~~[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

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 ~~[X]~~ ☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ~~[X]~~ ☒ No ~~[ ]~~☐

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

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 ~~[X]~~ ☒

As of ~~November 17, 2017,~~August 11, 2021, the registrant had ~~5,639,669~~29,350,000 shares of its Common Stock, ~~$0.01~~$0.0001 par value, outstanding.

							June 30,			December 31,
	September 30, 2017			December 31, 2016			2021			2020
	(unaudited)							(unaudited)
ASSETS
Current assets:
Cash	$	41,019		$	75,017		$	199,632		$	25,353
Accounts receivable, net		401,026			1,199,899			-			499,454
Inventory								490,988			445,415
Prepaid expenses and other current assets		146,713			149,385			175,162			148,522
Inventory		73,732			-
Income tax refunds receivable		1,458,438			1,458,438			1,139,226			1,420,251
Current assets of AMSG classified as held for sale		68,775			337,900
Current assets of discontinued operations								-			184,510
Total current assets		2,189,703			3,220,639			2,005,008			2,723,505

Property and equipment, net		3,090,047			3,043,590			7,515,703			7,814,435
Intangibles, net								259,443			259,443
Investments								8,500,000			-
Deposits		157,461			141,402			282,163			263,621
Non-current assets of AMSG classified as held for sale		928,722			76,762
Right-of-use assets								910,541			1,000,272
Non-current assets of discontinued operations								152,298			200,815

Total assets	$	6,365,933		$	6,482,393		$	19,625,156		$	12,262,091

LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable (includes related parties of $0.3 and $0.2 milion, respectively)	$	4,296,213		$	2,928,524
Accrued expenses		5,010,298			2,882,029
Accounts payable (includes related party amounts of $0.4 million and $0.3 million, respectively)							$	15,969,902		$	14,251,851
Checks issued in excess of bank account balance								203,784			84,760
Accrued expenses (includes related party amounts of $0.3 million and $0.2 million, respectively)								17,975,899			19,135,569
Income taxes payable		490,436			942,433			1,157,812			1,438,837
Current portion of notes payable		7,299,088			9,011,247			6,394,997			4,786,976
Current portion of notes payable, related party		223,500			328,500
Current portion of capital lease obligations		1,491,666			1,796,053
Current liabilities of AMSG classified as held for sale		1,368,612			1,675,981
Current portion of note payable, related party								2,627,000			2,097,000
Current portion of finance lease obligations								249,985			249,985
Current portion of debentures								12,690,539			12,690,539
Current portion of right-of-use operating lease obligations								217,937			172,952
Derivative liabilities								455,336			455,336
Current liabilities of discontinued operations								1,532,782			3,814,245
Total current liabilities		20,179,813			19,564,767			59,475,973			59,178,050

Other liabilities:
Debentures		4,239,005			-
Capital lease obligations, net of current portion		735,538			1,774,121
Derivative liabilities		-			2,803
Non-current liabilities of AMSG classified as held for sale		-			26,598

Notes payable, net of current portion								797,007			1,196,256
Right-of-use operating lease obligations, net of current portion								692,604			827,320
Non-current liabilities of discontinued operations								-			78,217
Total liabilities		25,154,356			21,368,289			60,965,584			61,279,843

Commitments and contingencies								-			-

Stockholders' deficit:
Series G preferred stock, $0.01 par value, 14,000 shares authorized, 215 shares issued and outstanding	$	2			2
Series H preferred stock, $0.01 par value, 14,202 shares authorized, 60 and 10,019 shares issued and outstanding		-			100
Series F preferred stock, $0.01 par value, 1,750,000 shares authorized, 1,750,000 and 0 shares issued and outstanding		17,500			-
Common stock, $0.01 par value, 500,000,000 shares authorized, 1,354,171 and 186,692 shares issued and outstanding		13,542			1,867
Stockholders’ deficit:
Series H preferred stock, $0.01 par value, 14,202 shares authorized, 10 shares issued and outstanding								-			-
Series F preferred stock, $0.01 par value, 1,750,000 shares authorized, 1,750,000 shares issued and outstanding								17,500			17,500
Series L preferred stock, $0.01 par value, 250,000 shares authorized, 250,000 shares issued and outstanding								2,500			2,500
Series M preferred stock, $0.01 par value, 30,000 shares authorized, 21,380 and 22,000 shares issued and outstanding, respectively								214			220
Series N preferred stock, $0.01 par value, 50,000 shares authorized, 16,369 and 29,434 shares issued and outstanding, respectively								163			294
Series O preferred stock, $0.01 par value, 10,000 shares authorized, 2,750 and 0 shares issued and outstanding, respectively								28			-
Preferred stock value
Common stock, $0.0001 par value, 10,000,000,000 shares authorized, 10,000,000 and 39,648 shares issued and outstanding, respectively								1,000			4
Additional paid-in-capital		126,335,119			45,752,999			971,608,828			819,498,236
Accumulated deficit		(145,154,586	)		(60,640,864	)		(1,012,970,661	)		(868,536,506	)
Total stockholders' deficit		(18,788,423	)		(14,885,896	)
Total liabilities and stockholders' deficit	$	6,365,933		$	6,482,393
Total stockholders’ deficit								(41,340,428	)		(49,017,752	)
Total liabilities and stockholders’ deficit							$	19,625,156		$	12,262,091

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

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

~~FOR THE NINE MONTHS ENDED SEPTEMBER~~For each of the quarters in the period ended June 30, ~~2017~~2021

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

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~CHANGES IN STOCKHOLDERS’ DEFICIT

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

~~Notes to Condensed Consolidated Financial Statements~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

Note 1 – Organization and ~~Basis~~Summary of ~~Presentation~~Significant Accounting Policies

Rennova Health, Inc. (“Rennova”), together with its subsidiaries, ~~(the~~the “Company”, “we”, “us” or “our”), is a ~~vertically integrated~~ provider of ~~healthcare related products and~~health care services. The ~~Company’s principal lines of business are (i) clinical laboratory operations; (ii) supportive software solutions~~Company owns one operating hospital in Oneida, Tennessee, a hospital located in Jamestown, Tennessee that it plans to ~~healthcare providers including Electronic Health Records (“EHR”), Medical Billing Services~~reopen and ~~Laboratory Information Services;~~operate, a physician’s office in Jamestown, Tennessee that it plans to reopen and ~~(iii) the recent addition of~~ a rural ~~critical access hospital.~~clinic in Kentucky. The Company’s operations consist of only one business segment.

The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the ~~2016 audited~~consolidated financial statements ~~included~~as filed in the Company’s Annual Report on Form 10-K ~~filed with~~for the ~~U.S. Securities and Exchange Commission (the “SEC”) on April 10, 2017. These~~year ended December 31, 2020. In the opinion of management, the unaudited condensed consolidated ~~interim~~ financial statements included herein contain all adjustments necessary to present fairly the Company’s consolidated financial position as of June 30, 2021, the results of its operations and changes in stockholders’ deficit for the three and six months ended June 30, 2021 and 2020 and its cash flows for the six months ended June 30, 2021 and 2020. Such adjustments are of a normal recurring nature. The results of operations for the six months ended June 30, 2021 may not be indicative of results for the year ending December 31, 2021.

The accompanying unaudited condensed consolidated financial statements, which have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC, and therefore omit or condense certain footnotes and other information normally included in consolidated interim financial statements prepared in accordance with U.S.accounting principles generally accepted ~~accounting principles~~in the United States of America (“U.S. GAAP”)., include the accounts of Rennova and its wholly-owned subsidiaries. All ~~material~~ intercompany ~~balances~~transactions and ~~transactions~~balances have been eliminated in ~~consolidation. In~~ the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) considered necessary for the fair presentation of the financial position and results of operations and cash flows for the interim periods reported herein. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.consolidation.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016,~~2020, comprehensive loss was equal to the net loss amounts presented in the accompanying unaudited condensed consolidated statements of operations. ~~In addition, certain prior year balances have been reclassified to conform to the current presentation.~~

Certain items in the ~~2016 condensed consolidated~~statement of operations for the six months ended June 30, 2021 were reclassified for comparison purposes.

The preparation of financial statements in conformity with U.S. GAAP requires management to ~~be consistent with~~make estimates and assumptions that affect the ~~2017 presentation. These principally relate to classification~~reported amounts of ~~certain revenues, cost~~assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and ~~related segment data, as well as balance sheet classifications to~~expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions include the estimates of fair values of assets acquired and liabilities ~~held for sale. Reclassifications~~assumed in business combinations, including hospital acquisitions, the fair values of consideration received from the sale of subsidiaries, reserves and write-downs related to receivables and inventories, the recoverability of long-lived assets, the valuation allowance relating to the ~~discontinued~~Company’s deferred tax assets, the valuation of equity and derivative instruments, deemed dividends and debt discounts, among others. Actual results could differ from those estimates and would impact future results of operations ~~of AMSG are described further in Note 14. The reclassifications had no impact on operations or~~and cash ~~flows for the three and nine months ended September 30, 2016.~~flows.

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents.

On ~~February 7, 2017,~~July 22, 2020, the Company’s Board of Directors approved an amendment to the Company’s Certificate of Incorporation to effect a ~~1-for-30~~1-for-10,000 reverse stock split ~~of the Company’s shares of common stock~~ effective ~~on February 22, 2017~~July 31, 2020 and on ~~September 21, 2017,~~July 8, 2021, the Company’s Board of Directors approved an amendment to the Company’s Certificate of Incorporation to effect a ~~1-for-15~~1-for-1,000 reverse stock split effective ~~October 5, 2017~~July 16, 2021 (the “Reverse Stock Splits”). The ~~stockholders~~holders of a majority of the ~~Company~~total voting power of the Company’s securities had approved these amendments to the Company’s Certificate of Incorporation on ~~December 22, 2016~~May 7, 2020 for the ~~February 7, 2017~~July 31, 2020 reverse stock split and on ~~September 20, 2017~~June 15, 2021 for the ~~October 5, 2017~~July 16, 2021 reverse stock split. In both cases, the Company’s stockholders had granted authorization to the Board of Directors to determine in its discretion the specific ratio, subject to limitations, and the timing of the reverse splits within certain specified effective dates.

As a result of the Reverse Stock Splits, every 3010,000 shares of the Company’s common stock then outstanding was combined and automatically converted into one share of the Company’s common stock on July 31, 2020 and every 1,000 shares of the Company’s then outstanding common stock was combined and automatically converted into one share of the Company’s common stock ~~par value $0.01 per share,~~ on February 7, 2017 and every 15 shares of the Company’s then outstanding common stock was combined and automatically converted into one share of the Company’s common stock, par value $0.01 per share, on October 5, 2017.July 16, 2021. In addition, the ~~conversions~~conversion and exercise prices of all of the Company’s outstanding preferred stock, common stock purchase warrants, stock options ~~restricted stock, equity incentive plans~~ and convertible ~~notes payable~~debentures were proportionately adjusted at the ~~1:30 reverse split ratio and again at the 1:15~~applicable reverse split ratio in accordance with the terms of such instruments. In addition, proportionate voting rights and other rights of common stockholders were not affected by the Reverse Stock Splits, other than as a result of the ~~rounding up of fractional shares in the February reverse split and the~~ payment of cash in lieu of fractional shares ~~in the October reverse split,~~ as no fractional shares were issued in connection with the Reverse Stock Splits.

The par value and other terms of the common stock were not affected by the Reverse Stock Splits. The authorized capital of the Company of ~~500,000,000~~10,000,000,000 shares of common stock and 5,000,000 shares of preferred stock were also unaffected by the Reverse Stock Splits.

All share, per share and capital stock amounts ~~for all periods~~and common stock equivalents presented herein have been restated where appropriate to give effect to the Reverse Stock Splits.

Sale of Health Technology Solutions, Inc. and Advanced Molecular Services, Inc.

On June 25, 2021, the Company sold its subsidiaries, Health Technology Solutions, Inc. (“HTS”) and Advanced Molecular Services, Inc. (“AMSG”), including their subsidiaries, to VisualMED Clinical Solutions Corp. (“VisualMED”). HTS and AMSG held Rennova’s software and genetic testing interpretation divisions.

In consideration for the shares of HTS and AMSG and the elimination of intercompany debt among the Company and HTS and AMSG, VisualMED issued the Company 14,000 shares of its Series B Non-Voting Convertible Preferred Stock (the “VisualMED Series B Preferred Stock”). The number of shares of VisualMED Series B Preferred Stock will be subject to a post-closing adjustment. Each share of VisualMED Series B Preferred Stock has a stated value of $1,000 and is convertible into that number of shares of VisualMED common stock equal to the stated value divided by 90% of the average closing price of the VisualMED common stock during the 10 trading days immediately prior to the conversion date. Conversion of the VisualMED Series B Preferred Stock, however, is subject to the limitation that no conversion can be made to the extent the holder’s beneficial interest (as defined pursuant to the terms of the VisualMED Series B Preferred Stock) in the common stock of VisualMED would exceed 4.99%. The shares of the VisualMED Series B Preferred Stock may be redeemed by VisualMED upon payment of the stated value of the shares plus any accrued declared and unpaid dividends.

As a result of the sale, the Company has recorded the VisualMED Series B Preferred Stock as a long-term asset valued at $8.5 million at June 30, 2021 and a gain on the sale of HTS and AMSG of $10.7 million in the six months ended June 30, 2021, of which $8.5 million resulted from the value of the VisualMED Series B Preferred Stock and $2.2 million resulted from the transfer to VisualMED of the net liabilities of HTS and AMSG. See Note 14 for a discussion of the assumptions used in the valuation of the VisualMed Series B Preferred Stock.

The financial results of HTS and AMSG, including the gain on sale, are reflected as discontinued operations in the Company’s consolidated financial statements. See Note 14.

We recognize revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606),” including subsequently issued updates. This series of comprehensive guidance has replaced all existing revenue recognition guidance. There is a five-step approach outlined in the standard. In determining revenue, we first identify the contract according to the scope of ASU Topic 606 with the following criteria:

~~RENNOVA HEALTH, INC.~~We review our calculations for the realizability of gross revenues monthly to make certain that we are properly allowing for the uncollectable portion of our gross billings and that our estimates remain sensitive to variances and changes within our payer groups and within our service offerings. The contractual allowance calculation is made based on historical allowance rates for the various specific payer groups monthly with a greater weight being given to the most recent trends; this process is adjusted based on recent changes in underlying contract provisions. This calculation is routinely analyzed by us based on actual allowances issued by payers and the actual payments made to determine what adjustments, if any, are needed.

Our revenues generally relate to ~~Condensed Consolidated Financial Statements~~contracts with patients in which our performance obligations are to provide health care services to the patients. Revenues are recorded during the period our obligations to provide health care services are satisfied. Our performance obligations for inpatient services are generally satisfied over periods that average approximately five days, and revenues are recognized based on charges incurred in relation to total expected charges. Our performance obligations for outpatient services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges. Medicare generally pays for inpatient and outpatient services at prospectively determined rates based on clinical, diagnostic and other factors. Services provided to patients having Medicaid coverage are generally paid at prospectively determined rates per discharge, per identified service or per covered member. Agreements with commercial insurance carriers, managed care and preferred provider organizations generally provide for payments based upon predetermined rates per diagnosis, per diem rates or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. Our net revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers. Estimates of contractual allowances under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Net revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts). We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record self-pay revenues at the estimated amounts we expect to collect.

Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. Estimated reimbursement amounts are adjusted in subsequent periods as cost reports are prepared and filed and as final settlements are determined (in relation to certain government programs, primarily Medicare, this is generally referred to as the “cost report” filing and settlement process). There were no adjustments to estimated Medicare and Medicaid reimbursement amounts and disproportionate-share funds related primarily to cost reports filed during the three and six months ended June 30, 2021 and 2020.

The Emergency Medical Treatment and Labor Act (“EMTALA”) requires any hospital participating in the Medicare program to conduct an appropriate medical screening examination of every person who presents to the hospital’s emergency room for treatment and, if the individual is suffering from an emergency medical condition, to either stabilize the condition or make an appropriate transfer of the individual to a facility able to handle the condition. The obligation to screen and stabilize emergency medical conditions exists regardless of an individual’s ability to pay for treatment. Federal and state laws and regulations require, and our commitment to providing quality patient care encourages, us to provide services to patients who are financially unable to pay for the health care services they receive. The federal poverty level is established by the federal government and is based on income and family size. The Company considers the poverty level in determining whether patients qualify for free or reduced cost of care. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in net revenues. We provide discounts to uninsured patients who do not qualify for Medicaid or charity care. In implementing the uninsured discount policy, we may first attempt to provide assistance to uninsured patients to help determine whether they may qualify for Medicaid, other federal or state assistance, or charity care. If an uninsured patient does not qualify for these programs, the uninsured discount is applied.

The collection of outstanding receivables for Medicare, Medicaid, managed care payers, other third-party payers and patients is our primary source of cash and is critical to our operating performance. The primary collection risks relate to uninsured patient accounts, including patient accounts for which the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and copayments) remain outstanding. Implicit price concessions relate primarily to amounts due directly from patients. Estimated implicit price concessions are recorded for all uninsured accounts, regardless of the aging of those accounts. Accounts are written off when all reasonable internal and external collection efforts have been performed. The estimates for implicit price concessions are based upon management’s assessment of historical write offs and expected net collections, business and economic conditions, trends in federal, state and private employer health care coverage and other collection indicators. Management relies on the results of detailed reviews of historical write-offs and collections at facilities that represent a majority of our revenues and accounts receivable (the “hindsight analysis”) as a primary source of information in estimating the collectability of our accounts receivable. We perform the hindsight analysis quarterly, utilizing rolling accounts receivable collection and write off data. We believe our quarterly updates to the estimated contractual allowance amounts and to the estimated implicit price concessions at each of our facilities provide reasonable estimates of our net revenues and valuation of our accounts receivable. For the three months ended June 30, 2021 and 2020, we recorded estimated contractual allowances of $4.0 million and $8.4 million, respectively, and estimated implicit price concessions of $1.3 million and $2.7 million, respectively. For the six months ended June 30, 2021 and 2020, we recorded estimated contractual allowances of $9.5 million and $18.9 million, respectively, and estimated implicit price concessions of $4.3 million and $4.0 million, respectively. These amounts have been recorded as to enable us to record our net revenues and accounts receivable at the estimated amounts we expect to collect. The estimated accounts receivable collection rate had been reduced to a lower percentage of gross revenue for the six months ended June 30, 2021 due to serving only emergency room patients during the first four months of the period. Inpatient services typically deliver higher collection rates and the absence of inpatient services meant that the Company was dependent on revenue from emergency room services, which is typically at a lower percentage of gross revenue. Inpatient services reopened in May 2021.

Accounts receivable are reported at realizable value, net of contractual allowances and estimated implicit price concessions (also referred to as doubtful accounts), which are estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimating and reviewing the collectability of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for contractual allowances and doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues which may impact the receivables or reserve estimates. Receivables deemed to be uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. Revisions to the allowances for doubtful accounts are recorded as an adjustment to revenues. As required by Topic 606, after estimated implicit price concessions and contractual and related allowance adjustments to revenues of $5.3 million and $11.1 million, respectively, for the three months ended June 30, 2021 and 2020, we reported net revenues of $0.9 million and $2.1 million, respectively. After estimated implicit price concessions and contractual and related allowance adjustments to revenues of $13.8 million and $22.9 million, respectively, for the six months ended June 30, 2021 and 2020, we reported net revenues of $0.3 million and $3.9 million, respectively. We continue to review the provisions for implicit price concessions and contractual allowances. See Note 4 – Accounts Receivable.

We account for leases in accordance with ASU No. 2016-02, Leases (Topic 842) as updated, which requires leases with durations greater than 12 months to be recognized on the balance sheet. Upon adoption in 2019, we elected the package of transition provisions available which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related right-of-use assets and right-of-use obligations at the present value of lease payments over the term. We do not separate lease and non-lease components of contracts. Our operating and finance leases are more fully discussed in Note 9.

~~In July 2017,~~We account for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board ~~(“FASB”~~(the “FASB”) ~~issued~~ Accounting Standards ~~Update~~Codification (“~~ASU”~~ASC”) Topic 360, Property, Plant and Equipment (“ASC 360”). ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates.

The Company did not record an asset impairment charge during the three and six months ended June 30, 2021 and 2020.

We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk. We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

We applied the Level 3 fair value hierarchy in determining the fair value of the VisualMed Series B Preferred Stock on June 30, 2021 as more fully discussed in Note 14.

In July 2017, the FASB issued ASU 2017-11 “Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815).” The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings (loss) per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common ~~shareholders~~stockholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect.

Under current GAAP, an equity-linked financial instrument with a down round feature that otherwise is not required to be classified as a liability under the guidance in Topic 480 is evaluated under the guidance in Topic 815, Derivatives and Hedging, to determine whether it meets the definition of a derivative. If it meets that definition, the instrument (or embedded feature) is evaluated to determine whether it is indexed to an entity’s own stock as part of the analysis of whether it qualifies for a scope exception from derivative accounting. Generally, for warrants and conversion options embedded in financial instruments that are deemed to have a debt host (assuming the underlying shares are readily convertible to cash or the contract provides for net settlement such that the embedded conversion option meets the definition of a derivative), the existence of a down round feature results in an instrument not being considered indexed to an entity’s own stock. This results in a reporting entity being required to classify the freestanding financial instrument or the bifurcated conversion option as a liability, which the entity must measure at fair value initially and at each subsequent reporting date.

The amendments in this Update revise the guidance for instruments with down round features in Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. An entity still is required to determine whether instruments would be classified in equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities and embedded conversion options with down round features are no longer bifurcated.

~~For entities that present EPS in accordance with Topic 260, and when~~When the down round feature is included in an equity-classified freestanding financial instrument, the value of the effect of the down round feature is treated as a dividend when it is triggered and as a numerator adjustment in the ~~basic~~ EPS calculation. This reflects the occurrence of an economic transfer of value to the holder of the instrument, while alleviating the complexity and income statement volatility associated with fair value measurement on an ongoing basis. ~~Convertible instruments are unaffected by the Topic 260 amendments in this Update.~~

Those amendments in Part 1 of this Update are a cost savings relative to current GAAP. This is because, assuming the required criteria for equity classification in Subtopic 815-40 are met, an entity that issued such an instrument no longer measures the instrument at fair value at each reporting period (in the case of warrants) or separately accounts for a bifurcated derivative (in the case of convertible instruments) on the basis of the existence of a down round feature. For convertible instruments with embedded conversion options that have down round features, applying specialized guidance such as the model for contingent beneficial conversion features rather than bifurcating an embedded derivative also reduces cost and complexity. Under that specialized guidance, the issuer recognizes the intrinsicThe incremental value of ~~the feature only when the feature becomes beneficial instead of bifurcating the conversion option and measuring it at fair value each reporting period.~~

The amendments in Part II of this Update replace the indefinite deferral of certain guidance in Topic 480 with a scope exception. This has the benefit of improving the readability of the Codification and reducing the complexity associated with navigating the guidance in Topic 480.

For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part 1 of this Update should be applied in either of the following ways: 1. Retrospectively to outstanding financial instruments with a down round feature by means of a cumulative-effect adjustment to the statement of financial position as of the beginning of the first fiscal year and interim period(s) in which the pending content that links to this paragraph is effective; or 2. Retrospectively to outstanding financial instruments with a down round feature for each prior reporting period presented in accordance with the guidance on accounting changes in paragraphs 250-10-45-5 through 45-10.

~~The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect.~~

The Company has determined that this amendment had a material impact on its condensed consolidated financial statements and has early adopted this accounting standard update. The cumulative effect of the adoption of ASU 2017-11 resulted in the reclassification of the derivative liability recorded of $56 million and the reversal of $41 million of interest expense recorded in the Company’s first fiscal quarter of 2017. The remaining $16 million was offset to additional paid in capital (discount on convertible debenture). Additionally, the Company recognized a deemed dividend from the trigger of the down round provision feature of $53.3 million. A $51 million deemed dividend was recorded retrospectively as of the beginning of the issuance of the March 2017 debentures where the initial derivative liability was recorded. A $2.3 million deemed dividend adjustment was recorded in the three months ended September 30, 2017warrants as a result of the down round ~~provision feature.~~provisions of $99.3 million and $149.6 million were recorded as deemed dividends for the three and six months ended June 30, 2021, respectively. We did 0t record deemed dividends as a result of the down round provisions during the three and six months ended June 30, 2020, however, we did record a deemed dividend during the three and six months ended June 30, 2020 as a result of the issuance of our Series M Convertible Preferred Stock (the “Series M Preferred Stock”) as more fully discussed in Note 11. See Note 10 for an additional discussion of derivative financial instruments.

Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized or the liability settled. The ~~Company’s condensed consolidated financial statements~~effect of a change in income tax rates on future income tax liabilities and assets is recognized in income in the period that the change occurs. Future income tax assets are ~~prepared using U.S. GAAP applicable~~recognized to ~~a going concern~~the extent that ~~contemplates~~they are considered more likely than not to be realized. When projected future taxable income is insufficient to provide for the realization of deferred tax assets, ~~and liquidation~~the Company recognizes a valuation allowance.

In accordance with U.S. GAAP, the Company is required to determine whether a tax position of ~~liabilities~~the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Derecognition of a tax benefit previously recognized could result in the ~~normal course~~Company recording a tax liability that would reduce net assets. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of ~~business.~~ June 30, 2021 and December 31, 2020.

The Company reports earnings (loss) per share in accordance with ASC Topic 260, “Earnings Per Share,” which establishes standards for computing and presenting earnings (loss) per share. Basic earnings (loss) per share of common stock is calculated by dividing net earnings (loss) available to common stockholders by the weighted-average shares of common stock outstanding during the period, without consideration of common stock equivalents. Diluted earnings (loss) per share is calculated by adjusting the weighted-average shares of common stock outstanding for the dilutive effect of common stock equivalents, including stock options and warrants outstanding for the period as determined using the treasury stock method. For purposes of the diluted net loss per share calculation, common stock equivalents are excluded from the calculation when their effect would be anti-dilutive. Therefore, basic and diluted net loss per share applicable to common stockholders is the same for periods with a net loss available to common stockholders. See Note 3 for the computation of the loss per share for the three and six months ended June 30, 2021 and 2020.

Following an inspection at Jamestown Regional Medical Center it was determined that several conditions of participation in its Medicare agreement were deficient and the hospital failed to adequately correct the deficiencies. As a result, on June 12, 2019, Jamestown Regional Medical Center’s Medicare agreement was terminated. A significant percentage of patients at Jamestown Regional Medical Center are covered by Medicare and without any ability to get paid for these services the Company suspended operations at the hospital. The Company plans to reopen the hospital upon securing adequate capital to do so. The reopening plans have also been disrupted by the coronavirus (“COVID-19”) pandemic and the timing of the reopening has ~~accumulated~~been delayed and is now intended that the re-opening process will be initiated in before the end of 2021.

Effective March 5, 2019, the Company acquired certain assets related to Jellico Community Hospital. On March 1, 2021, the Company closed Jellico Community Hospital, after the city of Jellico issued a 30-day termination notice for the lease of the building. The closure reduced operating losses and the monthly cash deficit for the Company. The collections of receivables for the hospital have been negatively impacted by the closure and mean a significant shortfall in the amount required to satisfy liabilities at the facility.

COVID-19 was declared a global pandemic by the World Health Organization on March 11, 2020. We have been closely monitoring the COVID-19 pandemic and its impact on our operations and we have taken steps intended to minimize the risk to our employees and patients. These steps have increased our costs and our revenues have been significantly adversely affected. Demand for hospital services has substantially decreased. As more fully discussed in Note 6, we have received Paycheck Protection Program (“PPP”) loans. We have also received Health and Human Services (“HHS”) Provider Relief Funds from the federal government as more fully discussed below. If the COVID-19 pandemic continues for a further extended period, we expect to incur significant losses and ~~has negative cash flows~~additional financial assistance may be required. Going forward, the Company is unable to determine the extent to which the COVID-19 pandemic will continue to affect its business. The nature and effect of the COVID-19 pandemic on our balance sheet and results of operations will depend on the severity and length of the pandemic in our service areas; government activities to mitigate the pandemic’s effect; regulatory changes in response to the pandemic, especially those affecting rural hospitals; and existing and potential government assistance that may be provided.

The Company received Provider Relief Funds from ~~operations,~~the United States Department of HHS provided to eligible healthcare providers out of the $100 billion Public Health and ~~at September~~ Social Services Emergency Fund provided for in the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The funds were allocated to eligible healthcare providers for expenses and lost revenue attributable to the COVID-19 pandemic. The funds were being released in tranches, and HHS partnered with UnitedHealth Group to distribute the initial $30 ~~2017 had a working capital deficit~~billion in funds by direct deposit to providers. As of June 30, 2021, our facilities have received approximately $12.4 million in relief funds. The fund payments are grants, not loans, and ~~stockholders’ deficit~~HHS will not require repayment, but the funds must be used only for grant approved purposes. Based on an analysis of ~~$18.0~~ the compliance and reporting requirements of the Provider Relief Funds and the impact of the pandemic on our operating results through June 30, 2021,we have recognized the full amount of these funds as income as of June 30, 2021 of which $7.5 million and ~~$18.8~~ $0.5 million was recognized during the second and third quarters of 2020, respectively, and $2.5million and $1.9 million was recognized as income during the first and second quarters of 2021, respectively.

On September 19, 2020, HHS issued a Post-Payment Notice of Reporting Requirements (the “September 19, 2020 Notice”), which indicates that providers may recognize reimbursement for healthcare-related expenses, as defined therein, attributable to coronavirus that another source has not reimbursed and is not obligated to reimburse. Additionally, amounts received from HHS that are not fully expended on eligible healthcare-related expenses may be recognized as reimbursement for lost revenues, represented as a negative change in year-over-year net patient care operating income. Providers may apply payments to lost revenues up to the amount of the 2019 net gain from healthcare-related sources or, for entities that reported a negative net operating gain in 2019, receipts from HHS may be recognized up to a net zero gain/loss in 2020. On October 22, 2020, HHS issued an updated Post-Payment Notice of Reporting Requirements and a Reporting Requirements Policy Update (together, the “October 22, 2020 Notice”), which includes two primary changes: (1) the definition of lost revenue is changed to refer to the negative year-over-year difference in 2019 and 2020 actual revenue from patient care related sources as opposed to the negative year-over-year change in net patient care operating income, and (2) the definition of reporting entities is broadened to include the parent of one or more subsidiary tax identification numbers that received general distribution payments, entities having providers associated with it that provide diagnoses, testing or treatment for cases of COVID-19, or entities that can otherwise attest to the terms and conditions. As codified in the October 22, 2020 Notice, the Company’s estimate of pandemic relief funds as of June 30, 2021 includes the allocation of certain general funds among subsidiaries. Regarding the amended definition of lost revenues, such change served to increase amounts eligible to be recognized as income, as compared to the September 19, 2020 Notice. As evidenced by the October 22, 2020 Notice, HHS’ interpretation of the underlying terms and conditions of such payments, including auditing and reporting requirements, continues to evolve. On January 15, 2021, the government issued “General and Targeted Distribution Post-Payment Notice of Reporting Requirements,” (the “January 15, 2021 Notice”), which again provides guidance on reporting instructions and use of funds. Additional guidance or new and amended interpretations of existing guidance on the terms and conditions of such payments may result in changes in the Company’s estimate of amounts for which the terms and conditions are reasonably assured of being met, and any such changes may be material. Additionally, any such changes may result in derecognition of amounts previously recognized, which may be material.

As of June 30, 2021, the Company’s estimate of the amount for which it is reasonably assured of meeting the underlying terms and conditions was updated based on, among other things, the September 19, 2020 Notice, the October 22, 2020 Notice, the January 15, 2021 Notice and the Company’s results of operations during 2020 and the six months ended June 30, 2021. The Company believes that it was appropriate to recognize as income the full amount of the funds received, which were $12.4 million, as of June 30, 2021.

Under ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. As required by ASC 205-40, this evaluation shall initially not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued. Management has assessed the Company’s ability to continue as a going ~~concern.~~concern in accordance with the requirements of ASC 205-40.

As reflected in the unaudited condensed consolidated financial statements, the Company had a working capital deficit and an accumulated deficit of $57.5 million and $1.0 billion, respectively, at June 30, 2021. In addition, the ~~Company’s cash position as~~Company had a loss from continuing operations before other income (expense) and income taxes of approximately $2.6 million and $3.2 million for the three months ended June 30, 2021 and 2020, respectively, and a loss from continuing operations before other income (expense) and income taxes of $7.9 million and $7.1 million, for the six months ended June 30, 2021 and 2020, respectively. Cash used in operating activities was $3.7 million and $9.1 million for the six months ended June 30, 2021 and 2020, respectively. As of the date of this report, our cash is ~~critically~~ deficient ~~critical~~and payments ~~are not being made~~for our operations in the ordinary course are not being made. The continued losses and other related factors, including the payment defaults under the terms of ~~business~~outstanding notes payable and ~~certain indebtedness~~debentures as more discussed in ~~the amount of $6.0 million matured on March 31, 2017, which the Company does not have the financial resources to satisfy (see Note 5), all of which~~Notes 6 and 7, raise substantial doubt about the Company’s ability to continue as a going ~~concern.~~concern for twelve months from the filing date of this report.

The Company’s unaudited condensed consolidated financial statements are prepared assuming the Company ~~continues~~can continue as a going concern, which contemplates continuity of operations through realization of assets, and the settling of liabilities in the normal course of business. As more fully discussed in Note 1, on June 25, 2021, the Company sold HTS and AMSG to ~~consider efficiencies~~VisualMED and ~~is currently using one laboratory for the majority of its toxicology diagnostics thereby reducing the number of employees and associated operating expenses, in order to reduce costs. In addition,~~ the Company received ~~approximately $15.7~~ VisualMED’s Series B Preferred Stock valued at $8.5 million ~~in cash from~~as consideration for the ~~issuances of debentures and warrants in the first nine months of 2017 (see Note 6), $3.8 million from related parties and an additional $4.0~~ sale (subject to post-closing adjustments). In addition, $2.2 million of ~~proceeds on October 30, 2017 from the issuance~~net liabilities of ~~convertible preferred stock (see Note 15). In July 2017, the Company announced that it plans~~HTS and AMSG were transferred to spin off its Advanced Molecular Services Group (“AMSG”) as an independent publicly traded company by way of a tax-free distribution to its shareholders. Completion of the spinoff of AMSG is expected to occur during the first quarter of 2018, and is subject to numerous conditions, including effectiveness of a Registration Statement on Form 10 to be filed with the Securities and Exchange Commission and consents, including under various funding agreements previously entered into by the Company.VisualMED. The intent of the spinoff of AMSG is to create two public companies, each of which can focus on its own strengths and operational plans. In accordance with ASC 205-20 and having met the criteria for “held for sale”, the Company has reflected ~~amounts~~the assets and liabilities relating to HTS and AMSG ~~as a disposal group classified as~~ held ~~for~~prior to the sale ~~and included~~ as part of discontinued operations. ~~AMSG is no longer~~In addition, during 2020, the Company announced plans to sell its clinical laboratory, EPIC Reference Labs, Inc., and as a result, EPIC Reference Labs, Inc.’s operations have been included in ~~the segment reporting following the reclassification to discontinued operations. The~~ discontinued operations ~~of AMSG~~for all periods presented. The Company has been unable to find a buyer for EPIC Reference Labs, Inc. and, therefore, effective June 30, 2021, it has ceased all efforts to sell the company. Discontinued operations are ~~described further~~more fully discussed in Note 14. ~~The~~

On March 1, 2021, the Company ~~also announced that~~closed Jellico Community Hospital, after the Big South Fork Medical Center received CMS regional office licensure approval and opened its doors on August 8, 2017. The hospital provided services to over 1,854 patients and recognized approximately $0.6 millioncity of ~~revenues during the three months ended September 30, 2017. The Company may amend its current revenue recognition policy and percentage~~Jellico issued a 30-day termination notice for the ~~hospital when payments are received to support amended revenue recognition methodologies. Therefore,~~lease of the building. Jellico Community Hospital had been operating at a loss since it was acquired by the Company ~~expects~~in March 2019. The Company’s core operating businesses are now a rural hospital and CarePlus Center and a hospital and physician’s office that ~~the opening of the hospital will continue~~it plans to ~~provide additional revenue~~reopen and ~~cash flow sources.~~operate. Rural hospitals are a specialized marketplace with a requirement for capable and knowledgeable management. The Company’s current financial condition may make it difficult to attract and maintain adequate expertise in its management team to successfully operate these businesses.

There can be no assurance that the Company will be able to achieve its business plan, which is to acquire and operate clusters of rural hospitals, raise any additional capital or secure the additional financing necessary to implement its current operating plan. The ability of the Company to continue as a going concern is dependent upon its ability to ~~significantly reduce~~raise adequate capital to fund its operations and repay its outstanding debt and other past due obligations, fully align its operating costs, increase its revenues, and eventually regain profitable operations. The ~~accompanying~~unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Basic loss per share is computed by dividing the loss available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Basic loss per share excludes potential dilution of securities or other contracts to issue shares of common stock. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company. For each of the three and six months ended June 30, 2021 and 2020, basic loss per share is the same as diluted loss per share.

The following table sets forth the computation of the Company’s basic and diluted net loss per share available to common stockholders during the three and six months ended June 30, 2021 and 2020:

Diluted loss per share excludes all dilutive potential shares if their effect is anti-dilutive. As of June 30, 2021 and 2020, the following potential common stock equivalents were excluded from the calculation of diluted loss per share as their effect was anti-dilutive:

~~Effective October 25, 2017,~~ Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The terms of certain of the warrants, convertible preferred stock and convertible debentures issued by the Company provide for reductions in the per share exercise prices of the warrants and the per share conversion prices of the debentures and preferred stock (if applicable and subject to a floor in certain cases), in the event that the Company issues common stock or common stock equivalents (as that term is defined in the agreements) at an effective exercise/conversion price that is less than the then exercise/conversion prices of the outstanding warrants, preferred stock or debentures, as the case may be. In addition, many of these equity-based securities contain exercise or conversion prices that vary based upon the price of the Company’s common stock ~~(RNVA)~~on the date of exercise/conversion (see Notes 7, 11 and ~~warrants to purchase~~12). These provisions have resulted in significant dilution of the Company’s common stock.

As a result of these down round provisions, the potential common stock ~~(RNVAW) were no longer listed on the Nasdaq Stock Market but began trading on the OTCQB instead,~~and common stock equivalents totaled 4.7 billion at August 11, 2021, as more fully discussed in Note ~~15.~~16. See Note 11 regarding a discussion of the number of shares of the Company’s authorized common stock.

Accounts receivables at June 30, 2021 (unaudited) and December 31, 2020 consisted of the following:

The allowance for contractual obligations reflected in the table above decreased as a percentage of accounts receivable to 58% at June 30, 2021 compared to 78% at December 31, 2020. The allowance is based on historical contractual allowance rates. The decrease in the percentage of contractual obligations to accounts receivable was due to rate changes.

Estimated implicit price concessions deducted from revenues for the three months ended June 30, 2021 and 2020 were $1.3 million and $2.7 million, respectively, and for the six months ended June 30, 2021 and 2020 were $4.3 million and $4.0 million, respectively. The allowance for doubtful accounts deducted from accounts receivable was $4.1 million at June 30, 2021 compared to $1.5 million at December 31, 2020, an increase of $2.6 million. The increase was due to updates to estimated collection rates and the closure of Jellico Community Hospital. The Company’s policy is to write off accounts receivable balances against the allowance for implicit price concessions once an accounts receivable ages past a specified number of days.

During the year ended December 31, 2020, the Company entered into six accounts receivable sales agreements under which the Company sold an aggregate of $3.3million of accounts receivable on a non-recourse basis for an aggregate purchase price paid to the Company of $2.2 million, less $0.1 million of origination fees. Accordingly, the Company recorded a loss on the sales of $1.2 million during the year ended December 31, 2020. As of June 30, 2021 and December 31, 2020, $1.5million and $1.7 million, respectively, was outstanding and owed under the accounts receivable sales agreements. As of June 30, 2021, $1.3 million was recorded as a reduction of accounts receivable and $0.2million was recorded in accrued expenses. The $0.2million that was recorded in accrued expenses (see Note 5) represents the portion sold in excess of the balance of accounts receivable recorded by the Company as due on June 30, 2021.

On ~~October 30, 2017,~~January 29, 2020, the Company ~~issued its Series I-1 Convertible Preferred Stock,~~entered into a secured installment promissory note (the “Ponte Note”) in the principal amount of $1.2 million, less $0.1 million in origination fees, the proceeds of which were used to satisfy in full the amounts due under accounts receivable sales agreements entered into during 2019. The Ponte Note is more fully discussed in Note 6.

As of June 30, 2021 and ~~modified~~December 31, 2020, the ~~anti-dilution provisions~~Company had $1.1 million and $1.4 million, respectively, of income tax refunds receivable. During 2020, the U.S. Congress approved the CARES Act, which allowed a five-year carryback privilege for federal net operating tax losses that arose in a tax year beginning in 2018 and through 2020. As a result, during the year ended December 31, 2020, the Company recorded approximately $1.1 million in refunds from the carryback of certain ~~outstanding debentures and warrants~~of its federal net operating losses. In addition, during the year ended December 31, 2020, the Company recorded $0.3 million in refunds related to other net operating loss carryback adjustments. During the six months ended June 30, 2021, the Company received income tax refunds of $0.3 million, which represented income tax refunds associated with the CARES Act. NaN refunds were received during the six months ended June 30, 2020. The Company used the $0.3 million of refunds that ~~were issued~~it received in ~~March 2017,~~the six months ended June 30, 2021 to repay a portion of the amount that it owes for federal income tax liabilities that arose from an audit of the Company’s 2015 Federal tax return as more fully discussed in Note ~~15.~~

13. The Company’s income taxes are more fully discussed in Note ~~2 – Accounts Receivable~~

~~Accounts receivable at September 30, 2017 (unaudited) and~~15 to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016 consisted of the following:~~2020.

~~Property and equipment at September 30, 2017 (unaudited) and December 31, 2016 consisted of the following:~~

On January 13, 2017, the Company completed an asset purchase agreement to acquire certain assets related to Scott County Community Hospital, based in Oneida, Tennessee (the “Hospital Assets”). The Hospital Assets include a 52,000 square foot hospital building and 6,300 square foot professional building on approximately 4.3 acres. Scott County Community Hospital, which has since been renamed as Big South Fork Medical Center, is classified as a Critical Access Hospital (rural). The Company acquired the Hospital Assets out of bankruptcy for a purchase price of $1.0 million, and the purchase price has been recorded as property and equipment in the Company’s condensed consolidated balance sheet. The Company opened the hospital on August 8, 2017.

Depreciation expense on property and equipment was $0.5 million and $0.7 million for the three months ended September 30, 2017 and 2016, and $1.5 million and $2.0 million for the nine months ended September 30, 2017 and 2016, respectively. Management periodically reviews the valuation of long-lived assets, including property and equipment, for potential impairment. Management did not recognize any impairment of these assets during the nine months ended September 30, 2017 and 2016.

Accrued expenses at ~~September~~June 30, ~~2017~~2021 (unaudited) and December 31, ~~2016~~2020 consisted of the following:

Accrued payroll and related liabilities at June 30, 2021 and December 31, 2020 included approximately $2.7 million and $2.5 million, respectively, for penalties associated with approximately $5.0 million and $4.4 million of accrued past due payroll taxes as of June 30, 2021 and December 31, 2020, respectively.

The Company and its subsidiaries are party to a number of loans with ~~affiliates~~third parties and ~~unrelated parties.~~affiliates. At ~~September~~June 30, ~~2017~~2021 (unaudited) and December 31, ~~2016,~~2020, notes payable consisted of the following:

On March 31, 2016, the Company entered into an agreement to pledge certain of its accounts receivable as collateral against a prepaid forward purchase contract whereby the Company received consideration in the amount of $5.0 million. The receivables had an estimated collectable value of $8.7 million which had been adjusted down to approximately $1.5 million on the Company’s balance sheet as of December 31, 2016 and $0 as of September 30, 2017. In exchange for the consideration received, the counterparty received the right to: (i) a 20% per annum investment return from the Company on the consideration, with a minimum repayment term of six months and minimum return of $0.5 million, (ii) all payments recovered from the accounts receivable up to $5.25 million, if paid in full within six months, or $5.5 million, if not paid in full within six months, and (iii) 20% of all payments of the accounts receivable in excess of amounts received in (i) and (ii). On March 31, 2017, to the extent that the counterparty has not been paid $6.0 million, the Company was required to pay the difference, plus 30% interest per annum on the total balance. To date, the Company has not recovered any payments against the accounts receivable. As of September 30, 2017, the Company has accrued $1.9 million for the counterparty’s required investment return, which is reflected in accrued expenses in the accompanying condensed consolidated balance sheet, and $6.9 million was due to the counterparty on September 30, 2017. The Company does not have the financial resources to repay this obligation.

The Company did not make the required monthly principal and interest payments due under the TCA Debenture for the period from October 2016 through March 2017. On February 2, 2017, the Company made a payment to TCA in the amount of $0.4 million which was applied to accrued and unpaid interest and fees, including default interest, as of the date of payment. On March 21, 2017, the Company made a payment to TCA in the amount of $0.75 million, of which approximately $0.1 million was applied to accrued and unpaid interest and fees in accordance with the terms of the TCA Debenture. Also on March 21, 2017, the Company entered into a letter agreement with TCA, which (i) waived any payment defaults through March 21, 2017; (ii) provided for the $0.75 million payment discussed above; (iii) set forth a revised repayment schedule whereby the remaining principal plus interest aggregating to approximately $2.6 million was to be repaid in various monthly installments from April of 2017 through September of 2017; and (iv) provided for payment of an additional service fee in the amount of $150,000, which was due on June 27, 2017, the day after effective date of the registration statement filed by the Company; which amount is reflected in accrued expenses in the accompanying condensed consolidated balance sheet at September 30, 2017. In addition, TCA entered into an ~~intercreditor~~inter-creditor agreement with the purchasers of the convertible debentures (see Note 6)7), which sets forth rights, preferences and priorities with respect to the security interests in the Company’s assets. On September 19, 2017, the Company entered into a new agreement with TCA, which extended the repayment schedule through to December 31, 2017. The ~~Company is current with its payments.~~

~~On September 15, 2016,~~TCA remains outstanding and TCA has made a demand for payment. In May 2020, the SEC appointed a Receiver to close down the TCA Global Master Fund, L.P. over allegations of accounting fraud. The amount recorded by the Company ~~entered into an agreement with two investors whereby~~as being owed to TCA was based on TCA’s application of prior payments made by the Company. The Company ~~sold~~believes that prior payments of principal and interest may have been applied to ~~the investors convertible notes in the aggregate principal amount of $0.4 million (the “September 2016 Notes”). The September 2016 Notes were convertible into shares of~~unenforceable investment banking and other fees and charges. It is the Company’s ~~common stock at a conversion price of $112.50 per share. In conjunction with~~position that the ~~sale of~~amount owed to TCA is less than the September 2016 Notes, the Company issued warrants to purchase an aggregate of 4,444 shares of the Company’s common stock at an exercise price of $180.00 per share. Based on the allocation of the net proceeds from the September 2016 Notes to the fair value of the warrants, and the resulting beneficial conversion features, the Company recognized a discount for the entire face value of the September 2016 Notes, which was accreted through the notes’ maturity date of March 15, 2017. On March 13, 2017, the September 2016 Notes, along with the accompanying warrants, were exchanged for 26,667 shares of the Company’s common stock.amount set forth above.

The Company did not make the second annual principal ~~payments~~payment under the Tegal Notes that ~~were~~was due on July 12, 2016. On November 3, 2016, the Company received a default notice from the holders of the Tegal Notes demanding immediate repayment of the outstanding principal at that time of $341,612 and accrued interest ~~aggregating to $0.4 million.~~of $43,000. On December 7, 2016, the Company received a breach of contract complaint with a request for the entry of a default judgment (see Note ~~11)~~13). ~~To date,~~On April 23, 2018, the holders of the Tegal Notes received a judgment against the Company. As of June 30, 2021, the Company has ~~yet to repay this amount.~~paid $50,051 of principal amount of these notes.

On ~~February 3, 2015,~~September 27, 2019, the Company ~~borrowed $3.0~~ issued a promissory note to a lender in the principal amount of $1.9 million ~~from Alcimede LLC (“Alcimede”). Seamus Lagan, the Company’s President~~ and ~~Chief Executive Officer, is the sole manager~~received proceeds of ~~Alcimede.~~$1.5 million, which was net of a $0.3 million original issue discount and $0.1 million in financing fees. The ~~note has an interest rate~~first principal payment of ~~6% and~~$1.0 million was ~~originally~~ due on February 2, 2016. Alcimede later agreed to extend the maturity date of the loan to August 2, 2017. On June 29, 2015, Alcimede exercised options granted in October 2012 to purchase 66,667 shares of the Company’s common stock at an exercise price of $37.50 per share, November 8, 2019and the ~~loan outstanding was reduced in satisfaction of the aggregate exercise price of $2.5 million. In August of 2016, $0.3~~ remaining $0.9 million was ~~repaid by~~due on December 26, 2019. These payments were not made. In February 2020, the ~~Company through the issuance of shares of common stock. In March of 2017,~~note holder sued the Company and Mr. ~~Lagan agreed that~~Diamantis, as guarantor, in New York State Supreme Court for the County of New York, for approximately $2.2 million for non-payment of the promissory note. Mr. Diamantis was a former member of the Company’s Board of Directors. In May 2020, the Company, Mr. Diamantis, as guarantor, and the note holder entered into a Stipulation providing for a payment ~~made to Alcimede in the amount~~ of ~~$50,000 would be deducted from the outstanding balance~~a total of ~~the note. On August 2, 2017, the Company and Alcimede agreed to further extend the maturity date of the loan to February 2, 2018.~~

~~The remaining balance due on this loan~~$2.2 million (which included accrued “penalty” interest as of ~~September~~that date) in installments through November 1, 2020. As of June 30, ~~2017 was $0.2 million, including accrued interest.~~

During the nine months ended September 30, 2017, the Company repaid $0.1 million that was outstanding to a former principal stockholder, and borrowed an additional $75,000 from this same stockholder of which $50,000 2021, $450,000 has been ~~repaid~~paid in cash and ~~$3.6~~ $2.1 million ~~from Mr. Diamantis, a director~~($1.4 million of ~~the Company, which has been~~principal and $0.6 million of accrued penalty interest), remains past due. The Stipulation is more fully ~~repaid (see~~discussed in Note ~~7).~~13.

~~RENNOVA HEALTH, INC.~~As of April 20, 2020 and through May 1, 2020, the Company and its subsidiaries received PPP loan proceeds in the form of promissory notes (the “PPP Notes”) in the aggregate amount of approximately $2.4 million. The PPP Notes and accrued interest are forgivable as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries. No collateral or guarantees were provided in connection with the PPP Notes. The unforgiven portion of the PPP Notes is payable over two yearsat an interest rate of 1.0% per annum, with a deferral of payments for the first sixteen months. Beginning sixteen months from the dates of issuance, the Company is required (if not forgiven) to make monthly payments of principal and interest to the lenders. The aggregate monthly payment of all of the PPP Notes would be approximately $0.1 million. The Company believes that it has used the proceeds for purposes consistent with the PPP. While the Company currently believes that its use of the loan proceeds has met the conditions for forgiveness of the loans, it cannot assure you that it has not taken actions that could cause the Company to be ineligible for forgiveness of the loans, in whole or in part. The Company is in the process of applying for forgiveness of the PPP Notes.

On January 29, 2020, the Company entered into the Ponte Note in the principal amount of $1.2 million. Pursuant to the Ponte Note, weekly installment payments ranging from $22,500 to $34,000 were due on or before February 5, 2020 through on or before October 21, 2020, the maturity date. The Ponte Note, which was issued with an original issue discount in the amount of approximately $0.1 million, is non-interest bearing and subject to a late-payment fee of 10%. The Company did not make certain installment payments due under the note and accordingly it recorded a $9,850 late payment penalty and incurred certain legal fees in connection with the payment default. On May 5, 2021, the Company entered into a settlement agreement with the holder under which the Company agreed to pay $125,000 in full satisfaction of the note of which $75,000 was paid in the six months ended June 30, 2021. The remaining balance of $50,000 is due in two monthly payments of $25,000 in July 2021 and August 2021.

On each of February 25, 2021, April 9, 2021, April 16, 2021 and April 22, 2021, the Company entered into agreements with certain institutional investors for warrant prepayment promissory notes with an aggregate principal amount of $1.1 million. The Company received proceeds of $1.0 million from the payees and, accordingly, it recorded a total of $0.1 million in original issue discount of which, $4,795 and $27,630 was amortized in the three and six months ended June 30, 2021, respectively. The payees may at their option apply all or any portion of the principal amount outstanding to the exercise of any common stock warrants of the Company. The notes are unsecured and they mature 12 months from the date of issuance. The notes do not bear interest but an interest rate of 18% will be applied to the outstanding principal commencing five days after any event of default that results in their acceleration.

During the six months ended June 30, 2021 and 2020, Mr. Christopher Diamantis, a former member of our Board of Directors, loaned the Company $0.9 million and $4.6 million, respectively, the majority of which was for working capital purposes. During the six months ended June 30, 2021 and 2020, the Company repaid $0.4 and $3.3 million of the loans from Mr. Diamantis, respectively, and on June 30, 2020, the Company exchanged the total amount owed to ~~Condensed Consolidated Financial Statements~~Mr. Diamantis on that date for outstanding loans and accrued interest, net of repayments, which totaled approximately $18.8 million, for shares of the Company’s Series M Preferred Stock. The Series M Preferred Stock is more fully discussed in Note 11.

During the three months ended June 30, 2021 and 2020, the Company accrued interest of $36,000 and $0.2 million, respectively, on the loans from Mr. Diamantis and during the six months ended June 30, 2021 and 2020, it accrued interest of $0.1 million and $0.5 million, respectively, on the loans from Mr. Diamantis. As of June 30, 2021 and December 31, 2020, accrued interest on the loans from Mr. Diamantis totaled $0.3 million and $0.2 million, respectively. Interest accrues on loans from Mr. Diamantis at a rate of 10% on the majority of the amounts loaned. In addition, Mr. Diamantis incurs interest expenses as a result of borrowing money from third parties to lend to the Company. Therefore, the Company reimburses Mr. Diamantis for a certain portion of the third party interest he incurs.

The carrying amount of all outstanding debentures as of ~~September~~June 30, ~~2017 (unaudited)~~2021and December 31, 2020 is as follows:

~~There were no~~Payment of all outstanding debentures totaling $12.7million, including late-payment penalties, at December 31, 2020 was past due by the debentures’ original terms. The debentures bear interest at the rate of 18% per annum and are secured by a first priority lien on all of the Company’s assets. The terms of the outstanding debentures as of December 31, ~~2016.~~2020 are more fully described in Note 9 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020. Certain of these debentures were issued with warrants to purchase shares of the Company’s common stock. Outstanding warrants are more fully discussed in Note 11.

~~February Offering~~The Company accrued interest expense on outstanding debentures during the three months ended June 30, 2021 and 2020 of $0.6 million and $1.9 million, respectively, and during the six months ended June 30, 2021 and 2020 of $1.1 million and $3.9 million, respectively.

On ~~February 2, 2017,~~June 30, 2021, as adjusted for the ~~Company issued $1.6~~ Reverse Stock Splits, $2.6 million ~~aggregate~~of principal amount of Original Issue Discount Convertible Debentures due three months from the date of issuance (the “February Debentures”) and warrants to purchase an aggregate of 6,667 shares of common stock, which can be exercised at any time after August 17, 2017 at an exercise price of $38.70 per share (the “February Warrants”), to an accredited investor for a purchase price of $1.5 million. On March 21, 2017, the February Debenturesoutstanding debentures were ~~exchanged for $2.5 million of exchange debentures as more fully discussed below.~~

On March 21, 2017, the Company issued $10.85 million aggregate principal amount of Senior Secured Original Issue Discount Convertible Debentures due March 21, 2019 (the “Convertible Debentures”). The Company received net proceeds from this transaction in the approximate amount of $8.4 million. The Company used $3.8 million of the net proceeds to repay the 2017 Diamantis Note (see Note 7) and $0.75 million of the net proceeds to make the partial repayment on the TCA Debenture (see Note 5). The remainder of the net proceeds were used for general corporate purposes. In conjunction with the issuance of the Convertible Debentures, the holder of the February Debentures exchanged these debentures for $2.5 million of new debentures (the “Exchange Debentures” and, collectively with the Convertible Debentures, the “March Debentures”) on the same terms as, and pari passu with, the Convertible Debentures and warrants. The Company recorded non-cash interest expense in the amount of $0.4 million as a result of this exchange. Additionally, the holders of an aggregate of $2.2 million stated value of the Company’s Series H Convertible Preferred Stock (the “Series H Preferred Stock”) exchanged such preferred stockconvertible into ~~$2.7~~ 5.9 million principal amount of Exchange Debentures and warrants. The March Debentures contain a 24% original issue discount, have no regularly scheduled interest payments except in the event of a default and have a maturity date of March 21, 2019.

~~In connection with the March Debentures the Company issued warrants to purchase an aggregate of 9,166,616~~ shares of the Company’s common stock to several accredited investors. The warrants were issued to the investors in three tranches, Series A Warrants, Series B Warrants and Series C Warrants (collectively, the “March Warrants”). The Series A Warrants are exercisable for 3,214,911 shares of the Company’s common stock. They are immediately exercisable and haveat a term of exercise equal to five years. The Series B Warrants are exercisable for 2,736,794 shares of the Company’s common stock and are exercisable for a period of 18 months commencing immediately. The Series C Warrants are exercisable for 3,214,911 shares of the Company’s common stock and have a term of five years provided such warrants shall only vest if, when and to the extent that the holders exercise the Series B Warrants. At September 30, 2017, the Series A, Series B and Series C Warrants each have an exercise price of ~~$5.85~~ $0.4407 per share ~~which reflects an adjustment pursuant to their terms. The Series A, Series B~~ and ~~Series C Warrants are subject to “full ratchet” and other customary anti-dilution protections.~~

~~The March Debentures are~~$5.6 million of outstanding debentures were convertible on that date into0.1 million shares of the Company’s common stock at a conversion price ~~which has been adjusted pursuant to the terms~~of $52.00. The remaining outstanding debentures of $4.5 million are non-convertible.

See Notes 3 and 11 for a discussion of the ~~March Debentures to $5.85 per share~~dilutive effect of the outstanding convertible debentures and warrants as of ~~September~~June 30, 2017, due to prices at which the Company has subsequently issued shares of common stock. The Convertible Debentures began to amortize monthly commencing on the 90th day following the closing date. The Exchange Debentures began to amortize monthly on the closing date. On each monthly amortization date, the Company may elect to repay 5% of the original principal amount of the March Debentures in cash or, in lieu thereof, the conversion price of such debentures will thereafter be 85% of the volume weighted average price at the time of conversion. In the event the Company does not elect to pay such amortization amounts in cash, each investor, in their sole discretion, may increase the conversion amount subject to the alternative conversion price by up to four times the amortization amount. The March Debentures contain customary affirmative2021 and negative covenants. The conversion prices are subject to reset in the event of offerings or other issuances of common stock, or rights to purchase common stock, at a price below the then conversion price, as well as other customary anti-dilution protections as more fully described in the debentures.

The March Debentures are secured by all of the Company’s assets and are guaranteed by substantially all of the Company’s subsidiaries. Between March 22, 2017 and September 30, 2017, holders of the March Debentures converted an aggregate of $4.1 million of these debentures into 548,932 shares of common stock.

The exercise prices of the March Warrants issued in connection with the March Debentures are subject to reset in the event of offerings or other issuances of common stock, or rights to purchase common stock, at a price below the then exercise price, as well as other customary anti-dilution protections. As a result of these provisions, both the March Debentures and the March Warrants were deemed to be not indexed to the Company’s common stock, and the Company recognized derivative liabilitiesNote 16 for the ~~embedded conversion feature~~dilutive effect of the March Debentures and the March Warrants in the original amount of $15.3 million and $41.3 million, respectively. The Company recognized a discount for 100% of the principal value of the March Debentures and non-cash interest expense in the amount of $43.7 million in connection with the recognition of these derivative liabilities. As a result of the adoption of ASU 2017-11 in the second quarter of 2017, the interest expense and derivative liability originally recognized were adjusted and extinguished during the three months ended June 30, 2017. See Note 1 for the adoption of ASU 2017-11 for the retrospective adjustments made to the Company’s condensed consolidated financial statements with respect to the derivative liabilities associated with theseoutstanding convertible debentures and ~~warrants.~~

~~In June 2017, the Company issued debentures due three months from the date of issuance in two issuances (collectively, the “June Debentures”) and~~ warrants to purchase an aggregate of 100,000 shares of common stock (33,333 warrants in the June 2, 2017 transaction and 66,667 in the June 22, 2017 transaction), which can be exercised at any time after nine months at an exercise price of $5.85 per share for the June 2, 2017 warrants and $5.70 per share for the June 22, 2017 warrants (collectively the “June Warrants”), to accredited investors for a purchase price of $1,902,700 and proceeds to the Company of $1.5 million. The Company recorded a discount on the debentures of $107,700 which has been fully amortized.~~As more fully discussed below, on July 17, 2017, the June Debentures were exchanged~~.

On July 17, 2017, the Company closed an offering of $4,136,862 aggregate principal amount of Original Issue Discount Debentures due October 17, 2017 (the “July Debentures”) and warrants to purchase an aggregate of 141,333 shares of common stock (the “July Warrants”) for consideration of $2,000,000 in cash and the exchange of the full $1,902,700 aggregate principal amount of the June Debentures. Under the Purchase Agreement, the Company was required to hold a stockholders’ meeting to obtain stockholder approval for at least a 1-for-8 reverse split of the Company’s common stock on or before September 20, 2017. Accordingly, the Company’s stockholders approved a reverse stock split on September 20, 2017 and the Company effected a 1-for-15 reverse stock split of its common stock on October 5, 2017, as further discussed in Note 1. The July Debentures were guaranteed by substantially all of the subsidiaries of the Company pursuant to a Subsidiary Guarantee in favor of the holders of the July Debentures. As more fully discussed below, on September 19, 2017, the July Debentures were exchanged for $6.4 million of exchange debentures.

The July Warrants are exercisable into shares of the Company’s common stock at any time from and after six months from the closing date at an exercise price of $5.63 per common share (subject to adjustment). The July Warrants will terminate five years after they become exercisable.

On September 19, 2017, the Company closed an offering of $2,604,000 principal amount of Senior Secured Original Issue Discount Convertible Debentures due September 19, 2019 (the “New Debentures”) and three series of warrants to purchase an aggregate of 6,935,517 shares of the Company’s common stock (the “Series A Warrants,” the “Series B Warrants,” and the “Series C Warrants,” and collectively, the “September Warrants”). The offering was pursuant to the terms of a Securities Purchase Agreement, dated as of August ~~31, 2017 (the “Purchase Agreement”), between the Company and certain existing institutional investors of the Company. The Company received proceeds of $2,100,000 from the offering.~~11, 2021.

Also on September 19, 2017, the Company closed exchanges by which the holders of the Company’s July Debentures exchanged $4,136,862 principal amount of such debentures for $6,412,136 principal amount of new debentures on the same items as, and pari passu with, the New Debentures (the “September Exchange Debentures” and, together with the New Debentures, the “September Debentures”). The Company recorded non-cash interest expense in the amount of $1.0 million as a result of this exchange. All issuance amounts of the September Debentures reflect a 24% original issue discount.

The September Debentures contain customary affirmative and negative covenants. The conversion price is subject to “full ratchet” and other customary anti-dilution protections as more fully described in the debentures. The September Debentures may be converted at any time into shares of the Company’s common stock. The September Debentures begin to amortize monthly commencing on October 1, 2017. For the first three amortization dates, the amortization amount is $100,000. Thereafter, on each monthly amortization date, the Company may elect to repay 5% of the original principal amount of September Debentures in cash or, in lieu thereof, the conversion price of such September Debentures shall thereafter be 85% of the volume weighted average price at the time of conversion. In the event the Company does not elect to pay such amortization amounts in cash, each investor, in their sole discretion, may increase the conversion amount subject to the alternative conversion price by up to four times the amortization amount.

The Series A Warrants are exercisable for an aggregate of 2,311,829 shares of the Company’s common stock. They are immediately exercisable and have a term of exercise equal to five years. The Series B Warrants are exercisable for an aggregate of 2,311,859 shares of the Company’s common stock and are exercisable for a period of 18 months commencing immediately. The Series C Warrants are exercisable for an aggregate of 2,311,829 shares of the Company’s common stock, and have a term of five years provided such Series C Warrants shall only vest if, when and to the extent that the holders exercise the Series B Warrants. The September Warrants each have an exercise price of $3.90. All of the September Warrants are subject to “full ratchet” and other customary anti-dilution protections.

The Company’s obligations under the September Debentures are secured by a security interest in all of the Company’s and its subsidiaries’ assets, pursuant to the terms of the Security Agreement, dated as of March 20, 2017.

During the nine months ended September 30, 2017, the Company realized approximately $15.7 million in proceeds from the issuances of these debentures and warrants. At September 30, 2017, the unamortized discounts were $16.4 million. These discounts represent original issue discounts, the relative fair value of the warrants issued with the debentures and the relative fair value of the beneficial conversion features of the debentures. During the three and nine months ended September 30, 2017, the Company recorded approximately $4.8 million and approximately $14.7 million of non-cash interest and amortization of debt discount expense primarily in connection with the debentures and warrants.

~~See Note 9 for summarized information related to warrants issued and the activity during the nine months ended September 30, 2017.~~

~~In addition to~~Alcimede LLC (“Alcimede”) billed $0.1 million and $0.1 million for consulting fees for the three months ended June 30, 2021 and 2020, respectively, and $0.2 million and $0.2 million for consulting fees for the six months ended June 30, 2021 and 2020, respectively. Seamus Lagan, the Company’s President and Chief Executive Officer, is the sole manager of Alcimede (also see Note 11).

The terms of the foregoing transaction and the transactions discussed in Note 5,6 and 11 are not necessarily indicative of those that would have been agreed to with unrelated parties for similar transactions.

We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the ~~Company had~~related right-of-use assets and right-of-use obligations at the ~~following related party transactions during~~present value of lease payments over the ~~nine months ended September 30, 2017~~term. We do not separate lease and ~~2016:~~non-lease components of contracts.

In January and February of 2017, the Company received advances aggregating $3.6 million from Christopher Diamantis, a director of the Company. The advances, along with $0.5 million of previously accrued but unpaid interest, were due on demand, bearing interest at 10% per annum. The Company used the advances to pay the purchase price for the Hospital Assets and for general corporate purposes. On March 7, 2017, the Company issued a promissory note to Mr. Diamantis in the amount of $3.8 million (the “2017 Diamantis Note”) in connection with these advances received in 2017, plus accrued and unpaid interest of $0.5 million. In conjunction with the issuance of the 2017 Diamantis Note, the Company also issued to Mr. Diamantis warrants to purchase 27,667 shares of the Company’s common stock, exercisable at $15.00. The 2017 Diamantis Note was repaid on March 21, 2017 with the proceeds received from the issuance of the Convertible Debentures (see Note 6). In May and June of 2017, the Company received advances from Mr. Diamantis, net of repayments totaling $0.2 million, at a 10% annumGenerally, we use our most recent agreed upon borrowing interest rate ~~which amount was paid in full on July 18, 2017.~~at lease commencement as our interest rate, as most of our operating leases do not provide a readily determinable implicit interest rate.

The following table presents our lease-related assets and ~~$0.3 million for consulting fees pursuant to a consulting agreement for each of the nine months ended September~~liabilities at June 30, ~~2017 and 2016, respectively.~~

Monarch Capital, LLC (“Monarch”) billed the Company for consulting fees pursuant to a consulting agreement in the amount of $0.1 million for the nine months ended September 30, 2017 and 2016, respectively. The agreement expired on August 31, 2017. Michael Goldberg, a director of the Company up until his resignation effective April 24, 2017, is the Managing Director of Monarch.

~~The Company leases various assets under capital leases expiring through 2020 as follows. At September 30, 2017 (unaudited)~~2021 and December 31, ~~2016, capital~~2020:

The following table presents certain information related to lease ~~obligations consisted~~expense for finance and operating leases for the three months and six months ended June 30, 2021 and 2020:

Schedule of Information Related to Lease Expense for Finance and Operating Leases

The following table presents supplemental cash flow information for the ~~following:~~six months ended June 30, 2021 and 2020:

Aggregate future minimum ~~rentals~~lease payments under ~~capital~~right-of-use operating and finance leases are as follows:

Schedule of Future Minimum Rentals Under Right-to-use Operating and Finance Leases

As of June 30, 2021, the Company was in default under its finance lease obligations, therefore, the aggregate future minimum lease payments and accrued interest under this finance lease totaling approximately $0.2 million is deemed to be immediately due.

We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

The estimated fair value of financial instruments was determined by the Company using available market information and valuation methodologies considered to be appropriate. At June 30, 2021 and December 31, 2020, the carrying value of the Company’s accounts receivable, accounts payable and accrued expenses approximated their fair values due to their short-term nature.

~~Note 9 – Stockholders’ Equity~~The following table sets forth the financial assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2021 and December 31, 2020:

The fair value of the VisualMED Series B Preferred Stock of $8.5 million as of June 30, 2021 is more fully discussed in Note 14.

The Company utilized the following method to value its derivative liability as of June 30, 2021 and December 31, 2020 for an embedded conversion option related to an outstanding debenture valued at $455,336. The Company determined the fair value by comparing the discounted conversion price per share (85% of market price) multiplied by the number of shares issuable at the balance sheet date to the actual price per share of the Company’s common stock multiplied by the number of shares issuable at that date with the difference in value recorded as a liability. There was 0 change in the value of the embedded conversion option in the three and six months ended June 30, 2021 and 2020 as there was 0 change in the conversion price terms during the periods.

During the three and six months ended June 30, 2021, the conversions of preferred stock triggered a further reduction in the exercise prices of warrants containing ratchet features that had not already ratcheted down to their floor. In accordance with U.S. GAAP, the incremental fair value of the debentures and warrants as a result of the decreases in the conversion/exercise prices was measured using Black Scholes. The following assumptions were utilized in the Black Scholes valuation models for the three months ended June 30, 2021: risk free rates ranging from 0.06% to 0.07%, volatility ranging from 216.72% to 253.20% and terms ranging from .66 year to 1 year. The following assumptions were utilized in the Black Scholes valuation models for the six months ended June 30, 2021: risk free rates ranging from 0.06% to 0.10%, volatility ranging from 213.25% to 253.20% and terms ranging from .66 year to 1.21 years. The incremental fair value of $99.3 million and $149.6 million was recorded as deemed dividends for the three and six months ended June 30, 2021, respectively. No deemed dividends were recorded in the three and six months ended June 30, 2020 as a result of down round provision features as no down round provisions were triggered during the periods. Deemed dividends of $3.2 million were recorded in the three and six months ended June 30, 2020 as a result of the issuance of the Series M Preferred Stock as more fully discussed in Note 11. Deemed dividends are also discussed in Notes 1 and 3.

The Company has 10,000,000,000 authorized shares of Common Stock at $0.0001 par value and 5,000,000 authorized shares of Preferred Stock at a par value of $0.01.

The Company has 5,000,000 shares, par value $0.01, of preferred stock authorized. As of ~~September~~June 30, ~~2017,~~2021, the Company had outstanding ~~1,750,275~~ shares of preferred stock consisting of ~~215 shares of its Series G Preferred Stock, 60 shares of its Series H Preferred Stock and~~ 1,750,000 shares of its Series F Convertible Preferred Stock ~~(the “Series F Preferred Stock”).~~

~~During~~convertible into one share of the ~~nine months ended September 30, 2017, 7,785 shares of Series H Preferred Stock were converted into 370,446 shares of~~Company’s common stock, in accordance with the terms of the Series H Preferred Stock. Also during the nine months ended September 30, 2017, 2,174 shares of Series H Preferred Stock with a stated value of $2.2 million were exchanged for Exchange Debentures with an aggregate principal amount of $2.7 million and warrants (see Note 6).

~~In connection with the acquisition of Genomas, Inc., on September 27, 2017, which is more fully discussed in Note 14, the Company issued 1,750,000~~10 shares of its Series FH Convertible Preferred Stock ~~valued at $174,097.~~convertible into 0.5 million shares of the Company’s common stock, 250,000 shares of its Series L Convertible Preferred Stock (the “Series L Preferred Stock”), 21,380.35 shares of its Series M Preferred Stock, 16,368.88 shares of its Series N Convertible Redeemable Preferred Stock (the “Series N Preferred Stock”), and 2,750 shares of its Series O Convertible Redeemable Preferred Stock (the “Series O Preferred Stock”). The ~~following is~~Series L Preferred Stock, the Series M Preferred Stock, the Series N Preferred Stock and the Series O Preferred Stock are more fully described below.

On May 4, 2020, the Company filed a ~~summary~~Certificate of ~~certain terms and provisions~~Designation with the Secretary of State of the State of Delaware to authorize the issuance of up to 250,000 shares of its Series L Preferred Stock. On May 5, 2020, the Company entered into an exchange agreement with Alcimede. Pursuant to the exchange agreement, the Company issued to Alcimede 250,000 shares of its Series L Preferred Stock in exchange for the 250,000 shares of the Company’s Series FK Preferred ~~Stock:~~

~~Rank~~.Stock held by Alcimede. Upon the issuance of the Series L Preferred Stock to Alcimede, the shares of Series K Preferred Stock were cancelled. The Series FL Preferred Stock ~~ranks on parity~~is not entitled to ~~our common stock.~~

~~Conversion~~.receive any dividends. Each share of the Series FL Preferred Stock is convertible into shares of ~~our~~the Company’s common stock (subject to adjustment as provided in the related certificate of designation of preferences, rights and limitations) at any time after the first anniversary of the issuance date at the option of the holder at a conversion price equal to ~~the greater of $29.25 or~~ the average closing price of the Company’s common stock ~~for~~on the 10ten trading days immediately ~~preceding~~prior to the ~~conversion.~~ conversion date.

The ~~maximum~~Company’s Board of Directors has designated 30,000 shares of the 5,000,000 shares of authorized preferred stock as the Series M Preferred Stock. Each share of Series M Preferred Stock has a stated value of $1,000. On June 30, 2020, the Company and Mr. Diamantis entered into an exchange agreement wherein Mr. Diamantis agreed to the extinguishment of the Company’s indebtedness to Mr. Diamantis totaling $18.8 million, including accrued interest, on that date in exchange for 22,000 shares of the Company’s Series M Preferred Stock with a par value of $0.01 per share. As a result of the exchange, the Company recorded a deemed dividend of approximately $3.2 million in the year ended December 31, 2020, which represented the difference between the $18.8 million of debt and accrued interest exchanged and the value of the Series M Preferred Stock of $22.0 million. See Note 6 for a discussion of the Company’s current indebtedness to Mr. Diamantis. The terms of the Series M Preferred Stock were set forth in the Company’s Current Report on Form 8-K filed with the SEC on June 16, 2020.

During the six months ended June 30, 2021, the holder converted 619.65 shares of his Series M Preferred Stock, with a stated value of $0.6 million into 450,000 shares of the Company’s common stock.

On August 13, 2020, Mr. Diamantis entered into a Voting Agreement and Irrevocable Proxy with the Company, Mr. Lagan and Alcimede (of which Mr. Lagan is the sole manager) pursuant to which Mr. Diamantis granted an irrevocable proxy to Mr. Lagan to vote the Series M Preferred Stock held by Mr. Diamantis, Mr. Diamantis has retained all other rights under the Series M Preferred Stock.

On August 31, 2020, the Company and its debenture holders exchanged, under the terms of the Exchange and Redemption Agreement, certain outstanding debentures and all of the outstanding shares of the Company’s Series I-1 Convertible Preferred Stock (the “Series I-1 Preferred Stock”) and Series I-2 Convertible Preferred Stock (the “Series I-2 Preferred Stock”) for 30,435.52 shares of the Company’s Series N Preferred Stock. The terms of the Series N Preferred Stock were set forth in the Company’s Current Report on Form 8-K filed with the SEC on September 1, 2020.

During the year ended December 31, 2020, the holders converted 1,001 shares of their Series N Preferred Stock, with a stated value of $1.0 million, into 38,371 shares of the Company’s common stock. During the six months ended June 30, 2021, the holders converted 13,065.53 shares of their Series N Preferred Stock, with a stated value of $13.1 million, into 9,510,352 shares of the Company’s common stock.

On May 10, 2021, the Company closed an offering of shares of its newly-authorized Series O Preferred Stock. The offering was pursuant to the terms of the Securities Purchase Agreement, dated as of May 10, 2021 (the “Purchase Agreement”), between the Company and certain existing institutional investors of the Company. The Purchase Agreement provides for the issuance of up to 4,400 shares of Series O Preferred Stock at four closings of 1,100 shares each. If all such shares of Series O Preferred Stock are issued, the Company will receive proceeds of $4.0 million.

The first closing occurred on May 10, 2021, the second closing occurred on May 18, 2021 and one-half of the third closing was funded on June 29, 2021. As of June 30, 2021, Company issued an aggregate of 2,750 shares of its Series O Preferred Stock and received total proceeds of $2.5 million as a result of the closings.

The Series O Preferred Stock, which has been issued for cash, does not contain mandatory redemption or other features that would require it to be presented on the balance sheet outside of equity and, therefore, it qualifies for equity accounting treatment. As a result of the equity accounting treatment, fair value accounting is not required in connection with the issuances of the stock and no gains, losses, derivative liabilities or deemed dividends have been recorded in connection with the issuances of the stock.

The terms of the Series O Preferred Stock were set forth in the Company’s Current Report on Form 8-K filed with the SEC on May 11, 2021, in particular:

General. The Company’s Board of Directors has designated 10,000 shares of the 5,000,000 authorized shares of preferred stock as the Series O Preferred Stock. Each share of the Series O Preferred Stock has a stated value of $1,000.

Voting Rights. Except as provided below or by law, the Series O Preferred Stock shall have no voting rights. However, as long as any shares of Series O Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series O Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series O Preferred Stock or alter or amend the Certificate of Designation, (b) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (c) increase the number of authorized shares of the Series O Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.

Dividends. Dividends at the rate per annum of 10% of the stated value per share shall accrue on each outstanding share of Series O Preferred Stock from and after the date of the original issuance of such share of Series O Preferred Stock (the “Series O Preferred Accruing Dividends”). The Series O Preferred Accruing Dividends shall accrue from day to day, whether or not declared, and shall be cumulative and non-compounding; provided, however, that such Series O Preferred Accruing Dividends shall be payable only when, as, and if declared by the Board of Directors. No cash dividends shall be paid on the common stock unless the Series O Preferred Accruing Dividends are paid.

Rank. The Series O Preferred Stock ranks with respect to dividends or a liquidation, (i) on parity with the common stock, the Company’s Series H Preferred Stock, the Company’s Series L Preferred Stock, the Company’s Series M Preferred Stock and the Company’s Series N Preferred Stock, (ii) senior to the Company’s Series F Preferred Stock, and (iii) junior to any other class or series of preferred stock of the Company afterwards created and ranking by its terms senior to the Series O Preferred Stock.

Conversion. Each share of the Series O Preferred Stock is convertible into shares of the Company’s common stock, at any time and from time to time, at the option of the holder, into that number of shares of common stock ~~issuable upon~~determined by dividing the stated value of such share of Series O Preferred Stock, plus any accrued declared and unpaid dividends, by the conversion price. The conversion price is equal to 90% of the lowest VWAP during the 10 trading days immediately prior to the conversion date. Holders of the Series FO Preferred Stock ~~is 59,829. Any~~are prohibited from converting Series O Preferred Stock into shares of ~~Series F Preferred Stock outstanding on~~common stock if, as a result of such conversion, the ~~fifth anniversary~~holder, together with its affiliates, would own more than 9.99% of the ~~issuance date will be mandatorily converted into~~total number of shares of common stock atthen issued and outstanding. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until 61 days after notice to the ~~applicable conversion price on such date.~~Company.

Liquidation Preference. ~~In the event of our~~Upon any liquidation, dissolution or ~~winding-up, holders~~winding up of ~~Series F Preferred Stock will be entitled to receive~~ the same amount that a holder of common stock would receive if the Series F Preferred Stock were fully converted into shares of our common stock at the conversion price (assuming for such purposes that the Series F Preferred Stock is then convertible) which amounts shall be paid pari passu with all holders of common stock.

~~Voting Rights~~~~. Each share of Series F Preferred Stock shall have one vote, and~~Company, the holders of the Series FO Preferred Stock shall ~~vote together with~~be entitled to receive an amount equal to the ~~holders of our common stock as a single class.~~

~~Dividends~~~~. The holders~~stated value of the Series FO Preferred Stock, ~~will participate,~~plus any accrued declared and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon, for each share of the Series O Preferred Stock before any distribution or payment shall be made on ~~an as-if-converted-to-common stock basis, in~~ any ~~cash dividends to the holders of common stock.~~junior securities.

Redemption. At any time ~~from time to time after~~ the ~~first anniversary of the issuance date, we~~Company shall have the right to redeem all, or any ~~portion of the outstanding Series F Preferred Stock at a price per share equal to $1.95 plus any accrued but unpaid dividends.~~

~~Negative Covenants~~. As long as any shares of Series F Preferred Stock are outstanding, the Company may not amend, alter or repeal any provision of our certificate of incorporation, the certificate of designation or our bylaws in a manner that materially adversely affects the powers, preferences or rightspart, of the Series ~~F Preferred Stock.~~

O Preferred Stock ~~Issued Subsequent~~then outstanding. The Series O Preferred Stock subject to ~~September 30, 2017~~

~~In October 2017,~~redemption shall be redeemed by the Company ~~issued its~~in cash in an amount equal to the stated value of the shares of the Series ~~I-1 Convertible~~O Preferred Stock ~~in connection with a financing as more fully discussed in Note 15.~~being redeemed plus all accrued declared and unpaid dividends.

The Company had ~~1,354,171~~10,000,000 and ~~186,692 shares of common stock outstanding at September 30, 2017 and December 31, 2016, respectively. The Company issued 1,167,479~~39,648 shares of its common stock ~~during~~issued and outstanding at June 30, 2021 and December 31, 2020, respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2017 as follows:~~

~~The February 22, 2017 reverse stock split, which is more fully described in Note 1, resulted in the issuance of 526 shares of common stock due to the rounding up of fractional shares.~~

~~On March 13, 2017,~~2021, the Company issued ~~26,667 shares of common stock in settlement of $0.4 million of outstanding notes and warrants (see Note 5).~~

On March 15, 2017, the Company agreed to issue 2,056 shares of common stock to the holders of a like number of warrants to purchase the Company’s common stock in exchange for the warrants valued at $57,868.

~~During the nine months ended September 30, 2017, the Company issued 548,932~~450,000 shares of its common stock upon the conversion of ~~$4.1 million~~619.65 shares of ~~the principal amount of the March Debentures (See Note 6).~~

~~On July 25, 2017, the Company issued 8,333~~its Series M Preferred Stock and 9,510,352 shares of its common stock ~~valued at $42,510 for severance owed to a former employee under~~upon the ~~terms~~conversion of 13,065.53 shares of its Series N Preferred Stock. During the ~~Company’s equity plan. The equity plan is more fully described below.~~

~~On August 14, 2017,~~six months ended June 30, 2020, the Company issued ~~181,933 shares of restricted stock to employees and directors, and later returned 4,933 shares of this stock to treasury, as more fully discussed under the heading~~~~Restricted Stock~~ ~~below.~~

~~On August 23, 2017, the Company issued 33,334~~25 shares of its common stock ~~in payment~~upon the conversion of ~~professional service fees valued at $118,493.~~21.25 shares of its Series I-2 Preferred Stock.

The Company has outstanding options, warrants, convertible preferred stock and convertible debentures. Exercise of the options and warrants, and conversions of the convertible preferred stock and debentures could result in substantial dilution of the Company’s common stock and a decline in the market price of the common stock. In addition, the terms of certain of the warrants, convertible preferred stock and convertible debentures issued by the Company provide for reductions in the per share exercise prices of the warrants and the per share conversion prices of the debentures and preferred stock (if applicable and subject to a floor in certain cases), in the event that the Company issues common stock or common stock equivalents (as that term is defined in the agreements) at an effective exercise/conversion price that is less than the then exercise/conversion prices of the outstanding warrants, preferred stock or debentures, as the case may be. These provisions, as well as the issuances of debentures and preferred stock with conversion prices that vary based upon the price of our common stock on the date of conversion, have resulted in significant dilution of the Company’s common stock and have given rise to reverse splits of its common stock, including the reverse stock split effected on July 16, 2021, which is more fully discussed in Note 1. See Note 16 for a discussion of the number of shares of the Company’s common stock and common stock equivalents outstanding as of August 11, 2021.

On August ~~14, 2017,~~13, 2020, Mr. Diamantis entered into the ~~Board of Directors, based on~~Voting Agreement with the ~~recommendation~~Company, Mr. Lagan and Alcimede (of which Mr. Lagan is the sole manager) pursuant to which Mr. Diamantis granted an irrevocable proxy to Mr. Lagan to vote the Series M Preferred Stock held by Mr. Diamantis. Mr. Diamantis has retained all other rights under the Series M Preferred Stock. Regardless of the ~~Compensation Committee~~number of shares of Series M Preferred Stock outstanding and so long as at least one share of Series M Preferred Stock is outstanding, the outstanding shares of Series M Preferred Stock shall have the number of votes, in the aggregate, equal to 51% of all votes entitled to be voted at any meeting of stockholders or action by written consent. This means that the holders of Series M Preferred Stock have sufficient votes, by themselves, to approve or defeat any proposal voted on by the Company’s stockholders, unless there is a supermajority required under applicable law or by agreement. As a result of the Board and in accordance with the provisions of the 2007 Equity Plan, approved grants to employees and directors of the Company of an aggregate of 181,933 shares of restricted common stock of the Company. The grants fully vest on the first anniversaryVoting Agreement, as of the date of ~~grant, subject~~filing this report, the Company believes that it has the ability to ~~the grantee’s continued status as an employee~~ensure that it has and or ~~director, as the case may be, on the vesting date. During the nine months ended September 30, 2017, 4,933~~can obtain sufficient authorized shares of ~~the restricted~~its common stock ~~were forfeited by their terms and returned~~ to ~~treasury and cancelled.~~cover all potentially dilutive common shares outstanding.

During the nine months ended September 30, 2017, the Company recognized stock-based compensation in the amount of $82,974 for the grant of the restricted stock based on a valuation of $3.75 per share. At September 30, 2017, the Company had approximately $580,750 of unrecognized compensation cost related to the restricted stock.

The Company maintained and sponsored the Tegal Corporation 2007 Incentive Award Equity Plan (the “2007 Equity Plan”). Tegal Corporation is the ~~predecessor entity to~~prior name of the Company. The 2007 Equity Plan, as amended, provided for the issuance of stock options and other equity awards to the Company’s officers, directors, employees and consultants. During the nine months ended September 30, 2017 and 2016, the Company recognized stock-based compensation in the amount of $34,081 and $0.7 million, respectively, for the vesting of outstanding stock options. The 2007 Equity Plan terminated pursuant to its terms in September 2017. ~~The following table summarizes~~As of June 30, 2021, 26 options were outstanding and exercisable with a weighted average exercise price of $2,992,125 per share. No options were issued, forfeited or expired during the ~~Company’s stock option activity for the nine~~six months ended ~~September~~June 30, ~~2017:~~2021. The remaining weighted average contractual term is 4.87 years. The intrinsic value of the options exercisable at each of June 30, 2021 and December 31, 2020 was $0. No compensation expense was recorded in the three and six months ended June 30, 2021 and 2020 as all of the options were fully vested as of December 31, 2019.

As of September 30, 2017, the Company had approximately $155,582 of unrecognized compensation cost related to stock options granted under the Company’s 2007 Equity Plan, which is expected to be recognized over a weighted-average period of 1.03 years.

The Company, as part of various debt and equity financing transactions, has issued warrants to purchase shares of the Company’s common stock totaling 122.4 million at June 30, 2021. During the six months ended June 30, 2021, as a result of the anti-dilution provisions of outstanding warrants, the exercise prices of certain warrants decreased and they became exercisable into an additional 117.8 million shares of the Company’s common stock. Certain of these warrants were issued in connection with the issuances of the debentures. Debentures are more fully discussed in Note 7.

Included in the warrants outstanding at June 30, 2021, were warrants issued in connection with the debentures issued in March 2017. The Company issued these warrants to purchase shares of the Company’s common stock to several accredited investors (the “March Warrants”). At June 30, 2021, these warrants were exercisable into an aggregate of approximately 108.9 million shares of the Company’s common stock. The March Warrants were issued to the investors in three tranches, Series A Warrants, Series B Warrants and Series C Warrants. At June 30, 2021, the Series A Warrants were exercisable for 40.8 million shares of the Company’s common stock. They were exercisable upon issuance and have a term of exercise equal to five years. At June 30, 2021, the Series B Warrants were exercisable for 26.1 million shares of the Company’s common stock and are exercisable until March 31, 2022. At June 30, 2021, the Series C Warrants were exercisable for 42.0 million shares of the Company’s common stock and have a term of five years provided such warrants shall only vest if, when and to the extent that the holders exercise the Series B Warrants. At June 30, 2021, the Series A, Series B and Series C Warrants each have an exercise price of $0.4407 per share, which reflects adjustments pursuant to their terms. The March Warrants are subject to “full ratchet” and other customary anti-dilution protections. During the three and six months ended June 30, 2021, reductions in the exercise prices of the March Warrants have given rise to deemed dividends as more fully discussed in Notes 1, 3 and 10.

The number of warrants issued and outstanding as well as the exercise prices of the warrants reflected in the table below have been adjusted to reflect the full ratchet and other dilutive and down round provisions pursuant to the warrant agreements. As a result of the full ratchet provisions of the majority of the outstanding warrants (subject to a floor in some cases), subsequent issuances of the Company’s common stock or common stock equivalents at prices below the then current exercise prices of the warrants have resulted in increases in the number of shares issuable pursuant to the warrants and decreases in the exercise prices of the warrants.

The following summarizes the information related to ~~warrants issued and~~ the ~~activity during the nine months ended September 30, 2017:~~

During the nine-months ended September 31, 2017, the Company issued 16,350,132 warrants with a weighted average exercise price of $5.03 per share in connection with the issuances of debentures as more fully discussed in Note 6.

~~Basic loss per share excludes dilution and is computed by dividing loss attributable to common stockholders by the weighted-average~~ number of ~~common~~ shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock ~~that then shared in~~issuable under outstanding warrants during the ~~income~~six months ended June 30, 2021:

See above and Notes 1, 3, 10, 11 and 16 for a discussion of the ~~Company. For~~dilutive effect on the ~~three and nine months ended September 30, 2017 and 2016, basic loss per share is the same as diluted loss per share.~~

~~Diluted loss per share excludes all dilutive potential shares if their effect is anti-dilutive. As of September 30, 2017 and 2016, the following potential~~Company’s common stock ~~equivalents were excluded from~~as a result of the ~~calculation of diluted loss per share as their effect was anti-dilutive:~~outstanding warrants.

~~The supplemental cash flow information for the nine months ended September 30, 2017 and 2016 (unaudited) is as follows:~~

Credit risk with respect to accounts receivable is generally diversified due to the large number of patients comprising the accounts receivable. The Company has receivable balances with government payers and various insurance carriers. The Company does not require collateral or other security to support customer receivables. However, the Company continually monitors and evaluates its collection procedures to minimize potential credit risks associated with its accounts receivable and establishes an allowance for uncollectible accounts and as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is not material to the financial statements.

A number of proposals for legislation continue to be under discussion which could substantially reduce Medicare and Medicaid reimbursements to hospitals. Depending upon the nature of regulatory action, and the content of legislation, the Company could experience a significant decrease in revenues from Medicare and Medicaid, which could have a material adverse effect on the Company. The Company is unable to predict, however, the extent to which such actions will be taken.

The Company maintains its cash balances in high credit quality financial institutions. The Company’s cash balances may, at times, exceed the deposit insurance limits provided by the Federal Deposit Insurance Corporation.

From time to time, the Company may be involved in a variety of claims, lawsuits, investigations and proceedings related to contractual disputes, employment matters, regulatory and compliance matters, intellectual property rights and other litigation arising in the ordinary course of business. The Company operates in a highly regulated industry which may inherently lend itself to legal matters. Management is aware that litigation has associated costs and that results of adverse litigation verdicts could have a material effect on the Company’s financial position or results of operations. The Company’s policy is to expense legal fees and expenses incurred in connection with the legal proceedings in the period in which the expense is incurred. Management, in consultation with legal counsel, has addressed known assertions and predicted unasserted claims below.

Biohealth Medical Laboratory, ~~Inc,~~Inc. and PB Laboratories, LLC (the “Companies”) filed suit against CIGNA Health in 2015 alleging that CIGNA failed to pay claims for laboratory services the Companies provided to patients pursuant to CIGNA - issued and CIGNA - administered plans. In 2016, the U.S. District Court dismissed part of the Companies’ claims for lack of standing. The Companies appealed that decision to the Eleventh Circuit Court of Appeals, which ~~recently~~in late 2017 reversed the District Court’s decision and found that the Companies have standing to raise claims arising out of traditional insurance plans as well as self-funded plans. In July 2019, the Companies and EPIC Reference Labs, Inc. filed suit against CIGNA Health for failure to pay claims for laboratory services provided. Cigna Health, in turn, sued for improper billing practices. CIGNA’s case against the Company was dismissed on June 22, 2020. The suit remains ongoing but because the Company did not have the financial resources to see the legal action to conclusion it assigned the benefit, if any, from the suit to Christopher Diamantis for his continued financial support to the Company and assumption of all costs to carry the cost to conclusion.

The Company’s Epinex Diagnostics Laboratories, Inc. subsidiary was sued in a California state court by two former employees who alleged that they were wrongfully terminated, as well as for a variety of unpaid wage claims. The parties entered into a settlement agreement of this matter on July 29, 2016 for approximately $0.2 million, and the settlement was consummated on August 25, 2016. In October of 2016, the plaintiffs in this matter filed a motion with the court seeking payment for attorneys’ fees in the approximate amount of $0.7 million. On March 24, 2017, the court granted plaintiffs’ motion for payment of attorneys’ fees in the amount of $0.3 million, and the Company has accrued this amount in its condensed consolidated financial statements. Additionally, the Company is seeking indemnification for these amounts from Epinex Diagnostics, Inc. (“EDI”), the seller of Epinex Diagnostic Laboratories, Inc. (“EDL”), pursuant to a Stock Purchase Agreement entered into by and among the parties.

In February 2016, the Company received notice that the Internal Revenue Service (the “IRS”) placed a lien against Medytox Solutions, Inc. and its subsidiaries relating to unpaid 2014 taxes due, plus penalties and interest, in the amount of $5.0 million. The Company paid $0.1 million toward its 2014 tax liability on March 2016. The Company filed its 2015 Federal tax return on March 15, 2016 and the accompanying election to carryback the reported net operating losses was filed in April 2016. On August 24, 2016, the lien was released, and on September of 2016 the Company received a refund from the IRS in the amount of $1.9 million. In November of 2016, the IRS commenced an audit of the Company’s 2015 Federal tax return. Based upon the audit results, the Company made provisions of approximately $1.0 million as a liability and approximately $0.9 million as a receivable in its financial statements for the year ended December 31, 2018. During the first quarter of 2020, the U.S. Congress approved the CARES Act, which allows a five-year carryback privilege for federal net operating tax losses that arose in a tax year beginning in 2018 and through 2020. As a result, during the six months ended June 30, 2020, the Company recorded approximately $1.1 million in refunds from the carryback of certain of its federal net operating losses. During the six months ended June 30, 2021, the Company received income tax refunds of $0.3 million, which represented income tax refunds associated with the CARES Act. NaN refunds were received during the six months ended June 30, 2020. The Company ~~is currently unable~~used the $0.3 million of refunds that it received in the six months ended June 30, 2021 to ~~predict the outcome~~repay a portion of the ~~audit or any liability to~~amount that it owes for federal income tax liabilities that arose from the 2015 federal income tax audit. As of June 30, 2021, the Company ~~that may result from the audit.~~had federal income tax receivables of $1.1 million and federal income tax liabilities of $0.8 million.

On September 27, 2016, a tax warrant was issued against the Company by the Florida Department of Revenue (the “DOR”) for unpaid 2014 state income taxes in the approximate amount of ~~$0.9~~$0.9 million, including penalties and interest. ~~On January 25, 2017, the Company paid the DOR $250,000 as partial payment on this liability, and in February 2017 the~~The Company entered into a Stipulation Agreement with the DOR ~~which will allow~~allowing the Company to make monthly ~~installment payments of $35,000~~installments until February 2018 and negotiate a new payment agreement then, if the balance of $0.3 million cannot be satisfied in a lump sum. If at any time during the Stipulation period the Company fails to timely file any required tax returns with the DOR or does not meet the payment obligations under the Stipulation Agreement, the entire amount due will be accelerated. The Company is current with the agreed payment plan.

In December of 2016, TCS-Florida, L.P. (“Tetra”), filed suit against the Company for failure to make the required payments under an equipment leasing contract that the Company had with Tetra (see Note 8). On January 3, 2017, Tetra received a Default Judgment against the Company in the amount of $2.6 million, representing the balance owed on the leases, as well as additional interest, penalties and fees.July 2019. The Company has ~~recognized this amount in its consolidated financial statements as of December 31, 2016. In January and February of 2017, the Company~~ made payments to ~~Tetra in connection with this judgment aggregating~~reduce the amount owed. The Company intends to ~~$0.7 million, and on February 15, 2017~~renegotiate another Stipulation agreement. However, there can be no assurance the Company ~~entered into a forbearance agreement with Tetra whereby the remaining $1.9 million due~~ will be ~~paid in 24 equal monthly installments. Payments commenced on May 1, 2017.~~successful. The ~~Company is current with its payments.~~balance accrued of approximately $0.4 million remained outstanding to the DOR at June 30, 2021.

In December of 2016, DeLage Landen Financial Services, Inc. (“DeLage”), filed suit against the Company for failure to make the required payments under an equipment leasing contract that the Company had with DeLage (see Note 8)9). On January 24, 2017, DeLage received a default judgment against the Company in the approximate amount of ~~$1.0~~$1.0 million, representing the balance owed on the lease, as well as additional interest, penalties and fees. The Company ~~has~~ recognized this amount in its consolidated financial statements as of December 31, 2016. On February 8, 2017, a Stay of Execution was filed and under its terms the balance due ~~will~~was to be paid in variable monthly installments through January of 2019, with an implicit interest rate of ~~4.97%~~4.97%. The Company ~~is current in its payments.~~and DeLage disposed of certain equipment and reduced the balance owed to DeLage. A balance of $0.2 million remained outstanding at June 30, 2021.

On December 7, 2016, the holders of the Tegal Notes (see Note 5)6) filed suit against the Company seeking payment for the amounts due under the notes in the aggregate of ~~$0.4 million, including~~the principal of $341,612, and accrued ~~interest.~~interest of $43,000. A request for entry of default judgment was filed on January 24, 2017. ~~A Case Management Conference is scheduled for December 5, 2017. The Company has submitted a settlement agreement proposal to~~On April 23, 2018, the holders of the Tegal Notes ~~and is awaiting~~received a ~~response.~~

~~Operating segments are defined under U.S. GAAP as components~~judgment against the Company. As of ~~an enterprise for which discrete financial information is available and are evaluated regularly by~~June 30, 2021, the ~~enterprise’s chief operating decision maker in determining how to allocate resources and assess performance. The~~ Company ~~operates in four reportable business segments:~~has repaid $50,051 of the principal amount of these notes.

The Company, as well as many of its subsidiaries, are defendants in a case filed in Broward County Circuit Court by TCA Global Credit Master Fund, L.P. The plaintiff alleges a breach by Medytox Solutions, Inc. of its obligations under a debenture and claims damages of approximately $2,030,000 plus interest, costs and fees. The Company and the other subsidiaries are sued as alleged guarantors of the debenture. The complaint was filed on August 1, 2018. The Company has recorded the principal balance and interest owed under the debenture agreement for the period ended June 30, 2021 (see Note 6). The Company and all defendants have filed a motion to dismiss the complaint, but have not recorded any potential liability related to any further damages. In May 2020, the SEC appointed a Receiver to close down the TCA Global Master Fund, L.P. over allegations of accounting fraud. The amount recorded by the Company as being owed to TCA was based on TCA’s application of prior payments made by the Company. The Company believes that prior payments of principal and interest may have been applied to unenforceable investment banking and other fees and charges. It is the Company’s ~~Decision Support~~position that the amount owed to TCA is less than what is set forth in Note 6 and ~~Informatics segment is now included~~the Company intends to negotiate a settlement with the Receiver.

On September 13, 2018, Laboratory Corporation of America sued EPIC Reference Labs, Inc., a subsidiary of the Company, in ~~discontinued operations~~Palm Beach County Circuit Court for amounts claimed to be owed. The court awarded a judgment against EPIC Reference Labs, Inc. in May 2019 for approximately $155,000. The Company has recorded the amount owed as ~~it has been classified as held for sale~~a liability as of June 30, 2021.

In February 2020, Anthony O. Killough sued the Company and Mr. Diamantis, as guarantor, in New York State Supreme Court for the County of New York, for approximately $2.0 million relating to the promissory note issued by the Company in September 2019. In May 2020, the parties entered into a Stipulation providing for a payment of a total of $2,158,168 (which includes accrued interest) in installments through November 1, 2020 (See Note 6). As of June 30, ~~2017. The accounting policies~~2021, the Company has not made the majority of the ~~reportable segments~~required payments and, as a result, approximately $1.5 million of principal and $0.6 million of penalty interest, which accrues at a rate of 20% per annum, are the same as those described in Note 2, Summary of Significant Accounting Policies, of the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016due and ~~in Note 1 for the adoption to ASU 2017-11. Selected financial information for the Company’s operating segments is as follows:~~owing.

~~Notes~~In February 2021, a supplier to ~~Condensed Consolidated Financial Statements~~

***`~~Intersegment revenues are eliminated~~the Company’s hospitals, Shared Medical Services, Inc., filed suit in ~~consolidation.~~

Palm Beach County Circuit Court for approximately $90,000 by virtue of default and for breach of contract and charges totaling approximately another $100,000. The Company disputes that it has any liability or responsibility under the agreements and has filed an initial response in the matter. A mediation is being scheduled for September 2021.

~~Note 13 – Recently Issued Accounting Standards~~Following the Company’s decision to suspend operations at Jamestown Regional Medical Center in June 2019 a number of vendors remain unpaid. A number have initiated or threatened legal actions. The Company believes it will come to satisfactory arrangements with these parties as it works toward reopening the hospital. The Company has accrued the amounts that it expects to owe in its financial statements. The Company is planning to reopen the hospital upon securing adequate capital to do so. The reopening plans and timing thereof have also been disrupted by the current pandemic.

Two former employees of Jamestown Regional Medical Center filed suit alleging violations of the federal Worker Adjustment and Retraining Notification Act (“WARN”). The ~~following table provides~~Court entered a ~~brief description~~default against the Company on August 14, 2019. The parties disagreed to the amount of ~~recently issued accounting standards:~~damages, specifically to whether part-time employees are entitled to WARN act damages. The parties have agreed to a confidential settlement agreement, which was concluded in the second quarter of 2021. The Company has accrued the estimated settlement amount.

In June 2019, CHSPSC, the former owners of Jamestown Regional Medical Center, obtained a judgment against the Company in the amount of $592,650. The Company has recorded $130,000 of this judgment as a liability as of June 30, 2021, as management believes that a number of insurance payments were made to CHSPCS after the change of ownership and will likely offset the majority of the claim made by CHSPCS.

In August 2019, Morrison Management Specialists, Inc. obtained a judgment against Jamestown Regional Medical Center and the Company in Fentress County, Tennessee in the amount of $194,455 in connection with housekeeping and dietary services. The Company has recorded this liability as of June 30, 2021.

~~Note 14 – Discontinued Operations~~In November 2019, Newstat, PLLC obtained a judgment against Big South Fork Medical Center in Knox County, Tennessee in the amount of $190,600 in connection with the provision of medical services. The Company has recorded this liability as of June 30, 2021.

On April 30 2021, Ponte Investments, LLC obtained a default judgment for $241,332 relating to a balance outstanding on a promissory note entered into on or about January 2020. In May 2021, the parties entered into a settlement agreement for $125,000 in full satisfaction of the note, of which $75,000 was paid in the six months ended June 30, 2021. The remaining balance of $50,000 is due in two monthly payments of $25,000 in July ~~12,~~2021 and August 2021. which as of the date of this report has been paid in full.

On June 28, 2021, Jellico Community Hospital and Big South Fork Medical Center entered into a settlement agreement with Maxim Healthcare Staffing Services, Inc. wherein Jellico Community Hospital and Big South Fork Medical Center agreed to pay Maxim $60,000 in full and final settlement of amounts owed under staffing agreements. The Company paid the settlement amount in full on June 30, 2021.

On June 30, 2021, the Company entered into a settlement agreement with the Tennessee Bureau of Workers’ Compensation. Per the terms of the settlement agreement, the Company has recorded a liability of $109,739 as of June 30, 2021.

In July 2021, WG Fund, Queen Funding and Diesel Funding filed legal actions in New York State Supreme Court for Kings County to recover amounts claimed to be outstanding on accounts receivable sales agreements entered into in 2020. The Company has recorded the contingent obligations (based on collections from accounts receivable) in the amount of $1.5 million under these agreements as of June 30, 2021.

In 2017, the Company announced plans to spin off or sell its wholly-owned subsidiaries, HTS and AMSG. On June 25, 2021, the Company sold the shares of stock of HTS and AMSG ~~as an independent publicly traded company by way of a tax-free distribution~~ to ~~the Company’s stockholders. Completion~~VisualMED. HTS and AMSG held Rennova’s software and genetic testing interpretation divisions. The terms of the ~~spinoff is expected to occur~~sale are discussed in the first quarter of 2018 and is subject to numerous conditions, including effectiveness of a Registration Statement on Form 10 to be filed with the Securities and Exchange Commission, and consents, including under various funding agreements previously entered into by the Company. A record date to determine those stockholders entitled to receive shares in the spin off should be approximately 30 to 60 days prior to the date of the spinoff. The strategic goal of the spinoff is to create two public companies, each of which can focus on its own strengths and operational plans. In addition, after the spinoff, each company will provide a distinct and targeted investment opportunity.Note 1.

During the ~~criteria for “held for sale”, as~~three months ended September 30, 2020, the Company ~~reached this~~made a decision ~~prior~~ to ~~September 30, 2017, the Company has reflected amounts relating~~sell its last clinical laboratory, EPIC Reference Labs, Inc., and it made a decision to ~~AMSG~~discontinue several other non-operating subsidiaries, and as a ~~disposal group classified as held for sale~~result, EPIC Reference Labs, Inc.’s operations and ~~included as part of discontinued operations. AMSG had~~the other non-operating subsidiaries have been included in discontinued operations for all periods presented. The Company has been unable to find a buyer for EPIC Reference Labs, Inc. and, therefore, effective June 30, 2021, it has ceased all efforts to sell the Decision Support and Informatics segment, except for the Company’s subsidiary, Alethea Laboratories, Inc., which had been included in the Clinical Laboratory Operations segment. Segment disclosures in Note 12 no longer include amounts relating to AMSG following the reclassification to discontinued operations.company.

Carrying amounts of major classes of assets and liabilities ~~classified as held for sale and~~sold or included as part of discontinued operations in the ~~condensed~~ consolidated balance sheets as of June 30, 2021 and December 31, 2020 consisted of the following:

~~RENNOVA HEALTH, INC.~~Consolidated Discontinued Operations Assets and Liabilities:

Major line items constituting ~~loss~~income (loss) from discontinued operations in the consolidated statements of operations for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 consisted of the ~~following:~~following (unaudited):

On September 29, 2016, the Company announced that it had entered into a Stock Purchase Agreement (the “Purchase Agreement”) to acquire the remaining outstanding equity securities of Genomas, Inc. (“Genomas”) that the Company did not already own, representing approximately 85% of the outstanding equity interests in Genomas, for 1,750,000 shares of the Company’s newly - designated Series F Preferred Stock. (The Series F Preferred Stock is more fully described in Note 9 and below.) Genomas is a biomedical company that develops PhyzioType Systems for DNA-guided management and prescription of drugs used to treat mental illness, pain, heart disease, and diabetes. The Company had previously announced that on July 19, 2016 it acquired approximately 15% of the outstanding equity of Genomas from Hartford Healthcare Corporation (“Hartford”), along with approximately $1.5 million of notes payable to Hartford and certain rights to and license participation in technology that is used by Genomas, for $250,000 in cash. Under the terms of the Purchase Agreement, the Company also agreed to assume approximately $0.8 million of indebtedness and other obligations of Genomas. The closing of this acquisition, which was subject to, among other things, receipt of regulatory and licensure approvals as well as other customary closing conditions, did not occur until September 27, 2017. As a result of delays in the closing of the transaction, the Company expensed all amounts previously paid for the company during the fourth quarter of 2016, including outstanding advances to Genomas in the amount of $0.4 million. Genomas will be spun-off as part of AMSG, so it is presented here in discontinued operations.

~~The Series F Preferred Stock issued effective September 27, 2017 has an aggregate stated value~~As presented in the table above, the Company recorded a gain on the sale of ~~$1,750,000,~~HTS and ~~is convertible into shares~~AMSG of ~~the Company’s common stock at any time after the one-year anniversary~~$10.7 million of the closing date at a conversion price per common share equal to the greater of $29.25 or the average closing sales price of the Company’s common stock for the 10 trading days immediately preceding the conversion. The maximum number of common shares issuable upon the conversion of the Series F Preferred Stock is 59,829. The Company valued the Series F Preferred Stock based onwhich $8.5 million resulted from the value of the VisualMED Series B Preferred Stock received per the terms of the sale and $2.2 million resulted from the transfer to VisualMED of the net liabilities of HTS and AMSG. The sale is more fully discussed in Note 1. The fair value of the VisualMED Series B Preferred Stock that the Company received as consideration for the sale of $8.5 million was based on a third-party valuation using the Option Price Method (the “OPM”) The OPM treats common ~~stock issuable upon conversion~~and preferred interests as call options on the ~~date~~equity value of the ~~acquisition, which~~subject company, with exercise prices based on the liquidation preference of the preferred interests and participation thresholds for subordinated classes. The common interest is modeled as a call option that gives its owner the right but not the obligation to buy the enterprise value at a predetermined or exercise price. In the model, the exercise price is based on a comparison with the enterprise value rather than, as in the case of a “regular” call option, a comparison with a per share stock price. Thus, the common interest is considered to be a call option with a claim on the enterprise at an exercise price equal to the remaining value immediately after the preferred interests are liquidated. The Black Scholes model was ~~$174,097.~~

used to price the call options. The ~~following table summarizes~~assumptions used were: risk free rate of 0.84%; volatility of 250.0%; and exit period of 5 years. Lastly, a discount rate of 35% was applied due to the ~~(preliminary) fair values~~lack of ~~assets acquired and liabilities assumed at~~marketability of the ~~acquisition date of Genomas. The Fair Market Value appears to equal cost. The Company has one year to revalue goodwill and other intangible assets in accordance with GAAP per ASC 850-10-25-14.~~

The acquisition of Genomas was accounted for under the purchase method of accounting and, accordingly, the unaudited condensed consolidated financial statements reflect the results of operations of Genomas from the date of acquisition. Unaudited pro forma results of operations for the three-months ended September 30, 2017 and 2016VisualMED Series B Preferred Stock and the ~~nine-months ended September 30, 2017~~underlying liquidity of VisualMED’s common stock.

EPIC Reference Labs, Inc. and 2016 are included below. Such pro forma information assumes that the Genomas acquisition had occurred as of January 1, 2017 and 2016, respectively, and revenue is presented in accordance with our accounting policies. These unaudited pro forma statements have been prepared for comparative purposes only and are not intended to be indicative of what our results would have been had the acquisition occurred at the beginning of the periods presented or the results which may occur in the future.Other Subsidiaries (Loss) Income from Discontinued Operations:

Three Months Ended September 30, Nine Months Ended September 30,
(unaudited) (unaudited)
2017 2016 2017 2016
Net Revenue $ 1,439,151 $ 122,432 $ 3,460,125 $ 4,251,890
Loss from discontinued operations (475,065 ) 452,083 (1,070,620 ) (1,871,057 )
Net loss (10,930,151 ) (10,770,201 ) (31,189,252 ) (21,158,568 )
Deemed dividend from triggher of down
round provision feature (2,280,280 ) - (53,341,619 ) -
Net loss to common shareholders $ (13,210,431 ) $ (10,770,201 ) $ (84,530,871 ) $ (21,158,568 )
Loss per share basic and diluted:
Loss per share – discontinued operations $ (0.40 ) $ (4.92 ) $ (1.57 ) $ (35.71 )
Net loss per common share $ (10.99 ) $ (117.32 ) $ (123.69 ) $ (403.88 )

	Three Months Ended June 30, 2021			Three Months Ended June 30, 2020			Six Months Ended June 30, 2021			Six Months Ended June 30, 2020
Revenue from services	$	-		$	-		$	-		$	442
Cost of services		-			110,257			-			-
Gross profit		-			(110,257	)		-			442
Operating expenses		(46,759	)		(22,537	)		(94,856	)		(51,653	)
Other income (expense)		51,876			93,035			48,771			90,392
Gain on sale		-			-			-			-
Provision for income taxes		-			-			-			-
Income (loss) from discontinued operations	$	5,117		$	(39,759	)	$	(46,085	)	$	39,181

~~Note 15 – Subsequent Events~~

Consolidated (Loss) Income from Discontinued Operations:

~~Common Stock Listing~~

	Three Months Ended June 30, 2021			Three Months Ended June 30, 2020			Six Months Ended June 30, 2021			Six Months Ended June 30, 2020
Revenue from services	$	98,725		$	103,110		$	216,941		$	262,619
Cost of services		1,996			112,469			2,386			10,989
Gross profit		96,729			(9,359	)		214,555			251,630
Operating expenses		(314,555	)		(89,903	)		(646,152	)		(303,387	)
Other income (expense)		52,089			67,535			39,194			38,961
Gain on sale		10,727,152			-			10,727,152			-
Provision for income taxes		-			-			-			-
Income (loss) from discontinued operations	$	10,561,415		$	(31,727	)	$	10,334,749		$	(12,796	)

As previously announced, on April 18, 2017, the Company was notified by Nasdaq that the stockholders’ equity balance reported on the Company’s Form 10-K for the year ended December 31, 2016 fell below the $2.5 million minimum requirement for continued listing under the Nasdaq Capital Market’s Listing Rule 5550(b)(1) (the “Rule”). As of September 30, 2017, the Company reported a stockholders’ deficit of $18.8 million.

In accordance with the Rule, the Company submitted a plan to Nasdaq outlining how it intended to regain compliance. On August 17, 2017, Nasdaq notified the Company that its plan to correct the stockholders’ equity deficiency did not contain sufficient evidence to support a correction being achieved in the required time frame. The Company appealed this decision to a Hearing Panel which, on October 23, 2017, maintained this position and denied the Company a continued listing. Effective October 25, 2017, the Company’s common stock (RNVA) and warrants to purchase common stock (RNVAW) were no longer listed on the Nasdaq Stock Market but began trading on the OTCQB instead.

~~Subsequent to September 30, 2017, the Company has issued an aggregate of 4.3 million shares of common stock upon the conversion of debentures and exercise of warrants.~~

~~Notes to Condensed Consolidated Financial Statements~~Note 15 – Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. Under this standard customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. The adoption of this new guidance prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense, and additional quantitative and qualitative disclosures. This ASU became effective for us on January 1, 2021. The adoption of this ASU did not have a material impact on our results of operations, financial position and cash flows.

~~On October 30, 2017,~~In December 2019, the ~~Company closed an offering of $4,960,000 stated value of its newly-authorized Series I-1 Convertible Preferred Stock (the “Series I-1 Preferred Stock”).~~ FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The ~~offering was pursuant~~new guidance simplifies the accounting for income taxes by removing certain exceptions to the ~~terms~~general principles and also simplifies areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes. This standard became effective for us on January 1, 2021. The adoption of this ASU did not have a material impact on our 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).The new guidance provides accounting for convertible instruments and contracts in an entity’s own equity. The FASB issued this Update to address issues identified as a result of the ~~Securities Purchase Agreement, dated as~~complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of ~~October 30, 2017 (the “Purchase Agreement”), between~~liabilities and equity. The Board focused on amending the ~~Company~~guidance on convertible instruments and ~~certain existing institutional investors of~~ the ~~Company. The Company received proceeds of $4,000,000 from the offering.~~

The Purchase Agreement gives the investors the right to participate in up to 50% of any offering of common stock or common stock equivalents by the Company. In the event of any such offering, the investors may also exchange all or some of their Series I-1 Preferred Stock for such new securities on an $0.80 stated value of Series I-1 Preferred Stock for $1.00 of new subscription amount basis.

~~The following is a summary of certain terms and provisions of the Series I-1 Preferred Stock:~~

~~General.~~The Company’s board of directors has designated up to 4,960 shares of the 5,000,000 authorized shares of preferred stock as the Series I-1 Preferred Stock. Each share of Series I-1 Preferred Stock has a stated value of $1,000.

~~Rank.~~~~The Series I-1 Preferred Stock is senior in right of payment, including dividend rights and liquidation preference, to the Company’s Series G Preferred Stock and Series H Preferred Stock.~~

~~Conversion.~~Each share of Series I-1 Preferred Stock is convertible into shares of the Company’s common stock at any time at the option of the holder at a conversion price equal to the lesser of (i) $1.00, subject to adjustment, and (ii) 85% of the lesser of the volume weighted average market price of the common stockguidance on the ~~day prior to conversion or~~derivatives scope exception for contracts in an entity’s own equity. This standard will be effective for us for annual periods beginning on January 1, 2024, including interim periods within those fiscal years. Early adoption of this standard is not permitted for us because we have already adopted ASU 2017-11 “Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815).” We have not yet determined the ~~day~~impact of conversion. The conversion price is subject to “full ratchet” and other customary anti-dilution protections as more fully described in the Certificate of Designation of the Series I-1 Preferred Stock.adopting this new accounting guidance on our consolidated financial statements.

~~Liquidation Preference.~~Upon any liquidation, dissolution or winding-up of the Company, the holders of Series I-1 Preferred Stock shall be entitled to receive an amount equal to the stated value of the Series I-1 Preferred Stock, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing for each share of Series I-1 Preferred Stock, before any distribution or payment shall be made on any junior securities.

~~Voting Rights.~~Shares of Series I-1 Preferred Stock generally have no voting rights, except as required by law and except that the affirmative vote of the holders of a majority of the then outstanding shares of Series I-1 Preferred Stock is required to (a) alter or change adversely the powers, preferences or rights given to the Series I-1 Preferred Stock or alter or amend the Certificate of Designation of the Series I-1 Preferred Stock, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon liquidation senior to, or otherwise pari passu with, the Series I-1 Preferred Stock, (c) amend the Company’s certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (d) increase the number of authorized shares of Series I-1 Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.

~~Dividends.~~Holders of Series I-1 Preferred Stock shall be entitled to receive dividends on shares of Series I-1 Preferred Stock equal (on an as-converted to common stock basis) to and in the same form as dividends actually paid on shares of common stock when, as and if dividends are paid on shares of common stock. No other dividends shall be paid on shares of Series I-1 Preferred Stock.

~~Redemption.~~Upon the occurrence of certain Triggering Events (as defined in the Certificate of Designation of the Series I-1 Preferred Stock), the holder shall, in addition to any other right it may have, have the right, at its option, to require the Company to either redeem the Series I-1 Preferred Stock in cash or in certain circumstance in shares of common stock at the redemption prices set forth in the Certificate of Designation.

~~Negative Covenants.~~As long as at least a specified number of shares of Series I-1 Preferred Stock are outstanding, unless the holders of 67% of the then outstanding shares of Series I-1 Preferred Stock shall have given prior written consent, the Company and its subsidiaries are, with certain exceptions, limited from (a) incurring indebtedness, (b) creating liens, (c) amending its charter documents, (d) repurchasing or acquiring shares of common stock or common stock equivalents, (e) paying cash dividends on junior securities, (f) entering into transactions with affiliates, or (g) entering into any agreement with respect to the foregoing.

In May 2021, the 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, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The FASB issued this Update to clarify and reduce 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 guidance clarifies 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 (EPS) effects, if any, or (2) an expense and, if so, the manner and pattern of recognition. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt the amendments in this Update in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. We have not yet determined the impact of adopting this new accounting guidance on our consolidated financial statements.

Other recent accounting standards issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

~~On October~~June 30, ~~2017,~~2021 and through August 11, 2021, the Company ~~entered into exchange agreements with the holders of the September Debentures to provide that the holders may, from time to time, exchange their September Debentures for~~issued 19,350,000 shares of ~~a newly-authorized~~its common stock upon conversions of 700.57 shares of its Series I-2 Convertible Preferred Stock of the Company (the “Series I-2 Preferred Stock”). The exchange agreements permit the holders of the September Debentures to exchange specified principal amounts of the September Debentures on various closing dates from December 2, 2017 through March 1, 2018. Any exchange is at the option of the holders. Each holder may reduce the principal amount of September Debentures exchanged on any particular closing date, or elect not to exchange any September Debentures at all on a closing date. If a holder does choose to exchange less principal amount of September Debentures, or no September Debentures at all, it can carry forward such lesser amount to a future closing date and then exchange more than the originally specified principal amount for that later closing date. For each $0.80 of principal amount of September Debenture surrendered to the Company at any closing date, the Company will issue the holder a share of Series I-2N Preferred Stock with a stated value of ~~$1.00. Each share~~$0.7 million.

Subsequent to June 30, 2021, the Company issued 1,650 shares of its Series O Preferred Stock with a stated value of $1,650,000 and received proceeds of $1.5 million, bringing the total number of outstanding shares of the Company’s common stock at any time at the option of the holder at a conversion price equal to the lesser of (i) $1.00, subject to adjustment, and (ii) 85% of the lesser of the volume weighted average market price of the common stock on the day prior to conversion or on the day of conversion. The conversion price is subject to “full ratchet” and other customary anti-dilution protections as more fully described in the Certificate of Designation of the Series ~~I-2 Preferred Stock.~~

~~The following is a summary of certain terms and provisions of the Series I-2 Preferred Stock.~~

~~General.~~~~The Company’s board of directors has designated up to 12,000 shares of the 5,000,000 authorized shares of preferred stock as the Series I-2 Preferred Stock. Each share of Series I-2~~O Preferred Stock ~~has~~to 4,400 shares with a stated value of ~~$1,000.~~$4.4 million.

On July 16, 2021, the Company effected a 1-for 1,000 reverse stock split as more fully discussed in Note 1.

The following table presents the potential dilutive effect of our various equity-linked instruments as of August 11, 2021:

On August 13, 2020, Mr. Diamantis entered into the Voting Agreement with the Company, Mr. Lagan and Alcimede (of which Mr. Lagan is the sole manager) pursuant to which Mr. Diamantis granted an irrevocable proxy to Mr. Lagan to vote the Series ~~I-2~~M Preferred Stock ~~is senior in right of payment, including dividend~~held by Mr. Diamantis, Mr. Diamantis has retained all other rights ~~and liquidation preference, to the Company’s Series G Preferred Stock and Series H Preferred Stock.~~

~~Liquidation Preference.~~ ~~Upon any liquidation, dissolution or winding-up of the Company, the holders of Series I-2 Preferred Stock shall be entitled to receive an amount equal to the stated value of~~under the Series ~~I-2~~M Preferred ~~Stock, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing for each share~~Stock. Regardless of ~~Series I-2 Preferred Stock, before any distribution or payment shall be made on any junior securities.~~

~~Voting Rights.~~ ~~Shares of Series I-2 Preferred Stock generally have no voting rights, except as required by law and except that~~ the affirmative vote of the holders of a majority of the then outstanding shares of Series I-2 Preferred Stock is required to (a) alter or change adversely the powers, preferences or rights given to the Series I-2 Preferred Stock or alter or amend the Certificate of Designation of the Series I-2 Preferred Stock, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon liquidation senior to, or otherwise pari passu with, the Series I-2 Preferred Stock, (c) amend the Company’s certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (d) increase the number of authorized shares of Series I-2 Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.

~~Dividends~~. Holders of Series I-2 Preferred Stock shall be entitled to receive dividends on shares of Series I-2 Preferred Stock equal (on an as-converted to common stock basis) to and in the same form as dividends actually paid on shares of common stock when, as and if dividends are paid on shares of common stock. No other dividends shall be paid on shares of Series I-2 Preferred Stock.

~~Redemption.~~Upon the occurrence of certain Triggering Events (as defined in the Certificate of Designation of the Series I-2 Preferred Stock), the holder shall, in addition to any other right it may have, have the right, at its option, to require the Company to either redeem the Series I-2 Preferred Stock in cash or in certain circumstance in shares of common stock at the redemption prices set forth in the Certificate of Designation.

~~Negative Covenants.~~~~As long as at least a specified~~ number of shares of Series ~~I-2~~M Preferred Stock ~~are~~ outstanding ~~unless~~and so long as at least one share of Series M Preferred Stock is outstanding, the ~~holders of 67% of the then~~ outstanding shares of Series ~~I-2~~M Preferred Stock shall have ~~given prior~~the number of votes, in the aggregate, equal to 51% of all votes entitled to be voted at any meeting of stockholders or action by written consent. This means that the holders of Series M Preferred Stock have sufficient votes, by themselves, to approve or defeat any proposal voted on by the Company’s stockholders, unless there is a supermajority required under applicable law or by agreement. As a result of the Voting Agreement, as of the date of filing this report, the Company believes that it has the ability to ensure that it has and ~~its subsidiaries are, with certain exceptions, limited from (a) incurring indebtedness, (b) creating liens, (c) amending its charter documents, (d) repurchasing~~ or ~~acquiring~~can obtain sufficient authorized shares of its common stock orto cover all potentially dilutive common ~~stock equivalents, (e) paying cash dividends on junior securities, (f) entering into transactions with affiliates, or (g) entering into any agreement with respect to the foregoing.~~shares outstanding.

~~Modification of Anti-Dilution Provisions of the March Debentures and March Warrants~~

~~On October 30, 2017, the Company agreed to amend the March Debentures and March Warrants, which are more fully discussed in Note 6, to remove the floor in the anti-dilution provisions therein.~~

During the month of October 2017, $2,185,464.02 aggregate principal amount of March Debentures were exercised for 1,924,037 shares of common stock and the Company received $633,000 upon the exercise of Class B Warrants issued in March 2017 for the issuance of 600,000 shares of common stock.

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

Certain statements made in this Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company’s plans and objectives are based, in part, on assumptions involving its continued business operations. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate and, therefore, there can be no assurance the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

The forward-looking statements included in this Form 10-Q and referred to elsewhere are related to future events or our strategies or future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “believe,” “anticipate,” “future,” “potential,” “estimate,” “expect,” “intend,” “plan,” or the negative of such terms or comparable terminology. All forward-looking statements included in this Form 10-Q are based on information available to us as of the filing date of this report, and the Company assumes no obligation to update any such forward-looking statements, except as required by law. Our actual results could differ materially from the forward-looking statements.

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2020 (the ~~“2016~~“2020 Form 10-K”) and in our subsequent filings with the Securities and Exchange Commission. The following discussion of our results of operations should be read in conjunction with the audited financial statements contained within the ~~2016~~2020 Form 10-K and with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this report.

We are a healthcare enterprise that delivers products and services to healthcare providers, their patients and individuals. We currently operate in three synergistic divisions: 1) Clinical diagnostics through our clinical laboratories; 2) supportive software solutions to healthcare providers including Electronic Health Records (“EHR”), Laboratory Information Systems and Medical Billing services; and 3) the recent addition of a rural critical access hospital in Tennessee. We aspire to create a more sustainable relationship with our customers by offering needed and interoperable solutions to capture multiple revenue streams from medical providers.

Our ~~principal line of business to date is laboratory blood and urine testing services performed by our Clinical Laboratory Operations business segment,~~hospital operations began with ~~a particular emphasis on~~ the provision of urine drug toxicology testing to physicians, clinics and rehabilitation facilities in the United States. Testing services to rehabilitation facilities represented approximately 60% and 85%opening of our ~~revenues for~~Big South Fork Medical Center on August 8, 2017, following the ~~nine months ended September 30, 2017~~receipt of the required licenses and ~~2016, respectively.~~

Our Supportive Software Solutions segment provides a customizable EHR and revenue cycle management services providing a full suite of billing services to substance abuse and behavioral health providers, as well as a dictation-based ambulatory EHR for physician practices and advanced transcription services.

On January 13, 2017, we closed on an asset purchase agreement to acquire certain assets related to Scott County Community Hospital, based in Oneida, Tennessee (the “Hospital Assets”). The Hospital Assets include a 52,000 square foot hospital building and 6,300 square foot professional building on approximately 4.3 acres. Scott County Community Hospitalregulatory approvals. Big South Fork Medical Center is classified as a Critical Access Hospital (rural) with 25 beds, a 24/7 emergency department, operating rooms and a laboratory that provides a range of diagnostic services. ~~Scott County Community Hospital closed~~On January 31, 2018, we entered into an asset purchase agreement to acquire an acute care hospital located in ~~July 2016 in connection with the bankruptcy filing~~Jamestown, Tennessee, referred to as Jamestown Regional Medical Center. The acquisition also included a separate physician practice, known as Mountain View Physician Practice, Inc. Jamestown is located 38 miles west of ~~its parent company, Pioneer Health Services, Inc. We acquired the Hospital Assets out of bankruptcy for a purchase price of $1.0 million. The hospital, which has been renamed~~ Big South Fork Medical Center. In addition, on March 5, 2019, we closed an asset purchase agreement whereby we acquired certain assets related to an acute care hospital located in Jellico, Tennessee, known as Jellico Community Hospital, and an outpatient clinic located in Williamsburg, Kentucky, known as CarePlus.

We suspended operations at Jamestown Regional Medical Center ~~became operational on August 8, 2017.~~in June 2019, as a result of the termination of its Medicare agreement. We ~~believe~~plan to reopen the hospital upon securing adequate capital to do so. The reopening plans have also been disrupted by the coronavirus (“COVID-19”) pandemic and the timing of the reopening has been delayed. It is now intended that the ~~hospital~~re-opening process will ~~provide us with~~be initiated in before the end of 2021.

On March 1, 2021, we closed Jellico Community Hospital, after the city of Jellico issued a ~~stable revenue base,~~30-day termination notice for the lease of the building. We do not expect this closure to have an adverse effect on our business strategy as ~~well as~~we believe it will have a positive impact from a reduced cash requirement in the ~~potential~~immediate future.

Sale of Health Technology Solutions, Inc. and Advanced Molecular Services, Inc.

In 2017, we announced plans to spin off or sell our wholly-owned subsidiaries Advanced Molecular Services Group (“AMSG”) and Health Technology Solutions, Inc. (“HTS”). On June 25, 2021, the Company sold the shares of stock of HTS and AMSG to VisualMED Clinical Solutions Corp. (“VisualMED”). HTS and AMSG held Rennova’s software and genetic testing interpretation divisions. In consideration for ~~significant synergistic opportunities with our Clinical Laboratory Operations business segment.~~the shares of HTS and AMSG and the elimination of inter-company debt between the Company and HTS and AMSG, VisualMED issued the Company 14,000 shares of its Series B Non-Voting Convertible Preferred Stock (the “VisualMED Series B Preferred Stock”). The ~~Company~~number of shares of Series B Preferred Stock will be subject to a post-closing adjustment. Each share of Series B Preferred Stock has a stated value of $1,000 and is ~~also actively seeking opportunities regarding other similar rural hospitals.~~convertible into that number of shares of VisualMED common stock equal to the stated value divided by 90% of the average closing price of the VisualMED common stock during the 10 trading days immediately prior to the conversion date. Conversion of the Series B Preferred Stock, however, is subject to the limitation that no conversion can be made to the extent the holder’s beneficial interest (as defined pursuant to the terms of the Series B Preferred Stock) in the common stock of VisualMED would exceed 4.99%. The shares of Series B Preferred Stock may be redeemed by VisualMED upon payment of the stated value of the shares plus any accrued declared and unpaid dividends.

~~RENNOVA HEALTH, INC.~~As a result of the sale, the Company has recorded the Series B Preferred Stock of VisualMED as a long-term asset valued at $8.5 million at June 30, 2021 and a gain on the sale of HTS and AMSG of $10.7 million in the three and six months ended June 30, 2021, of which $8.5 million resulted from the value of the VisualMED Series B Preferred Stock and $2.2 million resulted from the transfer to VisualMED of the net liabilities of HTS and AMSG.

~~Our Decision Support~~We have reflected the amounts relating to HTS and ~~Informatics~~AMSG, including the gain on sale, as a disposal group classified as held for sale and included in discontinued operations in our accompanying unaudited condensed consolidated financial statements.

During the third quarter of 2020, we announced that we had decided to sell EPIC Reference Labs, Inc., and as a result, EPIC Reference Labs, Inc.’s operations have been included in discontinued operations in the accompanying unaudited condensed consolidated financial statements. The Company has been unable to find a buyer for EPIC Reference Labs, Inc. and, therefore, effective June 30, 2021, it has ceased all efforts to sell the company.

We believe that the transition of our business ~~segment develops~~model from health information technology and ~~markets medical information~~diagnostics to ownership and ~~clinical decision support products~~operation of rural hospitals is now complete and once stabilized will create more predictable and stable revenue. Rural hospitals provide a much-needed service to their local communities and reduce our reliance on commission-based sales employees to generate sales. We currently operate one hospital and a rural clinic in the same general geographic location and we own another hospital and physician’s office at which operations are currently suspended. Owning a number of facilities in the same geographic location will create numerous efficiencies in purchasing and staffing and will enable the provision of additional, specialized and more valuable services that are needed by rural communities but cannot be sustained by a standalone rural hospital. We remain confident that this is a sustainable model we can continue to grow through acquisition and development and believe that we can benefit from the compliance and IT and software capabilities we already have in place. The progress of the COVID-19 pandemic, which is more fully discussed below, has severely affected our operations and may cause such expectations not to be achieved or, even if achieved, not to be done in the expected timeframe.

The COVID-19 pandemic was declared a global pandemic by the World Health Organization on March 11, 2020. We have been closely monitoring the COVID-19 pandemic and its impact on our operations and we have taken steps intended to ~~set~~minimize the risk to our employees and patients. These steps have increased our costs and our revenues have been significantly adversely affected. Demand for hospital services has substantially decreased. As noted in Notes 2 and 6 to the accompanying unaudited condensed consolidated financial statements, we have received Paycheck Protection Program loans (“PPP Notes”) as well as Health and Human Services (“HHS”) Provider Relief Funds from the federal government. If the COVID-19 pandemic continues for a ~~standard for~~further extended period, we expect to incur significant losses and additional financial assistance may be required. Going forward, we are unable to determine the ~~clinical interpretation~~extent to which the COVID-19 pandemic will continue to affect our business. The nature and effect of genomics-based, precision medicine. CollabRx offers interpretation and decision support solutions that enhance cancer diagnoses and treatment through actionable data analytics and reporting for oncologists and their patients. This segment is now considered part ofthe COVID-19 pandemic on our ~~discontinued operations.~~

~~Our discussion and analysis of financial condition~~balance sheet and results of operations ~~are based~~will depend on the severity and length of the pandemic in our ~~condensed consolidated financial statements, which~~service areas; government activities to mitigate the pandemic’s effect; regulatory changes in response to the pandemic, especially those affecting rural hospitals; and existing and potential government assistance that may be provided.

The COVID-19 pandemic and the steps taken by governments to seek to reduce its spread have severely impacted the economy and the health care industry in particular. Hospitals have especially been affected. Small rural hospitals, such as ours, may be overwhelmed by patients if conditions worsen in their local areas. Staffing costs, and concerns due to the potential exposure to infections, may increase, as may the costs of needed medical supplies necessary to keep the hospitals open. Doctors and patients may defer elective procedures and other health care services. Travel bans, social distancing and quarantines may limit access to our facilities. Business closings and layoffs in our local areas may result in the loss of insurance and adversely affect demand for our services, as well as the ability of patients and other payers to pay for services as rendered.

Hospitalizations in Tennessee for COVID-19 increased throughout 2020 and appear, until recently, to have peaked in December 2020. From third party information, there have been ~~prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation~~891,331 cases and 12,730 deaths as of ~~these financial statements requires us to make a number~~July 29, 2021. Unfortunately, current indications as of ~~estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at~~ the date of this report show a resurgence of COVID-19. According to a recent Tennessee state profile report from the ~~financial statements. Such estimates~~White House, as of August 6, 2021, Tennessee saw a 78% increases in cases per 100,000 persons compared to the previous week, averaging 276 cases per 100,000 persons. Hospitalizations and ~~assumptions affect~~deaths from COVID-19 have also jumped by 65% and 24%, respectively. One concern previously cited in the ~~reported amounts~~report and shared by health leaders is low vaccination rates in the state combined with a surge in cases. Tennessee is the 9th-worst in population of ~~revenues~~fully vaccinated individuals per the report and ~~expenses during~~10th in new cases per 100,000 persons.

It is hoped that the ~~reporting period. We base our estimates on historical experiences~~continued roll out of vaccinations will significantly reduce the risk of death and ~~on various other assumptions~~reduce transmission of the virus so that ~~we believe~~a return to ~~be reasonable under~~more normal expectations occurs throughout the ~~circumstances. Actual results~~remainder of 2021. These developments have had, and may ~~differ materially from these estimates under different assumptions and conditions. We~~ continue to ~~monitor significant estimates made during~~have, a material adverse effect on us and the ~~preparation~~operations of our ~~financial statements. On an ongoing basis, we evaluate estimates~~hospitals. Our plans to reopen our Jamestown Regional Medical Center, whose operations were suspended in June 2019, have been disrupted by the pandemic and ~~assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in~~ the ~~circumstances; however, actual results may differ from these estimates under different future conditions.~~

We have identified the policies and significant estimation processes discussed below as critical to our business and to the understanding of our results of operations. For a detailed application of these and other accounting policies, see Note 2 to the audited consolidated financial statements as of and for the year ended December 31, 2016 included in the 2016 Form 10-K.

Service revenues are principally generated from laboratory testing services, including chemical diagnostic tests such as blood analysis and urine analysis. Laboratory service revenues are recognized at the time the testing services are performed and billed and are reported at their estimated net realizable amounts.

~~Net service revenues are determined utilizing gross service revenues net of contractual adjustments and discounts. Even though it is the responsibility~~timing of the patient to pay for laboratory service bills, most individuals in the United States have an agreement with a third-party payer such as a commercial insurance provider, Medicaid or Medicare to pay all or a portion of their healthcare expenses; the majority of services provided by us are to patients covered under a third-party payer contract. In most cases, the Company is provided the third-party billing information and seeks payment from the third party in accordance with the terms and conditions of the third party payer for health service providers like us. Each of these third-party payers may differ not only in terms of rates, but also with respect to terms and conditions of payment and providing coverage (reimbursement) for specific tests. Estimated revenues are established based on a series of procedures and judgments that require industry specific healthcare experience and an understanding of payer methods and trends. Despite follow up billing efforts, the Company does not currently anticipate collection of a significant portion of self-pay billings, including the patient responsibility portion of the billing for patients covered by third party payers. The Company currently does not have any capitated agreements.reopening has been delayed.

We review our calculations for the realizability of gross service revenues on a monthly basis in order to make certain that we are properly allowing for the uncollectable portion of our gross billings and that our estimates remain sensitive to variances and changes within our payer groups. The contractual allowance calculation is made on the basis of historical allowance rates for the various specific payer groups on a monthly basis with a greater weight being given to the most recent trends; this process is adjusted based on recent changes in underlying contract provisions and shifts in the testing being performed. This calculation is routinely analyzed by us on the basis of actual allowances issued by payers and the actual payments made to determine what adjustments, if any, are needed. Based on the calculations at September 30, 2017 and 2016, we determined that the collectible portion of our gross billings that should be reflected in net revenues was approximately 13% and 15%, respectively, of the outgoing gross billings.

Accounts receivable are reported at realizable value, net of allowances for credits and doubtful accounts, which are estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimating and reviewing the collectability of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for contractual credits and doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues which may impact the collectability of these receivables or reserve estimates. Receivables deemed to be uncollectible are charged against the allowance for doubtful accounts at the time such receivables are written-off. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. Revisions to the allowances for doubtful accounts estimates are recorded as an adjustment to provision for bad debts.

~~The Company accounts for the impairment or disposal of long-lived assets according to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 360,~~~~Property, Plant and Equipment~~(“ASC 360”). ASC 360 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. We did not record any impairment charges during the nine months ended September 30, 2017 and 2016.

~~We account for warrants issued in conjunction with the issuance of common stock and certain convertible debt instruments in accordance with the guidance contained in ASC Topic 815,~~~~Derivatives and Hedging~~ ~~(“ASC 815”) and ASC Topic 480,~~~~Distinguishing Liabilities from Equity~~ (“ASC 480”). For warrant instruments and conversion options embedded in promissory notes that are not deemed to be indexed to the Company’s own stock, we classified such instruments as liabilities at their fair values at the time of issuance and adjusted the instruments to fair value at each reporting period. These liabilities were subject to re-measurement at each balance sheet date until extinguished either through conversion or exercise, and any change in fair value was recognized in our statement of operations. The fair values of these derivative and other financial instruments had been estimated using a Black-Scholes model and other valuation techniques.

In July 2017, the FASB issued ASU 2017-11“Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815).” The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect.

For entities that present EPS in accordance with Topic 260, and when the down round feature is included in an equity-classified freestanding financial instrument, the value of the effect of the down round feature is treated as a dividend when it is triggered and as a numerator adjustment in the basic EPS calculation. This reflects the occurrence of an economic transfer of value to the holder of the instrument, while alleviating the complexity and income statement volatility associated with fair value measurement on an ongoing basis. Convertible instruments are unaffected by the Topic 260 amendments in this Update.

The amendments in Part 1 of this Update are a cost savings relative to current GAAP. This is because, assuming the required criteria for equity classification in Subtopic 815-40 are met, an entity that issued such an instrument no longer measures the instrument at fair value at each reporting period (in the case of warrants) or separately accounts for a bifurcated derivative (in the case of convertible instruments) on the basis of the existence of a down round feature. For convertible instruments with embedded conversion options that have down round features, applying specialized guidance such as the model for contingent beneficial conversion features rather than bifurcating an embedded derivative also reduces cost and complexity. Under that specialized guidance, the issuer recognizes the intrinsic value of the feature only when the feature becomes beneficial instead of bifurcating the conversion option and measuring it at fair value each reporting period.

~~We have early adopted this amendment as it has a material impact on our condensed consolidated financial statements.~~

~~We account for Stock-Based Compensation under ASC 718 “~~~~Compensation – Stock Compensation~~”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized.

The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. Under ASC 505-50, the Company determines the fair value of the options, warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Any stock options or warrants issued to non-employees are recorded in expense and additional paid-in capital in stockholders’ equity (deficit) over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options or warrants at the end of each period.

Three months ended ~~September~~June 30, ~~2017~~2021 compared to the three months ended ~~September~~June 30, ~~2016~~2020

The following table summarizes the results of our consolidated continuing operations for the three months ended ~~September~~June 30, ~~2017~~2021 and ~~2016 (unaudited):~~2020:

Consolidated net revenues were $0.9 million for the three months ended June 30, 2021, as compared to consolidated net revenues of $2.1 million for the three months ended June 30, 2020, a decrease of $1.2 million. Net revenues in the three months ended June 30, 2021 from Jellico Community Hospital and CarePlus Center decreased by approximately $0.8 million and from Big South Fork Medical Center decreased by approximately $0.4 million. We closed Jellico Community Hospital on March 1, 2021 after the city of Jellico issued a 30-day termination notice for the lease of the building. We attribute the decrease in net revenues from Big South Fork Medical Center to pandemic related difficulties, including the closure of inpatient services for the first four months of 2021.

Net revenues for the three months ended June 30, 2021 and 2020 included estimated implicit price concessions of $1.3 million and $2.7 million, respectively, for doubtful accounts and $4.0 million and $8.4 million, respectively, for contractual allowances.

Direct costs of revenues decreased by $1.4 million for the three months ended ~~September~~June 30, 2017, as compared to $41 thousand for the three months ended September 30, 2016, an increase of $1.4 million. The increase is mainly the result of two factors; (1) the opening of the Hospital which resulted in net revenues of $0.6 million for the three months ended September 30, 2017 and (2) the increase in the Clinical Laboratory Operations business segment revenue of $0.6 million compared to last year, even though there was a 75% decline in insured test volumes. The net revenue decline for the three months ended September 30, 2016 was due to the determination that the collectible portion of gross billings should be reflected at 15%, as compared to 20% from earlier in 2016. This change in estimate resulted in a reduction in net revenues in the amount of $1.7 million. Net revenues in our Supportive Software Solutions increased by $0.2 million for the three months ended September 30, 2017 compared to the same period a year ago.

~~Direct costs of revenue is essentially unchanged in the three months ended September 30, 2017, as~~2021 compared to the three months ended ~~September~~June 30, ~~2016.~~2020. We attribute the decrease primarily to the closure of Jellico Community Hospital on March 1, 2021. As a percentage of net revenues, direct costs increased to 136.7% in the three months ended June 30, 2021 compared to 129.0% in the comparable 2020 period. We attribute the increase in the direct costs as a percentage of net revenues to the decrease in the number of patients served. While the number of patients served decreased, certain fixed costs of revenues remained.

General and administrative expenses decreased by ~~$1.3~~$0.3 million, or ~~20%~~12.2%, ~~in the third quarter of 2017 as~~ compared to the same period a year ago. ~~The~~We attribute the decrease ~~is mainly the result of a $1.1 million reduction in employee compensation and related costs, as we significantly reduced our headcount throughout the latter half of 2016 and 2017 in response~~ to the ~~decline in revenues,~~reduction of general and aadministrative expenses for our hospitals. Our corporate related expenses remained constant at approximately $0.7 million for both the three month periods ended June 30, 2021 and 2020.

Depreciation and amortization expense remained relatively stable at $0.2 million ~~reduction in maintenance costs~~ for ~~our laboratory equipment.~~both the three months ended June 30, 2021 and 2020.

~~Sales~~Loss from Continuing Operations Before Other Income (Expense) and ~~Marketing Expenses~~Income Taxes

~~The decline in sales~~Our loss from continuing operations before other income (expense) and ~~marketing expenses of $0.2 million, or 59%,~~income taxes for the three months ended ~~September~~June 30, ~~2017 as~~2021 was $2.6 million compared to ~~the three months ended September 30, 2016 was primarily due to~~ a ~~reduction in sales employee and contractor compensation expenses in the amount~~loss of ~~$0.2 million, as well as reduced travel, advertising and commissionable collections related to the decline in net revenues.~~

~~Bad debt expense for the three months ended September 30, 2017 was $0.5 million, as compared to $3.7~~$3.2 million for the three months ended ~~September~~June 30, ~~2016.~~2020. We attribute the decrease in the operating loss primarily to a reduction in costs associated with Jellico Community Hospital.

Other income (expense), net for the three months ended ~~September~~June 30, ~~2016, we recorded a charge~~2021 of ~~$3.5~~$2.0 million related to receivables in our Clinical Laboratory Operations segment that were deemed uncollectible. The primary factors in rendering these receivables uncollectible were our failure to obtain preauthorizationincluded $1.9 million of HHS Provider Relief Funds from the ~~third party prior to rendering services and the lack of an existing preferred provider contract with the third-party payer. We also increased the allowance~~federal government. Other income (expense), net for ~~doubtful accounts for our Supportive Software Solutions segment by $0.2 million.~~

~~During~~ the three months ended ~~September~~June 30, ~~2017, the Hospital business segment deemed uncollectible~~2020 of $6.8 million included $7.4 million of HHS Provider Relief Funds, partially offset by $0.4 million ~~related to~~in penalties and interest associated with non-payment of payroll taxes and $0.2 million of loss on the ~~August~~sale of accounts receivable under a sales agreement.

The gain from legal settlements was $31,050 and September receivables since their Medicare & Medicaid certification was not approved until October 11, 2017. The Company will submit all claims for services rendered for payment since the opening of the hospital. We also increased the allowance for doubtful accounts for our Supportive Software Solutions segment by $0.1 million.

~~Depreciation and amortization expense was $0.5~~$1.1 million for the three months ended ~~September~~June 30, ~~2017 as compared to $0.7 million~~2021 and 2020, respectively. The settlement of obligations under a financing lease for ~~the same period a year ago, as some of our~~ property and equipment ~~became fully depreciated during 2016 and our capital expenditures have been minimal due to~~resulted in $0.9 million of the ~~reduced sample volume at our laboratories.~~

~~Our operating loss decreased by $6.4 million, to $5.2 million~~gain for the three months ended September 30, 2017, as compared to $11.5 million for the three months ended September 30, 2016. The decrease is due to the $5.0 million decrease in total operating expenses and the $1.4 million increase in net revenues.2020 period.

Interest expense for the three months ended ~~September~~June 30, ~~2017~~2021 was ~~$5.3~~$0.9 million as compared to ~~$1.7~~$2.7 million for the three months ended ~~September~~June 30, ~~2016.~~2020. Interest expense for the three months ended June 30, 2021 was for interest expense on debentures and notes payable and included $36,000 of interest expense on loans from Mr. Diamantis, a former member of our Board of Directors. Interest expense for the three months ended June 30, 2020 included $2.0 million for interest on debentures and note payable, $0.3 million for interest incurred by Mr. Diamantis on borrowings he procured in order to lend funds to the Company and $0.2 million of interest on loans from Mr. Diamantis. The decrease in interest expense in the three months ended ~~September~~June 30, 2017 includes a $4.8 million non-cash interest charge related to the issuance of convertible debentures and warrants during the period. Interest expense in the three months ended September 30, 2016 mainly consists of an interest charge of $0.5 million related to the $5 million prepaid forward purchase contract and $0.4 million of non-cash interest expense related to the accretion of debt discounts.

~~Other income decreased by $1.9 million for three months ended September 30, 2017~~2021 as compared to ~~same~~the 2020 period ~~a year ago. The decrease consists~~was due primarily to the exchange of ~~$2.1 million~~loans from Mr. Diamantis on June 30, 2020 for preferred stock and the exchange of debentures in ~~non-cash gains on~~ the ~~change in fair value~~third quarter of ~~derivative financial instruments related to convertible notes and warrants recorded in 2016.~~2020 for preferred stock.

Our net loss from continuing operations for the three months ended ~~September~~June 30, ~~2017~~2021 was ~~$10.5~~$1.5 million as compared to ~~$11.2~~net income from continuing operations of $2.2 million for the ~~same period of a year ago, a decrease of $0.8 million.~~three months ended June 30, 2020. The change iswas due primarily ~~due~~ to a reduction in income of $5.5 million from HHS Provider Relief Funds and a $1.1 million gain from legal settlements in the ~~decrease~~2020 period, partially offset by a reduction in ~~operating expenses~~the loss from continuing operations before other income (expense) and income taxes of ~~$5.0~~$0.5 million ~~an increase of $3.6 million~~and a decrease in interest expense ~~and a decrease~~ of ~~$2.0 million in other income (expense), offset by the increase in revenue of $1.4~~$1.8 million.

~~The following table presents key financial and operating metrics for our Clinical Laboratory Operations segment:~~

~~The following table presents key financial metrics for our Supportive Software Solutions segment:~~

~~The following table presents key financial metrics for our Hospital segment:~~

~~Nine~~Six months ended ~~September~~June 30, ~~2017~~2021 compared to ~~Nine~~the six months ended ~~September~~June 30, ~~2016~~2020

The following table summarizes the results of our consolidated continuing operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016:~~2020:

Consolidated net revenues were ~~$3.3~~$0.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, as compared to ~~$4.1~~$3.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2020, a decrease of $0.8 million, or 19%. The decrease is mainly the result of a 72% decline in insured test volumes in our Clinical Laboratory Operations business segment, offset by the net revenue of the Hospital in the amount of $0.6$3.6 million. Net revenues in the six months ended June 30, 2021 from Jellico Community Hospital and CarePlus Center decreased by $1.0 million and from Big South Fork Medical Center decreased by $2.6 million. We closed Jellico Community Hospital on March 1, 2021, after the city of Jellico issued a 30-day termination notice for the lease of the building. Also, as a result of the COVID-19 pandemic, we believe the demand for our ~~Supportive Software Solutions increased~~services was reduced as we served less patients during the six months ended June 30, 2021 compared to the 2020 period.

Net revenues for the six months ended June 30, 2021 and 2020 included estimated implicit price concessions of $4.3 million and $4.0 million, respectively, for doubtful accounts and $9.5 million and $18.9 million, respectively, for contractual allowances. The increase in estimated implicit price concessions of $0.3 million for the six months ended June 30, 2021 as compared to the 2020 period was due to serving only emergency room patients during the first four months of 2021. Inpatient serves typically deliver higher collection rates and the absence of inpatient services in the first four months of 2021 meant that the Company was dependent on revenue from emergency room services, which is typically at a lower percentage of gross revenue. Inpatient services reopened in May 2021.

Direct costs of revenue decreased by ~~$0.1~~$2.5 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. We attribute the decrease to the reduction in the number of patients served at Jellico Community Hospital, CarePlus Center and Big South Fork Medical Center.

General and administrative expenses decreased by $0.4 million, or ~~15% for the nine months ended September 30, 2017 as~~8.2%, compared to the same period a year ago.

~~Direct costs of revenue decreased by 25%, from $1.1 million in~~ We attribute the ~~nine months ended September 30, 2016 to $0.8 million in the nine months ended September 30, 2017. The~~ decrease is a result of reduced expenses for transcription, data storage and software license related to our Supportive Software Solutions segment as well as a decrease in reagents and supplies at our laboratories offset by an increase of $0.1 million related to the ~~Hospital.~~

~~General~~reduction of general and administrative expenses decreased by $4.2 million, or 24%, for the nine months ended September 30, 2017, compared to the same period a year ago. The decrease is mainly the result of a $3.0 million reduction in employee compensation and related costs, net of Hospital employee compensation of $1.6 million, as we significantly reduced our headcount throughout the latter half of 2016 and 2017 in response to the decline in revenues in our Clinical and Supportive Software, and a $0.2 million reduction in maintenance costs for our ~~laboratory equipment~~hospitals. Our corporate related expenses remained constant at approximately $1.3 million for both the six month periods ended June 30, 2021 and ~~a $0.8~~2020.

Depreciation and amortization expense was $0.4 million ~~decrease in stock compensation expense.~~

The decline in sales and marketing expenses of $0.8 million, or 57%, for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 was primarily due to a reduction in sales employee and contractor compensation expenses in the amount of $0.8 million, as well as reduced travel, advertising and commissionable collections related to the decline in net revenues.

~~Bad debt expense for the nine months ended September 30, 2017 was $1.1 million, as compared to $3.7~~$0.3 million for the ~~same period of a year ago.~~six months ended June 30, 2021 and 2020, respectively. The ~~decrease is mainly~~increase in the six months ended June 30, 2021 was due to depreciation expense associated with the ~~$3.5 million bad debt charge in 2016 related to receivables in our Clinical Laboratory Operations segment.~~purchases of medical equipment.

~~RENNOVA HEALTH, INC.~~Loss from Continuing Operations Before Other Income (Expense) and Income Taxes

~~Depreciation~~Our loss from continuing operations before other income (expense) and ~~Amortization Expenses~~

~~Depreciation and amortization expense~~income taxes for the six months ended June 30, 2021 was ~~$1.5~~$7.9 million compared to a loss of $7.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 as compared~~2020. We attribute the increase in the operating loss primarily to ~~$2.0~~the reduction in the number of patients served in the 2021 period.

Other income (expense), net of $4.5 million for the ~~same period~~six months ended June 30, 2021 included $4.4 million of income from HHS Provider Relief Funds. Other income (expense), net of $6.8 million for the six months ended June 30, 2020 included $7.4 million of income from HHS Provider Relief Funds, partially offset by $0.6 million in penalties and interest associated with non-payment of payroll taxes and $0.2 million of loss on the sale of accounts receivable under a ~~year ago, as some~~sales agreement.

The gain from legal settlements was $22,190 and $1.1 million for the six months ended June 30, 2021 and 2020, respectively. The settlement of ~~our~~obligations under a financing lease for property and equipment ~~became fully depreciated during 2016 and our capital expenditures have been minimal due to the reduced sample volume at our laboratories. Most~~resulted in $0.9 million of the ~~capital expenditures~~gain for the ~~Hospital in the amount of $1.5 million, started depreciating at the time the Hospital was opened in August 2017.~~2020 period.

Our operating loss decreased by $7.7 million, to $13.7 million for the nine months ended September 30, 2017, as compared to $21.3 million for the nine months ended September 30, 2016. The decrease is due to the $8.4 million decrease in total operating expenses partially offset by the $0.8 million decrease in net revenues.

Interest expense for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 was ~~$16.5~~$1.8 million, as compared to ~~$4.7~~$5.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2020. Interest expense for the six months ended June 30, 2021 included $1.7 million for interest on debentures and notes payable and $0.1 million for interest on loans from Mr. Diamantis. Interest expense for the six months ended June 30, 2020 included $4.0 million for interest on debentures and note payable, $0.7 million for interest incurred by Mr. Diamantis, on borrowings he procured in order to lend funds to the Company and $0.5 million of interest on loans from Mr. Diamantis. The decrease in interest expense in the ~~nine~~six months ended ~~September~~June 30, ~~2017 includes a $8.5 million non-cash interest charge related to the issuance of convertible debentures and warrants during the period, and $6.2 million for amortization of debt discount.~~

~~Other income (expense) decreased by $6.8 million for nine months ended September 30, 2017~~2021 as compared to the ~~same~~2020 period was due primarily to the exchange of loans from Mr. Diamantis on June 30, 2020 for non-interest bearing preferred stock and the exchange of debentures in the third quarter of 2020 for non-interest bearing preferred stock.

During the six months ended June 30, 2020, the U.S. Congress approved the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act allows a five-year carryback privilege for federal net operating tax losses that arose in a tax year ~~ago. The decrease consists of~~beginning in 2018 and through the ~~$6.8~~current tax year, that is, 2020. As a result, during the six months ended June 30, 2020, we recorded approximately $1.1 million in ~~non-cash gains on~~refunds from the ~~change in fair value~~carryback of ~~derivative financial instruments related to convertible notes and warrants recorded in 2016.~~certain of our federal net operating losses.

Our net loss from continuing operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 was ~~$30.1~~$5.2 million as compared to ~~$19.3~~a net loss from continuing operations of $3.7 million for the ~~same~~six months ended June 30, 2020. The increase in the net loss in the 2021 period ~~a year ago, an increase of $10.8 million. The change is~~was primarily due to the increase ~~of $12.2 million~~ in ~~non-cash interest and amortization of debt discount charge, and a decrease of $6.8 million in~~the loss from continuing operations before other income (expense)~~, offset by~~ and income taxes of $0.7 million, a ~~decrease~~reduction in income of $3.0 million from HHS Provider Relief Funds in the 2021 period, and the $1.1 million gain from legal settlements in the 2020 period. Partially offsetting the increase in the net loss ~~from operations~~in the 2020 period was a reduction in interest expense of ~~$7.7~~$3.7 million.

~~The following table presents key financial and operating metrics for our Clinical Laboratory Operations segment:~~

~~The following table presents key financial metrics for our Supportive Software Solutions segment:~~

~~The decrease in general and administrative expenses relates primarily to the reduction in employee compensation and related costs, as we significantly reduced our headcount.~~

~~The following table presents key financial metrics for our Hospital segment:~~

The decrease in general and administrative expenses is mainly due to reductions in stock-based compensation in 2017 as compared to the prior year in the amount of $0.8 million, $0.7 million of interest and penalties that were recognized in 2016 in connection with unpaid taxes, and a $0.3 million decrease in salaries due to headcount reduction.

For the three and six months ended June 30 2021 and the year ended December 31, ~~2016 and through September 30, 2017,~~2020, we ~~have~~ financed our operations ~~primarily~~ from the issuances of equity, notes payable, loans from Christopher Diamantis, a former member of our Board of Directors, and the sale of accounts receivable under sales agreements. Also, during the year ended December 31, 2020 we received approximately $2.4 million from PPP Notes and our ~~equity securities, short-term advances~~continuing operations received approximately $12.4 million from ~~related parties,~~HHS Provider Relief Funds, of which $8.0 million was recognized as other income in the second and third quarters of 2020 and $4.4 million was recognized as income in the six months ended June 30, 2021. The PPP Notes and accrued interest are forgivable as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries. The Company is in the process of applying for forgiveness for the PPP Notes and accrued interest. The HHS Provider Relief Funds are grants, not loans, and HHS will not require repayment, but providers are restricted and the funds must be used only for grant approved purposes as more fully discussed in Note 2 to the accompanying unaudited condensed consolidated financial statements. We received approximately $1.2 million in cash from the issuances of promissory notes during the six months ended June 30, 2021 and $2.5 million from the issuance of ~~debentures~~our Series O Convertible Redeemable Preferred Stock (“Series O Preferred Stock”). During the six months ended June 30, 2021, Mr. Diamantis loaned the Company $0.9 million and during the ~~proceeds we received from pledging certain~~year ended December 31, 2020, Mr. Diamantis loaned the Company $7.6 million, the majority of ~~our accounts receivable as discussed below. Future cash needs~~which was used for working capital ~~capital expenditures~~purposes. Subsequent to June 30, 2021 and ~~potential acquisitions will require management to seek additional equity or obtain additional credit facilities. The sale~~through August 11, 2021, we received $0.3 million in loans from Mr. Diamantis and $1.5 million from the issuances of ~~additional equity will result~~our Series O Preferred Stock. These financing transactions are more fully discussed in ~~additional dilution~~Notes 2, 4, 5, 6, 11 and 16 to our ~~stockholders. A portion~~accompanying unaudited condensed consolidated financial statements.

As more fully discussed above, on June 25, 2021, the Company sold HTS and AMSG to VisualMED and the Company received shares of ~~our cash may be used~~VisualMED’s Series B Preferred Stock valued at $8.5 million as consideration for the sale (subject to ~~acquire~~ post-closing adjustments). In addition, $2.2 million of net liabilities of HTS and AMSG were transferred to VisualMED.

Under ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or ~~invest~~events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. As required by ASC 205-40, this evaluation shall initially not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued. Management has assessed the Company’s ability to continue as a going concern in ~~complementary businesses or products or to obtain~~accordance with the ~~right to use complementary technologies. From time to time,~~requirement of ASC 205-40.

As reflected in the ~~ordinary course of business, we evaluate potential acquisitions of such businesses, products or technologies.~~

~~At September 30, 2017, we~~accompanying unaudited condensed consolidated financial statements, the Company had ~~cash on hand from continuing operations of approximately $41,019,~~ a working capital deficit and an accumulated deficit of ~~$18.0~~$57.5 million and ~~a stockholders’ deficit of $18.8 million. In addition, we incurred~~$1.0 billion, respectively, at June 30, 2021. The Company had a loss from continuing operations before other income (expense) and income taxes of ~~$30.1~~approximately $2.6 million and $3.2 million for the ~~nine~~three months ended ~~September~~June 30, ~~2017.~~2021 and 2020, respectively, and a loss from continuing operations before other income (expense) and income taxes of $7.9 million and $7.1 million, for the six months ended June 30, 2021 and 2020, respectively. In addition, cash used in operating activities was $3.7 million and $9.1 million for the six months ended June 30, 2021 and 2020, respectively. As of the date of this report, our cash ~~position~~ is ~~critically~~ deficient and payments ~~critical to~~for our ~~ability to operate~~operations in the ordinary course are not being ~~made~~made. The continued losses and other related factors, including the payment defaults under the terms of outstanding notes payable and debentures as more discussed in Notes 6 and 7 to the ~~ordinary course.~~accompanying unaudited condensed consolidated financial statements, raise substantial doubt about the Company’s ability to continue as a going concern for 12 months from the filing date of this report. Our fixed operating expenses ~~including~~include payroll, rent, ~~capital~~finance lease payments and other fixed expenses, ~~including~~as well as the costs required to operate ~~Big South Fork Medical Center,~~our Hospital Operations.

The Company’s accompanying unaudited condensed consolidated financial statements are ~~approximately $1.5-$2.0 million per month.~~

~~On October 30, 2017, we raised $4.0 million from~~prepared assuming the ~~issuance~~Company can continue as a going concern, which contemplates continuity of ~~our Series I-1 Convertible Preferred Stock (the “Series I-1 Preferred Stock”) as~~operations through realization of assets, and the settling of liabilities in the normal course of business. As more fully discussed ~~below. However, our failure~~in Note 1 to the accompanying unaudited condensed consolidated financial statements, on June 25, 2021, the Company sold HTS and AMSG to VisualMED and the Company received VisualMED’s Series B Preferred Stock valued at $8.5 million as consideration for the sale (subject to post-closing adjustments). In addition, $2.2 million of net liabilities of HTS and AMSG were transferred to VisualMED. The Company has reflected the assets and liabilities relating to HTS and AMSG held prior to the sale as part of discontinued operations. In addition, during 2020, the Company announced plans to sell its last clinical laboratory, EPIC Reference Labs, Inc., and as a result, EPIC Reference Labs, Inc.’s operations have been included in discontinued operations for all periods presented. The Company has been unable to find a buyer for EPIC Reference Labs, Inc. and, therefore, effective June 30, 2021, it has ceased all efforts to sell the company.

On March 1, 2021, the Company closed Jellico Community Hospital, after the city of Jellico issued a 30-day termination notice for the lease of the building. Jellico Community Hospital had been operating at a loss since it was acquired by the Company in March 2019. The Company’s core operating businesses are now a rural hospital, a CarePlus Center and a hospital and physician’s office that it plans to reopen and operate. Rural hospitals are a specialized marketplace with a requirement for capable and knowledgeable management. The Company’s current financial condition may make it difficult to attract and maintain adequate expertise in its management team to successfully operate these businesses.

We need to raise additional ~~capital in the coming months~~funds immediately and will ~~have a material adverse effect on our ability~~continue to ~~operate our business. In addition,~~do so until we ~~will be required~~begin to ~~raise additional capital in order to fund our operations for the next twelve months.~~realize positive cash flow from operations. There can be no ~~assurances~~assurance that we will be able to achieve our business plan, which is to acquire and operate clusters of rural hospitals, raise ~~the necessary~~any additional capital ~~on terms that are acceptable to us,~~ or ~~at all. If we are unable to~~ secure the additional financing necessary ~~funding as and when required, it will have a material adverse effect on~~to implement our ~~business and we may be required to downsize, further reduce our workforce, sell some of our assets or possibly curtail or even cease operations, raising substantial doubt about our~~current operating plan. Our ability to continue as a going concern is dependent upon our ability to significantly reduce our operating costs, increase our revenues and eventually achieve profitable operations. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

On July 12, 2017 we announced that we plan to spin off the Advanced Molecular Services Group (“AMSG”) as an independent publicly traded company by way of a tax-free distribution to our shareholders. Completion of the spinoff is expected to occur during the first quarter of 2018, and is subject to numerous conditions, including effectiveness of a Registration Statement on Form 10 to be filed with the Securities and Exchange Commission and consents, including under various funding agreements previously entered into by the Company. The intent of the spinoff is to create two public companies, each of which can focus on its own strengths and operational plans. We also announced on July 24, 2017 that the Big South Fork Medical Center received CMS regional office licensure approval. The hospital opened in August 2017. We expect that the hospital will provide us additional revenue and cash flow sources.

In 2017, we received short-term advances from Christopher Diamantis, a member of our Board of Directors, in the amount of $3.3 million. On March 7, 2017 we issued a promissory note to Mr. Diamantis in the amount of $3.8 million (the “2017 Diamantis Note”) in connection with the advances we received in 2017, plus accrued and unpaid interest reflecting the advances we received in both fiscal 2016 and 2017, in the amount of $0.5 million.

On February 2, 2017, we issued $1.59 million of convertible debentures (the “February Debentures”) and warrants to purchase 6,667 shares of our common stock and received cash proceeds of $1.5 million.

On March 21, 2017, we issued $10.85 million aggregate principal amount of Senior Secured Original Issue Discount Convertible Debentures due two years from the date of issuance (the “Convertible Debentures”) and three series of warrants to purchase shares of our common stock to several accredited investors. We received net proceeds from this transaction in the approximate amount of $8.4 million. We used $3.8 million of the net proceeds to repay the 2017 Diamantis Note and $0.75 million of the net proceeds to make a partial repayment on the TCA Debenture (as defined below). The remainder of the net proceeds were used for general corporate purposes. In conjunction with the issuance of the Convertible Debentures, the holder of the February Debentures exchanged these debentures for $2.7 million of new debentures (the “Exchange Debentures” and, collectively with the Convertible Debentures, the “March Debentures”) on the same terms as, and pari passu with, the Convertible Debentures and warrants. Additionally, the holders of an aggregate of $2.2 million stated value of our Series H Convertible Preferred Stock (the “Series H Preferred Stock”) exchanged such preferred stock into $2.5 million principal amount of Exchange Debentures and warrants. All of the March Debentures contain a 24% original issue discount.

On June 2, 2017 and June 22, 2017, we issued $1.9 million aggregate principal amount of Original Issue Discount Debentures due three months from the date of issuance of these two issuances (collectively, the “June Debentures”) and warrants to purchase an aggregate of 100,000 shares of common stock to accredited investors for a purchase price of $1.8 million and cash proceeds of $1.5 million.

On July 17, 2017, we closed an offering of $4,136,862 aggregate principal amount of Original Issue Discount Debentures due October 17, 2017 and warrants to purchase an aggregate of 141,333 shares of common stock for consideration of $2,000,000 in cash and the exchange of the $1,902,700 aggregate principal amount of Original Issue Discount Debentures due September 22, 2017 issued by us on June 22, 2017.

On September 19, 2017, we closed an offering of $2,604,000 principal amount of Senior Secured Original Issue Discount Convertible Debentures due September 19, 2019 (the “New Debentures”) and three series of warrants to purchase shares of our common stock. The offering was pursuant to the terms of a Securities Purchase Agreement, dated as of August 31, 2017, between us and certain of our existing institutional investors. We received proceeds of $2,100,000 from the offering.

Also on September 19, 2017, we closed exchanges by which the holders of our July Debentures exchanged $4,136,862 principal amount of such debentures for $6,412,136 principal amount of new debentures and warrants on the same items as, and pari passu with, the New Debentures (the “September Exchange Debentures” and, together with the New Debentures, the “September Debentures”). All issuance amounts of the September Debentures reflect a 24% original issue discount.

On October 30, 2017, we closed an offering of $4,960,000 stated value of our newly-authorized Series I-1 Preferred Stock. The offering was pursuant to the terms of the Securities Purchase Agreement, dated as of October 30, 2017, between us and certain of our existing institutional investors. We received proceeds of $4,000,000 from the offering.

In September of 2016, we received $0.4 million from the sale of convertible notes and warrants with a maturity date of March 15, 2017. On March 13, 2017, these securities were exchanged for 26,666 shares of our common stock.

On March 31, 2016, we entered into an agreement to pledge certain of our accounts receivable as collateral against a prepaid forward purchase contract. The receivables had an estimated collectable value of $8.7 million which had been adjusted down to approximately $1.5 million and $0 on our balance sheet as of December 31, 2016 and September 30, 2017, respectively. The consideration received was $5.0 million. In exchange for the consideration received, the counterparty received the right to: (i) a 20% per annum investment return from us on the consideration, with a minimum repayment term of six months and minimum return of $0.5 million, (ii) all payments recovered from the accounts receivable up to $5.25 million, if paid in full within six months, or $5.5 million, if not paid in full within six months, and (iii) 20% of all payments of the accounts receivable in excess of amounts received in (i) and (ii). On March 31, 2017, to the extent that the counterparty has not been paid $6.0 million, we were required to pay the difference, plus 30% interest per annum on the total balance. As of ~~September~~June 30, 2017, and the date of this report, we had not collected any amounts due on these receivables, and $6.9 million, including accrued interest, is currently due to the counterparty. We currently do not have the financial resources to satisfy this obligation. Mr. Diamantis has guaranteed our payment obligation under this agreement.

On November 3, 2016, we received a Notice of Default from TCA Global Credit Master Fund, LP (“TCA”), the holder of a secured convertible debenture with an original outstanding principal amount of $3.0 million (the “TCA Debenture”), related to our failure to pay the monthly principal and interest payments required under the TCA Debenture. Prior to our issuance of the March Debentures on March 21, 2017, we had not made the last nine required payments under the TCA Debenture, other than a $0.4 million payment we made in February of 2017. In conjunction with the issuance of the March Debentures on March 21, 2017, we entered into a letter agreement with TCA, which (i) waived any non-payment default through March 21, 2017; (ii) provided for the $0.75 million payment discussed above; (iii) set forth a revised repayment schedule whereby the remaining principal plus interest aggregating to approximately $2.6 million was to be repaid in various monthly installments from April of 2017 through September of 2017; and (iv) provided for payment of an additional service fee in the amount of $150,000, which was due on June 27, 2017, the day after the effective date of the registration statement filed by us; which amount is reflected in accrued expenses in the accompanying consolidated balance sheet at September 30, 2017. In addition, TCA entered into an intercreditor agreement with the purchasers of the March Debentures which sets forth rights, preferences and priorities with respect to the security interests in our assets. On September 19, 2017, the Company entered into a new agreement with TCA, which extended the repayment schedule through to December 31, 2017. The Company is current with its payments.

~~As of September 30, 2017,~~2021, we were party to ~~the following~~ legal ~~matters:~~

~~Biohealth Medical Laboratory, Inc, and PB Laboratories, LLC (the “Companies”) filed suit against CIGNA Health~~proceedings, which are presented in 2015 alleging that CIGNA failed to pay claims for laboratory services the Companies provided to patients pursuant to CIGNA - issued and CIGNA - administered plans. In 2016, the U.S. District Court dismissed part of the Companies’ claims for lack of standing. The Companies appealed that decisionNote 13 to the Eleventh Circuit Court of Appeals, which recently reversed the District Court’s decision and found that the Companies have standing to raise claims arising out of traditional insurance plans as well as self-funded plans.

Our Epinex Diagnostics Laboratories, Inc. subsidiary had been sued in a California state court by two former employees who alleged that they were wrongfully terminated, as well as for a variety of unpaid wage claims. The parties entered into a settlement agreement of this matter on July 29, 2016 for approximately $0.2 million, and the settlement was consummated on August 25, 2016. In October of 2016, the plaintiffs in this matter filed a motion with the court seeking payment for attorneys’ fees in the approximate amount of $0.7 million. On March 24, 2017, the court granted plaintiffs’ motion for payment of attorneys’ fees in the amount of $0.3 million, and we have accrued this amount in itsaccompanying unaudited condensed consolidated financial statements. Additionally, we are seeking indemnification for these amounts from Epinex Diagnostics, Inc. (“EDI”), the seller of Epinex Diagnostic Laboratories, Inc. (“EDL”), pursuant to a Stock Purchase Agreement entered into by and among the parties.

InFebruary 2016, we received notice that the Internal Revenue Service (the “IRS”) had placed a lien against Medytox Solutions, Inc. and its subsidiaries relating to unpaid 2014 taxes due, plus penalties and interest, in the amount of $5.0 million. We paid $0.1 million toward the 2014 tax liability on March 2016. We filed our 2015 Federal tax return on March 15, 2016 and the accompanying election to carryback the reported net operating losses was filed in April 2016. On August 24, 2016, the lien was released, and in September of 2016, we received a refund from the IRS in the amount of $1.9 million. In November of 2016, the IRS commenced an audit of our 2015 Federal tax return. We are currently unable to predict the outcome of the audit or any liability to us that may result from the audit.

On September 27, 2016, a tax warrant was issued against us by the Florida Department of Revenue (the “DOR”) for unpaid 2014 state income taxes in the approximate amount of $0.9 million, including penalties and interest. On January 25, 2017, we paid the DOR $250,000 as partial payment on this liability, and in February 2017, we entered into a Stipulation Agreement with the DOR which will allow us to make monthly installment payments of $35,000 until February 2018 and negotiate a new payment agreement then, if the balance of $0.3 million cannot be satisfied in a lump sum. If at any time during the Stipulation period we fail to timely file any required tax returns with the DOR or do not meet the payment obligations under the Stipulation Agreement, the entire amount due will be accelerated. The Company is current with the agreed payment plan.

InDecember of 2016, TCS-Florida, L.P. (“Tetra”), filed suit against us for failure to make the required payments under an equipment leasing contract that we had with Tetra. On January 3, 2017, Tetra received a Default Judgment against us in the amount of $2.6 million, representing the balance owed on the leases, as well as additional interest, penalties and fees. We have recognized this amount in our consolidated financial statements as of December 31, 2016. In January and February of 2017, we made payments to Tetra in connection with this judgment aggregating to $0.7 million, and on February 15, 2017, we entered into a forbearance agreement with Tetra whereby the remaining $1.9 million due will be paid in 24 equal monthly installments. Payments commenced on May 1, 2017. The Company is current with its payments.

InDecember of 2016, DeLage Landen Financial Services, Inc. (“DeLage”), filed suit against us for failure to make the required payments under an equipment leasing contract that we had with DeLage. On January 24, 2017, DeLage received a default judgment against us in the approximate amount of $1.0 million, representing the balance owed on the lease, as well as additional interest, penalties and fees. We have recognized this amount in our consolidated financial statements as of December 31, 2016. On February 8, 2017, a Stay of Execution was filed and under its terms the balance due will be paid in variable monthly installments through January of 2019, with an implicit interest rate of 4.97%. The Company is current with its payments.

On December 7, 2016, the holders of the notes payable to CommerceNet and Jay Tannenbaum (the “Tegal Notes”) filed suit against us seeking payment for the amounts due under the notes in the aggregate of $0.4 million, including accrued interest. A request for entry of default judgment was filed on January 24, 2017. A Case Management Conference is scheduled for December 5, 2017.

The following table presents our capital resources as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016:~~2020:

The following table presents the major sources and uses of cash for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016:~~2020:

The ~~decrease in~~components of cash used in operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016 is~~2020 are presented in the following table:

Cash of $0.1 million and $10,435 was used by investing activities during the six months ended June 30, 2021 and 2020, respectively. The ~~increase in~~ cash used in ~~investing activities is due to the acquisition~~both periods was for purchases of ~~the Hospital Assets in January of 2017. Cash provided by investing activities for the nine months ended September 30, 2017 consists of $1.6 million.~~hospital equipment.

Cash provided by financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017 consists~~2021 of ~~the $15.7~~$4.0 million ~~of net~~included primarily $2.5 million in proceeds ~~received in connection with~~from the issuance of ~~debentures~~our Series O Preferred Stock, $0.9 million in loans from a former member of our Board of Directors and ~~warrants and $1.1~~$1.2 million from the issuances of ~~related party payments net of advances,~~notes payable, partially offset by $0.4 million in payments ~~on capital lease obligations~~of loans from to a former member of our Board of Directors, $0.1 million in ~~the amount~~payments of ~~$1.3 million.~~

notes payable and $0.2 million in payments of accounts receivable under sales agreements. Cash provided by financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2016 consists~~2020 of $9.9 million included primarily $4.6 million in loans from a former member of our Board of Directors, $2.4 million from PPP Notes, $7.5 million from HHS Provider Relief Funds, $0.5 million from the sale of accounts receivable and $1.1 million from the issuance of an installment note payable. Partially offsetting these cash receipts were $0.7 million in payments of debentures, $0.8 million of notes payable payments, $3.3 million in payments of loans from a former member of our Board of Directors and $0.1 million of finance lease obligation payments.

The Company had 10,000,000 and 39,648 shares of common stock issued and outstanding at June 30, 2021 and December 31, 2020, respectively. During the six months ended June 30, 2021, the Company issued an aggregate of 450,000 shares of its common stock upon conversion of $0.6 million of stated value of its Series M Preferred Stock and 9,510,352 shares of its common stock upon conversions of $13.1 million of stated value of shares of its Series N Preferred Stock. During the six months ended June 30, 2020, the Company issued an aggregate of 25 shares of its common stock upon conversion of $25,000 of value of its Series I-2 Convertible Preferred Stock.

The terms of certain of the ~~$5.0 million received from~~outstanding warrants, convertible preferred stock and convertible debentures issued by the ~~prepaid forward purchase contract~~Company provide for reductions in the per share exercise prices of the warrants and the ~~$7.5~~per share conversion prices of the debentures and preferred stock (if applicable and subject to a floor in certain cases), in the event that the Company issues common stock or common stock equivalents (as that term is defined in the agreements) at an effective exercise/conversion price that is less than the then exercise/conversion price of the outstanding warrants, preferred stock or debentures, as the case may be. In addition, the majority of these equity-based securities contain exercise/conversion prices that vary based upon the price of the Company’s common stock on the date of exercise/conversion (see Notes 7, 11 and 16 to the accompanying unaudited condensed consolidated financial statements). These provisions have resulted in significant dilution of the Company’s common stock and have given rise to reverse splits of the Company’s common stock, including a 1-for-1,000 reverse stock split effected on July 16, 2021. As a result of these down round provisions, the potential common stock equivalents, as adjusted for the July 16, 2021 reverse stock split, totaled 214.2 million at June 30, 2021 and 4.7 billion at August 11, 2021.

On August 13, 2020, Mr. Diamantis entered into the Voting Agreement with the Company, Mr. Lagan and Alcimede LLC (of which Mr. Lagan, the Company’s Chief Executive Officer, is the sole manager) pursuant to which Mr. Diamantis granted an irrevocable proxy to Mr. Lagan to vote the Series M Preferred Stock held by Mr. Diamantis. Mr. Diamantis has retained all other rights under the Series M Preferred Stock. Regardless of the number of shares of Series M Preferred Stock outstanding and so long as at least one share of Series M Preferred Stock is outstanding, the outstanding shares of Series M Preferred Stock shall have the number of votes, in ~~proceeds from a public offering, partially offset~~the aggregate, equal to 51% of all votes entitled to be voted at any meeting of stockholders or action by written consent. This means that the holders of Series M Preferred Stock have sufficient votes, by themselves, to approve or defeat any proposal voted on by the ~~$3.4 million~~Company’s stockholders, unless there is a supermajority required under applicable law or by agreement. As a result of ~~related party payments, net~~the Voting Agreement, as of ~~advances,~~the date of filing this report, the Company believes that it has the ability to ensure that it has and ~~repayment~~or can obtain sufficient authorized shares of ~~capital lease obligations in the amount of $0.8 million.~~its common stock to cover all potentially dilutive common shares outstanding.

We do not believe inflation has a significant effect on the Company’s operations at this time.

Under SEC regulations, we are required to disclose the Company’s off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources that are material to investors. Off-balance sheet arrangements consist of transactions, agreements or contractual arrangements to which any entity that is not consolidated with us is a party, under which we have:

As of ~~September~~June 30, ~~2017,~~2021, the Company had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of our chief executive officer and interim chief financial officer, of the effectiveness of the Company’sWe maintain disclosure controls and procedures ~~(as defined~~that are designed to ensure that material information required to be disclosed in ~~Rules 13a-15(e) and 15d-15(e)~~our periodic reports filed under the Securities Exchange Act of 1934, ~~(“Exchange~~as amended (the “Exchange Act”)~~) as of September 30, 2017. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act~~, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including ~~the chief executive officer,~~our Chief Executive Officer and Interim Chief Financial Officer as appropriate, to allow timely decisions regarding required ~~disclosures.~~

disclosure. Under the supervision and with the participation of our management, including our Chief Executive Officer, who also serves as our Interim Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures. Based on ~~that~~the foregoing evaluation, our management concluded that, as of June 30, 2021, our disclosure controls and procedures were not effective to provide reasonable assurance that the ~~end of~~information required to be disclosed by us in reports that we file or submit under the ~~period covered by this report,~~Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including our Chief Executive Officer (Principal Executive Officer), who also serves as our Interim Chief Financial Officer (Principal Financial Officer), does not expect that our disclosure controls and procedures ~~(as defined in Rules 13a-15(e)~~will prevent all errors and ~~15d-15(e) under the Exchange Act) were~~all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not ~~effective. In connection with such evaluation, management concluded~~absolute, assurance that the ~~material weakness~~objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in ~~internal~~all control ~~over financial reporting identified~~systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

In our Annual Report on Form 10-K for the year ended December 31, ~~2016 continued to exist, and as such~~2020, we identified material weaknesses in our ~~disclosure controls and procedures were not effective as of September 30, 2017.~~internal control over financial reporting. Insufficient staffing, accounting processes and procedures led to a lack of contemporaneous documentation supporting the accounting for certain transactions and the approval of certain cash disbursements. With the acquisitions of our hospitals, there are risks related to the timing and accuracy of the integration of information from various accounting systems whereby the Company has experienced delays in receiving information in a timely manner from its subsidiaries. Based on these material weaknesses in internal control over financial reporting, management concluded the Company did not maintain effective internal control over financial reporting as of December 31, 2020. As of June 30, 2021, we concluded that these material weaknesses continued to exist.

The Company expects improvements to be made on the integration of information issues during 2021 as we plan to move towards securing a prompt and accurate reporting system. The Company is continuing to further remediate the material weaknesses identified above as its resources permit. The Company is in the process of taking the following steps to remediate these material weaknesses: (i) increasing the staffing of its internal ~~accounting~~finance department, including ~~the addition of~~hiring a ~~full time Chief Financial Officer;~~chief financial officer; (ii) ~~beginning~~continuing the process of converting to a new integrated accounting system to enhance controls and procedures for recording accounting transactions; and (iii) implementing enhanced documentation procedures to be followed by the internal ~~accounting~~finance department, including independent review of material cash disbursements.

Notwithstanding such material weakness, management believes that the unaudited condensed consolidated financial statements included in this Form 10-Q fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods and dates presented.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, there ~~were~~have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial ~~reporting.~~reporting except as disclosed above.

From ~~time to time,~~time-to-time, the Company may be involved in a variety of claims, lawsuits, investigations and proceedings related to contractual disputes, employment matters, regulatory and compliance matters, intellectual property rights and other litigation arising in the ordinary course of business. The Company operates in a highly regulated industry which may inherently lend itself to legal matters. Management is aware that litigation has associated costs and that results of adverse litigation verdicts could have a material effect on the Company’s financial position or results of operations. Management, in consultation with legal counsel, has addressed known assertions and predicted unasserted claims, which are presented in Note 1113 to the accompanying unaudited condensed consolidated financial statements.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A of the ~~2016~~2020 Form 10-K which could materially affect our business, financial condition, or future results. There have been no material changes to the risk factors previously disclosed in our ~~2016~~2020 Form 10-K.

~~During the three-months ended September 30, 2017, the Company had the following issuance of unregistered sales of equity securities that was not previously disclosed on a Current Report on Form 8-K:~~None.

On August 15, 2017, the Company issued 33,334 shares of its common stock in payment of professional service fees valued at $118,493. These securities were issued without registration in reliance upon the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving a public offering.

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.

Delaware		68-0370244
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

400 ~~South~~S. Australian ~~Ave.~~Avenue, ~~8th Floor~~ Suite 800 West Palm Beach, FL		33401
(Address of principal executive offices)		(Zip Code)

Large accelerated filer ~~[ ]~~☐	Accelerated filer ~~[ ]~~☐
Non-accelerated filer ~~[ ](Do not check if a smaller reporting company)~~ ☒	Smaller reporting company ~~[X]~~☒

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016

Net revenues	$	1,414,211		$	41,362		$	3,312,476		$	4,067,562

Operating expenses:
Direct costs of revenue		309,347			305,157			849,632			1,128,060
General and administrative		5,169,478			6,497,718			12,978,349			17,142,263
Sales and marketing expenses		170,028			415,976			620,560			1,441,322
Bad debt		477,249			3,666,707			1,051,590			3,667,992
Depreciation and amortization		451,597			680,579			1,508,042			2,037,910
Total operating expenses		6,577,699			11,566,137			17,008,173			25,417,547

Loss from continuing operations before other income (expense) and income taxes		(5,163,488	)		(11,524,775	)		(13,695,697	)		(21,349,985	)

Other income (expense):
Other income		40,455			127,008			91,212			227,020
Change in fair value of derivative instruments		-			1,827,112			(42,702,815	)		6,553,772
Gain (loss) on extinguishment of debt		-			-			42,702,815			-
Loss on legal settlement		-			-			-			(17,654	)
Interest expense		(5,331,681	)		(1,651,629	)		(16,510,525	)		(4,700,664	)
Total other income (expense), net		(5,291,226	)		302,491			(16,419,313	)		2,062,474

Net loss from continuing operations before income taxes		(10,454,714	)		(11,222,284	)		(30,115,010	)		(19,287,511	)

Provision for income taxes		372			-			3,622			-

Net loss from continuing operations		(10,455,086	)		(11,222,284	)		(30,118,632	)		(19,287,511	)

Net loss from discontinued operations		(370,151	)		(787,155	)		(1,053,471	)		(2,828,030	)

Net loss		(10,825,237	)		(12,009,439	)		(31,172,103	)		(22,115,541	)
Deemed dividend from trigger of down round provision feature		(2,280,280	)		-			(53,341,619	)		-
Net loss to common shareholders	$	(13,105,157	)	$	(12,009,439	)	$	(84,513,722	)	$	(22,115,541	)

Net loss per common share:
Basic and diluted: continuing operations	$	(10.59	)	$	(122.24	)	$	(122.12	)	$	(368.16	)

Basic and diluted: discontinued operations		(0.31	)		(8.57	)		(1.54	)		(53.98	)

Total Basic and diluted	$	(10.90	)	$	(130.81	)	$	(123.66	)	$	(422.14	)

Weighted average number of common shares outstanding during the period:
Basic and diluted		1,202,299			91,808			683,411			52,389

	2021			2020			2021			2020
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020

Net revenues	$	928,849		$	2,069,019		$	278,157		$	3,910,109

Operating expenses:
Direct costs of revenues		1,269,302			2,669,112			2,866,400			5,345,649
General and administrative expenses		2,105,888			2,399,391			4,896,367			5,332,405
Depreciation and amortization		193,640			181,091			378,864			345,798
Total operating expenses		3,568,830			5,249,594			8,141,631			11,023,852
Loss from continuing operations before other income (expense) and income taxes		(2,639,981	)		(3,180,575	)		(7,863,474	)		(7,113,743	)

Other income (expense):
Other income/expense, net		2,008,597			6,895,827			4,486,246			6,790,061
Gain from legal settlements, net		31,050			1,096,613			22,190			1,096,613
Interest expense		(889,763	)		(2,658,510	)		(1,802,387	)		(5,548,770	)
Total other income (expense), net		1,149,884			5,333,930			2,706,049			2,337,904

Net income (loss) from continuing operations before income taxes		(1,490,097	)		2,153,355			(5,157,425	)		(4,775,839	)

Benefit from income taxes		-			-			-			(1,118,485	)

Net income (loss) from continuing operations		(1,490,097	)		2,153,355			(5,157,425	)		(3,657,354	)

Loss from discontinued operations		(165,737	)		(31,727	)		(392,403	)		(12,796	)
Gain on sale		10,727,152			-			10,727,152			-

Total income (loss) from discontinued operations		10,561,415			(31,727	)		10,334,749			(12,796	)
Net income (loss)		9,071,318			2,121,628			5,177,324			(3,670,150	)
Deemed dividends		(99,253,330	)		(3,150,368	)		(149,611,479	)		(3,150,368	)
Net loss available to common stockholders	$	(90,182,012	)	$	(1,028,740	)	$	(144,434,155	)	$	(6,820,518	)

Net loss per share of common stock available to common stockholders- basic and diluted:
Continuing operations	$	(13.78	)	$	(1,007.08	)	$	(40.74	)	$	(6,904.38	)
Discontinued operations		1.44			(32.05	)		2.72			(12.98	)
Total basic and diluted	$	(12.34	)	$	(1,039.13	)	$	(38.02	)	$	(6,917.36	)
Weighted average number of shares of common stock outstanding during the period:
Basic and diluted		7,310,286			990			3,799,062			986

	Preferred Stock																										Additional						Total
	Series G				Series H						Series F				Total						Common Stock						paid-in			Accumulated			Stockholders'
	Shares		Amount		Shares			Amount			Shares		Amount		Shares			Amount			Shares			Amount			capital			Deficit			Deficit
Balance at December 31, 2016		215	$	2		10,019		$	100			-	$	-		10,234		$	102			186,692		$	1,867		$	45,752,999		$	(60,640,864	)	$	(14,885,896	)
Conversion of preferred stock into common stock		-		-		(7,785	)		(78	)		-		-		(7,785	)	$	(78	)		370,446			3,704			(3,627	)		-			-
Preferred stock issued for business acquisition		-		-		-			-			1,750,000		17,500		1,750,000		$	17,500			-			-			156,597			-			174,097
Common stock issued in exchange for warrants		-		-		-			-			-		-		-			-			2,056			21			57,848			-			57,869
Shares issued in settlement of notes payable and warrants		-		-		-			-			-		-		-			-			26,667			267			439,733			-			440,000
Exchange of preferred stock for convertible debentures		-		-		(2,174	)		(22	)		-		-		(2,174	)		(22	)		-			-			(2,173,978	)		-			(2,174,000	)
Conversion of debentures into common stock		-		-		-			-			-		-		-			-			548,932			5,489			4,058,672			-			4,064,161
Rounding up of common shares in connection with reverse stock split		-		-		-			-			-		-		-			-			526			5			(5	)		-			-
Common stock granted to employees		-		-		-			-			-		-		-			-			185			2			(2	)		-			-
Discount on convertible debentures		-		-		-			-			-		-		-			-			-			-			252,143			-			252,143
Warrants and benefical conversion features related to the issuance of convertible notes		-		-		-			-			-		-		-			-			-			-			24,177,258			-			24,177,258
Stock-based compensation		-		-		-			-			-		-		-			-			-			-			34,081						34,081
Deemed dividend from trigger of down round provision feature		-		-		-			-			-		-		-			-			-			-			53,341,619			(53,341,619	)		-
Restricted stock issued to employees		-		-		-			-			-		-		-			-			181,933			1,819			81,145			-			82,964
Common stock issued for services and severance		-		-		-			-			-		-		-			-			41,667			417			160,586			-			161,003
Shares returned to treasury		-		-		-			-			-		-		-			-			(4,933	)		(49	)		49						-
Net loss		-		-		-			-			-		-		-			-			-			-			-			(31,172,103	)		(31,172,103	)
Balance at September 30, 2017		215	$	2		60		$	0			1,750,000	$	17,500		1,750,275		$	17,502			1,354,171		$	13,542		$	126,335,119		$	(145,154,586	)	$	(18,788,423	)

Title of Each Class		Trading Symbol(s)		Name of each exchange on which registered
None		None		None

			Page No.
PART I – FINANCIAL INFORMATION			3

Item 1.	Financial Statements		3
	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2021 (unaudited) and December 31, ~~2016~~2020		3
	Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 (unaudited)		4
	Condensed Consolidated ~~Statement~~Statements of Changes in Stockholders’ Deficit for each of the ~~nine months~~quarters in the periods ended ~~September~~June 30, ~~2017~~2021 and 2020 (unaudited)		5
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 (unaudited)	6	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	7	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43	44
Item 4.	Controls and Procedures	43	44

PART II – OTHER INFORMATION			45

Item 1.	Legal Proceedings	44	45
Item 1A.	Risk Factors	44	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44	45
Item 3.	Defaults Upon Senior Securities	44	45
Item 4.	Mine Safety Disclosures	44	45
Item 5.	Other Information	44	45
Item 6.	Exhibits	44	45

SIGNATURES			46

	Nine Months Ended September 30,
	2017			2016

Cash flows used in operating activities:
Net loss from continuing operations	$	(30,118,632	)	$	(19,287,511	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization		1,508,042			2,037,910
Non-cash gain on derivative instruments		-			(6,653,774	)
Stock issued for services		161,003			9,310
Stock-based compensation		34,081			884,165
Bad debt expense		1,051,590			3,667,992
Non-cash interest expense		8,441,043			-
Amortization of debt discount		6,228,352			2,474,497
Non-cash settlement of debt		(50,000	)		-
Loss (gain) on extinguishment of debt		(42,702,815	)		(100,000	)
Change in fair value of derivative instrument		42,702,815			-
Loss from discontinued operations		(1,053,471	)		(2,828,030	)
Changes in operating assets and liabilities:
Accounts receivable		(252,717	)		1,878,086
Inventory		(73,732	)		-
Prepaid expenses and other current assets		2,672			236,612
Security deposits		(16,059	)		3,040
Accounts payable		1,367,689			(1,679,960	)
Accrued expenses		2,081,876			331,797
Income tax assets and liabilities		(451,997	)		2,202,206
Net cash used in operating activities of continuing operations		(11,140,260	)		(16,823,660	)
Net cash used in discontinued operations		(643,181	)		(216,614	)
Net cash used in operating activities		(11,783,441	)		(17,040,274	)

Cash flows provided by (used in) investing activities:
Purchase of property and equipment		(1,554,499	)		(15,998	)
Net cash used in investing activities of continuing operations		(1,554,499	)		(15,998	)
Net cash provided by investing activites of discontinued operations		1,936			79,271
Net cash provided by (used in) investing activities		(1,552,563	)		63,273

Cash flows provided by financing activities:
Proceeds from the issuance of common stock and warrants, net of offering cost		-			7,521,036
Proceeds from issuance of related party notes payable and advances		3,805,000			8,285,000
Proceeds from issuance of notes payable and debentures		15,742,500			5,394,500
Payments on related party notes payable and advances		(3,860,000	)		(6,000,000	)
Payments on notes payable		(1,042,524	)		(5,715,000	)
Payments on capital lease obligations		(1,342,970	)		(791,365	)
Net cash provided by financing activities of continuing operations		13,302,006			8,694,171
Net cash used in financing activities of discontinued operations		-			(36,056	)
Net cash provided by financing activities		13,302,006			8,658,115

Net (decrease) in cash		(33,998	)		(8,318,886	)

Cash at beginning of period		75,017			8,833,230

Cash at end of period	$	41,019		$	514,344

	Preferred Stock						Common Stock				Additional paid-in-		Accumulated			Total Stockholders’
	Shares			Amount			Shares		Amount		capital		Deficit			Deficit
Balance at December 31, 2019		2,000,010		$	20,000			965	$	-	$	510,402,293	$	(586,942,014	)	$	(76,519,721	)
Conversion of Series I-2 Preferred Stock into common stock		-			-			25		-		25,000		-			25,000
Net loss		-			-			-		-		-		(5,791,778	)		(5,791,778	)
Balance at March 31, 2020		2,000,010		$	20,000			990	$	-	$	510,427,293	$	(592,733,792	)	$	(82,286,499	)
Exchange of Series K Preferred Stock for Series L Preferred Stock		(250,000	)		(2,500	)		-		-		-		-			(2,500	)
Issuance of Series L Preferred Stock		250,000			2,500			-		-		-		-			2,500
Issuance of Series M Preferred Stock in exchange for related party loans and accrued interest		22,000			220			-		-		21,999,780		-			22,000,000
Deemed dividend from issuance of Series M Preferred Stock		-			-			-		-		-		(3,150,368	)		(3,150,368	)
Net income		-			-			-		-		-		2,121,628			2,121,628
Balance at June 30, 2020		2,022,010		$	20,220			990	$	-	$	532,427,073	$	(593,762,532	)	$	(61,315,239	)

	2021			2020
	Six Months Ended June 30,
	2021			2020

Cash flows from operating activities:
Net loss from continuing operations	$	(5,157,425	)	$	(3,657,354	)
Adjustments to reconcile net loss to net cash (used in) provided by operations:
Depreciation and amortization		378,864			345,798
Amortization of debt discount		27,630			63,695
Net gain from legal settlements		(22,190	)		(1,096,613	)
Other income from federal government provider relief funds		(4,400,000	)		(7,483,830	)
Loss on sales of accounts receivable under sale agreements		-			249,500
Income (loss) from discontinued operations		10,334,749			(12,796	)
Gain on sale of discontinued operations		(10,727,152	)		-
Changes in operating assets and liabilities:
Accounts receivable		920,577			1,328,369
Inventory		(45,573	)		(75,732	)
Prepaid expenses and other current assets		(26,640	)		(16,935	)
Security deposits		(18,542	)		9,872
Change in right-of-use assets		89,731			(160,421	)
Accounts payable and checks issued in excess of bank balances		1,837,074			(1,973,633	)
Accrued expenses		3,126,033			4,492,549
Change in right-of-use operating lease obligations		(89,731	)		118,899
Income tax assets and liabilities		-			(1,118,485	)
Net cash used in operating activities of continuing operations		(3,772,595	)		(8,987,117	)
Net cash provided by (used in) operating activities of discontinued operations		40,098			(136,313	)
Net cash used in operating activities		(3,732,497	)		(9,123,430	)

Cash flows from investing activities:
Purchases of property and equipment		(80,132	)		(10,435	)
Net cash used in investing activities of continuing operations		(80,132	)		(10,435	)

Cash flows from financing activities:
Proceeds from issuance of related party note payable and advances		890,000			4,595,553
Payment on related party note payable and advances		(360,000	)		(3,251,387	)
Payments of debentures		-			(720,000	)
Proceeds from issuances of notes payable		1,245,000			1,077,116
Payments on notes payable		(100,508	)		(793,715	)
Proceeds from sale of accounts receivable under sales agreement		-			465,000
Receivables paid under accounts receivable sales agreements		(247,986	)		(1,073,854	)
Proceeds from issuance of Series O Preferred Stock		2,500,000			-
Federal government provider relief funds		-			7,483,830
Proceeds from Paycheck Protection Program notes payable		-			2,264,200
Payments on capital lease obligations		-			(100,707	)
Net cash provided by financing activities of continuing operations		3,926,506			9,946,036
Net cash provided by (used in) financing activities of discontinued operations		60,402			(18,256	)
Net cash provided by financing activities		3,986,908			9,927,780

Net change in cash		174,279			793,915

Cash at beginning of period		25,353			16,933

Cash at end of period	$	199,632		$	810,848

	●	The parties have approved the contract either in writing; orally by acknowledgement; or implicitly, based on customary business practices.
	●	Each party’s rights and the contract’s payment terms are identified.
	●	The contract has commercial substance.
	●	Collection is probable.

	September 30, 2017			December 31, 2016
Accounts receivable - laboratory services	$	4,118,407		$	12,715,835
Accounts receivable - hospital		2,982,771			-
Accounts receivable - all others		528,196			499,508
Total accounts receivable		7,629,374			13,215,343
Less:
Allowance for discounts		(3,583,014	)		(11,664,490	)
Allowance for discounts - hospital		(2,368,565	)		-
Allowance for bad debts		(1,276,769	)		(350,954	)
Accounts receivable, net	$	401,026		$	1,199,899

	September 30, 2017			December 31, 2016
Medical equipment	$	713,799		$	696,195
Building		1,359,484			-
Equipment		461,912			461,912
Equipment under capital leases		4,497,025			4,497,025
Furniture		408,101			377,630
Leasehold improvements		1,333,385			1,329,387
Vehicles		196,534			196,534
Computer equipment		587,742			564,742
Software		1,859,289			1,739,348
		11,417,271			9,862,773
Less accumulated depreciation		(8,327,224	)		(6,819,183	)
Property and equipment, net	$	3,090,047		$	3,043,590

	September 30, 2017			December 31, 2016
Loan payable under prepaid forward purchase contract	$	5,000,000		$	5,000,000

Loan payable to TCA Global Master Fund, LP ("TCA") in the original principal amount of $3 million at 16% interest (the "TCA Debenture"). Principal and interest payments due in various installments through December 31, 2017.		1,957,476			3,000,000

Notes payable to CommerceNet and Jay Tenenbaum in the original principal amount of $500,000, bearing interest at 6% per annum (the "Tegal Notes"). Prinicpal and interest payments are due annually from July 12, 2015 through July 12, 2017		341,612			341,612

Other convertible notes payable		-			440,000

Unamortized discount on other convertible notes		-			(179,889	)
Derivative liability associated with the TCA Debenture, at fair value		-			409,524
		7,299,088			9,011,247
Less current portion		(7,299,088	)		(9,011,247	)
Notes payable - third parties, net of current portion	$	-		$	-

	June 30, 2021			December 31, 2020

Loan payable to TCA Global Master Fund, L.P. (“TCA”) in the original principal amount of $3 million at 16% interest (the “TCA Debenture”). Principal and interest payments due in various installments through December 31, 2017	$	1,741,893		$	1,741,893

Notes payable to CommerceNet and Jay Tenenbaum in the original principal amount of $500,000, bearing interest at 6% per annum (the “Tegal Notes”). Principal and interest payments due annually from July 12, 2015 through July 12, 2017		291,559			297,068

Note payable to Anthony O’Killough dated September 27, 2019 in the original principal amount of $1.9 million. Interest is due only upon event of default. Issued net of $0.3 million of debt discount and $0.1 million of financing fees. Payment due in installments through November 2020.		1,450,000			1,450,000

Notes payable under the Paycheck Protection Program (“PPP) issued on April 20, 2020 through May 1, 2020 bearing interest at a rate of 1% per annum. To the extent not forgiven, principal and interest payments are due monthly beginning sixteen months from the date of issuance and the notes mature 40 months from the date of issuance.		2,385,922			2,385,921

The Ponte Note dated January 29, 2020, less original issue discount of $0.1 million, non-interest bearing, payable in weekly installment payments ranging from $22,500 to $34,000 due on or before February 5, 2020 through on or before October 21, 2020, the maturity date.		50,000			108,350

Notes payable dated January 31, 2021 and February 16, 2021 due six months from the date of issuance bearing interest at 10% for the period outstanding.		245,000			-

Warrant pre-payment promissory notes dated February 25, 2021, April 9, 2021, April 16, 2021 and April 22, 2021, non-interest bearing, $1,100,000 aggregate principal amount, issued with $100,000 of original issue discounts and payable 12 months from the date of issuance		1,027,630			-

		7,192,004			5,983,232
Less current portion		(6,394,997	)		(4,786,976	)
Notes payable - third parties, net of current portion	$	797,007		$	1,196,256

	September 30, 2017			December 31, 2016
Loan payable to Alcimede LLC, bearing interest at 6% per annum, with all principal and interest due on February 2, 2018	$	168,500		$	218,500

Other advances from related parties		55,000			110,000
		223,500			328,500
Less current portion		(223,500	)		(328,500	)
Total notes payable - related parties, net of current portion	$	-		$	-

	Balance Sheet Classification	June 30, 2021			December 31, 2020

Assets:
Operating leases	Right-of-use operating lease assets	$	910,541		$	1,000,272
Finance leases	Property and equipment, net		249,985			249,985

Total lease assets		$	1,160,526		$	1,250,257

Liabilities:
Current:
Operating leases	Right-of-use operating lease obligations	$	217,937		$	172,952
Finance leases	Current liabilities		249,985			249,985
Noncurrent:
Operating leases	Right-of-use operating lease obligations		692,604			827,320

Total lease liabilities		$	1,160,526		$	1,250,257

Weighted-average remaining term:
Operating leases			3.92 years			4.17 years
Finance leases			0 years			0 years
Weighted-average discount rate:
Operating leases			13.0	%		13.0	%
Finance leases			4.9	%		4.9	%

		Three Months Ended June 30, 2021		Three Months Ended June 30, 2020		Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
Finance lease expense:
Finance lease expense: Depreciation/amortization of leased assets	$	-	$	10,539	$	-	$	26,349
Finance lease expense: Interest on lease liabilities		-		46,503		-		93,012
Operating leases:
Operating leases: Short-term lease expense ⁽¹⁾		34,033		69,235		106,583		169,942

Total lease expense	$	34,033	$	126,277	$	106,693	$	289,303

	Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	102,152	$	73,812
Operating cash flows for finance leases		-		9,455
Financing cash flows for finance leases payments		-		100,707

	Right-of-Use Operating Leases			Finance Leases
Twelve months ended June 30, 2022	$	314,807		$	253,776
Twelve months ended June 30, 2023		339,024			-
Twelve months ended June 30, 2024		216,239			-
Twelve months ended June 30, 2025		222,712			-
Twelve months ended June 30, 2026		74,598			-
Thereafter		-			-
Total		1,167,380			253,776

Less interest		(256,839	)		(3,791	)
Present value of minimum lease payments	$	910,541		$	249,985

Less current portion of lease obligations		(217,937	)		(249,985	)
Lease obligations, net of current portion	$	692,604		$	-

Year ended December 31,
2017 (October through December)	$	493,282
2018		1,427,375
2019		377,919
2020		32,611
Total		2,331,187

Less interest		103,983
Present value of minimum lease payments		2,227,204

Less current portion of capital lease obligations		1,491,666
Capital lease obligations, net of current portion	$	735,538

	Level 1		Level 2		Level 3		Total

As of December 31, 2020:

VisualMED Series B Preferred Stock	$	-	$	-	$	-	$	-
Embedded conversion option of debenture		-	$	-	$	455,336	$	455,336
Total	$	-	$	-	$	455,336	$	455,336

As of June 30, 2021:
VisualMED Series B Preferred Stock	$	-	$	-	$	8,500,000	$	8,500,000
Embedded conversion option of debenture		-		-		455,336		455,336
Total	$	-	$	-	$	8,955,336	$	8,955,336

	Number of options			Weighted- average exercise price		Weighted- average contractual term (Yrs.)
Outstanding at December 31, 2016		47,268		$	1,941.45		8.93
Granted		-			-
Expired		-			-
Forfeit		(8,790	)		-
Exercised		-			-
Outstanding at September 30, 2017		38,478		$	2,072.75		8.68
Exercisable at September 30, 2017		31,811		$	2,445.84

	Number of warrants			Weighted average exercise price
Balance at December 31, 2016		93,843		$	175.50
Warrants issued during the period		17,900,999		$	4.58
Warrants exchanged/exercised during period		(6,500	)
Warrants expired during the period		-
Balance at September 30, 2017		17,988,342		$	5.40

	Number of Shares of Common Stock Issuable for Warrants		Weighted average exercise price
Balance at December 31, 2020		4,571,165	$	19.99
Increase in number of shares of common stock issuable under warrants during the period as a result of down round provisions		117,824,467
Balance at June 30, 2021		122,295,632	$	0.7465

	As of September 30,
	2017		2016
Warrants		17,988,342		78,102
Convertible preferred stock		71,147		47,463
Convertible debt		4,353,898		3,911
Stock options		38,478		49,331
		22,451,865		178,807

	●	~~Clinical Laboratory Operations~~~~, which specializes in providing urine and blood toxicology and pain medication testing to physicians, clinics and rehabilitation facilities in the United States.~~

	●	~~Supportive Software Solutions~~~~, including EHR and medical billing and laboratory information management systems.~~

	●	~~Hospital Operations~~~~, which reflects the purchase of the Hospital Assets (see Note 3) and the operations of Scott County Community Hospital, which has since been renamed as Big South Fork Medical Center.~~

	●	~~Corporate,~~~~which reflects consolidated company wide support services such as finance, legal counsel, human resources, and payroll.~~

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net revenues - External
Clinical Laboratory Operations	$	586,663		$	(9,085	)	$	1,994,639		$	3,461,987
Supportive Software Solutions		208,070			50,447			698,359			605,575
Hospital Operations		619,478			-			619,478			-
	$	1,414,211		$	41,362		$	3,312,476		$	4,067,562
Net revenues - Intersegment (***)
Supportive Software Solutions		217,431			502,055			501,924			1,036,396
	$	217,431		$	502,055		$	501,924		$	1,036,396
(Loss) income from operations
Clinical Laboratory Operations	$	(1,039,118	)	$	(7,364,096	)	$	(3,809,146	)	$	(10,590,435	)
Supportive Software Solutions		(660,800	)		(1,253,386	)		(1,721,694	)		(3,800,893	)
Hospital Operations		(2,093,805	)		-			(3,114,473	)		-
Corporate		(1,369,765	)		(2,940,956	)		(5,058,565	)		(7,059,644	)
Eliminations		-			33,663			8,181			100,987
	$	(5,163,488	)	$	(11,524,775	)	$	(13,695,697	)	$	(21,349,985	)
Depreciation and amortization
Clinical Laboratory Operations	$	410,801		$	549,748		$	1,265,174		$	1,646,167
Supportive Software Solutions		25,015			163,749			227,999			490,236
Hospital Operations		15,436			-			22,045			-
Corporate		345			745			1,005			2,494
Eliminations		-			(33,663	)		(8,181	)		(100,987	)
	$	451,597		$	680,579		$	1,508,042		$	2,037,910
Capital expenditures
Clinical Laboratory Operations	$	-		$	-		$	-		$	6,000
Supportive Software Solutions		-			-			-			9,998
Hospital Operations		160,413			-			1,554,499			-
	$	160,413		$	-		$	1,554,499		$	15,998

~~Title and reference~~	~~Prescribed~~	~~Commentary~~
~~Title and reference~~	~~Effective Date~~	~~Commentary~~
~~ASU No. 2015-11, “Inventory” (Topic 330): Simplifying the Measurement of Inventory.~~	~~Fiscal years beginning after December 15, 2016 and for interim periods therein.~~	In July 2015, the FASB issued ASU No. 2015-11, “Inventory” (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 simplifies the measurement of inventory by requiring certain inventory to be subsequently measured at the lower of cost and net realizable value. The amendments in this guidance are effective for fiscal years beginning after December 15, 2016 and for interim periods therein and did not have a significant impact on the Company’s consolidated financial statements upon adoption.
~~ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”~~	~~Fiscal years beginning after December 15, 2017 and for interim periods therein.~~	In May 2014, the FASB issued guidance that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most recent current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also specifies the accounting for certain incremental costs of obtaining a contract and costs to fulfill a contract with a customer. Entities have the option of applying either a full retrospective approach to all periods presented or a modified approach that reflects differences prior to the date of adoption as an adjustment to equity. In April 2015, FASB deferred the effective date of this guidance until January 1, 2018 and the Company is currently assessing the impact of this guidance on its consolidated financial statements.
~~ASU No. 2014-15, “Presentation of Financial Statements - Going Concern” (Subtopic 205-40): Disclosure of Uncertainty about an Entity’s Ability to Continue as a Going Concern.~~	~~Fiscal years, and interim periods within those years, beginning on or after December 15, 2016, with early adoption permitted.~~	In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern” (Subtopic 205-40): Disclosure of Uncertainty about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 provides guidance that establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and setting rules for how this information should be disclosed in the financial statements. Adoption of this new standard did not have a significant impact on the Company’s consolidated financial statements. See Note 1 regarding management’s current disclosures regarding the Company’s ability to continue as a going concern.
~~ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes”~~	~~Fiscal years beginning on or after December 15, 2016, with early adoption permitted.~~	In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). Topic 740, Income Taxes, requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. Deferred tax liabilities and assets that are not related to an asset or liability for financial reporting are classified according to the expected reversal date of the temporary difference. To simplify the presentation of deferred income taxes, the amendments in ASU 2015-17 require that deferred income tax liabilities and assets be classified as noncurrent in a classified statement of financial position. For public business entities, the amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Adoption of ASU 2015-17 did not have a material impact on the Company’s consolidated financial statements.

~~Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)”~~		~~Annual and interim periods within the annual period beginning after December 15, 2018.~~		In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The amendments in this update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. Topic 842 specifies the accounting for leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The main difference between Topic 842 and Topic 840 is the recognition of lease assets and lease liabilities for those leases classified as operating leases under Topic 840. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities. Early application of the amendments in ASU 2016-02 is permitted. The Company has not yet determined the impact that adoption of ASU 2016-02 will have on its consolidated financial statements.
~~ASU No. 2017-11, “Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815)” (“ASU 2017-11”)~~		~~Fiscal years beginning on or after December 15, 2018, with early adoption permitted.~~		~~The Company adopted this amendment as of its period ended June 30, 2017 (see Note 1)~~.

	June 30, 2021		December 31, 2020
	(unaudited)
Cash	$	-	$	136
Accounts receivable, net		-		-
Prepaid expenses and other current assets		-		-
Current assets classified as held for sale	$	-	$	136

Property and equipment, net	$	-	$	-
Deposits		100,014		100,014
Right-of-use assets		52,284		100,116
Non-current assets classified as held for sale	$	152,298	$	200,130

Accounts payable and checks in excess of bank balance	$	1,144,088	$	1,185,158
Accrued expenses		336,410		334,667
Current portion of right-of-use operating lease obligation		52,284		91,166
Current portion of notes payable		-		-
Current liabilities classified as held for sale	$	1,532,782	$	1,610,991

Note payable	$	-	$	-
Right-of-use operating lease obligation		-		8,950
Non-current liabilities classified as held for sale	$	-	$	8,950

	September 30, 2017			September 30, 2016
		(unaudited)			(unaudited)
Revenue from services	$	224,224		$	1,154,967
Cost of services		9,282			162,266
Gross profit		214,942			992,701
Operating expenses		1,225,638			4,073,873
Other income (expenses)		42,775			(253,142	)
Loss from discontinued operations	$	(1,053,471	)	$	(2,828,030	)

Cash	$	7,990
Accounts receivable, net		6,503
Accounts payable and accrued expenses		(458,736	)
Deferred revenue		(20,000	)
Loans payable short-term		(142,514	)
Note payable long-term		(134,118	)
Total identifiable net liabilities		(740,875	)
Goodwill		914,972
Total consideration	$	174,097

	August 11, 2021
Shares of common stock outstanding		29,350,000
Dilutive potential shares:
Convertible preferred stock		1,775,720,879
Warrants		2,657,130,516
Convertible debt		235,605,419
Stock options		26
Total dilutive potential shares of common stock, including outstanding common stock		4,697,806,840

	Three Months Ended June 30,
	2021					2020
				%					%
Net revenues	$	928,849		100.0	%	$	2,069,019		100.0	%
Operating expenses:
Direct costs of revenues		1,269,302		136.7	%		2,669,112		129.0	%
General and administrative expenses		2,105,888		226.7	%		2,399,391		116.0	%
Depreciation and amortization		193,640		20.8	%		181,091		8.8	%
Loss from continuing operations before other income (expense) and income taxes		(2,639,981	)	-284.2	%		(3,180,575	)	-153.7	%
Other income (expense), net		2,008,597		216.2	%		6,895,827		333.3	%
Net gain from legal settlements		31,050		3.3	%		1,096,613		53.0	%
Interest expense		(889,763	)	-95.8	%		(2,658,510	)	-128.5	%
Benefit from income taxes		-		0.0	%		-		0.0	%
Net income (loss) from continuing operations	$	(1,490,097	)	-160.4	%	$	2,153,355		104.1	%