (ii) further extend the maturity date of the $50k Note (as defined herein) until July 11, 2018. The fair value of the warrant was calculated using the Black-Scholes pricing model at $290,581, with the following assumptions: risk-free interest rate of 1.81%, expected life of 5 years, volatility of 190.86%, and expected dividend yield of zero. The issuance of the warrants in exchange for the maturity extension was treated as a modification of existing debt pursuant to the guidance of ASC 470-50.March 2023. Because the fair value of the warrantsconsideration issued was greater than 10% of the present value of the remaining cash flows under the $550k Note and $50k Note,modified Remaining Notes, the transaction was treated as a debt extinguishment and reissuance of a new debt instrument, withinstruments pursuant to the guidance of ASC 470-50. A loss on debt extinguishment was recorded in the amount of $126,502 in the year ended December 31, 2021, equal to the incremental fair value of the warrants of $290,581 recorded as a loss on debt extinguishment. The carrying valueExtended Warrants before and after the modification.
On January 14, 2021, the Company and the holder of the $550k Note (as well as the $50k Note) did not change as a result of the extinguishment since the discounts recognized at inception of both notes were fully amortized at the time of the warrant issuance.
The discounts resulting from the original issue discount, warrants and embedded conversion feature were amortized over the life of the $550k Note. Amortization expense related to these discounts in the three months ended September 30, 2017 and 2016 was $3,061 and $100,187, respectively. Amortization expense related to these discounts in the nine months ended September 30, 2017 and 2016 was $104,137 and $100,187, respectively. As of September 30, 2017, the unamortized discount was $-0-. As of September 30, 2017, the $550k note was convertible into 6,875,000 of the Company’s common shares.
During the nine months ended September 30, 2017 and 2016, the Company made no repayments on the $550k Note. During the three months ended September 30, 2017 and 2016, the Company recorded interest expense on the $550k Note totaling $8,318 and $7,685, respectively. During the nine months ended September 30, 2017 and 2016, the Company recorded interest expense on the $550k Note totaling $24,682 and $7,685, respectively.
ConvertibleRemaining Notes Payable ($50,000) – July 2016
On July 7, 2016, the Company entered into a 10% fixed convertible commitment fee promissory note with an investor with aseries of agreements pursuant to which (i) the holder agreed to convert the full face value of $50,000 maturing$1,038,500 and $317,096 of accrued interest on July 11, 2017 (the “$50k Note”). The $50k note was issued as a commitment fee payablethe Remaining Notes into 13,538,494 shares of common stock pursuant to the Investment Agreement investor in exchange for the investor’s commitment to enter into the Investment Agreement, subject to registrationoriginal conversion terms of the shares underlying notes, (ii) the Investment Agreement. The $50k Note is convertible intoholder agreed to a 180-day leak out provision, whereby, from and after January 14, 2021, it may not sell in shares of the Company’s common stock at the discretionin excess of the note holder at a fixed price of $0.10 per share. The embedded conversion feature did not have any intrinsic value at issuance. Accordingly, the full face value of $50,000 was allocated to the convertible note instrument. As of September 30, 2017, the $50k Note was convertible into 500,0005% of the Company’s common shares.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 9 –CONVERTIBLE NOTES PAYABLE (CONTINUED)
Duringdaily trading volume for the nine months ended September 30, 2017first 90 days and 2016, the Company made no repayments on the $50k Note. During the three months ended September 30, 2017 and 2016, the Company recorded interest expense on the $50k Note totaling $1,260 and $1,164, respectively. During the nine months ended September 30, 2017 and 2016, the Company recorded interest expense on the $50k Note totaling $3,740 and $1,164, respectively.
Convertible Notes Payable ($111,000) – May 2017
On May 22, 2017, the Company entered into a 10% fixed convertible secured promissory note with an investor with a face value of $111,000 (the “$111k Note”). The $111k Note matures on January 22, 2018. The $111k Note is convertible into shares of the Company’s common stock atdaily volume for the discretion ofnext 90 days, subject to certain exceptions, (iii) the note holder atagreed to release all security interests and share reserves related to the Remaining Notes, and (iv) the Company issued to the holder a fixed price of $0.35 per share, and is secured by all of the Company’s assets. The Company received $100,000 net proceeds from the note after an $11,000 original issue discount. At inception, the investors were also granted anew five-year warrant to purchase 133,33313,538,494 shares of the Company’s common stock at an exercise price of $0.75$0.30 per share. The fair value of the warrants was calculated using the Black-Scholes pricing model at $42,305,In connection with the following assumptions: risk-free interest rateconversion, the Company recognized a loss on debt extinguishment of 1.80%, expected life of 5 years, volatility of 40%, and expected dividend yield of zero. The net proceeds from the issuance of the $111k Note, being $100,000 after the original issue discount, were then allocated to the warrants and the convertible note instrument based on their relative fair values, of which $27,595 was allocated to the warrants and $72,405 to the convertible note. The intrinsic value of the embedded conversion feature of the $111k note was then calculated as $38,595. The original issue discount, warrants and embedded conversion feature were then allocated and recorded as discounts against the carrying value of the $111k Note. The final allocation of the proceeds at inception was as follows:
Original issue discount | $ | 11,000 | ||
Warrants | 27,595 | |||
Embedded conversion feature | 38,595 | |||
Convertible note | 33,810 | |||
Notes payable and bank loans, long-term portion | $ | 111,000 |
The discounts resulting from the original issue discount, warrants and embedded conversion feature are being amortized over the life of the $111k Note. Amortization expense related to these discounts$5,463,492 in the three and nine months ended September 30, 2017 was $28,986 and $41,273, respectively. No amortization expense was recognized during 2016 related to the $111k Note. As of September 30, 2017, the unamortized discount was $35,917. As of September 30, 2017, the $550k note was convertible into 317,143 of the Company’s common shares.
During the nine months ended September 30, 2017 and 2016, the Company made no repayments on the $111k Note. During the three and nine months ended September 30, 2017 and 2016, the Company recorded interest expense on the $111k Note totaling $4,168 and $5,935, respectively. No interest expense was recognized on this note in 2016.
Convertible Notes Payable ($53,000) – July 2017
On July 10, 2017, the Company entered into a securities purchase agreement for the sale of a $53,000 convertible note (the “$53k Note”) to PULG. The $53k Note included a $3,000 original issue discount, for net proceeds of $50,000. The $53k Note has an interest rate of 10% and a default interest rate of 22%. The $53k Note may be converted into common stock of the Company by the holder at any time following 180 days after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 39% discount to the average of the three (3) lowest closing bid prices during the fifteen (15) trading days prior to the conversion date. Upon an event of default caused by the Company’s failure to deliver shares upon a conversion pursuant to the terms of the Note, 300% of the outstanding principal and any interest due amount shall be immediately due. Upon an event of default caused by the Company’s breach of any other events of default specified in the $53k Note, 150% of the outstanding principal and any interest due amount shall be immediately due.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 9 –CONVERTIBLE NOTES PAYABLE (CONTINUED)
The fair value of the embedded conversion feature (“ECF”) of the $53k Note was calculated using the Black-Scholes pricing model at $58,154, with the following assumptions: risk-free interest rate of 1.23%, expected life of 0.76 years, volatility of 183.6%, and expected dividend yield of zero. Because the fair value of the ECF exceeded the net proceeds from the $53k Note, a charge was recorded to “Financing cost” forMarch 31, 2021, representing the excess of the fair value of the fairshares and warrant issued at conversion over the carrying value of the ECFhost instrument and accrued interest.
Prior to conversion, the Remaining Notes were carried at fair value and revalued at each period end, with changes to fair value recorded to the statement of $58,154 over the net proceeds from the noteoperations under “Change in Fair Value of $50,000, for a net charge of $8,154. The ECF qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.Debt.” The final allocation of the proceeds at inception was as follows:
Embedded conversion feature | $ | 58,154 | ||
Original issue discount | 3,000 | |||
Financing cost | (8,154 | ) | ||
Convertible note | --- | |||
Notes payable and bank loans, long-term portion | $ | 53,000 |
The discounts resulting from the original issue discount, warrants and embedded conversion feature are being amortized over the life of the $53k Note. Amortization expense related to these discountschanges in each offair value during the three and nine months ended September 30, 2017 was $15,577. No amortizationMarch 31, 2022 and 2021 were $-0- and $19,246, respectively.
Interest expense was recognizedon convertible notes outstanding during 2016 related to the $53k Note. As of September 30, 2017, the unamortized discount was $37,423. As of September 30, 2017, the $53k Note was convertible into 362,022 of the Company’s common shares, based on a 39% discount to the last sale price of the Company’s common stock of $0.24 on September 30, 2017.
During the ninethree months ended September 30, 2017March 31, 2022 and 2016, the Company made no repayments on the $53k Note. During the three2021 was $-0- and nine months ended September 30, 2017 and 2016, the Company recorded interest expense on the $53k Note totaling $1,191 and $1,191,$4,372, respectively. No interest expense was recognized on this note in 2016.
Convertible Notes Payable ($35,000) – September 2017
On September 7, 2017, the Company entered into a securities purchase agreement for the sale of a $35,000 convertible note (the “$35k Note”) to PULG. The $35k Note included a $3,000 original issue discount, for net proceeds of $32,000. The $35k Note has an interest rate of 10% and a default interest rate of 20%. The $35k Note may be converted into common stock of the Company by the holder at any time following 180 days after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 39% discount to the average of the three (3) lowest closing bid prices during the fifteen (15) trading days prior to the conversion date. Upon an event of default caused by the Company’s failure to deliver shares upon a conversion pursuant to the terms of the $35k Note, 300% of the outstanding principal and any interest due amount shall be immediately due. Upon an event of default caused by the Company’s breach of any other events of default specified in the $35k Note, 150% of the outstanding principal and any interest due amount shall be immediately due.
The fair value of the ECF of the $35k Note was calculated using the Black-Scholes pricing model at $38,338, with the following assumptions: risk-free interest rate of 1.21%, expected life of 0.77 years, volatility of 177.2%, and expected dividend yield of zero. Because the fair value of the ECF exceeded the net proceeds from the $35k Note, a charge was recorded to “Financing cost” for the excess of the fair value of the fair value of the ECF of $38,338 over the net proceeds from the note of $32,000, for a net charge of $6,338. The ECF qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The final allocation of the proceeds at inception was as follows:
Embedded conversion feature | $ | 38,338 | ||
Original issue discount | 3,000 | |||
Financing cost | (6,338 | ) | ||
Convertible note | --- | |||
Notes payable and bank loans, long-term portion | $ | 35,000 |
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 13 – SHAREHOLDERS’ EQUITY
SEPTEMBER 30, 2017 AND 2016
Private Placements
(UNAUDITED)
NOTE 9 –CONVERTIBLE NOTES PAYABLE (CONTINUED)
The discounts resulting from the original issue discount, warrants and embedded conversion feature are being amortized over the life of the $35k Note. Amortization expense related to these discounts in each of the three and nine months ended September 30, 2017 was $2,865. No amortization expense was recognized during 2016 related to the $35k Note. As of September 30, 2017, the unamortized discount was $32,135. As of September 30, 2017, the $35k Note was convertible into 239,071 of the Company’s common shares, based on a 39% discount to the last sale price of the Company’s common stock of $0.24 on September 30, 2017.
During the nine months ended September 30, 2017 and 2016, the Company made no repayments on the $35k Note. During the three and nine months ended September 30, 2017 and 2016, the Company recorded interest expense on the $35k Note totaling $220 and $220, respectively. No interest expense was recognized on this note in 2016.
Convertible Notes Payable ($55,000) – September 2017
On September 11, 2017, the Company entered into a securities purchase agreement for the sale of a $55,000 convertible note (the “$55k Note”) to Crown Bridge Partners LLC. The $55k Note included a $7,500 original issue discount, for net proceeds of $47,500. The 55k Note has an interest rate of 10% and a default interest rate of 12%. The $55k Note may be converted into common stock of the Company by the holder at any time after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to 60% multiplied by the lowest one (1) trading price for the Common Stock during the twenty (20) trading day period ending on the last complete trading day prior to the date of conversion. If, at any time while the $55k Note is outstanding, the conversion price pursuant to this formula is equal to or lower than $0.10, then an additional ten percent (10%) discount shall be factored into the conversion price until the $55k Note is no longer outstanding. In the event that shares of the Company’s Common Stock are not deliverable via DWAC following the conversion of any amount hereunder, an additional ten percent (10%) discount shall be factored into the Variable Conversion Price until the Note is no longer outstanding.
The fair value of the ECF of the $55k Note was calculated using the Black-Scholes pricing model at $65,332, with the following assumptions: risk-free interest rate of 1.24%, expected life of 1 year, volatility of 175.1%, and expected dividend yield of zero. Because the fair value of the ECF exceeded the net proceeds from the $55k Note, a charge was recorded to “Financing cost” for the excess of the fair value of the fair value of the ECF of $65,332 over the net proceeds from the note of $47,500, for a net charge of $17,832. The ECF qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The final allocation of the proceeds at inception was as follows:
Embedded conversion feature | $ | 65,332 | ||
Original issue discount | 7,500 | |||
Financing cost | (17,832 | ) | ||
Convertible note | --- | |||
Notes payable and bank loans, long-term portion | $ | 55,000 |
The discounts resulting from the original issue discount, warrants and embedded conversion feature are being amortized over the life of the $55k Note. Amortization expense related to these discounts in each of the three and nine months ended September 30, 2017 was $2,863. No amortization expense was recognized during 2016 related to the $55k Note. As of September 30, 2017, the unamortized discount was $52,137. As of September 30, 2017, the $55k Note was convertible into 381,944 of the Company’s common shares, based on a 40% discount to the last sale price of the Company’s common stock of $0.24 on September 30, 2017.
During the nine months ended September 30, 2017 and 2016, the Company made no repayments on the $55k Note. During the three and nine months ended September 30, 2017 and 2016, the Company recorded interest expense on the $55k Note totaling $286 and $286, respectively. No interest expense was recognized on this note in 2016.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 10 – DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments are comprised of the fair value of conversion features embedded in convertible promissory issued in 2017 for which the conversion rate is not fixed, but instead is adjusted based on a discount to the market price of the Company’s common stock. The fair market value of the derivative liabilities was calculated at inception of each of the $53k Note, the $35k Note and the $55k Note and allocated to the respective convertible notes, with any excess recorded as a charge to “Financing cost.” The derivative financial instruments are then revalued at the end of each period, with the change in value recorded to “Change in fair value of on derivative financial instruments.”
Derivative financial instruments recorded in the three and nine months ended September 30, 2017 include the following:
Change in fair value of | Fair | |||||||||||
Fair | Derivative | Value at | ||||||||||
Value at | Financial | September 30, | ||||||||||
Inception | Instruments | 2017 | ||||||||||
$53k Note ECF | $ | 58,154 | $ | (4,769 | ) | $ | 53,385 | |||||
$35k Note ECF | 38,338 | (578 | ) | 37,760 | ||||||||
$55k Note ECF | 65,332 | (65 | ) | 65,267 | ||||||||
$ | 161,824 | $ | (5,412 | ) | $ | 156,412 |
Fair market value of the derivative financial instruments is measured using the Black-Scholes pricing model with the following assumptions: risk-free interest rate of 1.21-1.31%, expected life of 0.54-1.00 years, volatility of 175.1-183.6%, and expected dividend yield of zero. The entire amount of derivative instrument liabilities is classified as current due to the fact that settlement of the derivative instruments could be required within twelve months of the balance sheet date.
NOTE 11 – SHAREHOLDERS’ DEFICIT
Issuance of Common Stock
During the nine months ended September 30, 2017,March 31, 2021, the Company sold 4,412,49811,787,766 shares of common stock in 46 separate private placement transactions to 15 investors.transactions. The Company received $533,000$3,488,725 in proceeds from the sales. TheIn connection with the stock sales, the Company also issued 5,893,889 five-year warrants to purchase shares were issuedof common stock at a share priceexercise prices between $0.10$0.27 and $0.30$1.05 per share.
Investment Agreement Draws
During the three months ended September 30, 2017,March 31, 2021, the Company issued 57,0163,006,098 common shares pursuant to draws made by the Company under the Investment Agreement. The CompanyAgreement and received $15,356an aggregate of $900,636 in net proceeds from the draws.
Shares issued to Consultants
During August 2017,the three months ended March 31, 2022 and 2021, the Company issued 276,8505,250 and 475,000 common shares, respectively, to a consultant.consultants for services rendered. In connection with the issuances, the Company recognized expenses totaling $8,044 and $122,829 in the three months ended March 31, 2022 and 2021, respectively.
Common Stock Issuable
As of September 30, 2017March 31, 2022 and December 31, 2016,2021, the Company was obligated to issue 10,313 and 80,643 shares of common stock, respectively, in exchange for professional services provided by a third party consultant during the further quarter of 2016 and the first eight months of 2017. During the three and nine months ended September 30, 2017, the Company recognized expense related to shares earned by the consultant of $17,705 and $46,669, respectively. During August 2017, 276,850 shares were issued to the consultant with a value of $49,996, in satisfaction of shares accrued through August 25, 2017.following shares:
March 31, 2022 | December 31, 2020 | |||||||||||||||
Amount | Shares | Amount | Shares | |||||||||||||
Shares issuable to consultants, employees and directors | $ | 318,040 | 938,191 | 282,347 | 719,366 |
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 11 – SHAREHOLDERS’ DEFICIT (CONTINUED)
Stock Warrants
Transactions involving our stock warrants during the ninethree months ended September 30, 2017March 31, 2022 and 2021 are summarized as follows:
2022 | 2021 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Average | Average | |||||||||||||||
Exercise | Exercise | |||||||||||||||
Number | Price | Number | Price | |||||||||||||
Outstanding at beginning of the period | 59,796,992 | $ | 0.25 | 51,352,986 | $ | 0.14 | ||||||||||
Granted during the period | — | $ | 0.00 | 19,585,790 | $ | 0.34 | ||||||||||
Exercised during the period | — | $ | 0.00 | (11,196,742 | ) | $ | (0.06 | ) | ||||||||
Expired during the period | (430,000 | ) | $ | (0.44 | ) | — | $ | — | ||||||||
Outstanding at end of the period | 59,366,992 | $ | 0.25 | 59,742,034 | $ | 0.22 | ||||||||||
Exercisable at end of the period | 59,366,992 | $ | 0.25 | 59,742,034 | $ | 0.22 | ||||||||||
Weighted average remaining life | 3.0 years | 3.7 years |
Weighted | ||||||||
Average | ||||||||
Exercise | ||||||||
Number | Price | |||||||
Outstanding at beginning of the period | 10,576,389 | $ | 0.08 | |||||
Granted during the period | 8,990,000 | $ | 0.40 | |||||
Exercised during the period | --- | $ | --- | |||||
Terminated during the period | --- | $ | --- | |||||
Outstanding at end of the period | 19,566,389 | $ | 0.23 | |||||
Exercisable at end of the period | 19,566,389 | $ | 0.23 | |||||
Weighted average remaining life | 4.5 years |
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 13 – SHAREHOLDERS’ EQUITY (CONTINUED)
The following table summarizes information about the Company’s stock warrants outstanding as of September 30, 2017:March 31, 2022:
Warrants Outstanding | Warrants Exercisable | ||||||||||||||||||
Weighted- | |||||||||||||||||||
Average | Weighted- | Weighted- | |||||||||||||||||
Remaining | Average | Average | |||||||||||||||||
Exercise | Number | Contractual | Exercise | Number | Exercise | ||||||||||||||
Prices | Outstanding | Life (years) | Price | Exercisable | Price | ||||||||||||||
$ | 0.0001 to 0.09 | 14,789,573 | 2.8 | $ | 0.07 | 14,789,573 | $ | 0.07 | |||||||||||
$ | 0.10 to 0.24 | 9,474,380 | 2.5 | $ | 0.17 | 9,474,380 | $ | 0.17 | |||||||||||
$ | 0.25 to 0.49 | 31,486,448 | 3.1 | $ | 0.31 | 31,486,448 | $ | 0.31 | |||||||||||
$ | 0.50 to 1.05 | 3,616,591 | 4.1 | $ | 0.69 | 3,616,591 | $ | 0.69 | |||||||||||
$ | 0.05 to 1.00 | 59,366,992 | 3.0 | $ | 0.25 | 59,366,992 | $ | 0.25 |
Warrants Outstanding | Warrants Exercisable | |||||||||||||||||||||
Weighted- | ||||||||||||||||||||||
Average | Weighted- | Weighted- | ||||||||||||||||||||
Remaining | Average | Average | ||||||||||||||||||||
Exercise | Number | Contractual | Exercise | Number | Exercise | |||||||||||||||||
Prices | Outstanding | Life (years) | Price | Exercisable | Price | |||||||||||||||||
$ | 0.05 to 0.09 | 8,388,889 | 4.6 | $ | 0.08 | 8,388,889 | $ | 0.08 | ||||||||||||||
$ | 0.10 to 0.15 | 2,687,500 | 3.9 | $ | 0.11 | 2,687,500 | $ | 0.11 | ||||||||||||||
$ | 0.25 to 0.50 | 7,300,000 | 4.5 | $ | 0.33 | 7,300,000 | $ | 0.33 | ||||||||||||||
$ | 0.51 to 1.00 | 1,190,000 | 4.5 | $ | 0.97 | 1,190,000 | $ | 0.97 | ||||||||||||||
$ | 0.05 to 1.00 | 19,566,389 | 4.5 | $ | 0.23 | 19,566,389 | $ | 0.23 |
During the ninethree months ended September 30, 2017,March 31, 2022 and 2021, the Company issued 8,990,000 warrants. The fair value of-0- and 19,585,790 warrants, respectively, the warrant was calculated using the Black-Scholes pricing model with the following assumptions: risk-free interest rate of 1.74% to 1.95%, expected life of 5 years, volatility of 40 - 190.86%, and expected dividend yield of zero. The aggregate grant date fair value of which was $-0- and $4,496,555, respectively. The fair value of the warrants issuedwas calculated using the following range of assumptions:
2022 | 2021 | |||
Pricing model utilized | No warrants issued | Binomial Lattice | ||
Risk free rate range | No warrants issued | 0.38% to 0.86% | ||
Expected life range (in years) | No warrants issued | 3.00 to 5.00 years | ||
Volatility range | No warrants issued | 170.58% to 193.21% | ||
Dividend yield | No warrants issued | 0.00% |
There were no warrants exercised during the ninethree months ended September 30, 2017 was $496,132.March 31, 2022. During the three months ended March 31, 2021, the Company received $62,500 upon the exercise of 625,000 warrants with an exercise price of $0.10. Additionally, the Company issued 9,047,332 shares upon cashless exercise of 10,571,742 warrant shares exercised using a cashless exercise feature in settlement of litigation and other disputes in amounts totaling $614,221 that had been accrued in 2020.
Employee Equity Incentive PlanPlans
On January 1, 2016, the Company institutedadopted the 2016 Employee Equity Incentive Plan (the “EIP”“2016 EIP”) for the purpose of having equity awards available to allow for equity participation by its employees. The 2016 EIP allowsallowed for the issuance of up to 15,503,680 shares of the Company’s common stock to employees, which may be issued in the form of stock options, stock appreciation rights, or restrictedcommon shares. The 2016 EIP is governed by the Company’s board, or a committee that may be appointed by the board in the future.
During August 2017, The 2016 EIP expired during 2021 but allows for the Company issued 207,500prospective issuance of shares of common stock subject to vesting of awards made prior to expiration of the 2016 EIP.
On September 9, 2021, the Company adopted the 2021 Employee Equity Incentive Plan (the “2021 EIP” and, together with the 2016 EIP, the “EIPs”) for the purpose of having equity awards available to allow for equity participation by its employees. The 2021 EIP allows for the issuance of up to 20,000,000 shares of the Company’s common stock to employees, underwhich may be issued in the form of stock options, stock appreciation rights, or common shares. The 2021 EIP asis governed by the Company’s board, or a result of grants madecommittee that may be appointed by the board in 2016 that vested during 2017.the future.
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016MARCH 31, 2022
(UNAUDITED)
NOTE 1113 – SHAREHOLDERS’ DEFICITEQUITY (CONTINUED)
Amounts recognized in the financial statements with respect to the EIPs in the three months ended March 31, 2022 and 2021 were as follows:
2022 | 2021 | |||||||
Total cost of share-based payment plans during the period | $ | 100,422 | $ | 307,160 | ||||
Amounts capitalized in deferred equity compensation during period | $ | — | $ | — | ||||
Amounts charged against income for amounts previously capitalized | $ | 8,438 | $ | — | ||||
Amounts charged against income, before income tax benefit | $ | 108,860 | $ | 307,160 | ||||
Amount of related income tax benefit recognized in income | $ | — | $ | — |
Stock Options
Stock options granted under the EIPs typically vest over a period of three to four years or based on achievement of Company and individual performance goals. The following table summarizes the status of shares issued and outstanding under the EIP outstandingstock option activity as of and for the ninethree months ended September 30, 2017:March 31, 2022 and 2021:
2022 | 2021 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Average | Average | |||||||||||||||
Exercise | Exercise | |||||||||||||||
Stock options | Number | Price | Number | Price | ||||||||||||
Outstanding at beginning of period | 3,456,250 | $ | 0.23 | 3,111,750 | $ | 0.20 | ||||||||||
Granted during the period | — | $ | — | — | $ | — | ||||||||||
Exercised during the period | (12,500 | ) | $ | (0.26 | ) | (12,500 | ) | $ | (0.25 | ) | ||||||
Forfeited during the period | (137,500 | ) | $ | (0.35 | ) | (32,500 | ) | $ | (0.16 | ) | ||||||
Outstanding at end of period | 3,306,250 | $ | 0.22 | 3,066,750 | $ | 0.20 | ||||||||||
Options exercisable at period-end | 2,535,000 | $ | 0.20 | 2,276,750 | $ | 0.17 |
Total stock basedAs of March 31, 2022, there was $108,313 of total unrecognized compensation recognized for grantscost related to options granted under the EIP was $2,435 and $3,030EIPs. That cost is expected to be recognized over a weighted-average period of 2.4 years.
The total fair value of options vested during the three months ended September 30, 2017March 31, 2022 and 2016,2021 was $2,627 and $46,746, respectively. Total stock based compensation recognized for grants under the EIP was $8,215 and $9,090The aggregate intrinsic value of share options exercised during the ninethree months ended September 30, 2017March 31, 2022 and 2016,2021 was $388 and $9,725, respectively. Total unrecognized stock compensation related to these grants was $31,655 as of September 30, 2017.
A summary ofDuring the status of non-vested shares issued pursuant to the EIP as of September 30, 2017 presented below:
Weighted | ||||||||
Average | ||||||||
Grant Date | ||||||||
Shares | Fair Value | |||||||
Nonvested at January 1, 2017 | 940,000 | $ | 0.04 | |||||
Granted | --- | $ | --- | |||||
Vested | (182,500 | ) | $ | 0.04 | ||||
Forfeited | (228,750 | ) | $ | 0.04 | ||||
Nonvested at September 30, 2017 | 528,750 | $ | 0.04 |
Employee Stock Options
The following table summarizes the status of options outstanding as of and for the ninethree months ended September 30, 2017:March 31, 2022, the Company issued 1,394 shares upon cashless exercise of 12,500 option shares exercised using a cashless exercise feature. During the three months ended March 31, 2021, the Company received $3,150 upon the exercise of 12,500 options with an exercise price of $0.252.
Weighted | ||||||||
Average | ||||||||
Exercise | ||||||||
Number | Price | |||||||
Outstanding at beginning of the period | 2,349,996 | $ | 0.12 | |||||
Granted during the period | --- | $ | --- | |||||
Exercised during the period | --- | $ | --- | |||||
Terminated during the period | --- | $ | --- | |||||
Outstanding at end of the period | 2,349,996 | $ | 0.12 | |||||
Options exercisable at period-end | 462,500 | |||||||
Weighted average remaining life (in years) | 8.9 | |||||||
Weighted average grant date fair value of options granted during the period | $ | --- | ||||||
Options available for grant at period-end | 11,829,934 |
The fair value of each stock option award is estimated on the date of grant using a binomial lattice option-pricing model based on the assumptions noted in the following table. No options were granted during the three months ended March 31, 2022 and 2021. The Company’s accounting policy is to estimate forfeitures in determining the amount of total compensation cost to record each period.
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016MARCH 31, 2022
(UNAUDITED)
NOTE 1113 – SHAREHOLDERS’ DEFICITEQUITY (CONTINUED)
The following table summarizes information about the Company’s stockstatus and activity of nonvested options outstandingissued pursuant to the EIPs as of September 30, 2017:and for the three months ended March 31, 2022 and 2021:
Options Outstanding | Options Exercisable | |||||||||||||||||||||
Weighted- | ||||||||||||||||||||||
Average | Weighted- | Weighted- | ||||||||||||||||||||
Remaining | Average | Average | ||||||||||||||||||||
Exercise | Number | Contractual | Exercise | Number | Exercise | |||||||||||||||||
Prices | Outstanding | Life (years) | Price | Exercisable | Price | |||||||||||||||||
$ | 0.08 | 1,600,000 | 8.8 | $ | 0.08 | 100,000 | $ | 0.08 | ||||||||||||||
$ | 0.20 | 749,996 | 9.2 | $ | 0.20 | --- | $ | --- | ||||||||||||||
$ | 0.08 to 0.20 | 2,349,996 | 8.9 | $ | 0.12 | 100,000 | $ | 0.08 |
2022 | 2021 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Average | Average | |||||||||||||||
Grant Date | Grant Date | |||||||||||||||
Stock options | Shares | Fair Value | Shares | Fair Value | ||||||||||||
Nonvested options at beginning of period | 858,750 | $ | 0.23 | 1,044,375 | $ | 0.21 | ||||||||||
Granted | — | $ | — | — | $ | — | ||||||||||
Vested | (12,500 | ) | $ | (0.21 | ) | (225,000 | ) | $ | (0.21 | ) | ||||||
Forfeited | (75,000 | ) | $ | (0.32 | ) | (29,375 | ) | $ | (0.12 | ) | ||||||
Nonvested options at end of period | 771,250 | $ | 0.22 | 790,000 | $ | 0.22 |
Stock Grants
Total
Stock grant awards made under the EIPs typically vest either immediately or over a period of up to four years. The following table summarizes stock basedgrant activity as of and for the three months ended March 31, 2022 and 2021:
2022 | 2021 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Average | Average | |||||||||||||||
Grant Date | Grant Date | |||||||||||||||
Stock Grants | Shares | Fair Value | Shares | Fair Value | ||||||||||||
Nonvested grants at beginning of period | 302,050 | $ | 0.07 | 200,000 | $ | 0.17 | ||||||||||
Granted | 157,454 | $ | 0.19 | 87,500 | $ | 0.11 | ||||||||||
Vested | (122,514 | ) | $ | (0.12 | ) | (87,500 | ) | $ | (0.12 | ) | ||||||
Forfeited | (104,954 | ) | $ | (0.19 | ) | — | $ | — | ||||||||
Nonvested grants at end of period | 232,036 | $ | 0.07 | 200,000 | $ | 0.17 |
As of December 31, 2021, there was $33,618 of total unrecognized compensation recognizedcost related to optionstock grants was $2,235 and $2,396made under the EIPs. That cost is expected to be recognized over a weighted-average period of 0.2 years. The weighted-average grant-date fair value of share grants made during the three months ended September 30, 2017March 31, 2022 and 2016. Total stock based compensation recognized related to option2021 was $0.19 per share and $0.11 per share, respectively. The aggregate fair value of share grants was $7,504 and $2,396that vested during the ninethree months ended September 30, 2017March 31, 2022 and 2016.2021 was $15,138 and $10,810, respectively.
A summaryThe fair value of each stock grant is calculated using the closing sale price of the statusCompany’s common stock on the date of non-vested optionsgrant using. The Company’s accounting policy is to estimate forfeitures in determining the amount of total compensation cost to record each period.
Liability-Classified Equity Instruments
During 2021, the Company made certain stock grants from the 2021 EIP that vest over a four-year period and that are settleable for a fixed dollar amount rather than a fixed number of shares. The original grant date fair value of the equity compensation was $165,000. The Company recognized an asset captioned “Deferred equity compensation” and an offsetting liability captioned as a “Liability-classified equity instrument.” During the three months ended March 31, 2022, the Company replaced certain variable share contracts with a new fixed share compensation structure. As a result, the Company de-recognized $25,000 of deferred stock compensation and liability-classified equity instruments. Amortization of the remaining deferred stock compensation assets in the three months ended March 31, 2022 and 2021 was $9,063 and $-0-, respectively. The liability will be converted to equity when shares are issued pursuant to prescribed vesting events.
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 14 – CONTINGENT ACQUISITION CONSIDERATION
Contingent acquisition consideration relates to future earn-out payments potentially payable related to the EIPCompany’s acquisitions of Hughes Center for Functional Medicine (“HCFM”) in 2019 and CHM and MOD in 2020. The terms of the earn-outs related to each acquisition require the Company to pay the former owners additional acquisition consideration for the achievement of prescribed revenue and/or earnings targets for performance of the underlying business for up to four years after the respective acquisition date. Contingent acquisition consideration for each entity is recorded at fair value using a probability-weighted discounted cash flow projection. The fair value of the contingent acquisition consideration is remeasured at the end of each reporting period and changes are included in the statement of operations under the caption “Change in fair value of contingent acquisition consideration.”
Contingent acquisition consideration as of September 30, 2017 is presented below:March 31, 2022 and December 31, 2021 was comprised of the following:
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Fair value of HCFM contingent acquisition consideration | $ | 176,263 | $ | 172,124 | ||||
Fair value of CHM contingent acquisition consideration | 270,152 | 276,529 | ||||||
Fair value of MOD contingent acquisition consideration | 300,953 | 737,037 | ||||||
Total contingent acquisition consideration | 747,368 | 1,185,690 | ||||||
Less: long term portion | (429,611 | ) | (782,224 | ) | ||||
Contingent acquisition consideration, current portion | $ | 317,757 | $ | 403,466 |
During the three months ended March 31, 2022 and 2021, the Company recognized gains (losses) on the change in the fair value of contingent acquisition consideration as follows:
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Change in fair value of HCFM contingent acquisition consideration | $ | (4,139 | ) | $ | (11,308 | ) | ||
Change in fair value of CHM contingent acquisition consideration | 6,376 | (33,252 | ) | |||||
Change in fair value of MOD contingent acquisition consideration | 436,085 | (591,140 | ) | |||||
$ | 438,322 | $ | (635,700 | ) |
Maturities of contingent acquisition consideration were as follows as of March 31, 2022:
2022 (April to December) | $ | 317,756 | ||
2023 | 218,227 | |||
2024 | 211,385 | |||
$ | 747,368 |
Hughes Center for Functional Medicine Acquisition – April 2019
On April 12, 2019, the Company acquired a 100% interest in HCFM, a medical practice engaged in improving the health of its patients through individualized and integrative health care. Following the acquisition, HCFM was rebranded as NCFM and was combined with NWC to form the Company’s Health Services segment. Under the terms of acquisition, the Company paid HCFM shareholders $500,000 in cash, issued 3,968,254 shares of the Company’s common stock and agreed to an earn-out provision of $500,000 that may be earned based on the performance of NCFM in the years ended on the first, second and third anniversary dates of the acquisition closing. The total consideration fair value represented a transaction fair value of $1,764,672. In May 2020, the Company paid the seller $47,000 in satisfaction of the year 1 earn out. In May 2021, the Company paid the seller $196,000 in satisfaction of the year 2 earn out.
Weighted | ||||||||
Average | ||||||||
Grant Date | ||||||||
Shares | Fair Value | |||||||
Nonvested at January 1, 2017 | 2,249,996 | $ | 0.03 | |||||
Granted | --- | $ | --- | |||||
Vested | (362,500 | ) | $ | --- | ||||
Forfeited | --- | $ | --- | |||||
Nonvested at September 30, 2017 | 1,887,496 | $ | 0.03 |
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 14 – CONTINGENT ACQUISITION CONSIDERATION (CONTINUED)
Cura Health Management LLC Acquisition – May 2020
On May 18, 2020, the Company acquired a 100% interest in CHM and its wholly owned subsidiary AHP. CHM and AHP assist physician practices in providing coordinated and more efficient care to patients via the MSSP. The Company accounted for the transaction as an acquisition of a business pursuant to ASC 805. Following the acquisition, the business of CHM comprised the Company’s ACO/MSO Division. Under the terms of acquisition, the Company paid CHM shareholders the following consideration: (i) $214,000 in cash paid at closing, (ii) 2,240,838 shares of the Company’s common stock issued at closing, (iii) up to $223,500 additional cash and $660,000 in additional shares of the Company’s common stock payable at the time CHM receives the final assessment of the calculation of MSSP savings for the 2019 program year, with this amount prorated based on a target MSSP payment (plus other ancillary revenue) of $1,725,000, and (iv) up to $437,500 based on the business achieving annual revenue of $2,250,000 and annual profit of $500,000 in each of the four years following closing.
The terms of the earn out require the Company to pay the former owners of CHM (i) up to $223,500 additional cash and to $660,000 of additional shares of Company common stock when CHM receives the final assessment of the calculation of 2019 plan year MSSP revenue (the “Current Earnout”), and (ii) up to $62,500, $125,000, $125,000 and $125,000 on the first, second, third and fourth anniversary, respectively, based on achievement by the underlying business of revenue of at least $2,250,000 (50% weighting) and profit of at least $500,000 (50% weighting) in the year preceding each anniversary date (the “Future Earnout”). During September 2020, pursuant to a Second Amendment to the Agreement and Plan of Merger (the “Second Amendment”) and in satisfaction of the Current Earnout, the Company paid $90,389 cash, issued 1,835,625 shares of the Company’s common stock and agreed that the balance of the Current Earnout that was not earned in 2020, being $124,043 cash and $366,300 in shares of Company common stock, would be deferred until the first future earnout year in which MSSP revenue exceeds $1.725 million and revenue from other services exceeds $605,000 (the “Residual Earnout”). During September 2021, the Company was notified of the amount of Medicare shared savings and received payment for plan year 2020 in the amount of $2,419,312. Because the shared saving payment exceeded $1.725 million, the sellers were paid $124,043 cash and issued 806,828 shares of Company common stock with a value of $366,300 pursuant to the Residual Earnout. Following the payments, the Company had no further obligations under the Residual Earnout. The Company also determined that the sellers did not earn any of the $62,500 year-one Future Earnout related to the performance period May 19, 2020 to May 18, 2021.
MedOffice Direct LLC Acquisition – October 2020
On October 19, 2020, the Company acquired a 100% interest in MOD, a virtual distributor of discounted medical supplies selling to both consumers and medical practices throughout the United States. With over 13,000 name brand medical products in over 150 different categories, MOD leverages pricing discounts with a small unit-of-measure direct-to-consumer shipping model to make ordering medical supplies more convenient and cost effective for its users. The Company accounted for the transaction as an acquisition of a business pursuant to ASC 805. Following the acquisition, the business of MOD comprised the Company’s Medical Distribution Division. Under the terms of acquisition, the Company paid the following consideration: (i) 19,045,563 shares of Company common stock issued at closing, (ii) partial satisfaction of certain outstanding debt obligations of MOD in the amount of $703,200 in cash paid by the Company, and (iii) up to 10,004,749 restricted shares of the Company’s common stock over a four-year period based on MOD achieving revenue targets in calendar years 2021 through 2024 of $1,500,000, $1,875,000, $2,344,000, and $2,930,000, respectively.
NOTE 1215 – COMMITMENTS AND CONTINGENCIES
Contracts Related to Medicare Shared Savings Revenue
The Company acquired CHM and its subsidiary AHP on May 18, 2020. CHM and AHP combine to operate an ACO under the terms of the MSSP as administered by the CMS. The MSSP is a program created under the Affordable Care Act (the “ACA,” also known as “Obamacare”) designed to enhance the efficiency of healthcare provided to patients covered by Medicare. The program allows for the creation of ACOs, which are organizations that agree to take responsibility for the efficiency of healthcare services provided by a group of participating healthcare providers under Medicare. The ACO is held accountable for the efficiency of the healthcare services of its participating providers as measured against benchmarks prescribed in the MSSP and earns shared savings payments if such benchmarks are met.
The Company, via AHP, is party to a Medicare Shared Savings Program Accountable Care Organization Participation Agreement with the CMS that establishes AHP as an ACO. The agreement is effective through December 31, 2024. The Company must comply with the terms and conditions of the agreement in order to maintain its status as an ACO and generate shared savings revenue.
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 15 – COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company, via CHM, is party to 33 separate participant agreements with participating providers that are members of the Company’s ACO with expiration dates through 2024. These agreements include certain restrictions and requirements to which the participating providers must adhere in order to maintain participation in the ACO.
Supplier Concentration
The Company relies on a sole supplier for the fulfillment of all of its product sales made through MOD.
Service contracts
The Company carries various service contracts on its office buildings & certain copier equipment for repairs, maintenance and inspections. All contracts are short term and can be cancelled.
Litigation
Litigation
None.
Leases
From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course
Maturities of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not aware of any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
Leases
The Company has two real estate leases in Naples, Florida. The Company entered into an operating lease for its main office in Naples, Florida beginning on August 1, 2013 and expiring July 31, 2020. The lease is for a 6901 square-foot space. The base rent for the first full year of the lease term is $251,287 per annum with increases during the period. The Company entered into another operating lease in the same building for an additional 361 square feet space for use of the medical equipment for the same period. The base rent for the first full year of the lease term is $13,140 per annum.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 12 – COMMITMENTS AND CONTINGENCIES (CONTINUED)
During the nine months ended September 30, 2017, the Company entered into an agreement with MOD pursuant to which the Company will pay rent to MOD in the amount of $2,040 per month for office space in MOD’s facility used by the Company and its employees. The agreement is effective from January 1, 2017 through July 31, 2018. During the three and nine months ended September 30, 2017, the Company recognized rent expense related to the marketing agreement in the amount of $6,120 and $18,360, respectively, pursuant to this agreement and had prepaid an additional $4,929 toward future rentliabilities were as follows as of September 30, 2017.March 31, 2022:
2022 | $ | 284,905 | ||
2023 | 285,721 | |||
2024 | 11,877 | |||
2025 | 11,877 | |||
2026 | 11,877 | |||
2027 | 990 | |||
Total lease payments | 607,247 | |||
Less interest | (108,043 | ) | ||
Present value of lease liabilities | $ | 499,204 |
Total lease expense for the three months ended September 30, 2017 and 2016 was $77,636 and $78,940, respectively. Total lease expense for the nine months ended September 30, 2017 and 2016 was $217,926 and $266,021, respectively.
Future minimum lease payments (excluding real estate taxes and maintenance costs) as of September 30, 2017 are as follows:
2017 (October to December) | $ | 72,227 | ||
2018 | 281,460 | |||
2019 | 273,856 | |||
2020 | 162,055 | |||
2021 | --- | |||
Total | $ | 789,598 |
Employment/Consulting Agreements
The Company has employment agreements with eachcertain of its four physicians.physicians, nurse practitioners and physical therapists in the Health Services division. The agreements generally call for a fixed salary at the beginning of the contract with a transaction to performance basedperformance-based pay later in the contract. The contracts expire at various times through 2019, with early termination available upon a notice period of 30-90 days during which compensation is paid to the physician but NWC has no further severance obligation. During 2016, DMD retired from practice to focus on his duties as CEO of HLYK.
On July 1, 2016, HLYKthe Company entered into an employment agreement with Dr. Michael Dent, Chief Executive Officer and a member of the Board of Directors. Dr. Dent’s employment agreement continues until terminated by Dr. Dent or HLYK.the Company. If Dr. Dent’s employment is terminated by HLYKthe Company (unless such termination is “For Cause” as defined in his employment agreement), then upon signing a general waiver and release, Dr. Dent will be entitled to severance in an amount equal to 12 months of his then-current annual base salary, as well as the pro-rata portion of any bonus that would be due and payable to him. In the event that Dr. Dent terminates the employment agreement, he shall be entitled to any accrued but unpaid salary and other benefits up to and including the date of termination, and the pro-rata portion of any unvested time-based options up until the date of termination.
On July 1, 2016, HLYK2018, the Company entered into an agreement with Mr. George O’Leary, HLYK’sthe Company’s Chief Financial Officer and a member of the Board of Directors, extending his prior agreement with the Company.Directors. If Mr. O’Leary’s employment agreement continues until terminated by Mr. O’Leary or HLYK. If Mr. O’Leary employment is terminated by HLYKthe Company (unless such termination is “For Cause” as defined in his employment agreement), then upon signing a general waiver and release, Mr. O’Leary will be entitled to receive his base salary and the Company shall maintain his employee benefits for a period of twelve (12)six months beginning on the date of termination. The agreement expires on June 30, 2022. In addition to a base salary, the event thatagreement provided Mr. O’Leary terminateswith certain performance-based cash bonuses, stock grants, and stock option grants.
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 15 – COMMITMENTS AND CONTINGENCIES (CONTINUED)
On May 18, 2020, the agreement, he shall be entitledCompany entered into separate 4-year consulting services agreements with each of the two principals of the ACO/MSO business acquired in May 2020 that call for each person to earn fixed annual consulting fees and a share of Medicare shared savings revenue, consulting revenue and overall profits generated by the underlying business.
Litigation
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business. The Company is not aware of any accrued by unpaid salary and other benefits up to and includingsuch legal proceedings that will have, individually or in the date of termination.aggregate, a material adverse effect on its business, financial condition or operating results.
NOTE 1316 – SEGMENT REPORTING
The Company has two4 reportable segments: NWCHealth Services, Digital Healthcare, ACO/MCO and HLYK. NWCMedical Distribution. Health Services division is comprised of the operations of (i) Naples Women’s Center (“NWC”), a multi-specialty medical group including OB/GYN (both Obstetrics and Gynecology), and General Practice.Practice, (ii) Naples Center for Functional Medicine (“NCFM”), a Functional Medical Practice acquired in April 2019 that is engaged in improving the health of its patients through individualized and integrative health care, and (iii) Bridging the Gap Physical Therapy (“BTG”), a physical therapy practice in Bonita Springs, FL that provides hands-on functional manual therapy techniques to speed patients’ recovery and manage pain without pain medication or surgery. The practice’s office is located in Naples, Florida. HLYKCompany’s Digital Healthcare segment develops and plans to operate an online personal medical information and record archive system, the “HealthLynked Network”,Network,” which will enable patients and doctors to keep track of medical information via the Internet in a cloud basedcloud-based system. Patients will completeThe ACO/MSO Division is comprised of the business acquired with CHM, which assists physician practices in providing coordinated and more efficient care to patients via the MSSP as administered by the CMS, which rewards providers for efficiency in patient care. The Medical Distribution Division is comprised of the operations of MedOffice Direct LLC (“MOD”), a detailed online personalvirtual distributor of discounted medical history including past surgical history, medications, allergies,supplies selling to both consumers and family history. Once this information is entered patients and their treating physicians will be able to updatemedical practices throughout the information as needed to provide a comprehensive medical history.United States acquired by the Company on October 19, 2020.
The Company evaluates performance and allocates resources based on profit or loss from operations before income taxes. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016MARCH 31, 2022
(UNAUDITED)
NOTE 1316 – SEGMENT REPORTING (CONTINUED)
Segment information for the three months ended September 30, 2017 and 2016March 31, 2022 was as follows:
Three Months Ended March 31, 2022 | ||||||||||||||||||||
Health Services | Digital Healthcare | ACO / MSO | Medical Distribution | Total | ||||||||||||||||
Revenue | ||||||||||||||||||||
Patient service revenue, net | $ | 1,375,685 | $ | — | $ | — | $ | — | $ | 1,375,685 | ||||||||||
Medicare shared savings revenue | — | — | — | — | — | |||||||||||||||
Subscription, consulting and event revenue | — | 6,624 | 77,594 | — | 84,218 | |||||||||||||||
Product revenue | — | — | — | 146,969 | 146,969 | |||||||||||||||
Total revenue | 1,375,685 | 6,624 | 77,594 | 146,969 | 1,606,872 | |||||||||||||||
Operating Expenses | ||||||||||||||||||||
Practice salaries and benefits | 718,073 | — | — | — | 718,073 | |||||||||||||||
Other practice operating expenses | 562,651 | — | — | — | 562,651 | |||||||||||||||
Medicare shared savings expenses | — | — | 227,729 | — | 227,729 | |||||||||||||||
Cost of product revenue | — | — | — | 160,811 | 160,811 | |||||||||||||||
Selling, general and administrative expenses | — | 1,264,876 | — | 70,264 | 1,335,140 | |||||||||||||||
Depreciation and amortization | 25,518 | 1,472 | — | 176,900 | 203,890 | |||||||||||||||
Total Operating Expenses | 1,306,242 | 1,266,348 | 227,729 | 407,975 | 3,208,294 | |||||||||||||||
Income (loss) from operations | $ | 69,443 | $ | (1,259,724 | ) | $ | (150,135 | ) | $ | (261,006 | ) | $ | (1,601,422 | ) | ||||||
Other Segment Information | ||||||||||||||||||||
Interest expense (income) | $ | 2,812 | $ | 2,211 | $ | — | $ | — | $ | 5,023 | ||||||||||
Change in fair value of contingent acquisition consideration | $ | — | $ | (438,322 | ) | $ | — | $ | — | $ | (438,322 | ) | ||||||||
March 31, 2022 | ||||||||||||||||||||
Identifiable assets | $ | 2,056,661 | $ | 2,208,771 | $ | 1,115,871 | $ | 2,542,446 | $ | 7,923,749 | ||||||||||
Goodwill | $ | — | $ | — | $ | 381,856 | $ | 766,249 | $ | 1,148,105 | ||||||||||
December 31, 2021 | ||||||||||||||||||||
Identifiable assets | $ | 2,152,533 | $ | 3,450,332 | $ | 1,167,965 | $ | 2,775,621 | $ | 9,546,451 | ||||||||||
Goodwill | $ | — | $ | — | $ | 381,856 | $ | 766,249 | $ | 1,148,105 |
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | |||||||||||||||||||||||
NWC | HLYK | Total | NWC | HLYK | Total | |||||||||||||||||||
Revenue | ||||||||||||||||||||||||
Patient service revenue, net | $ | 480,723 | $ | --- | $ | 480,723 | $ | 499,448 | $ | --- | $ | 499,448 | ||||||||||||
Operating Expenses | ||||||||||||||||||||||||
Salaries and benefits | 345,895 | 160,311 | 506,206 | 347,242 | 85,707 | 432,949 | ||||||||||||||||||
General and administrative | 228,278 | 252,336 | 480,614 | 273,416 | 239,988 | 513,404 | ||||||||||||||||||
Depreciation and amortization | 5,601 | 455 | 6,056 | 5,718 | --- | 5,718 | ||||||||||||||||||
Total Operating Expenses | 579,774 | 413,102 | 992,876 | 626,376 | 325,695 | 952,071 | ||||||||||||||||||
Loss from operations | $ | (99,051 | ) | $ | (413,102 | ) | $ | (512,153 | ) | $ | (126,928 | ) | $ | (325,695 | ) | $ | (452,623 | ) | ||||||
Other Segment Information | ||||||||||||||||||||||||
Interest expense | $ | 5,723 | $ | 21,401 | $ | 27,124 | $ | 4,442 | $ | 8,967 | $ | 13,409 | ||||||||||||
Loss on extinguishment of debt | $ | --- | $ | 290,581 | $ | 290,581 | $ | --- | $ | --- | $ | --- | ||||||||||||
Financing cost | $ | --- | $ | 32,324 | $ | 32,324 | $ | --- | $ | --- | $ | --- | ||||||||||||
Amortization of original issue and debt discounts on convertible notes | $ | --- | $ | 63,552 | $ | 63,552 | $ | --- | $ | 100,187 | $ | 100,187 | ||||||||||||
Proceeds from settlement of lawsuit | $ | --- | $ | --- | $ | --- | $ | 38,236 | $ | --- | $ | 38,236 | ||||||||||||
Change in fair value of derivative financial instruments | $ | --- | $ | 5,412 | $ | 5,412 | $ | --- | $ | --- | $ | --- |
HEALTHLYNKED CORP.
As of September 30, 2017 | As of December 31, 2016 | |||||||||||||||||||||||
Identifiable assets | $ | 217,344 | $ | 151,538 | $ | 368,882 | $ | 240,115 | $ | 89,396 | $ | 329,511 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DuringMARCH 31, 2022
(UNAUDITED)
NOTE 16 – SEGMENT REPORTING (CONTINUED)
Segment information for the three months ended September 30, 2017, HLYK recognized revenueMarch 31, 2021 was as follows:
Three Months Ended March 31, 2021 | ||||||||||||||||||||
Health Services | Digital Healthcare | ACO / MSO | Medical Distribution | Total | ||||||||||||||||
Revenue | ||||||||||||||||||||
Patient service revenue, net | $ | 1,514,376 | $ | — | $ | — | $ | — | $ | 1,514,376 | ||||||||||
Consulting and event revenue | — | 11,113 | 76,542 | — | 87,655 | |||||||||||||||
Product revenue | — | — | — | 182,663 | 182,663 | |||||||||||||||
Total revenue | 1,514,376 | 11,113 | 76,542 | 182,663 | 1,784,694 | |||||||||||||||
Operating Expenses | ||||||||||||||||||||
Practice salaries and benefits | 663,937 | — | — | — | 663,937 | |||||||||||||||
Other practice operating expenses | 730,784 | — | — | — | 730,784 | |||||||||||||||
Medicare shared savings expenses | — | — | 211,507 | — | 211,507 | |||||||||||||||
Cost of product revenue | — | — | — | 168,596 | 168,596 | |||||||||||||||
Selling, general and administrative expenses | — | 1,305,320 | — | 60,817 | 1,366,137 | |||||||||||||||
Depreciation and amortization | 28,323 | 595 | 0 | 182,740 | 211,658 | |||||||||||||||
Total Operating Expenses | 1,423,044 | 1,305,915 | 211,507 | 412,153 | 3,352,619 | |||||||||||||||
Income (loss) from operations | $ | 91,332 | $ | (1,294,802 | ) | $ | (134,965 | ) | $ | (229,490 | ) | $ | (1,567,925 | ) | ||||||
Other Segment Information | ||||||||||||||||||||
Interest expense | $ | 4,197 | $ | 6,282 | $ | — | $ | 109 | $ | 10,588 | ||||||||||
Loss on extinguishment of debt | $ | — | $ | 5,589,994 | $ | — | $ | — | $ | 5,589,994 | ||||||||||
Change in fair value of debt | $ | — | $ | 19,246 | $ | — | $ | — | $ | 19,246 | ||||||||||
Change in fair value of contingent acquisition consideration | $ | — | $ | 635,700 | $ | — | $ | — | $ | 635,700 | ||||||||||
March 31, 2021 | ||||||||||||||||||||
Identifiable assets | $ | 2,411,744 | $ | 3,043,929 | $ | 1,128,491 | $ | 3,287,628 | $ | 9,871,792 | ||||||||||
Goodwill | $ | — | $ | — | $ | 381,856 | $ | 766,249 | $ | 1,148,105 |
The Digital Healthcare made intercompany sales of $2,377$280 and $180 in the three months ended March 31, 2022 and 2021, respectively, related to subscription revenue billed to and paid for by NWCthe Company’s physicians for access to the HealthLynked Network,Network. The Medical Distribution segment made intercompany sales of $13,533 and $-0- in the three months ended March 31, 2022 and 2021, respectively, related to medical products sold to practices in the Company’s Health Services segment. Intercompany revenue and the related costs are eliminated on consolidation.
NOTE 17 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate their respective fair values due to the short-term nature of such instruments. The Company measures certain financial instruments at fair value on a recurring basis, including certain convertible notes payable and related party loans, which were extinguished and reissued and are therefore subject to fair value measurement, derivative financial instruments arising from conversion features embedded in convertible promissory notes for which the conversion rate was not fixed, and equity-class. All financial instruments carried at fair value fall within Level 3 of the fair value hierarchy as their value is based on unobservable inputs. The Company test-launched duringevaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the third quarter of 2017. The revenueappropriate level in which to classify them for HLYK and related expense for NWC were eliminated on consolidation.each reporting period. This determination requires significant judgments to be made.
HEALTHLYNKED CORPORATIONCORP.
(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 17 – FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The following table summarizes the conclusions reached regarding fair value measurements as of March 31, 2022 and December 31, 2021:
SEPTEMBER 30, 2017 AND 2016
As of March 31, 2022 | As of December 31, 2021 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Liability-classified equity instruments | $ | — | $ | — | $ | 136,875 | $ | 136,875 | $ | — | $ | — | $ | 162,500 | $ | 162,500 | ||||||||||||||||
Contingent acquisition consideration | — | — | 747,368 | 747,368 | — | — | 1,185,690 | 1,185,690 | ||||||||||||||||||||||||
Total | $ | — | $ | — | $ | 884,243 | $ | 884,243 | $ | — | $ | — | $ | 1,348,190 | $ | 1,348,190 |
(UNAUDITED)
NOTE 13 – SEGMENT REPORTING (CONTINUED)
Segment information forThe changes in Level 3 financial instruments that are measured at fair value on a recurring basis during the ninethree months ended September 30, 2017March 31, 2022 and 2016 was2021 were as follows:
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||||||||||||||||||||
NWC | HLYK | Total | NWC | HLYK | Total | |||||||||||||||||||
Revenue | ||||||||||||||||||||||||
Patient service revenue, net | $ | 1,473,639 | $ | --- | $ | 1,473,639 | $ | 1,515,293 | $ | --- | $ | 1,515,293 | ||||||||||||
Operating Expenses | ||||||||||||||||||||||||
Salaries and benefits | 1,025,333 | 443,878 | 1,469,211 | 1,001,838 | 132,235 | 1,134,073 | ||||||||||||||||||
General and administrative | 619,112 | 749,906 | 1,369,018 | 825,603 | 322,961 | 1,148,564 | ||||||||||||||||||
Depreciation and amortization | 16,858 | 765 | 17,623 | 15,804 | --- | 15,804 | ||||||||||||||||||
Total Operating Expenses | 1,661,303 | 1,194,549 | 2,855,852 | 1,843,245 | 455,196 | 2,298,441 | ||||||||||||||||||
Loss from operations | $ | (187,664 | ) | $ | (1,194,549 | ) | $ | (1,382,213 | ) | $ | (327,952 | ) | $ | (455,196 | ) | $ | (783,148 | ) | ||||||
Other Segment Information | ||||||||||||||||||||||||
Interest expense | $ | 17,086 | $ | 47,835 | $ | 64,921 | $ | 15,424 | $ | 8,967 | $ | 24,391 | ||||||||||||
Loss on extinguishment of debt | $ | --- | $ | 290,581 | $ | 290,581 | $ | --- | $ | --- | $ | --- | ||||||||||||
Financing cost | $ | --- | $ | 32,324 | $ | 32,324 | $ | --- | $ | --- | $ | --- | ||||||||||||
Amortization of original issue and debt discounts on convertible notes | $ | --- | $ | 194,120 | $ | 194,120 | $ | --- | $ | 100,187 | $ | --- | ||||||||||||
Proceeds from settlement of lawsuit | $ | --- | $ | --- | $ | --- | $ | 38,236 | $ | --- | $ | 38,236 | ||||||||||||
Change in fair value of derivative financial instruments | $ | --- | $ | 5,412 | $ | 5,412 | $ | --- | $ | --- | $ | --- |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Convertible notes payable | $ | — | $ | (19,246 | ) | |||
Contingent acquisition consideration | 438,322 | (635,700 | ) | |||||
Total | $ | 438,322 | $ | (654,946 | ) |
During the nine months ended September 30, 2017, HLYK recognized revenue of $2,377 related to subscription revenue billed to and paid for by NWC physicians for access to the HealthLynked Network, which the Company test-launched during the third quarter of 2017. The revenue for HLYK and related expense for NWC were eliminated on consolidation.
NOTE 1418 – SUBSEQUENT EVENTS
On October 5, 2017, the Company sold 211,111 shares of common stock, as well as a five-year warrant to purchase an additional 126,666 shares at an exercise price of $0.30 per share, to one investor. The Company received $38,000 in proceeds from the sale. The shares were issued at a share price of $0.18 per share.
On October 18, 2017, the Company sold 250,000 shares of common stock, as well as a five-year warrant to purchase an additional 166,666 shares at an exercise price of $0.30 per share, to one investor. The Company received $50,000 in proceeds from the sale. The shares were issued at a share price of $0.20 per share.
On October 23, 2017,May 13, 2022, the Company entered into an agreement to acquire Aesthetic Enhancements Unlimited (“AEU”), a securitiespatient service facility specializing in minimally and non-invasive cosmetic services including fat reduction, body sculpting, wrinkle reduction, hair removal, IV hydration, and feminine rejuvenation. The purchase agreement for the saleprice includes $325,000 cash, 792,394 shares of a $53,000 convertible note to PULG. The note has an interest rate of 10% and a default interest rate of 22%. The note may be converted intoCompany common stock, and the assumption of the Company by the holder at any time following 180 days after the issuance date, subjectup to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 39% discount to the average of the three (3) lowest closing bid prices during the fifteen (15) trading days prior to the conversion date. Upon an event of default caused by$75,000 in liabilities. AEU will be incorporated into the Company’s failureHealth Services segment. Closing is expected to deliver shares upon a conversion pursuant tobe completed the termsweek of the note, 300% of the outstanding principal and any interest due amount shall be immediately due. Upon an event of default caused by the Company’s breach of any other events of default specified in the note, 150% of the outstanding principal and any interest due amount shall be immediately due.
On October 27, 2017, the Company entered into a securities purchase agreement for the sale of a $171,500 convertible note to an individual lender. Net proceeds to the Company were $150,000. The note has an interest rate of 10% and a default interest rate of 22%. The note may be converted into common stock of the Company by the holder at any time following 180 days after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 35% discount to the lowest closing bid price during the twenty (20) trading days prior to the conversion date. Upon an event of default caused by the Company’s failure to deliver shares upon a conversion pursuant to the terms of the note, 300% of the outstanding principal and any interest due amount shall be immediately due. Upon an event of default caused by the Company’s breach of any other events of default specified in the note, 150% of the outstanding principal and any interest due amount shall be immediately due.
On November 1, 2017, the Company sold 1,000,000 shares of common stock, par value $0.0001, to an accredited investor at a purchase price of $0.20 per share. Net proceeds to the Company were $200,000. The investor was also granted a five-year warrant to purchase 666,666 shares of the Company’s common stock at an exercise price of $0.30 per share.
May 16, 2022.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
AllYou should read the following discussion and analysis of our financial condition and results of operations together with our financial statements containedand the related notes appearing elsewhere in this report, other than statements ofreport. In addition to historical facts, that address future activities, events or developments, areinformation, this discussion and analysis contains forward-looking statements including, but not limited to, statements containing the word “believe,” “anticipate,” “expect”that involve risks, uncertainties and word of similar import. These statements are based on certain assumptions and analyses made by the Company in light of its experience and assessment of historical trends, current conditions and expected future developments as well as other factors the Company believes are appropriate under the circumstances. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and thatassumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the forward-looking statements. Such risks and uncertainties include, without limitation: established competitors who have substantially greater financial resources and operating histories, regulatory delays or denials, ability to compete as a start-up companysection titled “Item 1A. Risk Factors” included in a highly competitive market, and access to sources of capital.
The following discussion and analysis should be read in conjunction with the Company’s financial statements and notes thereto included elsewhereour most recent Annual Report on Form 10-K. All amounts in this prospectus. Except forreport are in U.S. dollars, unless otherwise noted.
Overview
HealthLynked Corp. (the “Company,” “we,” “our,” or “us”) was incorporated in the historical information contained herein, the discussion in this prospectus contains certain forward-looking statements that involve risks and uncertainties, such as statementsState of the Company’s plans, objectives, expectations and intentions. The cautionary statements made in this prospectus should be read as being applicable to all related forward-looking statements wherever they appear in this prospectus. The Company’s actual results could differ materially from those discussed here.
Overview
The Company filed its Articles of IncorporationNevada on August 4, 20142014. We currently operate in Nevada. On September 3, 2014,four distinct divisions: the Company filed Amended Articles of Incorporation setting forthHealth Services Division, the total authorized shares of 250,000,000 shares, 230,000,000 of which are designated as common sharesDigital Healthcare Division, the ACO/MSO (Accountable Care Organization / Managed Service Organization) Division, and 20,000,000 as “blank check” preferred stock. The Company also had 2,953,840 designated shares of Series A Preferred Stock which were converted to common shares.
On September 5, 2014, the Company entered into the Share Exchange Agreement with NWC, acquiring 100%Medical Distribution Division. Our Health Services division is comprised of the LLC membership unitsoperations of NWC through the issuance of an aggregate of 50,000,000 shares of the Company’s common stock to the members of NWC.
NWC is(i) Naples Women’s Center (“NWC”), a multi-specialty medical group including OB/GYN (both Obstetrics and Gynecology) and General Practice, (ii) Naples Center for Functional Medicine (“NCFM”), a Functional Medical Practice engaged in improving the health of its patients through individualized and generalintegrative health care, and (iii) Bridging the Gap Physical Therapy (“BTG”), a physical therapy practice located in Naples, Florida.
The CompanyBonita Springs, FL that provides hands-on functional manual therapy techniques to speed patients’ recovery and manage pain without pain medication or surgery. Our Digital Healthcare division develops and operates an online personal medical information and record archive system, the “HealthLynked Network”,Network,” which enables patients and doctors to keep track of medical information via the Internet in a cloud basedcloud-based system. Patients completeOur ACO/MSO Division is comprised of the operations of Cura Health Management LLC (“CHM”) and its subsidiary ACO Health Partners LLC (“AHP”), which were acquired by the Company on May 18, 2020. CHM and AHP operate an Accountable Care Organization (“ACO”) and Managed Service Organization (“MSO”) that assists physician practices in providing coordinated and more efficient care to patients via the Medicare Shared Savings Program (“MSSP”) as administered by the Centers for Medicare and Medicaid Services (the “CMS”), which rewards providers for efficiency in patient care. Our Medical Distribution Division is comprised of the operations of MedOffice Direct LLC (“MOD”), a detailed online personalvirtual distributor of discounted medical history including past surgical history, medications, allergies,supplies selling to both consumers and family history. Once this information is entered patients and their treating physicians are able to updatemedical practices throughout the information as needed to provide a comprehensive medical history.United States we acquired on October 19, 2020.
The Company was formed for the purpose of acquiring NWC, and eventually developing its own online medical information system business as described above. Prior to the share exchange, NWC was an ongoing operation that had been in existence since 1996. NWC generated revenues in the prior years.
Critical accounting policies and significant judgments and estimates
This management’sFor a discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s condensed consolidated financial statements, which have been prepared in accordance with generally acceptedour critical accounting principlespolicies, see Note 2, “Significant Accounting Policies,” in the United States, or GAAP. The preparation of these condensedNotes to consolidated financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. The Company’s estimates are based on historical experience and on various other factors that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes that the accounting policies discussed below are critical to understanding the Company’s historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.Financial Statements.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Patient service revenues are recognized at the time of service for the net amount expected to be collected. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.
Cash and Cash Equivalents
For financial statement purposes, the Company considers all highly-liquid investments with original maturities of three months or less to be cash and cash equivalents.
Accounts Receivable
Trade receivables are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis; thus trade receivables do not bear interest. Trade accounts receivable are periodically evaluated for collectability based on past collectability of the insurance companies, government agencies, and customers’ accounts receivable during the related period which generally approximates 45% of total billings. Trade accounts receivable are recorded at this net amount.
Capital Leases
Costs associated with capitalized leases are capitalized and depreciated ratably over the term of the related useful life of the asset and/or the capital lease term.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. There are no patients/customers that represent 10% or more of the Company’s revenue or accounts receivable. Generally, the Company’s cash and cash equivalents are in checking accounts.
Property and Equipment
Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For consolidated financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 5 to 7 years. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized.
The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.
Convertible Notes
Convertible notes are regarded as compound instruments, consisting of a liability component and an equity component. The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized as additional paid-in capital and included in equity, net of income tax effects, and is not subsequently remeasured. After initial measurement, they are carried at amortized cost using the effective interest method.
Derivative Financial Instruments
The Company reviews the terms of convertible debt, equity instruments and other financing arrangements to determine whether there are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument liabilities exceed the total proceeds received, an immediate charge to income is recognized, in order to initially record the derivative instrument liabilities at their fair value. The discount from the face value of convertible debt instruments resulting from allocating some or all of the proceeds to the derivative instruments is amortized over the life of the instrument through periodic charges to income.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date. The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.
Fair Value of Assets and Liabilities
Fair value is the price that would be received from the sale of an asset or paid to transfer a liability (i.e. an exit price) in the principal or most advantageous market in an orderly transaction between market participants. In determining fair value, the accounting standards have established a three-level hierarchy that distinguishes between (i) market data obtained or developed from independent sources (i.e., observable data inputs) and (ii) a reporting entity’s own data and assumptions that market participants would use in pricing an asset or liability (i.e., unobservable data inputs). Financial assets and financial liabilities measured and reported at fair value are classified in one of the following categories, in order of priority of observability and objectivity of pricing inputs:
The fair value measurement level for an asset or liability is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs.
Stock-Based Compensation
The Company accounts for our stock based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
Income Taxes
The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse and are considered immaterial.
Recurring Fair Value Measurements
The carrying value of the Company’s financial assets and financial liabilities is their cost, which may differ from fair value. The carrying value of cash held as demand deposits, money market and certificates of deposit, marketable investments, accounts receivable, short-term borrowings, accounts payable and accrued liabilities approximated their fair value.
Net Income (Loss) per Share
Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Outstanding stock options, warrants and other dilutive securities are excluded from the calculation of diluted net loss per common share if inclusion of these securities would be anti-dilutive.
Recent Accounting Pronouncements
In September 2017, the FASB issued ASU 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842). The effective date for ASU 2017-13 is for fiscal years beginning after December 15, 2018. We are currently evaluating the impact of adopting ASU 2017-13 on our unaudited consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), which simplifies the goodwill impairment test. The effective date for ASU 2017-04 is for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of adopting ASU 2017-04 on our unaudited condensed consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018; however, early adoption is permitted with prospective application to any business development transaction. We are currently evaluating the impact of adopting ASU 2017-04 on our unaudited condensed consolidated financial statements.
The Company applied ASU 2015-03: Interest – Imputation of Interest, which simplifies the presentation of debt issuance costs, and netted debt issue costs previously reported as assets with the related liability for presentation purposes.
On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. The Company intends to adopt this guidance for the year ended December 31, 2017. The Company has not yet evaluated the impact the adoption this standard will have on its results of operations upon adoption.
In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements-Going Concern. The amendments in this update apply to all reporting entities and require an entity’s management, in connection with preparing financial statements for each annual and interim reporting period, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). This ASU is effective for annual periods ending after December 15, 2016. The Company adopted this standard for the year ended December 31, 2016. Based on the results of our analysis, no additional disclosures were required.
The Company has evaluated recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA and the SEC and we have not identified any that would have a material impact on the Company’s financial position, or statements.
Results of Operations
Comparison of Three Months Ended September 30, 2017March 31, 2022 and 20162021
The following table summarizes the changes in our results of operations for the three months ended September 30, 2017March 31, 2022 compared with the three months ended September 30, 2016:March 31, 2021:
Three Months Ended September 30, | Change | |||||||||||||||
2017 | 2016 | $ | % | |||||||||||||
Patient service revenue, net | $ | 480,723 | $ | 499,448 | $ | (18,725 | ) | -4 | % | |||||||
Salaries and benefits | 506,206 | 432,949 | 73,257 | 17 | % | |||||||||||
General and administrative | 480,614 | 513,404 | (32,790 | ) | -6 | % | ||||||||||
Depreciation and amortization | 6,056 | 5,718 | 338 | 6 | % | |||||||||||
(Loss) income from operations | (512,153 | ) | (452,623 | ) | (59,530 | ) | 13 | % | ||||||||
Loss on extinguishment of debt | (290,581 | ) | --- | (290,581 | ) | 100 | % | |||||||||
Financing cost | (32,324 | ) | --- | (32,324 | ) | 100 | % | |||||||||
Amortization of original issue and debt discounts on notes payable and convertible notes | (63,552 | ) | (100,187 | ) | 36,635 | -37 | % | |||||||||
Proceeds from settlement of lawsuit | --- | 38,236 | (38,236 | ) | -100 | % | ||||||||||
Change in fair value of derivative financial instruments | 5,412 | --- | 5,412 | 100 | % | |||||||||||
Interest expense | (27,124 | ) | (13,409 | ) | (13,715 | ) | 102 | % | ||||||||
Total other expenses | (408,169 | ) | (75,360 | ) | (332,809 | ) | 442 | % | ||||||||
Net loss | $ | (920,322 | ) | $ | (527,983 | ) | $ | (392,339 | ) | 74 | % |
Three Months Ended March 31, | Change | |||||||||||||||
2022 | 2021 | $ | % | |||||||||||||
Patient service revenue, net | $ | 1,375,685 | $ | 1,514,376 | $ | (138,691 | ) | 9 | % | |||||||
Subscription, consulting and event revenue | 84,218 | 87,655 | (3,437 | ) | 4 | % | ||||||||||
Product revenue | 146,969 | 182,663 | (35,694 | ) | 20 | % | ||||||||||
Total revenue | 1,606,872 | 1,784,694 | (177,822 | ) | 10 | % | ||||||||||
Operating Expenses and Costs | ||||||||||||||||
Practice salaries and benefits | 718,073 | 663,937 | 54,136 | 8 | % | |||||||||||
Other practice operating expenses | 562,651 | 730,784 | (168,133 | ) | 23 | % | ||||||||||
Medicare shared savings expenses | 227,729 | 211,507 | 16,222 | 8 | % | |||||||||||
Cost of product revenue | 160,811 | 168,596 | (7,785 | ) | 5 | % | ||||||||||
Selling, general and administrative expenses | 1,335,140 | 1,366,137 | (30,997 | ) | 2 | % | ||||||||||
Depreciation and amortization | 203,890 | 211,658 | (7,768 | ) | 4 | % | ||||||||||
Loss from operations | (1,601,422 | ) | (1,567,925 | ) | (33,497 | ) | 2 | % | ||||||||
Other Income (Expenses) | ||||||||||||||||
Loss on extinguishment of debt | — | (5,589,994 | ) | 5,589,994 | 100 | % | ||||||||||
Change in fair value of debt | — | (19,246 | ) | 19,246 | 100 | % | ||||||||||
Change in fair value of contingent acquisition consideration | 438,322 | (635,700 | ) | 1,074,022 | 169 | % | ||||||||||
Interest expense | (5,023 | ) | (10,588 | ) | 5,565 | 53 | % | |||||||||
Total other income (expenses) | 433,299 | (6,255,528 | ) | 6,688,827 | 107 | % | ||||||||||
Net loss | $ | (1,168,123 | ) | $ | (7,823,453 | ) | $ | 6,655,330 | 85 | % |
Revenue
Patient service revenue in the three months ended March 31, 2022 decreased by $18,725,$138,691, or 4%, from 20169% year-over-year, to 2017,$1,375,685, primarily as a result of decreased collections on similar gross billingpatient service revenue at our NWC practice of $199,205 due to the departure of a physician, offset by year-over-year increases at our NCFM and BTG practices of $58,190 and $2,324, respectively.
Subscription, consulting and event revenue in the impactthree months ended March 31, 2022 decreased by $3,437, or 4% year-over-year to $84,218. Consulting revenue of $77,594 was earned by the ACO/MSO Division in 2022, compared to $76,452 in the three months ended March 31, 2021. Subscription and event revenue of $6,624 and $11,113 in 2022 and 2021, respectively, was earned from office closure during Hurricane IrmaDigital Healthcare division subscription revenues and attendance fees for the Company’s annual healthcare summit.
Product revenue was $146,969 in September 2017.the three months ended March 31, 2022, compared to $182,663 in the three months ended March 31, 2021, a decrease of $35,694, or 20%. Product revenue was earned by the Medical Distribution Division, comprised of the operations of MOD.
SalariesOperating Expenses and Costs
Practice salaries and benefits increased by $73,257,$54,136, or 17%8%, to $718,073 in 2017the three months ended March 31, 2022 primarily as a result of increased salary expense associated with HLYK’sstaffing at our NCFM facility corresponding to an increase in patient visits in 2022.
Other practice operating costs decreased by $168,133, or 23%, to $562,651 in the three months ended March 31, 2022, due to reduced overhead at each of our facilities.
Medicare shared savings expenses increased by $16,222, or 8% to $227,729 in the three months ended March 31, 2022. Medicare shared savings expenses represent costs incurred to deliver Medicare shared savings revenue, including overhead and formationconsulting fees related to advising participating physician practices, as well as the physicians’ portion of any shared savings received by the HLYK sales team.ACO.
GeneralCost of product revenue was $160,811 in the three months ended March 31, 2022, a decrease of $7,785, or 5%, compared to the same period of 2021, corresponding the decrease in year-over-year sales.
Selling, general and administrative costs decreased by $32,790,$30,997, or 6%2%, to $1,335,140 in 2017the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily due to the one-timelower stock-based and cash-based consulting fees, and legal and commissionaccounting fees incurred in 20162022 compared to 2021, offset by more personnel and overhead costs in our corporate function in connection with our public listingcontinued expansion, as well as increased promotional and 2016 financing transactions.development costs associated with developing and marketing the HealthLynked Network and related applications.
Depreciation and amortization increaseddecreased the three months ended March 31, 2022 by $338,$7,768, or 6%4%, in 2017to $203,890 compared to the three months ended March 31, 2021, primarily as a result of new property and equipment acquisitions incertain fixed assets reaching the fourth quarterend of 2016 and the first three quarters of 2017.their depreciable lives.
Loss from operations increased by $59,530,$33,497, or 13%2%, to $1,601,422 in 2017the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily as a result of increasedlower patient service revenue and an increase in practice salaries benefits and overhead costs associated with preparing for product launch and initial public listing, and the impact from office closure during Hurricane Irma in September 2017, offset by one-time legal and commission fees incurred in 2016 in connection with our public listing and 2016 financing transactions.benefits.
Other Income (Expenses)
Loss on extinguishment of debt in 2017 arose from the issuancethree months ended March 31, 2021 was $5,589,994, primarily as a result of a January 2021 transaction pursuant to which the holder of convertible notes with a face value of $1,038,500 and $317,096 of accrued interest agreed to convert the notes pursuant to the original note terms and agreed to a leak-out provision on the received shares in exchange for a five-year warrant to purchase 1,000,00013,538,494 shares of HLYK common stock at an exercise price of $0.30 per share issued to the holder of the $550k Note in exchange for the extension of the maturity date of the note. Because the fair value of the warrants was greater than 10% of the present value of the remaining cash flows under the $550k Note and $50k Note, the transaction was treated as a debt extinguishment and reissuance of a new debt instrument,share. In connection with the fair value of the warrants of $290,581 recorded asconversion, we recognized a loss on debt extinguishment.
Financing cost arose from the issuanceextinguishment of three convertible promissory notes$5,463,492 in the third quarter of 2017 that reflected a floating conversion rate that gave rise to an ECF derivative instrument with a fair value greater than the face value of the notes. As a result,three months ended March 31, 2021, representing the excess of the fair value of the ECF derivative instrumentshares and warrant issued at conversion over the facecarrying value of the notes totaling $32,324host instrument and accrued interest. No loss on extinguishment of debt was recognized as “Loss at inception of convertible notes payable” atin the time of inception of the respective notes.
Amortization of original issue and debt discounts decreased by $36,635, or 37%, in 2017 as a result of the end of amortization of the $550k Note and the $50k Note in July 2017. These notes were amortized from their inception in July 2016 until early July 2017 with only small amortization amounts in third quarter 2017. These charges resulted from amortization of discounts against convertible notes related to an original issue discount, beneficial conversion feature, and warrants issued with convertible notes in 2016 and 2017.
three months ended March 31, 2022.
Proceeds from settlement of lawsuit were $38,236 in 2016, resulting from a one-time settlement of an employment dispute.
Change in fair value of derivative financial instruments was $5,412 in 2017 and resultsLosses from the change in fair value of derivative financial instruments embeddeddebt was $19,246 in the three months ended March 31, 2021. Such losses resulted from certain convertible promissory notes between inception of such derivative instruments and notes payable to related parties that, in previous periods, were extended and treated as an extinguishment and reissuance for accounting purposes, requiring these notes to be subsequently carried at fair value. The change in fair value at the end of the period.
Interest expense increased by $13,715, or 102%, in 2017 as a result of increased interest on new convertible notes issued in 2017, as well as on notes issued to DMD.
Total other expenses increased by $332,809, or 442%, in 2017 primarily as a result of a loss on extinguishment of debt in 2017 in the amount of $290,581 in 2017 stemming from warrants issued to extend the maturity debt on outstanding convertible promissory notes, loss at inception of convertible notes issued in 2017 in the amount of $32,324, as well as income of $38,236 from the settlement of a lawsuit in 2016.
Net loss increased by $392,339, or 74%, in 2017 primarily as a result of loss on extinguishment of debt in 2017, increased salaries, benefits and overhead costs associated with preparing for product launch and public listing in 2017, the impact from office closure during Hurricane Irma in September 2017, as well as amortization of debt discounts on convertible notes, and loss at inception of convertible notes issued in 2017.
Comparison of Nine Months Ended September 30, 2017 and 2016
The following table summarizes the changes in our results of operations for the nine months ended September 30, 2017 compared with the nine months ended September 30, 2016:
Nine Months Ended September 30, | Change | |||||||||||||||
2017 | 2016 | $ | % | |||||||||||||
Patient service revenue, net | $ | 1,473,639 | $ | 1,515,293 | $ | (41,654 | ) | -3 | % | |||||||
Salaries and benefits | 1,469,211 | 1,134,073 | 335,138 | 30 | % | |||||||||||
General and administrative | 1,369,018 | 1,148,564 | 220,454 | 19 | % | |||||||||||
Depreciation and amortization | 17,623 | 15,804 | 1,819 | 12 | % | |||||||||||
(Loss) income from operations | (1,382,213 | ) | (783,148 | ) | (599,065 | ) | 76 | % | ||||||||
Loss on extinguishment of debt | (290,581 | ) | --- | (290,581 | ) | 100 | % | |||||||||
Financing cost | (32,324 | ) | --- | (32,324 | ) | 100 | % | |||||||||
Amortization of original issue and debt discounts on notes payable and convertible notes | (194,120 | ) | (100,187 | ) | (93,933 | ) | 94 | % | ||||||||
Proceeds from settlement of lawsuit | --- | 38,236 | (38,236 | ) | -100 | % | ||||||||||
Change in fair value of derivative financial instruments | 5,412 | --- | 5,412 | 100 | % | |||||||||||
Interest expense | (64,921 | ) | (24,391 | ) | (40,530 | ) | 166 | % | ||||||||
Total other expenses | (576,534 | ) | (86,342 | ) | (490,192 | ) | 568 | % | ||||||||
Net loss | $ | (1,958,747 | ) | $ | (869,490 | ) | $ | (1,089,257 | ) | 125 | % |
Patient service revenue decreased by $41,654, or 3%, from 2016 to 2017, primarily as a result of primarily as a result of decreased collections on similar gross billing and the impact from office closure during Hurricane Irma in September 2017.
Salaries and benefits increased by $335,138, or 30%, in 2017 primarily as a result of increased salary expense associated with HLYK’s overhead and formation of the HLYK sales team.
General and administrative costs increased by $220,454, or 19%, in 2017 due primarily to the increase in legal, accounting and other professional and administrative costs associated with our preparation for the launch of the HealthLynked Network, as well as costs associated with our initial public listing.
Depreciation and amortization increased by $1,819, or 12%, in 2017 primarily as a result of new property and equipment acquisitions in the fourth quarter of 2016 and the first three quarters of 2017.
Loss from operations increased by $599,065, or 76%, in 2017 primarily as a result of increased salaries, benefits and overhead costs associated with HLYK’s overhead and formation of the HLYK sales team and initial public listing, as well as the impact from office closure during Hurricane Irma in September 2017.
Loss on extinguishment of debt in 2017 arose from the issuance of a warrant to purchase 1,000,000 shares of HLYK common stock at an exercise price of $0.30 per share issued to the holder of the $550k Note in exchange for the extension of the maturity date of the note. Because the fair value of the warrantseach reporting period was greater than 10% of the present value of the remaining cash flows under the $550k Note and $50k Note, the transaction was treated as a debt extinguishment and reissuance of a new debt instrument, with the fair value of the warrants of $290,581 recorded as a loss on debt extinguishment.
Financing cost arose from the issuance of three convertible promissory notes in the third quarter of 2017 that reflected a floating conversion rate that gave rise to an ECF derivative instrument with a fair value greater than the face value of the notes. As a result, the excess of the fair value of the ECF derivative instrument over the face value of the notes totaling $32,324 was recognized as “Loss at inception of convertible notes payable” at the time of inception of the respective notes.
Amortization of original issue and debt discounts increased by $93,933, or 94%, in 2017 as a result of amortization of new notes issued in 2017.
Proceeds from settlement of lawsuit were $38,236 in 2016, resulting from a one-time settlement of an employment dispute.
Change“Change in fair value of derivative financial instruments was $5,412debt.” After conversion of our remaining convertible notes outstanding in 2017January 2021, we had no further debt carried at fair value, and resultstherefore no change in fair value of debt in the three months ended March 31, 2022
Gain (loss) from the change in fair value of derivative financial instruments embeddedcontingent acquisition consideration decreased by $1,074,022, or 169%, to a gain of $438,322 in convertible promissory notes between inceptionthe three months ended March 31, 2022, compared to a loss of such derivative instruments and$635,700 in the endthree months ended March 31, 2021. Because contingent acquisition consideration related to our acquisition of MOD is payable in a fixed number of shares, changes in the fair value of the period.contingent acquisition consideration fluctuates with our share price. During the three months ended March 31, 2021, our share price increased substantially, resulting in an increase in the fair value of the contingent acquisition consideration liability and a corresponding loss from the change in fair value. During the three months ended March 31, 2022, our share price decreased substantially, resulting in a gain from the decrease in fair value of the liability.
Interest expense increaseddecreased by $40,530,$5,565, or 166%53%, to $5,023 for the three months ended March 31, 2022, compared to interest expense of $10,588 in 2017the three months ended March 31, 2021, as a result of increased interest on newthe repayment and conversion of convertible notes issuedand notes payable to related parties during 2020 and forgiveness of PPP loans in 2017,2021, leaving low-interest government loans as well as on notes issued to DMD.our only debt.
Total other expenses increasedincome (expenses) decreased by $490,192,$6,688,827, or 568%107%, to income of $433,299 in 2017the three months ended March 31, 2022 compared to expense of $6,255,528 in the three months ended March 31, 2021. The change was primarily a result of a $5,589,994 loss on extinguishment of debt associated with the retirement of our last remaining convertible notes payable in 2021, and a large gain from the change in fair value of contingent acquisition recognized in 2022 due principally to the fixed-share structure of the MOD contingent consideration.
Net loss decreased by $6,655,330, or 85%, to $1,168,123 in the three months ended March 31, 2022, compared to net loss of $7,823,453 in the three months ended March 31, 2021, primarily as a result of (i) a loss on extinguishment of debt of $5,589,994 in 20172021 associated with the retirement of our last remaining convertible notes payable, (ii) a $438,322 gain from the change in fair value of contingent acquisition recognized in 2022, as compared to a loss of $635,700 in 2021, due principally to the fair value impact of changes in our stock price on the fixed-share structure of the MOD contingent acquisition consideration, (iii) decreases in other practice operating costs in our Health Services division, offset by (iv) a decrease in patient services revenue, primarily at our NWC facility.
Seasonal Nature of Operations
We acquired CHM in May 2020. CHM’s primary source of revenue is derived from payments earned under the Medicare shared savings program. Such amounts are determined annually when we are notified by CMS of the amount of $290,581shared savings earned. Accordingly, we recognize Medicare shared savings revenue in 2017 stemming from warrants issuedthe period in which the CMS notifies us of the exact amount of shared savings to extendbe paid, which historically has occurred during the maturity debt on outstanding convertible promissory notes, higher amortizationthree-month period ended September 30 for the program year ended December 31 of the previous year. Medicare shared savings revenue for the program year ended December 31, 2020, for which we received payment and interest expense relatedrecognized revenue in September 2021, was $2,419,312. Medicare shared savings revenue for the program year ended December 31, 2019, for which we received payment and recognized revenue in September 2020, was $767,744. Future recognition of Medicare shared savings revenue is expected to new convertible promissory notes issuedresult in 2017, a loss at inceptionmaterial increase in our consolidated revenues in the third fiscal quarter of convertible notes issuedeach year compared to the first, second and fourth fiscal quarters. Likewise, in 2017the period in which we recognize Medicare shared savings revenue, we also determine the amount of $32,324, as well as incomeshared savings expense to be paid to physicians participating in our ACO. This expense is also expected to be recognized in the third fiscal quarter of $38,236 fromeach year and is expected to materially increase our total operating expenses in the settlementthird fiscal quarter compared to other quarters of a lawsuit in 2016.
Net loss increased by $1,089,257, or 125%, in 2017 primarily as a result of increased salaries, benefits and overhead costs associated with preparing for product launch and public listing in 2017, loss on extinguishment of debt in 2017, the impact from office closure during Hurricane Irma in September 2017, as well as higher amortization and interest expense related to new convertible promissory notes issued in 2017.fiscal year.
Liquidity and Capital Resources
Liquidity and Going Concern
During the second quarter of 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This update provided U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. Under this standard, we are required to evaluate whether there is substantial doubt about our ability to continue as a going concern each reporting period, including interim periods. In evaluating our ability to continue as a going concern, management considered the conditions and events that could raise substantial doubt about our ability to continue as a going concern within 12 months after our financial statements were issued (May 16, 2022). Management considered our current financial condition and liquidity sources, including current funds available, forecasted future cash flows and our obligations due before May 16, 2023.
We are subject to a number of risks, including uncertainty related to product development and generation of revenues and positive cash flow from our Digital Healthcare division and a dependence on outside sources of capital. The attainment of profitable operations is dependent on future events, including obtaining adequate financing to fulfill our growth and operating activities and generating a level of revenues adequate to support our cost structure.
We have experienced net losses and cash outflows from operating activities since inception. As of September 30, 2017, the CompanyMarch 31, 2022, we had acash balances of $1,926,714, working capital of $503,527 and an accumulated deficit of $1,536,307 and accumulated deficit $4,082,966.$33,373,312. For the ninethree months ended September 30, 2017, the CompanyMarch 31, 2022, we had a net loss of $1,958,747 and$1,168,123, net cash used by operating activities of $1,131,324. Net cash used in investing activities was $13,238. Net$1,342,918, and no cash provided by financing activities was $1,102,021, resulting principally from $548,356activities. We expect to continue to incur net losses and have significant cash outflows for at least the next 12 months.
Management has evaluated the significance of the conditions described above in relation to our ability to meet our obligations and concluded that, without additional funding, we will not have sufficient funds to meet our obligations within one year from the proceedsdate the condensed consolidated financial statements were issued.
On April 20, 2021, we filed a shelf registration statement on form S-3 that was declared effective by the Securities and Exchange Commission on April 26, 2021 (the “Shelf Registration”). The Shelf Registration registered for resale up to $50,000,000 of the sale of 4,469,514 shares ofour common stock, $308,470 proceeds from related party loans and $229,500 net proceeds from the issuance of convertible notes. Subsequent to September 30, 2017, the Company received additional $150,000 net proceeds from the sale of a convertible promissory note and $200,000 from the sale of 1,000,000stock. During August 2021, we sold 3,703,704 common shares with an attachedand 1,851,852 five-year warrant to purchase 666,666 shares of the Company’s common stock atwarrants with an exercise price of $0.30$0.65 to an institutional investor at an offering price of $0.54 per share.
The Company’s cash balance and revenues generated are not currently sufficient and cannot be projectedshare pursuant to cover its operating expenses for the next twelve monthsShelf Registration, generating gross proceeds of $2,000,000. We may still make sales of common stock up to an additional $48,000,000 under the Shelf Registration. Management intends to alleviate the conditions described above by raising additional capital from the date of this report. These matters raiseShelf Registration. However, there is no assurance that management’s plans will be successful. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry.
Without raising additional capital, either via the Shelf Registration or from other sources, there is substantial doubt about the Company’sour ability to continue as a going concern. Management’s plans include attempting to improve its business profitability and its ability to generate sufficient cash flow from its operations to meet its needs on a timely basis, obtaining additional working capital fundsconcern through equity and debt financing arrangements, and restructuring on-going operations to eliminate inefficiencies to raise cash balance in order to meet its anticipated cash requirements for the next twelve months from the date of this report. However, there can be no assurance that these plans and arrangements will be sufficient to fund the Company’s ongoing capital expenditures, working capital, and other requirements. Management intends to make every effort to identify and develop sources of funds. The outcome of these matters cannot be predicted at this time. There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all.
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital and achieve profitable operations.May 16, 2023. The accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilitieshave been prepared assuming that may result should the Company be unable towe will continue as a going concern.
During This basis of presentation contemplates the year ended December 31, 2016, HLYK (i) received proceedsrecovery of $374,000 fromour assets and the salesatisfaction of 6,167,500 sharesliabilities in the normal course of common stock, (ii) received net proceeds of $475,000 from the issuance of convertible promissory notes with a combined face value of $600,000, and (iii) entered into an Investment Agreement (the “Investment Agreement”) pursuant to which the investor has agreed to purchase up to $3,000,000 of HLYK common stock over a three-year period starting upon registration of the underlying shares, with such shares put to the investor by the Company pursuant to a specified formula that limits the number of shares able to be put to the investor to the number equal to the average trading volume of the Company’s common shares for the ten consecutive trading days prior to the put notice being issued. During the nine months ended September 30, 2017, the Company received $15,356 from the proceeds of the sale of 57,016 shares pursuant to the Investment Agreement.business.
The Company intendsWe intend that the longer term (i.e., beyond twelve months) cost of completing additional intended acquisitions, implementing itsour development and sales efforts related to the HealthLynked Network as well asand maintaining its existing and expanding overhead and administrative costs will be funded principallyfinanced from (i) cash on hand, (ii) profits generated by cashNCFM, BTG and CHM (including expected Medicare Shared Savings revenue projected to be received byannually in the Company fromthird fiscal quarter of each year), and (iii) the put rights associated with the Investment Agreement and supplemented by other funding mechanisms, including loans from related parties and convertible notes. The Company expects to repay its outstanding convertible notes –use of which $111,000 face value matures on January 22, 2018, $53,000 on April 15, 2018, $35,000 on June 15, 2018, $550,000 on July 7, 2018, and $50,000 on July 11, 2018, and $55,000 on September 11, 2018 – fromfurther outside funding sources, including but not limited to amounts available upon the exercise of the put rights granted to the Company under the Investment Agreement, sales of equity, loans from related parties and others or through the conversion of the notes into equity.sources. No assurances can be given that the Companywe will be able to access sufficientadditional outside capital in a timely fashion in order to repay the convertible notes before they mature.fashion. If necessary funds are not available, the Company’sour business and operations would be materially adversely affected and in such event, the Companywe would attempt to reduce costs and adjust itsour business plan.
Significant Liquidity EventsCOVID-19
Through September 30, 2017, we have funded our operations principally throughA novel strain of coronavirus, COVID-19, that was first identified in China in December 2019, has surfaced in several regions across the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. In March 2020, the World Health Organization declared the outbreak of COVID-19 a combination of related party debt and private placements of our common stock, as described below.
On July 7, 2016, we entered into three financing transactions as described below.pandemic. The transactions closed on July 11, 2016.
On May 22, 2017, we entered into a 10% fixed convertible secured promissory note with an investor with a face value of $111,000. The $111k Note matures on January 22, 2018. The $111k Note is convertible into sharesoutbreak of the Company’s common stock atpandemic is materially adversely affecting our employees, patients, communities and business operations, as well as the discretionU.S. economy and financial markets. The further spread of COVID-19, and the requirement to take action to limit the spread of the note holderillness, may impact our ability to carry out our business as usual and may materially adversely impact global economic conditions, our business and financial condition, including our potential to conduct financings on terms acceptable to us, if at a fixed price of $0.35 per share,all. The extent to which COVID-19 may impact our business will depend on future developments, which are highly uncertain and is secured by allcannot be predicted with confidence, such as the ultimate geographic spread of the Company’s assets. The Company received $100,000 net proceeds fromdisease, the note after an $11,000 original issue discount. At inception, the investors were also granted a five-year warrant to purchase 133,333 sharesduration of the Company’s common stock at an exercise priceoutbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of $0.75 per share.
Duringactions taken in the three months ended September 30, 2017,United States and other countries to contain and treat the disease. In response to COVID-19, we entered into a three separate floating conversion rate convertible secured promissory notes with a combined face value of $143,000, from which we received net proceeds of $129,500.
During 2016, we also sold 6,167,500 shares of common stockimplemented additional safety measures in private placement transactions, generating aggregate proceeds of $374,000. During the nine months ended September 30, 2017, we received an additional $533,000 from the sale of 4,412,498 shares of our common stock in private placement transactions. During the third quarter of 2017 we also madepatient services locations and our first draws on our $3,000,000 Investment Agreement totaling $15,356. Finally, we during 2017 we have borrowed $308,500 from our CEO Dr. Dent under 11 separate unsecured promissory notes.corporate headquarters.
Plan of operation and future funding requirements
Our plan of operations is to profitably operate NWCour Health Services business and continue to invest in our Digital Healthcare business, including our cloud-based online personal medical information and record archiving system, the “HealthLynked Network”, which enables patients and doctors to keep track of medical information via the Internet in a cloud based system.Network.”
During June 2017, we began a test-launch of the HealthLynked Network in three test markets in Florida, which continued through the third quarter of 2017. We intend to market the HealthLynked Network through top level sales efforts with our new VP of sales Jeffrey Cohen targeting large health systems, hospitals and universities. In addition, we will market via direct sales forcetelesales targeting physicians’ offices, direct to patient marketing, affiliated marketing campaigns, co-marketing with online medical suppliesour Medical Distribution businesses retailer MedOfficeDirect,MOD, and expanded southeast regional sales efforts. We intend that our initial primary sales strategy will be direct physician salestelesales through the use of regional salestelesales representatives whom we will hire as access to capital allows. In combination with our direct sales,telesales, we intend to also utilize Internet based marketing to increase penetration to targeted geographical areas. These campaigns will be focused on both physician providers and patient members.
We also intend to leverage MOD’s discounted medical supplies as an offering to our patient and physician members in both the HealthLynked Network and our ACO network and plans. If we fail to complete the development of, or successfully market, the HealthLynked Network, our ability to realize future increases in revenue and operating profits could be impacted, and our results of operations and financial position would be materially adversely affected.
WeCurrently, we are focusing on acquiring additional profitable ACOs with a concentration on physician-based ACOs in Florida, the Southeast, Texas, New Jersey and Arizona. ACOs’ objectives are to reduce patients’ healthcare costs while improving their health. Our initial targets are physician-based Florida Medicare ACOs. Profitable ACOs have shared savings, which are payments made by the Medicare governing body CMS to ACOs whose Medicare patients have aggregate total savings over the regional threshold for all Medicare patients in the territory and that meet CMS’ quality standards. Given HealthLynked’s goal to improve healthcare and reduce healthcare costs for all patients, we anticipate that we will need an additional $375,000 in eachthe ACO acquisition model can help us expand both physician and patient utilization of the fourth quarter of 2017 and first, second and third quarters of 2018 to properly execute our business plan. We anticipate that approximately 50% of this amount will be used for sales and marketing related costs and the remainder for executive compensation, IT expenses and legal and accounting expenses related to being a public company.
We intend that the cost of implementing our development and sales efforts related to the HealthLynked Network as well as maintainingwhile continuing to add incremental revenue and profit from to our existingHealth Services and expanding overhead and administrative costs, will be funded principally by cash received by us from the put rights associated with the $3,000,000 Investment Agreement.ACO/MSO business units. We expectplan to repay outstanding convertible notes from outside funding sources, including but not limitedraise additional capital to amounts available upon the exercise of the put rights granted to us under the Investment Agreement, sales offund our equity, loans from related parties and others and the conversion of their notes to equity. No assurances can be given that we will be able to access sufficient outside capital in a timely fashion in order to repay the convertible notes before they mature. In order to access cash available under the Investment Agreement, our common stock must be listed on a recognized stock exchange or market and the shares underlying the arrangement must be subject to an effective registration statement. On May 10, 2017, our stock began trading on the OTCQB, which qualifies as a recognized stock exchange or market pursuant to the terms of the Investment Agreement, under the symbol “HLYK.” Although we have met the requirements to utilize the funds available under the Investment Agreement, there can be no assurances that we will be able to continue to meet these requirements. Additionally, the amount available to us upon the exercise of the put rights granted to us under the Investment Agreement is dependent upon the trading volume of our stock. Between May 22, 2017 and September 30, 2017, our daily trading volume averaged only about 6,800 shares per day. Until our stock reaches more substantial volumes, the amounts available to us upon the exercise of the put rights granted to us under the Investment Agreement will not be sufficient to meet our capital requirements. If we are unable to access sufficient funds upon the exercise of the put rights granted to us under the Investment Agreement, then we will be required to seek alternative financing including additional equity and debt financing similar to what we have raised to date. There can be no assurances that such alternative financing sources will be available. If necessary funds are not available, our business and operations would be materially adversely affected and in such event, we would attempt to reduce costs and adjust our business plan.
ongoing acquisition strategy.
Historical Cash Flows
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Net cash (used in) provided by: | ||||||||
Operating activities | $ | (1,342,918 | ) | $ | (1,216,959 | ) | ||
Investing Activities | (22,014 | ) | (7,399 | ) | ||||
Financing activities | — | 4,403,902 | ||||||
Net increase (decrease) in cash | $ | (1,364,932 | ) | $ | 3,179,544 |
Historical Cash Flows
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Net cash (used in) provided by: | ||||||||
Operating activities | $ | (1,131,324 | ) | $ | (496,441 | ) | ||
Investing Activities | (13,238 | ) | (12,611 | ) | ||||
Financing activities | 1,102,021 | 803,486 | ||||||
Net increase (decrease) in cash | $ | (42,541 | ) | $ | 294,434 |
Operating Activities– During the ninethree months ended September 30, 2017,March 31, 2022, we used cash from operating activities of $1,131,324,$1,342,918, as compared with $496,441$1,216,959 in the same period of 2016.three months ended March 31, 2021. The increasedincrease in cash usage results from higher losses resulting primarily from increased salariesselling, general and benefits, as well an increase in sales, legal, accounting and other overheadadministrative costs associated with preparing for product launch and public listing in 2017.increased related to our continued expansion.
Investing Activities – Our business isDuring the three months ended March 31, 2022, we used $22,014 in investing activities for the acquisition of computers and office equipment. During the three months ended March 31, 2021, we used $7,399 in investing activities for the acquisition of computers and office equipment.
Financing Activities – During the three months ended March 31, 2022, we did not capital intensive, and as suchhave any cash flows from investingfinancing activities. Cash generated from financing activities are minimal in each period. Capital expenditures of $13,238 in the nine months ended September 30, 2017 and $12,611 in the nine months ended September 30, 2016 are comprised solely of computer equipment and furniture.
Financing Activities– During the nine months ended September 30, 2017, we realized $548,356 proceeds from sales of our common stock, $308,470 from related party loans, $229,500 from the issuance of convertible notes payable, and $75,010 from the issuance of notes payable. We also made repayments on loans from related party loans2021 in the amount of $11,192, paid capital lease obligations$4,403,902 was comprised of $13,761, and repaid notes payable in the amount of $34,362. During the nine months ended September 30, 2016, we received proceeds of $475,000 from issuance of convertible promissory notes, $374,000$4,389,361 from the sale of common stock pursuant to private placements and $176,500 from related party loans. We also made repayments of $123,273 against related party loans, $84,980 against bank loans payable,puts under the Investment Agreement and $13,761 against capital lease obligations. Since September 30, 2017 the company raised $400,000 in addition capital.
Exercise of Warrants and Options
There were no$65,650 proceeds generated from the exercise of options and warrants, or options duringoffset by repayments against a vendor note in the nine months ended September 30, 2017.
Other Outstanding Obligations at September 30, 2017
Warrants
Asamount of September 30, 2017, 19,566,389 shares of our Common Stock are issuable pursuant to the exercise of warrants with exercise prices ranging from $0.05 to $1.00.$51,109.
Options
As of September 30, 2017, 2,349,996 shares of our Common Stock are issuable pursuant to the exercise of options with exercise prices ranging from $0.08 to $0.20.
Off Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable Securities and Exchange Commission rules.
Contractual Obligations
Our contractual obligations as of September 30, 2017 were as follows:
Operating | Capital | Total | ||||||||||
Leases | Leases | Commitments | ||||||||||
2017 (October to December) | $ | 72,227 | $ | 4,587 | $ | 76,814 | ||||||
2018 | 281,460 | 18,348 | 299,808 | |||||||||
2019 | 273,856 | 18,348 | 292,204 | |||||||||
2020 | 162,055 | 3,058 | 165,113 | |||||||||
2021 | --- | --- | --- | |||||||||
Total | $ | 789,598 | $ | 44,341 | $ | 833,939 |
Operating lease commitments relate to three leases in Naples, Florida. First, the Company entered into an operating lease for its main office in Naples, Florida. The lease commenced on August 1, 2013 and expires July 31, 2020. The lease is for a 6901 square-foot space. The base rent for the first full year of the lease term is $251,287 per annum with increases during the period. Second, the Company entered into another operating lease in the same building for an additional 361 square feet space for use of the medical equipment for the same period. The base rent for the first full year of the lease term is $13,140 per annum. Third, the Company entered into an agreement with MOD pursuant to which the Company will pay rent to MOD in the amount of $2,040 per month for office space in MOD’s facility used by the Company and its employees. The agreement is effective from January 1, 2017 through July 31, 2018.
Capital lease commitments are comprised of a capital equipment finance lease for Ultra Sound equipment with Everbank. There was no interest on this lease. The monthly payment is $1,529 for 60 months ending in March 2020.
Item 3. Quantitative and qualitative disclosuresQualitative Disclosures about market riskMarket Risk
Pursuant to Item 305(e) of Regulation S-K (§229.305(e)), theThe Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined byin Rule 229.10(f)(1).
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
AsWe maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) promulgated under the Securities Exchange Act of September 30, 2017,1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, assessedincluding our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our internal control over financial reportingdisclosure controls and procedures as of March 31, 2022 based on the criteria for effective internal control over financial reporting establishedframework in Internal Control--Integrated Framework“Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments.(COSO) in 2013. Based on that evaluation, theyour management concluded that during the period covered by this report, such internalour disclosure controls and procedures were not effective to detect the inappropriate applicationas of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.March 31, 2022.
The material weaknesses consist of controls associated with segregation of duties and a lack of written policies and procedures for internal controls. To address the material weaknesses, we performed additional analyses and other post-closing procedures to ensure that our condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934)Act) during the three and nine monthsfiscal quarter ended September 30, 2017March 31, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
We are not aware of any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
Item 1A. Risk Factors
The Company is not required to provide the information required by this Itemitem as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Except as previously disclosed in a Current Report on Form 8-K, or as set forth below, the Company has not sold securities that were not registered under the Securities Act of 1933, as amended (the “Securities Act”), during the period covered by this report.
During July 2017, the Company sold 45,833 shares of common stock to three investors. The Company received $13,000 in proceeds from the sale. The shares were issued at a share price of $0.20 per share with respect to 27,500 shares and at $0.30 per share with respect to 38,333 shares.
The sales of the above securities were exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act, as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
None.
Item 6. Exhibits
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* | Filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: November 14, 2017May 16, 2022
HEALTHLYNKED CORP. | |||
By: | /s/ Michael Dent | ||
Name: | Michael Dent | ||
Title: | Chief Executive Officer and Chairman (Principal Executive Officer) |
By: | /s/ George O’Leary | ||
Name: | George O’Leary | ||
Title: | Chief Financial Officer (Principal Financial Officer) |
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