Quarterly Report (10-q)

Date : 05/15/2019 @ 9:26PM
Source : Edgar (US Regulatory)
Stock : Healthlynked Corp. (QB) (HLYK)
Quote : 0.208  0.0069 (3.43%) @ 9:30PM

Quarterly Report (10-q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10–Q

 

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2019

 

or

 

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

 

For the transition period from [               ] to [                ]

 

Commission file number: 000-55768

 

HealthLynked Corp.
(Exact name of registrant as specified in its charter)
     
Nevada   47-1634127
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
     
1726 Medical Blvd Suite 101, Naples, Florida 34110
(Address of principal executive offices)
 
239-513-1992
(Registrant’s telephone number, including area code)
 
 
(Former name, former address and former fiscal year, if changed since last report)

 

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

 

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

 

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

 

Large accelerated filer ☐  Accelerated filer ☐ 
Non-accelerated filer ☒  Smaller reporting company ☒ 
    Emerging growth company ☒ 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common stock   HLYK   OTCQB

 

As of May 13, 2019, there were 98,163,226 shares of the issuer’s common stock, par value $0.0001, outstanding.

 

 

 

 

 

 

TABLE OF CONTENTS

 

    PAGE NO.
     
PART I FINANCIAL INFORMATION 1
Item 1 Financial Statements (Unaudited) 1
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations 30
Item 3 Quantitative and Qualitative Disclosures about Market Risk 41
Item 4 Controls and Procedures 41
     
Part II OTHER INFORMATION 42
Item 1 Legal Proceedings 42
Item 1A Risk Factors 42
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 42
Item 3 Defaults upon Senior Securities 42
Item 4 Mine Safety Disclosure 42
Item 5 Other Information 42
Item 6 Exhibits 43

 

i

 

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HEALTHLYNKED CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

    March 31,     December 31,  
    2019     2018  
ASSETS   (unaudited)        
Current Assets            
Cash   $ 514,309     $ 135,778  
Accounts receivable, net of allowance for doubtful accounts of $13,972 and $13,972 as of March 31, 2019 and December 31, 2018, respectively     106,905       114,884  
Prepaid expenses     18,639       28,542  
Deferred offering costs     57,609       96,022  
Total Current Assets     697,462       375,226  
Property, plant and equipment, net of accumulated depreciation of $683,494 and $752,173 as of March 31, 2019 and December 31, 2018, respectively     23,837       42,597  
ROU lease assets, long term portion and deposits     364,987       9,540  
                 
Total Assets   $ 1,086,286     $ 427,363  
                 
LIABILITIES AND SHAREHOLDERS’ DEFICIT                
                 
Current Liabilities                
Accounts payable and accrued expenses   $ 447,096     $ 394,333  
Capital lease, current portion     ---       19,877  
Lease liability, current portion     266,130       ---  
Due to related party, current portion     446,276       429,717  
Notes payable to related party, current portion     678,329       672,471  
Convertible notes payable, net of original issue discount and debt discount of $363,089 and $386,473 as of March 31, 2019 and December 31, 2018, respectively     1,057,315       1,042,314  
Derivative financial instruments     580,855       800,440  
Total Current Liabilities     3,476,001       3,359,152  
                 
Long-Term Liabilities                
Capital leases, long-term portion     ---       3,058  
Lease liability, long term portion     90,387       ---  
                 
Total Liabilities     3,566,388       3,362,210  
                 
Shareholders’ Deficit                
Common stock, par value $0.0001 per share, 500,000,000 shares authorized, 93,577,019 and 85,178,902 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively     9,358       8,518  
Common stock issuable, $0.0001 par value; 205,301 and 114,080 shares as of March 31, 2019 and December 31, 2018, respectively     46,097       26,137  
Additional paid-in capital     9,026,215       7,531,553  
Accumulated deficit     (11,561,772 )     (10,501,055 )
Total Shareholders’ Deficit     (2,480,102 )     (2,934,847 )
                 
Total Liabilities and Shareholders’ Deficit   $ 1,086,286     $ 427,363  

 

See the accompanying notes to these Unaudited Condensed Consolidated Financial Statements

 

1

 

 

HEALTHLYNKED CORP.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

 

    Three Months Ended
March 31,
 
    2019     2018  
Revenue            
Patient service revenue, net   $ 464,990     $ 645,639  
                 
Operating Expenses                
Salaries and benefits     529,225       560,856  
General and administrative     757,356       574,828  
Depreciation and amortization     1,655       6,029  
Total Operating Expenses     1,288,236       1,141,713  
                 
Loss from operations     (823,246 )     (496,074 )
                 
Other Income (Expenses)                
Loss on extinguishment of debt     (139,798 )     (325,223 )
Change in fair value of debt     (29,697 )     (57,946 )
Financing cost     (33,903 )     (192,062 )
Amortization of original issue and debt discounts on notes payable and convertible notes     (179,384 )     (154,835 )
Change in fair value of derivative financial instrument     191,633       (14,621 )
Interest expense     (46,322 )     (40,347 )
Total other expenses     (237,471 )     (785,034 )
                 
Net loss before provision for income taxes     (1,060,717 )     (1,281,108 )
                 
Provision for income taxes     ---       ---  
                 
Net loss   $ (1,060,717 )   $ (1,281,108 )
                 
Net loss per share, basic and diluted:                
Basic   $ (0.01 )   $ (0.02 )
Fully diluted   $ (0.01 )   $ (0.02 )
                 
Weighted average number of common shares:                
Basic     88,506,930       72,907,455  
Fully diluted     88,506,930       72,907,455  

 

See the accompanying notes to these Unaudited Condensed Consolidated Financial Statements

 

2

 

 

HEALTHLYNKED CORP.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT

THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(UNAUDITED)

 

    Number of Shares           Common     Additional           Total  
    Common     Common     Stock     Paid-in     Accumulated     Shareholders’  
    Stock     Stock     Issuable     Capital     Deficit     Deficit  
    (#)     ($)     ($)     ($)     ($)     ($)  
Balance at December 31, 2018     85,178,902       8,518       26,137       7,531,553       (10,501,055 )     (2,934,847 )
                                                 
Sale of common stock     3,261,978       326       ---       693,832       ---       694,158  
Fair value of warrants allocated to proceeds of common stock     ---       ---       ---       139,068       ---       139,068  
Shares issued with convertible notes payable     28,000       3       ---       4,673       ---       4,676  
Fair value of warrants issued for professional services     ---       ---       ---       54,257       ---       54,257  
Conversion of convertible notes payable to common stock     2,512,821       251       ---       534,980       ---       535,231  
Consultant fees payable with common shares and warrants     270,000       27       19,960       6,850       ---       26,837  
Shares and options issued pursuant to employee equity incentive plan     113,750       12       ---       61,223       ---       61,235  
Exercise of stock warrants     2,098,427       210       ---       (210 )     ---       ---  
Exercise of stock options     113,141       11       ---       (11 )     ---       ---  
Net loss     ---       ---       ---       ---       (1,060,717 )     (1,060,717 )
                                                 
Balance at March 31, 2019     93,577,019       9,358       46,097       9,026,215       (11,561,772 )     (2,480,102 )

 

    Number of Shares           Common     Additional           Total  
    Common     Common     Stock     Paid-in     Accumulated     Shareholders’  
    Stock     Stock     Issuable     Capital     Deficit     Deficit  
    (#)     ($)     ($)     ($)     ($)     ($)  
Balance at December 31, 2017     72,302,937       7,230       8,276       2,638,311       (4,705,230 )     (2,051,413 )
                                                 
Sale of common stock     631,204       63       236       133,312       ---       133,611  
Fair value of warrants allocated to proceeds of common stock     ---       ---       ---       117,956       ---       117,956  
Fair value of warrants issued to extend related party notes payable     ---       ---       ---       337,467       ---       337,467  
Fair value of warrants issued to extend convertible notes payable     ---       ---       ---       10,199       ---       10,199  
Consultant fees payable with common shares and warrants     ---       ---       5,287       ---       ---       5,287  
Shares and options issued pursuant to employee equity incentive plan     75,000       8       (8 )     5,577       ---       5,577  
Net loss     ---       ---       ---       ---       (1,281,108 )     (1,281,108 )
                                                 
Balance at March 31, 2018     73,009,141       7,301       13,791       3,242,822       (5,986,338 )     (2,722,424 )

 

See the accompanying notes to these Unaudited Condensed Consolidated Financial Statements

 

3

 

 

HEALTHLYNKED CORP.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

 

    Three Months Ended
March 31,
 
    2019     2018  
Cash Flows from Operating Activities            
Net loss   $ (1,060,717 )   $ (1,281,108 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation     1,655       6,029  
Stock based compensation, including amortization of prepaid fees     180,741       23,666  
Amortization of original issue discount and debt discount on convertible notes     179,384       154,835  
Financing cost     33,903       192,062  
Change in fair value of derivative financial instrument     (191,633 )     14,621  
Loss on extinguishment of debt     139,798       325,223  
Change in fair value of debt     29,697       57,946  
Changes in operating assets and liabilities:                
Accounts receivable     7,979       (36,174 )
Prepaid expenses and deposits     9,903       12,575  
Accounts payable and accrued expenses     51,237       90,336  
Lease liability     1,070       ---  
Due to related party, current portion     16,590       15,835  
Net cash used in operating activities     (600,393 )     (424,154 )
                 
Cash Flows from Investing Activities                
Acquisition of property and equipment     (4,302 )     (201 )
Net cash used in investing activities     (4,302 )     (201 )
                 
Cash Flows from Financing Activities                
Proceeds from sale of common stock     833,226       251,568  
Proceeds from issuance of convertible notes     150,000       325,000  
Repayment of convertible notes     ---       (209,682 )
Proceeds from related party loans     ---       101,450  
Repayment of related party loans     ---       (9,000 )
Repayment of notes payable and bank loans     ---       (52,619 )
Payments on capital leases     ---       (3,058 )
Net cash provided by financing activities     983,226       403,659  
                 
Net increase (decrease) in cash     378,531       (20,696 )
Cash, beginning of period     135,778       50,006  
                 
Cash, end of period   $ 514,309     $ 29,310  
                 
Supplemental disclosure of cash flow information:                
Cash paid during the period for interest   $ 830     $ 7,117  
Cash paid during the period for income tax   $ ---     $ ---  
Schedule of non-cash investing and financing activities:                
Fair value of beneficial conversion feature and original issue discount allocated to proceeds of convertible notes payable   $ 179,227     $ ---  
Common stock issuable issued during period   $ 4,483     $ 8  
Fair of warrants issued for professional service   $ 14,743     $ ---  
Conversion of convertible note payable to common shares   $ 535,231     $ ---  
Fair value of common shares issued with convertible notes payable   $ 4,676     $ ---  
Cashless exercise of options and warrants   $ 222     $ ---  
Adoption of lease obligation and ROU asset   $ 417,317     $ ---  
Fair value of beneficial conversion feature and original issue discount allocated to proceeds of convertible note payable   $ ---       325,000  
Fair value of warrants issued to extend maturity date of convertible notes payable   $ ---     $ 10,199  
Fair value of warrants issued to extend related party notes payable   $ ---     $ 337,466  
Derivative liabilities written off with repayment of convertible notes payable   $ ---     $ 160,850  

 

See the accompanying notes to these Unaudited Condensed Consolidated Financial Statements

 

4

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 1 - BUSINESS AND BUSINESS PRESENTATION

 

HealthLynked Corp., a Nevada corporation (the “Company” or “HLYK”) filed its Articles of Incorporation on August 4, 2014 with the Secretary of State of Nevada. 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 February 5, 2018, the Company filed an amendment with the Secretary of State of Nevada to increase the amount of authorized shares of common stock to 500,000,000 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.

 

On June 28, 2018, the Company formed wholly-owned subsidiary HLYK FL LLC (“Merger Sub”) to act as the acquiring entity in the acquisition of Hughes Center for Functional Medicine, P.A. (the “HCFM”). The acquisition of HCFM was completed on April 12, 2019. See “Note 15 – SUBSEQUENT EVENTS.” Merger Sub did not have any material activity since its inception or during the three months ended March 31, 2019.

 

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, 2018 and 2017, respectively, which are included in the Company’s Form 10-K filed with the United States Securities and Exchange Commission on April 1, 2019. 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 months ended March 31, 2019 are not necessarily indicative of results for the entire year ending December 31, 2019.

 

All significant intercompany transactions and balances have been eliminated upon consolidation. In addition, certain amounts in the prior periods’ consolidated financial statements have been reclassified to conform to the current period presentation.

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

A summary of the significant accounting policies applied in the presentation of the accompanying consolidated financial statements follows:

 

Basis of Presentation

 

The accompanying 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 unaudited condensed consolidated financial statements are in United States Dollars ($) unless stated otherwise.

 

5

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

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 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, borrowing rate consideration for ROU lease assets including related lease liability and useful life of fixed assets.

 

Adopted Accounting Pronouncements

 

Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (“ASU 2016-02”) using the required modified retrospective approach. ASU 2016-02 requires lessees to record most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current accounting. See discussion below under the caption “Leases” in this Note 2 and in Note 7 for more detail on the Company’s accounting policy with respect to lease accounting.

 

Effective January 1, 2019, the Company adopted ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees and supersedes the guidance in Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. The adoption of this guidance did not materially impact the Company’s financial statements and related disclosures .

 

Patient Service Revenue

 

Patient service revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient care. These amounts are due from patients and third-party payors (including health insurers and government programs) and includes variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations. Generally, the Company bills patients and third-party payors within days after the services are performed and/or the patient is discharged from the facility. Revenue is recognized as performance obligations are satisfied.

 

Performance obligations are determined based on the nature of the services provided by the Company. Revenue for performance obligations satisfied over time is recognized based on actual charges incurred in relation to total expected charges. The Company believes that this method provides a faithful depiction of the transfer of services over the term of the performance obligation based on the inputs needed to satisfy the obligation. Revenue for performance obligations satisfied at a point in time is recognized when goods or services are provided and the Company does not believe it is required to provide additional goods or services to the patient.

 

The Company determines the transaction price based on standard charges for goods and services provided, reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients in accordance with the Company’s policy, and/or implicit price concessions provided to uninsured patients. The Company determines its estimates of contractual adjustments and discounts based on contractual agreements, its discount policies, and historical experience. The Company determines its estimate of implicit price concessions based on its historical collection experience with this class of patients.

 

Agreements with third-party payors typically provide for payments at amounts less than established charges. A summary of the payment arrangements with major third-party payors follows:

 

  Medicare: Certain inpatient acute care services are paid at prospectively determined rates per discharge based on clinical, diagnostic and other factors. Certain services are paid based on cost-reimbursement methodologies subject to certain limits. Physician services are paid based upon established fee schedules. Outpatient services are paid using prospectively determined rates.

 

  Medicaid: Reimbursements for Medicaid services are generally paid at prospectively determined rates per discharge, per occasion of service, or per covered member.

 

  Other: Payment agreements with certain commercial insurance carriers, health maintenance organizations, and preferred provider organizations provide for payment using prospectively determined rates per discharge, discounts from established charges, and prospectively determined daily rates.

 

6

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Laws and regulations concerning government programs, including Medicare and Medicaid, are complex and subject to varying interpretation. As a result of investigations by governmental agencies, various health care organizations have received requests for information and notices regarding alleged noncompliance with those laws and regulations, which, in some instances, have resulted in organizations entering into significant settlement agreements. Compliance with such laws and regulations may also be subject to future government review and interpretation as well as significant regulatory action, including fines, penalties, and potential exclusion from the related programs. There can be no assurance that regulatory authorities will not challenge the Company’s compliance with these laws and regulations, and it is not possible to determine the impact, if any, such claims or penalties would have upon the Company. In addition, the contracts the Company has with commercial payors also provide for retroactive audit and review of claims.

 

Settlements with third-party payors for retroactive adjustments due to audits, reviews or investigations are considered variable consideration and are included in the determination of the estimated transaction price for providing patient care. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved. Estimated settlements are adjusted in future periods as adjustments become known, or as years are settled or are no longer subject to such audits, reviews, and investigations.

 

The Company also provides services to uninsured patients, and offers those uninsured patients a discount, either by policy or law, from standard charges. The Company estimates the transaction price for patients with deductibles and coinsurance and from those who are uninsured based on historical experience and current market conditions. The initial estimate of the transaction price is determined by reducing the standard charge by any contractual adjustments, discounts, and implicit price concessions. Subsequent changes to the estimate of the transaction price are generally recorded as adjustments to patient service revenue in the period of the change.

 

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 47% of total billings. Trade accounts receivable are recorded at this net amount. As of March 31, 2019 and December 31, 2018, the Company’s gross accounts receivable were $227,943 and $244,956, respectively, and net accounts receivable were $106,905 and $114,884, respectively, based upon net reporting of accounts receivable. As of March 31, 2019 and December 31, 2018, the Company’s allowance of doubtful accounts was $13,972 and $13,972, respectively.

 

Leases

 

Upon transition under ASU 2016-02, the Company elected the suite of practical expedients as a package applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases. For new leases, the Company will determine if an arrangement is or contains a lease at inception. Leases are included as right-of-use (“ROU”) assets within other assets and ROU liabilities within accrued expenses and other liabilities and within other long-term liabilities on the Company’s condensed consolidated balance sheets.

 

7

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company’s leases do not provide an implicit rate. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

 

Adoption of ASU 2016-02 had an impact of $355,447 and $356,517 million on the Company’s assets and liabilities, respectively, and had no material impact on cash provided by or used in operating, investing or financing activities on the Company’s unaudited condensed consolidated statements of cash flows.

 

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 March 31, 2019 and December 31, 2018.  

 

Convertible Notes

 

Convertible notes are regarded as compound instruments, consisting of a liability component and an equity component. The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized as additional paid-in capital and included in equity, net of income tax effects, and is not subsequently remeasured. After initial measurement, they are carried at amortized cost using the effective interest method. Convertible notes for which the maturity date has been extended and that qualify for debt extinguishment treatment are recorded at fair value on the extinguishment date and then revalue at the end of each reporting period, with the change recorded to the statement of operations under “Change in Fair Value of Debt.”

 

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.

 

8

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

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.

 

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.

 

9

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Income Taxes

 

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse and are considered immaterial. No Income Tax has been provided for the three months ended March 31, 2019, since the Company has sustained a loss for the period. Due to the uncertainty of the utilization and recoverability of the loss carry-forwards (including the three months ended March 31, 2019) and other deferred tax assets, management has determined a full valuation allowance for the deferred tax assets, since it is more likely than not that the deferred tax assets will not be realizable.

 

Recurring Fair Value Measurements

 

The carrying value of the Company’s financial assets and financial liabilities is their cost, which may differ from fair value. The carrying value of cash held as demand deposits, money market and certificates of deposit, marketable investments, accounts receivable, short-term borrowings, accounts payable, accrued liabilities, and derivative financial instruments approximated their fair value.

 

Net Loss per Share  

 

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. During the three months ended March 31, 2019 and 2018, 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 March 31, 2019 and December 31, 2018, potentially dilutive securities were comprised of (i) 45,058,874 and 46,161,463 warrants outstanding, respectively, (ii) 3,549,250 and 3,707,996 stock options outstanding, respectively, (iii) 10,346,866 and 15,517,111 shares issuable upon conversion of convertible notes, respectively, and (iv) 463,750 and 565,000 unissued shares subject to future vesting requirements granted pursuant to the Company’s Employee Incentive Plan.  

 

Common stock awards

 

The Company grants common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided or the fair value of the awards granted, whichever is more reliably measurable. The fair value measurement date of these awards is generally the date the performance of services is complete. The fair value of the awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the settlement of services provided by non-employees is recorded on the consolidated statement of comprehensive loss in the same manner and charged to the same account as if such settlements had been made in cash.

 

Warrants

 

In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense over the requisite service period or at the date of issuance, if there is not a service period. Warrants granted in connection with ongoing arrangements are more fully described in Note 11, Shareholders’ Deficit .

 

10

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Business Segments

 

The Company uses the “management approach” to identify its reportable segments. The management approach designates the internal organization used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. Using the management approach, the Company determined that it has two operating segments: NWC (multi-specialty medical group including OB/GYN and General Practice) and HLYK (develops and markets the “HealthLynked Network,” an online personal medical information and record archive system).

 

NOTE 3 – GOING CONCERN MATTERS AND LIQUIDITY

 

As of March 31, 2019, the Company had a working capital deficit of $2,778,539 and accumulated deficit $11,561,772. For the three months ended March 31, 2019, the Company had a net loss of $1,060,717 and net cash used by operating activities of $600,393. Net cash used in investing activities was $4,302. Net cash provided by financing activities was $983,226, resulting principally from $833,226 proceeds from the sale of common stock and $150,000 net proceeds from the issuance of convertible notes.

 

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.

 

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 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 July 2016, HLYK 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 three months ended March 31, 2019, the Company received $493,226 from the proceeds of the sale of 2,128,644 shares pursuant to the Investment Agreement.

 

NOTE 4 – DEFERRED OFFERING COSTS AND PREPAID EXPENSES

 

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.”

 

11

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 4 – DEFERRED OFFERING COSTS AND PREPAID EXPENSES (CONTINUED)

 

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.

 

This fair value of the warrants described above 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 months ended March 31, 2019 and 2018, the Company recognized $12,802 and $12,802, respectively, in general and administrative expense related to the cost of the warrants.

 

Prepaid Expenses

 

On December 6, 2018, the Company granted additional three-year warrants to purchase 240,000 shares at an exercise price of $0.20 per share to two advisors for services to be provided over a three-month period. The fair value of the warrants was calculated using the Black-Scholes pricing model at $35,462, with the following assumptions: risk-free interest rate of 2.76%, expected life of 3 years, volatility of 285.22%, and expected dividend yield of zero. The Company recognized $25,611 and $-0- in the three months ended March 31, 2019 and 2018, respectively, to general and administrative expense related to the cost of the warrants.

 

NOTE 5 – PROPERTY, PLANT, AND EQUIPMENT

 

Property, plant and equipment at March 31, 2019 and December 31, 2018 are as follows:

 

    March 31,     December 31,  
    2019     2018  
             
Capital Lease equipment   $ 251,752     $ 343,492  
Telephone equipment     12,308       12,308  
Furniture, Transport and Office equipment     443,271       438,970  
                 
Total Property, plant and equipment     707,331       794,770  
Less: accumulated depreciation     (683,494 )     (752,173 )
                 
Property, plant and equipment, net   $ 23,837     $ 42,597  

 

Depreciation expense during the three months ended three months ended March 31, 2019 and 2018 was $1,655 and $6,029, respectively.

 

12

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 6 – NOTES PAYABLE AND OTHER AMOUNTS DUE TO RELATED PARTY

 

Amounts due to related parties as of March 31, 2019 and December 31, 2018 were comprised of the following:

 

    March 31,     December 31,  
    2019     2018  
Due to related party:            
Deferred compensation, Dr. Michael Dent   $ 300,600     $ 300,600  
Accrued interest payable to Dr. Michael Dent     145,676       129,117  
Total due to related party   $ 446,276     $ 429,717  
                 
Notes payable to related party:                
Notes payable to Dr. Michael Dent, current portion   $ 678,329     $ 672,471  

 

Notes Payable to 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. All principal and interest is due at maturity of the $750k DMD Note on December 31, 2019. Interest accrued on the $750k DMD Note as of March 31, 2019 and December 31, 2018 was $72,687 and $66,859, respectively.

 

The carrying values of notes payable to Dr. Michael Dent as of March 31, 2019 and December 31, 2018 were as follows:

 

              Interest     March 31,     December 31,  
Inception Date   Maturity Date   Borrower     Rate     2019     2018  
January 12, 2017   January 13, 2019   HLYK       10 %   $ 41,750 *   $ 40,560 *
January 18, 2017   January 19, 2019   HLYK       10 %     23,827 *     23,165 *
January 24, 2017   January 15, 2019   HLYK       10 %     59,491 *     57,839 *
February 9, 2017   February 10, 2019   HLYK       10 %     35,574 *     34,586 *
April 20, 2017   April 21, 2019   HLYK       10 %     11,681 *     11,357 *
June 15, 2017   June 16, 2019   HLYK       10 %     37,506 *     36,464 *
August 17, 2017   August 18, 2018   HLYK       10 %     20,000       20,000  
August 24, 2017   August 25, 2018   HLYK       10 %     37,500       37,500  
September 7, 2017   September 8, 2018   HLYK       10 %     35,000       35,000  
September 21, 2017   September 22, 2018   HLYK       10 %     26,500       26,500  
September 29, 2017   September 30, 2018   HLYK       10 %     12,000       12,000  
December 21, 2017   December 22, 2018   HLYK       10 %     14,000       14,000  
January 8, 2018   January 9, 2019   HLYK       10 %     75,000       75,000  
January 11, 2018   January 12, 2019   HLYK       10 %     9,000       9,000  
January 26, 2018   January 27, 2019   HLYK       10 %     17,450       17,450  
January 3, 2014   December 31, 2018   NWC       10 %     222,050       222,050  
                                   
                      $ 678,329     $ 672,471  

 

* - Denotes that note payable is carried at fair value

 

On July 18, 2018, in connection with a $2,000,000 private placement by a third-party investor, Dr. Dent agreed to extend the maturity date on all of the above notes until December 31, 2019. Interest accrued on the above unsecured promissory notes as of March 31, 2019 and December 31, 2018 was $73,020 and $62,258, respectively.

 

13

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 6 – NOTES PAYABLE AND OTHER AMOUNTS DUE TO RELATED PARTY (CONTINUED)

 

On February 12, 2018, the Company issued a warrant to purchase 6,678,462 shares of common stock to DMD as an inducement to (i) extend the maturity dates of up to $439,450 loaned by Dr. Dent to the Company in 2017 and 2018 in the form of unsecured promissory notes, including $75,000 loaned from Dr. Dent to the Company in January 2018 to allow the Company to retire an existing convertible promissory note payable to Power-up Lending Group Ltd. before such convertible promissory note became eligible for conversion, and (ii) provide continued loans to the Company. The warrant is immediately exercisable at an exercise price of $0.065 per share, subject to adjustment, and expires five years after the date of issuance. The fair value of the warrants was calculated using the Black-Scholes pricing model at $337,466, with the following assumptions: risk-free interest rate of 2.56%, expected life of 5 years, volatility of 268.90%, and expected dividend yield of zero. On March 28, 2018, DMD agreed to extend the maturity dates of promissory notes with an aggregate face value of $177,500, which were originally scheduled to mature before September 30, 2018, by one year from the original maturity date. Because the fair value of the warrants was greater than 10% of the present value of the remaining cash flows under the modified promissory notes, the transaction was treated as a debt extinguishment and reissuance of new debt instruments pursuant to the guidance of ASC 470-50 “Debt – Modifications and Extinguishments” (“ASC 470-50”). A loss on debt extinguishment was recorded in the amount of $348,938, equal to the fair value of the warrants of $337,466, plus the excess of $11,472 of the fair value of the reissued debt instruments over the carrying value of the existing debt instruments. The change in fair value of the reissued debt instruments subsequent to the reissuance date was $5,828 and $3,449 in the three months ended three months ended March 31, 2019 and 2018, respectively, and is included on the statement of operations in “Change in fair value of debt.”

 

MedOffice Direct

 

During 2017, the Company entered into an agreement with MedOffice Direct (“MOD”), a company majority-owned by the Company’s CEO and largest shareholder, Dr. Michael Dent, pursuant to which the Company agreed to 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 for the period from January 1, 2017 through July 31, 2018. The agreement terminated on July 31, 2018. During the three months ended March 31, 2019 and 2018, the Company recognized rent expense to MOD in the amount of $-0- and $6,120, respectively, pursuant to this agreement.

 

During 2017, the Company entered into a separate Marketing Agreement with MOD pursuant to which MOD agreed to market the HealthLynked Network to its physician practice clients, in exchange for a semi-annual fee of $25,000. This agreement was terminated effective April 1, 2018. During the three months ended March 31, 2019 and 2018, the Company recognized general and administrative expense in the amount of $-0- and $12,500, respectively, pursuant to this agreement. On July 1, 2018 HLYK and MOD signed a marketing and service agreement pursuant to which HLYK will include MOD offering as part of its product offering to Physicians and HLYK will receive 8% of revenue for new sales related to MOD products sold through the HLYK network.

 

NOTE 7 – LEASES

 

The Company has two operating leases for office space and equipment that expire in July 2020. The Company’s weighted-average remaining lease term relating to its operating leases is 1.3 years, with a weighted-average discount rate of 11.71%. The Company is also lessee in a capital equipment finance lease for medical equipment entered into in March 2015 and expiring in March 2020. The Company’s weighted-average remaining lease term relating to its financing lease is 1.0 years, with a weighted-average discount rate of 9.38%. The Company’s lease agreements generally do not provide an implicit borrowing rate, therefore an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments.

 

The table below summarizes the Company’s lease-related assets and liabilities as of March 31, 2019:

 

    As of March 31, 2019  
    Operating     Financing     Total  
    Leases     Leases     Leases  
Lease assets   $ 338,126     $ 17,321     $ 355,447  
                         
Lease liabilities                        
Lease liabilities (short term)   $ 248,809     $ 17,321     $ 266,130  
Lease liabilities (long term)     90,387       ---       90,387  
Total lease liabilities   $ 339,196     $ 17,321     $ 356,517  

 

14

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 7 – LEASES (CONTINUED)

 

The Company incurred lease expense of $73,415 for the three months ended March 31, 2019, of which $68,828 related to operating leases and $4,587 related to financing leases.

 

Maturities of operating lease liabilities were as follows as of March 31, 2019:

 

    Operating     Capital     Total  
    Leases     Leases     Commitments  
2019 (April through December)   $ 206,098     $ 13,761     $ 219,859  
2020     162,055       4,587       166,642  
2021     ---       ---       ---  
2022     ---       ---       ---  
2023     ---       ---       ---  
Total lease payments     368,153       18,348       386,501  
Less interest     (28,957 )     (1,027 )     (29,984 )
Present value of lease liabilities   $ 339,196     $ 17,321     $ 356,517  

 

NOTE 8 – NOTES PAYABLE

 

On December 20, 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 $75,000 before closing fees (the “December MCA”). The Company is required to repay the advance, which acts like an ordinary note payable, at the rate of $4,048 per week until the balance of $102,000, which was scheduled for June 2018. At inception, the Company recognized a note payable in the amount of $102,000 and a discount against the note payable of $28,500. The discount was being amortized over the life of the instrument. During the three months ended March 31, 2019 and 2018, the Company made installment payments of $-0- and $52,619, respectively, on the December MCA. During the three months ended March 31, 2019 and 2018, the Company recognized amortization of the discount in the amount of $-0- and $14,574, respectively. The December MCA was repaid on June 1, 2018.

 

NOTE 9 –CONVERTIBLE NOTES PAYABLE

 

Convertible notes payable as of March 31, 2019 and December 31, 2018 are comprised of the following:

 

    March 31,     December 31,  
    2019     2018  
             
$550k Note - July 2016   $ 611,651 *   $ 594,813  
$50k Note - July 2016     62,019 *     60,312  
$111k Note - May 2017     128,734 *     125,190  
$171.5k Note - October 2017     ---       186,472  
$103k Note I - October 2018     103,000       103,000  
$103k Note II - November 2018     103,000       103,000  
$153k Note - November 2018     153,000       153,000  
$103k Note III - December 2018     103,000       103,000  
$78k Note I - January 2019     78,000       ---  
$78k Note II - January 2019     78,000       ---  
      1,420,404       1,428,787  
Less: unamortized discount     (363,089 )     (386,473 )
Convertible notes payable, net of original issue discount and debt discount     1,057,315       1,042,314  

 

* - Denotes that convertible note payable is carried at fair value

 

15

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 9 –CONVERTIBLE NOTES PAYABLE (CONTINUED)

 

Amortization expense and interest expense recognized on each convertible note outstanding during the three months ended March 31, 2019 and 2018 were as follows:

 

    Amortization of Debt Discount     Interest Expanse  
    Three Months Ended
March 31,
    Three Months Ended
March 31,
 
    2019     2018     2019     2018  
                         
$550k Note - July 2016   $ ---     $ ---     $ 8,137     $ 8,137  
$50k Note - July 2016     ---       ---       1,233       1,233  
$111k Note - May 2017     ---       11,011       4,078       4,078  
$53k Note - July 2017     ---       1,520       ---       116  
$35k Note - September 2017     ---       7,972       ---       614  
$55k Note - September 2017     ---       10,849       ---       1,085  
$53k Note II - October 2017     ---       17,036       ---       1,307  
$171.5k Note - October 2017     ---       42,404       1,785       4,229  
$57.8k Note - January 2018     ---       13,923       ---       1,392  
$112.8k Note - February 2018     ---       17,608       ---       1,761  
$83k Note - February 2018     ---       10,460       ---       1,046  
$105k Note - March 2018     ---       7,479       ---       748  
$103k Note I - October 2018     32,526       ---       2,540       ---  
$103k Note II - November 2018     31,856       ---       2,540       ---  
$153k Note - November 2018     50,440       ---       3,773       ---  
$103k Note III - December 2018     25,397       ---       2,540       ---  
$78k Note I - January 2019     21,714       ---       1,624       ---  
$78k Note II - January 2019     17,451       ---       1,410       ---  
                                 
    $ 179,384     $ 140,262     $ 29,660     $ 25,746  

 

Unamortized debt discount on outstanding convertible notes payable as of March 31, 2019 and December 31, 2018 are comprised of the following:

 

    Unamortized Discount as of  
    March 31,     December 31,  
    2019     2018  
             
$103k Note I - October 2018   $ 43,730     $ 76,256  
$103k Note II - November 2018     53,801       85,656  
$153k Note - November 2018     79,022       129,462  
$103k Note III - December 2018     69,701       95,099  
$78k Note I - January 2019     56,286       ---  
$78k Note II - January 2019     60,549       ---  
                 
    $ 363,089     $ 386,473  

 

16

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 9 –CONVERTIBLE NOTES PAYABLE (CONTINUED)

 

Certain of our convertible notes payable are also carried at fair value and revalued at each period end, with changes to fair value recorded to the statement of operations under “Change in Fair Value of Debt.” The changes in fair value during the three months ended March 31, 2019 and 2018 on such instruments were as follows:

 

    Change in Fair Value of Debt     Fair Value of Debt as of  
    Three Months Ended March 31,     March 31,     December 31,  
    2019     2018     2019     2018  
                         
$550k Note - July 2016   $ 16,838     $ 46,298     $ 611,651     $ 594,813  
$50k Note - July 2016     1,707       8,199       62,019       60,312  
$111k Note - May 2017     3,544       8,815       128,734       125,190  
$171.5k Note - October 2017     1,781       ---       ---       186,472  
                                 
    $ 23,870     $ 63,312     $ 802,404     $ 966,787  

 

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, or 6,875,000 of the Company’s common shares, 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. The $550k Note was originally scheduled to mature on April 11, 2017, but the maturity date was extended to July 7, 2018 during August 2017 and to December 31, 2019 during July 2018. The discount from the original issue discount, warrants and embedded conversion feature (“ECF”) associated with the $550k Note was amortized over the original life of the note. The $550k Note is carried at fair value due to an extinguishment and reissuance recorded in 2017 and is revalued at each period end, with changes to fair value recorded to the statement of operations under “Change in Fair Value of Debt.”

 

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 (the “$50k Note”). The $50k Note was originally scheduled to mature on April 11, 2017, but the maturity date was extended to July 11, 2018 during August 2017 and to December 31, 2019 during July 2018. 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, or 500,000 of the Company’s common shares. The $50k Note is carried at fair value due to an extinguishment and reissuance recorded in 2017 and is revalued at each period end, with changes to fair value recorded to the statement of operations under “Change in Fair Value of Debt.”

 

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 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, or 317,143 of the Company’s common shares, 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.

 

17

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 9 –CONVERTIBLE NOTES PAYABLE (CONTINUED)

 

On March 28, 2018, in exchange for a five-year warrant to purchase 125,000 shares of HLYK common stock at an exercise price of $0.05 per share, the holder of the $111k Note agreed to extend the maturity date from the original date of January 22, 2018 until July 11, 2018. The fair value of the warrants using Black/Scholes was $10,199 with the following assumptions: risk-free interest rate of 2.59%, expected life of 5 years, volatility of 578.45%, and expected dividend yield of zero. The issuance of the warrants in exchange for the maturity extension was treated as an extinguishment and reissuance of existing debt pursuant to the guidance of ASC 470-50. Accordingly, the $111k Note is carried at fair value and is revalued at each period end, with changes to fair value recorded to the statement of operations under “Change in Fair Value of Debt.” During July 2018, the maturity date of the $111k Note was further extended until December 31, 2017.

 

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. On January 8, 2018, the Company prepaid the balance on the $53k Note, including accrued interest, for a one-time cash payment of $74,922. The Company recognized a gain on debt extinguishment in the three months ended March 31, 2018 in connection with the repayment, as follows:

 

Cash repayment   $ 74,922  
Less face value of convertible note payable retired     (53,000 )
Less carrying value of derivative financial instruments arising from ECF     (53,893 )
Less accrued interest     (2,644 )
Plus carrying value of discount at extinguishment     18,427  
         
Gain on extinguishment of debt   $ (16,188 )

 

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. On March 5, 2018, the Company prepaid the balance on the $35k Note, including accrued interest, for a one-time cash payment of $49,502. The Company recognized a gain on debt extinguishment in the three months ended March 31, 2018 in connection with the repayment, as follows:

 

Cash repayment   $ 49,502  
Less face value of convertible note payable retired     (35,000 )
Less carrying value of derivative financial instruments arising from ECF     (37,269 )
Less accrued interest     (1,716 )
Plus carrying value of discount at extinguishment     12,705  
         
Gain on extinguishment of debt   $ (11,778 )

 

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. On March 13, 2018, the Company prepaid the balance on the $55k Note, including accrued interest, for a one-time cash payment of $85,258. The Company recognized a gain on debt extinguishment in the three months ended March 31, 2018 in connection with the repayment, as follows:

 

Cash repayment   $ 85,258  
Less face value of convertible note payable retired     (55,000 )
Less carrying value of derivative financial instruments arising from ECF     (69,687 )
Less accrued interest     (2,759 )
Plus carrying value of discount at extinguishment     27,425  
         
Gain on extinguishment of debt   $ (14,763 )

 

18

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 9 –CONVERTIBLE NOTES PAYABLE (CONTINUED)

 

Convertible Notes Payable ($171,500) – October 2017

 

On October 27, 2017, the Company entered into a securities purchase agreement for the sale of a $171,500 convertible note (the “$171.5k Note”) to an individual lender. The $171.5k Note included a $21,500 original issue discount, for net proceeds of $150,000. The $171.5k Note had an interest rate of 10% and a default interest rate of 22% and matures on October 26, 2018. The $171.5k Note was convertible 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 $171.5k Note, 300% of the outstanding principal and any interest due amount was immediately due. Upon an event of default caused by the Company’s breach of any other events of default specified in the $171.5k Note, 150% of the outstanding principal and any interest due amount was immediately due. During three months ended March 31, 2019, the holder of the $171.5k Note converted the entire principal balance of $171,500 into 2,512,821 shares of Company common stock.

 

Convertible Notes Payable ($57,750) – January 2018

 

On January 2, 2018, the Company entered into a securities purchase agreement for the sale of a $57,750 convertible note (the “$58k Note”). The transaction closed on January 3, 2018. The $58k Note included a $5,250 original issue discount and $2,500 fee for net proceeds of $50,000. The $58k Note had an interest rate of 10% and a default interest rate of 18% and was scheduled to mature on January 2, 2019. The $58k Note was convertible 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 28% discount to the lowest bid or trading price of the Company’s common stock during the twenty (20) trading days prior to the conversion date. On June 26, 2018, the holder agreed, without consideration, to reduce the discount to 28% of the volume weighted average price of the Company’s common stock for the 10 days prior to the conversion date. During third and fourth quarter of 2018, the holder of the $58k Note converted the entire principal balance of $57,750, as well as accrued interest in the amount of $3,786, into 384,839 shares of Company common stock. Accrued but unpaid interest of $21,990 was outstanding as of March 31, 2019.

 

Convertible Notes Payable ($112,750) – February 2018

 

On February 2, 2018, the Company entered into a securities purchase agreement for the sale of a $112,750 convertible note (the “$113k Note”). The transaction closed on February 8, 2018. The $113k Note included $12,750 fees for net proceeds of $100,000. The $113k Note has an interest rate of 10% and a default interest rate of 24% and matures on February 2, 2019. The $113k 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 40% discount to the lowest bid or trading price of the Company’s common stock 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, 200% 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 August 7, 2018, the Company prepaid the balance on the $113k Note, including accrued interest, for a one-time cash payment of $151,536. In connection with the extinguishment, the Company also issued the holder a 3-year warrant to purchase 100,000 shares of Company common stock at an exercise price of $0.25. The fair value of the warrant was $50,614. The Company recognized a gain on debt extinguishment of $2,054 in the third quarter of 2018 in connection with the repayment

 

Convertible Notes Payable ($83,000) – February 2018

 

On February 13, 2018, the Company entered into a securities purchase agreement for the sale of a $83,000 convertible note (the “$83k Note”). The transaction closed on February 21, 2018. The $83k Note included $8,000 fees for net proceeds of $75,000. The $83k Note has an interest rate of 10% and a default interest rate of 24% and matures on February 13, 2019. The $113k 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 40% discount to the lowest bid or trading price of the Company’s common stock during the twenty (20) trading days prior to the conversion date. Upon an event of default, 200% of the outstanding principal and any interest due amount shall be immediately due.

 

19

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 9 –CONVERTIBLE NOTES PAYABLE (CONTINUED)

 

On August 16, 2018, the Company prepaid the balance on the $83k Note, including accrued interest, for a one-time cash payment of $111,596. In connection with the extinguishment, the Company also issued the holder a 5-year warrant to purchase 237,143 shares of Company common stock at an exercise price of $0.35. The fair value of the warrant was $92,400. The Company recognized a loss on debt extinguishment of $51,251 in the third quarter of 2018 in connection with the repayment.

 

Convertible Notes Payable ($105,000) – March 2018

 

On March 5, 2018, the Company entered into a securities purchase agreement for the sale of a $105,000 convertible note (the “$105k Note”). The transaction closed on March 12, 2018. The $105k Note included $5,000 fees for net proceeds of $100,000. The $105k Note has an interest rate of 10% and a default interest rate of 24% and matures on March 5, 2019. The $113k Note may be converted into common stock of the Company by the holder at any time after the 6-month anniversary of the issuance date, subject to a 9.9% beneficial ownership limitation, at a conversion price per share equal to 40% discount to the lowest bid or trading price of the Company’s common stock during the twenty (20) trading days prior to the conversion date. Upon an event of default, 110-150% of the outstanding principal and any interest due amount shall be immediately due, depending on the nature of the breach.

 

On August 30, 2018, the Company prepaid the balance on the $105k Note, including accrued interest, for a one-time cash payment of $140,697. The Company recognized a gain on debt extinguishment of $51,804 in the third quarter of 2018 in connection with the repayment.

 

Convertible Notes Payable ($78,000) – January 2019

 

On January 14, 2019, the Company entered into a securities purchase agreement for the sale of a $78,000 convertible note (the “$78k Note”). The $78k Note included $3,000 fees for net proceeds of $75,000. The $78k Note has an interest rate of 10% and a default interest rate of 24% and matures on October 14, 2019. The $78k Note may be converted into common stock of the Company by the holder at any time after the 6-month anniversary of the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 25% discount to the lowest bid or trading price of the Company’s common stock during the ten (10) 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.

 

The fair value of the ECF of the $78k Note was calculated using the Black-Scholes pricing model at $78,088, with the following assumptions: risk-free interest rate of 2.57%, expected life of 0.75 years, volatility of 243.61%, and expected dividend yield of zero. In connection with the $78k Note, the Company also issued to the holder 28,000 shares of Company common stock valued at $4,676, which was recorded to equity. Because the fair value of the ECF exceeded the net proceeds from the $78k Note, a charge was recorded to “Financing cost” for the excess of the fair value of the fair value of the ECF of $78,088 and the common shares issued of $4,676 over the net proceeds from the note of $75,000, for a net charge of $7,764. 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   $ 78,088  
Original issue discount and fees     3,000  
Fair value of shares recorded to equity     4,676  
Financing cost     (7,764 )
Convertible note     ---  
         
Gross proceeds   $ 78,000  

 

20

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 9 –CONVERTIBLE NOTES PAYABLE (CONTINUED)

 

Convertible Notes Payable ($78,000) – January 2019

 

On January 24, 2018, the Company entered into a securities purchase agreement for the sale of a $78,000 convertible note (the “$78k Note II”). The $78k Note II included $3,000 fees for net proceeds of $75,000. The $78k Note II has an interest rate of 10% and a default interest rate of 22% and matures on November 15, 2019. The $78k Note II may be converted into common stock of the Company by the holder at any time after the 6-month anniversary of the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 39% discount to the lowest bid or trading price of the Company’s common stock 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.

 

The fair value of the ECF of the $78k Note II was calculated using the Black-Scholes pricing model at $101,139, with the following assumptions: risk-free interest rate of 2.58%, expected life of 0.81 years, volatility of 243.03%, and expected dividend yield of zero. Because the fair value of the ECF exceeded the net proceeds from the $78k Note II, a charge was recorded to “Financing cost” for the excess of the fair value of the fair value of the ECF of $101,139 over the net proceeds from the note of $75,000, for a net charge of $26,139. 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   $ 101,139  
Original issue discount and fees     3,000  
Financing cost     (26,139 )
Convertible note     ---  
         
Gross proceeds   $ 78,000  

 

NOTE 10 – DERIVATIVE FINANCIAL INSTRUMENTS

 

Derivative financial instruments are comprised of the fair value of conversion features embedded in convertible promissory notes for which the conversion rate is not fixed, but instead is adjusted based on a discount to the market price of the Company’s common stock. The fair market value of the derivative liabilities was calculated at inception of each convertible promissory notes for which the conversion rate is not fixed and allocated to the respective convertible notes, with any excess recorded as a charge to “Financing cost.” 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 and changes thereto recorded in the three months ended March 31, 2019 include the following:

 

                Change in              
    Fair Value     Inception of     Fair Value     Conversion     Fair Value  
    as of     Derivative     of Derivative     of Derivative     as of  
    December 31,     Financial     Financial     Financial     March 31,  
    2018     Instruments     Instruments     Instruments     2019  
                               
$171.5k Note - October 2017   $ 229,902     $ ---     $ (22,720 )   $ (207,182 )   $ ---  
$103k Note I - October 2018     131,617       ---       (33,857 )     ---       97,760  
$103k Note II - November 2018     135,845       ---       (32,378 )     ---       103,467  
$153k Note - November 2018     157,426       ---       (45,408 )     ---       112,018  
$103k Note III - December 2018     145,650       ---       (28,544 )     ---       117,106  
$78k Note I - January 2019     ---       78,088       (14,573 )     ---       63,515  
$78k Note II - January 2019     ---       101,142       (14,153 )     ---       86,989  
                                         
    $ 800,440     $ 179,230     $ (191,633 )   $ (207,182 )   $ 580,855  

 

21

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 10 – DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

 

Derivative financial instruments and changes thereto recorded in the three months ended March 31, 2018 include the following:

 

                Change in              
    Fair Value     Inception of     Fair Value     Write off     Fair Value  
    as of     Derivative     of Derivative     Derivative     as of  
    December 31,     Financial     Financial     Financial     March 31,  
    2017     Instruments     Instruments     Instruments     2018  
    (audited)                          
$53k Note - July 2017   $ 48,876     $ ---     $ 5,017     $ (53,893 )   $ ---  
$35k Note - September 2017     36,161       ---       1,108       (37,269 )     ---  
$55k Note - September 2017     64,656       ---       5,032       (69,688 )     ---  
$53k Note #2 - October 2017     58,216       ---       617       ---       58,833  
$171.5k Note - October 2017     190,580       ---       11,979       ---       202,559  
$57.8k Note - January 2018     ---       82,653       (2,905 )     ---       79,748  
$112.8k Note - February 2018     ---       161,527       (2,371 )     ---       159,156  
$83k Note - February 2018     ---       119,512       (1,525 )     ---       117,987  
$105k Note - March 2018     ---       153,371       (2,331 )     ---       151,040  
                                         
    $ 398,489     $ 517,063     $ 14,621     $ (160,850 )   $ 769,323  

 

During the three months ended March 31, 2019, the $171.5k Note was converted in full into common shares by the holder.

 

During the three months ended March 31, 2018, three convertible notes were repaid in full for cash. Accordingly, the derivative financial instruments associated with the ECFs of these convertible notes were written off in connection with the extinguishment of each convertible note.

 

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 2.40% to 2.73%, expected life of 0.33 to 1.00 years, volatility of 202.73% to 293.97%, 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

 

Sales of Common Stock

 

On January 11, 2018, the Company sold 588,235 shares of common stock in a private placement transaction to an investor and received $50,000 in proceeds from the sale. The shares were issued at a share price of $0.085 per share. In connection with the stock sales, the Company also issued 588,235 five-year warrants to purchase shares of common stock at an exercise price of $0.15 per share.

 

On February 28, 2018, the Company sold 2,352,942 shares of common stock in private placement transactions to two investors and received $200,000 in proceeds from the sale. The shares were issued at a share price of $0.085 per share. In connection with the stock sales, the Company also issued 1,764,706 five-year warrants to purchase shares of common stock at an exercise price of $0.15 per share.

 

During the three months ended March 31, 2019, the Company sold 1,133,334 shares of common stock in two separate private placement transactions and received $340,000 in proceeds from the sales. The shares were issued at a share price of $0.30 per share. In connection with the stock sale, we also issued 566,667 five-year warrants to purchase shares of common stock at an exercise price of $0.40 per share and 250,000 three-year warrants to purchase shares of common stock at an exercise price of $0.50 per share.

 

During the three months ended March 31, 2019 and 2018, the Company issued 2,128,644 and 42,969 common shares, respectively, pursuant to draws made by the Company under the Investment Agreement and received an aggregate of $493,226 and $1,563, respectively, in net proceeds from the draws.

 

22

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 11 – SHAREHOLDERS’ DEFICIT (CONTINUED)

 

Common Stock Issuable

 

As of March 31, 2019 and December 31, 2018, the Company was obligated to issue 205,301 and 114,080 shares of common stock, respectively, in exchange for professional services provided by two third party consultants. During the three months ended March 31, 2019 and 2018, the Company recognized expense related to shares earned by the consultants of $46,098 and $5,287, respectively.

 

Stock Warrants

 

Transactions involving our stock warrants during the three months ended three months ended March 31, 2019 and 2018 are summarized as follows:

 

    2019     2018  
          Weighted           Weighted  
          Average           Average  
          Exercise           Exercise  
    Number     Price     Number     Price  
Outstanding at beginning of the period     46,161,463     $ 0.18       20,526,387     $ 0.23  
Granted during the period     996,667     $ 0.42       9,156,403     $ 0.09  
Exercised during the period     (2,099,256 )   $ 0.00       ---     $ ---  
Terminated during the period     ---     $ ---       ---     $ ---  
Outstanding at end of the period     45,058,874     $ 0.19       29,682,790     $ 0.19  
                                 
Exercisable at end of the period     45,058,874     $ 0.19       29,682,790     $ 0.19  
                                 
Weighted average remaining life     3.5       years       4.9       years  

 

The following table summarizes information about the Company’s stock warrants outstanding as of March 31, 2019:

 

Warrants Outstanding     Warrants Exercisable  
            Weighted-                    
            Average     Weighted-           Weighted-  
            Remaining     Average           Average  
Exercise     Number     Contractual     Exercise     Number     Exercise  
Prices     Outstanding     Life (years)     Price     Exercisable     Price  
$ 0.0001 to 0.09       18,157,768       3.6     $ 0.06       18,157,768     $ 0.06  
$ 0.10 to 0.24       14,520,441       3.8     $ 0.19       14,520,441     $ 0.19  
$ 0.25 to 0.49       8,440,665       3.3     $ 0.29       8,440,665     $ 0.29  
$ 0.50 to 1.00       3,940,000       2.9     $ 0.64       3,940,000     $ 0.64  
$ 0.05 to 1.00       45,058,874       3.5     $ 0.20       45,058,874     $ 0.20  

 

During the three months ended March 31, 2019, the Company issued 996,667 warrants. The fair value of the warrant was calculated using the Black-Scholes pricing model with the following assumptions: risk-free interest rate of 2.44% to 2.52%, expected life of 3 to 5 years, volatility of 212.96% to 216.35%, and expected dividend yield of zero. The aggregate grant date fair value of warrants issued during the three months ended March 31, 2019 was $294,707.

 

During the three months ended March 31, 2018, the Company issued 9,156,403 warrants. The fair value of the warrant was calculated using the Black-Scholes pricing model with the following assumptions: risk-free interest rate of 2.23% to 2.65%, expected life of 5 years, volatility of 261.18 - 278.45%, and expected dividend yield of zero. The aggregate grant date fair value of warrants issued during the three months ended March 31, 2018 was $582,311.

 

23

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 11 – SHAREHOLDERS’ DEFICIT (CONTINUED)

 

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.

 

The following table summarizes the status of shares issued and outstanding under the EIP outstanding as of and for the three months ended March 31, 2019 and 2018:

 

    2019     2018  
Outstanding at beginning of the period     1,738,750       1,498,750  
Granted during the period     61,563       ---  
Terminated during the period     ---       ---  
Outstanding at end of the period     1,800,313       1,498,750  
                 
Shares vested at period-end     1,336,563       1,058,750  
Weighted average grant date fair value of shares granted during the period   $ 0.26     $ ---  
Aggregate grant date fair value of shares granted during the period   $ 12,805     $ ---  
Shares available for grant pursuant to EIP at period-end     10,154,118       11,654,934  

 

Total stock-based compensation recognized for grants under the EIP was $32,779 and $2,435 during the three months ended March 31, 2019 and 2018. Total unrecognized stock compensation related to these grants was $92,918 as of March 31, 2019.

 

A summary of the status of non-vested shares issued pursuant to the EIP as of and for the three months ended March 31, 2019 and 2018 is presented below:

 

    2019     2018  
          Weighted           Weighted  
          Average           Average  
          Grant Date           Grant Date  
    Shares     Fair Value     Shares     Fair Value  
Nonvested at beginning of period     540,000     $ 0.16       628,750     $ 0.05  
Granted     ---     $ ---       ---     $ ---  
Vested     (76,250 )   $ 0.04       (188,750 )   $ 0.04  
Forfeited     ---     $ ---       ---     $ ---  
Nonvested at end of period     463,750     $ 0.18       440,000     $ 0.05  

 

24

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 11 – SHAREHOLDERS’ DEFICIT (CONTINUED)

 

Employee Stock Options

 

The following table summarizes the status of options outstanding as of and for the three months ended March 31, 2019 and 2018:

 

    2019     2018  
          Weighted           Weighted  
          Average           Average  
          Exercise           Exercise  
    Number     Price     Number     Price  
Outstanding at beginning of the period     3,707,996     $ 0.18       2,349,996     $ 0.12  
Granted during the period     591,250     $ 0.26       ---     $ ---  
Exercised during the period     (154,166 )   $ 0.20       ---     $ ---  
Forfeited during the period     (595,830 )   $ 0.20       ---     $ ---  
Outstanding at end of the period     3,549,250     $ 0.19       2,349,996     $ 0.12  
                                 
Options exercisable at period-end     1,261,000               637,500          
Weighted average remaining life (in years)     8.2               8.4          
Weighted average grant date fair value of options granted during the period   $ 0.21             $ ---          
Options available for grant at period-end     10,154,118               11,654,934          

 

The following table summarizes information about the Company’s stock options outstanding as of March 31, 2019:

 

Options Outstanding     Options Exercisable  
            Weighted-                    
            Average     Weighted-           Weighted-  
            Remaining     Average           Average  
Exercise     Number     Contractual     Exercise     Number     Exercise  
Prices     Outstanding     Life (years)     Price     Exercisable     Price  
$ --- to 0.10       1,733,000       6.9     $ 0.08       1,183,000       0.08  
$ 0.11 to 0.31       1,816,250       9.5     $ 0.29       78,000       0.31  
$ 0.08 to 0.31       3,549,250       8.2     $ 0.19       1,261,000     $ 0.10  

 

Total stock-based compensation recognized related to option grants was $28,456 and $2,354 during the three months ended March 31, 2019 and 2018, respectively.

 

A summary of the status of non-vested options issued pursuant to the EIP as of and for the three months ended March 31, 2019 and 2018 is presented below:

 

    2019     2018  
          Weighted           Weighted  
          Average           Average  
          Grant Date           Grant Date  
    Shares     Fair Value     Shares     Fair Value  
Nonvested at beginning of period     2,332,413     $ 0.13       1,774,996     $ 0.03  
Granted     591,250     $ 0.21       ---     $ ---  
Vested     (39,583 )   $ 0.03       (62,500 )   $ 0.03  
Forfeited     (595,830 )   $ 0.02       ---     $ ---  
Nonvested at end of period     2,288,250     $ 0.18       1,712,496     $ 0.03  

 

25

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

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

 

Maturities of operating lease liabilities were as follows as of March 31, 2019:

 

    Operating     Capital     Total  
    Leases     Leases     Commitments  
2019 (April through December)   $ 206,098     $ 13,761     $ 219,859  
2020     162,055       4,587       166,642  
2021     ---       ---       ---  
2022     ---       ---       ---  
2023     ---       ---       ---  
Total lease payments     368,153       18,348       386,501  
Less interest     (28,957 )     (1,027 )     (29,984 )
Present value of lease liabilities   $ 339,196     $ 17,321     $ 356,517  

 

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.

 

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, the Company’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. On July 1, 2018, HLYK and Mr. O’Leary entered into an Extension Letter Agreement pursuant to which Mr. O’Leary was increased to full time employment (previously half-time) and agreed to extend the term of his employment to September 30, 2022. In addition to a base salary, the extension provides Mr. O’Leary with certain performance-based cash bonuses, stock grants, and stock option grants.

 

26

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

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.

 

Segment information for the three months ended March 31, 2019 and 2018 was as follows:

 

    Three Months Ended March 31, 2019     Three Months Ended March 31, 2018  
      NWC       HLYK       Total       NWC       HLYK       Total  
Revenue                                    
Patient service revenue, net   $ 464,990     $ ---     $ 464,990     $ 645,639     $ ---     $ 645,639  
                                                 
Operating Expenses                                                
Salaries and benefits     350,238       178,987       529,225       403,055       157,801       560,856  
General and administrative     242,600       514,756       757,356       225,652       349,176       574,828  
Depreciation and amortization     1,060       595       1,655       5,574       455       6,029  
Total Operating Expenses     593,898       694,338       1,288,236       634,281       507,432       1,141,713  
                                                 
Loss from operations   $ (128,908 )   $ (694,338 )   $ (823,246 )   $ 11,358     $ (507,432 )   $ (496,074 )
                                                 
Other Segment Information                                                
Interest expense   $ 5,828     $ 40,494     $ 46,322     $ 5,697     $ 34,650     $ 40,347  
Loss on extinguishment of debt   $ ---     $ 139,798     $ 139,798     $ ---     $ 325,223     $ 325,223  
Financing cost   $ ---     $ 33,903     $ 33,903     $ ---     $ 192,062     $ 192,062  
Amortization of original issue and debt discounts on convertible notes   $ ---     $ 179,384     $ 179,384     $ ---     $ 154,835     $ 154,835  
Change in fair value of debt   $ ---     $ 29,697     $ 29,697     $ ---     $ 57,946     $ 57,946  
Change in fair value of derivative financial instruments   $ ---     $ (191,633 )   $ (191,633 )   $ ---     $ 14,621     $ 14,621  

 

 

    March 31, 2019     December 31, 2018  
Identifiable assets   $ 520,535     $ 565,751     $ 1,086,286     $ 184,912     $ 242,451     $ 427,363  

 

During the three months ended March 31, 2019 and 2018, HLYK recognized revenue of $1,941 and $6,888, respectively, related to subscription revenue billed to and paid for by NWC physicians for access to the HealthLynked Network. The revenue for HLYK and related expense for NWC were eliminated on consolidation.

 

NOTE 14 – FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate their respective fair values due to the short-term nature of such instruments.

 

The Company measures certain financial instruments at fair value on a recurring basis, including certain convertible notes payable and related party loans which were extinguished and reissued and are therefore subject to fair value measurement, as well as derivative financial instruments arising from conversion features embedded in convertible promissory notes for which the conversion rate is not fixed. All financial instruments carried at fair value fall within Level 3 of the fair value hierarchy as their value is based on unobservable inputs. The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made.

 

27

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 14 – FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

 

The following table summarizes the conclusions reached regarding fair value measurements as of March 31, 2019 and December 31, 2018:

 

    As of March 31, 2019  
                      Total  
    Level 1     Level 2     Level 3     Fair Value  
Convertible notes payable   $ ---     $ ---     $ 802,404     $ 802,404  
Notes payable to related party     ---       ---       209,829       209,829  
Derivative financial instruments     ---       ---       580,855       580,855  
                                 
Total   $ ---     $ ---     $ 1,593,088     $ 1,593,088  

 

    As of December 31, 2018  
                      Total  
    Level 1     Level 2     Level 3     Fair Value  
Convertible notes payable   $ ---     $ ---     $ 780,315     $ 780,315  
Notes payable to related party     ---       ---       203,971       203,971  
Derivative financial instruments     ---       ---       800,440       800,440  
                                 
Total   $ ---     $ ---     $ 1,784,726     $ 1,784,726  

 

The changes in Level 3 financial instruments that are measured at fair value on a recurring basis during the three months ended March 31, 2019 and 2018 were as follows:

 

    Three Months Ended
March 31,
 
    2019     2018  
             
Convertible notes payable   $ (23,869 )   $ (54,497 )
Notes payable to related party     (5,828 )     (3,449 )
Derivative financial instruments     191,633       (14,621 )
                 
Total   $ 161,936     $ (72,567 )

 

NOTE 15 – SUBSEQUENT EVENTS

 

On April 12, 2019 the Company acquired a 100% interest in HCFM, a medical practice engaged in improving the health of its patients through individualized and integrative health care. Under the terms of acquisition, we paid HCFM shareholders $500,000 in cash and issued 3,968,254 shares of our common stock along with an earn out provision of $500,000 that may be earned based on the performance of HCFM in fiscal years ended December 31, 2019-21. The total consideration represents a transaction value of approximately $2 million. The Company funded the acquisition of HCFM through available cash and the issuance of restricted common shares. The Company plans to account for the transaction as an acquisition of a business pursuant to ASC 805, “Business Combinations” (“ASC 805”). The Company is currently engaged in establishing the acquisition date fair value and allocating the fair value across the specific assets and liabilities acquired pursuant to the requirements of ASC 805. The Company expects that the required enterprise valuation of the acquisition and purchase price allocation will be completed by and included in our financial statements reporting our second quarter activity as of June 30, 2019.

 

28

 

 

HEALTHLYNKED CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

 

NOTE 15 – SUBSEQUENT EVENTS (CONTINUED)

 

On April 3, 2019, the Company entered into a securities purchase agreement for the sale of a $103,000 convertible note. The note included $3,000 fees for net proceeds of $100,000. The note has an interest rate of 10% and a default interest rate of 22%, matures on February 28, 2020 and may be converted into common stock of the Company by the holder at any time after the 6-month anniversary of the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 39% discount to the lowest bid or trading price of the Company’s common stock 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 April 4, 2019, the Company repaid a convertible note dated October 18, 2018 with a face value of $103,000, along with interest accrued thereon, for a one-time cash payment of $134,500.

 

On April 11, 2019, the Company entered into securities purchase agreements for the sale of two identical convertible notes with an aggregate face value of $209,000. The notes included $9,000 fees for net proceeds of $200,000. The notes have an interest rate of 10% and a default interest rate of 22%, mature on April 11, 2020, and may be converted into common stock of the Company by the holder at any time after the 6-month anniversary of the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 25% discount to the lowest bid or trading price of the Company’s common stock during the ten (10) 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 April 15, 2019, the Company issued a convertible note with a face value of $357,500. The note included $32,500 fees for net proceeds of $325,000. The note has an interest rate of 10%, matures on December 31, 2019, and may be converted into common stock of the Company by the holder at any time, subject to a 9.99% beneficial ownership limitation, at a fixed conversion price per share of $0.20. Upon an event of default, 140% of the outstanding principal and any interest due amount shall be immediately due and the conversion price resets to a 40% discount to the lowest bid or trading price of the Company’s common stock during the twenty (20) trading days prior to the conversion date.

 

On May 7, 2019, the Company entered into a securities purchase agreement for the sale of a $103,000 convertible note. The note included $3,000 fees for net proceeds of $100,000. The note has an interest rate of 10% and a default interest rate of 22%, matures on February 28, 2020 and may be converted into common stock of the Company by the holder at any time after the 6-month anniversary of the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 39% discount to the lowest bid or trading price of the Company’s common stock 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 May 7, 2018, the Company prepaid the balance on a convertible note payable dated November 12, 2018 with a face value of $103,000, plus interest accrued thereon, for a one-time cash payment of $134,888.

 

29

 

 

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

 

Forward-Looking Statements

 

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Item 1A. Risk Factors” included elsewhere in this Form 10-Q. All amounts in this report are in U.S. dollars, unless otherwise noted.

 

Overview

 

HealthLynked Corp. (the “Company,” “we,” “our, “us” or “HLYK”) was incorporated in the State of Nevada on August 4, 2014. On September 2, 2014, the Company filed Amended and Restated Articles of Incorporation with the Secretary of State of Nevada setting the total number of authorized shares at 250,000,000 shares, which included up to 230,000,000 shares of common stock and 20,000,000 shares of “blank check” preferred stock. On February 5, 2018, the Company filed an Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State of Nevada to increase the number of authorized shares of common stock to 500,000,000 shares. The Company also previously had 2,953,840 designated shares of Series A Preferred Stock in 2014, which were converted into the 2,953,840 shares of the Company’s common shares on July 30, 2016.

 

On September 5, 2014, the Company entered into the Share Exchange Agreement with Naples Women’s Center, LLC (“NWC”), a multi-specialty medical group including OB/GYN (both Obstetrics and Gynecology), and general practice located in Naples, Florida, acquiring 100% of the LLC membership interests of NWC in exchange for an aggregate of 50,000,000 shares of the Company’s common stock to the members of NWC.

 

The Company was formed for the purpose of acquiring NWC, and eventually developing its own online medical information system business as described above. Prior to the share exchange, NWC was an ongoing operation that had been in existence since 1996. NWC has generated revenues since its inception.

  

The Company operates 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.

 

Critical accounting policies and significant judgments and estimates

 

This management’s discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these consolidated financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods. The Company’s estimates are based on historical experience and on various other factors that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes that the accounting policies discussed below are critical to understanding the Company’s historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

 

Adopted Accounting Pronouncements

 

Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (“ASU 2016-02”) using the required modified retrospective approach. ASU 2016-02 requires lessees to record most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current accounting. See discussion below under the caption “Leases” in this Note 2 and in Note 7 for more detail on the Company’s accounting policy with respect to lease accounting.

 

30

 

 

Effective January 1, 2019, the Company adopted ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees and supersedes the guidance in Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. The adoption of this guidance did not materially impact the Company’s financial statements and related disclosures .

 

Patient Service Revenue

 

Patient service revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient care. These amounts are due from patients and third-party payors (including health insurers and government programs) and includes variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations. Generally, the Company bills patients and third-party payors within days after the services are performed and/or the patient is discharged from the facility. Revenue is recognized as performance obligations are satisfied.

 

Performance obligations are determined based on the nature of the services provided by the Company. Revenue for performance obligations satisfied over time is recognized based on actual charges incurred in relation to total expected charges. The Company believes that this method provides a faithful depiction of the transfer of services over the term of the performance obligation based on the inputs needed to satisfy the obligation. Revenue for performance obligations satisfied at a point in time is recognized when goods or services are provided and the Company does not believe it is required to provide additional goods or services to the patient.

 

The Company determines the transaction price based on standard charges for goods and services provided, reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients in accordance with the Company’s policy, and/or implicit price concessions provided to uninsured patients. The Company determines its estimates of contractual adjustments and discounts based on contractual agreements, its discount policies, and historical experience. The Company determines its estimate of implicit price concessions based on its historical collection experience with this class of patients.

 

Agreements with third-party payors typically provide for payments at amounts less than established charges. A summary of the payment arrangements with major third-party payors follows:

 

  Medicare: Certain inpatient acute care services are paid at prospectively determined rates per discharge based on clinical, diagnostic and other factors. Certain services are paid based on cost-reimbursement methodologies subject to certain limits. Physician services are paid based upon established fee schedules. Outpatient services are paid using prospectively determined rates.

 

  Medicaid: Reimbursements for Medicaid services are generally paid at prospectively determined rates per discharge, per occasion of service, or per covered member.

 

  Other: Payment agreements with certain commercial insurance carriers, health maintenance organizations, and preferred provider organizations provide for payment using prospectively determined rates per discharge, discounts from established charges, and prospectively determined daily rates.

 

Laws and regulations concerning government programs, including Medicare and Medicaid, are complex and subject to varying interpretation. As a result of investigations by governmental agencies, various health care organizations have received requests for information and notices regarding alleged noncompliance with those laws and regulations, which, in some instances, have resulted in organizations entering into significant settlement agreements. Compliance with such laws and regulations may also be subject to future government review and interpretation as well as significant regulatory action, including fines, penalties, and potential exclusion from the related programs. There can be no assurance that regulatory authorities will not challenge the Company’s compliance with these laws and regulations, and it is not possible to determine the impact, if any, such claims or penalties would have upon the Company. In addition, the contracts the Company has with commercial payors also provide for retroactive audit and review of claims.

 

Settlements with third-party payors for retroactive adjustments due to audits, reviews or investigations are considered variable consideration and are included in the determination of the estimated transaction price for providing patient care. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved. Estimated settlements are adjusted in future periods as adjustments become known, or as years are settled or are no longer subject to such audits, reviews, and investigations.

 

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The Company also provides services to uninsured patients, and offers those uninsured patients a discount, either by policy or law, from standard charges. The Company estimates the transaction price for patients with deductibles and coinsurance and from those who are uninsured based on historical experience and current market conditions. The initial estimate of the transaction price is determined by reducing the standard charge by any contractual adjustments, discounts, and implicit price concessions. Subsequent changes to the estimate of the transaction price are generally recorded as adjustments to patient service revenue in the period of the change.

 

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 48% of total billings. Trade accounts receivable are recorded at this net amount.

 

Leases

 

Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (“ASU 2016-02”) using the required modified retrospective approach. ASU 2016-02 requires lessees to record most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current accounting.

 

Upon transition under ASU 2016-02, the Company elected the suite of practical expedients as a package applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases. For new leases, the Company will determine if an arrangement is or contains a lease at inception. Leases are included as right-of-use (“ROU”) assets within other assets and ROU liabilities within accrued expenses and other liabilities and within other long-term liabilities on the Company’s condensed consolidated balance sheets.

 

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company’s leases do not provide an implicit rate. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

 

Adoption of ASU 2016-02 had an impact of $355,447 and $356,517 million on the Company’s assets and liabilities, respectively, and had no material impact on cash provided by or used in operating, investing or financing activities on the Company’s consolidated statements of cash flows.

  

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 March 31, 2019 and December 31, 2018.  

 

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Convertible Notes

 

Convertible notes are regarded as compound instruments, consisting of a liability component and an equity component. The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortized cost basis until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized as additional paid-in capital and included in equity, net of income tax effects, and is not subsequently remeasured. After initial measurement, they are carried at amortized cost using the effective interest method. Convertible notes for which the maturity date has been extended and that qualify for debt extinguishment treatment are recorded at fair value on the extinguishment date and then revalue at the end of each reporting period, with the change recorded to the statement of operations under “Change in Fair Value of Debt.”

 

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.

 

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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. No Income Tax has been provided for the three months ended March 31, 2019, since the Company has sustained a loss for the period. Due to the uncertainty of the utilization and recoverability of the loss carry-forwards (including the three months ended March 31, 2019) and other deferred tax assets, management has determined a full valuation allowance for the deferred tax assets, since it is more likely than not that the deferred tax assets will not be realizable.

 

Recurring Fair Value Measurements

 

The carrying value of the Company’s financial assets and financial liabilities is their cost, which may differ from fair value. The carrying value of cash held as demand deposits, money market and certificates of deposit, marketable investments, accounts receivable, short-term borrowings, accounts payable, accrued liabilities, and derivative financial instruments approximated their fair value.

 

Net Income (Loss) per Share  

 

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Outstanding stock options, warrants and other dilutive securities are excluded from the calculation of diluted net loss per common share if inclusion of these securities would be anti-dilutive.  

 

Common stock awards

 

The Company grants common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided or the fair value of the awards granted, whichever is more reliably measurable. The fair value measurement date of these awards is generally the date the performance of services is complete. The fair value of the awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the settlement of services provided by non-employees is recorded on the consolidated statement of comprehensive loss in the same manner and charged to the same account as if such settlements had been made in cash.

 

Warrants

 

In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense over the requisite service period or at the date of issuance, if there is not a service period. Warrants granted in connection with ongoing arrangements are more fully described in Note 11, Shareholders’ Deficit .

 

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Business Segments

 

The Company uses the “management approach” to identify its reportable segments. The management approach designates the internal organization used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. Using the management approach, the Company determined that it has two operating segments: NWC (multi-specialty medical group including OB/GYN and General Practice) and HLYK (develops and markets the “HealthLynked Network,” an online personal medical information and record archive system).

 

Recent Accounting Pronouncements

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers — Topic 606 , which supersedes the revenue recognition requirements in FASB ASC 605. The new guidance primarily states that an entity should recognize 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 and services. In January 2017 and September 2017, the FASB issued several amendments to ASU 2014-09, including updates stemming from SEC Accounting Staff Announcement in July 2017. The amendments and updates included clarification on accounting for principal versus agent considerations (i.e., reporting gross versus net), licenses of intellectual property and identification of performance obligations. These amendments and updates do not change the core principle of the standard, but provide clarity and implementation guidance. The Company adopted this standard on January 1, 2018 and selected the modified retrospective transition method. The Company has modified its accounting policies to reflect the requirements of this standard, however, the planned adoption did not materially impact the Company’s financial statements and related disclosures.

 

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. The guidance is effective in the first quarter of fiscal 2019. The Company adopted this guidance effective January 1, 2019. The adoption of this guidance did not materially impact the Company’s financial statements and related disclosures .

 

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity and Derivatives and Hedging , which changes the accounting and earnings per share for certain instruments with down round features. The amendments in this ASU should be applied using a cumulative-effect adjustment as of the beginning of the fiscal year or retrospective adjustment to each period presented and is effective for annual periods beginning after December 15, 2018, and interim periods within those periods. The Company adopted this guidance effective January 1, 2019. The adoption of this guidance did not materially impact the Company’s financial statements and related disclosures .

 

In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASC Update No 2018-02 (Topic 220) Income Statement – Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.  This ASC update allows for a reclassification into retained earnings of the stranded tax effects in accumulated other comprehensive income (“AOCI”) resulting from the enactment of the Tax Cuts and Jobs Act (“TCJA”). The updated guidance is effective for interim and annual periods beginning after December 15, 2018.  The Company adopted this guidance effective January 1, 2019. The adoption of this guidance did not materially impact the Company’s financial statements and related disclosures .

 

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees and supersedes the guidance in Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. Under ASU 2018-07, equity-classified nonemployee share-based payment awards are measured at the grant date fair value on the grant date The probability of satisfying performance conditions must be considered for equity-classified nonemployee share-based payment awards with such conditions. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company adopted this guidance effective January 1, 2019. The adoption of this guidance did not materially impact the Company’s financial statements and related disclosures .

 

In July 2018, the FASB issued ASU 2018-09 to provide clarification and correction of errors to the Codification. The amendments in this update cover multiple Accounting Standards Updates. Some topics in the update may require transition guidance with effective dates for annual periods beginning after December 15, 2018. The Company adopted this guidance effective January 1, 2019. The adoption of this guidance did not materially impact the Company’s financial statements and related disclosures .

 

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Results of Operations

 

Comparison of Three Months Ended March 31, 2019 and 2018

 

The following table summarizes the changes in our results of operations for the three months ended March 31, 2019 compared with the three months ended March 31, 2018:

 

    Three Months Ended March 31,     Change  
    2019     2018     Increase (Decrease) in $     Increase (Decrease) in %  
Patient service revenue, net   $ 464,990     $ 645,639     $ (180,649 )     -28 %
                                 
Salaries and benefits     529,225       560,856       (31,631 )     -6 %
General and administrative     757,356       574,828       182,528       32 %
Depreciation and amortization     1,655       6,029       (4,374 )     -73 %
Loss from operations     (823,246 )     (496,074 )     327,172       66 %
                                 
Loss on extinguishment of debt     (139,798 )     (325,223 )     (185,425 )     -57 %
Change in fair value of debt     (29,697 )     (57,946 )     (28,249 )     -49 %
Financing cost     (33,903 )     (192,062 )     (158,159 )     -82 %
Amortization of original issue and debt discounts on notes payable and convertible notes     (179,384 )     (154,835 )     24,549       16 %
Change in fair value of derivative financial instruments     191,633       (14,621 )     (206,254 )     -1411 %
Interest expense     (46,322 )     (40,347 )     5,975       15 %
Total other expenses     (237,471 )     (785,034 )     (547,563 )     -70 %
                                 
Net loss   $ (1,060,717 )   $ (1,281,108 )   $ (220,391 )     -17 %

 

Patient service revenue decreased by $180,649, or 28%, from three months ended March 31, 2019 to 2018, primarily as a result of a 30% decrease in gross billing due to physician turnover, disability and retirement.

 

Salaries and benefits decreased by $31,631, or 6%, in 2019 primarily as a result of decreased salary expense associated with NWC production pay and a shift from a direct sales to an indirect sale approach for HLYK.

 

General and administrative costs increased by $182,528, or 32%, in 2019 primarily due to higher stock-based consulting fees and professional costs in 2019, as well as higher legal, professional and accounting costs related to the acquisition of HCFM.

 

Depreciation and amortization decreased by $4,374, or 73%, in 2019 primarily as a result of the adoption of ASU 2016-02 in the three months ended March 31, 2019, which resulted in charges associated with a capital lease that were previously recorded as depreciation being charged to general and administrative expense.

 

Loss from operations increased by $327,172, or 66%, in 2019 primarily as a result of decreased revenue compared to the same period of 2018, increased stock-based consulting fees and professional costs in 2019 and higher legal, professional and accounting costs related to the acquisition of HCFM.

 

Loss on extinguishment of debt decreased by $185,425, or 77%, in 2019. Loss on extinguishment of debt in 2019 arose from conversion of a convertible note. Loss on extinguishment of debt in 2018 arose from the cash repayment of five convertible notes.

 

Change in fair value of debt decreased by $28,249, or 49%, and results from certain convertible notes and notes payable to Dr. Michael Dent that were extended in previous periods and treated as an extinguishment and reissuance for accounting purposes, requiring these notes to be subsequently carried at fair value. The change in fair value at the end of each reporting period is recorded as “Change in fair value of debt.”

 

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Financing cost decreased by $158,159, or 82% in 2019. Financing cost arises from the issuance of convertible promissory notes with a floating conversion rate that gave rise to an ECF derivative instrument with a fair value greater than the face value of the notes. During 2019, we entered into two such notes with aggregate face value of $156,000, as compared to 2018 when we entered into four such notes with aggregate face value of $358,500.

 

Amortization of original issue and debt discounts increased by $24,549, or 16%, in 2019 as a result of the amortization of convertible notes with larger average discount balances being amortized in 2019.

 

Change in fair value of derivative financial instruments decreased by $206,254, or 1,411% as a result of gains in fair value of derivative financial instruments embedded in convertible promissory notes in 2019.

 

Interest expense increased by $5,975, or 15%, in 2019 as a result of higher average balance on convertible notes and notes payable to Dr. Dent during 2019.

 

Total other expenses decreased by $547,563, or 70%, in 2019 primarily as a result of gains from changes in the fair values of derivative financial instruments, fewer extinguished convertible notes compared to 2018 that gave rise to debt extinguishment losses, and decreased financing costs associated with lower inception value of convertible notes in 2019.

 

Net loss decreased by $220,391, or 17%, in 2019 primarily as a result of gains from changes in the fair values of derivative financial instruments, fewer extinguished convertible notes compared to 2018 that gave rise to debt extinguishment losses, and decreased financing costs associated with lower inception value of convertible notes in 2019, offset by higher general and administrative costs and lower revenue.

 

Liquidity and Capital Resources

 

Going Concern

 

As of March 31, 2019, we had a working capital deficit of $2,778,539 and accumulated deficit $11,561,772. For the three months ended March 31, 2019, we had a net loss of $1,060,717 and net cash used by operating activities of $600,393. Net cash used in investing activities was $4,302. Net cash provided by financing activities was $983,226, resulting principally from $833,226 proceeds from the sale of common stock and $150,000 net proceeds from the issuance of convertible notes.

 

Our cash balance and revenues generated are not currently sufficient and cannot be projected to cover our operating expenses for the next twelve months from the date of this report. These matters raise substantial doubt about our 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 our 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 our 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 us on satisfactory terms and conditions, if at all.

 

Our ability to continue as a going concern is dependent upon our ability to raise additional capital and achieve profitable operations. The accompanying 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 we be unable to continue as a going concern. 

 

As further discussed below in “Significant Liquidity Events,” in July 2018, we completed a Private Placement (the “July 2018 Private Placement”) and received net proceeds of $1,774,690. Moreover, in July 2016, we entered into an Investment Agreement (the “Investment Agreement”) pursuant to which the investor has agreed to purchase up to $3,000,000 of our common stock over a three-year period starting upon registration of the underlying shares, with such shares put to the investor by us pursuant to a specified formula that limits the number of shares able to be put to the investor to the number equal to the average trading volume of our common shares for the ten consecutive trading days prior to the put notice being issued. During the three months ended March 31, 2019, we received $493,226 from the proceeds of the sale of 2,128,644 shares pursuant to the Investment Agreement.

 

We intend that the cost of implementing our development and sales efforts related to the HealthLynked Network, as well as maintaining our existing and expanding overhead and administrative costs, will be funded principally by cash received from (i) the July 2018 Private Placement, (ii) the put rights associated with the Investment Agreement, and (iii) other funding mechanisms, including sales of our common stock, loans from related parties and convertible notes. We expect to repay our outstanding convertible notes, which have an aggregate face value of $1,379,000 as of March 31, 2019, from outside funding sources, including but not limited to new convertible notes payable, amounts available upon the exercise of the put rights granted to us under the Investment Agreement, sales of equity, loans from related parties and others or through the conversion of the convertible notes into equity. No assurances can be given that we will be able to access sufficient outside capital in a timely fashion in order to repay the convertible notes before they mature. If necessary funds are not available, our business and operations would be materially adversely affected and in such event, we would attempt to reduce costs and adjust its business plan.

 

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Significant Liquidity Events

 

Through March 31, 2019, we have funded our operations principally through a combination of convertible promissory notes, private placements of our common stock, promissory notes and related party debt, as described below.

 

July 2018 Private Placement

 

On July 17, 2018, we completed the July 2018 Private Placement pursuant to which we sold the following securities: (1) an aggregate of 3,900,000 shares of our common stock, par value $0.0001 per share, (2) Pre-Funded Warrants to purchase an aggregate of 4,100,000 shares of our common stock with an exercise price of $0.0001 and a term of five-years, (3) Series A Warrants to purchase up to an aggregate of 8,000,000 shares of our common stock with an exercise price of $0.25 per share (subsequently reset to $0.2233 on the Repricing Date) and a term of five years, and (4) Series B Warrants to purchase up to a maximum of 17,000,000 shares of our common stock (subsequently reset at 2,745,757 pursuant to the terms of such warrants) at an exercise price of $0.0001. Net proceeds to the Company were $1,774,690. The Company also issued to the placement agent 640,000 Series A Warrants with the same terms as the investor’s Series A Warrants and Series B Warrants to purchase up to a maximum of 219,661 shares of Company common stock at an exercise price of $0.0001.

 

Investment Agreement

 

On July 7, 2016, we 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 our common stock during the five consecutive trading days prior to the date on which written notice is sent by us to the investor stating the number of shares that the Company is selling to the investor, subject to certain discounts and adjustments. Further, pursuant to an Amended Investment Agreement dated March 22, 2017, we granted to the investor warrants to purchase an aggregate of seven (7) million shares of common stock with the following fixed exercise prices: (i) four million shares at $0.25 per share; (ii) two million shares at $0.50 per share; and (iii) one million shares at $1.00 per share. The warrants also contain a “cashless exercise” provision and the shares underlying the warrants will not be registered. During the three months ended March 31, 2019 and years ended December 31, 2018 and 2017, we received proceeds from the sale of shares pursuant to the Investment Agreement totaling $493,226 (2,128,644 shares), $440,523 (2,440,337 shares) and $27,640 (222,588 shares), respectively.

 

Other Sales of Common Stock

 

During 2017, we sold 5,873,609 shares of common stock in private placement transactions to 18 investors and received $821,000 in proceeds from the sales. The shares were issued at a share price between $0.10 and $0.30 per share.

 

During 2018, we sold 3,534,891 shares of common stock in six separate private placement transactions. We received $417,500 in proceeds from the sales, which were transacted at share prices between $0.085 and $0.35 per share. In connection with these stock sales, we also issued 2,649,798 five-year warrants to purchase shares of common stock at exercise prices between $0.15 and $0.45 per share. 

 

During the three months ended March 31, 2019, we sold 1,133,334 shares of common stock in two separate private placement transactions and received $340,000 in proceeds from the sales. The shares were issued at a share price of $0.30 per share.

 

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Convertible Notes Payable

 

As of March 31, 2019, we had outstanding convertible notes payable with aggregate face value of $1,379,000 maturing between July and December 2019, as follows:

 

                Conversion        
          Interest     Price/        
    Face Value     Rate     Discount     Term  
$550k Note - July 2016   $ 550,000       6 %   $ 0.08     December 31, 2019  
$50k Note - July 2016     50,000       10 %   $ 0.10     December 31, 2019  
$111k Note - May 2017     111,000       10 %   $ 0.35     December 31, 2019  
$171.5k Note - October 2017     171,500       10 %     35 %   December 31, 2019  
$103k Note I - October 2018     103,000       10 %     39 %   July 30, 2019  
$103k Note II - November 2018     103,000       10 %     39 %   August 30, 2019  
$153k Note - November 2018     153,000       10 %     25 %   August 19, 2019  
$103k Note III - December 2018     103,000       10 %     39 %   December 3, 2019  
$78k Note I - January 2019     78,000       10 %     25 %   October 14, 2019  
$78k Note II - January 2019     78,000       10 %     39 %   November 15, 2019  
    $ 1,500,500                        

 

Plan of operation and future funding requirements

 

Our plan of operations is to operate NWC and continue to invest in our cloud-based online personal medical information and record archiving system, the “HealthLynked Network,” which enables patients and doctors to keep track of medical information via the Internet in a cloud-based system.

 

We intend to market the HealthLynked Network via direct sales force targeting physicians’ offices, direct to patient marketing, affiliated marketing campaigns, co-marketing with online medical supplies retailer MedOffice Direct, and expanded southeast regional sales efforts. We intend that our initial primary sales strategy will be direct physician sales through the use of regional sales representatives whom we will hire as access to capital allows. In combination with our direct sales, we intend to also utilize Internet based marketing to increase penetration to targeted geographical areas. These campaigns will be focused on both physician providers and patient members.

 

If we fail to complete the development of, or successfully market, the HealthLynked Network, our ability to realize future increases in revenue and operating profits could be impacted, and our results of operations and financial position would be materially adversely affected.

 

The capital from the July 2018 Private Placement was raised for the purpose of technology enhancement, sales and marketing initiatives and for our planned acquisition strategy. Beginning in the fourth quarter of 2018 and first quarter of 2019, we plan to acquire health service businesses and offer physician owners cash, stock, and deferred compensation. We expect to initially target practices in Florida with at least $1 million in annual revenue and that demonstrate at least three current consecutive years of strong profitability. On April 12, 2019, the Company completed its first acquisition of Hughes Center for Functional Medicine, P.A. (“HCFM”) for (i) $500,000 in cash, (ii) 3,968,254 shares of the Corporation’s common stock, and (iii) “earn-out” payments in the aggregate amount of $500,000 to be paid over three (3) years, subject to certain revenue and profit targets. HCFM is a functional medicine practice focusing on neurodegenerative diseases such as Alzheimer’s, Parkinson’s and Multiple Sclerosis along with other treatments aimed at improving health and slowing aging, including hormones, thyroid, weight loss, wellness and prevention.

 

We anticipate that approximately 50% of the proceeds from the July 2018 Private Placement will be used for sales and marketing related costs and the remainder for executive compensation, IT expenses and legal and accounting expenses related to being a public company. We plan on raising additional capital to fund our recently disclosed acquisition strategy. In addition, we have extended a significant portion of our outstanding debt until December 31, 2019. Specifically, all of Dr. Michael Dent’s notes payable with an aggregate face value of $646,000 and all of Iconic Holdings LLC convertible notes payable with an aggregate face value of $711,000 have been extended until December 31, 2019.

 

39

 

 

We intend that the cost of implementing our development and sales efforts related to the HealthLynked Network, as well as maintaining our existing and expanding overhead and administrative costs, will be funded principally by the July 2018 Private Placement in addition to the cash received by us from the put rights associated with the Investment Agreement and new convertible notes payable. We expect to repay outstanding convertible notes from outside funding sources, including but not limited to amounts available upon the exercise of the put rights granted to us under the Investment Agreement, sales of our equity, loans from outside parties and the conversion of such related party notes to equity. No assurances can be given that we will be able to access sufficient outside capital in a timely fashion in order to repay the convertible notes before they mature. In order to access cash available under the Investment Agreement, our common stock must be listed on a recognized stock exchange or market and the shares underlying the arrangement must be subject to an effective registration statement. On May 10, 2017, our stock began trading on the OTCQB, which qualifies as a recognized stock exchange or market pursuant to the terms of the Investment Agreement, under the symbol “HLYK.” Although we have met the requirements to utilize the funds available under the Investment Agreement, there can be no assurances that we will be able to continue to meet these requirements. Additionally, the amount available to us upon the exercise of the put rights granted to us under the Investment Agreement is dependent upon the trading volume of our stock. Between May 22, 2017 and March 31, 2019, our daily trading volume averaged approximately 115,000 shares per day. Based upon increases in our volume since the end of 2017, Iconic Holdings has increased our maximum amount to access on the equity line from $150,000 maximum to $300,000 maximum. We project that amounts available to us upon the exercise of the put rights granted to us under the Investment Agreement will be sufficient to meet our capital requirements.

 

Historical Cash Flows

 

    Three Months Ended March 31,  
    2019     2018  
Net cash (used in) provided by:            
Operating activities   $ (600,393 )   $ (424,154 )
Investing Activities     (4,302 )     (201 )
Financing activities     983,226       403,659  
Net increase (decrease) in cash   $ 378,531     $ (20,696 )

 

Operating Activities – During the three months ended March 31, 2019, we used cash from operating activities of $600,393, as compared with $424,154 in the same period of 2018. The increased cash usage results from an increase in professional and other overhead costs associated with preparing for product launch and operating as a public company in 2019.

 

Investing Activities – Our business is not capital intensive, and as such cash flows from investing activities are minimal in each period. Capital expenditures of $4,302 in the three months ended March 31, 2019 and $201 in the three months ended March 31, 2018 are comprised of computer equipment and furniture.

 

Financing Activities – During the three months ended March 31, 2019, we realized $833,226 from the proceeds of the sale of shares of common stock to investors and pursuant to the Investment Agreement and $150,000 net proceeds from the issuance of convertible notes.

 

Exercise of Warrants and Options

 

There were no proceeds generated from the exercise of warrants or options during the three months ended March 31, 2019.

 

Other Outstanding Obligations

 

Warrants

 

As of March 31, 2019, 45,058,874 shares of our Common Stock were issuable pursuant to the exercise of warrants with exercise prices ranging from $0.0001 to $1.00.

 

Options

As of March 31, 2019, 3,549,250 shares of our Common Stock were issuable pursuant to the exercise of options with exercise prices ranging from $0.08 to $0.31.

 

Off Balance Sheet Arrangements

 

We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable Securities and Exchange Commission rules.

 

40

 

 

Contractual Obligations

 

    Operating     Capital     Total  
    Leases     Leases     Commitments  
2019 (April through December)   $ 206,098     $ 13,761     $ 219,859  
2020     162,055       4,587       166,642  
2021     ---       ---       ---  
2022     ---       ---       ---  
2023     ---       ---       ---  
Total lease payments     368,153       18,348       386,501  
Less interest     (28,957 )     (1,027 )     (29,984 )
Present value of lease liabilities   $ 339,196     $ 17,321     $ 356,517  

 

Operating lease commitments relate to three leases in Naples, Florida. First, the Company entered into an operating lease for its main office in Naples, Florida. The lease commenced on August 1, 2013 and expires July 31, 2020. The lease is for a 6901 square-foot space. The base rent for the first full year of the lease term is $251,287 per annum with increases during the period. Second, the Company entered into another operating lease in the same building for an additional 361 square feet space for use of the medical equipment for the same period. The base rent for the first full year of the lease term is $13,140 per annum. Third, the Company leases on a month-to-month basis approximately 2,500 square feet of office space in Naples, FL. Monthly rent is approximately $3,300.

 

Financing lease commitments are comprised of a capital equipment finance lease for Ultrasound equipment with Everbank. There was no interest on this lease. The monthly payment is $1,529 for 60 months ending in March 2020.

 

Item 3. Quantitative and qualitative disclosures about market risk

 

Pursuant to Item 305(e) of Regulation S-K (§229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

As of March 31, 2019, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

 

The material weaknesses consist of controls associated with segregation of duties and a lack of written policies and procedures for internal controls, as well as understaffing in our accounting and reporting function. To address the material weaknesses, we hired a full time Controller starting in May 2018 and have engaged outside consultants and performed additional analyses and other post-closing procedures to ensure that our consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).

 

Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

Changes in Internal Control over Financial Reporting

 

There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) during the fiscal quarter ended March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

41

 

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not aware of any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

 

Item 1A. Risk Factors

 

The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

 

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

 

Except as previously disclosed in a Current Report on Form 8-K, or as set forth below, the Company has not sold securities that were not registered under the Securities Act of 1933, as amended (the “Securities Act”), during the period covered by this report.

 

On January 15, 2019, we issued 28,000 common shares to the holder of a $78,000 convertible promissory note as an inducement to enter into the convertible promissory note transaction.

 

During February 7, 2019, we issued 2,512,821 common shares to a convertible note holder upon conversion of outstanding principal by the note holder.

 

On February 13, 2019, the investor in the July 18, 2018 private placement transaction exercised the remaining 2,098,427 of the Pre-Funded Warrants. We did not receive any proceeds from the transaction.

 

On February 21, 2019, we issued 20,000 common shares to a third-party consultant as partial compensation for professional services.

 

On March 19, 2019, we issued 250,000 common shares to a third-party consultant as partial compensation for professional services.

 

During February and March 2019, the Company sold 1,250,000 shares of common stock in two separate private placement transactions and received $340,000 in proceeds from the sales. The shares were issued at a share price of $0.30 per share. In connection with the stock sale, we also issued 566,667 five-year warrants to purchase shares of common stock at an exercise price of $0.40 per share and 250,000 three-year warrants to purchase shares of common stock at an exercise price of $0.50 per share.

 

The sales of the above securities were exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof, and appropriate restrictive legends were placed upon the stock certificates issued in these transactions.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

42

 

 

Item 6. Exhibits

 

Exhibit No.   Exhibit Description
10.1   Securities Purchase Agreement with Morningview Financial LLC dated January 2, 2018 (Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2018)
10.2   Convertible Promissory Note with Morningview Financial LLC dated January 2, 2018 (Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2018)
10.3   Securities Purchase Agreement with Auctus Fund LLC dated February 2, 2018 (Filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2018)
10.4   Convertible Promissory Note with Auctus Fund LLC dated February 2, 2018 (Filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2018)
10.6   Securities Purchase Agreement with EMA Financial LLC dated February 13, 2018 (Filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2018)
10.7   Convertible Promissory Note with EMA Financial LLC dated February 13, 2018 (Filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2018)
10.8   Form of Warrant Agreement issued to Dr. Michael Dent (Filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 15, 2018)
10.9   Securities Purchase Agreement with LG Capital Funding LLC dated March 5, 2018 (Filed as Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2018)
10.10   Convertible Promissory Note with LG Capital Funding LLC dated March 5, 2018 (Filed as Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2018)
10.11*   Form of Securities Purchase Agreement with BHP Capital NY Inc. dated January 14, 2019
10.12*   Form of Convertible Promissory Note with BHP Capital NY Inc. dated January 14, 2019
10.13   Agreement and Plan of Merger, dated January 15, 2019, by and among HealthLynked Corp., HLYK Florida, LLC, Hughes Center for Functional Medicine, P.A., and Pamela A. Hughes, D.O. (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 22, 2019)
10.14   Press Release, dated January 22, 2019 (Filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 22, 2019)
10.15*   Form of Securities Purchase Agreement with Power Up Lending Group Ltd. dated January 24, 2019
10.16*   Form of Convertible Promissory Note with Power Up Lending Group Ltd. dated January 24, 2019
10.17   First Amendment to Agreement and Plan of Merger, dated April 12, 2019, by and among HealthLynked Corp., HLYK Florida, LLC, Hughes Center for Functional Medicine, P.A., and Pamela A. Hughes, D.O. (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 18, 2019)
10.18*   Form of Securities Purchase Agreement with Power Up Lending Group Ltd. dated April 3, 2019
10.19*   Form of Convertible Promissory Note with Power Up Lending Group Ltd. dated April 3, 2019
10.20*   Form of Securities Purchase Agreement with BHP Capital NY Inc. and Jefferson Street Capital LLC dated April 11, 2019
10.21*   Form of Convertible Promissory Note with BHP Capital NY Inc. dated April 11, 2019
10.22*   Form of Convertible Promissory Note with Jefferson Street Capital LLC dated April 11, 2019
10.23*   Form of Convertible Promissory Note with Iconic Holdings LLC dated April 15, 2019
10.24*   Form of Securities Purchase Agreement with Power Up Lending Group Ltd. dated May 7, 2019
10.25*   Form of Convertible Promissory Note with Power Up Lending Group Ltd. dated May 7, 2019
31.1*   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer.
31.2*   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer.
32.1*   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer
32.2*   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer
     
101*   XBRL Instance Document
    XBRL Taxonomy Extension Schema Document
    XBRL Taxonomy Extension Calculation Linkbase Document
    XBRL Taxonomy Extension Definition Linkbase Document
    XBRL Taxonomy Extension Label Linkbase Document
    XBRL Taxonomy Extension Presentation Linkbase Document

 

* Filed herewith.

 

 

43

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Dated: May 15, 2019

 

  HEALTHLYNKED CORP.
   
  By: /s/ Michael Dent
    Name: Michael Dent
    Title:

Chief Executive Officer and Chairman

(Principal Executive Officer)

 

  By: /s/ George O’Leary
    Name: George O’Leary
    Title:

Chief Financial Officer

(Principal Financial Officer)

 

 

44

 

 

 

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