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 ended ~~September 30, 2021~~March 31, 2022

☐ 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.)~~

(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 every Interactive Data File required to be submitted 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 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 15, 2021,~~May 13, 2022, there were ~~237,769,723~~238,983,761 shares of the ~~issuer's~~issuer’s common stock, par value $0.0001, outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

September 30, December 31,
2021 2020
ASSETS (Unaudited)
Current Assets
Cash $ 5,448,791 $ 162,184
Accounts receivable, net of allowance for doubtful accounts of $13,972 and $13,972 as of September 30, 2021 and December 31, 2020, respectively 112,983 87,153
Inventory 106,906 95,200
Prepaid expenses and other 68,836 59,003
Total Current Assets 5,737,516 403,540

Property, plant and equipment, net of accumulated depreciation of $258,222 and $177,457 as of September 30, 2021 and December 31, 2020, respectively 368,997 437,286
Intangible assets, net of accumulated amortization of $694,450 and $151,776 as of September 30, 2021 and December 31, 2020, respectively 5,059,088 5,601,762
Goodwill 1,148,105 1,148,105
ROU lease assets and deposits 648,406 435,855

Total Assets $ 12,962,112 $ 8,026,548

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities
Accounts payable and accrued expenses $ 1,761,162 $ 1,891,749
Contract liabilities 30,535 89,425
Lease liability, current portion 292,844 150,251
Due to related party, current portion 300,600 300,600
Government and vendor notes payable, current portion --- 411,427
Convertible notes payable, net of original issue discount and debt discount of $-0- and $-0- as of September 30, 2021 and December 31, 2020, respectively --- 1,336,350
Contingent acquisition consideration, current portion 282,211 701,961
Total Current Liabilities 2,667,352 4,881,763

Long-Term Liabilities
Government and vendor notes payable, long term portion 450,000 722,508
Contingent acquisition consideration, long term portion 764,501 798,479
Lease liability, long term portion 309,799 273,790

Total Liabilities 4,191,652 6,676,540

Shareholders’ Equity
Common stock, par value $0.0001 per share, 500,000,000 shares authorized, 235,703,829 and 187,967,881 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 23,570 18,797
Series B convertible preferred stock, par value $0.001 per share, 20,000,000 shares authorized, 2,750,000 and -0- shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 2,750 2,750
Common stock issuable, $0.0001 par value; 2,517,458 and 2,150,020 shares as of September 30, 2021 and December 31, 2020, respectively 728,368 262,273
Additional paid-in capital 38,497,916 22,851,098
Accumulated deficit (30,482,144 ) (21,784,910 )
Total Shareholders’ Equity 8,770,460 1,350,008

Total Liabilities and Shareholders’ Equity $ 12,962,112 $ 8,026,548
HEALTHLYNKED CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
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 CORP.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended
March 31,
2021 2020 2021 2020 2022 2021
Revenue
Patient service revenue, net $ 1,394,356 $ 1,054,806 $ 4,379,282 $ 3,502,836 $ 1,375,685 $ 1,514,376
Medicare shared savings revenue 2,419,312 767,744 2,419,312 767,744
Consulting and event revenue 69,595 217,605 229,114 268,025
Subscription, consulting and event revenue 84,218 87,655
Product revenue 161,456 --- 512,325 --- 146,969 182,663
Total revenue 4,044,719 2,040,155 7,540,033 4,538,605 1,606,872 1,784,694

Operating Expenses and Costs
Practice salaries and benefits 739,024 590,690 2,305,993 1,910,897 718,073 663,937
Other practice operating expenses 549,086 548,667 1,790,874 1,633,380 562,651 730,784
Medicare shared savings expenses 1,748,585 759,848 2,157,555 824,084 227,729 211,507
Cost of product revenue 145,432 --- 474,026 --- 160,811 168,596
Selling, general and administrative expenses 1,147,591 958,874 3,661,206 2,116,159 1,335,140 1,366,137
Depreciation and amortization 205,311 25,151 623,438 74,811 203,890 211,658
Total Operating Expenses and Costs 4,535,029 2,883,230 11,013,092 6,559,331 3,208,294 3,352,619

Loss from operations (490,310 ) (843,075 ) (3,473,059 ) (2,020,726 ) (1,601,422 ) (1,567,925 )

Other Income (Expenses)
Loss on sales of marketable securities --- (281,606 ) --- (281,606 )
Gain (loss) on extinguishment of debt --- (450,999 ) (4,957,168 ) (1,347,371 )
Loss on extinguishment of debt — (5,589,994 )
Change in fair value of debt --- (79,062 ) (19,246 ) (198,764 ) — (19,246 )
Amortization of original issue and debt discounts on notes payable and convertible notes --- (65,816 ) --- (530,930 )
Change in fair value of derivative financial instruments --- 12,802 --- 739,485
Change in fair value of contingent acquisition consideration 126,411 45,996 (234,678 ) 687 438,322 (635,700 )
Interest income (expense) (4,118 ) (72,535 ) (13,083 ) (193,134 )
Interest expense (5,023 ) (10,588 )
Total other income (expenses) 122,293 (891,220 ) (5,224,175 ) (1,811,633 ) 433,299 (6,255,528 )

Net loss before provision for income taxes (368,017 ) (1,734,295 ) (8,697,234 ) (3,832,359 ) (1,168,123 ) (7,823,453 )

Provision for income taxes --- --- --- --- — —

Net loss $ (368,017 ) $ (1,734,295 ) $ (8,697,234 ) $ (3,832,359 ) $ (1,168,123 ) $ (7,823,453 )

Deemed dividend - amortization of beneficial conversion feature and down round adjustment to warrants (88,393 ) (63,862 ) (265,179 ) (63,862 ) (88,393 ) (88,393 )

Net loss to common stockholders $ (456,410 ) $ (1,798,157 ) $ (8,962,413 ) $ (3,896,221 )
Net loss to common shareholders $ (1,256,516 ) $ (7,911,846 )

Net loss per share to common stockholders, basic and diluted:
Net loss per share to common shareholders, basic and diluted:
Basic $ (0.00 ) $ (0.01 ) $ (0.04 ) $ (0.03 ) $ (0.01 ) $ (0.04 )
Fully diluted $ (0.00 ) $ (0.01 ) $ (0.04 ) $ (0.03 ) $ (0.01 ) $ (0.04 )

Weighted average number of common shares:
Basic 232,203,244 147,366,619 224,658,709 129,234,540 238,008,478 213,279,052
Fully diluted 232,203,244 147,366,619 224,658,709 129,234,540 238,008,478 213,279,052
See the accompanying notes to these Unaudited Condensed Consolidated Financial Statements

HEALTHLYNKED CORP.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2022 AND MARCH 31, 2021
(UNAUDITED)
Number of Shares Common Additional Total Number of Shares Common Additional Total
Shareholders’
Common Preferred Common Preferred Stock Paid-in Accumulated 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
Stock Stock Stock Stock Issuable Capital Deficit Equity (Deficit)
(#) (#) ($) ($) ($) ($) ($) ($)
Balance at December 31, 2020 187,967,881 2,750,000 18,797 2,750 262,273 22,851,098 (21,784,910 ) 1,350,008 187,967,881 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 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 — — — — 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 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 — — — — — 3,201,138 — 3,201,138
Fair value of warrants issued for professional services --- --- --- --- --- 32,426 --- 32,426 — — — — — 32,426 — 32,426
Consultant and director fees payable with common shares and warrants 475,000 --- 48 --- 114,500 122,781 --- 237,329 475,000 — 48 — 114,500 122,781 — 237,329
Shares and options issued pursuant to employee equity incentive plan 240,310 --- 24 --- (14,956 ) 52,337 --- 37,405 240,310 — 24 — (14,956 ) 52,337 — 37,405
Exercise of stock warrants 9,047,332 --- 905 --- 62,500 613,316 --- 676,721 9,047,332 — 905 — 62,500 613,316 — 676,721
Exercise of stock options 12,500 --- 1 --- 3,149 --- 3,150 12,500 — 1 — 3,149 — 3,150
Net loss --- --- --- --- --- --- (7,823,453 ) (7,823,453 ) — — — — — — (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 ) 6,165,633 226,075,381 2,750,000 22,608 2,750 424,317 35,324,321 (29,608,363 ) 6,165,633

Sales of common stock 374,177 --- 37 --- --- 177,642 --- 177,679
Fair value of warrants allocated to proceeds of common stock --- --- --- --- --- 82,320 --- 82,320
Fair value of warrants issued for professional services --- --- --- --- --- 3,603 --- 3,603
Consultant and director fees payable with common shares and warrants 93,492 --- 9 --- 68,807 17,990 --- 86,806
Shares and options issued pursuant to employee equity incentive plan 875,047 --- 88 --- (147,791 ) 211,358 --- 63,655
Exercise of stock warrants 1,225,000 --- 123 --- 62,500 152,378 --- 215,001
Exercise of stock options 133,000 --- 13 --- --- 13,287 --- 13,300
Net loss --- --- --- --- --- --- (505,764 ) (505,764 )

Balance at June 30, 2021 228,776,097 2,750,000 22,878 2,750 407,833 35,982,899 (30,114,127 ) 6,302,233

Sales of common stock 4,703,704 --- 470 --- --- 1,608,874 --- 1,609,344
Fair value of warrants allocated to proceeds of common stock --- --- --- --- --- 690,577 --- 690,577
Contingent acquisition consideration issuable --- --- --- --- 366,300 --- --- 366,300
Fair value of warrants issued for professional services --- --- --- --- --- 3,603 --- 3,603
Consultant and director fees payable with common shares and warrants 8,750 --- 1 --- 84,785 4,942 --- 89,728
Shares and options issued pursuant to employee equity incentive plan 375,000 --- 37 --- (5,550 ) 25,955 --- 20,442
Exercise of stock warrants 1,840,278 --- 184 --- (125,000 ) 181,066 --- 56,250
Net loss --- --- --- --- --- --- (368,017 ) (368,017 )

Balance at September 30, 2021 235,703,829 2,750,000 23,570 2,750 728,368 38,497,916 (30,482,144 ) 8,770,460
See the accompanying notes to these Unaudited Condensed Consolidated Financial Statements

~~HEALTHLYNKED CORP.~~
~~CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)~~
~~NINE MONTHS ENDED SEPTEMBER 30, 2020~~
~~(UNAUDITED)~~
Number of Shares Common Additional Total
Common Preferred Common Preferred Stock Paid-in Accumulated Shareholders’
Stock Stock Stock Stock Issuable Capital Deficit Equity (Deficit)
(#) (#) ($) ($) ($) ($) ($) ($)
Balance at December 31, 2019 109,894,490 --- 10,990 --- 159,538 13,016,446 (16,029,654 ) (2,842,680 )

Sale of common stock 4,187,566 --- 419 --- (59,000 ) 407,181 348,600
Fair value of warrants allocated to proceeds of common stock --- --- --- --- --- 88,833 --- 88,833
Conversion of convertible notes payable to common stock 4,672,612 --- 467 --- 51,652 600,441 --- 652,560
Consultant and director fees payable with common shares and warrants --- --- --- --- 60,212 6,666 --- 66,878
Shares and options issued pursuant to employee equity incentive plan 132,500 --- 13 --- (7,161 ) 45,724 --- 38,576
Net loss --- --- --- --- --- --- (580,216 ) (580,216 )

Balance at March 31, 2020 118,887,168 --- 11,889 --- 205,241 14,165,291 (16,609,870 ) (2,227,449 )

Acquisition of Cura Health Management LLC 2,240,838 --- 224 --- --- 201,451 --- 201,675
Sale of common stock 3,180,312 --- 318 --- 24,651 228,808 --- 253,777
Fair value of warrants allocated to proceeds of common stock --- --- --- --- --- 33,482 --- 33,482
Conversion of convertible notes payable to common stock 6,669,320 --- 667 --- (51,652 ) 584,268 --- 533,283
Consultant and director fees payable with common shares and warrants 111,110 --- 11 --- 34,705 8,989 --- 43,705
Shares and options issued pursuant to employee equity incentive plan 163,027 --- 16 --- 39,397 --- 39,413
Net loss --- --- --- --- --- --- (1,517,848 ) (1,517,848 )
Balance at June 30, 2020 131,251,775 --- 13,125 --- 212,945 15,261,686 (18,127,718 ) (2,639,962 )

Contingent acquisition consideration issued 1,835,626 --- 184 --- 292,599 --- 292,783
Sales of common stock 4,829,289 --- 483 --- (23,901 ) 340,582 --- 317,164
Fair value of warrants allocated to proceeds of common stock --- --- --- --- --- 57,444 --- 57,444
Sale of common and preferred stock in exchange for marketable securities 24,522,727 2,750,000 2,452 2,750 --- 3,061,687 3,066,889
Conversion of convertible notes payable to common stock 2,855,191 --- 286 --- --- 479,387 --- 479,673
Gain on extinguishment of related party debt allocated to additional paid in capital --- --- --- --- --- 283,862 --- 283,862
Consultant and director fees payable with common shares and warrants 1,003,751 --- 100 --- (6,952 ) 136,611 --- 129,759
Shares and options issued pursuant to employee equity incentive plan 529,465 --- 53 --- --- 98,448 --- 98,501
Net loss --- --- --- --- --- --- (1,734,295 ) (1,734,295 )
Balance at September 30, 2020 166,827,824 2,750,000 16,683 2,750 182,092 20,012,306 (19,862,013 ) 351,818
~~See the accompanying notes to these Unaudited Condensed Consolidated Financial Statements~~

HEALTHLYNKED CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

Nine Months Ended
September 30,

2021 2020
Cash Flows from Operating Activities
Net loss $ (8,697,234 ) $ (3,832,359 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 623,438 74,811
Stock based compensation, including amortization of prepaid fees 574,998 436,038
Amortization of original issue discount and debt discount on convertible notes --- 530,930
Loss on sales of marketable securities --- 281,606
Change in fair value of derivative financial instruments --- (739,485 )
Loss on extinguishment of debt 4,957,168 1,347,371
Change in fair value of debt 19,246 198,764
Change in fair value of contingent acquisition consideration 234,678 (687 )
Changes in operating assets and liabilities:
Accounts receivable (25,831 ) (20,297 )
Inventory (11,706 ) (34,740 )
Prepaid expenses and deposits (40,516 ) 51,575
ROU lease assets 78,835 200,372
Accounts payable and accrued expenses 800,732 615,434
Lease liability (82,102 ) (197,877 )
Due to related party, current portion --- 46,370
Contract liabilities (58,890 ) (52,321 )
Net cash used in operating activities (1,627,184 ) (1,094,495 )

Cash Flows from Investing Activities
Proceeds from sale of marketable securities --- 2,740,806
Acquisition, net of cash acquired --- (164,005 )
Payment of contingent acquisition consideration (322,106 ) (137,390 )
Acquisition of property and equipment (12,475 ) (13,541 )
Net cash (used in) provided by investing activities (334,581 ) 2,425,870

Cash Flows from Financing Activities
Proceeds from sale of common stock 6,949,281 1,099,300
Proceeds from exercise of options and warrants 350,200 ---
Proceeds from issuance of convertible notes --- 827,500
Repayment of convertible notes --- (1,882,405 )
Proceeds from related party loans --- 149,000
Repayment of related party loans --- (967,756 )
Proceeds from government loans --- 1,045,669
Repayment of vendor loans payable (51,109 ) ---
Net cash provided by financing activities 7,248,372 271,308

Net increase in cash 5,286,607 1,602,683
Cash, beginning of period 162,184 110,441

Cash, end of period $ 5,448,791 $ 1,713,124
~~(continued)~~
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 CORP.~~
~~CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS~~
~~(UNAUDITED)~~

Nine Months Ended
September 30,

2021 2020
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 232 $ 202,768
Cash paid during the period for income tax $ --- $ ---
Schedule of non-cash investing and financing activities:
Forgiveness of government loans $ 632,826 $ ---
Common stock issuable issued during period $ 192,547 $ 66,161
Fair value of warrants issued for professional service $ 39,632 $ ---
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 $ 1,665,516
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 $ ---
Contingent acquisition consideration payable in common stock $ 366,300 $ ---
Initial derivative liability and fair value of beneficial conversion feature and original issue discount allocated to proceeds of variable convertible notes payable $ --- $ 211,497
Adoption of lease obligation and ROU asset $ --- $ 219,744
Fair value of shares issued as initial acquisition consideration $ --- $ 201,675
Fair value of shares issued as contingent acquisition consideration $ --- $ 292,783
Fair value of contingent acquisition consideration issued $ --- $ 1,057,785
Derivative liabilities written off with repayment of convertible notes payable $ --- $ 328,000
Derivative liabilities written off with conversion of convertible notes payable $ --- $ 135,300
Reduction in contingent acquisition consideration $ --- $ 200,328
Fair value of marketable securities received as consideration for sale of common and preferred shares $ --- $ 3,006,889
Gain on extinguishment of related party debt allocated to additional paid in capital $ --- $ 283,862
~~See the accompanying notes to these Unaudited Condensed Consolidated Financial Statements~~

HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2021~~MARCH 31, 2022
(UNAUDITED)

NOTE 1 - BUSINESS AND BUSINESS PRESENTATION

HealthLynked Corp. (the “Company”) was incorporated in the State of Nevada on August 4, 2014. On September 2, 2014, the Company filed Amended and Restated Articles of Incorporation with 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 common stock to 500,000,000 shares.

~~As of September 30, 2021, the Company operated~~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 the Medical Distribution Division. The 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, (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 ~~opened in January 2020~~ 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,” which enables patients and doctors to keep track of medical information via the Internet in a cloud-based system. The ACO/MSO Division is comprised of the ~~business acquired~~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 virtual distributor of discounted medical supplies selling to both consumers and medical practices throughout the 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 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, ~~2020~~2021 and ~~2019,~~2020, respectively, which are included in the Company’s Form 10-K, filed with the United States Securities and Exchange Commission on March 31, ~~2021.~~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, 2021~~March 31, 2022 are not necessarily indicative of results for the entire year ending December 31, ~~2021.~~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 consolidated financial statements follows:

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP.

All amounts referred to in the notes to the consolidated financial statements are in United States Dollars ($) unless stated otherwise.

HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2021~~MARCH 31, 2022
(UNAUDITED)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP 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 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 CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2021~~MARCH 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 ~~$15,966~~$22,461 and ~~$35,779~~$42,530 as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~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. The Company was notified of the amount of Medicare shared savings and received payment for plan year 2020 in September 2021 and for plan year 2019 in September 2020. Accordingly, the Company recognized Medicare shared savings revenue of $2,419,312 and $767,744 in the three and nine months ended September 30, 2021 and 2020, respectively. 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 ~~$47,864~~$25,000 as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~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
~~SEPTEMBER 30, 2021~~MARCH 31, 2022
(UNAUDITED)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Product Revenue

Revenue is derived from the distribution of medical products that are sourced from a third party. The Company recognizes revenue at a point in time when title transfers to customers and the Company has no further obligation to provide services related to such products, which occurs 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 it 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 were ~~$14,569~~$10,887 and ~~$5,782~~$5,308 as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. There were no contract assets as of ~~September 30, 2021~~March 31, 2022 or December 31, ~~2020.~~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 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 United States.

The Company maintains a return policy that allows customers to return a product within a specified period of time prior to and subsequent to the expiration date of the product. The Company analyzes the need for a product return allowance at the end of each period based on eligible products. Product return allowance was ~~$3,919~~$9,526 and ~~$26,839~~$14,834 and as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.
Contract Liabilities

Contract liabilities represent payments from customers for consulting services, patient services and medical products that precede the Company’s service or product fulfillment performance obligation. The Company’s contract liabilities balance was ~~$30,535~~$33,348 and ~~$89,425~~$72,838 as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~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 payment 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 year following the completion of the program year. ~~The Company received~~Because of the timing of recognition of Medicare shared savings ~~payments and recognized~~ revenue, ~~of $2,419,312 for plan year 2020 in September 2021 and $767,744 for plan year 2019 in September 2020. Of the~~there was no Medicare shared savings ~~payments received, $979,736 and $388,884 were recognized as~~revenue or related provider shared savings expense recognized in the ~~quarter~~three months ended March 31, 2022 and ~~year-to-date periods ended September 30, 2021 and 2020, respectively, and are included in “Medicare shared savings expenses” on the accompanying Condensed Consolidated Statement of Operations.~~2021.

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 at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had ~~$4,205,870~~$1,666,580 and ~~$18,227~~$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 ~~48.1%~~48% of total billings. Trade accounts receivable are recorded at this net amount. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company’s gross patient services accounts receivable were ~~$245,148~~$174,493 and ~~$165,464,~~$193,363, respectively, and net patient services accounts receivable were ~~$111,658~~$76,890 and ~~$71,655,~~$86,287, respectively, based upon net reporting of accounts receivable. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company’s allowance of doubtful accounts was $13,972 and $13,972, respectively. ~~The Company also had $-0- and $15,498 accounts receivable related to amounts billed under consulting contracts as of September 30, 2021 and December 31, 2020, respectively.~~

HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2021~~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.

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the 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 87 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 contract, 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 ~~or nine~~ months ended ~~September 30, 2021 or 2020.~~March 31, 2022 and 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, which was acquired by the Company in October 2020.~~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
~~SEPTEMBER 30, 2021~~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.

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. Convertible notes for which the maturity date has been extended and that qualify for debt extinguishment treatment are recorded at fair value on the extinguishment date and then revalued at the end of each reporting period, with the change 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 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 Company accounts for forgiveness of government loans pursuant to FASB ASC 470, “Debt,” (“ASC 470”). Pursuant to ASC 470, loan forgiveness is recognized in earnings as a gain on extinguishment of debt when the debt is legally released by the lender.

~~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.

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~
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 data;

● 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 liability.

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.

~~Prior to January 1, 2020, the~~
HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company ~~utilized the closed-form Black-Scholes~~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. ~~Effective January 1, 2020, the Company changed to a binomial lattice option pricing model.~~ The Company believes that the binomial lattice model results in ~~a better~~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 ~~fair~~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-based compensation to employees and nonemployees 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 its 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. ~~Effective January 1, 2020, the~~The Company uses a binomial lattice pricing model to estimate the fair value of options and warrants granted. ~~In prior periods, the Company used the Black-Scholes pricing model.~~

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~
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~~income tax has been provided for the three ~~or nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~or 2020,~~ 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 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 ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ 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, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, potentially dilutive securities were comprised of (i) ~~60,136,992~~59,366,992 and ~~51,352,986~~59,796,992 warrants outstanding, respectively, (ii) ~~3,013,750~~3,306,250 and ~~3,111,750~~3,456,250 stock options outstanding, respectively, (iii) ~~-0-~~232,036 and ~~10,298,333 shares issuable upon conversion of convertible notes, respectively, (iv) 90,000 and 200,000~~302,050 unissued shares subject to future vesting requirements granted pursuant to the Company’s Employee Incentive Plan, and ~~(v)~~(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.

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~
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. ~~Effective January 1, 2020, the~~The Company uses a binomial lattice pricing model to estimate the fair value of compensation options and warrants. ~~In prior periods, the Company used the Black-Scholes pricing model.~~ 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 ~~14,~~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 Accounting Pronouncements~~

HEALTHLYNKED CORP.
~~In December 2019, the FASB issued ASU 2019-12~~ ~~Simplifying the~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting ~~for Income Taxes~~, which eliminates the need for an organization to analyze whether the following apply in a given period: (1) exception to the incremental 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 effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company does not expect that this standard will have a material effect on its consolidated financial statements.Pronouncements

In March 2020, the FASB issued ASU 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 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 for smaller reporting companies for fiscal years beginning after December 15, 2022 with early application permitted. The Company is currently evaluating the impact the adoption of this guidance may have on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06 Debt—Debt with Conversion and Other 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, to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. Public entities must adopt the new guidance for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact and timing of adoption of this guidance.

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~Recently Adopted Pronouncements
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

In December 2019, the FASB issued ASU 2019-12 Simplifying the Accounting for Income Taxes, which eliminates the need for an organization to analyze whether the following apply in a given period: (1) exception to the incremental 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 effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company adopted this standard in the year ended December 31, 2021. The adoption did not have a material effect on the Company’s consolidated financial statements.
In May 2021, the Financial Accounting Standards Board (“FASB”) issued 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 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 ASU 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 related earnings per share effects, if any, or (2) an expense and, if so, the manner and pattern of recognition. ASU 2021-04 is effective for 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 is currently evaluating the impact that this standard will have on its consolidated financial statements. The Company adopted this standard for the year ended December 31, 2022. The adoption did not have a material effect on the Company’s consolidated financial statements.

No other new accounting pronouncements were issued or became effective in the period that had, or are expected to have, a material impact on our consolidated Financial Statements.

HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 3 – LIQUIDITY AND GOING CONCERN ANALYSIS

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, the Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern each reporting period, including interim periods. In evaluating the Company’s ability to continue as a going concern, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern 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 a number of risks, including uncertainty related to product development and generation 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 ~~September 30, 2021,~~March 31, 2022, the Company had cash balances of ~~$5,448,791,~~$1,926,714, working capital of ~~$3,070,164~~$503,527 and an accumulated deficit ~~$30,482,144.~~of $33,373,312. For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company had a net loss of ~~$8,697,234 and~~$1,168,123, net cash used by operating activities of ~~$1,627,184. Net cash used in investing activities was $334,581. Net~~$1,342,918, and no cash provided by financing ~~activities was $7,248,372, including $6,949,281 received from sales~~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 ~~common stock~~the conditions described above in ~~private placements, registered direct transactions and puts pursuant~~relation to the ~~July 2016 $3 million investment agreement (the “Investment Agreement”),~~Company’s ability to meet its obligations and ~~$350,200 in proceeds~~concluded that, without additional funding, the Company will not have sufficient funds to meet its obligations within one year from the ~~exercise of stock options and warrants. During January~~date the condensed consolidated financial statements were issued.
On April 20, 2021, the ~~holder of $1,038,500 fixed rate convertible debt converted~~Company filed a shelf registration statement on form S-3 that was declared effective by the ~~entire face value of $1,038,500, plus $317,096 of accrued interest~~Securities and Exchange Commission on ~~such notes, into 13,538,494 shares of common stock pursuant~~April 26, 2021 (the “Shelf Registration”). The Shelf Registration registered for resale up to ~~the original conversion terms~~$50,000,000 of the ~~underlying notes. Following the conversion, the Company had no further convertible debt outstanding. During May 2021, PPP loans in the amount of $632,826 plus $6,503 accrued interest were forgiven.~~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 ~~resulting in~~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 is no assurance that management’s plans will be successful. The Company’s ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, the Company’s performance and investor sentiment with respect to the Company and its industry.

~~Management believes that~~Without raising additional capital, either via the ~~Company has sufficient cash on hand~~Shelf Registration or from other sources, there is substantial doubt about the Company’s ability to ~~fund the business for at least the next 12 months.~~continue as a going concern through May 16, 2023. The Company intends that the longer term (i.e., beyond twelve months) cost of completing additional intended acquisitions, implementing its development and sales efforts related to the HealthLynked Network and maintaining existing and expanding overhead and administrative costs will be financed from (i) cash on hand resulting from fund raising efforts in 2021, (ii) profits generated by NCFM, BTG and CHM (including expected Medicare Shared Savings revenue projected to be received annually in the third fiscal quarter of each year), and (iii) the use of further outside funding sources. No assurances can be givenaccompanying condensed consolidated financial statements have been prepared assuming that the Company will ~~be able to access additional outside capital in~~continue as a ~~timely fashion. If necessary funds are not available,~~going concern. This basis of presentation contemplates the recovery of the Company’s ~~business~~assets and ~~operations would be materially adversely affected and~~the satisfaction of liabilities in ~~such event,~~ the ~~Company would attempt to reduce costs and adjust its business plan.~~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 take action to limit the spread of the illness, 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 all. The extent to which COVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with 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 implemented additional safety measures in its patient services locations and its corporate headquarters.

HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2021~~MARCH 31, 2022
(UNAUDITED)
~~NOTE 4 – ACQUISITIONS~~
~~Hughes Center for Functional Medicine – April 2019~~
On April 12, 2019, the Company acquired a 100% interest in Hughes Center for Functional Medicine (“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 HCFM in the years ended on the first, second and third anniversary dates of the acquisition closing. The total consideration fair value represents a transaction value of $1,764,672. The Company accounted for the transaction as an acquisition of a business pursuant to ASC 805, “Business Combinations” (“ASC 805”).
~~The total consideration fair value represents a transaction value of $1,764,672. The following table summarizes the fair value of consideration paid:~~
Cash $ 500,000
Common Stock (3,968,254 shares) 1,000,000
Fair Value of Contingent Acquisition Consideration 299,672
Less cash received (35,000 )

Fair Value of Total Consideration $ 1,764,672
The fair value of the 3,968,254 common shares issued as part of the acquisition consideration was determined using the intraday volume weighted average price of the Company’s common shares on the acquisition date. The terms of the earn out require the Company to pay the former owner of HCFM up to $100,000, $200,000 and $200,000 on the first, second and third anniversary, respectively, based on achievement by NCFM of revenue of at least $3,100,000 (50% weighting) and EBITDA of at least $550,000 (50% weighting) in the year preceding each anniversary date. 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.
The fair value of the contingent acquisition consideration related to the future earn-out payments is calculated using a probability-weighted discounted cash flow projection and 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.” During the three months ended September 30, 2021 and 2020, the Company recognized losses on the change in the fair value of contingent acquisition consideration of ($14,316) and ($1,185), respectively. During the nine months ended September 30, 2021 and 2020, the Company recognized losses on the change in the fair value of contingent acquisition consideration of ($63,769) and ($12,512), respectively. During the nine months ended September 30, 2021 and 2020, the Company paid the sellers $196,000 and $47,000 cash, respectively, in satisfaction of the second year and first year earn-outs, respectively.
~~The following table summarizes the estimated fair values of the assets acquired at the acquisition date. There were no liabilities assumed in the acquisition of HCFM.~~
Hyperbaric Chambers $ 452,289
Medical Equipment 29,940
Computer Equipment/Software 19,739
Office Furniture & Equipment 23,052
Inventory 72,114
Leasehold Improvements 25,000
Website 41,000
Patient Management Platform Database 1,101,538

Fair Value of Identifiable Assets Acquired $ 1,764,672

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 4 – ACQUISITIONS (CONTINUED)~~
The fair value of the website of $41,000 was determined based upon the cost to reconstruct and put into use applying current market rates. The fair value of the Patient Management Platform Database of $1,101,538 was estimated by applying the income approach. Under the income approach, the expected future cash flows generated by the Patient Management Platform Database are estimated and discounted to their net present value at an appropriate risk-adjusted rate of return. Significant factors considered in the calculation of the rate of return are the weighted average cost of capital and return on assets, as well as the risks inherent in the business. Cash flows were estimated based on EBITDA using forecasted revenue and costs. The measure is based on significant inputs that are not observable in the market (i.e. Level 3 inputs). Key assumptions include (i) a capitalization rate of 11.75% (ii) sustainable growth of 5% and (iii) a benefit stream using EBITDA cash flow. The Company finalized the purchase price allocation in March 2020 and determined that no goodwill was included in the acquisition.
~~Cura Health Management LLC – 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 total consideration fair value represents a transaction value of $1,423,465. The following table summarizes the fair value of consideration paid:~~
Cash paid at closing $ 214,000
Shares issued at closing (2,240,838 shares) 201,675
Cash and shares contingent upon 2019 program year MSSP payment target 778,192
Cash contingent upon four-year earn-out 279,593
Less cash received (49,995 )

$ 1,423,465
The fair value of the 2,240,838 common shares issued at closing was determined using the intraday average high and low trading price of the Company’s common shares on the acquisition date. 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. As a result, the sellers were paid the residual $124,043 cash in September 2021 and issued 806,828 shares of Company common stock with a value of $366,300 in October 2021 pursuant to the Residual Earnout. Following the payments, the Company has 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.

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 4 – ACQUISITIONS (CONTINUED)~~
The fair value of the contingent acquisition consideration related to both the Current Earnout and the Future Earnout were calculated 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.” During the three months ended September 30, 2021 and 2020, the Company recognized gains (losses) on the change in the fair value of contingent acquisition consideration of ($116,151) and $47,181, respectively. During the nine months ended September 30, 2021 and 2020, the Company recognized gains (losses) on the change in the fair value of contingent acquisition consideration of ($54,848) and $13,200, respectively.
~~The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:~~
Accounts receivable $ 90,197
Prepayments 15,294
ACO physician contracts 1,073,000
Goodwill 381,856
Accounts payable (32,848 )
Deferred revenue (104,034 )

Fair Value of Identifiable Assets Acquired and Liabilities Assumed $ 1,423,465
The fair value of the ACO Physician Contracts of $1,073,000 was estimated by applying the income approach. Under the income approach, the expected future cash flows generated by the ACO Physician Contracts are estimated and discounted to their net present value at an appropriate risk-adjusted rate of return. Significant factors considered in the calculation of the rate of return are the weighted average cost of capital and return on assets, as well as the risks inherent in the business. Cash flows were estimated based on EBITDA using forecasted revenue and costs. The measure is based on significant inputs that are not observable in the market (i.e. Level 3 inputs). Key assumptions include (i) a capitalization rate of 24.24% (ii) sustainable growth of 5.00% and (iii) a benefit stream using EBITDA cash flow. Goodwill of $381,856 arising from the acquisition consists of value associated with the legacy name. None of the goodwill recognized is expected to be deductible for income tax purposes.
~~MedOffice Direct LLC – 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 prescribed revenue targets in calendar years 2021 through 2024.
Dr. Michael Dent, the Chief Executive Officer and the Chairman of the Board of Directors of the Company, George O’Leary, the Chief Financial Officer and a director of the Company, and Robert Gasparini, a director of the Company, were members of MOD and received consideration in connection with Company’s acquisition of MOD as follows: (1) Dr. Dent received 10,573,745 Company common shares at closing, may earn up to 5,554,452 additional Company common shares pursuant to the earn-out, and received $457,200 cash repayment of debt, (2) Mr. O’Leary received 1,130,213 Company common shares at closing, may earn up to 593,707 additional Company common shares pursuant to the earn-out, and received $66,000 cash repayment of debt, and (3) Mr. Gasparini received 99,437 Company common shares at closing and may earn up to 52,235 additional Company common shares pursuant to the earn-out.

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 4 – ACQUISITIONS (CONTINUED)~~
~~The total consideration fair value represents a transaction value of $3,999,730. The following table summarizes the fair value of consideration paid:~~
Shares issued at closing (19,045,563 shares) $ 2,704,470
Payment of MOD debt obligations in cash 703,200
Shares contingent upon four-year earn-out 649,108
Less cash received (57,048 )

$ 3,999,730
The fair value of the 19,045,563 common shares issued at closing was determined using the average closing price for the five days prior to the closing date of October 19, 2020. The terms of the earn out require the Company to issue to the former equity members of MOD up to 1,9688,448 shares, 3,154,264 shares, 2,631,195 shares and 2,250,842 shares, respectively, (the “MOD Earnout Shares”) based on achievement by the underlying business of revenue of at least $1,500,000 in 2021, $1,875,000 in 2022, $2,344,000 in 2023 and $2,930,000 in 2024. The MOD Earnout Shares are issuable by April 30 of the year following the measurement year.
The fair value of the contingent acquisition consideration related to the MOD Earnout Shares was calculated 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.” During the three months ended September 30, 2021 and 2020, the Company recognized gains (losses) on the change in the fair value of contingent acquisition consideration related to the MOD Earnout Shares of $256,877 and $-0-, respectively. During the nine months ended September 30, 2021 and 2020, the Company recognized gains (losses) on the change in the fair value of contingent acquisition consideration related to the MOD Earnout Shares of ($116,062) and $-0-, respectively.
~~The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:~~
Website $ 3,538,000
Goodwill 766,249
Accounts payable and accruals (160,762 )
Notes payable (90,759 )
Deferred revenue (52,998 )

Fair Value of Identifiable Assets Acquired and Liabilities Assumed $ 3,999,730
The fair value of the website of $3,538,000 was estimated by applying the income approach. Under the income approach, the expected future cash flows generated by the asset are estimated and discounted to their net present value at an appropriate risk-adjusted rate of return. Significant factors considered in the calculation of the rate of return are the weighted average cost of capital and return on assets, as well as the risks inherent in the business. Cash flows were estimated based on EBITDA using forecasted revenue and costs. The measure is based on significant inputs that are not observable in the market (i.e. Level 3 inputs). Key assumptions include (i) a discount rate of 23.48% (ii) sustainable growth of 3.00% and (iii) a benefit stream using EBITDA cash flow. The website is being amortized over a five-year expected life. Goodwill of $766,249 arising from the acquisition consists of value associated with the legacy name. None of the goodwill recognized is expected to be deductible for income tax purposes.

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 4 – ACQUISITIONS (CONTINUED)~~
~~Pro Forma Financial Information~~
The following table represents the pro forma consolidated income statement as if HCFM, CHM and MOD had been included in the consolidated results of the Company for the entire nine-month period ending September 30, 2020. All acquired entities were included in the Company’s consolidated results of operations in the full three- and nine-month periods ended September 30, 2021.
Revenue $ 4,740,283
Net loss $ (3,846,293 )
These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of HCFM, CHM and MOD to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied on January 1, 2021 and 2020, respectively.
NOTE 54 – PREPAID EXPENSES AND OTHER
OnPrepaid and other expenses as of March ~~22, 2017, the Company granted to the investor~~31, 2022 and December 31, 2021 were as follows:
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 ~~the Investment Agreement warrants to purchase 4,000,000 shares of~~2021 from the Company’s ~~common stock at $0.25 per share, 2,000,000 shares at $0.50 per share~~2021 Equity Incentive Plan that vest over a four-year period and 1,000,000 shares at $1.00 per share. On June 7, 2017, 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 asthat are settleable for a ~~fee in connection with the Investment Agreement.~~fixed dollar amount rather than a fixed number of shares. The ~~aggregate~~original grant date fair value of ~~these warrants totaling $153,625~~the equity compensation was recorded as a deferred offering cost and was amortized over the initial period during which the Company was able access the financing, which began on May 15, 2017 and ended on May 15, 2020. The Company recognized general and administrative expense related to the cost of the warrants of $-0- and $-0-$165,000. Amortization in the three months ~~ending September 30,~~ended March 31, 2022 and 2021 ~~and 2020, respectively,~~was $9,063 and $-0- ~~and $19,203 in~~, respectively. At inception, the ~~nine months ending September 30, 2021 and 2020, respectively.~~Company recorded a corresponding liability captioned “Liability-classified equity instruments.”
NOTE 65 – PROPERTY, PLANT, AND EQUIPMENT
Property, plant and equipment ~~at September 30, 2021~~as of March 31, 2022 and December 31, ~~2020~~2021 were as follows:
September 30, December 31, March 31, December 31,
2021 2020 2022 2021

Medical equipment $ 484,126 $ 484,126 $ 493,854 $ 484,126
Furniture, office equipment and leasehold improvements 143,093 130,617 162,154 149,868

Total property, plant and equipment 627,219 614,743 656,008 633,994
Less: accumulated depreciation (258,222 ) (177,457 ) (308,480 ) (283,512 )

Property, plant and equipment, net $ 368,997 $ 437,286 $ 347,528 $ 350,482
Depreciation expense during the three months ended ~~September 30,~~March 31, 2022 and 2021 was $24,969 and ~~2020 was $26,343 and $23,084,~~$26,896, respectively. ~~Depreciation expense during the nine months ended September 30, 2021 and 2020 was $80,764 and $68,655, respectively.~~

HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2021~~MARCH 31, 2022
(UNAUDITED)
NOTE 76 – INTANGIBLE ASSETS AND GOODWILL
Intangible assets ~~at September 30, 2021~~as of March 31, 2022 and December 31, ~~2020~~2021 were as follows:
September 30, December 31, March 31, December 31,
2021 2020 2022 2021

NCFM: Medical database $ 1,101,538 $ 1,101,538 $ 1,101,538 $ 1,101,538
NCFM: Website 41,000 41,000 41,000 41,000
CHM: ACO physician contracts 1,073,000 1,073,000 1,073,000 1,073,000
MOD: Website 3,538,000 3,538,000 3,538,000 3,538,000

Total intangible assets 5,753,538 5,753,538 5,753,538 5,753,538
Less: accumulated amortization (694,450 ) (151,776 ) (1,052,338 ) (873,417 )

Intangible assets, net $ 5,059,088 $ 5,601,762 $ 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.~~MOD and amounts to $1,148,105 as of March 31, 2022 and December 31, 2021.
Amortization expense in the three months ended ~~September 30,~~March 31, 2022 and 2021 was $178,921 and ~~2020 was $178,968 and $2,067, respectively. Amortization expense in the nine months ended September 30, 2021 and 2020 was $542,674 and $6,156,~~$184,762, respectively. No impairment charges were recognized related to goodwill and intangible assets in the three ~~or nine~~ months ended ~~September 30, 2021 or 2020.~~March 31, 2022 and 2021.
NOTE 87 – LEASES
The Company has separate operating leases for office space related to its NWC, NCFM and BTG practices, ~~and~~ two separate ~~lease~~leases relating to its corporate headquarters, and a copier lease that expire in July 2023, May 2022, March 2023, November 2023, ~~and~~ November 2023 and January 2027, respectively. As of ~~September 30, 2021,~~March 31, 2022, the Company’s weighted-average remaining lease term relating to its operating leases was ~~2.0~~1.9 years, with a weighted-average discount rate of ~~20.49%~~18.39%. ~~The Company was also previously a lessee in a capital equipment finance lease for medical equipment entered into in March 2015 that expired in March 2020.~~
The table below summarizes the Company’s lease-related assets and liabilities as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:
September 30, December 31, March 31, December 31,
2021 2020 2022 2021
Lease assets $ 599,781 $ 417,913 $ 499,144 $ 526,730

Lease liabilities
Lease liabilities (short term) $ 292,844 $ 150,251 $ 294,442 $ 288,966
Lease liabilities (long term) 309,799 273,790 204,762 239,225
Total lease liabilities $ 602,643 $ 424,041 $ 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
~~SEPTEMBER 30, 2021~~MARCH 31, 2022
(UNAUDITED)
NOTE 87 – LEASES (CONTINUED)
~~Lease expense in the three and nine months ended September 30, 2021 and 2020 was as follow:~~

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021 2020 2021 2020

Operating leases $ 99,544 $ 61,526 $ 241,909 $ 242,891
Financing leases --- --- --- 4,587

Total lease expense $ 99,544 $ 61,526 $ 241,909 $ 247,478
Maturities of operating lease liabilities were as follows as of ~~September 30, 2021:~~March 31, 2022:
2021 (July to December) $ 107,623
2022 383,619
2022 (April to December) $ 284,905
2023 273,844 285,721
2024 11,877
2025 11,877
2026 11,877
2027 990
Total lease payments 765,086 607,247
Less interest (162,443 ) (108,043 )
Present value of lease liabilities $ 602,643 $ 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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were as ~~follow:~~follows:
September 30, December 31, March 31, December 31,
2021 2020 2022 2021

Patient services paid but not provided $ 15,966 $ 35,779 $ 22,461 $ 42,530
Consulting services paid but not provided --- 47,864 — 25,000
Unshipped products 14,569 5,782 10,887 5,308
$ 30,535 $ 89,425 $ 33,348 $ 72,838
Contract liabilities ~~relates~~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, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were comprised of deferred compensation inpayable to the ~~amount of $300,600.~~
~~Retired Notes Payable to Dr. Dent~~
~~Our~~Company’s founder and CEO, Dr. Michael Dent, ~~made loans to the Company from time to time~~ in the ~~form~~amount of unsecured promissory notes payable (the “Dent Notes”). The Dent Notes were repaid in full during September 2020 and had no balance as of September 30, 2021 or December 31, 2020. Prior to repayment, the Dent Notes were carried at fair value and revalued at each period end, with changes to fair value recorded to the statement of operations under “Change in Fair Value of Debt.” The changes in fair value were $-0- and $32,968 during$300,600.
During the three months ended ~~September 30,~~March 31, 2022 and 2021, the Company paid Dr. Dent’s spouse $22,308 and ~~2020,~~$33,462, respectively, and $-0- and $80,935 during the nine months ended September 30, 2021 and 2020, respectively. No interest was accrued on the Dent Notes as of September 30, 2020 or December 31, 2020. Interest expense on the Dent Notes was $-0- and $14,159 in ~~the three months ended September 30, 2021 and 2020, respectively, and $-0- and $86,446 in the nine months ended September 30, 2021 and 2020, respectively.~~
consulting fees pursuant to a consulting agreement.

HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2021~~MARCH 31, 2022
(UNAUDITED)
~~NOTE 10 – AMOUNTS DUE TO RELATED PARTY AND RELATED PARTY TRANSACTIONS (CONTINUED)~~
~~Other Amounts Due to Dr. Dent~~
On January 7, 2020, the Company entered into a Merchant Cash Advance Factoring Agreement with a trust controlled by Dr. Dent, pursuant to which the Company received an advance of $149,000 (the “2020 MCA”). The Company was required to repay the 2020 MCA, which acts like an ordinary note payable, at the rate of $7,212 per week until the balance of $187,500 is repaid, which was scheduled for July 2020. At inception, the Company recognized a note payable in the amount of $187,500 and a discount against the note payable of $38,500. The discount was amortized over the life of the instrument. The 2020 MCA was repaid in full and retired during July 2020. The Company made installment payments against the MCA of $-0- and $36,059 during the three months ended September 30, 2021 and 2020, respectively, and $-0- and $187,500 during the nine months ended September 30, 2021 and 2020, respectively. The Company recognized amortization of the discount in the amount of $-0- and $-0-, during the three months ended September 30, 2021 and 2020, respectively, and $-0- and $38,500, during the nine months ended September 30, 2021 and 2020, respectively.
NOTE 11 – GOVERNMENT AND VENDOR NOTES PAYABLE
~~Government and vendor notes payable as of September 30, 2021 and December 31, 2020 were comprised of the following:~~
September 30, December 31,
2021 2020

PPP loans $ --- $ 632,826
Disaster relief loans 450,000 450,000
Vendor note --- 51,109
Total government and vendor notes payable 450,000 1,133,935
Less: long term portion (450,000 ) (722,508 )
Government and vendor notes payable, current portion $ --- $ 411,427
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. ~~As a result of the forgiveness, the Company recognized a gain on extinguishment of debt in the amount of $632,826 and interest income of $6,503 during the nine months ended September 30, 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 years from issuance. Mandatory principal and interest payments were originally scheduled to begin 12 months from the inception date of each loan and were subsequently extended by the SBA until 2430 months from the inception date. ~~Interest accrued on SBA Disaster Relief loans payable as of September 30, 2021 and~~Installment payments are now scheduled to begin in December 31, 2020 was $20,484 and $12,240, respectively. Interest expense on the loans was $4,226 and $861 for the three months ended September 30, 2021 and 2020, respectively, and $12,594 and $861 for the nine months ended September 30, 2021 and 2020, respectively.2022.
In connection with the October 19, 2020 acquisition of MOD, the Company acquired a note payable to MOD’s primary product vendor with a remaining principal balance of $79,002 as of the acquisition ~~date.~~date and $51,109 as of December 31, 2020. The vendor note was paid in full during the first quarter of 2021.

Interest accrued on government and vendor notes payable as of March 31, 2022 and December 31, 2021 was $28,942 and $24,723, respectively. Interest expense on the loans was $4,219 and $7,605 for the three months ended March 31, 2022 and 2021, respectively.
~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
NOTE 12 – CONVERTIBLE NOTES PAYABLE
~~Convertible~~The Company had no convertible notes payable as of ~~September 30, 2021 and~~March 31, 2022 or December 31, ~~2020 were comprised of the following:~~2021.
September 30, December 31,
2021 2020

$550k Note - July 2016 $ --- $ 719,790
$50k Note - July 2016 --- 71,611
$111k Note - May 2017 --- 120,659
$357.5k Note - April 2019 --- 424,290
--- 1,336,350
Less: unamortized discount --- ---
Convertible notes payable, net of original issue discount and debt discount $ --- $ 1,336,350
Amortization of debt discount recognized on each convertible note outstanding during the three and nine months ended September 30, 2021 and 2020 are shown in the following table. There were no unamortized discounts as of September 30, 2021 or December 31, 2020 related to convertible notes payable.
Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
$154k Note - June 2019 $ --- $ --- $ --- $ 1,093
$67.9k Note - July 2019 --- --- --- 7,252
$67.9k Note II - July 2019 --- --- --- 2,813
$78k Note III - July 2019 --- --- --- 6,208
$230k Note - July 2019 --- --- --- 58,527
$108.9k Note - August 2019 --- --- --- 21,038
$142.5k Note - October 2019 --- 21,804 --- 92,663
$103k Note V - October 2019 --- --- --- 29,143
$108.9k Note II - October 2019 --- --- --- 33,205
$128.5k Note - October 2019 --- --- --- 51,705
$103k Note VI - November 2019 --- --- --- 39,450
$78.8k Note II - December 2019 --- --- --- 27,111
$131.3k Note - January 2020 --- 1,158 --- 16,205
$78k Note IV - January 2020 --- 1,608 --- 14,955
$157.5k Note - March 2020 --- 7,432 --- 20,044
$157.5k Note II - April 2020 --- 9,127 --- 21,436
$135k Note - April 2020 --- 7,744 --- 17,718
$83k Note II - April 2020 --- 6,675 --- 13,767
$128k Note - April 2020 --- 10,268 --- 18,097

$ --- $ 65,816 $ --- $ 492,430

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 12 – CONVERTIBLE NOTES PAYABLE (CONTINUED)~~
~~Interest expense recognized on each convertible note outstanding during the three and nine months ended September 30, 2021 and 2020 were as follows:~~
Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020

$550k Note - July 2016 $ --- $ 8,318 $ 2,351 $ 24,773
$50k Note - July 2016 --- 1,260 219 3,753
$111k Note - May 2017 --- 2,042 333 8,755
$357.5k Note - April 2019 --- 9,012 1,469 18,751
$154k Note - June 2019 --- --- --- 46
$67.9k Note - July 2019 --- --- --- 707
$67.9k Note II - July 2019 --- --- --- 177
$78k Note III - July 2019 --- --- --- 492
$230k Note - July 2019 --- --- --- 3,041
$108.9k Note - August 2019 --- --- --- 2,564
$142.5k Note - October 2019 --- 3,592 --- 12,884
$103k Note V - October 2019 --- --- --- 2,653
$108.9k Note II - October 2019 --- --- --- 3,970
$128.5k Note - October 2019 --- --- --- 5,149
$103k Note VI - November 2019 --- --- --- 3,527
$78.8k Note II - December 2019 --- --- --- 3,344
$131.3k Note - January 2020 --- 467 --- 6,545
$78k Note IV - January 2020 --- 427 --- 3,975
$157.5k Note - March 2020 --- 2,848 --- 7,681
$157.5k Note II - April 2020 --- 2,848 --- 6,688
$135k Note - April 2020 --- 2,441 --- 5,585
$83k Note II - April 2020 --- 1,819 --- 3,752
$128k Note - April 2020 --- 2,805 --- 4,945

$ --- $ 37,879 $ 4,372 $ 133,757
Certain of the Company’s convertible notes payable are also carried at fair value and revalued at each period end, with changes to fair value recorded to the statement of operations under “Change in Fair Value of Debt.” The changes in fair value during the three and nine months ended September 30, 2021 and 2020 and the fair value as of such instruments as of September 30, 2021 and December 31, 2020 were as follows:
Change in Fair Value of Debt Fair Value of Debt as of
Three Months Ended
September 30, Nine Months Ended
September 30, September 30, December 31,
2021 2020 2021 2020 2021 2020

$550k Note - July 2016 $ --- $ 24,285 $ 10,344 $ 59,618 $ --- $ 719,790
$50k Note - July 2016 --- 2,520 1,017 6,187 --- 71,611
$111k Note - May 2017 --- 4,721 1,706 16,261 --- 120,659
$357.5k Note - April 2019 --- 14,567 6,179 35,763 --- 424,290

$ --- $ 46,093 $ 19,246 $ 117,829 $ --- $ 1,336,350

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 12 – CONVERTIBLE NOTES PAYABLE (CONTINUED)~~
~~Extension and Conversion – January 2021~~
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 a $550,000 6% fixed convertible secured promissory note dated July 7, 2016 (the “$550k Note”), a $50,000 10% fixed convertible commitment fee promissory note dated July 7, 2016 (the “$50k Note”), $81,000 of principal remaining on a $111,000 10% fixed convertible secured promissory note dated May 22, 2017 (the “$111k Note”), and a $357,500 10% fixed convertible note dated April 15, 2019 (the “$357.5k Note” and together with the $550k Note, the $50k Note and the $111k Note, the “Remaining Notes”) – agreed to extend the maturity date on the Remaining Notes to January 14, 2021. In exchange for the extension, the Company agreed to extend the expiration date of 3,508,333 existing warrants held by the holder (the “Extended Warrants”) from dates between July 2021 and March 2022 until March 2023. Because the fair value of consideration issued was greater than 10% of the present value of the remaining cash flows under the modified Remaining Notes, the transaction was treated as a debt extinguishment and reissuance of new debt instruments pursuant to the guidance of ASC 470-50. A loss on debt extinguishment was recorded in the amount of $126,502 in the ~~nine months~~year ended ~~September 30,~~December 31, 2021, equal to the incremental fair value of the Extended Warrants before and after the modification.
On January 14, 2021, the Company and the holder of the Remaining Notes entered into a series of agreements pursuant to which (i) the holder agreed to convert the full face value of $1,038,500 and $317,096 of accrued interest on the Remaining Notes into 13,538,494 shares of common stock pursuant to the original conversion terms of the underlying notes, (ii) the holder 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 in excess of 5% of the Company’s daily trading volume for the first 90 days and 10% of the Company’s daily volume for the next 90 days, subject to certain exceptions, (iii) the holder agreed to release all security interests and share reserves related to the Remaining Notes, and (iv) the Company issued to the holder a new five-year warrant to purchase 13,538,494 shares of common stock at an exercise price of $0.30 per share. In connection with the conversion, the Company recognized a loss on debt extinguishment of $5,463,492 in the ~~nine~~three months ended ~~September 30,~~March 31, 2021, representing the excess of the fair value of the shares and warrant issued at conversion over the carrying value of the host instrument and accrued interest.
~~Convertible Note Payable ($550,000) – July 2016~~
~~On July 7, 2016,~~Prior to conversion, the Company entered into a 6% fixed convertible secured promissory note with an investor with a face value of $550,000. The $550k Note and related interest was convertible into shares of common stock at the discretion of the note holder at a fixed price of $0.08 per share of the Company’s common shares and was secured by all of the Company’s assets. The $550k Note was scheduled to mature on January 14, 2021. The $550k Note wasRemaining Notes were carried at fair value ~~due to an extinguishment~~ and ~~reissuance recorded in 2017 and was~~ revalued at each period end, with changes to fair value recorded to the statement of operations under “Change in Fair Value of Debt.” The ~~holder converted~~changes in fair value during the ~~full principal of $550,000, plus $180,129 of accrued interest, into 9,126,610 shares of common stock on January 14, 2021.~~three months ended March 31, 2022 and 2021 were $-0- and $19,246, respectively.
~~Convertible Note Payable ($50,000) – July 2016~~Interest expense on convertible notes outstanding during the three months ended March 31, 2022 and 2021 was $-0- and $4,372, respectively.
On July 7, 2016, the Company entered into a 10% fixed convertible commitment fee promissory note with an investor with a face value of $50,000. The $50k Note was scheduled to mature on January 14, 2021. The $50k note was issued as a commitment fee payable to the Investment Agreement investor in exchange for the investor’s commitment to enter into the Investment Agreement, subject to registration of the shares underlying the Investment Agreement. The $50k Note and related interest was convertible into shares of common stock at the discretion of the note holder at a fixed price of $0.10 per share. The $50k Note was carried at fair value due to an extinguishment and reissuance recorded in 2017 and is revalued at each period end, with changes to fair value recorded to the statement of operations under “Change in Fair Value of Debt.” The holder converted the full principal of $50,000 plus $22,630 of accrued interest into 726,302 shares of common stock on January 14, 2021.

HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 12 – CONVERTIBLE NOTES PAYABLE (CONTINUED)~~
~~Convertible Note 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 and related interest was convertible into shares of common stock at the discretion of the note holder at a fixed price of $0.15 per share and was 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 a five-year warrant to purchase 133,333 shares of common stock at an exercise price of $0.75 per share. The $111k Note was scheduled to mature on January 14, 2021. On February 6, 2020, the holder of the $111k Note converted $30,000 principal on the note into 448,029 shares of common stock. In connection with the conversion, the Company recognized a loss on debt extinguishment of $25,394 in the nine months ended September 30, 2020, representing the excess of the fair value of the shares issued at conversion over the carrying value of the portion of the host instrument and the bifurcated conversion feature converted. The holder converted the remaining principal of $81,000 plus $180,129 of accrued interest into 815,787 shares of common stock on January 14, 2021.
~~Convertible Note Payable ($357,500) – April 2019~~
~~On April 15, 2019, the Company issued a fixed convertible note with a face value of $357,500 (the “$357.5k Note”). The $357.5k Note had an interest rate of 10%, matures on December~~MARCH 31, 2020, and was convertible into common stock by the holder at any time, subject to a 9.99% beneficial ownership limitation, at a fixed conversion price per share of $0.15, or 2,383,333 shares. The holder converted the full principal of $357,500 plus $72,969 of accrued interest into 2,869,795 shares on January 14, 2021.
~~Convertible Note Payable ($154,000) – June 2019~~2022
On June 3, 2019, the Company issued a $154,000 convertible note (the “$154k Note”). On January 8, 2020, the holder converted the remaining unpaid principal balance of $50,000 and accrued interest of $8,572 into 968,390 shares of common stock. In connection with the conversion, the Company recognized a loss on debt extinguishment of $125,865 in the nine months ended September 30, 2020, representing the excess of the fair value of the shares issued at conversion over the carrying value of the portion of the host instrument and the bifurcated conversion feature converted.
~~Convertible Note Payable ($67,925) – July 2019~~
On July 11, 2019, the Company issued a $67,925 convertible note (the “$67.9k Note I”). During January and February 2020, the holder converted the full principal of $67,925 and accrued interest of $3,926 into 885,847 shares of common stock. In connection with the conversion, the Company recognized a loss on debt extinguishment of $55,117 in the nine months ended September 30, 2020, representing the excess of the fair value of the shares issued at conversion over the carrying value of the portion of the host instrument and the bifurcated conversion feature converted.
~~Convertible Note Payable ($67,925) – July 2019~~
On July 11, 2019, the Company issued a second $67,925 convertible note (the “$67.9k Note II”). On January 14, 2020, the Company prepaid the balance on the $67.9k Note II, including accrued interest, for a one-time cash payment of $89,152. In connection with the repayment, the Company recognized a loss on debt extinguishment of $26,890 in the nine months ended September 30, 2020, equal to the excess of the payment amount over the carrying value of the note, derivative embedded conversion feature and accrued interest.
~~Convertible Note Payable ($78,000) – July 2019~~
On July 16, 2019, the Company issued a $78,000 convertible note (the “$78k Note III”). During the nine months ended September 30, 2020, the Company prepaid the balance on the $78k Note III, including accrued interest, for a one-time cash payment of $102,388. In connection with the repayment, the Company recognized a loss on debt extinguishment of $31,432 in the nine months ended September 30, 2020, equal to the excess of the payment amount over the carrying value of the note, derivative embedded conversion feature and accrued interest.

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 12 – CONVERTIBLE NOTES PAYABLE (CONTINUED)~~
~~Convertible Note Payable ($230,000) – July 2019~~(UNAUDITED)
On July 18, 2019, the Company issued a convertible note with a face value of $230,000 (the “$230k Note”). During the nine months ended September 30, 2020, the holder converted $80,000 of principal and $4,373 of accrued interest on the note into 1,236,668 shares of common stock and the Company repaid principal of $150,000 and accrued interest of $9,128 for cash payments totaling $181,554. The note was retired upon these conversions and repayments. In connection with the conversions and repayments, the Company recognized a loss on debt extinguishment of $112,498 in the nine months ended September 30, 2020 equal to the excess of the cash payment amount and the fair value of the shares issued at conversion over the carrying value of the note, derivative embedded conversion feature and accrued interest.
~~Convertible Note Payable ($108,947) – August 2019~~
On August 26, 2019, the Company issued a convertible note with a face value of $108,947 (the “$108.9k Note”). During March 2020, the holder converted principal of $75,000 and accrued interest of $6,335 into 1,779,322 shares of common stock. In connection with the conversion, the Company recognized a loss on debt extinguishment of $90,732 in the nine months ended September 30, 2020, representing the excess of the fair value of the shares issued at conversion over the carrying value of the portion of the host instrument and the bifurcated conversion feature converted.
~~Convertible Note Payable ($103,000) – October 2019~~
On October 1, 2019, the Company issued a $103,000 convertible note (the “$103k Note V”). On April 3, 2020, the Company prepaid the balance on the $103k Note V, including accrued interest, for a one-time cash payment of $135,205. In connection with the repayment, the Company recognized a loss on debt extinguishment of $43,777 in the nine months ended September 30, 2020, equal to the excess of the payment amount over the carrying value of the note, derivative embedded conversion feature and accrued interest.
~~Convertible Note Payable ($142,500) – October 2019~~
On October 1, 2019, the Company issued a $142,500 convertible note (the “$142.5k Note”). During the nine months ended September 30, 2020, the holder converted the full principal of $142,500 and accrued interest of $14,250 into 2,855,191 shares of Company common stock. In connection with the conversions, the Company recognized a loss on debt extinguishment of $305,100 in the nine months ended September 30, 2020, representing the excess of the fair value of the shares issued at conversion over the carrying value of the portion of the host instrument and the bifurcated conversion feature converted.
~~Convertible Note Payable ($108,947) – October 2019~~
On October 30, 2019, the Company issued a convertible note with a face value of $108,947 (the “$108.9k Note II”). During May and June 2020, the holder converted the full principal of $108,947 and accrued interest of $5,821 into 1,954,870 shares of Company common stock. In connection with the conversions, the Company recognized a loss on debt extinguishment of $76,895 in the nine months ended September 30, 2020, representing the excess of the fair value of the shares issued at conversion over the carrying value of the portion of the host instrument and the bifurcated conversion feature converted.
~~Convertible Note Payable ($128,500) – October 2019~~
On October 30, 2019, the Company issued a $128,500 convertible note (the “$128.5k Note”). During May and June 2020, the holder converted the full principal of $128,500 and accrued interest of $8,832 into 3,197,877 shares of Company common stock. In connection with the conversion, the Company recognized a loss on debt extinguishment of $154,248 in the nine months ended September 30, 2020, representing the excess of the fair value of the shares issued at conversion over the carrying value of the portion of the host instrument and the bifurcated conversion feature converted.
~~Convertible Note Payable ($103,000) – November 2019~~
On November 4, 2019, the Company issued a $103,000 convertible note (the “$103k Note VI”). On May 4, 2020, the Company prepaid the balance on the $103k Note VI, including accrued interest, for a one-time cash payment of $135,099. In connection with the repayment, the Company recognized a loss on debt extinguishment of $45,077 in the nine months ended September 30, 2020, equal to the excess of the payment amount over the carrying value of the note, derivative embedded conversion feature and accrued interest.

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 12 – CONVERTIBLE NOTES PAYABLE (CONTINUED)~~
~~Convertible Note Payable ($78,750) – December 2019~~
On December 2, 2019, the Company issued a $78,750 convertible note (the “$78.8k Note”). On June 3, 2020, the Company prepaid the balance on the $78.8k Note, including accrued interest, for a one-time cash payment of $103,359. In connection with the repayment, the Company recognized a loss on debt extinguishment of $37,554 in the nine months ended September 30, 2020, equal to the excess of the payment amount over the carrying value of the note, derivative embedded conversion feature and accrued interest.
~~Convertible Note Payable ($131,250) – January 2020~~
On January 13, 2020, the Company issued a $131,250 convertible note (the “$131.3k Note”). On July 13, 2020, the Company prepaid the balance on the $131.3k Note, including accrued interest, for a one-time cash payment of $172,108. In connection with the repayment, the Company recognized a loss on debt extinguishment of $24,663 in the nine months ended September 30, 2020, equal to the excess of the payment amount over the carrying value of the note, derivative embedded conversion feature and accrued interest.
~~Convertible Note Payable ($78,000) – January 2020~~
On January 16, 2020, the Company issued a $78,000 convertible note (the “$78k Note IV”). On July 20, 2020, the Company prepaid the balance on the $78k Note IV, including accrued interest, for a one-time cash payment of $102,308. In connection with the repayment, the Company recognized a loss on debt extinguishment of $9,104 in the nine months ended September 30, 2020, equal to the excess of the payment amount over the carrying value of the note, derivative embedded conversion feature and accrued interest.
~~Convertible Note Payable ($157,500) – March 2020~~
On March 10, 2020, the Company issued a $157,500 convertible note (the “$157.5k Note”). On September 4, 2020, the Company prepaid the balance on the $157.5k Note, including accrued interest, for a one-time cash payment of $206,314. In connection with the repayment, the Company recognized a loss on debt extinguishment of $28,150 in the nine months ended September 30, 2020, equal to the excess of the payment amount over the carrying value of the note, derivative embedded conversion feature and accrued interest.
~~Convertible Note Payable ($157,500) – April 2020~~
On April 2, 2020, the Company issued a $157,500 convertible note (the “$157.5k Note II”). On September 4, 2020, the Company prepaid the balance on the $157.5k Note, including accrued interest, for a one-time cash payment of $205,235. In connection with the repayment, the Company recognized a loss on debt extinguishment of $31,490 in the nine months ended September 30, 2020, equal to the excess of the payment amount over the carrying value of the note, derivative embedded conversion feature and accrued interest.
~~Convertible Note Payable ($135,000) – April 2020~~
On April 6, 2020, the Company issued a $135,000 convertible note (the “$135k Note”). On September 4, 2020, the Company prepaid the balance on the $135k Note, including accrued interest, for a one-time cash payment of $175,592. In connection with the repayment, the Company recognized a loss on debt extinguishment of $18,479 in the nine months ended September 30, 2020, equal to the excess of the payment amount over the carrying value of the note, derivative embedded conversion feature and accrued interest.
~~Convertible Note Payable ($83,000) – April 2020~~
On April 6, 2020, the Company issued an $83,000 convertible note (the “$83k Note”). On September 18, 2020, the Company prepaid the balance on the $83k Note, including accrued interest, for a one-time cash payment of $108,127. In connection with the repayment, the Company recognized a loss on debt extinguishment of $13,012 in the nine months ended September 30, 2020, equal to the excess of the payment amount over the carrying value of the note, derivative embedded conversion feature and accrued interest.

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 12 – CONVERTIBLE NOTES PAYABLE (CONTINUED)~~
~~Convertible Note Payable ($128,000) – April 2020~~
On April 30, 2020, the Company issued a $128,000 convertible note (the “$128k Note”). On September 18, 2020, the Company prepaid the balance on the $128k Note, including accrued interest, for a one-time cash payment of $165,962. In connection with the repayment, the Company recognized a loss on debt extinguishment of $21,000 in the nine months ended September 30, 2020, equal to the excess of the payment amount over the carrying value of the note, derivative embedded conversion feature and accrued interest.
~~NOTE 13 – DERIVATIVE FINANCIAL INSTRUMENTS~~
Derivative financial instruments are comprised of the fair value of embedded conversion features (“ECFs”) in convertible promissory notes 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 ECF derivative liabilities was calculated at inception of each convertible promissory note for which the conversion rate is not fixed and allocated to the respective convertible notes, with any excess recorded as a charge to “Financing cost.” Derivative financial instruments are 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 and changes thereto recorded in the three and nine months ended September 30, 2021 and 2020 include the following:~~
Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020

Balance, beginning of period $ --- $ 257,384 $ --- $ 991,288
Inception of derivative financial instruments --- --- --- 211,498
Change in fair value of derivative financial instruments --- (12,802 ) --- (739,485 )
Conversion or extinguishment of derivative financial instruments --- (244,582 ) --- (463,301 )

Balance, end of period $ --- $ --- $ --- $ ---
~~Fair market value of the derivative financial instruments was measured using the following assumptions:~~
Nine Months Ended
September 30,
2021 2020

Pricing model utilized Binomial Lattice Binomial Lattice
Risk free rate range --- 0.05% to 1.61%
Expected life range (in years) --- 0.14 to 1.00
Volatility range --- 117.48% to 144.51%
Dividend yield --- 0.00 %
In addition, specific assumptions regarding investor exercise behavior were used in the above periods, including probability assumptions related to estimated exercise behavior. 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.
During 2020, the Company retired all convertible notes for which the conversion rate was adjusted based on a discount to the market price of the Company’s common stock, which gave rise to ECF-related derivative financial instruments. Accordingly, the Company had no further derivative financial instruments outstanding as of September 30, 2021 or December 31, 2020.

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
NOTE 1413 – SHAREHOLDERS’ EQUITY
~~Registered Direct Offering – August 2021~~Private Placements
On August 26, 2021, the Company entered into a securities purchase agreement with a certain institutional investor (the “Purchaser”) pursuant to which the Company agreed to sell in a registered direct offering (the “Registered Direct Offering”) 3,703,704 shares of the Company’s common stock to the Purchaser at an offering price of $0.54 per share and issue associated warrants. In a concurrent private placement, the Company also sold to the Purchaser unregistered warrants (the “Warrants”) to purchase up to an aggregate of 1,851,852 shares of common stock, representing 50% of the shares of common stock that may be purchased in the Registered Direct Offering. The Warrants are exercisable at an exercise price of $0.65 per share, are exercisable immediately upon issuance and have a term of exercise equal to five years from the date of issuance. The Company also issued compensation warrants to its placement agent to purchase up to 269,269 shares of common stock, equal to 8.0% of the aggregate number of shares of common stock placed in the Registered Direct Offering. The placement agent warrants have a term of five (5) years from the commencement of sales under the Registered Direct Offering and an exercise price of $0.675 per share of common stock (equal to 125% of the offering price per share of common stock).
The Company received net proceeds from the sale of shares of common stock, after deducting placement agent fees and other offering expenses payable by the Company, of $1,719,921. The transactions closed on August 31, 2021.
~~Private Placements~~
During the ~~nine~~three months ended ~~September 30,~~March 31, 2021, the Company sold ~~13,161,943~~11,787,766 shares of common stock in 5346 separate private placement transactions. The Company received ~~$4,328,725~~$3,488,725 in proceeds from the sales. In connection with ~~these~~the stock sales, the Company also issued ~~6,581,527~~5,893,889 five-year warrants to purchase shares of common stock at exercise prices between $0.27 and $1.05 per share.
During the nine months ended September 30, 2020, the Company sold 6,650,843 shares of common stock in 20 separate private placement transactions and received $673,001 in proceeds from the sales. In connection with the stock sales, the Company also issued 3,463,825 five-year warrants to purchase shares of common stock at exercise price between $0.16 and $0.27 per share.
Investment Agreement Draws
During ~~nine~~the three months ended ~~September 30,~~March 31, 2021, ~~and 2020,~~ the Company issued 3,006,098 ~~and 4,975,491~~ common shares ~~respectively,~~ pursuant to draws made by the Company under the Investment Agreement and received an aggregate of $900,636 ~~and $426,299, respectively,~~ in net proceeds from the draws.
Shares issued to Consultants
During the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company issued ~~677,242~~5,250 and ~~1,214,861~~475,000 common shares, respectively, to consultants for services rendered. In connection with the issuances, the Company recognized expenses totaling ~~$151,322~~$8,044 and ~~$156,501~~$122,829 in the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.
Common Stock Issuable
As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company was obligated to issue the 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
September 30, 2021 December 31, 2020
Amount Shares Amount Shares
Shares issuable to consultants, employees and directors $ 728,368 2,517,458 $ 262,273 2,150,020

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 14 – SHAREHOLDERS’ EQUITY (CONTINUED)~~
Stock Warrants
Transactions involving our stock warrants during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ are summarized as follows:
2021 2020 2022 2021
Weighted Weighted Weighted Weighted
Average Average Average Average
Exercise Exercise Exercise Exercise
Number Price Number Price Number Price Number Price
Outstanding at beginning of the period 51,352,986 $ 0.17 47,056,293 $ 0.17 59,796,992 $ 0.25 51,352,986 $ 0.14
Granted during the period 22,421,026 $ 0.39 3,463,825 $ 0.20 — $ 0.00 19,585,790 $ 0.34
Exercised during the period (13,637,020 ) $ (0.18 ) --- $ --- — $ 0.00 (11,196,742 ) $ (0.06 )
Expired during the period --- $ 0.00 (50,000 ) $ (0.40 ) (430,000 ) $ (0.44 ) — $ —
Outstanding at end of the period 60,136,992 $ 0.25 50,470,118 $ 0.18 59,366,992 $ 0.25 59,742,034 $ 0.22

Exercisable at end of the period 60,136,992 $ 0.25 50,470,118 $ 0.18 59,366,992 $ 0.25 59,742,034 $ 0.22

Weighted average remaining life 3.4 years 3.4 years 3.0 years 3.7 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, 2021:~~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 3.3 $ 0.07 14,789,573 $ 0.07
$ 0.10 to 0.24 9,714,380 2.9 $ 0.17 9,714,380 $ 0.17
$ 0.25 to 0.49 31,741,448 3.5 $ 0.31 31,741,448 $ 0.31
$ 0.50 to 1.05 3,891,591 4.3 $ 0.67 3,891,591 $ 0.67
$ 0.05 to 1.00 60,136,992 3.4 $ 0.25 60,136,992 $ 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
$ 0.0001 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

During the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company issued ~~22,421,026~~-0- and ~~3,463,825~~19,585,790 warrants, respectively, the aggregate grant date fair value of which was ~~$5,823,476~~$-0- and ~~$222,987,~~$4,496,555, respectively. The fair value of the warrants was calculated using the following range of assumptions:
Nine Months Ended
September 30,
2021 2020
2022 2021
Pricing model utilized Binomial Lattice Binomial Lattice No warrants issued Binomial Lattice
Risk free rate range 0.38% to 0.97% 0.19% to 1.59% No warrants issued 0.38% to 0.86%
Expected life range (in years) 3.00 to 5.00 years 5.00 years No warrants issued 3.00 to 5.00 years
Volatility range 170.58% to 193.21% 119.69% to 132.19% No warrants issued 170.58% to 193.21%
Dividend yield 0.00 % 0.00 % No warrants issued 0.00%
~~In addition, specific assumptions regarding investor exercise behavior~~There were ~~used in~~no warrants exercised during the ~~above periods, including probability assumptions related to estimated exercise behavior.~~

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 14 – SHAREHOLDERS’ EQUITY (CONTINUED)~~
three months ended March 31, 2022. During the ~~nine~~three months ended ~~September 30,~~March 31, 2021, the Company received ~~$333,750~~$62,500 upon the exercise of ~~3,065,278~~625,000 warrants with an exercise ~~prices between $0.09 and $0.15.~~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. ~~There were no warrants exercised during the nine months ended September 30, 2020.~~
Employee Equity Incentive ~~Plan~~Plans
On January 1, 2016, the Company adopted the 2016 Employee Equity Incentive Plan (the “2016 EIP”) for the purpose of having equity awards available to allow for equity participation by its employees. The 2016 EIP ~~allows~~allowed 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 common shares. The 2016 EIP is governed by the Company’s board, or a committee that may be appointed by the board in the future. The ~~plan~~2016 EIP expired during 2021 but allows for the prospective issuance of ~~additional~~ shares of common stock subject to vesting of awards made prior to expiration of the ~~plan.~~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, which may be issued in the form of stock options, stock appreciation rights, or common shares. The 2021 EIP is governed by the Company’s board, or a committee that may be appointed by the board in the future. ~~No awards were made under~~

HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 13 – SHAREHOLDERS’ EQUITY (CONTINUED)
Amounts recognized in the ~~2021 EIP during~~financial statements with respect to the EIPs in the three ~~or nine~~ months ended ~~September 30~~March 31, 2022 and 2021 ~~or 2020.~~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 2016 EIP outstanding~~stock option activity as of and for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:
2021 2020
Outstanding at beginning of the period 2,603,528 1,874,063
Granted during the period 1,015,047 664,465
Forfeited during the period (52,500 ) (62,500 )
Outstanding at end of the period 3,566,075 2,476,028

Shares vested at period-end 3,476,075 2,176,028
Weighted average grant date fair value of shares granted during the period $ 0.27 $ 0.14
Aggregate grant date fair value of shares granted during the period $ 4,050 $ 18,760
Shares available for grant pursuant at period-end 8,923,855 9,778,403
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-based~~As of March 31, 2022, there was $108,313 of total unrecognized compensation cost related to options granted under the EIPs. That cost is expected to be recognized ~~for employee grants was $60,422 and $79,196~~over a weighted-average period of 2.4 years.
The total fair value of options vested during the three months ended ~~September 30,~~March 31, 2022 and 2021 was $2,627 and ~~2020, respectively, and $239,729 and $109,349~~$46,746, respectively. The aggregate intrinsic value of share options exercised during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 was $388 and ~~2020,~~$9,725, respectively. ~~Total unrecognized stock compensation related to these grants was $25,575 as~~During the three months ended March 31, 2022, the Company issued 1,394 shares upon cashless exercise of ~~September 30, 2021.~~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.
~~A summary~~The fair value of each stock option award is estimated on the ~~status~~date of ~~nonvested shares issued pursuant to~~grant using a binomial lattice option-pricing model based on the ~~2016 EIP as of and for~~assumptions noted in the ~~nine~~following table. No options were granted during the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020~~2021. The Company’s accounting policy is ~~presented below:~~to estimate forfeitures in determining the amount of total compensation cost to record each period.
2021 2020
Weighted Weighted
Average Average
Grant Date Grant Date
Shares Fair Value Shares Fair Value
Nonvested at beginning of period 200,000 $ 0.17 332,500 $ 0.17
Granted 1,015,047 $ 0.27 664,465 $ 0.14
Vested (1,075,047 ) $ (0.26 ) (609,465 ) $ (0.14 )
Forfeited (50,000 ) $ (0.10 ) (87,500 ) $ (0.06 )
Nonvested at end of period 90,000 $ 0.19 300,000 $ 0.20

HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2021~~MARCH 31, 2022
(UNAUDITED)
NOTE 1413 – SHAREHOLDERS’ EQUITY (CONTINUED)
During the nine months ended September 30, 2021 and 2020, the Company issued 1,235,047 and 724,992 shares under the 2016 EIP pursuant to the grants and vesting described in the tables above, respectively, of which 428,543 and 724,992, respectively were issued to employees and 806,504 and -0-, respectively, were issued to directors.
~~Employee Stock Options~~
The following table summarizes the status ~~of options outstanding as of~~ and ~~for the nine months ended September 30, 2021 and 2020:~~
2021 2020
Weighted Weighted
Average Average
Exercise Exercise
Number Price Number Price
Outstanding at beginning of the period 3,111,750 $ 0.20 3,269,250 $ 0.21
Granted during the period 80,000 $ 0.75 60,000 $ 0.09
Exercised during the period (145,500 ) $ (0.11 ) --- $ ---
Forfeited during the period (32,500 ) $ (0.16 ) (80,000 ) $ (0.26 )
Outstanding at end of the period 3,013,750 $ 0.22 3,249,250 $ 0.20
~~The following table summarizes information about the Company’s stock options outstanding as of September 30, 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
$ --- to 0.25 1,652,500 5.9 $ 0.13 1,381,250 0.11
$ 0.25 to 0.50 1,281,250 7.1 $ 0.30 762,500 0.30
$ 0.51 to 0.77 80,000 9.7 $ 0.75 30,000 0.75
$ 0.08 to 0.31 3,013,750 6.5 $ 0.22 2,173,750 $ 0.19
Total stock-based compensation recognized related to option grants was $9,615 and $19,305 during the three months ended September 30, 2021 and 2020, respectively, and $64,304 and $61,155 during the nine months ended September 30, 2021 and 2020, respectively. During the nine months ended September 30, 2021, the Company received $16,450 upon the exercise of 145,500 options with exercise prices between $0.10 and $0.252. There were no options exercised during the nine months ended September 30, 2020.
~~A summary of the status~~activity of nonvested options issued pursuant to the ~~EIP~~EIPs as of and for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020 is presented below:~~2021:
2021 2020 2022 2021
Weighted Weighted Weighted Weighted
Average Average Average Average
Grant Date Grant Date Grant Date Grant Date
Shares Fair Value Shares Fair Value
Nonvested at beginning of period 1,044,375 $ 0.21 1,636,250 $ 0.22
Stock options Shares Fair Value Shares Fair Value
Nonvested options at beginning of period 858,750 $ 0.23 1,044,375 $ 0.21
Granted 80,000 $ 0.62 60,000 $ 0.07 — $ — — $ —
Vested (255,000 ) $ (0.25 ) (379,375 ) $ (0.20 ) (12,500 ) $ (0.21 ) (225,000 ) $ (0.21 )
Forfeited (29,375 ) $ (0.12 ) (80,000 ) $ (0.21 ) (75,000 ) $ (0.32 ) (29,375 ) $ (0.12 )
Nonvested at end of period 840,000 $ 0.24 1,236,875 $ 0.21
Nonvested options at end of period 771,250 $ 0.22 790,000 $ 0.22
Stock Grants
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 grant 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 cost related to stock grants made 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 March 31, 2022 and 2021 was $0.19 per share and $0.11 per share, respectively. The aggregate fair value of share grants that vested during the three months ended March 31, 2022 and 2021 was $15,138 and $10,810, respectively.
The fair value of each stock grant is calculated using the closing sale price of the Company’s common stock on the date of grant 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
~~SEPTEMBER 30, 2021~~MARCH 31, 2022
(UNAUDITED)
NOTE 1514 – CONTINGENT ACQUISITION CONSIDERATION
~~Contingent acquisition consideration as of September 30, 2021 and December 31, 2020 was comprised of the following:~~
September 30, December 31,
2021 2020

Fair value of HCFM contingent acquisition consideration $ 169,005 $ 301,236
Fair value of CHM contingent acquisition consideration 245,102 682,661
Fair value of MOD contingent acquisition consideration 632,605 516,543

$ 1,046,712 $ 1,500,440
Contingent acquisition consideration relates to future earn-out payments potentially payable related to the Company’s acquisitions of ~~HCFM,~~Hughes Center for Functional Medicine (“HCFM”) in 2019 and CHM and ~~MOD.~~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.” ~~Gain (loss) from~~
Contingent acquisition consideration as of 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 ~~was $126,411 and $45,996 during the three months ended September 30, 2021 and 2020, respectively, and ($234,678) and $687 during the nine months ended September 30, 2021 and 2020, respectively.~~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 ~~September 30, 2021:~~March 31, 2022:
2021 (October to December) $ 16,632
2022 325,904
2022 (April to December) $ 317,756
2023 352,809 218,227
2024 351,367 211,385
$ 1,046,712 $ 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.

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 1615 – 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 ~~between 2020 and~~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, which was acquired by the Company in October 2020.~~
MOD.

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 16 – COMMITMENTS AND CONTINGENCIES (CONTINUED)~~
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
~~None.~~
~~Leases~~None.
Leases
Maturities of operating lease liabilities were as follows as of ~~September 30, 2021:~~March 31, 2022:
2021 (October to December) $ 107,623
2022 383,619 $ 284,905
2023 273,844 285,721
2024 11,877
2025 11,877
2026 11,877
2027 990
Total lease payments 765,086 607,247
Less interest (162,443 ) (108,043 )
Present value of lease liabilities $ 602,643 $ 499,204
Employment/Consulting Agreements
The Company has employment agreements with certain of its 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-based pay later in the contract.
On July 1, 2016, the 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 the Company. If Dr. Dent’s employment is terminated by the 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,~~2018, the Company entered into an agreement with Mr. George O’Leary, the 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 is terminated by the 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. ~~In the event that Mr. O’Leary terminates the~~The agreement he shall be entitled to any accrued by unpaid salary and other benefits up to and including the date of termination. On July 1, 2018, the Company and Mr. O’Leary entered into an Extension Letter Agreement pursuant to which Mr. O’Leary was increased to full time employment (previously half-time) and agreed to extend the term of his employment to Septemberexpires on June 30, 2022. In addition to a base salary, the ~~extension provides~~agreement provided Mr. O’Leary with 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 Company 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 such legal proceedings that will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
NOTE 1716 – SEGMENT REPORTING
The Company has ~~four~~4 reportable segments: Health Services, Digital Healthcare, ACO/MCO and Medical 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, (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 Company’s Digital Healthcare segment develops and plans to operate an online personal medical information and record archive system, the “HealthLynked Network,” which will enable patients and doctors to keep track of medical information via the Internet in a cloud-based system. The 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 virtual distributor of discounted medical supplies selling to both consumers and medical practices throughout the 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 CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
NOTE 16 – SEGMENT REPORTING (CONTINUED)
Segment information for the three months ended ~~September 30, 2021~~March 31, 2022 was as follows:
Three Months Ended September 30, 2021 Three Months Ended March 31, 2022
Health
Services Digital
Healthcare ACO /
MSO Medical
Distribution Total Health Services Digital Healthcare ACO / MSO Medical Distribution Total
Revenue
Patient service revenue, net $ 1,394,356 $ --- $ --- $ --- $ 1,394,356 $ 1,375,685 $ — $ — $ — $ 1,375,685
Medicare shared savings revenue --- --- 2,419,312 --- 2,419,312 — — — — —
Consulting and event revenue --- --- 69,595 --- 69,595
Subscription, consulting and event revenue — 6,624 77,594 — 84,218
Product revenue --- --- --- 161,456 161,456 — — — 146,969 146,969
Total revenue 1,394,356 --- 2,488,907 161,456 4,044,719 1,375,685 6,624 77,594 146,969 1,606,872

Operating Expenses
Practice salaries and benefits 739,024 --- --- --- 739,024 718,073 — — — 718,073
Other practice operating expenses 549,086 --- --- --- 549,086 562,651 — — — 562,651
Medicare shared savings expenses --- --- 1,748,585 --- 1,748,585 — — 227,729 — 227,729
Cost of product revenue --- --- --- 145,432 145,432 — — — 160,811 160,811
Selling, general and administrative expenses --- 1,093,461 --- 54,130 1,147,591 — 1,264,876 — 70,264 1,335,140
Depreciation and amortization 26,196 2,215 --- 176,900 205,311 25,518 1,472 — 176,900 203,890
Total Operating Expenses 1,314,306 1,095,676 1,748,585 376,462 4,535,029 1,306,242 1,266,348 227,729 407,975 3,208,294

(Loss) income from operations $ 80,050 $ (1,095,676 ) $ 740,322 $ (215,006 ) $ (490,310 )
Income (loss) from operations $ 69,443 $ (1,259,724 ) $ (150,135 ) $ (261,006 ) $ (1,601,422 )

Other Segment Information
Interest expense (income) $ 2,706 $ 1,412 $ --- $ --- $ 4,118 $ 2,812 $ 2,211 $ — $ — $ 5,023
Change in fair value of contingent acquisition consideration $ --- $ (126,411 ) $ --- $ --- $ (126,411 ) $ — $ (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

HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2021~~MARCH 31, 2022
(UNAUDITED)
NOTE 1716 – SEGMENT REPORTING (CONTINUED)
~~Segment information for the nine months ended September 30, 2021 was as follows:~~
Nine Months Ended September 30, 2021
Health
Services Digital
Healthcare ACO / MSO Medical
Distribution Total
Revenue
Patient service revenue, net $ 4,379,282 $ --- $ --- $ --- $ 4,379,282
Medicare shared savings revenue --- --- 2,419,312 --- 2,419,312
Consulting and event revenue --- 11,905 217,209 --- 229,114
Product revenue --- --- --- 512,325 512,325
Total revenue 4,379,282 11,905 2,636,521 512,325 7,540,033

Operating Expenses
Practice salaries and benefits 2,305,993 --- --- --- 2,305,993
Other practice operating expenses 1,790,874 --- --- --- 1,790,874
Medicare shared savings expenses --- --- 2,157,555 --- 2,157,555
Cost of product revenue --- --- --- 474,026 474,026
Selling, general and administrative expenses --- 3,472,493 --- 188,713 3,661,206
Depreciation and amortization 83,493 3,405 --- 536,540 623,438
Total Operating Expenses 4,180,360 3,475,898 2,157,555 1,199,279 11,013,092

(Loss) income from operations $ 198,922 $ (3,463,993 ) $ 478,966 $ (686,954 ) $ (3,473,059 )

Other Segment Information
Interest expense (income) $ 5,145 $ 8,038 $ --- $ (100 ) $ 13,083
Loss (gain) on extinguishment of debt $ (502,959 ) $ 5,471,884 $ --- $ (11,757 ) $ 4,957,168
Change in fair value of debt $ --- $ 19,246 $ --- $ --- $ 19,246
Change in fair value of contingent acquisition consideration $ --- $ 234,678 $ --- $ --- $ 234,678
September 30, 2021
Identifiable assets $ 2,104,819 $ 3,967,850 $ 2,850,949 $ 2,890,389 $ 11,814,007
Goodwill $ --- $ --- $ 381,856 $ 766,249 $ 1,148,105

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 17 – SEGMENT REPORTING (CONTINUED)~~
Segment information for the three months ended ~~September 30, 2020~~March 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
Three Months Ended September 30, 2020
Health
Services Digital
Healthcare ACO / MSO Medical
Distribution Total
Revenue
Patient service revenue, net $ 1,054,806 $ --- $ --- $ --- $ 1,054,806
Medicare shared savings revenue --- --- 767,744 --- 767,744
Consulting revenue --- --- 217,605 --- 217,605
Product revenue --- --- --- --- ---
Total revenue 1,054,806 --- 985,349 --- 2,040,155

Operating Expenses
Practice salaries and benefits 590,690 --- --- --- 590,690
Other practice operating expenses 548,667 --- --- --- 548,667
Medicare shared savings expenses --- --- 759,848 --- 759,848
Cost of product revenue --- --- --- --- ---
Selling, general and administrative expenses --- 958,874 --- --- 958,874
Depreciation and amortization 24,557 594 --- --- 25,151
Total Operating Expenses 1,163,914 959,468 759,848 --- 2,883,230

Loss from operations $ (109,108 ) $ (959,468 ) $ 225,501 $ --- $ (843,075 )

Other Segment Information
Interest expense $ 23,186 $ 49,349 $ --- $ --- $ 72,535
Loss on sales of marketable securities $ --- $ 281,606 $ --- $ --- $ 281,606
Loss on extinguishment of debt $ --- $ 450,999 $ --- $ --- $ 450,999
Amortization of original issue and debt discounts on convertible notes $ --- $ 65,816 $ --- $ --- $ 65,816
Change in fair value of debt $ --- $ 79,062 $ --- $ --- $ 79,062
Change in fair value of derivative financial instruments $ --- $ (12,802 ) $ --- $ --- $ (12,802 )
Change in fair value of contingent acquisition consideration $ --- $ (45,996 ) $ --- $ --- $ (45,996 )

~~HEALTHLYNKED CORP.~~
~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2021~~
~~(UNAUDITED)~~
~~NOTE 17 – SEGMENT REPORTING (CONTINUED)~~
~~Segment information for the nine months ended September 30, 2020 was as follows:~~
Nine Months Ended September 30, 2020
Health Services Digital Healthcare ACO / MSO Medical Distribution Total
Revenue
Patient service revenue, net $ 3,502,836 $ --- $ --- $ --- $ 3,502,836
Medicare shared savings revenue --- --- 767,744 --- 767,744
Consulting revenue --- --- 268,025 --- 268,025
Product revenue --- --- --- --- ---
Total revenue 3,502,836 --- 1,035,769 --- 4,538,605

Operating Expenses
Practice salaries and benefits 1,910,897 --- --- --- 1,910,897
Other practice operating expenses 1,633,380 --- --- --- 1,633,380
Medicare shared savings expenses --- --- 824,084 --- 824,084
Cost of product revenue --- --- --- --- ---
Selling, general and administrative expenses --- 2,116,159 --- --- 2,116,159
Depreciation and amortization 73,027 1,784 --- --- 74,811
Total Operating Expenses 3,617,304 2,117,943 824,084 --- 6,559,331

Loss from operations $ (114,468 ) $ (2,117,943 ) $ 211,685 $ --- $ (2,020,726 )

Other Segment Information
Interest expense $ 35,096 $ 158,038 $ --- $ --- $ 193,134
Loss on sales of marketable securities $ --- $ 281,606 $ --- $ --- $ 281,606
Loss on extinguishment of debt $ --- $ 1,347,371 $ --- $ --- $ 1,347,371
Amortization of original issue and debt discounts on convertible notes $ --- $ 530,930 $ --- $ --- $ 530,930
Change in fair value of debt $ --- $ 198,764 $ --- $ --- $ 198,764
Change in fair value of derivative financial instruments $ --- $ (739,485 ) $ --- $ --- $ (739,485 )
Change in fair value of contingent acquisition consideration $ --- $ (687 ) $ --- $ --- $ (687 )
September 30, 2020
Identifiable assets $ 2,250,647 $ 952,716 $ 901,736 $ --- $ 4,105,099
Goodwill $ --- $ --- $ 1,454,856 $ --- $ 1,454,856
The Digital Healthcare ~~segment recognized revenue~~made intercompany sales of ~~$400~~$280 and ~~$1,366~~$180 in the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $743 and $3,797 in the nine months ended September 30, 2021 and 2020,~~ respectively, related to subscription revenue billed to and paid for by the Company’s physicians for access to the HealthLynked Network. The ~~revenue for Digital Healthcare~~Medical Distribution segment made intercompany sales of $13,533 and $-0- in the three months ended March 31, 2022 and 2021, respectively, related ~~expense for~~to medical products sold to practices in the Company’s Health Services ~~were~~segment. Intercompany revenue and the related costs are eliminated on consolidation.
NOTE 1817 – 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, ~~as well as~~ derivative financial instruments arising from conversion features embedded in convertible promissory notes for which the conversion rate iswas not ~~fixed.~~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 evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made.

HEALTHLYNKED CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2021~~MARCH 31, 2022
(UNAUDITED)
NOTE 1817 – FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The following table summarizes the conclusions reached regarding fair value measurements as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:
As of September 30, 2021 As of March 31, 2022 As of December 31, 2021
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Level 1 Level 2 Level 3 Fair Value
Liability-classified equity instruments $ — $ — $ 136,875 $ 136,875 $ — $ — $ 162,500 $ 162,500
Contingent acquisition consideration $ --- $ --- $ 1,046,712 $ 1,046,712 — — 747,368 747,368 — — 1,185,690 1,185,690

Total $ --- $ --- $ 1,046,712 $ 1,046,712 $ — $ — $ 884,243 $ 884,243 $ — $ — $ 1,348,190 $ 1,348,190
As of December 31, 2020
Total
Level 1 Level 2 Level 3 Fair Value
Convertible notes payable $ --- $ --- $ 1,336,350 $ 1,336,350
Contingent acquisition consideration --- --- 1,500,440 1,500,440

Total $ --- $ --- $ 2,836,790 $ 2,836,790
The changes in Level 3 financial instruments that are measured at fair value on a recurring basis during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were as follows:
Three Months Ended
September 30, Nine Months Ended
September 30, Three Months Ended
March 31,
2021 2020 2021 2020 2022 2021

Convertible notes payable $ --- $ (46,094 ) $ (19,246 ) $ (117,829 ) $ — $ (19,246 )
Notes payable to related party --- (32,968 ) --- (80,935 )
Derivative financial instruments --- 12,802 --- 739,485
Contingent acquisition consideration 126,411 45,996 (234,678 ) 687 438,322 (635,700 )

Total $ 126,411 $ (20,264 ) $ (253,924 ) $ 541,408 $ 438,322 $ (654,946 )
NOTE 1918 – SUBSEQUENT EVENTS

~~None.~~On May 13, 2022, the Company entered into an agreement to acquire Aesthetic Enhancements Unlimited (“AEU”), a patient 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 price includes $325,000 cash, 792,394 shares of Company common stock, and the assumption of up to $75,000 in liabilities. AEU will be incorporated into the Company’s Health Services segment. Closing is expected to be completed the week of May 16, 2022.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. 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 section titled “Item 1A. Risk Factors” included in our most recent Annual Report on Form 10-K. All amounts in this report are in U.S. dollars, unless otherwise noted.
Overview
HealthLynked Corp. (the “Company,” “we,” “our,” or “us”) was incorporated in the State of Nevada on August 4, 2014. 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 the Medical Distribution Division. Our 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, (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 ~~opened in January 2020~~ 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,” which enables patients and doctors to keep track of medical information via the Internet in a cloud-based system. Our ACO/MSO Division is comprised of the ~~business acquired~~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 virtual distributor of discounted medical supplies selling to both consumers and medical practices throughout the United States we acquired on October 19, 2020.
~~Recent Developments~~
During August 2021, we sold in a registered direct offering 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, resulting in gross proceeds of $2,000,000. Net proceeds after offering costs and expenses were $1,719,921.
During the nine months ended September 30, 2021, we sold 13,161,943 shares of common stock in 53 separate private placement transactions. We received $4,328,725 in proceeds from the sales. In connection with these stock sales, we also issued 6,581,527 five-year warrants to purchase shares of common stock at exercise prices between $0.27 and $1.05 per share. During the same period, we also issued 3,006,098 shares pursuant to draws under the Investment Agreement for additional gross proceeds of $900,636.
~~See “Liquidity and Capital Resources-Significant Liquidity Events-Investment Agreement” below for further details on the financing transactions.~~
Critical accounting policies and significant judgments and estimates
~~See~~For a discussion of our critical accounting policies, see Note 2, “Significant Accounting Policies,” in the Notes to consolidated Financial Statements.

Results of Operations
Comparison of Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~
The following table summarizes the changes in our results of operations for the three months ended ~~September 30, 2021~~March 31, 2022 compared with the three months ended ~~September 30, 2020:~~March 31, 2021:
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 %
Three Months Ended September 30, Change
2021 2020 $ %

Patient service revenue, net $ 1,394,356 $ 1,054,806 $ 339,550 32 %
Medicare shared savings revenue 2,419,312 767,744 1,651,568 215 %
Consulting and event revenue 69,595 217,605 (148,010 ) 68 %
Product revenue 161,456 --- 161,456 *
Total revenue 4,044,719 2,040,155 2,004,564 98 %

Operating Expenses and Costs
Practice salaries and benefits 739,024 590,690 148,334 25 %
Other practice operating expenses 549,086 548,667 419 0 %
Medicare shared savings expenses 1,748,585 759,848 988,737 130 %
Cost of product revenue 145,432 --- 145,532 *
Selling, general and administrative expenses 1,147,591 958,874 188,717 20 %
Depreciation and amortization 205,311 25,151 180,160 716 %
Loss from operations (490,310 ) (843,075 ) 352,765 42 %

Other Income (Expenses)
Loss on sales of marketable securities --- (281,606 ) 281,606 100 %
Loss on extinguishment of debt --- (450,999 ) 450,999 100 %
Change in fair value of debt --- (79,062 ) 79,062 100 %
Amortization of original issue and debt discounts on notes payable and convertible notes --- (65,816 ) 65,816 100 %
Change in fair value of derivative financial instruments --- 12,802 (12,802 ) 100 %
Change in fair value of contingent acquisition consideration 126,411 45,996 80,415 175 %
Interest expense (4,118 ) (72,535 ) 68,417 94 %
Total other income (expenses) 122,293 (891,220 ) 1,013,513 114 %

Net loss $ (368,017 ) $ (1,734,295 ) $ 1,366,278 79 %
Revenue
* - Denotes new line item on statement of operations for which there was no corresponding activity in the same period of 2020.
~~Revenue~~
Patient service revenue in the three months ended ~~September 30, 2021 increased~~March 31, 2022 decreased by ~~$339,550,~~$138,691, or ~~32%~~9% year-over-year, to ~~$1,394,365,~~$1,375,685, primarily as a result of ~~increased~~decreased patient service revenue at our ~~NCFM~~NWC practice of ~~$230,331,~~$199,205 due to the departure of a physician, offset by year-over-year increases at our ~~NWC practice~~NCFM and BTG practices of ~~$85,975,~~$58,190 and ~~increases at our BTG practice of $23,065.~~$2,324, respectively.
Medicare shared savings revenue in the three months ended September 30, 2021 increased by $1,651,568, or 215%, year-over-year to $2,419,312 as a result of the higher $2,419,312 MSSP payment received in September 2021 compared to a payment of $767,744 received in September 2020.
~~Consulting~~Subscription, consulting and event revenue in the three months ended ~~September 30, 2021~~March 31, 2022 decreased by ~~$148,010,~~$3,437, or ~~68%~~4% year-over-year to ~~$69,595 as a result~~$84,218. Consulting revenue of ~~decreased consulting revenue~~$77,594 was earned by the ACO/MSO Division in ~~our ACO/MSO Division.~~

~~Product revenue was $161,456~~2022, compared to $76,452 in the three months ended ~~September 30,~~March 31, 2021. Subscription and event revenue of $6,624 and $11,113 in 2022 and 2021, respectively, was earned from Digital Healthcare division subscription revenues and attendance fees for the Company’s annual healthcare summit.
Product revenue was $146,969 in 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 ~~acquired with MOD in October 2020, so there was no corresponding revenue in the three months ended September 30, 2020.~~of MOD.
Operating Expenses and Costs
Practice salaries and benefits increased by ~~$148,334,~~$54,136, or ~~25%~~8%, to ~~$739,024~~$718,073 in the three months ended ~~September 30, 2021~~March 31, 2022 primarily as a result of increased staffing at ~~each of~~ our ~~service facilities relative~~NCFM facility corresponding to ~~2020 to meet~~ an increase in patient visits in ~~2021 relative to 2020.~~2022.
Other practice operating costs ~~increased~~decreased by ~~$419,~~$168,133, or ~~less than 1%~~23%, to ~~$549,086~~$562,651 in the three months ended March 31, 2022, due ~~primarily~~ to ~~higher costs~~reduced overhead at ~~NCFM corresponding to the increase in revenue.~~each of our facilities.

Medicare shared savings expenses increased by ~~$988,737,~~$16,222, or ~~130%,~~8% to ~~$1,748,585 as a result of~~$227,729 in the ~~higher $2,419,312 MSSP payment received in September 2021 compared to a payment of $767,744 received in September 2020, resulting in higher payments to participating providers.~~three months ended March 31, 2022. Medicare shared savings expenses represent costs incurred to deliver Medicare shared savings revenue, including overhead and consulting fees related to advising participating physician practices, as well as the physicians’ ~~contractual~~ portion of any shared savings received by the ACO.
Cost of product revenue was ~~$145,432~~$160,811 in the three months ended ~~September 30, 2021. Cost~~March 31, 2022, a decrease of product revenue relates to the cost of medical products sold by the Medical Distribution Division, which is comprised of the operations acquired with MOD in October 2020, so there was no corresponding cost in the three months ended September 30, 2020.
~~Selling, general and administrative costs increased by $188,717,~~$7,785, or ~~20%~~5%, ~~to $1,147,591 in the three months ended September 30, 2021~~ compared to the same period of ~~2020,~~2021, corresponding the decrease in year-over-year sales.
Selling, general and administrative costs decreased by $30,997, or 2%, to $1,335,140 in the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily due to lower stock-based and cash-based consulting fees, and legal and accounting fees in 2022 compared to 2021, offset by more personnel and overhead costs in our corporate function in connection with our continued expansion, as well as increased ~~legal, accounting and consulting fees, stock-based consulting fees, and development and promotional costs associated with building and marketing the HealthLynked Network and its related applications.~~
Depreciation and amortization increased the three months ended September 30, 2021 by $180,160, or 716%, to $205,311 compared to the same period in 2020, primarily as a result of amortization of finite-lived intangible assets acquired in the MOD acquisition.
Loss from operations decreased by $352,765, or 42%, to $490,310 in the three months ended September 30, 2021 compared to the same period in 2020, primarily as a result of a year-over-year increase in Medicare shared savings revenue of $1,651,568, offset by higher selling, general and administrative costs and higher amortization expense related to acquired intangible assets.
~~Other Income (Expenses)~~
Loss on sales of marketable securities was $281,606, or 100%, in the three months ended September 30, 2020. Such losses arose in the three months ended September 30, 2020 from sales of marketable securities in the August 2020 Equity Transaction at prices below the acquisition price. There were no such losses in the three months ended September 30, 2021.
Loss on extinguishment of debt of $450,999 in the three months ended September 30, 2020 arose when the fair value of consideration paid to retire previously outstanding convertible note exceeded the carrying value of the instruments retired, including any related derivative financial instruments, such as embedded conversion features. No such debt was retired, and therefore there were no corresponding charges, in the three months ended September 30, 2021.
Loss from the change in fair value of debt of $79,062 in the three months ended September 30, 2020 resulted from certain convertible notes 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 and revalued at each period end. After conversion of our remaining convertible notes outstanding in January 2021, we had no further debt carried at fair value, and therefore no change in fair value of debt in the three months ended September 30, 2021.
Amortization of original issue and debt discounts was $65,816 in the three months ended September 30, 2020. With the retirement in 2020 of all floating rate convertible notes that with discounts subject to amortization, there were no corresponding charges in the three months ended September 30, 2021.
Gain from the change in fair value of derivative financial instruments was $12,802 in the three months ended September 30, 2020. We retired all derivative financial instruments in 2020 with the repayment of all adjustable-rate convertible notes payable that had associated embedded conversion feature derivatives, so there were no corresponding charges in the three months ended September 30, 2021.

Gains from the change in fair value of contingent acquisition consideration increased by $80,415, or 175%, to $126,411 in the three months ended September 30, 2021. Fair value of contingent acquisition consideration relates to future acquisition consideration that may be payable if certain prescribed performance milestones are met by businesses acquired by us, including NCFM (acquired in April 2019), CHM (acquired in May 2020), and MOD (acquired in October 2020). The fair value of contingent acquisition consideration is remeasured at each reporting period using a probability-weighted discounted cash flow model. The increase in gains in 2021 was due primarily to a $218,201 decrease in fair value of contingent acquisition consideration related to our acquisition of MOD, which is payable in a fixed number of shares upon achievement of annual revenue milestones of the underlying business between 2021 and 2024.
Interest expense decreased by $68,417, or 94%, to $4,118 in the three months ended September 30, 2021 when compared to the same period in 2020, as a result of the repayment and conversion of convertible notes and notes payable to related parties during 2020, combined with low-interest government loans added to our balance sheet, resulting in substantially lower debt balances in 2021.
Total other income (expenses) increased by $1,013,513, or 114%, in the three months ended September 30, 2021 to income of $122,293 compared to expense in the same period in 2020 of $891,220, primarily as a result of other expenses incurred in 2020 – including loss on sales of marketable securities, loss on extinguishment of debt, loss on change in fair value of debt, amortization of original issue and debt discounts on notes payable and convertible notes, and change in fair value of derivative financial instruments – related to convertible debt and other instruments no longer held by us, resulting in no corresponding charges in the three months ended September 30, 2021.
Net loss decreased by $1,366,278, or 79%, to $368,017 in the three months ended September 30, 2021 when compared to the same period in 2020, primarily as a result of (i) debt-related charges incurred in 2020 corresponding to debt that has since been retired, (ii) a 100% increase in our revenue streams year-over year, including an increase of $1,651,568 in our annual MSSP revenue receipt, (iii) losses on sales of marketable securities incurred in 2020 with corresponding losses in 2021, and (iv) increased gains on the reduction in fair value of contingent acquisition consideration payable related to three of our acquisitions. The lower loss was offset by increases in Medicare shared savings expenses corresponding to the increase in MSSP revenue and selling, general and administrative expenses.

~~Comparison of Nine months Ended September 30, 2021 and 2020~~
~~The following table summarizes the changes in our results of operations for the nine months ended September 30, 2021 compared with the nine months ended September 30, 2020:~~
Nine Months Ended September 30, Change
2021 2020 $ %

Patient service revenue, net $ 4,379,282 $ 3,502,836 $ 876,446 25 %
Medicare shared savings revenue 2,419,312 767,744 1,651,568 215 %
Consulting and event revenue 229,114 268,025 (38,911 ) 15 %
Product revenue 512,325 --- 512,235 *
Total revenue 7,540,033 4,538,605 3,001,428 66 %

Operating Expenses and Costs
Practice salaries and benefits 2,305,993 1,910,897 395,096 21 %
Other practice operating expenses 1,790,874 1,633,380 157,494 10 %
Medicare shared savings expenses 2,157,555 824,084 1,333,471 162 %
Cost of product revenue 474,026 --- 474,026 *
Selling, general and administrative expenses 3,661,206 2,116,159 1,545,047 73 %
Depreciation and amortization 623,438 74,811 548,627 733 %
Loss from operations (3,473,059 ) (2,020,726 ) (1,452,333 ) 72 %

Other Income (Expenses)
Loss on sales of marketable securities --- (281,606 ) 281,606 100 %
Loss on extinguishment of debt (4,957,168 ) (1,347,371 ) (3,609,797 ) 268 %
Change in fair value of debt (19,246 ) (198,764 ) 179,518 90 %
Amortization of original issue and debt discounts on notes payable and convertible notes --- (530,930 ) 530,930 100 %
Change in fair value of derivative financial instruments --- 739,485 (739,485 ) 100 %
Change in fair value of contingent acquisition consideration (234,678 ) 687 (235,365 ) 34260 %
Interest expense (13,083 ) (193,134 ) 180,051 93 %
Total other expenses (5,224,175 ) (1,811,633 ) (3,412,542 ) 188 %

Net loss $ (8,697,234 ) $ (3,832,359 ) $ (4,864,875 ) 127 %
* - Denotes new line item on statement of operations for which there was no corresponding activity in the same period of 2020.
~~Revenue~~
Patient service revenue in the nine months ended September 30, 2021 increased by $876,446, or 25% year-over-year, to $4,379,282 primarily as a result of increased patient service revenue at our NCFM practice of $661,277, increases at our NWC practice of $200,832, and increases at our BTG practice of $14,158.
Medicare shared savings revenue in the nine months ended September 30, 2021 increased by $1,651,568, or 215%, to $2,419,312 year-over-year as a result of the higher $2,419,312 MSSP payment received in September 2021 compared to a payment of $767,744 received in September 2020.
Consulting and event revenue in the nine months ended September 30, 2021 decreased by $38,911, or 15% year-over-year to $229,114. Consulting revenue of $217,209 was earned by the ACO/MSO Division in 2021, compared to $268,025 in the corresponding period of 2020. Event revenue of $11,905 was earned in connection with the HealthLynked Future of Healthcare Summit held in March 2021.

Product revenue was $512,325 in the nine months ended September 30, 2021. Product revenue was earned by the Medical Distribution Division comprised of the operations acquired with MOD in October 2020, so there was no corresponding revenue in the nine months ended September 30, 2020.
~~Operating Expenses and Costs~~
Practice salaries and benefits increased by $395,096, or 21%, to $2,305,993 in the nine months ended September 30, 2021 primarily as a result of increased staffing at each of our service facilities relative to 2020 to meet an increase in patient visits in 2021 relative to 2020.
~~Other practice operating costs increased by $157,494, or 10%, to 1,790,874 in the nine months ended September 30, 2021 corresponding to increased revenue at NCFM and NWC practices.~~
Medicare shared savings expenses increased by $1,331,471, or 162% to $2,157,555 as a result of the higher $2,419,312 MSSP payment received in September 2021 compared to a payment of $767,744 received in September 2020, resulting in higher payments to participating providers. Medicare shared savings expenses represent costs incurred to deliver Medicare shared savings revenue, including overhead and consulting fees related to advising participating physician practices, as well as the physicians’ contractual portion of any shared savings received by the ACO.
Cost of product revenue was $474,026 in the nine months ended September 30, 2021. Cost of product revenue relates to the cost of medical products sold by the newly formed Medical Distribution Division, which is comprised of the operations acquired with MOD in October 2020, so there was no corresponding cost in the nine months ended September 30, 2020.
Selling, general and administrative costs increased by $1,545,047, or 73%, to $3,661,206 in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to increased stock-based consulting fees, cash-based legal, accounting and consulting fees, more personnel in our corporate function in connection with our continued expansion, and higher advertising, promotional and development costs associated with developing and marketing the HealthLynked Network and related applications.
Depreciation and amortization ~~increased~~decreased the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 by ~~$548,627,~~$7,768, or ~~733%~~4%, to ~~$623,438~~$203,890 compared to the ~~same period in 2020,~~three months ended March 31, 2021, primarily as a result of ~~amortization~~certain fixed assets reaching the end of ~~finite-lived intangible assets acquired in the MOD acquisition.~~their depreciable lives.
Loss from operations increased by ~~$1,452,333,~~$33,497, or ~~72%~~2%, to ~~$3,473,059~~$1,601,422 in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~same period in 2020,~~three months ended March 31, 2021, primarily as a result of ~~increased selling, general~~lower patient service revenue and ~~administrative costs related to our expansion as well as amortization of intangibles from MOD, offset by increases~~an increase in ~~each of our revenue streams.~~practice salaries and benefits.
Other Income (Expenses)
Loss on sales of marketable securities was $281,606, or 100%, in the nine months ended September 30, 2020. Such losses arose in the three months ended September 30, 2020 from sales of marketable securities in the August 2020 Equity Transaction at prices below the acquisition price. There were no such losses in the three months ended September 30, 2021.
Loss on extinguishment of debt in the ~~nine~~three months ended ~~September 30,~~March 31, 2021 ~~increased by $3,609,797, or 268%, to $4,957,168 as compared to the same period in 2020,~~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 13,538,494 shares of common stock at an exercise price of $0.30 per share. In connection with the conversion, we recognized a loss on debt extinguishment of $5,463,492 in the ~~nine~~three months ended ~~September 30,~~March 31, 2021, representing the excess of the fair value of the shares and warrant issued at conversion over the carrying value of the host instrument and accrued interest. ~~This~~No loss ~~was offset by a debt extinguishment gain of $632,826 related to the forgiveness of PPP loans in May and June 2021. Losses~~ on extinguishment of debt was recognized in the ~~nine~~three months ended ~~September 30, 2020 resulted from an excess of fair value of consideration paid to retire a convertible notes over the carrying value of the instrument and related derivatives being retired.~~March 31, 2022.
Losses from the change in fair value of debt ~~decreased by $179,518, or 90%, to~~was $19,246 ~~for~~in the ~~nine~~three months ended ~~September 30, 2021 when compared to the same period in 2020.~~March 31, 2021. Such ~~gains and~~ losses ~~result~~resulted from certain convertible notes 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 each reporting period iswas recorded as “Change in fair value of debt.” After conversion of our remaining convertible notes outstanding in January 2021, we had no further debt carried at fair ~~value.~~

~~Amortization of original issue~~value, and ~~debt discounts was $530,930 for the nine months ended September 30, 2020. With the retirement in 2020 of all floating rate convertible notes that with discounts subject to amortization, there were~~therefore no ~~corresponding charges in the nine months ended September 30, 2021.~~
~~Gains from the~~ change in fair value of ~~derivative financial instruments was $739,485 for~~debt in the ~~nine~~three months ended September 30, 2020. We retired all derivative financial instruments in 2020 with the repayment of all adjustable-rate convertible notes payable that had associated embedded conversion feature derivatives, so there were no corresponding gains or charges in the nine months ended September 30, 2021.March 31, 2022
~~(Loss) gain~~Gain (loss) from the change in fair value of contingent acquisition consideration ~~increased~~decreased by ~~$235,365,~~$1,074,022, or ~~34,260%~~169%, to a gain of $438,322 in the three months ended March 31, 2022, compared to a loss of ~~$234,678~~$635,700 in the ~~nine~~three months ended ~~September 30, 2021 when compared to the same period in 2020. The increase in the loss in 2021 was due primarily to the increase in fair value of~~March 31, 2021. Because contingent acquisition consideration related to our acquisition of MOD ~~which~~ is payable in a fixed number of shares, ~~upon achievement of annual revenue milestones of the underlying business between 2021 and 2024. Due~~changes in ~~large part to an increase in our stock price since December 31, 2020,~~ the fair value of the 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 ~~increased substantially.~~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 decreased by ~~$180,051,~~$5,565, or ~~93%~~53%, to ~~$13,083~~$5,023 for the ~~nine~~three months ended ~~September 30, 2021 when~~March 31, 2022, compared to interest expense of $10,588 in the ~~same period in 2020,~~three months ended March 31, 2021, as a result of the repayment and conversion of convertible notes and notes payable to related parties during 2020 ~~combined with~~and forgiveness of PPP loans in 2021, leaving low-interest government loans ~~added to~~as our ~~balance sheet, resulting in substantially lower debt balances in 2021.~~only debt.
Total other ~~expenses increased~~income (expenses) decreased by ~~$3,412,542,~~$6,688,827, or ~~188%~~107%, to ~~$5,224,175~~income of $433,299 in the ~~nine~~three months ended ~~September 30, 2021 when~~March 31, 2022 compared to expense of $6,255,528 in the ~~same period in 2020~~three months ended March 31, 2021. The change was primarily as a result of a ~~(i)~~ $5,589,994 loss on extinguishment of debt associated with the retirement of our last remaining convertible notes payable in 2021, ~~(ii) an increase in losses~~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, and (iii) a gain in change in fair value of derivative financial instruments in 2020 with no corresponding income or charge in 2021.~~consideration.

Net loss ~~increased~~decreased by ~~$4,864,875,~~$6,655,330, or ~~127%~~85%, to ~~$8,697,234~~$1,168,123 in the ~~nine~~three months ended ~~September 30, 2021 when~~March 31, 2022, compared to net loss of $7,823,453 in the ~~same period in 2020~~three months ended March 31, 2021, primarily as a result of (i) a loss on extinguishment of debt of $5,589,994 in 2021 associated with the retirement of our last remaining convertible notes payable, ~~in 2021,~~ (ii) ~~increased selling, general and administrative costs related to our expansion, an increase in losses~~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, ~~and~~ (iii) ~~a gain~~decreases in ~~change~~other practice operating costs in ~~fair value of derivative financial instruments in 2020 with no corresponding income or charge in 2021. The increased losses were~~our Health Services division, offset by (iv) a ~~67% overall increase~~decrease in patient services revenue, primarily at our revenue year-over-year, a gain on debt extinguishment related to the forgiveness of PPP Loans in 2021, and the retirement of convertible debt that eliminated debt discount amortization charges incurred in prior periods.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 shared savings earned. Accordingly, we recognize Medicare shared savings revenue in the period in which the CMS notifies us of the exact amount of shared savings to be paid, which historically has occurred during the three-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 ~~notification~~payment and ~~payment~~recognized revenue in September 2021, was $2,419,312. Medicare shared savings revenue for the program year ended December 31, 2019, for which we received ~~notification~~payment and ~~payment~~recognized revenue in September 2020, was $767,744. Future recognition of Medicare shared savings revenue is expected to result in a material increase in our consolidated revenues in the third fiscal quarter of each year compared to the first, second and fourth fiscal quarters. Likewise, in the period in which we recognize Medicare shared savings revenue, we also determine the amount of shared 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 each year and is expected to materially increase our total operating expenses in the third fiscal quarter compared to other quarters of the 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, 2021,~~March 31, 2022, we had cash balances of ~~$5,448,791,~~$1,926,714, working capital of ~~$3,070,164~~$503,527 and an accumulated deficit ~~$30,482,144.~~of $33,373,312. For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we had a net loss of ~~$8,697,234 and~~$1,168,123, net cash used by operating activities of ~~$1,627,184. Net cash used in investing activities was $334,581. Net~~$1,342,918, and no cash provided by financing ~~activities was $7,248,372, including $6,949,281 received from sales~~activities. 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 ~~common stock~~the conditions described above in ~~private placements, registered direct transactions~~relation to our ability to meet our obligations and ~~puts pursuant~~concluded that, without additional funding, we will not have sufficient funds to ~~the July 2016 $3 million investment agreement (the “Investment Agreement”), and $350,200 in proceeds~~meet our obligations within one year from the ~~exercise~~date 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 stock options and warrants. During January 2021, the holder of $1,038,500 fixed rate convertible debt converted the entire face value of $1,038,500, plus $317,096 of accrued interest on such notes, into 13,538,494 shares ofour common stock pursuant to the original conversion terms of the underlying notes. Following the conversion, the Company had no further convertible debt outstanding. During May 2021, PPP loans in the amount of $632,826 plus $6,503 accrued interest were forgiven.stock. During August 2021, we 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 ~~resulting in~~pursuant to the Shelf 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 Shelf 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.

~~We believe~~Without raising additional capital, either via the Shelf Registration or from other sources, there is substantial doubt about our ability to continue as a going concern through May 16, 2023. The accompanying condensed consolidated financial statements have been prepared assuming that we ~~have sufficient cash on hand to fund~~will continue as a going concern. This basis of presentation contemplates the ~~business for at least~~recovery of our assets and the ~~next 12 months.~~ satisfaction of liabilities in the normal course of business.
We intend that the longer term (i.e., beyond twelve months) cost of completing additional intended acquisitions, implementing our development and sales efforts related to the HealthLynked Network and maintaining existing and expanding overhead and administrative costs will be financed from (i) cash on hand, ~~resulting from fund raising efforts in 2021,~~ (ii) profits generated by NCFM, BTG and CHM (including expected Medicare Shared Savings revenue projected to be received annually in the third fiscal quarter of each year), and (iii) the use of further outside funding sources. No assurances can be given that we will be able to access additional outside capital in a timely fashion. 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.
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 our 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 take action to limit the spread of the illness, 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 all. The extent to which COVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with 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~~we implemented additional safety measures in ~~its~~our patient services locations and ~~its~~our corporate headquarters.
~~Significant Liquidity Events~~
Historically, we have funded our operations principally through a combination of convertible promissory notes, private placements of our common stock, promissory notes and related party debt, as described below.
~~Registered Direct Offering – August 2021~~
On August 26, 2021, we entered into a securities purchase agreement with a certain institutional investor (the “Purchaser”) pursuant to which we agreed to sell in a registered direct offering (the “Registered Direct Offering”) 3,703,704 shares of our common stock to the Purchaser at an offering price of $0.54 per share. In a concurrent private placement, we also sold to the Purchaser unregistered warrants (the “Warrants”) to purchase up to an aggregate of 1,851,852 shares of our common stock, representing 50% of the shares of common stock that were purchased in the Registered Direct Offering. The Warrants are exercisable at an exercise price of $0.65 per share, are exercisable immediately upon issuance and have a term of exercise equal to five years from the date of issuance. We also issued compensation warrants to our placement agent to purchase up to 269,269 shares of common stock, equal to 8.0% of the aggregate number of shares of common stock placed in the Registered Direct Offering. The placement agent warrants have a term of five (5) years from the commencement of sales under the Registered Direct Offering and an exercise price of $0.675 per share of common stock (equal to 125% of the offering price per share of common stock in the Registered Direct Offering).
We received net proceeds from the in the Registered Direct Offering, after deducting placement agent fees and other offering expenses payable by us, of $1,719,921. The transactions closed on August 31, 2021.
~~2021 Equity Transactions~~
During the nine months ended September 30, 2021, we sold 13,161,943 shares of common stock in 53 separate private placement transactions. We received $4,328,725 in proceeds from the sales. In connection with these stock sales, we also issued 6,581,527 five-year warrants to purchase shares of common stock at exercise prices between $0.27 and $1.05 per share.
~~Investment Agreement~~
In July 2016, we entered into an Investment Agreement (the “Investment Agreement”) with Iconic Holdings, LLC (the “Investor”), pursuant to which the Investor agreed to purchase up to $3,000,000 of our common stock over a three-year period starting upon registration of the underlying shares, with such shares put to the Investor by us 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 our common shares for the ten consecutive trading days prior to the put notice being issued. In May 2020, the Investment Agreement, which was scheduled to expire on May 15, 2020, was extended until the earlier of May 15, 2022 or until the registration statement covering the agreement is no longer in effect. During the nine months ended September 30, 2021 and 2020, we issued 3,006,098 and 4,975,491 shares of common stock pursuant to draws under the Investment Agreement, respectively, for gross proceeds of $900,636 and $426,299, respectively.

Plan of operation and future funding requirements
Our plan of operations is to profitably operate our 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.”
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 telesales targeting physicians’ offices, direct to patient marketing, affiliated marketing campaigns, co-marketing with our Medical Distribution businesses retailer MOD, and expanded southeast regional sales efforts. We intend that our initial primary sales strategy will be physician telesales through the use of telesales representatives whom we will hire as access to capital allows. In combination with our 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.
A ~~summarized timeline of our strategic acquisition transactions and the related funding sources is as follows:~~

● In July 2018 we raised approximately $1.8 million in a private placement for the purpose of technology enhancement, sales and marketing initiatives and to fund a portion of the first phase of our planned acquisition strategy.
● ~~In 2019, we began implementation of our plan to acquire health service businesses and offer physician owners cash, stock, and deferred compensation.~~
● ~~On April 15, 2019, we acquired HCFM for $750,000 in cash, $750,000 in shares of our common stock and $500,000 in a three-year performance-based payout.~~
● On May 18, 2020, we acquired CHM for $214,000 in cash, $201,675 in shares of our common stock, up to $223,000 cash and $660,000 in shares of our common stock based on a target MSSP payment of $1,725,000 in the current year, and up to $437,500 in a four-year performance-based payout.
● On August 20, 2020, we completed the August 2020 Equity Transaction with Trusts controlled by our CEO, Dr. Michael Dent, pursuant to which the Trusts contributed an aggregate of 76,026 NEO Shares with a fair value of $3,066,889 to us, in exchange for an aggregate of 2,750,000 shares of our newly designated Series B Preferred Stock and an aggregate of 24,522,727 shares of our common stock.
● On October 19, 2020, we acquired MOD, a virtual distributor of discounted medical supplies selling to both consumers and medical practices throughout the United States, in exchange for (i) 19,045,563 restricted shares of our common stock valued at $2,704,470, (ii) the issuance of an aggregate of up to 10,004,749 restricted shares of the buyer’s common stock valued at up to $2,602,330 over a four year period based on MOD achieving certain revenue targets, and (iii) the partial satisfaction of certain outstanding debt obligations of MOD in the amount of $703,200 in cash by us.
● During the second half of 2020, we retired floating rate convertible debt with a face value of $1,012,750 through conversions and repayments and repaid related party notes with a face value of $646,000 in an effort to improve our balance sheet.
● During January 2021, the holder of $1,038,500 fixed rate convertible debt converted the full face value of $1,038,500, plus $317,096 of accrued interest on such notes, into 13,538,494 shares of common stock pursuant to the original conversion terms of the underlying notes. Following the conversion, we had no further convertible debt outstanding.
● During August 2021, we sold in the Registered Direct Offering 3,703,704 shares of common stock 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, resulting in gross proceeds of $2,000,00 and net proceeds after offering costs and expenses of $1,719,921.
● During the nine months ended September 30, 2021, we sold 13,161,943 shares of common stock in 53 separate private placement transactions. We received $4,328,725 in proceeds from the sales. In connection with these stock sales, we also issued 6,581,527 five-year warrants to purchase shares of common stock at exercise prices between $0.27 and $1.05 per share. We also issued 3,006,098 shares pursuant to draws under the Investment Agreement for additional gross proceeds of $900,636.

Currently, 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 the ACO acquisition model can help us expand both physician and patient utilization of the HealthLynked Network while continuing to add incremental revenue and profit from to our ~~health services~~Health Services and ~~ACO segments.~~ACO/MSO business units. We plan to raise additional capital to fund our ongoing acquisition strategy.
Historical Cash Flows
Nine Months Ended
September 30,
2021 2020
Net cash (used in) provided by:
Operating activities $(1,627,184) $(1,094,495)
Investing Activities (334,581 ) 2,425,870
Financing activities 7,248,372 271,308
Net increase (decrease) in cash $ 5,286,607 $ 1,602,683
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

Operating Activities – During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we used cash from operating activities of ~~$1,627,184,~~$1,342,918, as compared with ~~$1,094,495~~$1,216,959 in the ~~same period of 2020.~~three months ended March 31, 2021. The increase in cash usage results primarily from increased selling, general and administrative costs increased related to our continued ~~expansion, offset by increases in our revenue streams in 2021 compared to 2020.~~expansion.
Investing Activities – During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we used ~~$334,581~~$22,014 in investing activities ~~including $196,000 contingent acquisition consideration payment paid the sellers of NCFM and $126,106 contingent acquisition consideration payment paid the sellers of Cura, plus $12,475~~ for the acquisition of computers and office equipment. During the ~~same period of 2020,~~three months ended March 31, 2021, we ~~generated $2,425,870 from~~used $7,399 in investing activities including $2,740,806 received from the sale of marketable securities received in an August 2020 financing transaction, offset by $164,005 used to acquire CHM (net of $49,995 cash received), $137,390 paid against contingent acquisition consideration related to the acquisitions of NCFM and CHM and $13,541 for the acquisition of computers and office equipment.
Financing Activities – During the ~~nine~~three months ended ~~September 30, 2021 and 2020,~~March 31, 2022, we ~~realized $7,248,372 and $271,308, respectively, in~~did not have any cash flows from financing activities. Cash ~~realized~~generated from financing activities in 2021 in the amount of $4,403,902 was comprised ~~mainly~~ of ~~$5,229,360~~$4,389,361 from the sale of common stock pursuant to private placements and puts under the Investment Agreement ~~$1,719,921 net proceeds from the Registered Direct Offering,~~ and ~~$350,200~~$65,650 proceeds from the exercise of options and ~~warrants. We also made cash~~warrants, offset by repayments against a vendor note in the amount of $51,109, retiring the note in full. Cash realized in 2020 was comprised mainly of $1,099,300 from the proceeds of the sale of shares of common stock to investors and pursuant to the Investment Agreement, $1,045,669 net proceeds from government loans, $827,500 from the issuance of convertible notes, $149,000 from related party loans and. We also repaid $1,882,405 of convertible loans and $967,756 of related party loans.$51,109.
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.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 229.10(f)(1).
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) promulgated under the Securities Exchange Act of 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, including 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 disclosure controls and procedures as of ~~September 30, 2020~~March 31, 2022 based on the framework in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective as of ~~September 30, 2021.~~March 31, 2022.
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 Exchange Act) during the fiscal quarter ended ~~September 30, 2021~~March 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 item 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 the three months ended September 30, 2021, we sold 1,000,000 shares of common stock for cash in a private placement transaction to an accredited investor. We received $580,000 in proceeds from the sales. In connection with this stock sale, we also issued 500,000 five-year warrants to the accredited investor to purchase shares of common stock at an exercise price of $0.75 per share.
~~During the three months ended September 30, 2021, we issued 208,750 shares of common stock to two separate consultants as compensation for services provided.~~
~~During the three months ended September 30, 2021, we issued 1,840,278 shares of common stock to three separate warrant holders upon exercise of outstanding warrants for aggregate proceeds of $181,250.~~
The sales of the above securities were exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, 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 purposes only and not with a view to or for sale in connection with any distribution thereof, and appropriate restrictive 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.

Item 6. Exhibits
Exhibit No. Exhibit Description
~~4.1~~31.1* ~~Form of Investor Warrant (Filed as Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on August 30, 2021)~~
~~4.2~~ ~~Form of Placement Agent Warrant (Filed as Exhibit 4.2 to the Company’s Form 8-K filed with the Commission on August 30, 2021)~~
~~10.1~~ ~~Form of Securities Purchase Agreement (Filed as Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on August 30, 2021)~~
~~10.2~~ ~~Engagement Letter with H.C. Wainwright & Co. (Filed as Exhibit 10.2 to the Company’s Form 8-K filed with the Commission on August 30, 2021)~~
31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer
31.2* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer
32.1* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer
32.2* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer
101.INS* Inline XBRL Instance Document.
101.SCH* Inline XBRL Taxonomy Extension Schema Document.
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.

SIGNATURES
~~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 15, 2021~~May 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)
55
37

10-Q 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 false --12-31 Q3 0001680139 iso4217:USD xbrli:shares

		PAGE NO.

PART I	FINANCIAL INFORMATION	1
Item 1	Financial Statements (Unaudited)	1
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4330
Item 3	Quantitative and Qualitative Disclosures about Market Risk	5235
Item 4	Controls and Procedures	5235

~~PART~~Part II	OTHER INFORMATION	~~OTHER INFORMATION~~	5336
Item 1	Legal Proceedings	~~Legal Proceedings~~	5336
Item 1A	Risk Factors	~~Risk Factors~~	5336
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	5336
Item 3	Defaults upon Senior Securities	5336
Item 4	Mine Safety Disclosure	5336
Item 5	Other Information	5336
Item 6	Exhibits	5436

	September 30,			December 31,
	2021			2020
ASSETS	(Unaudited)
Current Assets
Cash	$	5,448,791		$	162,184
Accounts receivable, net of allowance for doubtful accounts of $13,972 and $13,972 as of September 30, 2021 and December 31, 2020, respectively		112,983			87,153
Inventory		106,906			95,200
Prepaid expenses and other		68,836			59,003
Total Current Assets		5,737,516			403,540

Property, plant and equipment, net of accumulated depreciation of $258,222 and $177,457 as of September 30, 2021 and December 31, 2020, respectively		368,997			437,286
Intangible assets, net of accumulated amortization of $694,450 and $151,776 as of September 30, 2021 and December 31, 2020, respectively		5,059,088			5,601,762
Goodwill		1,148,105			1,148,105
ROU lease assets and deposits		648,406			435,855

Total Assets	$	12,962,112		$	8,026,548

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities
Accounts payable and accrued expenses	$	1,761,162		$	1,891,749
Contract liabilities		30,535			89,425
Lease liability, current portion		292,844			150,251
Due to related party, current portion		300,600			300,600
Government and vendor notes payable, current portion		---			411,427
Convertible notes payable, net of original issue discount and debt discount of $-0- and $-0- as of September 30, 2021 and December 31, 2020, respectively		---			1,336,350
Contingent acquisition consideration, current portion		282,211			701,961
Total Current Liabilities		2,667,352			4,881,763

Long-Term Liabilities
Government and vendor notes payable, long term portion		450,000			722,508
Contingent acquisition consideration, long term portion		764,501			798,479
Lease liability, long term portion		309,799			273,790

Total Liabilities		4,191,652			6,676,540

Shareholders’ Equity
Common stock, par value $0.0001 per share, 500,000,000 shares authorized, 235,703,829 and 187,967,881 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		23,570			18,797
Series B convertible preferred stock, par value $0.001 per share, 20,000,000 shares authorized, 2,750,000 and -0- shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		2,750			2,750
Common stock issuable, $0.0001 par value; 2,517,458 and 2,150,020 shares as of September 30, 2021 and December 31, 2020, respectively		728,368			262,273
Additional paid-in capital		38,497,916			22,851,098
Accumulated deficit		(30,482,144	)		(21,784,910	)
Total Shareholders’ Equity		8,770,460			1,350,008

Total Liabilities and Shareholders’ Equity	$	12,962,112		$	8,026,548

	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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
Revenue
Patient service revenue, net	$	1,394,356		$	1,054,806		$	4,379,282		$	3,502,836		$	1,375,685		$	1,514,376
Medicare shared savings revenue		2,419,312			767,744			2,419,312			767,744
Consulting and event revenue		69,595			217,605			229,114			268,025
Subscription, consulting and event revenue														84,218			87,655
Product revenue		161,456			---			512,325			---			146,969			182,663
Total revenue		4,044,719			2,040,155			7,540,033			4,538,605			1,606,872			1,784,694

Operating Expenses and Costs
Practice salaries and benefits		739,024			590,690			2,305,993			1,910,897			718,073			663,937
Other practice operating expenses		549,086			548,667			1,790,874			1,633,380			562,651			730,784
Medicare shared savings expenses		1,748,585			759,848			2,157,555			824,084			227,729			211,507
Cost of product revenue		145,432			---			474,026			---			160,811			168,596
Selling, general and administrative expenses		1,147,591			958,874			3,661,206			2,116,159			1,335,140			1,366,137
Depreciation and amortization		205,311			25,151			623,438			74,811			203,890			211,658
Total Operating Expenses and Costs		4,535,029			2,883,230			11,013,092			6,559,331			3,208,294			3,352,619

Loss from operations		(490,310	)		(843,075	)		(3,473,059	)		(2,020,726	)		(1,601,422	)		(1,567,925	)

Other Income (Expenses)
Loss on sales of marketable securities		---			(281,606	)		---			(281,606	)
Gain (loss) on extinguishment of debt		---			(450,999	)		(4,957,168	)		(1,347,371	)
Loss on extinguishment of debt														—			(5,589,994	)
Change in fair value of debt		---			(79,062	)		(19,246	)		(198,764	)		—			(19,246	)
Amortization of original issue and debt discounts on notes payable and convertible notes		---			(65,816	)		---			(530,930	)
Change in fair value of derivative financial instruments		---			12,802			---			739,485
Change in fair value of contingent acquisition consideration		126,411			45,996			(234,678	)		687			438,322			(635,700	)
Interest income (expense)		(4,118	)		(72,535	)		(13,083	)		(193,134	)
Interest expense														(5,023	)		(10,588	)
Total other income (expenses)		122,293			(891,220	)		(5,224,175	)		(1,811,633	)		433,299			(6,255,528	)

Net loss before provision for income taxes		(368,017	)		(1,734,295	)		(8,697,234	)		(3,832,359	)		(1,168,123	)		(7,823,453	)

Provision for income taxes		---			---			---			---			—			—

Net loss	$	(368,017	)	$	(1,734,295	)	$	(8,697,234	)	$	(3,832,359	)	$	(1,168,123	)	$	(7,823,453	)

Deemed dividend - amortization of beneficial conversion feature and down round adjustment to warrants		(88,393	)		(63,862	)		(265,179	)		(63,862	)		(88,393	)		(88,393	)

Net loss to common stockholders	$	(456,410	)	$	(1,798,157	)	$	(8,962,413	)	$	(3,896,221	)
Net loss to common shareholders													$	(1,256,516	)	$	(7,911,846	)

Net loss per share to common stockholders, basic and diluted:
Net loss per share to common shareholders, basic and diluted:
Basic	$	(0.00	)	$	(0.01	)	$	(0.04	)	$	(0.03	)	$	(0.01	)	$	(0.04	)
Fully diluted	$	(0.00	)	$	(0.01	)	$	(0.04	)	$	(0.03	)	$	(0.01	)	$	(0.04	)

Weighted average number of common shares:
Basic		232,203,244			147,366,619			224,658,709			129,234,540			238,008,478			213,279,052
Fully diluted		232,203,244			147,366,619			224,658,709			129,234,540			238,008,478			213,279,052

	Number of Shares								Common			Additional					Total			Number of Shares								Common			Additional					Total Shareholders’
	Common		Preferred		Common		Preferred		Stock			Paid-in		Accumulated			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
	Stock		Stock		Stock		Stock		Issuable			Capital		Deficit			Equity (Deficit)
	*(#)*		*(#)*		*($)*		*($)*		*($)*			*($)*		*($)*			*($)*
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			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			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			—		—		—		—					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			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			—		—		—		—		—			3,201,138		—			3,201,138
Fair value of warrants issued for professional services		---		---		---		---		---			32,426		---			32,426			—		—		—		—		—			32,426		—			32,426
Consultant and director fees payable with common shares and warrants		475,000		---		48		---		114,500			122,781		---			237,329			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			240,310		—		24		—		(14,956	)		52,337		—			37,405
Exercise of stock warrants		9,047,332		---		905		---		62,500			613,316		---			676,721			9,047,332		—		905		—		62,500			613,316		—			676,721
Exercise of stock options		12,500		---		1		---					3,149		---			3,150			12,500		—		1		—					3,149		—			3,150
Net loss		---		---		---		---		---			---		(7,823,453	)		(7,823,453	)		—		—		—		—		—			—		(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			226,075,381		2,750,000		22,608		2,750		424,317			35,324,321		(29,608,363	)		6,165,633

Sales of common stock		374,177		---		37		---		---			177,642		---			177,679
Fair value of warrants allocated to proceeds of common stock		---		---		---		---		---			82,320		---			82,320
Fair value of warrants issued for professional services		---		---		---		---		---			3,603		---			3,603
Consultant and director fees payable with common shares and warrants		93,492		---		9		---		68,807			17,990		---			86,806
Shares and options issued pursuant to employee equity incentive plan		875,047		---		88		---		(147,791	)		211,358		---			63,655
Exercise of stock warrants		1,225,000		---		123		---		62,500			152,378		---			215,001
Exercise of stock options		133,000		---		13		---		---			13,287		---			13,300
Net loss		---		---		---		---		---			---		(505,764	)		(505,764	)

Balance at June 30, 2021		228,776,097		2,750,000		22,878		2,750		407,833			35,982,899		(30,114,127	)		6,302,233

Sales of common stock		4,703,704		---		470		---		---			1,608,874		---			1,609,344
Fair value of warrants allocated to proceeds of common stock		---		---		---		---		---			690,577		---			690,577
Contingent acquisition consideration issuable		---		---		---		---		366,300			---		---			366,300
Fair value of warrants issued for professional services		---		---		---		---		---			3,603		---			3,603
Consultant and director fees payable with common shares and warrants		8,750		---		1		---		84,785			4,942		---			89,728
Shares and options issued pursuant to employee equity incentive plan		375,000		---		37		---		(5,550	)		25,955		---			20,442
Exercise of stock warrants		1,840,278		---		184		---		(125,000	)		181,066		---			56,250
Net loss		---		---		---		---		---			---		(368,017	)		(368,017	)

Balance at September 30, 2021		235,703,829		2,750,000		23,570		2,750		728,368			38,497,916		(30,482,144	)		8,770,460

	Nine Months Ended September 30,
	2021			2020
Cash Flows from Operating Activities
Net loss	$	(8,697,234	)	$	(3,832,359	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		623,438			74,811
Stock based compensation, including amortization of prepaid fees		574,998			436,038
Amortization of original issue discount and debt discount on convertible notes		---			530,930
Loss on sales of marketable securities		---			281,606
Change in fair value of derivative financial instruments		---			(739,485	)
Loss on extinguishment of debt		4,957,168			1,347,371
Change in fair value of debt		19,246			198,764
Change in fair value of contingent acquisition consideration		234,678			(687	)
Changes in operating assets and liabilities:
Accounts receivable		(25,831	)		(20,297	)
Inventory		(11,706	)		(34,740	)
Prepaid expenses and deposits		(40,516	)		51,575
ROU lease assets		78,835			200,372
Accounts payable and accrued expenses		800,732			615,434
Lease liability		(82,102	)		(197,877	)
Due to related party, current portion		---			46,370
Contract liabilities		(58,890	)		(52,321	)
Net cash used in operating activities		(1,627,184	)		(1,094,495	)

Cash Flows from Investing Activities
Proceeds from sale of marketable securities		---			2,740,806
Acquisition, net of cash acquired		---			(164,005	)
Payment of contingent acquisition consideration		(322,106	)		(137,390	)
Acquisition of property and equipment		(12,475	)		(13,541	)
Net cash (used in) provided by investing activities		(334,581	)		2,425,870

Cash Flows from Financing Activities
Proceeds from sale of common stock		6,949,281			1,099,300
Proceeds from exercise of options and warrants		350,200			---
Proceeds from issuance of convertible notes		---			827,500
Repayment of convertible notes		---			(1,882,405	)
Proceeds from related party loans		---			149,000
Repayment of related party loans		---			(967,756	)
Proceeds from government loans		---			1,045,669
Repayment of vendor loans payable		(51,109	)		---
Net cash provided by financing activities		7,248,372			271,308

Net increase in cash		5,286,607			1,602,683
Cash, beginning of period		162,184			110,441

Cash, end of period	$	5,448,791		$	1,713,124

Cash	$	500,000
Common Stock (3,968,254 shares)		1,000,000
Fair Value of Contingent Acquisition Consideration		299,672
Less cash received		(35,000	)

Fair Value of Total Consideration	$	1,764,672

Hyperbaric Chambers	$	452,289
Medical Equipment		29,940
Computer Equipment/Software		19,739
Office Furniture & Equipment		23,052
Inventory		72,114
Leasehold Improvements		25,000
Website		41,000
Patient Management Platform Database		1,101,538

Fair Value of Identifiable Assets Acquired	$	1,764,672

Cash paid at closing	$	214,000
Shares issued at closing (2,240,838 shares)		201,675
Cash and shares contingent upon 2019 program year MSSP payment target		778,192
Cash contingent upon four-year earn-out		279,593
Less cash received		(49,995	)

	$	1,423,465

Accounts receivable	$	90,197
Prepayments		15,294
ACO physician contracts		1,073,000
Goodwill		381,856
Accounts payable		(32,848	)
Deferred revenue		(104,034	)

Fair Value of Identifiable Assets Acquired and Liabilities Assumed	$	1,423,465

Shares issued at closing (19,045,563 shares)	$	2,704,470
Payment of MOD debt obligations in cash		703,200
Shares contingent upon four-year earn-out		649,108
Less cash received		(57,048	)

	$	3,999,730

Website	$	3,538,000
Goodwill		766,249
Accounts payable and accruals		(160,762	)
Notes payable		(90,759	)
Deferred revenue		(52,998	)

Fair Value of Identifiable Assets Acquired and Liabilities Assumed	$	3,999,730

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

Operating leases	$	99,544	$	61,526	$	241,909	$	242,891
Financing leases		---		---		---		4,587

Total lease expense	$	99,544	$	61,526	$	241,909	$	247,478

2021 (July to December)	$	107,623
2022		383,619
2022 (April to December)				$	284,905
2023		273,844			285,721
2024					11,877
2025					11,877
2026					11,877
2027					990
Total lease payments		765,086			607,247
Less interest		(162,443	)		(108,043	)
Present value of lease liabilities	$	602,643		$	499,204

	Change in Fair Value of Debt								Fair Value of Debt as of
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30,		December 31,
	2021		2020		2021		2020		2021		2020

$550k Note - July 2016	$	---	$	24,285	$	10,344	$	59,618	$	---	$	719,790
$50k Note - July 2016		---		2,520		1,017		6,187		---		71,611
$111k Note - May 2017		---		4,721		1,706		16,261		---		120,659
$357.5k Note - April 2019		---		14,567		6,179		35,763		---		424,290

	$	---	$	46,093	$	19,246	$	117,829	$	---	$	1,336,350

	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

	September 30, 2021				December 31, 2020
	Amount		Shares		Amount		Shares
Shares issuable to consultants, employees and directors	$	728,368		2,517,458	$	262,273		2,150,020

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		3.3	$	0.07		14,789,573	$	0.07
$	0.10 to 0.24		9,714,380		2.9	$	0.17		9,714,380	$	0.17
$	0.25 to 0.49		31,741,448		3.5	$	0.31		31,741,448	$	0.31
$	0.50 to 1.05		3,891,591		4.3	$	0.67		3,891,591	$	0.67
$	0.05 to 1.00		60,136,992		3.4	$	0.25		60,136,992	$	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
$	0.0001 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

	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	$	—	$	—

	2021			2020
Outstanding at beginning of the period		2,603,528			1,874,063
Granted during the period		1,015,047			664,465
Forfeited during the period		(52,500	)		(62,500	)
Outstanding at end of the period		3,566,075			2,476,028

Shares vested at period-end		3,476,075			2,176,028
Weighted average grant date fair value of shares granted during the period	$	0.27		$	0.14
Aggregate grant date fair value of shares granted during the period	$	4,050		$	18,760
Shares available for grant pursuant at period-end		8,923,855			9,778,403

	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

Options Outstanding									Options Exercisable
					Weighted-
					Average		Weighted-				Weighted-
					Remaining		Average				Average
		Exercise	Number		Contractual		Exercise		Number		Exercise
		Prices	Outstanding		Life (years)		Price		Exercisable		Price
	$	--- to 0.25		1,652,500		5.9	$	0.13		1,381,250		0.11
	$	0.25 to 0.50		1,281,250		7.1	$	0.30		762,500		0.30
	$	0.51 to 0.77		80,000		9.7	$	0.75		30,000		0.75
	$	0.08 to 0.31		3,013,750		6.5	$	0.22		2,173,750	$	0.19

2021 (October to December)	$	16,632
2022		325,904
2022 (April to December)			$	317,756
2023		352,809		218,227
2024		351,367		211,385
	$	1,046,712	$	747,368

	Three Months Ended September 30, 2021													Three Months Ended March 31, 2022
	Health Services		Digital Healthcare			ACO / MSO		Medical Distribution			Total			Health Services		Digital Healthcare			ACO / MSO			Medical Distribution			Total
Revenue
Patient service revenue, net	$	1,394,356	$	---		$	---	$	---		$	1,394,356		$	1,375,685	$	—		$	—		$	—		$	1,375,685
Medicare shared savings revenue		---		---			2,419,312		---			2,419,312			—		—			—			—			—
Consulting and event revenue		---		---			69,595		---			69,595
Subscription, consulting and event revenue															—		6,624			77,594			—			84,218
Product revenue		---		---			---		161,456			161,456			—		—			—			146,969			146,969
Total revenue		1,394,356		---			2,488,907		161,456			4,044,719			1,375,685		6,624			77,594			146,969			1,606,872

Operating Expenses
Practice salaries and benefits		739,024		---			---		---			739,024			718,073		—			—			—			718,073
Other practice operating expenses		549,086		---			---		---			549,086			562,651		—			—			—			562,651
Medicare shared savings expenses		---		---			1,748,585		---			1,748,585			—		—			227,729			—			227,729
Cost of product revenue		---		---			---		145,432			145,432			—		—			—			160,811			160,811
Selling, general and administrative expenses		---		1,093,461			---		54,130			1,147,591			—		1,264,876			—			70,264			1,335,140
Depreciation and amortization		26,196		2,215			---		176,900			205,311			25,518		1,472			—			176,900			203,890
Total Operating Expenses		1,314,306		1,095,676			1,748,585		376,462			4,535,029			1,306,242		1,266,348			227,729			407,975			3,208,294

(Loss) income from operations	$	80,050	$	(1,095,676	)	$	740,322	$	(215,006	)	$	(490,310	)
Income (loss) from operations														$	69,443	$	(1,259,724	)	$	(150,135	)	$	(261,006	)	$	(1,601,422	)

Other Segment Information
Interest expense (income)	$	2,706	$	1,412		$	---	$	---		$	4,118		$	2,812	$	2,211		$	—		$	—		$	5,023
Change in fair value of contingent acquisition consideration	$	---	$	(126,411	)	$	---	$	---		$	(126,411	)	$	—	$	(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

	Nine Months Ended September 30, 2021
	Health Services			Digital Healthcare			ACO / MSO		Medical Distribution			Total
Revenue
Patient service revenue, net	$	4,379,282		$	---		$	---	$	---		$	4,379,282
Medicare shared savings revenue		---			---			2,419,312		---			2,419,312
Consulting and event revenue		---			11,905			217,209		---			229,114
Product revenue		---			---			---		512,325			512,325
Total revenue		4,379,282			11,905			2,636,521		512,325			7,540,033

Operating Expenses
Practice salaries and benefits		2,305,993			---			---		---			2,305,993
Other practice operating expenses		1,790,874			---			---		---			1,790,874
Medicare shared savings expenses		---			---			2,157,555		---			2,157,555
Cost of product revenue		---			---			---		474,026			474,026
Selling, general and administrative expenses		---			3,472,493			---		188,713			3,661,206
Depreciation and amortization		83,493			3,405			---		536,540			623,438
Total Operating Expenses		4,180,360			3,475,898			2,157,555		1,199,279			11,013,092

(Loss) income from operations	$	198,922		$	(3,463,993	)	$	478,966	$	(686,954	)	$	(3,473,059	)

Other Segment Information
Interest expense (income)	$	5,145		$	8,038		$	---	$	(100	)	$	13,083
Loss (gain) on extinguishment of debt	$	(502,959	)	$	5,471,884		$	---	$	(11,757	)	$	4,957,168
Change in fair value of debt	$	---		$	19,246		$	---	$	---		$	19,246
Change in fair value of contingent acquisition consideration	$	---		$	234,678		$	---	$	---		$	234,678
	September 30, 2021
Identifiable assets	$	2,104,819		$	3,967,850		$	2,850,949	$	2,890,389		$	11,814,007
Goodwill	$	---		$	---		$	381,856	$	766,249		$	1,148,105

	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

	Three Months Ended September 30, 2020
	Health Services			Digital Healthcare			ACO / MSO		Medical Distribution		Total
Revenue
Patient service revenue, net	$	1,054,806		$	---		$	---	$	---	$	1,054,806
Medicare shared savings revenue		---			---			767,744		---		767,744
Consulting revenue		---			---			217,605		---		217,605
Product revenue		---			---			---		---		---
Total revenue		1,054,806			---			985,349		---		2,040,155

Operating Expenses
Practice salaries and benefits		590,690			---			---		---		590,690
Other practice operating expenses		548,667			---			---		---		548,667
Medicare shared savings expenses		---			---			759,848		---		759,848
Cost of product revenue		---			---			---		---		---
Selling, general and administrative expenses		---			958,874			---		---		958,874
Depreciation and amortization		24,557			594			---		---		25,151
Total Operating Expenses		1,163,914			959,468			759,848		---		2,883,230

Loss from operations	$	(109,108	)	$	(959,468	)	$	225,501	$	---	$	(843,075	)

Other Segment Information
Interest expense	$	23,186		$	49,349		$	---	$	---	$	72,535
Loss on sales of marketable securities	$	---		$	281,606		$	---	$	---	$	281,606
Loss on extinguishment of debt	$	---		$	450,999		$	---	$	---	$	450,999
Amortization of original issue and debt discounts on convertible notes	$	---		$	65,816		$	---	$	---	$	65,816
Change in fair value of debt	$	---		$	79,062		$	---	$	---	$	79,062
Change in fair value of derivative financial instruments	$	---		$	(12,802	)	$	---	$	---	$	(12,802	)
Change in fair value of contingent acquisition consideration	$	---		$	(45,996	)	$	---	$	---	$	(45,996	)

	Nine Months Ended September 30, 2020
	Health Services			Digital Healthcare			ACO / MSO		Medical Distribution		Total
Revenue
Patient service revenue, net	$	3,502,836		$	---		$	---	$	---	$	3,502,836
Medicare shared savings revenue		---			---			767,744		---		767,744
Consulting revenue		---			---			268,025		---		268,025
Product revenue		---			---			---		---		---
Total revenue		3,502,836			---			1,035,769		---		4,538,605

Operating Expenses
Practice salaries and benefits		1,910,897			---			---		---		1,910,897
Other practice operating expenses		1,633,380			---			---		---		1,633,380
Medicare shared savings expenses		---			---			824,084		---		824,084
Cost of product revenue		---			---			---		---		---
Selling, general and administrative expenses		---			2,116,159			---		---		2,116,159
Depreciation and amortization		73,027			1,784			---		---		74,811
Total Operating Expenses		3,617,304			2,117,943			824,084		---		6,559,331

Loss from operations	$	(114,468	)	$	(2,117,943	)	$	211,685	$	---	$	(2,020,726	)

Other Segment Information
Interest expense	$	35,096		$	158,038		$	---	$	---	$	193,134
Loss on sales of marketable securities	$	---		$	281,606		$	---	$	---	$	281,606
Loss on extinguishment of debt	$	---		$	1,347,371		$	---	$	---	$	1,347,371
Amortization of original issue and debt discounts on convertible notes	$	---		$	530,930		$	---	$	---	$	530,930
Change in fair value of debt	$	---		$	198,764		$	---	$	---	$	198,764
Change in fair value of derivative financial instruments	$	---		$	(739,485	)	$	---	$	---	$	(739,485	)
Change in fair value of contingent acquisition consideration	$	---		$	(687	)	$	---	$	---	$	(687	)
	September 30, 2020
Identifiable assets	$	2,250,647		$	952,716		$	901,736	$	---	$	4,105,099
Goodwill	$	---		$	---		$	1,454,856	$	---	$	1,454,856

	As of September 30, 2021								As of March 31, 2022								As of December 31, 2021
							Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	Level 1		Level 2		Level 3		Fair Value
Liability-classified equity instruments									$	—	$	—	$	136,875	$	136,875	$	—	$	—	$	162,500	$	162,500
Contingent acquisition consideration	$	---	$	---	$	1,046,712	$	1,046,712		—		—		747,368		747,368		—		—		1,185,690		1,185,690

Total	$	---	$	---	$	1,046,712	$	1,046,712	$	—	$	—	$	884,243	$	884,243	$	—	$	—	$	1,348,190	$	1,348,190