See the accompanying notes to these
Unaudited Condensed Consolidated Financial Statements
See the accompanying notes to these
Unaudited Condensed Consolidated Financial Statements
See the accompanying notes to these
Unaudited Condensed Consolidated Financial Statements
See the accompanying notes to these
Unaudited Condensed Consolidated Financial Statements
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 1 - BUSINESS AND BUSINESS
PRESENTATION
HealthLynked Corporation, a Nevada
corporation (the “Company” or “HLYK”) filed its Articles of Incorporation on August 4, 2014. On September
3, 2014 HLYK filed Amended Articles of Incorporation clarifying that the total authorized shares of 250,000,000 shares are broken
up between 230,000,000 common shares and 20,000,000 preferred shares.
On September 5, 2014, HLYK entered
into a share exchange agreement (the “Share Exchange Agreement”) with Naples Women’s Center LLC (“NWC”),
a Florida Limited Liability Company (“LLC”), acquiring 100% of the LLC membership units of NWC through the issuance
of 50,000,000 shares of HLYK common stock to the members of NWC (the “Restructuring”).
NWC is a multi-specialty medical
group including OB/GYN (both Obstetrics and Gynecology), and General Practice located in Naples, Florida.
HLYK operates an online personal
medical information and record archive system, the “HealthLynked Network”, which enables patients and doctors to keep
track of medical information via the Internet in a cloud based system. Patients complete a detailed online personal medical history
including past surgical history, medications, allergies, and family history. Once this information is entered patients and their
treating physicians are able to update the information as needed to provide a comprehensive medical history.
These unaudited condensed consolidated
financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary
to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the
GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated
financial statements and notes thereto for the years ended December 31, 2016 and 2015, respectively, which are included in Amendment
#2 to the Company’s Registration Statement on Form S-1 filed with the United States Securities and Exchange Commission on
March 23, 2017. The Company assumes that the users of the interim financial information herein have read, or have access to, the
audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a
fair presentation may be determined in that context. The results of operations for the three and nine months ended September 30,
2017 are not necessarily indicative of results for the entire year ending December 31, 2017.
All significant intercompany transactions
and balances have been eliminated upon consolidation. In addition, certain amounts in the prior periods’ consolidated financial
statements have been reclassified to conform to the current period presentation.
NOTE 2 – SIGNIFICANT ACCOUNTING
POLICIES
A summary of the significant accounting
policies applied in the presentation of the accompanying condensed consolidated financial statements follows:
Basis of Presentation
The accompanying unaudited condensed
consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America (“US GAAP”).
All amounts referred to in the notes
to the condensed consolidated financial statements are in United States Dollars ($) unless stated otherwise.
Use of Estimates
The preparation of the condensed
consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting
period. Accordingly, actual results could differ from those estimates. Significant estimates include assumptions about collection
of accounts receivable, the valuation and recognition of stock-based compensation expense, valuation allowance for deferred tax
assets and useful life of fixed assets.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Revenue Recognition
The Company recognizes revenue in
accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires
that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery
has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria
(3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered
and the collectability of those amounts. Patient service revenues are recognized at the time of service for the net amount expected
to be collected. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments
Cash and Cash Equivalents
For financial statement purposes,
the Company considers all highly-liquid investments with original maturities of three months or less to be cash and cash equivalents.
Accounts Receivable
Trade receivables are carried at
their estimated collectible amounts. Trade credit is generally extended on a short-term basis; thus trade receivables do not bear
interest. Trade accounts receivable are periodically evaluated for collectability based on past collectability of the insurance
companies, government agencies, and customers’ accounts receivable during the related period which generally approximates
45% of total billings. Trade accounts receivable are recorded at this net amount. As of September 30, 2017 and December 31, 2016,
the Company’s gross accounts receivable were $269,501 and $333,804, respectively, and net accounts receivable were $118,581
and $146,874, respectively, based upon net reporting of accounts receivable.
Capital Leases
Costs associated with capitalized
leases are capitalized and depreciated ratably over the term of the related useful life of the asset and/or the capital lease term.
The related depreciation for the three months ended September 30, 2017 and 2016 was $4,587 and $4,587, respectively. The related
depreciation for the nine months ended September 30, 2017 and 2016 was $13,761 and $13,761, respectively. Accumulated depreciation
of capitalized leases was $299,151 and $285,390 at September 30, 2017 and December 31, 2016, respectively.
Concentrations of Credit Risk
The Company’s financial instruments
that are exposed to a concentration of credit risk are cash and accounts receivable. There are no patients/customers that represent
10% or more of the Company’s revenue or accounts receivable. Generally, the Company’s cash and cash equivalents are
in checking accounts.
Property and Equipment
Property and equipment are stated
at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective
accounts and the net difference less any amount realized from disposition, is reflected in earnings. For consolidated financial
statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated
useful lives of 5 to 7 years. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements
are capitalized.
The Company examines the possibility
of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may
not be recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less
than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated
fair value and its book value. There was no impairment as of September 30, 2017 and December 31, 2016.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Convertible Notes
Convertible notes are regarded as
compound instruments, consisting of a liability component and an equity component. The component parts of compound instruments
are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar
non-convertible instrument. This amount is recorded as a liability on an amortized cost basis until extinguished upon conversion
or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component
from the fair value of the compound instrument as a whole. This is recognized as additional paid-in capital and included in equity,
net of income tax effects, and is not subsequently remeasured. After initial measurement, they are carried at amortized cost using
the effective interest method.
Derivative Financial Instruments
The Company reviews the terms of
convertible debt, equity instruments and other financing arrangements to determine whether there are embedded derivative instruments,
including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial
instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants
that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. Derivative financial
instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities,
the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in
the fair value reported as charges or credits to income. To the extent that the initial fair values of the freestanding and/or
bifurcated derivative instrument liabilities exceed the total proceeds received, an immediate charge to income is recognized, in
order to initially record the derivative instrument liabilities at their fair value. The discount from the face value of convertible
debt instruments resulting from allocating some or all of the proceeds to the derivative instruments is amortized over the life
of the instrument through periodic charges to income.
The classification of derivative
instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each
reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is
reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed.
Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash
settlement of the derivative instrument could be required within twelve months of the balance sheet date. The Company does not
use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.
Fair Value of Assets and Liabilities
Fair
value is the price that would be received from the sale of an asset or paid to transfer a liability (i.e. an exit price) in the
principal or most advantageous market in an orderly transaction between market participants. In determining fair value, the accounting
standards have established a three-level hierarchy that distinguishes between (i) market data obtained or developed from independent
sources (i.e., observable data inputs) and (ii) a reporting entity’s own data and assumptions that market participants would
use in pricing an asset or liability (i.e., unobservable data inputs). Financial assets and financial liabilities measured and
reported at fair value are classified in one of the following categories, in order of priority of observability and objectivity
of pricing inputs:
|
●
|
Level 1 –
Fair value based on quoted prices in active markets for identical assets or liabilities
|
|
●
|
Level 2
– Fair value based on significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data.
|
|
●
|
Level 3
– Fair value based on prices or valuation techniques that require significant unobservable data inputs. Inputs would normally be a reporting entity’s own data and judgments about assumptions that market participants would use in pricing the asset or liability
|
The fair value measurement level
for an asset or liability is based on the lowest level of any input that is significant to the fair value measurement. Valuation
techniques should maximize the use of observable inputs and minimize the use of unobservable inputs.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Stock-Based Compensation
The Company accounts for stock based
compensation under ASC 718 “Compensation – Stock Compensation” using the fair value based method. Under this
method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period,
which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity
exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in
exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled
by the issuance of those equity instruments.
The Company uses the fair value
method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options.
The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services
is completed (measurement date) and is recognized over the vesting periods.
Income Taxes
The Company follows Accounting Standards
Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax
assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.
Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence
suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation
allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes
in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes
may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes
in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities
to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified
as current or non-current depending on the periods in which the temporary differences are expected to reverse and are considered
immaterial.
Recurring Fair Value Measurements
The carrying value of the Company’s
financial assets and financial liabilities is their cost, which may differ from fair value. The carrying value of cash held as
demand deposits, money market and certificates of deposit, marketable investments, accounts receivable, short-term borrowings,
accounts payable, accrued liabilities, and derivative financial instruments approximated their fair value.
Net Income (Loss) per Share
Basic net income (loss) per common
share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the
period. During the three and nine month periods ended September 30, 2017 and 2016, the Company reported a net loss and excluded
all outstanding stock options, warrants and other dilutive securities from the calculation of diluted net loss per common share
because inclusion of these securities would have been anti-dilutive. As of September 30, 2017 and 2016, potentially dilutive securities
were comprised of (i) 19,566,389 and 10,576,389 warrants outstanding, respectively, (ii) 2,349,996 and 1,600,000 stock options
outstanding, respectively, (iii) 8,675,180 and 7,375,000 shares issuable upon conversion of convertible notes, respectively, and
(iv) 528,750 and 940,000 unissued shares subject to future vesting requirements granted pursuant to the Company’s Employee
Incentive Plan.
Recent Accounting Pronouncements
In September 2017,
the FASB issued ASU 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic
840), and Leases (Topic 842). The effective date for ASU 2017-13 is for fiscal years beginning after December 15, 2018. We are
currently evaluating the impact of adopting ASU 2017-13 on our unaudited consolidated financial statements.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 2 – SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
In January 2017,
the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350), which simplifies the goodwill impairment test. The effective
date for ASU 2017-04 is for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill
impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of adopting ASU 2017-04
on our unaudited condensed consolidated financial statements.
In January 2017, the FASB issued ASU No.
2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition
of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen
requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single
identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for
the Company on January 1, 2018; however, early adoption is permitted with prospective application to any business development transaction.
We are currently evaluating the impact of adopting ASU 2017-04 on our unaudited condensed consolidated financial statements.
The Company applied ASU 2015-03:
Interest – Imputation of Interest, which simplifies the presentation of debt issuance costs, and netted debt issue costs
previously reported as assets with the related liability for presentation purposes.
On May 28, 2014, the Financial Accounting
Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. The standard will
eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle-based
approach for determining revenue recognition. The Company intends to adopt this guidance for the year ended December 31, 2017.
The Company has not yet evaluated the impact the adoption this standard will have on its results of operations upon adoption.
In August 2014, the FASB issued
ASU No. 2014-15 Presentation of Financial Statements-Going Concern. The amendments in this update apply to all reporting entities
and require an entity’s management, in connection with preparing financial statements for each annual and interim reporting
period, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the
entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or
within one year after the date that the financial statements are available to be issued when applicable). This ASU is effective
for annual periods ending after December 15, 2016. The Company adopted this standard for the year ended December 31, 2016.
Based on the results of our analysis, no additional disclosures were required.
The Company has evaluated recent
accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA and the SEC and we have not
identified any that would have a material impact on the Company’s financial position, or statements.
NOTE 3 – GOING CONCERN
MATTERS AND LIQUIDITY
As of September 30, 2017, the Company
had a working capital deficit of $1,536,307 and accumulated deficit $4,082,966. For the nine months ended September 30, 2017, the
Company had a net loss of $1,958,747 and net cash used by operating activities of $1,131,324. Net cash used in investing activities
was $13,238. Net cash provided by financing activities was $1,102,021, resulting principally from $548,356 from the proceeds of
the sale of 4,469,514 shares of common stock, $308,470 proceeds from related party loans and $229,500 net proceeds from the issuance
of convertible notes. Subsequent to September 30, 2017, the Company received additional $150,000 net proceeds from the sale of
a convertible promissory note and $200,000 from the sale of 1,000,000 common shares with an attached five-year warrant to purchase
666,666 shares of the Company’s common stock at an exercise price of $0.30 per share (see Note 14).
The Company’s cash balance
and revenues generated are not currently sufficient and cannot be projected to cover its operating expenses for the next twelve
months from the date of this report. These matters raise substantial doubt about the Company’s ability to continue as a
going concern. Management’s plans include attempting to improve its business profitability and its ability to generate sufficient
cash flow from its operations to meet its needs on a timely basis, obtaining additional working capital funds through equity and
debt financing arrangements, and restructuring on-going operations to eliminate inefficiencies to raise cash balance in order
to meet its anticipated cash requirements for the next twelve months from the date of this report. However, there can be no assurance
that these plans and arrangements will be sufficient to fund the Company’s ongoing capital expenditures, working capital,
and other requirements. Management intends to make every effort to identify and develop sources of funds. The outcome of these
matters cannot be predicted at this time. There can be no assurance that any additional financings will be available to the Company
on satisfactory terms and conditions, if at all.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 3 – GOING CONCERN
MATTERS AND LIQUIDITY (CONTINUED)
The ability of the Company to continue
as a going concern is dependent upon its ability to raise additional capital and achieve profitable operations. The accompanying
condensed consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying
amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
During the year ended December 31,
2016, HLYK (i) received proceeds of $374,000 from the sale of 6,167,500 shares of common stock, (ii) received net proceeds of $475,000
from the issuance of convertible promissory notes with a combined face value of $600,000, and (iii) entered into an Investment
Agreement (the “Investment Agreement”) pursuant to which the investor has agreed to purchase up to $3,000,000 of HLYK
common stock over a three-year period starting upon registration of the underlying shares, with such shares put to the investor
by the Company pursuant to a specified formula that limits the number of shares able to be put to the investor to the number equal
to the average trading volume of the Company’s common shares for the ten consecutive trading days prior to the put notice
being issued. During the nine months ended September 30, 2017, the Company received $15,356 from the proceeds of the sale of 57,016
shares pursuant to the Investment Agreement.
The Company intends that the cost
of implementing its development and sales efforts related to the HealthLynked Network, as well as maintaining its existing and
expanding overhead and administrative costs, will be funded principally by cash received by the Company from the put rights associated
with the Investment Agreement and supplemented by other funding mechanisms, including loans from related parties and convertible
notes. The Company expects to repay its outstanding convertible notes – of which $111,000 face value matures on January 22,
2018, $53,000 on April 15, 2018, $35,000 on June 15, 2018, $550,000 on July 7, 2018, and $50,000 on July 11, 2018, and $55,000
on September 11, 2018 – from outside funding sources, including but not limited to amounts available upon the exercise of
the put rights granted to the Company under the Investment Agreement, sales of equity, loans from related parties and others or
through the conversion of the notes into equity. No assurances can be given that the Company will be able to access sufficient
outside capital in a timely fashion in order to repay the convertible notes before they mature. If necessary funds are not available,
the Company’s business and operations would be materially adversely affected and in such event, the Company would attempt
to reduce costs and adjust its business plan.
NOTE 4 – DEFERRED OFFERING
COSTS
On July 7, 2016, the Company entered
into the Investment Agreement with an accredited investor, pursuant to which an accredited investor agreed to invest up to $3,000,000
to purchase the Company’s common stock, par value of $.0001 per share. The purchase price for such shares shall be 80% of
the lowest volume weighted average price of the Company’s common stock during the five consecutive trading days prior to
the date on which written notice is sent by the Company to the investor stating the number of shares that the Company is selling
to the investor, subject to certain discounts and adjustments. Further, for each $50,000 that the investor tenders to the Company
for the purchase of shares of common stock, the investor was to be granted warrants for the purchase of an equivalent number of
shares of common stock. The warrants were to expire five (5) years from their respective grant dates and have an exercise price
equal to 130% of the weighted average purchase price for the respective “$50,000 increment.”
On March 22, 2017, the Company and
the investor entered into an Amended Investment Agreement (the “Amended Investment Agreement”) whereby the parties
agreed to modify the terms of the Investment Agreement by providing that in lieu of granting the investor warrants for each $50,000
that the investor tenders to the Company, the Company granted to the investor warrants to purchase an aggregate of 7,000,000 shares
of common stock. The warrants have the following fixed exercise prices: (i) 4,000,000 shares at $0.25 per share; (ii) 2,000,000
shares at $0.50 per share; and (iii) 1,000,000 shares at $1.00 per share. The warrants also contain a “cashless exercise”
provision and the shares underlying the warrants will not be registered. The fair value of the warrants was calculated using the
Black-Scholes pricing model at $56,635, with the following assumptions: risk-free interest rate of 1.95%, expected life of 5 years,
volatility of 40%, and expected dividend yield of zero.
On June 7, 2017, the Company also
granted warrants to purchase 200,000 shares at $0.25 per share, 100,000 shares at $0.50 per share and 50,000 shares at $1.00 per
share to an advisor as a fee in connection with the Amended Investment Agreement. The fair value of the warrants was calculated
using the Black-Scholes pricing model at $96,990, with the following assumptions: risk-free interest rate of 1.74%, expected life
of 5 years, volatility of 40%, and expected dividend yield of zero.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 4 – DEFERRED OFFERING
COSTS (CONTINUED)
This fair value of the warrants
was recorded as a deferred offering cost and will be amortized over the period during which the Company can access the financing,
which begins the day after a registration statement registering shares underlying the Investment Agreement is declared effective
by the United States Securities and Exchange Commission (the “SEC”), and ends 3 years from that date. On May 15, 2017,
the SEC declared effective a registration statement registering shares underlying the Investment Agreement. During the three and
nine months ended September 30, 2017, the Company recognized $12,802 and $19,203, respectively, in general and administrative expense
related to the cost of the warrants.
NOTE 5 – PROPERTY, PLANT,
AND EQUIPMENT
Property, plant and equipment at September 30, 2017 and
December 31, 2016 are as follows:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
(audited)
|
|
Capital Lease equipment
|
|
$
|
343,492
|
|
|
$
|
343,492
|
|
Telephone equipment
|
|
|
12,308
|
|
|
|
12,308
|
|
Furniture, Transport and Office equipment
|
|
|
433,059
|
|
|
|
419,821
|
|
|
|
|
|
|
|
|
|
|
Total Property, plant and equipment
|
|
|
788,859
|
|
|
|
775,621
|
|
Less: accumulated depreciation
|
|
|
(722,407
|
)
|
|
|
(704,785
|
)
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
$
|
66,452
|
|
|
$
|
70,836
|
|
Depreciation expense during the
three months ended September 30, 2017 and 2016 was $6,055 and $5,718, respectively. Depreciation expense during the nine months
ended September 30, 2017 and 2016 was $17,622 and $15,804, respectively.
NOTE 6 – DUE TO RELATED
PARTY
Amounts due to related parties as
of September 30, 2017 and December 31, 2016 were comprised of the following:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
(audited)
|
|
Current portion:
|
|
|
|
|
|
|
Notes payable and accrued interest, Dr. Michael Dent
|
|
$
|
320,011
|
|
|
$
|
---
|
|
Deferred compensation, Dr. Michael Dent
|
|
|
300,600
|
|
|
|
300,600
|
|
Due to MedOffice Direct
|
|
|
---
|
|
|
|
11,192
|
|
Total current portion
|
|
|
620,611
|
|
|
|
311,792
|
|
|
|
|
|
|
|
|
|
|
Long term portion:
|
|
|
|
|
|
|
|
|
Notes payable and accrued interest, Dr. Michael Dent
|
|
|
253,242
|
|
|
|
237,157
|
|
|
|
|
|
|
|
|
|
|
Total due to related parties
|
|
$
|
873,853
|
|
|
$
|
548,949
|
|
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 6 – DUE TO RELATED
PARTY (CONTINUED)
Dr. Michael Dent
Prior to August 2014, NWC was owned
and controlled by the Company’s Chief Executive Officer, Dr. Michael Dent (“DMD”). DMD first provided an up to
$175,000 unsecured note payable to the Company with a 0% interest rate. During 2013 the limit on the unsecured Note Payable was
increased up to $500,000 and during 2014 it was increased to $750,000 with a maturity date of December 31, 2017. During January
2017, the note was again amended to extend the maturity date until December 31, 2018, to accrue interest on outstanding balances
after January 1, 2017 at a rate of 10% per annum, and to fix interest accrued on balances between January 1, 2015 and December
31, 2016 at an amount equal to $22,108 (the “$750k DMD Note”). All principal and interest is due at maturity of the
$750k DMD Note. Interest accrued on the $750k DMD Note as of September 30, 2017 and December 31, 2016 was $38,192 and $22,108,
respectively.
During the nine months ended September
30, 2017, the Company borrowed $308,500 from Dr. Dent under unsecured promissory notes as follows:
Inception Date
|
|
Maturity Date
|
|
Interest Rate
|
|
|
Amount
|
|
January 12, 2017
|
|
January 13, 2018
|
|
|
10
|
%
|
|
$
|
35,000
|
|
January 18, 2017
|
|
January 19, 2018
|
|
|
10
|
%
|
|
|
20,000
|
|
January 24, 2017
|
|
January 15, 2018
|
|
|
10
|
%
|
|
|
50,000
|
|
February 9, 2017
|
|
February 10, 2018
|
|
|
10
|
%
|
|
|
30,000
|
|
April 20, 2017
|
|
April 21, 2018
|
|
|
15
|
%
|
|
|
10,000
|
|
June 15, 2017
|
|
June 16, 2018
|
|
|
10
|
%
|
|
|
32,500
|
|
August 17, 2017
|
|
August 18, 2018
|
|
|
10
|
%
|
|
|
20,000
|
|
August 24, 2017
|
|
August 25, 2018
|
|
|
10
|
%
|
|
|
37,500
|
|
September 7, 2017
|
|
September 8, 2018
|
|
|
10
|
%
|
|
|
35,000
|
|
September 21, 2017
|
|
September 22, 2018
|
|
|
10
|
%
|
|
|
26,500
|
|
September 29, 2017
|
|
September 30, 2018
|
|
|
10
|
%
|
|
|
12,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
308,500
|
|
Interest accrued on the 2017 DMD
Notes as of September 30, 2017 and December 31, 2016 was $11,511 and -0-, respectively.
MedOffice Direct
During 2016, MedOffice Direct (“MOD”),
a company majority-owned by the Company’s CEO and largest shareholder, Dr. Michael Dent, paid a direct obligation of the
Company in the amount of $25,000. The Company also paid direct obligations of MOD totaling $13,808 in 2016, resulting in an amount
payable to MOD of $11,192 as of December 31, 2016. This amount was paid in full in January 2017.
During the nine months ended September
30, 2017, the Company entered into an agreement with MOD pursuant to which the Company will pay rent to MOD in the amount of $2,040
per month for office space in MOD’s facility used by the Company and its employees. The agreement is effective from January
1, 2017 through July 31, 2018. During the three and nine months ended September 30, 2017, the Company recognized rent expense related
to the marketing agreement in the amount of $6,120 and $18,360, respectively, pursuant to this agreement and had prepaid an additional
$4,929 toward future rent as of September 30, 2017.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 7 – CAPITAL LEASE
Capital lease obligations as of September 30, 2017 and
December 31, 2016 are comprised of the following:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
(audited)
|
|
Note payable, New Everbank Lease
|
|
$
|
44,341
|
|
|
$
|
58,102
|
|
Less: note payable, New Everbank Lease (Capital leases), current portion
|
|
|
(18,348
|
)
|
|
|
(18,348
|
)
|
|
|
|
|
|
|
|
|
|
Notes payable, bank loans and capital leases, long-term portion
|
|
$
|
25,993
|
|
|
$
|
39,754
|
|
In March 2015, the Company entered
into a capital equipment finance lease for Ultra Sound equipment with Everbank. There was no interest on this lease. The monthly
payment is $1,529 for 60 months ending in March 2020. As of September 30, 2017, the Company owed Everbank $48,928 pursuant to this
capital lease. During the nine months ended September 30, 2017 and 2016, the Company made payments on capital leases of $13,761
and $13,761, respectively.
Future minimum payments to which
the Company is obligated pursuant to the capital leases as of September 30, 2017 are as follows:
2017 (October to December)
|
|
$
|
4,587
|
|
2018
|
|
|
18,348
|
|
2019
|
|
|
18,348
|
|
2020
|
|
|
3,058
|
|
2021
|
|
|
---
|
|
|
|
|
|
|
Total
|
|
$
|
44,341
|
|
NOTE 8 – NOTES PAYABLE
On July 11, 2017, the Company entered
into a Merchant Cash Advance Factoring Agreement (“MCA”) with Power Up Lending Group, Ltd. (the “PULG”)
pursuant to which the Company received an advance of $26,000 before closing fees. The Company is required to repay the advance,
which acts like an ordinary note payable, at the rate of $1,372 per week until the balance of $34,580 has been repaid. At inception,
the Company recognized a note payable in the amount of $34,580 and a discount against the note payable of $9,550. The discount
is being amortized over the life of the instrument. During each of the three and nine month periods ending September 30, 2017,
the Company recognized amortization of the discount in the amount of $4,227. As of September 30, 2017, the net carrying value of
the instrument was $14,162.
On August 9, 2017, the Company entered
into a second MCA with PULG pursuant to which the Company received an advance of $51,000 before closing fees. The Company is required
to repay the advance, which acts like an ordinary note payable, at the rate of $2,752 per week until the balance of $69,360 has
been repaid. At inception, the Company recognized a note payable in the amount of $69,360 and a discount against the note payable
of $19,380. The discount is being amortized over the life of the instrument. During each of the three and nine month periods ending
September 30, 2017, the Company recognized amortization of the discount in the amount of $5,477. As of September 30, 2017, the
net carrying value of the instrument was $36,190.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 9 –CONVERTIBLE NOTES
PAYABLE
Convertible notes payable as of September 30, 2017 and
December 31, 2016 are comprised of the following:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
(audited)
|
|
Face Value
|
|
|
|
|
|
|
$550k Note - July 2016
|
|
$
|
550,000
|
|
|
$
|
550,000
|
|
$50k Note - July 2016
|
|
|
50,000
|
|
|
|
50,000
|
|
$111k Note - May 2017
|
|
|
111,000
|
|
|
|
---
|
|
$53k Note - July 2017
|
|
|
53,000
|
|
|
|
---
|
|
$35k Note - September 2017
|
|
|
35,000
|
|
|
|
---
|
|
$55k Note - September 2017
|
|
|
55,000
|
|
|
|
---
|
|
|
|
|
854,000
|
|
|
|
600,000
|
|
Unamortized Discount
|
|
|
|
|
|
|
|
|
$550k Note - July 2016
|
|
$
|
---
|
|
|
$
|
(96,631
|
)
|
$50k Note - July 2016
|
|
|
---
|
|
|
|
(17,701
|
)
|
$111k Note - May 2017
|
|
|
(35,917
|
)
|
|
|
---
|
|
$53k Note - July 2017
|
|
|
(37,423
|
)
|
|
|
---
|
|
$35k Note - September 2017
|
|
|
(32,135
|
)
|
|
|
---
|
|
$55k Note - September 2017
|
|
|
(52,137
|
)
|
|
|
---
|
|
|
|
|
(157,612
|
)
|
|
|
(114,332
|
)
|
Net Book Value
|
|
|
|
|
|
|
|
|
$550k Note - July 2016
|
|
$
|
550,000
|
|
|
$
|
453,369
|
|
$50k Note - July 2016
|
|
|
50,000
|
|
|
|
32,299
|
|
$111k Note - May 2017
|
|
|
75,083
|
|
|
|
---
|
|
$53k Note - July 2017
|
|
|
15,577
|
|
|
|
---
|
|
$35k Note - September 2017
|
|
|
2,865
|
|
|
|
---
|
|
$55k Note - September 2017
|
|
|
2,863
|
|
|
|
---
|
|
|
|
|
|
|
|
|
|
|
Convertible notes payable, net of original issue discount and debt discount
|
|
$
|
696,388
|
|
|
$
|
485,668
|
|
Convertible Notes Payable ($550,000)
– July 2016
On July 7, 2016, the Company entered
into a 6% fixed convertible secured promissory note with an investor with a face value of $550,000 (the “$550k Note”).
The $550k Note is convertible into shares of the Company’s common stock at the discretion of the note holder at a fixed price
of $0.08 per share, and is secured by all of the Company’s assets. The Company received $500,000 net proceeds from the note
after a $50,000 original issue discount. At inception, the investors were also granted a five-year warrant to purchase 6,111,111
shares of the Company’s common stock at an exercise price of $0.09 per share. The fair value of the warrants was calculated
using the Black-Scholes pricing model at $157,812, with the following assumptions: risk-free interest rate of 0.97%, expected life
of 5 years, volatility of 40%, and expected dividend yield of zero. The net proceeds from the issuance of the $550k Note, being
$500,000 after the original issue discount, were then allocated to the warrants and the convertible note instrument based on their
relative fair values, of which $111,479 was allocated to the warrants and $388,521 to the convertible note. The intrinsic value
of the embedded conversion feature of the $550k Note was then calculated as $161,479. The original issue discount, warrants and
embedded conversion feature were then allocated and recorded as discounts against the carrying value of the $550k Note.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 9 –CONVERTIBLE NOTES
PAYABLE (CONTINUED)
The final allocation of the proceeds
at inception was as follows:
Original issue discount
|
|
$
|
50,000
|
|
Warrants
|
|
|
111,479
|
|
Embedded conversion feature
|
|
|
161,479
|
|
Convertible note
|
|
|
227,042
|
|
|
|
|
|
|
Face value of convertible note
|
|
$
|
550,000
|
|
The $550k Note was originally schedule
to mature on April 11, 2017. During February 2017, the holder of the $550k Note agreed to extend the maturity date until July 7,
2017 in exchange for a five-year warrant to purchase 500,000 shares of HLYK common stock at an exercise price of $0.15 per share.
The fair value of the warrants of $7,506 was recorded as an additional discount against the $550k Note and was amortized over the
new remaining life of the $550k Note. The fair value of the warrant was calculated using the Black-Scholes pricing model at $7,506,
with the following assumptions: risk-free interest rate of 1.89%, expected life of 5 years, volatility of 40%, and expected dividend
yield of zero. The issuance of the warrants in exchange for the maturity extension was treated as a modification of existing debt
pursuant to the guidance of ASC 470-50 “Debt – Modifications and Extinguishments” (“ASC 470-50”).
On August 8, 2017, in exchange for
a five-year warrant to purchase 1,000,000 shares of HLYK common stock at an exercise price of $0.30 per share, the holder of the
$550k Note agreed to (i) further extend the maturity date of the $550k Note until July 7, 2018, and (ii) further extend the maturity
date of the $50k Note (as defined herein) until July 11, 2018. The fair value of the warrant was calculated using the Black-Scholes
pricing model at $290,581, with the following assumptions: risk-free interest rate of 1.81%, expected life of 5 years, volatility
of 190.86%, and expected dividend yield of zero. The issuance of the warrants in exchange for the maturity extension was treated
as a modification of existing debt pursuant to the guidance of ASC 470-50. Because the fair value of the warrants was greater than
10% of the present value of the remaining cash flows under the $550k Note and $50k Note, the transaction was treated as a debt
extinguishment and reissuance of a new debt instrument, with the fair value of the warrants of $290,581 recorded as a loss on debt
extinguishment. The carrying value of the $550k Note (as well as the $50k Note) did not change as a result of the extinguishment
since the discounts recognized at inception of both notes were fully amortized at the time of the warrant issuance.
The discounts resulting from the
original issue discount, warrants and embedded conversion feature were amortized over the life of the $550k Note. Amortization
expense related to these discounts in the three months ended September 30, 2017 and 2016 was $3,061 and $100,187, respectively.
Amortization expense related to these discounts in the nine months ended September 30, 2017 and 2016 was $104,137 and $100,187,
respectively. As of September 30, 2017, the unamortized discount was $-0-. As of September 30, 2017, the $550k note was convertible
into 6,875,000 of the Company’s common shares.
During the nine months ended September
30, 2017 and 2016, the Company made no repayments on the $550k Note. During the three months ended September 30, 2017 and 2016,
the Company recorded interest expense on the $550k Note totaling $8,318 and $7,685, respectively. During the nine months ended
September 30, 2017 and 2016, the Company recorded interest expense on the $550k Note totaling $24,682 and $7,685, respectively.
Convertible Notes Payable ($50,000)
– July 2016
On July 7, 2016, the Company entered
into a 10% fixed convertible commitment fee promissory note with an investor with a face value of $50,000 maturing on July 11,
2017 (the “$50k Note”). The $50k note was issued as a commitment fee payable to the Investment Agreement investor in
exchange for the investor’s commitment to enter into the Investment Agreement, subject to registration of the shares underlying
the Investment Agreement. The $50k Note is convertible into shares of the Company’s common stock at the discretion of the
note holder at a fixed price of $0.10 per share. The embedded conversion feature did not have any intrinsic value at issuance.
Accordingly, the full face value of $50,000 was allocated to the convertible note instrument. As of September 30, 2017, the $50k
Note was convertible into 500,000 of the Company’s common shares.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 9 –CONVERTIBLE NOTES
PAYABLE (CONTINUED)
During the nine months ended September
30, 2017 and 2016, the Company made no repayments on the $50k Note. During the three months ended September 30, 2017 and 2016,
the Company recorded interest expense on the $50k Note totaling $1,260 and $1,164, respectively. During the nine months ended September
30, 2017 and 2016, the Company recorded interest expense on the $50k Note totaling $3,740 and $1,164, respectively.
Convertible Notes Payable ($111,000)
– May 2017
On May 22, 2017, the Company entered
into a 10% fixed convertible secured promissory note with an investor with a face value of $111,000 (the “$111k Note”).
The $111k Note matures on January 22, 2018. The $111k Note is convertible into shares of the Company’s common stock at the
discretion of the note holder at a fixed price of $0.35 per share, and is secured by all of the Company’s assets. The Company
received $100,000 net proceeds from the note after an $11,000 original issue discount. At inception, the investors were also granted
a five-year warrant to purchase 133,333 shares of the Company’s common stock at an exercise price of $0.75 per share. The
fair value of the warrants was calculated using the Black-Scholes pricing model at $42,305, with the following assumptions: risk-free
interest rate of 1.80%, expected life of 5 years, volatility of 40%, and expected dividend yield of zero. The net proceeds from
the issuance of the $111k Note, being $100,000 after the original issue discount, were then allocated to the warrants and the convertible
note instrument based on their relative fair values, of which $27,595 was allocated to the warrants and $72,405 to the convertible
note. The intrinsic value of the embedded conversion feature of the $111k note was then calculated as $38,595. The original issue
discount, warrants and embedded conversion feature were then allocated and recorded as discounts against the carrying value of
the $111k Note. The final allocation of the proceeds at inception was as follows:
Original issue discount
|
|
$
|
11,000
|
|
Warrants
|
|
|
27,595
|
|
Embedded conversion feature
|
|
|
38,595
|
|
Convertible note
|
|
|
33,810
|
|
|
|
|
|
|
Notes payable and bank loans, long-term portion
|
|
$
|
111,000
|
|
The discounts resulting from the
original issue discount, warrants and embedded conversion feature are being amortized over the life of the $111k Note. Amortization
expense related to these discounts in the three and nine months ended September 30, 2017 was $28,986 and $41,273, respectively.
No amortization expense was recognized during 2016 related to the $111k Note. As of September 30, 2017, the unamortized discount
was $35,917. As of September 30, 2017, the $550k note was convertible into 317,143 of the Company’s common shares.
During the nine months ended September
30, 2017 and 2016, the Company made no repayments on the $111k Note. During the three and nine months ended September 30, 2017
and 2016, the Company recorded interest expense on the $111k Note totaling $4,168 and $5,935, respectively. No interest expense
was recognized on this note in 2016.
Convertible Notes Payable ($53,000)
– July 2017
On July 10, 2017, the Company entered
into a securities purchase agreement for the sale of a $53,000 convertible note (the “$53k Note”) to PULG. The $53k
Note included a $3,000 original issue discount, for net proceeds of $50,000. The $53k Note has an interest rate of 10% and a default
interest rate of 22%. The $53k Note may be converted into common stock of the Company by the holder at any time following 180 days
after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 39% discount
to the average of the three (3) lowest closing bid prices during the fifteen (15) trading days prior to the conversion date. Upon
an event of default caused by the Company’s failure to deliver shares upon a conversion pursuant to the terms of the Note,
300% of the outstanding principal and any interest due amount shall be immediately due. Upon an event of default caused by the
Company’s breach of any other events of default specified in the $53k Note, 150% of the outstanding principal and any interest
due amount shall be immediately due.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 9 –CONVERTIBLE NOTES
PAYABLE (CONTINUED)
The fair value of the embedded conversion
feature (“ECF”) of the $53k Note was calculated using the Black-Scholes pricing model at $58,154, with the following
assumptions: risk-free interest rate of 1.23%, expected life of 0.76 years, volatility of 183.6%, and expected dividend yield of
zero. Because the fair value of the ECF exceeded the net proceeds from the $53k Note, a charge was recorded to “Financing
cost” for the excess of the fair value of the fair value of the ECF of $58,154 over the net proceeds from the note of $50,000,
for a net charge of $8,154. The ECF qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.”
The final allocation of the proceeds at inception was as follows:
Embedded conversion feature
|
|
$
|
58,154
|
|
Original issue discount
|
|
|
3,000
|
|
Financing cost
|
|
|
(8,154
|
)
|
Convertible note
|
|
|
---
|
|
|
|
|
|
|
Notes payable and bank loans, long-term portion
|
|
$
|
53,000
|
|
The discounts resulting from the
original issue discount, warrants and embedded conversion feature are being amortized over the life of the $53k Note. Amortization
expense related to these discounts in each of the three and nine months ended September 30, 2017 was $15,577. No amortization expense
was recognized during 2016 related to the $53k Note. As of September 30, 2017, the unamortized discount was $37,423. As of September
30, 2017, the $53k Note was convertible into 362,022 of the Company’s common shares, based on a 39% discount to the last
sale price of the Company’s common stock of $0.24 on September 30, 2017.
During the nine months ended September
30, 2017 and 2016, the Company made no repayments on the $53k Note. During the three and nine months ended September 30, 2017 and
2016, the Company recorded interest expense on the $53k Note totaling $1,191 and $1,191, respectively. No interest expense was
recognized on this note in 2016.
Convertible Notes Payable ($35,000)
– September 2017
On September 7, 2017, the Company
entered into a securities purchase agreement for the sale of a $35,000 convertible note (the “$35k Note”) to PULG.
The $35k Note included a $3,000 original issue discount, for net proceeds of $32,000. The $35k Note has an interest rate of 10%
and a default interest rate of 20%. The $35k Note may be converted into common stock of the Company by the holder at any time following
180 days after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to
a 39% discount to the average of the three (3) lowest closing bid prices during the fifteen (15) trading days prior to the conversion
date. Upon an event of default caused by the Company’s failure to deliver shares upon a conversion pursuant to the terms
of the $35k Note, 300% of the outstanding principal and any interest due amount shall be immediately due. Upon an event of default
caused by the Company’s breach of any other events of default specified in the $35k Note, 150% of the outstanding principal
and any interest due amount shall be immediately due.
The fair value of the ECF of the
$35k Note was calculated using the Black-Scholes pricing model at $38,338, with the following assumptions: risk-free interest rate
of 1.21%, expected life of 0.77 years, volatility of 177.2%, and expected dividend yield of zero. Because the fair value of the
ECF exceeded the net proceeds from the $35k Note, a charge was recorded to “Financing cost” for the excess of the fair
value of the fair value of the ECF of $38,338 over the net proceeds from the note of $32,000, for a net charge of $6,338. The ECF
qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The final allocation
of the proceeds at inception was as follows:
Embedded conversion feature
|
|
$
|
38,338
|
|
Original issue discount
|
|
|
3,000
|
|
Financing cost
|
|
|
(6,338
|
)
|
Convertible note
|
|
|
---
|
|
|
|
|
|
|
Notes payable and bank loans, long-term portion
|
|
$
|
35,000
|
|
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 9 –CONVERTIBLE NOTES
PAYABLE (CONTINUED)
The discounts resulting from the
original issue discount, warrants and embedded conversion feature are being amortized over the life of the $35k Note. Amortization
expense related to these discounts in each of the three and nine months ended September 30, 2017 was $2,865. No amortization expense
was recognized during 2016 related to the $35k Note. As of September 30, 2017, the unamortized discount was $32,135. As of September
30, 2017, the $35k Note was convertible into 239,071 of the Company’s common shares, based on a 39% discount to the last
sale price of the Company’s common stock of $0.24 on September 30, 2017.
During the nine months ended September
30, 2017 and 2016, the Company made no repayments on the $35k Note. During the three and nine months ended September 30, 2017 and
2016, the Company recorded interest expense on the $35k Note totaling $220 and $220, respectively. No interest expense was recognized
on this note in 2016.
Convertible Notes Payable ($55,000)
– September 2017
On September 11, 2017, the Company
entered into a securities purchase agreement for the sale of a $55,000 convertible note (the “$55k Note”) to Crown
Bridge Partners LLC. The $55k Note included a $7,500 original issue discount, for net proceeds of $47,500. The 55k Note has an
interest rate of 10% and a default interest rate of 12%. The $55k Note may be converted into common stock of the Company by the
holder at any time after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share
equal to 60% multiplied by the lowest one (1) trading price for the Common Stock during the twenty (20) trading day period ending
on the last complete trading day prior to the date of conversion. If, at any time while the $55k Note is outstanding, the conversion
price pursuant to this formula is equal to or lower than $0.10, then an additional ten percent (10%) discount shall be factored
into the conversion price until the $55k Note is no longer outstanding. In the event that shares of the Company’s Common
Stock are not deliverable via DWAC following the conversion of any amount hereunder, an additional ten percent (10%) discount shall
be factored into the Variable Conversion Price until the Note is no longer outstanding.
The fair value of the ECF of the
$55k Note was calculated using the Black-Scholes pricing model at $65,332, with the following assumptions: risk-free interest rate
of 1.24%, expected life of 1 year, volatility of 175.1%, and expected dividend yield of zero. Because the fair value of the ECF
exceeded the net proceeds from the $55k Note, a charge was recorded to “Financing cost” for the excess of the fair
value of the fair value of the ECF of $65,332 over the net proceeds from the note of $47,500, for a net charge of $17,832. The
ECF qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The final allocation
of the proceeds at inception was as follows:
Embedded conversion feature
|
|
$
|
65,332
|
|
Original issue discount
|
|
|
7,500
|
|
Financing cost
|
|
|
(17,832
|
)
|
Convertible note
|
|
|
---
|
|
|
|
|
|
|
Notes payable and bank loans, long-term portion
|
|
$
|
55,000
|
|
The discounts resulting from the
original issue discount, warrants and embedded conversion feature are being amortized over the life of the $55k Note. Amortization
expense related to these discounts in each of the three and nine months ended September 30, 2017 was $2,863. No amortization expense
was recognized during 2016 related to the $55k Note. As of September 30, 2017, the unamortized discount was $52,137. As of September
30, 2017, the $55k Note was convertible into 381,944 of the Company’s common shares, based on a 40% discount to the last
sale price of the Company’s common stock of $0.24 on September 30, 2017.
During the nine months ended September
30, 2017 and 2016, the Company made no repayments on the $55k Note. During the three and nine months ended September 30, 2017 and
2016, the Company recorded interest expense on the $55k Note totaling $286 and $286, respectively. No interest expense was recognized
on this note in 2016.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 10 – DERIVATIVE FINANCIAL
INSTRUMENTS
Derivative financial instruments
are comprised of the fair value of conversion features embedded in convertible promissory issued in 2017 for which the conversion
rate is not fixed, but instead is adjusted based on a discount to the market price of the Company’s common stock. The fair
market value of the derivative liabilities was calculated at inception of each of the $53k Note, the $35k Note and the $55k Note
and allocated to the respective convertible notes, with any excess recorded as a charge to “Financing cost.” The derivative
financial instruments are then revalued at the end of each period, with the change in value recorded to “Change in fair value
of on derivative financial instruments.”
Derivative financial instruments
recorded in the three and nine months ended September 30, 2017 include the following:
|
|
|
|
|
Change in
fair value of
|
|
|
Fair
|
|
|
|
Fair
|
|
|
Derivative
|
|
|
Value at
|
|
|
|
Value at
|
|
|
Financial
|
|
|
September 30,
|
|
|
|
Inception
|
|
|
Instruments
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
$53k Note ECF
|
|
$
|
58,154
|
|
|
$
|
(4,769
|
)
|
|
$
|
53,385
|
|
$35k Note ECF
|
|
|
38,338
|
|
|
|
(578
|
)
|
|
|
37,760
|
|
$55k Note ECF
|
|
|
65,332
|
|
|
|
(65
|
)
|
|
|
65,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
161,824
|
|
|
$
|
(5,412
|
)
|
|
$
|
156,412
|
|
Fair market value of the derivative
financial instruments is measured using the Black-Scholes pricing model with the following assumptions: risk-free interest rate
of 1.21-1.31%, expected life of 0.54-1.00 years, volatility of 175.1-183.6%, and expected dividend yield of zero. The entire amount
of derivative instrument liabilities is classified as current due to the fact that settlement of the derivative instruments could
be required within twelve months of the balance sheet date.
NOTE 11 – SHAREHOLDERS’
DEFICIT
Issuance of Common Stock
During the nine months ended September 30, 2017, the
Company sold 4,412,498 shares of common stock in private placement transactions to 15 investors. The Company received $533,000
in proceeds from the sales. The shares were issued at a share price between $0.10 and $0.30 per share.
During the three months ended September 30, 2017, the
Company issued 57,016 common shares pursuant to draws made by the Company under the Investment Agreement. The Company received
$15,356 in proceeds from the draws.
During August 2017, the Company issued 276,850 shares
to a consultant.
Common Stock Issuable
As of September 30, 2017 and December
31, 2016, the Company was obligated to issue 10,313 and 80,643 shares of common stock, respectively, in exchange for professional
services provided by a third party consultant during the further quarter of 2016 and the first eight months of 2017. During the
three and nine months ended September 30, 2017, the Company recognized expense related to shares earned by the consultant of $17,705
and $46,669, respectively. During August 2017, 276,850 shares were issued to the consultant with a value of $49,996, in satisfaction
of shares accrued through August 25, 2017.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 11 – SHAREHOLDERS’
DEFICIT (CONTINUED)
Stock Warrants
Transactions involving our stock warrants during the
nine months ended September 30, 2017 are summarized as follows:
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Exercise
|
|
|
|
Number
|
|
|
Price
|
|
Outstanding at beginning of the period
|
|
|
10,576,389
|
|
|
$
|
0.08
|
|
Granted during the period
|
|
|
8,990,000
|
|
|
$
|
0.40
|
|
Exercised during the period
|
|
|
---
|
|
|
$
|
---
|
|
Terminated during the period
|
|
|
---
|
|
|
$
|
---
|
|
Outstanding at end of the period
|
|
|
19,566,389
|
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of the period
|
|
|
19,566,389
|
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
|
Weighted average remaining life
|
|
|
4.5 years
|
|
|
|
|
|
The following table summarizes information
about the Company’s stock warrants outstanding as of September 30, 2017:
Warrants Outstanding
|
|
|
Warrants Exercisable
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Weighted-
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
Remaining
|
|
|
Average
|
|
|
|
|
|
Average
|
|
Exercise
|
|
|
Number
|
|
|
Contractual
|
|
|
Exercise
|
|
|
Number
|
|
|
Exercise
|
|
Prices
|
|
|
Outstanding
|
|
|
Life (years)
|
|
|
Price
|
|
|
Exercisable
|
|
|
Price
|
|
$
|
0.05 to 0.09
|
|
|
|
8,388,889
|
|
|
|
4.6
|
|
|
$
|
0.08
|
|
|
|
8,388,889
|
|
|
$
|
0.08
|
|
$
|
0.10 to 0.15
|
|
|
|
2,687,500
|
|
|
|
3.9
|
|
|
$
|
0.11
|
|
|
|
2,687,500
|
|
|
$
|
0.11
|
|
$
|
0.25 to 0.50
|
|
|
|
7,300,000
|
|
|
|
4.5
|
|
|
$
|
0.33
|
|
|
|
7,300,000
|
|
|
$
|
0.33
|
|
$
|
0.51 to 1.00
|
|
|
|
1,190,000
|
|
|
|
4.5
|
|
|
$
|
0.97
|
|
|
|
1,190,000
|
|
|
$
|
0.97
|
|
$
|
0.05 to 1.00
|
|
|
|
19,566,389
|
|
|
|
4.5
|
|
|
$
|
0.23
|
|
|
|
19,566,389
|
|
|
$
|
0.23
|
|
During the nine months ended September
30, 2017, the Company issued 8,990,000 warrants. The fair value of the warrant was calculated using the Black-Scholes pricing model
with the following assumptions: risk-free interest rate of 1.74% to 1.95%, expected life of 5 years, volatility of 40 - 190.86%,
and expected dividend yield of zero. The aggregate grant date fair value of warrants issued during the nine months ended September
30, 2017 was $496,132.
Employee Equity Incentive Plan
On January 1, 2016, the Company
instituted the Employee Equity Incentive Plan (the “EIP”) for the purpose of having equity awards available to allow
for equity participation by its employees. The EIP allows for the issuance of up to 15,503,680 shares of the Company’s common
stock to employees, which may be issued in the form of stock options, stock appreciation rights, or restricted shares. The EIP
is governed by the Company’s board, or a committee that may be appointed by the board in the future.
During August 2017, the Company
issued 207,500 shares of common stock to employees under the EIP as a result of grants made in 2016 that vested during 2017.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 11 – SHAREHOLDERS’
DEFICIT (CONTINUED)
The following table summarizes the
status of shares issued and outstanding under the EIP outstanding as of and for the nine months ended September 30, 2017:
Outstanding at beginning of the period
|
|
|
1,552,500
|
|
Granted during the period
|
|
|
---
|
|
Terminated during the period
|
|
|
(228,750
|
)
|
Outstanding at end of the period
|
|
|
1,323,750
|
|
|
|
|
|
|
Shares vested at period-end
|
|
|
795,000
|
|
Weighted average grant date fair value of shares granted during the period
|
|
$
|
---
|
|
Aggregate grant date fair value of shares granted during the period
|
|
$
|
---
|
|
Shares available for grant pursuant to EIP at period-end
|
|
|
11,829,934
|
|
Total stock based compensation recognized
for grants under the EIP was $2,435 and $3,030 during the three months ended September 30, 2017 and 2016, respectively. Total stock
based compensation recognized for grants under the EIP was $8,215 and $9,090 during the nine months ended September 30, 2017 and
2016, respectively. Total unrecognized stock compensation related to these grants was $31,655 as of September 30, 2017.
A summary of the status of non-vested
shares issued pursuant to the EIP as of September 30, 2017 presented below:
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Grant Date
|
|
|
|
Shares
|
|
|
Fair Value
|
|
Nonvested at January 1, 2017
|
|
|
940,000
|
|
|
$
|
0.04
|
|
Granted
|
|
|
---
|
|
|
$
|
---
|
|
Vested
|
|
|
(182,500
|
)
|
|
$
|
0.04
|
|
Forfeited
|
|
|
(228,750
|
)
|
|
$
|
0.04
|
|
Nonvested at September 30, 2017
|
|
|
528,750
|
|
|
$
|
0.04
|
|
Employee Stock Options
The following table summarizes the status of options
outstanding as of and for the nine months ended September 30, 2017:
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Exercise
|
|
|
|
Number
|
|
|
Price
|
|
Outstanding at beginning of the period
|
|
|
2,349,996
|
|
|
$
|
0.12
|
|
Granted during the period
|
|
|
---
|
|
|
$
|
---
|
|
Exercised during the period
|
|
|
---
|
|
|
$
|
---
|
|
Terminated during the period
|
|
|
---
|
|
|
$
|
---
|
|
Outstanding at end of the period
|
|
|
2,349,996
|
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at period-end
|
|
|
462,500
|
|
|
|
|
|
Weighted average remaining life (in years)
|
|
|
8.9
|
|
|
|
|
|
Weighted average grant date fair value of options granted during the period
|
|
$
|
---
|
|
|
|
|
|
Options available for grant at period-end
|
|
|
11,829,934
|
|
|
|
|
|
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 11 – SHAREHOLDERS’
DEFICIT (CONTINUED)
The following table summarizes information
about the Company’s stock options outstanding as of September 30, 2017:
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Weighted-
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
Remaining
|
|
|
Average
|
|
|
|
|
|
Average
|
|
Exercise
|
|
|
Number
|
|
|
Contractual
|
|
|
Exercise
|
|
|
Number
|
|
|
Exercise
|
|
Prices
|
|
|
Outstanding
|
|
|
Life (years)
|
|
|
Price
|
|
|
Exercisable
|
|
|
Price
|
|
$
|
0.08
|
|
|
|
1,600,000
|
|
|
|
8.8
|
|
|
$
|
0.08
|
|
|
|
100,000
|
|
|
$
|
0.08
|
|
$
|
0.20
|
|
|
|
749,996
|
|
|
|
9.2
|
|
|
$
|
0.20
|
|
|
|
---
|
|
|
$
|
---
|
|
$
|
0.08 to 0.20
|
|
|
|
2,349,996
|
|
|
|
8.9
|
|
|
$
|
0.12
|
|
|
|
100,000
|
|
|
$
|
0.08
|
|
Total stock based compensation recognized
related to option grants was $2,235 and $2,396 during the three months ended September 30, 2017 and 2016. Total stock based compensation
recognized related to option grants was $7,504 and $2,396 during the nine months ended September 30, 2017 and 2016.
A summary of the status of non-vested
options issued pursuant to the EIP as of September 30, 2017 is presented below:
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Grant Date
|
|
|
|
Shares
|
|
|
Fair Value
|
|
Nonvested at January 1, 2017
|
|
|
2,249,996
|
|
|
$
|
0.03
|
|
Granted
|
|
|
---
|
|
|
$
|
---
|
|
Vested
|
|
|
(362,500
|
)
|
|
$
|
---
|
|
Forfeited
|
|
|
---
|
|
|
$
|
---
|
|
Nonvested at September 30, 2017
|
|
|
1,887,496
|
|
|
$
|
0.03
|
|
NOTE 12 – COMMITMENTS AND
CONTINGENCIES
Service contracts
The Company carries various service
contracts on its office buildings & certain copier equipment for repairs, maintenance and inspections. All contracts are short
term and can be cancelled.
Litigation
From time to time, we may become
involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject
to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
We are not aware of any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse
effect on our business, financial condition or operating results.
Leases
The Company has two real estate
leases in Naples, Florida. The Company entered into an operating lease for its main office in Naples, Florida beginning on August
1, 2013 and expiring July 31, 2020. The lease is for a 6901 square-foot space. The base rent for the first full year of the lease
term is $251,287 per annum with increases during the period. The Company entered into another operating lease in the same building
for an additional 361 square feet space for use of the medical equipment for the same period. The base rent for the first full
year of the lease term is $13,140 per annum.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 12 – COMMITMENTS AND
CONTINGENCIES (CONTINUED)
During the nine months ended September
30, 2017, the Company entered into an agreement with MOD pursuant to which the Company will pay rent to MOD in the amount of $2,040
per month for office space in MOD’s facility used by the Company and its employees. The agreement is effective from January
1, 2017 through July 31, 2018. During the three and nine months ended September 30, 2017, the Company recognized rent expense related
to the marketing agreement in the amount of $6,120 and $18,360, respectively, pursuant to this agreement and had prepaid an additional
$4,929 toward future rent as of September 30, 2017.
Total lease expense for the three
months ended September 30, 2017 and 2016 was $77,636 and $78,940, respectively. Total lease expense for the nine months ended September
30, 2017 and 2016 was $217,926 and $266,021, respectively.
Future minimum lease payments (excluding
real estate taxes and maintenance costs) as of September 30, 2017 are as follows:
2017 (October to December)
|
|
$
|
72,227
|
|
2018
|
|
|
281,460
|
|
2019
|
|
|
273,856
|
|
2020
|
|
|
162,055
|
|
2021
|
|
|
---
|
|
|
|
|
|
|
Total
|
|
$
|
789,598
|
|
Employment/Consulting Agreements
The Company has employment agreements
with each of its four physicians. The agreements generally call for a fixed salary at the beginning of the contract with a transaction
to performance based pay later in the contract. The contracts expire at various times through 2019, with early termination available
upon a notice period of 30-90 days during which compensation is paid to the physician but NWC has no further severance obligation.
During 2016, DMD retired from practice to focus on his duties as CEO of HLYK.
On July 1, 2016, HLYK entered into
an employment agreement with Dr. Michael Dent, Chief Executive Officer and a member of the Board of Directors. Dr. Dent’s
employment agreement continues until terminated by Dr. Dent or HLYK. If Dr. Dent’s employment is terminated by HLYK (unless
such termination is “For Cause” as defined in his employment agreement), then upon signing a general waiver and release,
Dr. Dent will be entitled to severance in an amount equal to 12 months of his then-current annual base salary, as well as the pro-rata
portion of any bonus that would be due and payable to him. In the event that Dr. Dent terminates the employment agreement, he shall
be entitled to any accrued but unpaid salary and other benefits up to and including the date of termination, and the pro-rata portion
of any unvested time-based options up until the date of termination.
On July 1, 2016, HLYK entered into
an agreement with Mr. George O’Leary, HLYK’s Chief Financial Officer and a member of the Board of Directors, extending
his prior agreement with the Company. Mr. O’Leary’s employment agreement continues until terminated by Mr. O’Leary
or HLYK. If Mr. O’Leary employment is terminated by HLYK (unless such termination is “For Cause” as defined
in his employment agreement), then upon signing a general waiver and release, Mr. O’Leary will be entitled to receive his
base salary and the Company shall maintain his employee benefits for a period of twelve (12) months beginning on the date of termination.
In the event that Mr. O’Leary terminates the agreement, he shall be entitled to any accrued by unpaid salary and other benefits
up to and including the date of termination.
NOTE 13 – SEGMENT REPORTING
The Company has two reportable segments:
NWC and HLYK. NWC is a multi-specialty medical group including OB/GYN (both Obstetrics and Gynecology), and General Practice. The
practice’s office is located in Naples, Florida. HLYK plans to operate an online personal medical information and record
archive system, the “HealthLynked Network”, which will enable patients and doctors to keep track of medical information
via the Internet in a cloud based system. Patients will complete a detailed online personal medical history including past surgical
history, medications, allergies, and family history. Once this information is entered patients and their treating physicians will
be able to update the information as needed to provide a comprehensive medical history.
The Company evaluates performance
and allocates resources based on profit or loss from operations before income taxes. The accounting policies of the reportable
segments are the same as those described in the summary of significant accounting policies.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 13 – SEGMENT REPORTING (CONTINUED)
Segment information for the three
months ended September 30, 2017 and 2016 was as follows:
|
|
Three Months Ended September 30, 2017
|
|
|
Three Months Ended September 30, 2016
|
|
|
|
NWC
|
|
|
HLYK
|
|
|
Total
|
|
|
NWC
|
|
|
HLYK
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient service revenue, net
|
|
$
|
480,723
|
|
|
$
|
---
|
|
|
$
|
480,723
|
|
|
$
|
499,448
|
|
|
$
|
---
|
|
|
$
|
499,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
345,895
|
|
|
|
160,311
|
|
|
|
506,206
|
|
|
|
347,242
|
|
|
|
85,707
|
|
|
|
432,949
|
|
General and administrative
|
|
|
228,278
|
|
|
|
252,336
|
|
|
|
480,614
|
|
|
|
273,416
|
|
|
|
239,988
|
|
|
|
513,404
|
|
Depreciation and amortization
|
|
|
5,601
|
|
|
|
455
|
|
|
|
6,056
|
|
|
|
5,718
|
|
|
|
---
|
|
|
|
5,718
|
|
Total Operating Expenses
|
|
|
579,774
|
|
|
|
413,102
|
|
|
|
992,876
|
|
|
|
626,376
|
|
|
|
325,695
|
|
|
|
952,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
$
|
(99,051
|
)
|
|
$
|
(413,102
|
)
|
|
$
|
(512,153
|
)
|
|
$
|
(126,928
|
)
|
|
$
|
(325,695
|
)
|
|
$
|
(452,623
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Segment Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
5,723
|
|
|
$
|
21,401
|
|
|
$
|
27,124
|
|
|
$
|
4,442
|
|
|
$
|
8,967
|
|
|
$
|
13,409
|
|
Loss on extinguishment of debt
|
|
$
|
---
|
|
|
$
|
290,581
|
|
|
$
|
290,581
|
|
|
$
|
---
|
|
|
$
|
---
|
|
|
$
|
---
|
|
Financing cost
|
|
$
|
---
|
|
|
$
|
32,324
|
|
|
$
|
32,324
|
|
|
$
|
---
|
|
|
$
|
---
|
|
|
$
|
---
|
|
Amortization of original issue and debt discounts on convertible notes
|
|
$
|
---
|
|
|
$
|
63,552
|
|
|
$
|
63,552
|
|
|
$
|
---
|
|
|
$
|
100,187
|
|
|
$
|
100,187
|
|
Proceeds from settlement of lawsuit
|
|
$
|
---
|
|
|
$
|
---
|
|
|
$
|
---
|
|
|
$
|
38,236
|
|
|
$
|
---
|
|
|
$
|
38,236
|
|
Change in fair value of derivative financial instruments
|
|
$
|
---
|
|
|
$
|
5,412
|
|
|
$
|
5,412
|
|
|
$
|
---
|
|
|
$
|
---
|
|
|
$
|
---
|
|
|
|
As of September 30, 2017
|
|
|
As of December 31, 2016
|
|
Identifiable assets
|
|
$
|
217,344
|
|
|
$
|
151,538
|
|
|
$
|
368,882
|
|
|
$
|
240,115
|
|
|
$
|
89,396
|
|
|
$
|
329,511
|
|
During the three months ended September
30, 2017, HLYK recognized revenue of $2,377 related to subscription revenue billed to and paid for by NWC physicians for access
to the HealthLynked Network, which the Company test-launched during the third quarter of 2017. The revenue for HLYK and related
expense for NWC were eliminated on consolidation.
HEALTHLYNKED CORPORATION
(FORMERLY KNOWN AS NAPLES WOMEN’S
CENTER)
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2017 AND 2016
(UNAUDITED)
NOTE 13 – SEGMENT REPORTING (CONTINUED)
Segment information for the nine
months ended September 30, 2017 and 2016 was as follows:
|
|
Nine Months Ended September 30, 2017
|
|
|
Nine Months Ended September 30, 2016
|
|
|
|
NWC
|
|
|
HLYK
|
|
|
Total
|
|
|
NWC
|
|
|
HLYK
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient service revenue, net
|
|
$
|
1,473,639
|
|
|
$
|
---
|
|
|
$
|
1,473,639
|
|
|
$
|
1,515,293
|
|
|
$
|
---
|
|
|
$
|
1,515,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
1,025,333
|
|
|
|
443,878
|
|
|
|
1,469,211
|
|
|
|
1,001,838
|
|
|
|
132,235
|
|
|
|
1,134,073
|
|
General and administrative
|
|
|
619,112
|
|
|
|
749,906
|
|
|
|
1,369,018
|
|
|
|
825,603
|
|
|
|
322,961
|
|
|
|
1,148,564
|
|
Depreciation and amortization
|
|
|
16,858
|
|
|
|
765
|
|
|
|
17,623
|
|
|
|
15,804
|
|
|
|
---
|
|
|
|
15,804
|
|
Total Operating Expenses
|
|
|
1,661,303
|
|
|
|
1,194,549
|
|
|
|
2,855,852
|
|
|
|
1,843,245
|
|
|
|
455,196
|
|
|
|
2,298,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
$
|
(187,664
|
)
|
|
$
|
(1,194,549
|
)
|
|
$
|
(1,382,213
|
)
|
|
$
|
(327,952
|
)
|
|
$
|
(455,196
|
)
|
|
$
|
(783,148
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Segment Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
17,086
|
|
|
$
|
47,835
|
|
|
$
|
64,921
|
|
|
$
|
15,424
|
|
|
$
|
8,967
|
|
|
$
|
24,391
|
|
Loss on extinguishment of debt
|
|
$
|
---
|
|
|
$
|
290,581
|
|
|
$
|
290,581
|
|
|
$
|
---
|
|
|
$
|
---
|
|
|
$
|
---
|
|
Financing cost
|
|
$
|
---
|
|
|
$
|
32,324
|
|
|
$
|
32,324
|
|
|
$
|
---
|
|
|
$
|
---
|
|
|
$
|
---
|
|
Amortization of original issue and debt discounts on convertible notes
|
|
$
|
---
|
|
|
$
|
194,120
|
|
|
$
|
194,120
|
|
|
$
|
---
|
|
|
$
|
100,187
|
|
|
$
|
---
|
|
Proceeds from settlement of lawsuit
|
|
$
|
---
|
|
|
$
|
---
|
|
|
$
|
---
|
|
|
$
|
38,236
|
|
|
$
|
---
|
|
|
$
|
38,236
|
|
Change in fair value of derivative financial instruments
|
|
$
|
---
|
|
|
$
|
5,412
|
|
|
$
|
5,412
|
|
|
$
|
---
|
|
|
$
|
---
|
|
|
$
|
---
|
|
During the nine months ended September
30, 2017, HLYK recognized revenue of $2,377 related to subscription revenue billed to and paid for by NWC physicians for access
to the HealthLynked Network, which the Company test-launched during the third quarter of 2017. The revenue for HLYK and related
expense for NWC were eliminated on consolidation.
NOTE 14 – SUBSEQUENT EVENTS
On October 5, 2017, the Company
sold 211,111 shares of common stock, as well as a five-year warrant to purchase an additional 126,666 shares at an exercise price
of $0.30 per share, to one investor. The Company received $38,000 in proceeds from the sale. The shares were issued at a share
price of $0.18 per share.
On October 18, 2017, the Company
sold 250,000 shares of common stock, as well as a five-year warrant to purchase an additional 166,666 shares at an exercise price
of $0.30 per share, to one investor. The Company received $50,000 in proceeds from the sale. The shares were issued at a share
price of $0.20 per share.
On October 23, 2017, the Company entered into a securities
purchase agreement for the sale of a $53,000 convertible note to PULG. The note has an interest rate of 10% and a default interest
rate of 22%. The note may be converted into common stock of the Company by the holder at any time following 180 days after the
issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 39% discount to the
average of the three (3) lowest closing bid prices during the fifteen (15) trading days prior to the conversion date. Upon an event
of default caused by the Company’s failure to deliver shares upon a conversion pursuant to the terms of the note, 300% of
the outstanding principal and any interest due amount shall be immediately due. Upon an event of default caused by the Company’s
breach of any other events of default specified in the note, 150% of the outstanding principal and any interest due amount shall
be immediately due.
On October 27, 2017, the Company
entered into a securities purchase agreement for the sale of a $171,500 convertible note to an individual lender. Net proceeds
to the Company were $150,000. The note has an interest rate of 10% and a default interest rate of 22%. The note may be converted
into common stock of the Company by the holder at any time following 180 days after the issuance date, subject to a 4.99% beneficial
ownership limitation, at a conversion price per share equal to a 35% discount to the lowest closing bid price during the twenty
(20) trading days prior to the conversion date. Upon an event of default caused by the Company’s failure to deliver shares
upon a conversion pursuant to the terms of the note, 300% of the outstanding principal and any interest due amount shall be immediately
due. Upon an event of default caused by the Company’s breach of any other events of default specified in the note, 150%
of the outstanding principal and any interest due amount shall be immediately due.
On November 1, 2017, the Company sold 1,000,000 shares
of common stock, par value $0.0001, to an accredited investor at a purchase price of $0.20 per share. Net proceeds to the Company
were $200,000. The investor was also granted a five-year warrant to purchase 666,666 shares of the Company’s common stock
at an exercise price of $0.30 per share.