As filed with the Securities and Exchange Commission on May 12, 2017

Registration No. 333-217309

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Amendment No. 1 to

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

HealthLynked Corp.

(Exact Name of Registrant as specified in its charter)

 

Nevada		7373		47-1634127
(State or other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

 

1726 Medical Blvd Suite 101

Naples, Florida 34110

Tel: 239-513-1992

Facsimile: (239-513-9022)

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

Michael Dent, MD

Chief Executive Officer

1726 Medical Blvd Suite 101

Naples, Florida 34110

Tel: 239-513-1992

Facsimile: (239-513-9022)

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

 

With copies to:

 

Gregory Sichenzia, Esq.

Avital Perlman, Esq.

Sichenzia Ross Ference Kesner LLP

61 Broadway, 32nd Floor

New York, NY 10006

Telephone: (212) 930-9700

Facsimile: (212) 930-9725

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. þ

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

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

 

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-Accelerated Filer ☐                 (Do not check if a smaller reporting company)	Smaller Reporting Company þ Emerging Growth Company þ

 

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 to Section 7(a)(2)(B) of the Securities Act. ☐

 

  

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of Securities to be Registered		Amount to be Registered (1)				Proposed Maximum Offering Price per Share				Proposed Maximum Aggregate Offering Price (2)				Amount of Registration Fee
Common Stock, par value $0.0001 per share			21,000,000			$	0.20			$	4,200,000			$	486.78	*

 

	(1)	This registration statement shall also cover any additional shares of common stock which become issuable by reason of any stock dividend, stock split, recapitalization or any other similar transaction effected without the receipt of consideration which results in an increase in the number of the registrant’s outstanding shares of common stock.
	(2)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
	*	Previously paid

  

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

  

 

 

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED MAY 12, 2017

 

PRELIMINARY PROSPECTUS

 

21,000,000 Shares

 

HEALTHLYNKED CORP.

 

Common Stock

 

This prospectus relates to shares of common stock of HealthLynked Corp. that may be sold by the selling stockholder identified in this prospectus. The shares of common stock offered under this prospectus by the selling stockholder are issuable to Iconic Holdings LLC, or Iconic, pursuant to an investment agreement between Iconic and ourselves entered into in July 2016 and amended in March 2017. We are registering the offer and sale of the shares to satisfy registration rights we have granted. We will not receive any of the proceeds from the sale of shares by the selling stockholder.

 

The selling stockholder may sell the shares of common stock described in this prospectus in a number of different ways and at varying prices. We provide more information about how the selling stockholder may sell its shares of common stock in the section titled “Plan of Distribution.” Iconic is an “underwriter” within the meaning of the Securities Act of 1933, as amended, in connection with sales of shares offered pursuant to this prospectus. We will pay the expenses incurred in registering the shares, including legal and accounting fees.

 

Our common stock is traded on the OTCQB under the symbol “HLYK” since May 10, 2017. The last reported sale price of our common stock on the OTCPink on May 11, 2017 was $0.50.

 

In addition, we qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act of 1933 and, as such, are allowed to provide in this prospectus more limited disclosures than an issuer that would not so qualify. Furthermore, for so long as we remain an emerging growth company, we will qualify for certain limited exceptions from investor protection laws such as the Sarbanes Oxley Act of 2002 and the Investor Protection and Securities Reform Act of 2010. Please read “Risk Factors” and “Summary—Emerging Growth Company Status.”

 

Investing in our common stock is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties described under the heading “Risk Factors” beginning on page 5 of this prospectus before making a decision to purchase our common stock.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

The date of this prospectus is May 12, 2017

 

  

TABLE OF CONTENTS

 

PROSPECTUS SUMMARY	1
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS	4
RISK FACTORS	5
USE OF PROCEEDS	16
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS	16
DIVIDEND POLICY	17
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17
BUSINESS	23
MANAGEMENT	32
EXECUTIVE COMPENSATION	33
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	35
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	35
SELLING STOCKHOLDER	37
DESCRIPTION OF SECURITIES	37
PLAN OF DISTRIBUTION	39
LEGAL MATTERS	40
EXPERTS	40
WHERE YOU CAN FIND ADDITIONAL INFORMATION	40
INDEX TO FINANCIAL STATEMENTS	F-1

 

You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

 

 

RISK FACTORS

 

FINANCIAL AND GENERAL BUSINESS RISKS

  

Our subsidiary the Naples Women’s Center, currently our only source of income, has achieved profitability and incurred losses in the past and may not be able to achieve profitability in the future.

 

Even though our subsidiary the Naples Women’s Center (“NWC”) was established in 1996, it is subject to many of the risks inherent in the practice of medicine. We cannot give any assurance that NWC’s operations will continue as currently intended and no assurance can be given that we can continue to receive reimbursement from third party payers. Further, changes in Healthcare regulations in the coming years may negatively impact our operations. NWC realized segment income from operations for the year ended December 31, 2015, but incurred segment losses in the years ended December 31, 2014 and 2016. We expect to hire approximately five additional new physicians over the next two to five years, which will result in increased costs and expenses, which may result in future operating losses.

 

We may never be able to implement our proposed online personal medical information and archiving system and as such, an investment in us at this stage of our business is extremely risky.

 

The HealthLynked Network is in the developmental stages and we currently anticipate launching the network sometime during the first six months of 2017. However, we cannot guarantee how long it will take us to develop our technology. In addition, we cannot predict whether physicians and patients will adopt our technology, or even if they do, the timing of such adoption. Further, it is possible that other competitors will greater resources could enter the market and make it more difficult for us to attract or keep customers. Consequently, at this phase of our development, our future is speculative and depends on the proper execution of our business model.

 

No assurance can be given that we will be able to timely repay the amounts due on the Convertible Notes.

 

At the present time, no assurance can be given that we will earn sufficient revenues or secure the necessary financing, if needed, to timely pay the amounts owed under the Convertible Notes. The Secured Note is secured by substantially all of our assets, including, but not limited to, receivables of NWC, machinery, equipment, contracts rights, and letters of credits. If we fail to timely repay the amounts owed under the Secured Note, a default may allow the lender under the relevant instruments to accelerate the related debt and to exercise their remedies under these agreements, which will typically include the right to declare the principal amount of that debt, together with accrued and unpaid interest and other related amounts, immediately due and payable, to exercise any remedies the lender may have to foreclose on assets that are subject to liens securing that debt. As of December 31, 2016, $566,003 in principal and interest was outstanding under the Secured Note and $52,425 in principal and interest was outstanding under the Fee Note. We expect to repay the Convertible Notes from outside funding sources, including but not limited to amounts available upon the exercise of the Put Right granted to us under the Investment Agreement, sales of our equity, loans from related parties and others, or to satisfy the Convertible Notes through the issuance of shares upon conversion pursuant to the terms of the Convertible Notes. 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 or satisfy the Convertible Notes through the issuance of shares upon conversion, 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. If we are unable to meet these requirements, we will not have access to funds under this arrangement.

 

We have substantial future capital needs and our ability to continue as a going concern depends upon our ability to raise additional capital and achieve profitable operations.

 

We currently anticipate that our available cash resources will be sufficient to meet our presently anticipated working capital requirements through the second quarter of 2017. However, we anticipate that we will need an additional $250,000 in the third and fourth quarters of 2017 to properly execute our business plan. We may also need to raise additional funds in order to support more rapid expansion, develop new or enhanced services and products, hire employees, respond to competitive pressures, acquire technologies or respond to unanticipated requirements. Management’s plans include attempting to improve our profitability and our ability to generate sufficient cash flow from operations to meet our operating 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 increase our cash balances. 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 the Company on satisfactory terms and conditions, if at all. If adequate funds are not available on acceptable terms, we may be unable to develop or enhance our services and products, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, which could have a material adverse effect on our business, financial condition and operating results. Further, we may seek to raise additional funds through the issuance of equity securities, in which case, the percentage ownership of our shareholders will be reduced and holders may experience additional dilution in net book value per share.

 

Our future success depends on our ability to execute our business plan by fully developing our online medical records platform and recruiting physicians and patients to adopt and use the system. However, there is no guarantee that we will be able to successfully implement our business plan.

 

Our operations to date have been limited to the medical services provided by the NWC. The online medical records platform we seek to provide through the HealthLynked Network is in the early stages of development and as such, we have not yet demonstrated our ability to successfully develop or market this platform. As of the date of this prospectus, we have not entered into any agreements with third party doctors or patients to use our system for their medical records and there is no assurance that we will be able to enter into such agreements in the future.

 

  

We may not be able to effectively control and manage our growth.

 

Our strategy envisions a period of potentially rapid growth in our physician network over the next five years based on aggressively increasing our marketing efforts. We intend to rely on the efforts of our newly engaged Chief Commercial Officer to attempt to enroll over 2,000 new physicians by December 2017 with that level of growth doubling every year over the next five years. We currently maintain a small in house programming, IT, administrative and sales personnel. The capacity to service the online medical records platform and our expected growth may impose a significant burden on our future planned administrative and operational resources. The growth of our business may require significant investments of capital and increased demands on our management, workforce and facilities. We will be required to substantially expand our administrative and operational resources and attract, train, manage and retain qualified employees, management and other personnel. Failure to do so, or to satisfy such increased demands would interrupt or have a material adverse effect on our business and results of operations.

 

The departure or loss of Dr. Michael Dent could disrupt our business.

 

We depend heavily on the continued efforts of Dr. Michael Dent, Chief Executive Officer and Chairman of the Board. Dr. Dent is essential to our strategic vision and day-to-day operations and would be difficult to replace. While we have entered into a four-year written employment contract with Dr. Dent effective July 1, 2016, we cannot be certain that Dr. Dent will continue with us for any particular period of time. The departure or loss of Dr. Dent, or the inability to hire and retain a qualified replacement, could negatively impact our ability to manage our business.

 

The departure or loss of Robert Horel, our Chief Commercial Officer, could disrupt our business.

 

We depend heavily on the continued efforts of Robert Horel, our Chief Commercial Officer. Mr. Horel’s expertise and contacts are essential to our sales strategy and would be difficult to replace. While we have entered into a written employment contract with Mr. Horel effective November 28, 2016, we cannot be certain that Mr. Horel will continue with us for any particular period of time. The departure or loss of Mr. Horel, or the inability to hire and retain a qualified replacement, could negatively impact our ability to manage our business.

 

George O’Leary may devote only a portion of his business time to us, which could materially and adversely affect us and our business.

 

Mr. O’Leary, our Chief Financial Officer, has entered into a two-year consultancy agreement with us effective July 1, 2016. However, under the terms of such agreement, he is not required to work exclusively for us and does not devote all of his time to our operations. Presently, Mr. O’Leary allocates only a portion of his time to the operation of our business. As Mr. O’Leary is currently providing consulting services elsewhere in addition to serving as our Chief Financial Officer, he is able to commit to us only up to twenty-five hours a week but is not obligated to devote any particular amount of time to our business or affairs.

 

The healthcare industry is highly regulated, and government authorities may determine that we have failed to comply with applicable laws, rules or regulations.

 

The healthcare industry, healthcare information technology, the online medical records platform services that we provide and the physicians’ medical practices we engage in through NWC are subject to extensive and complex federal, state and local laws, rules and regulations, compliance with which imposes substantial costs on us. Of particular importance are the provisions summarized as follows:

 

	●	federal laws (including the federal False Claims Act) that prohibit entities and individuals from knowingly or recklessly making claims to Medicaid, Medicare and other government-funded programs that contain false or fraudulent information or from improperly retaining known overpayments;
	●	a provision of the Social Security Act, commonly referred to as the “anti-kickback” statute, that prohibits the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback, rebate or other remuneration, in cash or in kind, in return for the referral or recommendation of patients for items and services covered, in whole or in part, by federal healthcare programs, such as Medicaid and Medicare;
	●	a provision of the Social Security Act, commonly referred to as the Stark Law, that, subject to limited exceptions, applies when physicians refer Medicare patients to an entity for the provision of certain “designated health services” if the physician or a member of such physician’s immediate family has a direct or indirect financial relationship (including a compensation arrangement) with the entity;
	●	similar state law provisions pertaining to anti-kickback, fee splitting, self-referral and false claims issues, which typically are not limited to relationships involving government-funded programs;
	●	provisions of the federal Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”) that prohibit knowingly and willfully executing a scheme or artifice to defraud a healthcare benefit program or falsifying, concealing or covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services;
	●	state laws that prohibit general business corporations from practicing medicine, controlling physicians’ medical decisions or engaging in certain practices, such as splitting fees with physicians;

 

 

	●	federal and state healthcare programs may deny our application to become a participating provider that could in turn cause us to not be able to treat those patients or prohibit us from billing for the treatment services provided to such patients;
	●	federal and state laws that prohibit providers from billing and receiving payment from Medicaid or Medicare for services unless the services are medically necessary, adequately and accurately documented and billed using codes that accurately reflect the type and level of services rendered;
	●	federal and state laws pertaining to the provision of services by non-physician practitioners, such as advanced nurse practitioners, physician assistants and other clinical professionals, physician supervision of such services and reimbursement requirements that may be dependent on the manner in which the services are provided and documented; and
	●	federal laws that impose civil administrative sanctions for, among other violations, inappropriate billing of services to federally funded healthcare programs, inappropriately reducing hospital care lengths of stay for such patients, or employing individuals who are excluded from participation in federally funded healthcare programs.

 

In addition, we believe that our business, including the business conducted through NWC, will continue to be subject to increasing regulation, the scope and effect of which we cannot predict.

 

We may in the future become the subject of regulatory or other investigations or proceedings, and our interpretations of applicable laws, rules and regulations may be challenged. For example, regulatory authorities or other parties may assert that our arrangements with the physicians using the HealthLynked Network constitute fee splitting and seek to invalidate these arrangements, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our common stock. Regulatory authorities or other parties also could assert that our relationships violate the anti-kickback, fee splitting or self-referral laws and regulations. Such investigations, proceedings and challenges could result in substantial defense costs to us and a diversion of management’s time and attention. In addition, violations of these laws are punishable by monetary fines, civil and criminal penalties, exclusion from participation in government-sponsored healthcare programs, and forfeiture of amounts collected in violation of such laws and regulations, any of which could have a material adverse effect on our overall business, financial condition, results of operations, cash flows and the trading price of our common stock.

 

Federal and state laws that protect the privacy and security of protected health information may increase our costs and limit our ability to collect and use that information and subject us to penalties if we are unable to fully comply with such laws.

 

Numerous federal and state laws and regulations govern the collection, dissemination, use, security and confidentiality of individually identifiable health information. These laws include:

 

	●	Provisions of HIPAA that limit how healthcare providers may use and disclose individually identifiable health information, provide certain rights to individuals with respect to that information and impose certain security requirements;
	●	The Health Information Technology for Economic and Clinical Health Act (“HITECH”), which strengthens and expands the HIPAA Privacy Standards and Security Standards and imposes data breach notification obligations;
	●	Other federal and state laws restricting the use and protecting the privacy and security of protected health information, many of which are not preempted by HIPAA;
	●	Federal and state consumer protection laws; and
	●	Federal and state laws regulating the conduct of research with human subjects.

 

Through the HealthLynked Network, we collect and maintain protected health information in paper and electronic format. New protected health information standards, whether implemented pursuant to HIPAA, HITECH, congressional action or otherwise, could have a significant effect on the manner in which we handle healthcare-related data and communicate with third parties, and compliance with these standards could impose significant costs on us, or limit our ability to offer certain services, thereby negatively impacting the business opportunities available to us.

 

In addition, if we do not comply with existing or new laws and regulations related to protected health information, we could be subject to remedies that include monetary fines, civil or administrative penalties, civil damage awards or criminal sanctions.

 

 

RISKS RELATED TO THE HEALTHLYNKED NETWORK

 

The market for Internet-based personal medical information and record archiving systems may not develop substantially further or develop more slowly than we expect, harming the growth of our business.

 

It is uncertain whether personal medical information and record archiving systems will achieve and sustain the high levels of demand and market acceptance we anticipate. Further, even though we expect NWC patients and physicians to use the HealthLynked Network, our success will depend, to a substantial extent, on the willingness of unaffiliated patients, physicians and hospitals to use our services. Some patients, physicians and hospitals may be reluctant or unwilling to use our services, because they may have concerns regarding the risks associated with the security and reliability, among other things, of the technology model associated with these services. If our target users do not believe our systems are secure and reliable, then the market for these services may not expand as much or develop as quickly as we expect, either of which would significantly adversely affect our business, financial condition, or operating results.

 

If we do not continue to innovate and provide services that are useful to our target users, we may not remain competitive, and our revenues and operating results could suffer.

 

Our success depends on our ability to keep pace with technological developments, satisfy increasingly sophisticated client requirements, and obtain market acceptance. Our competitors are constantly developing products and services that may become more efficient or appealing to our clients and users. As a result, we will be required to invest significant resources in research and development in order to enhance our existing services and introduce new high-quality services that clients and users will want, while offering these services at competitive prices.

 

If we are unable to predict user preferences or industry changes, or if we are unable to modify our services on a timely or cost-effective basis, we may lose clients and target users. Our operating results would also suffer if our innovations are not responsive to the needs of our clients and users, are not appropriately timed with market opportunity, or are not effectively brought to market. As technology continues to develop, our competitors may be able to offer results that are, or that are perceived to be, substantially similar to or better than those generated by our services. This may force us to compete on additional service attributes and to expend significant resources in order to remain competitive.

 

Failure to manage our rapid growth effectively could increase our expenses, decrease our revenue, and prevent us from implementing our business strategy.

 

To manage our anticipated future growth effectively, we will need to enhance our information technology infrastructure and financial and accounting systems and controls, as well as manage expanded operations in geographically distributed locations. We also must engage and retain a significant number of qualified professional services personnel, software engineers, technical personnel, and management personnel. Failure to manage our rapid growth effectively could lead us to over-invest or under-invest in technology and operations; result in weaknesses in our infrastructure, systems, or controls; give rise to operational mistakes, losses, or loss of productivity or business opportunities; reduce client or user satisfaction; limit our ability to respond to competitive pressures; and could also result in loss of employees and reduced productivity of remaining employees. Our growth could require significant capital expenditures and may divert financial resources and management attention from other projects, such as the development of new or enhanced services. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our revenue could decline or may grow more slowly than expected, and we may be unable to implement our business strategy

 

We may be unable to adequately protect, and we may incur significant costs in enforcing, our intellectual property and other proprietary rights.

 

Our success depends in part on our ability to enforce our intellectual property and other proprietary rights. We expect to rely upon a combination of copyright, trademark, trade secret, and unfair competition laws, as well as license and access agreements and other contractual provisions, to protect these rights.

 

Our attempts to protect our intellectual property through copyright, patent, and trademark registration may be challenged by others or invalidated through administrative process or litigation. While we intend to submit patent applications covering our integrated technology during 2017, the scope of issued patents, if any, may be insufficient to prevent competitors from providing products and services similar to ours, our patents may be successfully challenged, and we may not be able to obtain additional meaningful patent protection in the future. There can be no assurance that our patent registration efforts will be successful.

 

 

Our expected agreements with clients, users, vendors and strategic partners will limit their use of, and allow us to retain our rights in, our intellectual property and proprietary information. Further, we anticipate that these agreements will grant us ownership of intellectual property created in the performance of those agreements to the extent that it relates to the provision of our services. In addition, we require certain of our employees and consultants to enter into confidentiality, non-competition, and assignment of inventions agreements. We also require certain of our vendors and strategic partners to agree to contract provisions regarding confidentiality and non-competition. However, no assurance can be given that these agreements will not be breached, and we may not have adequate remedies for any such breach. Further, no assurance can be given that these agreements will be effective in preventing the unauthorized access to, or use of, our proprietary information or the reverse engineering of our technology. Agreement terms that address non-competition are difficult to enforce in many jurisdictions and may not be enforceable in any particular case. In any event, these agreements do not prevent our competitors from independently developing technology or authoring clinical information that is substantially equivalent or superior to our technology or the information we distribute.

 

To the extent that our intellectual property and other proprietary rights are not adequately protected, third parties might gain access to our proprietary information, develop and market products or services similar to ours, or use trademarks similar to ours, each of which could materially harm our business. Existing U.S. federal and state intellectual property laws offer only limited protection. In addition, if we resort to legal proceedings to enforce our intellectual property rights or to determine the validity and scope of the intellectual property or other proprietary rights of others, the proceedings could be burdensome and expensive, even if we were to prevail. Any litigation that may be necessary in the future could result in substantial costs and diversion of resources and could have a material adverse effect on our business, operating results, or financial condition.

 

In addition, our platforms incorporate “open source” software components that are licensed to us under various public domain licenses. While we believe that we have complied with our obligations under the various applicable licenses for open source software that we use, open source license terms are often ambiguous, and there is little or no legal precedent governing the interpretation of many of the terms of certain of these licenses. Therefore, the potential impact of such terms on our business is somewhat unknown. For example, some open source licenses require that those using the associated code disclose modifications made to that code and such modifications be licensed to third parties at no cost. We monitor our use of open source software in an effort to avoid uses in a manner that would require us to disclose or grant licenses under our proprietary source code. However, there can be no assurance that such efforts will be successful, and such use could inadvertently occur.

 

We may be sued by third parties for alleged infringement of their proprietary rights.

 

The software and Internet industries are characterized by the existence of a large number of patents, trademarks, and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. We may receive in the future communications from third parties claiming that we, our technology, or components thereof, infringe on the intellectual property rights of others. We may not be able to withstand such third-party claims against our technology, and we could lose the right to use third-party technologies that are the subject of such claims. Any intellectual property claims, whether with or without merit, could be time-consuming and expensive to resolve, divert management attention from executing our business plan, and require us to pay monetary damages or enter into royalty or licensing agreements. Although we intend that many of our third-party service providers will be obligated to indemnify us if their products infringe the rights of others, such indemnification may not be effective or adequate to protect us or the indemnifying party may be unable to uphold its contractual obligations.

 

Moreover, any settlement or adverse judgment resulting from such a claim could require us to pay substantial amounts of money or obtain a license to continue to use the technology or information that is the subject of the claim, or otherwise restrict or prohibit our use of the technology or information. There can be no assurance that we would be able to obtain a license on commercially reasonable terms, if at all, from third parties asserting an infringement claim; that we would be able to develop alternative technology on a timely basis, if at all; that we would be able to obtain a license to use a suitable alternative technology or information to permit us to continue offering, and our clients to continue using, our affected services; or that we would not need to change our product and design plans, which could require us to redesign affected products or services or delay new offerings. Accordingly, an adverse determination could prevent us from implementing our strategy or offering our services and products, as currently contemplated.

 

We may not be able to properly safeguard the information on the HealthLynked Network.

 

Information security risks have generally increased in recent years because of new technologies and the increased activities of perpetrators of cyber-attacks resulting in the theft of protected health, business or financial information. A failure in, or a breach of our information systems as a result of cyber attacks could disrupt our business, result in the release or misuse of confidential or proprietary information, damage our reputation, and increase our administrative expenses. Although we plan to have robust information security procedures and other safeguards in place, as cyber threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures or to investigate and remediate any information security vulnerabilities. Any of these disruptions or breaches of security could have a material adverse effect on our business, financial condition and results of operations.

 

 

Our employees may not take all appropriate measures to secure and protect confidential information in their possession.

 

Each of our employees is advised that they are responsible for the security of the information in our systems and to ensure that private information is kept confidential. Should an employee not follow appropriate security measures, including those that have been put in place to prevent cyber threats or attacks, the improper release of protected health information could result. The release of such information could have a material adverse effect our reputation and our business, financial condition, results of operations and cash flows.

 

RISKS RELATED TO THE PROVISION OF MEDICAL SERVICES BY NWC

 

Continuing unfavorable economic conditions could have an adverse effect on our business.

 

Although economic conditions in the United States have gradually improved, the number of unemployed and under-employed workers remains significant and economic growth has been slow. The percentage of our patient services provided through NWC that are being reimbursed under government-sponsored healthcare programs could increase if economic conditions do not improve or if they deteriorate and possibly lower patient volumes. These conditions could also lead to additional increases in the number of unemployed and under-employed workers and a decline in the number of private employers that offer healthcare insurance coverage to their employees. Employers that do offer healthcare coverage may increase the required contributions from employees to pay for their coverage and increase patient responsibility amounts. As a consequence, the number of patients who participate in government-sponsored programs or are uninsured could increase. In addition, due to the rising costs of managed care premiums and patient responsibility amounts, coupled with the current economic environment, NWC may experience increased bad debt due to patients’ inability to pay for certain services. Further, it is too early to determine whether the Affordable Care Act will increase or decrease the number of our patients with private healthcare insurance, obtained either through employers or the recently established insurance exchanges. Payments received from government-sponsored programs are substantially less than payments received from private healthcare insurance programs (managed care and other third-party payors). In addition, payments under the recently established health care exchanges may be less than payments from private healthcare insurance programs. A payor mix shift from private healthcare insurance programs to government payors may result in an increase in NWC’s estimated provision for contractual adjustments and uncollectible amounts and a corresponding decrease in our net patient service revenue. Further increases in the government component of our payor mix at the expense of other third-party payors could result in a significant reduction in our average reimbursement rates.

 

Any state budgetary constraints could have an adverse effect on our reimbursement from Medicaid programs.

 

As a result of slow economic growth and volatile economic conditions, many states are continuing to collect less revenue than they did in prior years and as a consequence are facing budget shortfalls and underfunded pension and other obligations. Although the shortfalls for the more recent budgetary years have declined, they are still significant by historical standards. The financial condition in Florida or other states in which we may in the future could lead to reduced or delayed funding for Medicaid programs and, in turn, reduced or delayed reimbursement for physician services, which could adversely affect our results of operations, cash flows and financial condition.

 

The Affordable Care Act may have a significant effect on our business.

 

The Affordable Care Act contains a number of provisions that could affect us over the next several years. These provisions include the establishment of health insurance exchanges to facilitate the purchase of qualified health plans, expanding Medicaid eligibility, subsidizing insurance premiums and creating requirements and incentives for businesses to provide healthcare benefits. Other provisions contain changes to healthcare fraud and abuse laws and expand the scope of the FCA.

 

The Affordable Care Act contains numerous other measures that could affect us. For example, payment modifiers are being developed that will differentiate payments to physicians under federal healthcare programs based on quality and cost of care. In addition, other provisions authorize voluntary demonstration projects relating to the bundling of payments for episodes of hospital care and the sharing of cost savings achieved under the Medicare program.

 

The Centers for Medicare and Medicaid Services (“CMS”) issued a final rule under the Affordable Care Act that is intended to allow physicians, hospitals and other health care providers to coordinate care for Medicare beneficiaries through Accountable Care Organizations (“ACOs”). ACOs are entities consisting of healthcare providers and suppliers organized to deliver services to Medicare beneficiaries and eligible to receive a share of any cost savings the entity can achieve by delivering services to those beneficiaries at a cost below a set baseline and based upon established quality of care standards. We will continue to evaluate the impact of the ACO regulations on our business and operations.

 

 

Many of the Affordable Care Act’s most significant reforms, such as the establishment of state-based and federally facilitated insurance exchanges that provide a marketplace for eligible individuals and small employers to purchase health care insurance, became effective relatively recently. On October 1, 2013, individuals began enrolling in health care insurance plans offered under these state-based and federally-facilitated insurance exchanges, notwithstanding significant technical issues in accessing and enrolling in the federal online exchange. Such issues may have delayed or reduced the purchase of health care insurance by uninsured persons. In order to be covered on the effective date of January 1, 2014 individuals were required to enroll and pay their first premium by December 24, 2013, however, extensions have been, and may continue to be granted on a case by case basis depending on specific circumstances. Uninsured persons who do not enroll in health care insurance plans by March 31, 2014 will be required to pay a penalty to the Internal Revenue Service, unless a hardship exception applies. The patient responsibility costs related to health care plans obtained through the insurance exchanges may be high, and we may experience increased bad debt due to NWC’s patients’ inability to pay for certain services.

 

The Affordable Care Act also allows states to expand their Medicaid programs through an increase in the Medicaid eligibility income limit from a state’s current eligibility levels to 133% of the federal poverty level. It remains unclear to what extent states will expand their Medicaid programs by raising the income limit to 133% of the federal poverty level. As a result of these and other uncertainties, we cannot predict whether there will be more uninsured patients in 2014 than anticipated when the Affordable Care Act was enacted.

 

The Affordable Care Act also remains subject to continuing legislative scrutiny, including efforts by Congress to amend or repeal a number of its provisions as well as administrative actions delaying the effectiveness of key provisions. As a result, we cannot predict with any assurance the ultimate effect of the Affordable Care Act on our Company, nor can we provide any assurance that its provisions will not have a material adverse effect on our business, financial condition, results of operations or cash flows.

 

Government-funded programs or private insurers may limit, reduce or make retroactive adjustments to reimbursement amounts or rates.

 

A portion of the net patient service revenue derived from services rendered through NWC is from payments made by Medicare and Medicaid and other government-sponsored or funded healthcare programs (the “GHC Programs”). These government-funded programs, as well as private insurers, have taken and may continue to take steps, including a movement toward increased use of managed care organizations, value-based purchasing, and new patient care models to control the cost, eligibility for, use and delivery of healthcare services as a result of budgetary constraints and cost containment pressures due to unfavorable economic conditions, rising healthcare costs and for other reasons. These government-funded programs and private insurers may attempt other measures to control costs, including bundling of services and denial of, or reduction in, reimbursement for certain services and treatments. As a result, payments from government programs or private payors may decrease significantly. Also, any adjustment in Medicare reimbursement rates may have a detrimental impact on our reimbursement rates not only for Medicare patients, but also because Medicaid and other third-party payors often base their reimbursement rates on a percentage of Medicare rates. Our business may also be materially affected by limitations on, or reductions in, reimbursement amounts or rates or elimination of coverage for certain individuals or treatments. Moreover, because government-funded programs generally provide for reimbursements on a fee-schedule basis rather than on a charge-related basis, we generally cannot increase our revenues from these programs by increasing the amount we charge for services rendered by NWC’s physicians. To the extent our costs increase, we may not be able to recover our increased costs from these programs, and cost containment measures and market changes in non-government-funded insurance plans have generally restricted our ability to recover, or shift to non-governmental payors, these increased costs. In addition, funds we receive from third-party payors are subject to audit with respect to the proper billing for physician and ancillary services and, accordingly, our revenue from these programs may be adjusted retroactively. Any retroactive adjustments to our reimbursement amounts could have a material effect on our financial condition, results of operations, cash flows and the trading price of our common stock.

 

We may become subject to billing investigations by federal and state government authorities.

 

Federal and state laws, rules and regulations impose substantial penalties, including criminal and civil fines, exclusion from participation in government healthcare programs and imprisonment, on entities or individuals (including any individual corporate officers or physicians deemed responsible) that fraudulently or wrongfully bill government-funded programs or other third-party payors for healthcare services. CMS issued a final rule requiring states to implement a Medicaid Recovery Audit Contractor (“RAC”) program effective January 1, 2012. States are required to contract with one or more eligible Medicaid RACs to review Medicaid claims for any overpayments or underpayments, and to recoup overpayments from providers on behalf of the state. In addition, federal laws, along with a growing number of state laws, allow a private person to bring a civil action in the name of the government for false billing violations. We believe that audits, inquiries and investigations from government agencies will occur from time to time in the ordinary course of NWC’s operations, which could result in substantial defense costs to us and a diversion of management’s time and attention. We cannot predict whether any future audits, inquiries or investigations, or the public disclosure of such matters, would have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our common stock.

 

 

We may not appropriately record or document the services provided by our physicians.

 

We must appropriately record and document the services our doctors provide to seek reimbursement for their services from third-party payors. If our physicians do not appropriately document, or where applicable, code for their services, we could be subjected to administrative, regulatory, civil, or criminal investigations or sanctions and our business, financial condition, results of operations and cash flows could be adversely affected.

 

We may not be able to successfully recruit and retain qualified physicians, who are key to NWC’s revenues and billing.

 

As part of our business plan, we may acquire other medical practices as we see fit to further develop, test and deploy the HealthLynked Network into new strategic regional areas throughout the country. We compete with many types of healthcare providers, including teaching, research and government institutions, hospitals and health systems and other practice groups, for the services of qualified doctors. We may not be able to continue to recruit new physicians or renew contracts with existing physicians on acceptable terms. If we do not do so, our ability to service execute our business plan may be adversely affected. Our founder, Dr. Michael Dent, retired in 2016 from seeing patients. We are in the process of replacing him with an experienced physician who is qualified to perform surgeries. If we are unable to replace Dr. Dent, or to find a physician who can perform the same types of procedures, including surgeries, it could have a material adverse effect on the operations of NWC. Patient service revenue decreased by $592,068, or 23%, from 2015 to 2016, primarily as a result of Dr. Dent’s retirement in February 2016 and a decrease in production by the physician staff, resulting in a decrease in gross billings of approximately 16%.

 

A significant number of NWC physicians could leave our practice and we may be unable to enforce the non-competition covenants of departed employees.

 

We have entered into employment agreements with the current NWC physicians. Certain of our employment agreements can be terminated without cause by any party upon prior written notice. In addition, substantially all of our physicians have agreed not to compete with us within a specified geographic area for a certain period after termination of employment. The law governing non-compete agreements and other forms of restrictive covenants varies from state to state. Although we believe that the non-competition and other restrictive covenants applicable to our affiliated physicians are reasonable in scope and duration and therefore enforceable under applicable state law, courts and arbitrators in some states are reluctant to strictly enforce non-compete agreements and restrictive covenants against physicians. Our physicians may leave our practices for a variety of reasons, including providing services for other types of healthcare providers, such as teaching, research and government institutions, hospitals and health systems and other practice groups. If a substantial number of our physicians leave our practices or we are unable to enforce the non-competition covenants in the employment agreements, our business, financial condition, results of operations and cash flows could be materially, and adversely affected. We cannot predict whether a court or arbitration panel would enforce these covenants in any particular case.

 

We may be subject to medical malpractice and other lawsuits not covered by insurance.

 

Our business entails an inherent risk of claims of medical malpractice against our affiliated physicians and us. We may also be subject to other lawsuits which may involve large claims and significant defense costs. Although we currently maintain liability insurance coverage intended to cover professional liability and other claims, there can be no assurance that our insurance coverage will be adequate to cover liabilities arising out of claims asserted against us. Liabilities in excess of our insurance coverage, including coverage for professional liability and other claims, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our common stock. See “Description of Our Business-Professional and General Liability Coverage.”

 

 

We may not be able to collect reimbursements for our services from third-party payors in a timely manner.

 

A significant portion of our net patient service revenue is derived from reimbursements from various third-party payors, including GHC Programs, private insurance plans and managed care plans, for services provided by NWC physicians. We are responsible for submitting reimbursement requests to these payors and collecting the reimbursements, and we assume the financial risks relating to uncollectible and delayed reimbursements. In the current healthcare environment, payors continue their efforts to control expenditures for healthcare, including revisions to coverage and reimbursement policies. Due to the nature of our business and our participation in government-funded and private reimbursement programs, we are involved from time to time in inquiries, reviews, audits and investigations by governmental agencies and private payors of our business practices, including assessments of our compliance with coding, billing and documentation requirements. We may be required to repay these agencies or private payors if a finding is made that we were incorrectly reimbursed, or we may be subjected to pre-payment reviews, which can be time-consuming and result in non-payment or delayed payment for the services we provide. We may also experience difficulties in collecting reimbursements because third-party payors may seek to reduce or delay reimbursements to which we are entitled for services that our affiliated physicians have provided. In addition, GHC Programs may deny our application to become a participating provider that could prevent us from providing services to patients or prohibit us from billing for such services. If we are not reimbursed fully and in a timely manner for such services or there is a finding that we were incorrectly reimbursed, our revenue, cash flows and financial condition could be materially, adversely affected.

 

Certain federal and state laws may limit our effectiveness at collecting monies owed to us from patients.

 

We utilize third parties to collect from patients any co-payments and other payments for services that are provided by NWC physicians. The federal Fair Debt Collection Practices Act restricts the methods that third-party collection companies may use to contact and seek payment from consumer debtors regarding past due accounts. State laws vary with respect to debt collection practices, although most state requirements are similar to those under the Fair Debt Collection Practices Act. The Florida Consumer Collection Practices Act, is broader than the federal legislation, applying the regulations to “creditors” as well as “collectors,” whereas the Fair Debt Collection Practices Act is applicable only to collectors. This prohibits creditors who are attempting to collect their own debts from engaging in behavior prohibited by the Fair Debt Collection Practices Act and Florida Consumer Collection Practices Act. The Act has very specific guidelines regarding which actions debt collectors and creditors may engage in to collect unpaid debt. If our collection practices or those of our collection agencies are inconsistent with these standards, we may be subject to actual damages and penalties. These factors and events could have a material adverse effect on our business, financial condition and results of operations.

 

We may not be able to maintain effective and efficient information systems.

 

The profitability of our business, including the services provided by NWC, is dependent on uninterrupted performance of our information systems. Failure to maintain reliable information systems, disruptions in our existing information systems or the implementation of new systems could cause disruptions in our business operations, including errors and delays in billings and collections, disputes with patients and payors, violations of patient privacy and confidentiality requirements and other regulatory requirements, increased administrative expenses and other adverse consequences.

 

RISKS RELATING TO OUR ORGANIZATION

 

Our articles of incorporation authorize our board to create a new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.

 

Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further stockholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing stockholders.

 

Stockholder’s ability to influence corporate decisions may be limited because Michael Dent, our Chief Executive Officer and Chairman of the Board, currently owns a controlling percentage of our common stock.

 

Currently, Dr. Dent, our Chief Executive Officer and Chairman of the Board, beneficially owns approximately 72.39% of our outstanding common stock. As a result of this stock ownership, Dr. Dent can control all matters submitted to our stockholders for approval, including the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration of voting power could delay or prevent an acquisition of our company on terms that other stockholders may desire. In addition, as the interests of Dr. Dent and our minority stockholders may not always be the same, this large concentration of voting power may lead to stockholder votes that are inconsistent with the best interests of our minority stockholders or the best interest of the Company as a whole.

 

 

If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our common stock.

 

Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a result, our small size and any current internal control deficiencies may adversely affect our financial condition, results of operation and access to capital. We have not performed an in-depth analysis to determine if historical un-discovered failures of internal controls exist, and may in the future discover areas of our internal control that need improvement.

 

We are required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act of 2002, which require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. However, we will not be required to make our first assessment of our internal control over financial reporting until the year following our first annual report required to be filed with the SEC. To comply with the requirements of being a public company, we will need to implement additional financial and management controls, reporting systems and procedures and hire accounting, finance and legal staff.

 

Further, our independent registered public accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting, and will not be required to do so for as long as we are an “emerging growth company” pursuant to the provisions of the JOBS Act. Please read “Summary—Emerging Growth Company Status.”

 

Public company compliance may make it more difficult to attract and retain officers and directors.

 

The Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies. As a public company, we expect these new rules and regulations to increase our compliance costs and to make certain activities more time consuming and costly. As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.

 

The public market for our common stock is new and extremely limited.  Failure to develop or maintain a trading market could negatively affect its value and make it difficult or impossible for you to sell your shares.

 

Our common stock has traded on the OTCQB under the symbol “HLYK” since May 10, 2017.  There is a limited public market for our common stock and an active public market for our common stock may not develop.  Failure to develop or maintain an active trading market could make it difficult for you to sell your shares or recover any part of your investment in us.  Even if a market for our common stock does develop, the market price of our common stock may be highly volatile.  In addition to the uncertainties relating to future operating performance and the profitability of operations, factors such as variations in interim financial results or various, as yet unpredictable, factors, many of which are beyond our control, may have a negative effect on the market price of our common stock.

 

Our common stock is subject to the “penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in our common stock cumbersome and may reduce the value of an investment in our common stock. 

  

Rule 15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.  For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

  

 

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

  

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction.  Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules.  This may make it more difficult for investors to dispose of our Common Stock and cause a decline in the market value of our Common Stock.

  

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions.  Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

Drawdowns under the Investment Agreement may cause dilution to existing shareholders.

 

Iconic has committed to purchase up to $3,000,000 worth of shares of our common stock. From time to time during the term of the Investment Agreement, and at our sole discretion, we may present Iconic with a put notice requiring Iconic to purchase shares of our common stock. The purchase price to be paid by Iconic will 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 adjustments. As a result, our existing shareholders will experience immediate dilution upon the purchase of any of the shares by Iconic. The issue and sale of the shares under the Investment Agreement may also have an adverse effect on the market price of the common shares. Iconic may resell some, if not all, of the shares that we issue to it under the Investment Agreement and such sales could cause the market price of the common stock to decline significantly. To the extent of any such decline, any subsequent puts would require us to issue and sell a greater number of shares to Iconic in exchange for each dollar of the put amount. Under these circumstances, the existing shareholders of our company will experience greater dilution. The effect of this dilution may, in turn, cause the price of our common stock to decrease further, both because of the downward pressure on the stock price that would be caused by a large number of sales of our shares into the public market by Iconic, and because our existing stockholders may disagree with a decision to sell shares to Iconic at a time when our stock price is low, and may in response decide to sell additional shares, further decreasing our stock price. If we draw down amounts under the Investment Agreement when our share price is decreasing, we will need to issue more shares to raise the same amount of funding.

 

There is no guarantee that we will be able to fully utilize the Investment Agreement, if at all.

 

The purchase price and amount of shares we can sell to Iconic under the Investment Agreement shall depend on our stock price and stock volume, and we cannot guarantee that our stock price and trading volume will be adequate to allow us to raise sufficient funds under the agreement. The purchase price for shares sold to Iconic 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, subject to certain discounts and adjustments. The maximum Put Amount that the Company shall be entitled to put to Iconic per any applicable put notice is an amount of shares of common stock up to or equal to 100% of the average of the daily trading volume for the ten consecutive trading days immediately prior to the applicable put notice date, so long as such amount is at least $5,000 and does not exceed $150,000, as calculated by multiplying the Put Amount by the average daily weighted average price of our common stock for the ten consecutive trading days immediately prior to the applicable put notice date. 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. We must also have complied with our obligations and otherwise not be in material breach or default of the Convertible Notes and warrants issued to Iconic. If we are unable to meet these requirements, we will not have access to funds under this arrangement. There can be no assurances that we will be able to meet these requirements.

 

 

Certain restrictions on the extent of puts and the delivery of advance notices may have little, if any, effect on the adverse impact of our issuance of shares in connection with the Investment Agreement and as such, Iconic may sell a large number of shares, resulting in substantial dilution to the value of shares held by existing stockholders.

 

Iconic has agreed, subject to certain exceptions listed in the investment agreement with Iconic, to refrain from holding an amount of shares which would result in Iconic or its affiliates owning more than 9.99% of the then-outstanding shares of our common stock at any one time. These restrictions, however, do not prevent Iconic from selling shares of our common stock received in connection with a put, and then receiving additional shares of our common stock in connection with a subsequent put. In this way, Iconic could sell more than 9.99% of the outstanding common stock in a relatively short time frame while never holding more than 9.99% at one time.

 

USE OF PROCEEDS

 

The selling stockholder will receive all of the proceeds from the sale of 21,000,000 shares offered by it under this prospectus.

 

We expect to receive up to $3,000,000 upon the exercise of the Put Right granted to us under the Investment Agreement, which we expect we would use primarily for working capital purposes such as sales, marketing and product development costs related to the commercialization of the HealthLynked Network, to supplement the operations of NWC, and for overhead costs. 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, and we have complied with certain obligations under the Investment Agreement. If we are unable to meet these requirements, we will not have access to funds under this arrangement. There can be no assurances that we will be able to meet these requirements. The purchase price and amount of shares we can sell to Iconic under the Investment Agreement shall depend on our stock price and stock volume, and we cannot guarantee that our stock price and trading volume will be adequate to allow us to raise sufficient funds under the agreement.

 

MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

 

Since May 10, 2017, our common stock has been eligible for quotation and trades on the OTCQB under the symbol “HLYK.” There has been very limited trading in our common stock to date. The last sale price of our common stock on May 11, 2017 was $0.50. There are 56 shareholders of record of our common stock as of May 11, 2017. Our stock was initially eligible for quotation and trades on OTCPink on May 5, 2017 under the symbol “HLYK.” 

 

 

DIVIDEND POLICY

 

We have not declared nor paid any cash dividend on our common stock, and we currently intend to retain future earnings, if any, to finance the expansion of our business, and we do not expect to pay any cash dividends in the foreseeable future. The decision whether to pay cash dividends on our common stock will be made by our board of directors, in their discretion, and will depend on our financial condition, results of operations, capital requirements and other factors that our board of directors considers significant.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

All statements contained in this prospectus, other than statements of historical facts, that address future activities, events or developments, are forward-looking statements, including, but not limited to, statements containing the word “believe,” “anticipate,” “expect” and word of similar import. These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and that actual results may differ materially from those in the forward-looking statements. Such risks and uncertainties include, without limitation: established competitors who have substantially greater financial resources and operating histories, regulatory delays or denials, ability to compete as a start-up company in a highly competitive market, and access to sources of capital.

 

The following discussion and analysis should be read in conjunction with our financial statements and notes thereto included elsewhere in this prospectus. Except for the historical information contained herein, the discussion in this prospectus contains certain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in this prospectus should be read as being applicable to all related forward-looking statements wherever they appear in this prospectus. The Company’s actual results could differ materially from those discussed here.

 

Overview

 

The Company filed its Articles of Incorporation on August 4, 2014. On September 3, 2014, we filed Amended Articles of Incorporation setting forth the total authorized shares of 250,000,000 shares, 230,000,000 of which are designated as common shares, and 20,000,000 as “blank check” preferred stock. We also have 2,953,840 designated shares of Series A Preferred Stock.

 

On September 5, 2014, we entered into a share exchange agreement with NWC, acquiring 100% of the LLC membership units of NWC through the issuance of an aggregate of 50,000,000 shares of our common stock to the members of NWC.

 

NWC is a multi-specialty medical group including OB/GYN (both Obstetrics and Gynecology), and general practice located in Naples, Florida.

 

The Company 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.

 

Prior to September 5, 2014, the Company was a shell company and had no material operations between formation and the merger date. 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 merger date, NWC was an ongoing operation that had been in existence since 1996. NWC generated revenues in the prior years.

 

Critical accounting policies and significant judgments and estimates

 

Our management’s discussion and analysis of our financial condition and results of operations is based on our 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 us 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. Our estimates are based on our historical experience and on various other factors that we believe 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. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

 

 

Revenue Recognition

 

The Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Patient service revenues are recognized at the time of service for the net amount expected to be collected. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

 

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 50% of total billings. Trade accounts receivable are recorded at this net amount.

 

Capital Leases

 

Costs associated with capitalized leases are capitalized and depreciated ratably over the term of the related useful life of the asset and/or the capital lease term.

 

Concentrations of Credit Risk

 

The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. There are no patients/customers that represent 10% or more of the Company’s revenue or accounts receivable. Generally, the Company’s cash and cash equivalents are in checking accounts.

 

Property and Equipment

 

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For consolidated financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 5 to 7 years. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized.

 

The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. There was no impairment as of December 31, 2016 or 2015.

 

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.

 

 

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 our stock based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

 

The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.

 

Income Taxes

 

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse and are considered immaterial.

 

Recent Accounting Pronouncements

 

On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. The Company intends to adopt this guidance for the year ended December 31, 2017. The Company has not yet evaluated the impact the adoption this standard will have on its results of operations upon adoption.

 

In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements-Going Concern. The amendments in this update apply to all reporting entities and require an entity’s management, in connection with preparing financial statements for each annual and interim reporting period, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). This ASU is effective for annual periods ending after December 15, 2016. The Company adopted this standard for the year ended December 31, 2016. Based on the results of our analysis, no additional disclosures were required.

 

The Company has evaluated recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA and the SEC and we have not identified any that would have a material impact on the Company’s financial position, or statements.

 

 

Results of Operations

 

Comparison of Years Ended December 31, 2016 and 2015

 

The following table summarizes the changes in our results of operations for the year ended December 31, 2016 compared with the year ended December 31, 2015:

 

		Year Ended December 31,								Change
		2016				2015				$				%
Patient service revenue, net		$	1,945,664			$	2,537,732			$	(592,068	)			-23	%
Medicare incentives			---				11,760				(11,760	)			-100	%
Salaries and benefits			1,559,725				1,459,167				100,558				7	%
General and administrative			1,543,866				1,143,966				399,900				35	%
Depreciation and amortization			16,461				20,910				(4,449	)			-21	%
Loss from operations			(1,174,388	)			(74,551	)			(1,099,837	)			1475	%
Proceeds from settlement of lawsuit			43,236				---				43,236				---
Amortization of original issue and debt discounts on convertible notes			(208,626	)			---				(208,626	)			---
Interest expense			(36,628	)			(14,480	)			(22,148	)			153	%
Net loss		$	(1,376,406	)		$	(89,031	)		$	(1,287,375	)			1446	%

 

Patient service revenue decreased by $592,068, or 23%, from 2015 to 2016, primarily as a result of the retirement of the founder of NWC in February 2016 and a decrease in production by the physician staff, resulting in a decrease in gross billings of approximately 16%.

 

Medicare incentives revenue decreased by $11,760, or 100%, representing an incentive that was available in 2015 for the practice to utilize an electronic medical records system.

 

Salaries and benefits increased by $100,558, or 7%, as a result of increased salary expense associated with our overhead, which was offset by a reduction in NWC salaries and benefits in 2016 resulting from the retirement of NWC’s founder and a higher concentration of production pay, as opposed to fixed salaries, for NWC physicians.

 

General and administrative costs increased by $399,900, or 35%, in 2016 due primarily to increased legal, professional and other administrative costs associated with our preparation for product launch and public listing.

 

Depreciation and amortization decreased by $4,449, or 21%, in 2016 primarily as a result of furniture and telephone equipment reaching full depreciation in 2016.

 

Loss from operations increased by $1,099,837, or 1475%, from 74,551 in 2015, as a result of lower revenue in 2016, coupled with increased overhead and administrative expenses related to our public listing.

 

Proceeds from settlement of a lawsuit in 2016 is comprised of a successful claim against a former employee in the amount of $43,236.

 

Amortization of original issue and debt discounts of $208,626 in 2016 resulted from amortization of discounts against convertible notes related to an original issue discount, beneficial conversion feature, and warrants issued with a convertible note in July 2016. The discounts, which totaled $322,958 at inception, are being amortized over the life of the note, which matures on July 7, 2017.

 

Interest expense increased by $22,148, or 153%, in 2016 as a result of interest accrued on convertible notes with a face value of $600,000 that were issued in July 2016.

 

Net loss increased by $1,287,375, or 1,446%, primarily as a result of lower revenue in 2016, coupled with increased overhead and administrative expenses related to our public listing and increased amortization of debt discounts resulting from financing transactions in 2016. We did not have any provision for income tax in 2015 or 2016.

 

 

Liquidity and Capital Resources

 

Going Concern

 

As of December 31, 2016, the Company had a working capital deficit of $715,147 and accumulated deficit of $2,124,219. For the year ended December 31, 2016, the Company had a net loss of $1,376,406 and net cash used in operating activities of $756,339. Net cash used in investing activities was $12,611. Net cash provided by financing activities was $797,887, resulting principally from net proceeds from issuance of convertible notes of $475,000 and the sale of common stock of $374,000.

 

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, its ability to generate sufficient cash flow from its operations to meet its operating needs on a timely basis, obtain additional working capital funds through equity and debt financing arrangements, and restructure 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.

 

Significant Liquidity Events

 

Through December 31, 2016, we have funded our operations principally through a combination of related party debt, private placements of our common stock, and outside investor loans.

 

On July 7, 2016, we entered into three financing transactions as described below. The transactions closed on July 11, 2016. First, we entered into the Investment Agreement 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.

 

Originally, for each $50,000 that the investor tenders to the Company for the purchase of shares of common stock, the investor would be granted warrants for the purchase of an equivalent number of shares of common stock. The warrants would have expired five years from their respective grant dates and would have had an exercise price equal to 130% of the weighted average purchase price for the respective “$50,000 increment.” On March 22, 2017, the Company entered into the Amended Investment Agreement whereby the parties have agreed to modify the terms of 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 shall grant, and has granted, to the investor warrants to purchase an aggregate of seven (7) million shares of common stock. The warrants shall have 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.

 

Second, we entered into a 6% fixed convertible secured promissory note with an investor with a face value of $550,000 (the “$550k Note”). The $550k Note is convertible into shares of the Company’s common stock at the discretion of the note holder at a fixed price of $0.08 per share, and is secured by all of the Company’s assets. The Company received $500,000 net proceeds from the note after a $50,000 original issue discount. The investors were also granted a five-year warrant to purchase 6,111,111 shares of the Company’s common stock at an exercise price of $0.09 per share. The $550k Note was originally scheduled to mature on April 11, 2017. In February 2017, the holder of the $550k Note agreed to extend the maturity date until July 7, 2017 in exchange for a five-year warrant to purchase 500,000 shares of common stock at an exercise price of $0.15 per share.

 

Third, we entered into a 10% fixed convertible commitment fee promissory note with an investor with a face value of $50,000 maturing on July 11, 2017 (the “$50k Note”). The $50k note was issued as a commitment fee payable to the investor in exchange for the investor’s commitment to enter into the $3,000,000 purchase described above, subject to registration of the shares underlying the commitment. The $50k Note is convertible into shares of the Company’s common stock at the discretion of the note holder at a fixed price of $0.10 per share. The embedded conversion feature did not have any intrinsic value at issuance.

 

In addition to these financing transactions, we sold 6,167,500 shares of common stock in private placement transactions during 2016, generating aggregate proceeds of $374,000. Subsequent to December 31, 2016, we received an additional $270,000 from the sale of 2,700,000 shares of our common stock in private placement transactions.

 

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, referred to as the “HealthLynked Network”, which will enable patients and doctors to keep track of medical information via the Internet in a cloud based system.

 

 

We intend that HealthLynked will be introduced and marketed beginning in the second quarter of 2017 via direct sales force targeting physicians’ offices, direct to patient marketing, affiliated marketing campaigns, co-marketing with MedOfficeDirect, 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 on a variable cost basis. 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 physicians and patients.

 

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.

 

Our founder, Dr. Michael Dent, retired from seeing patients at NWC during 2016, which contributed in part to a decline in revenue for the year ended December 31, 2016 compared with the same period of 2015. We are in the process of replacing him with an experienced physician who is qualified to perform surgeries, which could potentially increase our revenue by up to $650,000 per year. Lastly, we intend to consider acquiring additional medical practices to increase our revenue and profitability as well as add to our patient network for marketing directly to new physicians’ patients.

 

We currently anticipate that our available cash resources will be sufficient to meet our presently anticipated working capital requirements through the second quarter of 2017. However, we anticipate that we will need an additional $250,000 in each of the third and fourth quarters of 2017 to properly execute our business plan. We anticipate that 50% of this amount will be used for sales and marketing related costs and the remainder shall be used for executive compensation, IT expenses and legal and accounting expenses related to being a public company.

 

We intend that the cost of implementing our development and sales efforts related to the HealthLynked Network, as well as maintaining our existing and expanding overhead and administrative costs, will be funded principally by cash received by us from the Put Rights associated with the $3,000,000 investor commitment. We expect to repay the Convertible Notes, of which $550,000 face value matures on July 7, 2017 and $50,000 on July 11, 2017, from outside funding sources, including but not limited to amounts available upon the exercise of the Put Right granted to us under the Investment Agreement, sales of our equity, loans from related parties and others. 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. If we are unable to meet these requirements, we will not have access to funds under this arrangement. There can be no assurances that we will be able to meet these requirements, and if we are unable to do so then we will be required to seek alternative financing. There can be no assurances that such alternative financing sources will be available. If necessary funds are not available, our business and operations would be materially adversely affected and in such event, we would attempt to reduce costs and adjust our business plan.

 

Historical Cash Flows

 

Our historical cash flows were as follows:

 

		Year Ended December 31,
		2016				2015
Net cash (used in) provided by:
Operating activities		$	(756,339	)		$	15,389
Investing Activities			(12,611	)			(1,550	)
Financing activities			797,887				(28,066	)
Net increase (decrease) in cash		$	28,937			$	(14,227	)

 

Operating Activities – During 2015, we generated cash from the operating activities of NWC. During 2016, we substantially increased the expenditures related to the development and administration of the Company by approximately $400,000. Combined with decreasing revenue and profits from NWC’s operations in 2016 as a result of fewer full time equivalent physicians as described above, we had negative cash flow from operating activities in 2016.

 

Investing Activities – Our business is not capital intensive, and as such cash flows from investing activities are minimal in each period. Capital expenditures of $12,611 in 2016 are comprised primarily of new office furniture and equipment.

 

Financing Activities – Our financing activities in 2015 were comprised primarily of related party loans of $194,026, of which $167,064 were repaid during 2015. We also made repayments on notes payable totaling $39,738 and payments on capital lease obligations of $15,290. During 2016, we issued convertible notes payable with a face value of $600,000, from which we received net proceeds of $475,000. We also received net proceeds of $374,000 from the sale of our common stock and proceeds of $201,500 from related party loans. We made repayments of $149,285 against related party loans, $84,980 against notes payable, and $18,348 against capital lease obligations.

 

 

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 SEC rules.

 

Contractual Obligations

 

Our contractual obligations as of December 31, 2016 were as follows:

 

		Operating				Capital				Total
		Leases				Leases				Commitments
2017		$	264,427				18,348			$	282,775
2018			267,180				18,348				285,528
2019			273,856				18,348				292,204
2020			162,055				3,058				165,113
2021			---				---				---
Total		$	967,518			$	58,102			$	1,025,620

 

Operating lease commitments relate to two leases in Naples, Florida. 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. 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.

 

The Company previously leased an office in Estero, Florida. The lease commenced on July 1, 2006 and expired on June 30, 2016, at which time this office was closed.

 

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

 

Quantitative and qualitative disclosures about market risk

 

We are not currently exposed to significant market risk related to changes in interest rates or foreign currency exchange rates. Inflation generally affects us by increasing our cost of labor. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the years ended December 31, 2014, 2015 or 2016.

 

BUSINESS

 

Overview

 

HealthLynked Corp. is a development stage company incorporated in the state of Nevada on August 6, 2014. We intend to operate a cloud-based online personal medical information and record archiving system, referred to as the “HealthLynked Network”, which will enable patients and doctors to keep track of medical information via the Internet in a cloud based system. Through our website, www.HealthLynked.com, Patients will be able to complete a detailed online personal medical history including past surgical history, medications, allergies, and family medical history. Once this information is entered, patients and their treating physicians will be able to update the information as needed, to provide a comprehensive and up to date medical history.

 

We believe that the HealthLynked Network offers a number of advantages to patients and physicians not available in the market today. Our real-time appointment scheduling application allows for patients to book appointments online with participating healthcare providers in as soon as 30 minutes. Our database and record archives allow for seamless sharing of medical records between healthcare providers and keep patients in control of shared access. In the HealthLynked Network, parents will be able to create accounts for their children that are linked to their family account, allowing them to provide access to healthcare providers, track vaccination records, allow access by hospitals and allow schools to access medical histories, drug allergies and other medical information in case of emergencies. The HealthLynked Network will be accessible 24 hours a day, 7 days a week, on web browsers and as a mobile phone application. We believe this type of accessibility is convenient for schools and during office visits, but most importantly, is crucial in times of a medical emergency.

 

 

Our system will also provide for 24-hour access to medical specialist healthcare providers who can answer medical questions and direct appropriate care to paying members. In addition to 24-hour access, patients may also schedule telemedicine consultations at set times with participating healthcare providers who have expertise in various specialized areas of medicine. Participating physicians can elect to allow patients to request online appointments either via our real-time app or by setting, in their administrator dashboard panel, times and days of the week that patients may request appointments. Appointment requests are then sent by our systems to an email address specified by the physician’s office, who are then requested to follow up to confirm these appointment requests or automatically accept the appointment request.

 

Physicians create HealthLynked profiles that will be searchable on the Internet. There are three levels of profiles; “Basic,” “Standard” and “Premium”. Basic profiles are created at no additional charge. Standard profiles allow a physician to add additional features and marketing services. Premium profiles allow for the addition of videos and other marketing services. HealthLynked provider profiles enable participating physicians to market directly to patients by providing complete profiles, with their areas of specialization, hours of operation, participating insurance plans, phone numbers and office addresses linked to Google maps. Physician practices generate more income the more patients they treat, so maximizing efficiency and patient turnover is critical to increasing total revenues and profitability. As such, we believe that our system will enable physicians to reduce the amount of time required to process patient intake forms, as patients will no longer be required to spend ten to thirty minutes filling out forms at each visit, and the practices’ staffs will not need to input this information multiple times into their electronic medical records systems. Patients will complete their online profiles once and thereafter, they and their physicians will be able to update their profiles as needed. Physicians’ participation in the HealthLynked Network will be required to update the patient records within 24 hours of seeing the patient. The information will be organized in an easy to read format in order that a physician will be able to review the necessary information quickly during and prior to patient visits, which, in turn, will facilitate a more comprehensive and effective patient encounter.

 

Patient data will be stored in conformity with the Health Insurance Portability and Accountability Act of 1996, or “HIPAA”. The network will utilize Amazon AWS infrastructure which will use Amazon “HIPPA” complaint servers along with Amazon RDS with LAMP, HTML5 and several JavaScript frameworks, including Angular and React. Recommendations for end users are 512 kbps+ internet connection speed and a web browser such as Google Chrome, Internet Explorer, Mozilla Firefox, Safari or handheld devices such as iOS devices, android phones or tablets. Our developers may utilize third party controls for functionality or user interface where the use of those controls adds value to the system beyond custom creation of new tools. We intend to adjust forward compatibility for major browser version updates, new browsers, operating system updates or new operating system as needed. The HealthLynked Network will be EMR agnostic, and will be compatible with all electronic medical records systems, allowing for minimal barriers to participation and broader penetration of the market.

 

Acquisition of NWC

 

In August 2014, we acquired the NWC, an OB/GYN practice in Naples, Florida that was established in 1996.

 

This acquisition provides a foundation for ongoing development of the HealthLynked Network by allowing us to register NWC’s approximately 6,000 active patients and to utilize the expertise of our employed physicians to help in the design and strategy for deployment of the HealthLynked Network. It is anticipated that future medical practices may be acquired from time to time as we see fit to further develop, test and deploy the HealthLynked Network into new strategic regional areas throughout the country.

 

Through NWC, we also provide Obstetrical and Gynecological medical services to patients in the South West Florida region. NWC currently employs four OB/GYN physicians and one ARNP nurse practitioner. The services offered include obstetrical services for high and low risk patients, in office ultrasonography, and prenatal testing. Gynecological services include general physical exams, surgical procedures such as hysterectomy, bladder incontinence procedures, pelvic reconstruction, sterilization, endometrial ablation, advanced robotic surgery, contraceptive management and infertility testing and treatment.

 

The HealthLynked Network- How It Works

 

We plan to launch the HealthLynked Network in the first half of 2017 under the domain name “www.HealthLynked.com”. Our systems will walk patients through a series of easy to use pages with point and click selections and drop down menus that allow them to enter their past medical history, past surgical history, allergies, medications, and family medical history. In addition, members will be allowed to create accounts for children under the age of 18 and keep track of required visits and vaccines. Members will select physicians, schools, hospitals and other parties to whom they wish to grant access to their records. This access can be either ongoing, or restricted by time and date, in accordance with the patient’s control settings.

 

 

Physicians will be required to have an active account in order to access patients’ online records and receive referrals for new patients. Once a patient has granted their physician access to their medical charts, office intake paperwork can be downloaded by the physician without the need for the patient to fill out lengthy and repetitive paperwork. Upon completion of the office visit, providers will be required to upload the medical record into the online patients’ file within 24 hours via eFax or through the HealthLynked Portal. Each patient's account will have a unique bar code that when faxed into our system will be recognized for that patient and will be archived in the patient's chart, by date and provider. The HealthLynked Network will be independent of any EMR system and physicians will only require a fax machine or computer to participate, allowing for minimal barriers to participation and broader penetration of the market.

 

In addition to serving as a complete medical record archive, we believe that the HealthLynked Network will allow for shorter wait times at doctors’ offices by giving doctors immediate access to patients’ complete medical information, insurance information and required treatment consent forms. Patients only need to verify their treating physician’s access to their files upon or prior to their next doctor’s visit. Patients will also be able to coordinate multiple physician visits and keep an updated and complete personal medical record archive. These files may also be shared among a patient’s different specialty physicians, a function that we believe will be especially helpful for patients who travel and may need to access their records or obtain physician referrals in multiple localities. We also believe that the HealthLynked Network will be especially useful in medical emergencies when patients are unable to provide a medical history on their own because our system will allow patients the option to grant healthcare providers, in advance, special access in emergency situations.

 

The HealthLynked Network will also provide an online scheduling function for patients to book appointments with participating providers. Healthcare provider profiles will feature physicians’ biographies, office locations, hours and available appointment times. In addition, the platform will provide patients with a list of recommended health screenings tailored to each patient’s unique medical history and demographics. Recommended screenings could include, but is not limited to, annual mammograms for women over the age of 40, colonoscopy every 10 years after the age of 50, recommended pap smear screenings, routine blood tests, and prostate exams. This base service will be free for patients. However, we plan to charge additional fees for real-time schedule booking, access to telemedicine service and access to a 24-hour nurse’s hotline and to charge physicians for upgraded physician profiles and SEO marketing.

 

Benefits for Multiple Constituencies

 

We believe that the HealthLynked Network will provide numerous benefits for patients, medical providers, hospitals, emergency rooms and schools.

 

Benefits for patients:

 

	●	Base service, which includes all of the below benefits other than telemedicine and the nurse hotline, will be free
	●	Easy online scheduling of appointments
	●	Real-time booking for appointments available in the next 4 hours
	●	Keep track of co-pays and deductibles on insurance plans
	●	More accurate and detailed personal medical history
	●	Complete medication lists with dosing and warnings of potential drug interactions
	●	Ability to create accounts for children, and track recommended health screenings and vaccines
	●	When traveling, patients will have the ability to access their medical records online 24 hours a day, 7 days a week even in the case of an emergency
	●	Shortened wait times at physicians’ offices by reducing the need to fill out redundant paper work
	●	Access to a referral network of physicians across the United States who participate in the HealthLynked Network
	●	Telemedicine online nurse/ physician triage to help patients get appropriate medical care for fee paying members
	●	Patients can access family members’ records in the event of illness or accident
	●	Access to telemedicine for medical consultations and appointments for fee paying members
	●	24 hour nurse hotline available for fee paying members

 

 

Benefits for physicians and providers:

 

●

More accurate patient medical history

 

●

“EMR Agnostic” and compatible with all electronic medical records systems

 

●

A detailed and accurate medications list from patients

 

●

Shortened time for patients to complete necessary paperwork translating into improved efficiency, shorter wait times, greater patient satisfaction and higher revenues

 

●

Referral source for new patients

 

●

Online marketing profiles

 

●

SEO and marketing options

 

●

Co-pay and deductible information on patients insurance plans will be readily available

 

●

Additional revenue stream from signing up new patients

 

●

Online and real-time patient scheduling to control gaps in scheduling due to last minute cancelations by existing patients

 

●

Low membership fees of $200 per month per provider during the first year

 

●

No new equipment required

 

Benefits for hospitals and emergency rooms:

 

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Information on patients who present that are not conscious to provide a complete medical history

 

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Information on traveling patients who present to a hospital in an emergency situation

 

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Online access to patient information 24 hours a day, 7 days a week

 

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“EMR Agnostic” and compatible with all electronic medical records systems

 

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No new equipment required

 

Benefits for schools:

 

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Access by authorized school officials to students’ medical histories

 

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Linked access to students’ primary care physicians

 

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Access to vaccination records

 

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Allergy and medication tracking

 

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Emergency contact information of family members

 

Benefits for parents:

 

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Complete children profiles

 

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Access given to schools in case of medical emergences

 

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List of allergies available to those granted access

 

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Vaccine records available to those granted access

 

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Recommended health screenings

 

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Journal for health log and milestones

 

 

Business Model

 

Our business model is focused on market penetration and recruiting physicians and patients to use our system for archiving patient medical records, for scheduling physician appointments, and as an additional marketing tool for physicians.

 

We currently intend to charge physicians $200 per month to participate in the network. Physicians will pay additional fees for online marketing and scheduling services. We also currently intend to pay physicians for direct patient recruitment to our network, which will also be facilitated by providing each new provider with office brochures and posters to promote our services. We will also provide each office with an iPad for patients to use in order to register online while they are in the waiting room.

 

We also anticipate charging certain healthcare facilities either an annual or monthly fee that will vary per facility based upon number of professionals per facility. Currently, it is anticipated that hospitals and emergency rooms would be charged a higher fee for our services once our patient network has been expanded.

 

The base services of our network will be free for patients, but they may also upgrade their service should they wish to receive telemedicine services and access to a 24-hour nurse hotline.

 

Pursuant to our business strategy, we have acquired NWC to begin deployment of the HealthLynked Network and register NWC’s approximately 6,000 active patients into the HealthLynked system. While we expect to generate minimal revenues from physician fees related to such deployment in fiscal 2017, we anticipate that establishing the patient database will be a valuable marketing tool for our sales team in marketing to new physicians in the marketplace. We plan to further expand NWC by engaging five additional physicians and expect, although no assurance can be given, that by 2020, NWC will generate annual aggregate net revenues of approximately $5,000,000. We believe that targeting women’s practices to market HealthLynked is one of the best approaches as women generally make most of the healthcare decisions for their families. We intend to begin expanding our sales force and marketing outside of Florida to include Alabama, Georgia and South Carolina and establish a footprint within the southeastern United States by the end of 2017.

 

Sales Strategy

 

We intend that HealthLynked will be introduced and marketed through the following strategies beginning in the second quarter of 2017:

 

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Direct sales force targeting physicians' offices

 

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Direct to patient marketing:

 

o

Email campaigns

 

o

TV commercials

 

o

Through physician offices

 

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In-office marketing materials

 

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Physician incentive programs to register current patients to the network

 

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Use of the HealthLynked Network for appointment scheduling

 

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Affiliated marketing campaigns

 

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Co-marketing with MedOfficeDirect (a virtual distributor of medical supplies to physicians’ offices that is affiliated with our management team)

 

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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 on a variable cost basis. We expect to target two key metropolitan areas, Orlando, Florida and Dallas, Texas, and deploy sales representative in each region who will report to our newly appointed Chief Commercial Officer, Robert Horel.

 

Rapid growth is expected over the next five years, due in large part to our recent engagement of our Mr. Horel, a seasoned sales professional. Mr. Horel shall be responsible for our overall sales and marketing efforts. We do not consider Mr. Horel to be a “named executive officer” under Item 402 of Regulation S-K.

 

 

Mr. Horel was formerly a sales executive at NeoGenomics, Inc. We believe that with his expertise and contacts, HealthLynked will be able to sign over 2,000 physicians in the next twelve months, with this level of growth doubling every year over the next five years. Under Mr. Horel’s leadership, our sales team is projected to grow from 10 sales representatives to over 100 sales representatives during this five-year period. Mr. Horel and Company management will decide on new markets after Orlando and Dallas.

 

We intend to use our client relationship management system to track sales calls and market penetration. Our marketing efforts towards physicians will emphasize how our systems can improve office efficiencies, increase physician practice revenues and improve the accuracy of recorded patients’ medical histories.

 

Once a physician has agreed to participate, we will provide him or her with patient marketing materials that explain the benefits of our online medical records platform. As mentioned above, access to the HealthLynked Network will be free for patients. To align the interests of our physicians with the program, we will offer our initial physicians financial incentives correlated with the number of patients they directly recruit to sign up to the HealthLynked Network. It is anticipated that these incentives may cover the physicians’ first year of cost for the HealthLynked Network of $2,400.

 

In combination with our direct sales, we intend to also utilize internet based marketing to increase our presence in certain targeted geographical areas. These campaigns will be focused on both physicians and patients. We believe that direct to consumer marketing through email campaigns, as well as local and regional TV commercials will be an effective way to build interest and drive patient demand for our services. We anticipate that we will be able to foster faster market penetration and increase demand for our services by marketing to “both sides”, the consumer and the practitioner.

 

Our campaigns will direct patients to look for physicians in the HealthLynked Network to ensure that they maintain the accuracy and completeness of their medical records. Our system will further allow patients to search for in-network physician providers and schedule online appointments via our system. We believe that physicians in the HealthLynked Network will see an increase in new patients as a result of their participation and as more patients sign up, the value to physicians of joining our network will grow exponentially.

 

We believe that affiliated marketing campaigns would be very helpful in attracting new users and increasing market awareness. We intend to partner with pharmaceutical companies, medical distributors, insurance companies; medical societies and others to cross market our products. We have already partnered with MedOfficeDirect, an online medical supply distributor affiliated with our management, to co-market our respective services and share advertising on our web sites.

 

Intellectual Property

 

We have reserved the domain www.HealthLynked.com and have registered “HealthLynked” and our corporate logo as a service mark with the United States Patent and Trademark Office. We plan to file patent applications as needed to protect our technology as soon as the technology is launched, which is currently anticipated to be during the first six months of 2017.

 

Research and Development

 

Our research and development efforts consist of building and developing the HealthLynked Network, including the real time scheduling of appointments through our new mobile application, regular appointment scheduling, telemedicine appointment scheduling, sharing of secured documents between physicians and patients, and devise independent access mobile, table and web browser. Further, we are developing our systems to provide for secured date storage, drug interaction alerts, and the barcoding of documents for retrieval and storage.

 

Professional and General Liability Coverage

 

We maintain professional and general liability insurance policies with third-party insurers generally on a claims-made basis, subject to deductibles, policy aggregates, exclusions, and other restrictions, in accordance with standard industry practice. We believe that our insurance coverage is appropriate based upon our claims experience and the nature and risks of our business. However, no assurance can be given that any pending or future claim against us will not be successful or if successful will not exceed the limits of available insurance coverage. Our insurance policies have not been modified in anticipation of the launch of the new HealthLynked Network. We do not expect that such modification will be required by our insurance providers. Our business entails an inherent risk of claims of medical malpractice against our affiliated physicians and us. We contract and pay premiums for professional liability insurance that indemnifies us and our affiliated healthcare professionals generally on a claims-made basis for losses incurred related to medical malpractice litigation. Professional liability coverage is required in order for our physicians to maintain hospital privileges.

 

Employees

 

As of May 11, 2017, we have 22 full time employees and 6 part time employees. None of our employees are covered by a collective bargaining agreement. We consider our relationship with our employees to be good.

 

Competition

 

The markets for our products and services are highly competitive, and are characterized by rapidly evolving technology and product standards, as well as frequent introduction of new products and services. All of our competitors are more established, benefit from greater name recognition, and have substantially greater financial, technical, and marketing resources than we do.

 

 

Our principal existing competitors include but are not limited to ZocDoc, Inc., AthenaHealth Inc., All scripts Healthcare Solutions, Inc., Cerner Corporation and Epic Systems Corporation. In addition, we expect that major software information systems companies, large information technology consulting service providers, start-up companies, managed care companies and others specializing in the health care industry may offer competitive products and services. 

We believe that we differ from our competitors in that we are not practice management software or an EMR provider. Companies like AthenaHealth Inc., All scripts Healthcare Solutions, Inc., Cerner and Epic Systems Corporation offer software solutions to operate and manage a medical practice. Functions of these systems include patient billing, monitoring patient account balances and payments, tracking of appointments and creating encounter visits for each patient seen. HealthLynked works in conjunction with these practice management software systems and does not seek to replace them. Patients’ medical encounters created by these systems are uploaded to the patient’s profile in the HealthLynked Network. The HealthLynked Network can incorporate any physical or digital documents into a patient’s medical record history and thus allow it to be utilized across all healthcare platforms. HealthLynked provides an online appointment scheduling application that is similar to ZocDoc, Inc.’s offering, but in addition offers telemedicine appointments through our own patient interface. 

The advantage of having a healthcare network independent of any one practice management or EMR software allows the HealthLynked system to be fully utilized across the entire medical community. Integration and participation by both patients and healthcare providers in a unified platform offers significant advantages in the quality and nature of healthcare delivery in the future. To our knowledge a unified healthcare network like HealthLynked currently does not exist in the market.  

Property 

Our headquarters are located in Naples Florida where we lease approximately 7,200 gross square feet of office space. The lease for a 6901 square-foot space commenced on August 1, 2013 and expires July 31, 2020. The base rent for the first full year of the lease term is $251,287 per annum with increases during the period. The Company entered into another operating lease in the same building for an additional 361 square feet space for use of the medical equipment for the same period. The base rent for the first full year of the lease term is $13,140 per annum. 

We also entered into an operating lease in a second location in Estero, Florida. The lease commenced on July 1, 2006 and expired on June 30, 2016, at which time this office was closed. 

Government Regulation 

The healthcare industry is governed by a framework of federal and state laws, rules and regulations that are extensive and complex and for which, in many cases, the industry has the benefit of only limited judicial and regulatory interpretation. If we are found to have violated these laws, rules or regulations, our business, financial condition and results of operations could be materially, adversely affected. Moreover, the Affordable Care Act contains numerous provisions that are reshaping the United States healthcare delivery system, and healthcare reform continues to attract significant legislative interest, regulatory activity, new approaches, legal challenges and public attention that create uncertainty and the potential for additional changes. Healthcare reform implementation, additional legislation or regulations, and other changes in government policy or regulation may affect our reimbursement, restrict our existing operations, limit the expansion of our business or impose additional compliance requirements and costs, any of which could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our common stock. See Risk Factors—“The Affordable Care Act may have a significant effect on our business.” 

Licensing and Certification 

Florida imposes licensing requirements on individual physicians and clinical professionals, and on facilities operated or utilized by healthcare practices. We may have to obtain regulatory approval, including certificates of need, before establishing certain types of healthcare facilities, offering certain services or expending amounts in excess of statutory thresholds for healthcare equipment, facilities or programs. We are also required to meet applicable Medicaid provider requirements under state laws and regulations and Medicare provider requirements under federal laws, rules and regulations. 

Fraud and Abuse Provisions 

Existing federal laws, as well as similar state laws, relating to government-sponsored or funded healthcare programs, or GHC Programs, impose a variety of fraud and abuse prohibitions on healthcare companies like us. These laws are interpreted broadly and enforced aggressively by multiple government agencies, including the Office of Inspector General of the Department of Health and Human Services, the Department of Justice (the “DOJ”) and various state agencies. In addition, in the Deficit Reduction Act of 2005, Congress established a Medicaid Integrity Program to enhance federal and state efforts to detect Medicaid fraud, waste and abuse and provide financial incentives for states to enact their own false claims legislation as an additional enforcement tool against Medicaid fraud and abuse. Since then, a growing number of states have enacted or expanded healthcare fraud and abuse laws. 

The fraud and abuse provisions include extensive federal and state laws, rules and regulations applicable to us, particularly on the services offered through NWC. In particular, the federal anti-kickback statute has criminal provisions relating to the offer, payment, solicitation or receipt of any remuneration in return for either referring Medicaid, Medicare or other GHC Program business, or purchasing, leasing, ordering, or arranging for or recommending any service or item for which payment may be made by GHC Programs. In addition, the federal physician self-referral law, commonly known as the “Stark Law,” applies to physician ordering of certain designated health services reimbursable by Medicare from an entity with which the physician has a prohibited financial relationship. These laws are broadly worded and have been broadly interpreted by federal courts, and potentially subject many healthcare business arrangements to government investigation and prosecution, which can be costly and time consuming. Violations of these laws are punishable by substantial penalties, including monetary fines, civil penalties, administrative remedies, criminal sanctions (in the case of the anti-kickback statute), exclusion from participation in GHC Programs and forfeiture of amounts collected in violation of such laws, any of which could have an adverse effect on our business and results of operations. 

 

There are a variety of other types of federal and state fraud and abuse laws, including laws authorizing the imposition of criminal, civil and administrative penalties for filing false or fraudulent claims for reimbursement with government healthcare programs. These laws include the civil False Claims Act (“FCA”), which prohibits the submission of, or causing to be submitted, false claims to GHC Programs, including Medicaid, Medicare, TRICARE (the program for military dependents and retirees), the Federal Employees Health Benefits Program, and insurance plans purchased through the recently established Affordable Care Act exchanges. Substantial civil fines and multiple damages, along with other remedies, can be imposed for violating the FCA. Furthermore, proving a violation of the FCA requires only that the government show that the individual or company that submitted or caused to be submitted an allegedly false claim acted in “reckless disregard” or in “deliberate ignorance” of the truth or falsity of the claim or with “willful disregard,” notwithstanding that there may have been no specific intent to defraud the government program and no actual knowledge that the claim was false (which typically are required to be shown to sustain a criminal conviction). The FCA also applies to the improper retention of known overpayments and includes “whistleblower” provisions that permit private citizens to sue a claimant on behalf of the government and thereby share in the amounts recovered under the law and to receive additional remedies. In recent years, many cases have been brought against healthcare companies by such “whistleblowers,” which have resulted in judgments or, more often, settlements involving substantial payments to the government by the companies involved. It is anticipated that the number of such actions against healthcare companies will continue to increase with the enactment or enhancement of a growing number of state false claims acts, certain amendments to the FCA and enhanced government enforcement.

 

In addition, federal and state agencies that administer healthcare programs have at their disposal statutes, commonly known as “civil money penalty laws,” that authorize substantial administrative fines and exclusion from government programs in cases where an individual or company that filed a false claim, or caused a false claim to be filed, knew or should have known that the claim was false or fraudulent. As under the FCA, it often is not necessary for the agency to show that the claimant had actual knowledge that the claim was false or fraudulent in order to impose these penalties.

 

The civil and administrative false claims statutes are being applied in an increasingly broader range of circumstances. For example, government authorities have asserted that claiming reimbursement for services that fail to meet applicable quality standards may, under certain circumstances, violate these statutes. Government authorities also often take the position, now with support in the FCA, that claims for services that were induced by kickbacks, Stark Law violations or other illicit marketing schemes are fraudulent and, therefore, violate the false claims statutes. Many of the laws and regulations referenced above can be used in conjunction with each other.

 

If we were excluded from participation in any government-sponsored healthcare programs, not only would we be prohibited from submitting claims for reimbursement under such programs, but we also would be unable to contract with other healthcare providers, such as hospitals, to provide services to them. It could also adversely affect our ability to contract with, or to obtain payment from, non-governmental payors.

 

Although we intend to conduct our business in compliance with all applicable federal and state fraud and abuse laws, many of the laws, rules and regulations applicable to us, including those relating to billing and those relating to financial relationships with physicians and hospitals, are broadly worded and may be interpreted or applied by prosecutorial, regulatory or judicial authorities in ways that we cannot predict. Accordingly, we cannot assure you that our arrangements or business practices will not be subject to government scrutiny or be alleged or found to violate applicable fraud and abuse laws. Moreover, the standards of business conduct expected of healthcare companies under these laws and regulations have become more stringent in recent years, even in instances where there has been no change in statutory or regulatory language. If there is a determination by government authorities that we have not complied with any of these laws, rules and regulations, our business, financial condition and results of operations could be materially, adversely affected.

 

Government Reimbursement Requirements

 

In order to participate in the various state Medicaid programs and in the Medicare program, we must comply with stringent and often complex enrollment and reimbursement requirements. Moreover, different states impose differing standards for their Medicaid programs. While we believe that we adhere to the laws, rules and regulations applicable to the government programs in which we participate, any failure to comply with these laws, rules and regulations could negatively affect our business, financial condition and results of operations.

 

In addition, GHC Programs are subject to statutory and regulatory changes, administrative rulings, interpretations and determinations, requirements for utilization review and new governmental funding restrictions, all of which may materially increase or decrease program payments, as well as affect the cost of providing services and the timing of payments to providers. Moreover, because these programs generally provide for reimbursement on a fee-schedule basis rather than on a charge-related basis, we generally cannot increase our revenue by increasing the amount we charge for our services. To the extent our costs increase, we may not be able to recover our increased costs from these programs, and cost containment measures and market changes in non-governmental insurance plans have generally restricted our ability to recover, or shift to non-governmental payors, these increased costs. In attempts to limit federal and state spending, there have been, and we expect that there will continue to be, a number of proposals to limit or reduce Medicaid and Medicare reimbursement for various services. Our business may be significantly and adversely affected by any such changes in reimbursement policies and other legislative initiatives aimed at reducing healthcare costs associated with Medicaid, Medicare and other government healthcare programs.

 

Our business also could be adversely affected by reductions in or limitations of reimbursement amounts or rates under these government programs, reductions in funding of these programs or elimination of coverage for certain individuals or treatments under these programs.

 

HIPAA and Other Privacy Laws

 

Numerous federal and state laws, rules and regulations govern the collection, dissemination, use and confidentiality of protected health information, including the HIPAA, and its implementing regulations, violations of which are punishable by monetary fines, civil penalties and, in some cases, criminal sanctions. As part of the HealthLynked Network and our medical record keeping, third-party billing and other services, we collect and maintain protected health information on the patients that we serve.

 

 

Pursuant to HIPAA, the U.S. Department of Health and Human Services (“HHS”) has adopted standards to protect the privacy and security of individually identifiable health information, known as the Privacy Standards and Security Standards. HHS’ Privacy Standards apply to medical records and other individually identifiable health information in any form, whether electronic, paper or oral, that is used or disclosed by healthcare providers, hospitals, health plans and healthcare clearinghouses, which are known as “Covered Entities.” We have implemented privacy policies and procedures, including training programs, designed to be compliant with the HIPAA Privacy Standards.

 

HHS’ Security Standards require healthcare providers to implement administrative, physical and technical safeguards to protect the integrity, confidentiality and availability of individually identifiable health information that is electronically received, maintained or transmitted (including between us and our affiliated practices). We have implemented security policies, procedures and systems designed to facilitate compliance with the HIPAA Security Standards.

 

In February 2009, Congress enacted the HITECH as part of the ARRA. Among other changes to the law governing protected health information, HITECH strengthened and expanded HIPAA, increased penalties for violations, gave patients new rights to restrict uses and disclosures of their health information, and imposed a number of privacy and security requirements directly on third-parties that perform functions or services for us or on our behalf. Specifically, HITECH requires that Covered entities report any unauthorized use or disclosure of protected health information that meets the definition of a breach, to the affected individuals, HHS and, depending on the number of affected individuals, the media for the affected market. In addition, HITECH requires that business associates report breaches to their Covered Entity customers. HITECH also authorizes state Attorneys General to bring civil actions in response to violations of HIPAA that threaten the privacy of state residents. Final regulations implementing the HITECH requirements were issued in January 2013. We have privacy policies and procedures aimed at ensuring compliance with HITECH requirements. In addition to the federal HIPAA and HITECH requirements, numerous other state and certain other federal laws protect the confidentiality of patient information, including state medical privacy laws, state social security number protection laws, state genetic privacy laws, human subjects research laws and federal and state consumer protection laws.

 

Environmental Regulations

 

Our healthcare operations generate medical waste that must be disposed of in compliance with federal, state and local environmental laws, rules and regulations. Our office-based operations are subject to compliance with various other environmental laws, rules and regulations. Such compliance does not, and we anticipate that such compliance will not, materially affect our capital expenditures, financial position or results of operations.

 

Fair Debt Collection Practices Act

 

Some of our operations may be subject to compliance with certain provisions of the Fair Debt Collection Practices Act and comparable state laws. Under the Fair Debt Collection Practices Act, a third-party collection company is restricted in the methods it uses to contact consumer debtors and elicit payments with respect to placed accounts. Requirements under state collection agency statutes vary, with most requiring compliance similar to that required under the Fair Debt Collection Practices Act. Florida’s Consumer Collection Practices Act is broader than the federal legislation, applying the regulations to “creditors” as well as “collectors,” whereas the Fair Debt Collection Practices Act is applicable only to collectors. This prohibits creditors who are attempting to collect their own debts from engaging in behavior prohibited by the Fair Debt Collection Practices Act and Consumer Collection Practices Act. The Consumer Collection Practices Act has very specific guidelines regarding which actions debt collectors and creditors may engage in to collect unpaid debt.

 

Government Investigations

 

We expect that audits, inquiries and investigations from government authorities, agencies, contractors and payors will occur in the ordinary course of business. Such audits, inquiries and investigations and their ultimate resolutions, individually or in the aggregate, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our common stock.

 

 

MANAGEMENT

 

The following table sets forth information regarding our executive officers and directors. All directors hold office for one-year terms until the election and qualification of their successors. Officers are elected by the board of directors and serve at the discretion of the board.

 

Name		Age		Positions with the Company
Michael Dent, MD		52		Chief Executive Officer and Chairman of the Board of Directors
George O'Leary		54		Chief Financial Officer, and Director

 

Michael T. Dent, MD, Founder, Chief Executive Officer and Chairman of the Board of Directors. Dr. Dent founded the Naples Women’s Center in 1996 where he served as its principal executive from formation through February 2016. He is also Co-Founder and Managing Director of InLight Capital Partners LLC since January 2014 and is responsible for its healthcare, information technology and life science investments. He has held key leadership positions in business development, operations, corporate development, and strategy in the healthcare and technology industries since the mid-90s. Prior to founding InLight Capital Partners, Dr. Dent was Founder, Chairman and Chief Executive Officer of NeoGenomics Laboratories (Nasdaq: NEO) where he was on the Board of Directors from 1998 until July 2015. As a retired physician, Dr. Dent is uniquely qualified to understand the challenges and opportunities in healthcare and emerging technologies. Dr. Dent received his Bachelors Degree from Davidson College, where he majored in both Biology and Pre-Med, and went on to earn his medical degree from The University of South Carolina in Charleston, South Carolina. Dr. Dent also attended Florida Gulf Coast University's Business Executive Education program. Dr. Dent's holds board affiliations with NeoGenomics Laboratories (Director), MedOfficeDirect (Founder), and The Naples Women's Center.

 

George G. O’Leary, Chief Financial Officer and Member of the Board of Directors. Mr. O’Leary has served as our Chief Financial Officer since August 6, 2014. Mr. O’Leary is also Co-Founder and Managing Director of InLight Capital Partners LLC since January 2014. He is a financially trained senior executive specializing in innovative strategic problem solving across functional and industry boundaries. Mr. O’Leary is currently the Chairman of the Board of Directors of Timios Holdings Corp. since March 2014 and on the Board of Directors of MedOfficeDirect since October 2013. From June 2009 to May 2013 Mr. O’Leary was Chairman of the Board and Chief Financial Officer of Protection Plus Securities Corporation until it was sold to Universal Protection Services. From February 2007 to June 2015, Mr. O’Leary was a member of the Board of Directors of NeoMedia Technologies. Mr. O’Leary is founder and President of SKS Consulting of South Florida Corp. (“SKS”) since June 2006 where he works with public and private companies in board representation and/or under consulting agreements providing executive level management expertise, as well as helping the implementation and execution of their companies’ strategic & operational plans. Mr. O’Leary started SKS with the mission to help companies focus on high growth initiatives and execution of their core business while shedding non-core business assets. From 1996 to 2000, Mr. O’Leary was Chief Executive Officer and President of Communication Resources Incorporated (“CRI”), where annual revenues grew from $5 million to $40 million during his tenure. Prior to CRI, Mr. O’Leary was Vice President of Operations of Cablevision Industries, where he ran $125 million of business until it was sold to Time Warner. Mr. O’Leary started his professional career as a senior accountant with Peat Marwick and Mitchell (KPMG). Mr. O’Leary holds a B.B.A. degree in Accounting with honors from Siena College.

 

Family Relationships

 

No family relationships exist between any of our current or former directors or executive officers.

 

Involvement is Certain Legal Proceedings

 

No director, executive officer or control person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.

 

Limitation of Liability of Directors

 

Our Amended and Restated Articles of Incorporation states that directors and officers shall be indemnified and held harmless to the fullest extend legally permissible under the laws of the State of Nevada, from time to time, against all expenses, liability and loss (including attorney’s fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him/her in connection with acts performed in such capacity. Such right of indemnification shall be a contract right, which may be enforced in a nay manner desired by such person. The expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the Company as they are incurred and in advance of the final disposition of the action, suit or proceeding.

 

Directors’ and Officers’ Liability Insurance

 

We have obtained directors’ and officers’ liability insurance insuring our directors against liability for acts or omissions in their capacity as directors or officers. Such insurance also insures us against losses, which we may incur in indemnifying our officers and directors. Our officers and directors shall have indemnification rights under applicable laws, our standard indemnification agreement, and our articles of incorporation and bylaws.

 

 

Board Independence

 

We are not a listed issuer and, as such, are not subject to any director independence standards. Using the definition of independence set forth in the rules of the Nasdaq Stock Market, Dr. Dent and Mr. O’Leary would not be considered independent directors of the Company.

 

Board Committees

 

We expect our board of directors, in the future, to appoint an audit committee, nominating committee and compensation committee, and to adopt charters relative to each such committee. We intend to appoint such persons to committees of the board of directors that meet the required corporate governance requirements imposed by a national securities exchange, although we are not required to comply in the future, with such requirements until we elect to seek a listing on a national securities exchange. In addition, we intend that a majority of our directors will be independent directors, of which at least one director will qualify as an “audit committee financial expert,” within the meaning of Item 407(d)(5) of Regulation S-K, as promulgated by the SEC. We do not currently have an “audit committee financial expert” since we currently do not have an audit committee in place.

 

Except as may be provided in our bylaws, we do not currently have specified procedures in place pursuant to which security holders may recommend nominees to the Board of Directors.

 

Code of Ethics

 

We have not yet adopted a Code of Ethics although we expect to as we develop our infrastructure and business.

 

EXECUTIVE COMPENSATION

 

We are providing compensation disclosure that satisfies the requirements applicable to emerging growth companies, as defined in the JOBS Act.

 

Summary Compensation Table

 

The following table summarizes the overall compensation earned over each of the past two fiscal years ending December 31, 2016 and 2015 by each person who served as our principal executive officer during fiscal 2015.

 

Name and Principal Position		Year		Salary ($)				Stock Awards ($) (1)				All Other Compensation ($)				Total ($)
Dr. Michael Dent.		2016			51,731				31,950				---				83,681
(Chief Executive Officer)		2015			156,600				---				---				156,000
George O’Leary		2016			65,995				19,170				---				85,165
(Chief Financial Officer)		2015			40,000				45,000				---				85,000

 

(1)	Reflects the grant date fair values of stock options and restricted stock awards calculated in accordance with FASB Accounting Standards Codification Topic 718.

 

Employment Agreements with Named Officers

 

On July 1, 2016, we entered into an employment agreement with Dr. Michael Dent, Chief Executive Officer and a member of our Board of Directors. Dr. Dent’s employment agreement continues until terminated by Dr. Dent, or us and provides for an initial annual base salary of $70,000. Dr. Dent is eligible to receive performance-based incentives, pro-rated for the number of months of service in any given year. Annual bonuses are awarded based on set annual target incentives for executives and other senior ranking employees that are to be determined by the to-be-established Compensation Committee of the Board of Directors. In addition, Mr. Dent is also entitled to receive 500,000 time-based options, as well as 500,000 performance based options, all of which vest in accordance with the schedule set forth in the employment agreement.

 

 

If Dr. Dent’s employment is terminated by us (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 separation.

 

On July 1, 2016, we entered into an agreement with Mr. George O’Leary, our Chief Financial Officer and a member of our Board of Directors, extending his prior agreement with the Company. Mr. O’Leary’s employment agreement continues until terminated by Mr. O’Leary, or us and provides for an initial annual base salary of $90,000 a year and shall increase to $100,000 per year in year two. Mr. O’Leary is also eligible to receive performance-based incentives. In addition, Mr. O’Leary is also entitled to receive stock options to purchase up to 600,000 shares of common stock of the Company at an exercise price equivalent to the closing price per share at which the stock is quoted on the day prior to his start date. The grant of such options will be made pursuant to the Company’s stock option plan then in effect, shall have a ten-year term from the grant date and shall vest in accordance with the schedule set forth in the agreement. In addition, Mr. O’Leary shall receive healthcare allowance of $750 per month and a car allowance of $650 per month to be paid at the beginning of each month.

 

If Mr. O’Leary employment is terminated by us (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.

 

Grants of Plan Based Awards and Outstanding Equity Awards at Fiscal Year-End

 

In January 2015, we issued 1,200,000 shares of common stock for services rendered by our Chief Financial Officer in 2014. The shares of common stock were valued at $60,000, or $0.05 per share based on concurrent sales of Company common stock to third parties at that price.

 

On January 1, 2016, the Company instituted the 2016 Equity Incentive Plan (the “EIP”) for the purpose of having equity awards available to allow for equity participation by its employees. The EIP allows for the issuance of up to 15,503,680 shares of the Company’s common stock to employees, which may be issued in the form of stock options, stock appreciation rights, or restricted shares. The EIP is governed by the Company’s board, or a committee that may be appointed by the board in the future. During the twelve months ended December 31, 2016, the Company made grants totaling 1,552,500 shares of restricted common stock pursuant to the EIP. The grants are subject to time-based vesting requirements and generally vest a portion upon grant and the balance on a straight-line basis over a period of four years. Shares vested during the twelve months ended December 31, 2016 totaled 612,500, leaving 940,000 unvested.

 

In June 2016, we issued 900,000 shares of common stock outside of the EIP to our Chief Financial Officer for services rendered in 2015. The shares of common stock were valued at $45,000, or $0.05 per share based on concurrent sales of Company common stock to third parties at that price.

 

As of December 31, 2016, we had outstanding 1,600,000 stock options with an exercise price of $0.08 per share held by our executive officers, of which 1,000,000 were issued to our Chief Executive Officer and 600,000 were issued to our Chief Financial Officer. Of the 1,600,000 issued options, 700,000 (500,000 held by our Chief Executive Officer and 200,000 held by our Chief Financial Officer) have time-based vesting and 900,000 (500,000 held by our Chief Executive Officer and 400,000 held by our Chief Financial Officer) vest based on Company performance measures. The grant date fair value of the options was $51,120. The options have a term of 10 years. No options were vested as of December 31, 2016.

 

As of December 31, 2016, we also had 749,996 outstanding stock options held by an employee with an exercise price of $0.20 per share and a term of 10 years. Of the total grant, 299,996 options shall vest over a three-year period, and 450,000 shall vest based on future Company and individual performance measures.

 

Director Compensation

 

Our directors did not receive any compensation for their services for the years ending December 31, 2016 and 2015 except as set forth above.

 

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

In September 2014, we entered into a share exchange agreement with Dr. Dent, Dr. Monaco and NWC pursuant to which we issued Dr. Dent and Dr. Monaco an aggregate of 50,000,000 shares of our common stock in exchange for all of their membership interests in NWC. Following this transaction, NWC became our wholly owned subsidiary. We issued Dr. Dent 46,900,000 shares of common stock in exchange for his 67.3% ownership interest in NWC and Dr. Monaco 3,100,000 shares of common stock in exchange for her 32.7% ownership interest in NWC.

 

Prior to the share exchange, NWC was owned and controlled by Dr. Dent, who 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 up to $750,000, with a maturity date of December 31, 2017. During 2015, as described below, interest was paid on the note balance through the end of 2014 via the issuance of warrants to purchase our common shares.

 

During 2014, Dr. Dent provided new loans totaling $293,938, and NWC repaid Dr. Dent $435,169, including $368,179 that was received by NWC for insurance proceeds. In addition, Dr. Dent deferred $144,000 in compensation during 2014, was paid $46,615 in cash against outstanding deferred compensation balances, and was further issued 2,953,640 shares of preferred stock with a value of $147,692 to reduce his deferred compensation balance.

 

During 2015, Dr. Dent provided new loans totaling $194,026, and NWC repaid Dr. Dent $167,064. In addition, Dr. Dent deferred $156,600 in compensation during 2015. On January 2, 2015, we agreed to issue to Dr. Dent 2,000,000 10-year warrants to purchase common shares at an exercise price of $0.05 per share as compensation for interest accrued on loans made by Dr. Dent to NWC. The warrants had a fair value of $52,847.

 

During 2016, Dr. Dent provided new loans totaling $176,500, and the Company repaid Dr. Dent $135,477. The Company accrued interest on amounts due to Dr. Dent of $14,270 in 2016. In January 2017, the Company’s note payable to Dr. Dent was amended to extend the maturity date from December 31, 2017 until December 31, 2018, to accrue interest on outstanding balances after January 1, 2017 at a rate of 10% per annum, and to fix interest accrued on balances between January 1, 2015 and December 31, 2016 at an amount equal to $22,108. All principal and interest will be due at maturity of the note.

 

During the three months ended March 31, 2017, the Company borrowed $135,000 from Dr. Dent in the form of four separate unsecured promissory notes dated January 12, 2017 ($35,000), January 18, 2017 ($20,000), January 24, 2017 ($50,000) and February 9, 2017 ($30,000) (collectively, the “2017 DMD Notes”). Each of the notes bears interest at 10% per annum and has a maturity date one year from the issuance date. Interest accrued on the 2017 DMD Notes as of March 31, 2017 and December 31, 2016 was $2,458 and $0, respectively.

 

In September 2014 we issued Dr. Dent 2,953,640 shares of our Series A Preferred Stock as payment for $147,692 in deferred compensation for services provided to NWC during the fiscal year ended December 31, 2013. He converted the Series A Preferred Stock into 2,953,640 shares of common stock on July 30, 2016.

 

During 2016, MedOffice Direct, a company majority-owned by Dr. Dent, paid a direct obligation of the Company in the amount of $25,000. The Company also paid direct obligations of MedOffice Direct totaling $13,808 in 2016, resulting in an amount payable to MedOffice Direct of $11,192 as of December 31, 2016. This amount was paid in full in January 2017.

  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth information with respect to the beneficial ownership of our common stock as of May 11, 2017 by:

 

	●	each person known by us to beneficially own more than 5.0% of our common stock;
	●	each of our directors;
	●	each of the named executive officers; and
	●	all of our directors and executive officers as a group.

 

The percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition of the security. Except as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned and each person’s address is c/o HealthLynked Corp., 726 Medical Blvd Suite 101, Naples, Florida 34110. As of May 11, 2017, we had 69,703,640 shares issued and outstanding.

 

  

Name of Beneficial Owner		Shares of Common Stock Beneficially Owned (1)				Percentage of Shares of Common Stock Beneficially Owned (2)
Dr. Michael Dent, Chief Executive Officer and Chairman (3)			52,053,640				72.39	%
George O’Leary, Interim Chief Financial Officer, Chief Operating Officer and Director (4)			2,300,000				3.29	%
All officers and directors as a group (2 persons)			53,953,640				75.65	%
5% Stockholders:
Urania Holdings LLC (5)			5,620,000				7.92	%
Iconic Holdings, LLC (6)			6,963,394				9.99	%

 

(1)

Under Rule 13d-3 of the Exchange Act of 1934, as amended (the “Exchange Act”), a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares: (i) voting power, which includes the power to vote or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.

 

(2)	Based on 69,703,640 shares of common stock issued and outstanding as of May 11, 2017.

  

(3)

Includes 2,953,640 shares of common stock held by Dr. Dent directly, 46,900,000 shares of common stock held in the name of Mary S. Dent Gifting Trust Common, 2,000,000 shares of common stock issuable upon exercise of warrants, and 200,000 vested employee stock options. Excludes 800,000 employee stock options which are subject to future vesting requirements and are not expected to vest within 60 days of May 11, 2017.

 

(4)

Includes 2,100,000 shares of common stock held by SKS, a corporation directly controlled by George O’Leary, and 200,000 vested employee stock options. Excludes 400,000 employee stock options which are subject to future vesting requirements and are not expected to vest within 60 days of May 11, 2017.

 

(5)

The address of this beneficial owner is 1405 Estuary Trail, Delray Beach, Florida 33483. Chris Salamone, as Chief Executive Officer of Urania Holdings LLC, holds voting and dispositive power over the securities of the Company held by Urania Holdings LLC. Includes 4,370,000 shares of common stock and 1,250,000 shares of common stock issuable upon exercise of warrants.

 

(6)

The address of this beneficial owner is 2251 San Diego Ave, #B150, San Diego CA 92110. Michael Sobeck as the Managing Member of Iconic Holdings, LLC holds voting and dispositive power over the securities of the Company held by Iconic Holdings, LLC. Includes 6,963,394 shares of common stock issuable upon conversion of the Convertible Notes, which are subject to a 9.99% beneficial ownership limitation. Does not include (i) 411,606 shares of common stock issuable upon conversion of the Convertible Notes, (ii) 13,611,111 shares of common stock issuable under warrants with 9.99% beneficial ownership limitation and (iii) up to 21,0000,000 shares of common stock issuable under the Investment Agreement, which are subject to a 9.99% beneficial ownership limitation.

 

 

SELLING STOCKHOLDER

 

This prospectus covers the resale, from time to time, of up to 21,000,000 shares of common stock issuable to Iconic under the Investment Agreement. We are registering the shares hereby pursuant to the terms of a registration rights agreement between us and Iconic, in order to permit it to offer the shares for resale from time to time. Except as described in the registration statement of which this prospectus forms a part, there is no relationship between us and Iconic.

 

Number of Shares

Number of

Number of Shares

Beneficially Owned

Shares

Beneficially Owned

Prior to this Offering

Being

After this Offering (2)

Selling Stockholder

Number

Percent (1)

Offered

Number

Percent (1)

Iconic Holdings, LLC (3)

6,963,394

(4)

9.99

%

21,000,000

9,061,294

(5)

9.99

%

 

(1)

Applicable percentage ownership is based on 69,703,640 shares of common stock outstanding as of May 11, 2017. "Beneficial ownership" includes shares for which an individual, directly or indirectly, has or shares voting or investment power, or both. Unless otherwise indicated, all of the listed persons have sole voting and investment power over the shares listed opposite their names. Beneficial ownership as reported in the above table has been determined in accordance with Rule 13d-3 of the Exchange Act. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.

 

(2)	We have assumed that the selling stockholder will sell all of the shares being offered in this offering.
(3)	The address of this selling stockholder is 2251 San Diego Ave, #B150, San Diego CA 92110. Michael Sobeck as the Managing Member of Iconic Holdings, LLC holds voting and dispositive power over the securities of the Company held by Iconic Holdings, LLC.
(4)	Beneficial ownership prior to the offering includes 6,963,394 shares of common stock issuable upon conversion of the Convertible Notes, which are subject to a 9.99% beneficial ownership limitation; and (iii) shares of common stock issuable under the Investment Agreement. Does not include (i) 411,606 shares of common stock issuable upon conversion of the Convertible Notes, (ii) 13,611,111 shares of common stock issuable under warrants with 9.99% beneficial ownership limitation and (iii) up to 21,0000,000 shares of common stock issuable under the Investment Agreement, which are subject to a 9.99% beneficial ownership limitation.
(5)	Beneficial ownership following the offering includes (i) 7,375,000 shares of common stock issuable upon conversion of the Convertible Notes and (iii) 1,561,419 shares of common stock issuable under warrants, which are subject to a 9.99% beneficial ownership limitation.  Excludes 12,049,692 shares issuable under the warrants.

  

DESCRIPTION OF SECURITIES

 

Authorized and Outstanding Capital Stock

 

We have authorized 230,000,000 shares of common stock, par value $0.0001, 69,703,640 of which are currently issued and outstanding. We currently have 20,000,000 shares of “blank check” preferred stock. We had designated and issued 2,953,640 shares of Series A Preferred Stock in September 2014, however these shares were converted to common stock on July 30, 2016.

 

Common Stock

 

The holders of our common stock are entitled to one vote per share. In addition, the holders of our common stock will be entitled to receive ratably dividends, if any, declared by our board of directors out of legally available funds; however, the current policy of our board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our common stock will be entitled to share ratably in all assets that are legally available for distribution. The holders of our common stock will have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock, which may be designated solely by action of our board of directors and issued in the future.

  

Series A Preferred Stock

 

Each holder of Series A Preferred Stock may convert such stock into shares of Common Stock in an amount equal to one share of common stock for each share of Series A Preferred Stock. is entitled to vote on all matters submitted to shareholder of the Company and shall be entitled to the number of votes equal to the number of common stock to which such Series A Preferred Stock are convertible. We currently have no shares of Series A Preferred Stock outstanding.

 

Blank Check Preferred Stock

 

Our board of directors will be authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders, to issue from time to time shares of preferred stock in one or more series. Each series of preferred stock will have the number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.

 

 

Warrants

 

On March 22, 2017, the Company entered into the Amended Investment Agreement whereby the parties have agreed to modify the terms of 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 shall grant, and has granted, to the investor warrants to purchase an aggregate of seven million shares of common stock. The warrants shall have 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.

 

In connection with the Investment Agreement, we also issued to Iconic a warrant to purchase up to 6,111,111 shares of our common stock, at an exercise price of $0.09 per share. The warrant shall expire on July 11, 2021 and shall have a “cashless” exercise provision. The warrant has a 4.99% beneficial ownership limitation which may be adjusted at the holder’s request to a 9.99% beneficial ownership limitation upon 61 days’ notice.

 

On January 2, 2015, NWC agreed to issue to Dr. Dent 2,000,000 ten-year warrants to purchase common shares at an exercise price of $0.05 per share as compensation for interest accrued on loans made by Dr. Dent to NWC. The warrants had a fair value of $52,847.

 

In July 2016, we issued to investors five-year warrants to purchase up to 2,187,500 shares of common stock at an exercise price of $0.10 per share.

 

In July 2016 we issued Delaney five year warrants to purchase 277,778 shares of commons stock at an exercise price of $0.09, in exchange for services provided.

 

In February 2017 we issued the counterparty in the Investment Agreement a warrant to purchase up to 500,000 shares of our common stock, at an exercise price of $0.15 per share. The warrant shall expire on February 10, 2020 and shall have a “cashless” exercise provision. The warrant has a 9.99% beneficial ownership limitation.

 

Convertible Notes

 

In connection with the Investment Agreement, we issued the Secured Note due April 11, 2017 in the principal amount of $550,000. At any time and from time to time, the holder of the Secured Note may convert, in whole or in part, the outstanding and unpaid principal amount under the Secured Note into shares of the Company’s common stock at a conversion price of $0.08 per share. In addition, we also issued the Fee Note due July 11, 2017 in the principal amount of $50,000. The holder of the Fee Note also has the right to, at the holder's sole option, at any time and from time to time, to convert in whole or in part the outstanding and unpaid principal amount under the Fee Note into shares of the Company’s common stock at a conversion price of $0.10 per share. The Convertible Notes have a 9.99% beneficial ownership limitation.

 

Loans from Related Parties

 

Dr. Michael Dent first provided an up to $175,000 unsecured Note Payable to NWC with a stated 0% interest rate. During 2013 the limit on the unsecured Note Payable was increased up to $500,000, and during 2014 it was increased up to $750,000, with a maturity date of December 31, 2017. On January 2, 2015, we agreed to issue to Dr. Dent 2,000,000 10-year warrants to purchase common shares at an exercise price of $0.05 per share as one-time compensation for past interest accrued on loans made by Dr. Dent to NWC. The warrants had a fair value of $52,847. We do not have an obligation to pay further interest on these loans.

 

During 2014, Dr. Dent provided new loans totaling $293,938, and NWC repaid Dr. Dent $435,169, including $368,179 that was received by NWC for insurance proceeds. In addition, Dr. Dent deferred $144,000 in compensation during 2014, was paid $46,615 in cash against outstanding deferred compensation balances, and was further issued 2,953,640 shares of preferred stock with a value of $147,692 to reduce his deferred compensation balance.

 

During 2015, Dr. Dent provided new loans totaling $194,026, and NWC repaid Dr. Dent $167,064. In addition, Dr. Dent deferred $156,600 in compensation during 2015. On January 2, 2015, we agreed to issue to Dr. Dent 2,000,000 10-year warrants to purchase common shares at an exercise price of $0.05 per share as compensation for interest accrued on loans made by Dr. Dent to NWC. The warrants had a fair value of $52,847.

 

During 2016, Dr. Dent provided new loans totaling $176,500, and the Company repaid Dr. Dent $123,273.

 

During the three months ended March 31, 2017, the Company borrowed $135,000 from Dr. Dent in the form of four separate unsecured promissory notes dated January 12, 2017 ($35,000), January 18, 2017 ($20,000), January 24, 2017 ($50,000) and February 9, 2017 ($30,000) (collectively, the “2017 DMD Notes”). Each of the notes bears interest at 10% per annum and has a maturity date one year from the issuance date. Interest accrued on the 2017 DMD Notes as of March 31, 2017 and December 31, 2016 was $2,458 and $0, respectively.

 

During 2016, MedOffice Direct, a company majority-owned by Dr. Dent, paid a direct obligation of the Company in the amount of $25,000. The Company also paid direct obligations of MedOffice Direct totaling $13,808 in 2016, resulting in an amount payable to MedOffice Direct of $11,192 as of December 31, 2016. This amount was paid in full in January 2017.

 

 

PLAN OF DISTRIBUTION

 

We are registering 21,000,000 shares of common stock under this prospectus on behalf of Iconic. Except as described below, to our knowledge, the selling stockholder has not entered into any agreement, arrangement or understanding with any particular broker or market maker with respect to the shares of common stock offered hereby, nor, except as described below, do we know the identity of any brokers or market makers that may participate in the sale of the shares.

 

The selling stockholder may decide not to sell any shares. The selling stockholder may from time to time offer some or all of the shares of common stock through brokers, dealers or agents who may receive compensation in the form of discounts, concessions or commissions from the selling stockholder and/or the purchasers of the shares of common stock for whom they may act as agent. In effecting sales, broker-dealers that are engaged by the selling stockholder may arrange for other broker-dealers to participate. Iconic is an “underwriter” within the meaning of the Securities Act. Any brokers, dealers or agents who participate in the distribution of the shares of common stock may also be deemed to be “underwriters,” and any profits on the sale of the shares of common stock by them and any discounts, commissions or concessions received by any such brokers, dealers or agents may be deemed to be underwriting discounts and commissions under the Securities Act. Iconic has advised us that it may effect resales of our common stock through any one or more registered broker-dealers. Because the selling stockholder is deemed to be an underwriter, the selling stockholder will be subject to the prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities of, including but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

 

The selling stockholder will act independently of us in making decisions with respect to the timing, manner and size of each sale. Such sales may be made over the OTCQB at then prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. The shares of common stock may be sold according to one or more of the following methods:

  

●

a block trade in which the broker or dealer so engaged will attempt to sell the shares of common stock as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

●

purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus;

  

●

ordinary brokerage transactions and transactions in which the broker solicits purchasers;

 

●

privately negotiated transactions;

 

●

a combination of such methods of sale; and

 

●

any other method permitted pursuant to applicable law.

 

Any shares covered by this prospectus which qualify for sale pursuant to Rule 144 of the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus. In addition, the selling stockholder may transfer the shares by other means not described in this prospectus.

 

Any broker-dealer participating in such transactions as agent may receive commissions from Iconic (and, if they act as agent for the purchaser of such shares, from such purchaser). Broker-dealers may agree with Iconic to sell a specified number of shares at a stipulated price per share, and, to the extent such a broker-dealer is unable to do so acting as agent for Iconic, to purchase as principal any unsold shares at the price required to fulfill the broker-dealer commitment to Iconic. Broker-dealers who acquire shares as principal may thereafter resell such shares from time to time in transactions (which may involve crosses and block transactions and which may involve sales to and through other broker-dealers, including transactions of the nature described above) on the Nasdaq Capital Market, on the over-the-counter market, in privately-negotiated transactions or otherwise at market prices prevailing at the time of sale or at negotiated prices, and in connection with such resales may pay to or receive from the purchasers of such shares commissions computed as described above. To the extent required under the Securities Act, an amendment to this prospectus, or a supplemental prospectus will be filed, disclosing:

 

●

the name of any such broker-dealers;

 

●

the number of shares involved;

 

●

the price at which such shares are to be sold;

 

●

the commission paid or discounts or concessions allowed to such broker-dealers, where applicable;

 

●

that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, as supplemented; and

 

●

other facts material to the transaction.

 

 

Underwriters and purchasers that are deemed underwriters under the Securities Act may engage in transactions that stabilize, maintain or otherwise affect the price of the securities, including the entry of stabilizing bids or syndicate covering transactions or the imposition of penalty bids. Iconic and any other persons participating in the sale or distribution of the shares will be subject to the applicable provisions of the Exchange Act and the rules and regulations thereunder including, without limitation, Regulation M. These provisions may restrict certain activities of, and limit the timing of, purchases by the selling stockholder or other persons or entities. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and certain other activities with respect to such securities for a specified period of time prior to the commencement of such distributions, subject to special exceptions or exemptions. Regulation M may restrict the ability of any person engaged in the distribution of the securities to engage in market-making and certain other activities with respect to those securities. In addition, the anti-manipulation rules under the Exchange Act may apply to sales of the securities in the market. All of these limitations may affect the marketability of the shares and the ability of any person to engage in market-making activities with respect to the securities.

 

We have agreed to pay the expenses of registering the shares of common stock under the Securities Act, including registration and filing fees, printing expenses, administrative expenses and certain legal and accounting fees. The selling stockholder will bear all discounts, commissions or other amounts payable to underwriters, dealers or agents, as well as transfer taxes and certain other expenses associated with the sale of securities.

 

Under the terms of the registration rights agreement with Iconic, we have agreed to indemnify the selling stockholder and certain other persons against certain liabilities in connection with the offering of the shares of common stock offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable, to contribute toward amounts required to be paid in respect of such liabilities.

 

At any time a particular offer of the shares of common stock is made, a revised prospectus or prospectus supplement, if required, will be distributed. Such prospectus supplement or post-effective amendment will be filed with the SEC, to reflect the disclosure of required additional information with respect to the distribution of the shares of common stock. We may suspend the sale of shares by the selling stockholder pursuant to this prospectus for certain periods of time for certain reasons, including if the prospectus is required to be supplemented or amended to include additional material information.

 

LEGAL MATTERS

 

Sichenzia Ross Ference Kesner LLP., New York, New York, will pass upon the validity of the shares of our common stock to be sold in this offering.

 

EXPERTS

 

Our audited financial statements as of December 31, 2016 and 2015 have been included in this prospectus in reliance on the report of RBSM LLP, an independent registered public accounting firm appearing elsewhere herein given on the authority of said firm as experts in auditing and accounting.

 

WHERE YOU CAN FIND ADDITIONAL INFORMATION

 

We have filed with the SEC a registration statement on Form S-1, together with any amendments and related exhibits, under the Securities Act with respect to our shares of common stock offered by this prospectus. The registration statement contains additional information about us and the shares of common stock that we are offering in this prospectus.

 

We file annual, quarterly and current reports and other information with the SEC under the Exchange Act. Such reports and other information filed by the Company with the SEC are available free of charge on the SEC’s website. You may also request a copy of those filings, excluding exhibits, from us at no cost. These requests should be addressed to us at: George O’Leary, Chief Financial Officer, HealthLynked Corp., 1726 Medical Blvd Suite 101, Naples, Florida 34110 and our telephone number is: 239-513-1992. The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing by reference. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only.

 

 

INDEX TO FINANCIAL STATEMENTS

 

CONTENTS	PAGE NO.
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets at December 31, 2016 and 2015	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2016 and 2015	F-4
Consolidated Statement of Changes in Shareholders’ Deficit for the Years Ended December 31, 2016 and 2015	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016 and 2015	F-6
Notes to the Consolidated Financial Statements	F-7

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Shareholders of

HealthLynked Corp.

 

We have audited the accompanying consolidated balance sheets of HealthLynked Corp. (formerly Naples Women’s Center) (the “Company”) as of December 31, 2016 and 2015, and the related statements of operations, changes in shareholders' deficit, and cash flows for each of the two years in the period ended December 31, 2016. These consolidated financial statements are the responsibility of the Company management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted the audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of HealthLynked Corp. as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the two years ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the accompanying consolidated financial statements, the Company has suffered loss from operations and is experiencing difficulty in generating sufficient cash flows to meet its obligations and sustain its operations, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ RBSM LLP

 

New York, NY

March 13, 2017, except for Note 11, as to which the date is March 23, 2017

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

CONSOLIDATED BALANCE SHEETS

 

		As of December 31,
		2016				2015
ASSETS
Current Assets
Cash		$	58,716			$	29,779
Accounts receivable, net			146,874				300,126
Prepaid expenses			43,545				71,497
Total Current Assets			249,135				401,402
Property, plant and equipment, net of accumulated depreciation of $704,785 and $688,323 as of December 31, 2016 and 2015, respectively			70,836				74,686
Deposits			9,540				16,796
Total Assets		$	329,511			$	492,884
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued expenses		$	148,474			$	145,265
Capital leases, current portion			18,348				18,348
Due to related party, current portion			311,792				330,411
Convertible notes payable, net of original issue discount and debt discount of $114,332 and -0- as of December 31, 2016 and 2015, respectively			485,668				---
Notes payable and bank loans, current portion			---				45,133
Total Current Liabilities			964,282				539,157
Long-Term Liabilities
Capital leases, long-term portion			39,754				58,102
Due to related party, long-term portion			237,157				152,052
Notes payable and bank loans, long-term portion			---				39,847
Total Liabilities			1,241,193				789,158
Shareholders’ Deficit
Common stock, par value $0.0001 per share, 230,000,000 shares authorized, 65,753,640 and 54,120,000 shares issued and outstanding as of December 31, 2016 and 2015, respectively			6,575				5,412
Preferred stock, par value $0.0001 per share, 20,000,000 shares authorized, -0- and 2,953,640 shares issued and outstanding as of December 31, 2016 and 2015, respectively			---				295
Common stock issuable, $0.0001 par value; 80,643 and 900,000 shares as of December 31, 2016 and 2015, respectively			6,451				45,000
Additional paid-in capital			1,199,511				400,832
Accumulated deficit			(2,124,219	)			(747,813	)
Total Shareholders’ Deficit			(911,682	)			(296,274	)
Total Liabilities and Shareholders’ Deficit		$	329,511			$	492,884

 

See the accompanying notes to these Consolidated Financial Statements

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

CONSOLIDATED STATEMENT OF OPERATIONS

 

		Year Ended December 31,
		2016				2015
Revenue
Patient service revenue, net		$	1,945,664			$	2,537,732
Medicare incentives			---				11,760
Total revenue			1,945,664				2,549,492
Operating Expenses
Salaries and benefits			1,559,725				1,459,167
General and administrative			1,543,866				1,143,966
Depreciation and amortization			16,461				20,910
Total Operating Expenses			3,120,052				2,624,043
(Loss) income from operations			(1,174,388	)			(74,551	)
Other Income (Expenses)
Proceeds from settlement of lawsuit			43,236				---
Amortization of original issue and debt discounts on convertible notes			(208,626	)			---
Interest expense			(36,628	)			(14,480	)
Total other expenses			(202,018	)			(14,480	)
Net loss before provision for income taxes			(1,376,406	)			(89,031	)
Provision for income taxes			---				---
Net loss		$	(1,376,406	)		$	(89,031	)
Net loss per share, basic and diluted:
Basic		$	(0.02	)		$	(0.00	)
Fully diluted		$	(0.02	)		$	(0.00	)
Weighted average number of common shares:
Basic			60,034,482				53,272,876
Fully diluted			60,034,482				53,272,876

 

See the accompanying notes to these Consolidated Financial Statements

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT

YEARS ENDED DECEMBER 31, 2016 AND 2015

 

		Number of Shares																Common				Additional								Total
		Common				Preferred				Common				Preferred				Stock				Paid-in				Accumulated				Shareholders’
		Stock				Stock				Stock				Stock				Issuable				Capital				Deficit				Deficit
		(#)				(#)				($)				($)				($)				($)				($)				($)
Balance at December 31, 2014			51,920,000				2,953,640				5,192				295				60,000				238,205				(658,782	)			(355,090	)
Consultant fees paid with common shares			2,200,000				---				220				---				(60,000	)			109,780				---				50,000
Consultant fees payable with common shares			---				---				---				---				45,000				---				---				45,000
Fair value of warrants issued to pay accrued interest to related party			---				---				---				---				---				52,847				---				52,847
Net loss			---				---				---				---				---				---				(89,031	)			(89,031	)
Balance at December 31, 2015			54,120,000				2,953,640				5,412				295				45,000				400,832				(747,813	)			(296,274	)
Sale of common stock			6,167,500				---				617				---				---				373,383				---				374,000
Consultant fees payable with common shares			---				---				---				---				6,451				---				---				6,451
Consultant fees paid with common shares and warrants			1,900,000				---				190				---				(45,000	)			131,983				---				87,173
Fair value of warrants and beneficial conversion feature allocated to proceeds of convertible notes payable			---				---				---				---				---				272,957				---				272,957
Shares and options issued pursuant to employee equity incentive plan			612,500				---				61				---				---				20,356				---				20,417
Conversion of preferred shares to common shares			2,953,640				(2,953,640	)			295				(295	)			---				---				---				---
Net loss			---				---				---				---				---				---				(1,376,406	)			(1,376,406	)
Balance at December 31, 2016			65,753,640				---				6,575				---				6,451				1,199,511				(2,124,219	)			(911,682	)

 

See the accompanying notes to these Consolidated Financial Statements

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Year Ended December 31,
		2016				2015
Cash Flows from Operating Activities
Net loss		$	(1,376,406	)		$	(89,031	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation			16,461				20,910
Stock based compensation, including amortization of prepaid fees			146,208				62,833
Amortization of original issue discount and debt discount on convertible notes			208,626				---
Non-cash expenses			75,000				---
Changes in operating assets and liabilities:
Accounts receivable			153,252				(103,055	)
Prepaid expenses and deposits			3,042				(39,330	)
Accounts payable and accrued expenses			3,207				1,394
Due to related party, current portion			14,271				161,668
Net cash (used in) provided by operating activities			(756,339	)			15,389
Cash Flows from Investing Activities
Acquisition of property and equipment			(12,611	)			(1,550	)
Net cash used in investing activities			(12,611	)			(1,550	)
Cash Flows from Financing Activities
Proceeds from sale of common stock			374,000				---
Proceeds from issuance of convertible notes			475,000				---
Proceeds from related party loans			201,500				194,026
Repayment of related party loans			(149,285	)			(167,064	)
Payment on notes payable-Bank loan			(84,980	)			(39,738	)
Payments on capital leases			(18,348	)			(15,290	)
Net cash provided by (used in) financing activities			797,887				(28,066	)
Net increase (decrease) in cash			28,937				(14,227	)
Cash, beginning of period			29,779				44,006
Cash, end of period		$	58,716			$	29,779
Supplemental disclosure of cash flow information:
Cash paid during the period for interest		$	3,813			$	6,643
Cash paid during the period for income tax		$	---			$	---
Schedule of non-cash investing and financing activities:
Discount on convertible notes payable		$	272,957			$	---
Common stock issued for preferred stock conversion		$	295			$	---
Common stock to be issued now issued		$	45,000			$	60,000
Common stock issued for prepaid fees, stock based compensation		$	---			$	50,000
Capitalize full value of new Everbank Capital Lease		$	---			$	91,740
Fair value of warrants issued to pay accrued interest on related party loans		$	---			$	52,847

 

See the accompanying notes to these Consolidated Financial Statements

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 1 - BUSINESS AND BUSINESS PRESENTATION

 

HealthLynked Corporation, a Nevada corporation (the “Company” or “HLKD”) filed its Articles of Incorporation on August 4, 2014. On September 3, 2014 HLKD filed Amended Articles of Incorporation clarifying that the total authorized shares of 250,000,000 shares are broken up between 230,000,000 common shares and 20,000,000 preferred shares.

 

On September 5, 2014, HLKD 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 HLKD 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.

 

HLKD 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.

 

Prior to September 5, 2014 (merger date), HLKD was a shell company that had no material operations between formation and the merger date. HLKD was formed for the purpose of acquiring NWC, and eventually developing its own online medical information system business as described above. Prior to the merger date, NWC was an ongoing operation that had been in existence since 1996. NWC generated revenues in the prior years.

 

The acquisition of NWC (an ongoing operation) by HLKD (an inactive shell company) was treated as a reverse merger subject to the guidance provided in ASC 805-40, “Reverse Acquisitions.” Because the consolidated financial statements represent the continuation of the financial statements of the legal acquiree (NWC), except for its capital structure, the consolidated financial statements reflect all of the following:

 

	●	The assets and liabilities of the legal acquiree (the accounting acquirer, NWC) recognized and measured at their precombination carrying amounts.
	●	The assets and liabilities of the legal parent (the accounting acquirer, HLKD) recognized and measured in accordance with the guidance in this chapter applicable to business combinations.
	●	The retained earnings and other equity balances of the legal subsidiary (the accounting acquirer, NWC) before the business combination.

 

Additionally, the equity structure of the legal acquiree (the accounting acquirer, NWC) was restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent (the accounting acquire, HLKD) issued in the reverse acquisition.

 

The consolidated financial statements presented herein include the operations of NWC from the date of its formation as if the transaction between the parties under common control had taken place as of the beginning of the earliest period presented, as well as the operations of HLKD since its inception on August 4, 2014. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization.

 

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.

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

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 consolidated financial statements are in United States Dollars ($) unless stated otherwise.

 

Use of Estimates

 

The preparation of the 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 and useful life of fixed assets.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Patient service revenues are recognized at the time of service for the net amount expected to be collected. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments

 

Cash and Cash Equivalents

 

For financial statement purposes, the Company considers all highly-liquid investments with original maturities of three months or less to be cash and cash equivalents.

 

Accounts Receivable

 

Trade receivables are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis; thus trade receivables do not bear interest. Trade accounts receivable are periodically evaluated for collectability based on past collectability of the insurance companies, government agencies, and customers’ accounts receivable during the related period which generally approximates 50% of total billings. Trade accounts receivable are recorded at this net amount. As of December 31, 2016 and 2015, the Company’s gross accounts receivable were $333,804 and $666,947, respectively, and net accounts receivable were $146,874 and $300,126, respectively, based upon net reporting of accounts receivable.

 

Capital Leases

 

Costs associated with capitalized leases are capitalized and depreciated ratably over the term of the related useful life of the asset and/or the capital lease term. The related depreciation for the years ended December 31, 2016 and 2015 was $13,748 and $15,290, respectively. Accumulated depreciation of capitalized leases was $285,390 and $271,642 at December 31, 2016 and 2015, respectively.

 

Concentrations of Credit Risk

 

The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. There are no patients/customers that represent 10% or more of the Company’s revenue or accounts receivable. Generally, the Company’s cash and cash equivalents are in checking accounts.

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

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 December 31, 2016 and 2015.

 

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.

 

Fair Value of Assets and Liabilities

 

Fair value is the price that would be received from the sale of an asset or paid to transfer a liability (i.e. an exit price) in the principal or most advantageous market in an orderly transaction between market participants. In determining fair value, the accounting standards have established a three-level hierarchy that distinguishes between (i) market data obtained or developed from independent sources (i.e., observable data inputs) and (ii) a reporting entity’s own data and assumptions that market participants would use in pricing an asset or liability (i.e., unobservable data inputs). Financial assets and financial liabilities measured and reported at fair value are classified in one of the following categories, in order of priority of observability and objectivity of pricing inputs:

 

●

Level 1 – Fair value based on quoted prices in active markets for identical assets or liabilities

 

●

Level 2 – Fair value based on significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data.

 

●

Level 3 – Fair value based on prices or valuation techniques that require significant unobservable data inputs. Inputs would normally be a reporting entity’s own data and judgments about assumptions that market participants would use in pricing the asset or liability

 

The fair value measurement level for an asset or liability is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs.

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Stock-Based Compensation

 

The Company accounts for stock based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

 

The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.

 

Income Taxes

 

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse and are considered immaterial.

 

Recurring Fair Value Measurements

 

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

 

Net Income (Loss) per Share 

 

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. During the years ended December 31, 2016 and 2015, 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 December 31, 2016 and 2015, potentially dilutive securities were comprised of (i) 10,576,389 and 2,000,000 warrants outstanding, respectively, (ii) 2,349,996 and -0- stock options outstanding, respectively, and (iii) 7,375,000 and -0- shares issuable upon conversion of convertible notes, respectively.

 

Recent Accounting Pronouncements

 

On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. The Company intends to adopt this guidance for the year ended December 31, 2017. The Company has not yet evaluated the impact the adoption this standard will have on its results of operations upon adoption.

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements-Going Concern. The amendments in this update apply to all reporting entities and require an entity’s management, in connection with preparing financial statements for each annual and interim reporting period, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). This ASU is effective for annual periods ending after December 15, 2016. The Company adopted this standard for the year ended December 31, 2016. Based on the results of our analysis, no additional disclosures were required.

 

The Company has evaluated recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA and the SEC and we have not identified any that would have a material impact on the Company’s financial position, or statements.

 

NOTE 3 – GOING CONCERN MATTERS AND LIQUIDITY

 

As of December 31, 2016, the Company had a working capital deficit of $715,147 and accumulated deficit of $2,124,219. For the year ended December 31, 2016, the Company had a net loss of $1,376,406 and net cash used by operating activities of $756,339. Net cash used in investing activities was $12,611. Net cash provided by financing activities was $797,887, resulting principally from net proceeds from issuance of convertible notes of $475,000, the sale of common stock of $374,000, and related party loans of $201,500, net of repayments.

 

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, its ability to generate sufficient cash flow from its operations to meet its operating needs on a timely basis, obtain additional working capital funds through equity and debt financing arrangements, and restructure 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 the year ended December 31, 2016, HLKD (i) received proceeds of $374,000 from the sale of 6,167,500 shares of common stock, (ii) received net proceeds of $475,000 from the issuance of convertible promissory notes with a combined face value of $600,000, and (iii) entered into an arrangement with an equity line of credit arrangement with an investor pursuant to which the investor has agreed to purchase up to $3,000,000 of HLKD common stock over a three-year starting upon registration of the underlying shares, with such shares put to the investor by the Company pursuant to the formula specified in the transaction documents, which limits the number of shares put to the investor to the number equal to the average trading volume of the Company’s common shares for the 10 trading days prior to the put notice being issued. Moreover, during January and February 2017, the Company received $210,000 from the sale of 2,100,000 shares of its common stock and $135,000 from the issuance of unsecured promissory notes to its founder, Dr. Michael Dent. This funding is expected to provide the Company with sufficient capital resources to meet its projected cash flow requirements in conducting its operations for at least the next twelve-month period commencing on December 31, 2016. However, there can be no assurance that additional and unforeseen non-recurring expenses will not arise during the next twelve-month period or that the Company will be successful in completing its business development plan.

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 4 – PROPERTY, PLANT, AND EQUIPMENT

 

Property, plant and equipment at December 31, 2016 and 2015 are as follows:

 

		As of December 31,
		2016				2015
Capital Lease equipment		$	343,492			$	343,492
Telephone equipment			12,308				12,308
Furniture, Transport and Office equipment			419,821				407,209
Total Property, plant and equipment			775,621				763,009
Less: accumulated depreciation			(704,785	)			(688,323	)
Property, plant and equipment, net		$	70,836			$	74,686

 

During the year ended December 31, 2016 and 2015 depreciation expense charged to operations was $16,461 and $20,910, respectively.

 

NOTE 5 – DUE TO RELATED PARTY

 

Amounts due to related parties were comprised of the following:

		As of December 31,
		2016				2015
Current portion:
Due to Dr. Michael Dent		$	---			$	29,811
Deferred compensation, Dr. Michael Dent			300,600				300,600
Due to MedOffice Direct			11,192				---
Total current portion			311,792				330,411
Long term portion:
Due to Dr. Michael Dent			237,157				152,052
Total due to related parties		$	548,949			$	482,463

 

Dr. Michael Dent

 

Prior to August 2014, NWC was owned and controlled by the Company’s Chief Executive Officer, Dr. Michael Dent (“DMD”). DMD first provided an up to $175,000 unsecured Note Payable to the Company with a 0% interest rate. During 2013 the limit on the unsecured Note Payable was increased up to $500,000 and during 2014 it was increased to $750,000 with a maturity date of December 31, 2017. During January 2017, note was again amended to extend the maturity date until December 31, 2018, to accrue interest on outstanding balances after January 1, 2017 at a rate of 10% per annum, and to fix interest accrued on balances between January 1, 2015 and December 31, 2016 at an amount equal to $22,108. All principal and interest is due at maturity of the note. During 2015, as described below, interest was paid on the note balance through the end of 2014 via the issuance of warrants to purchase HLKD common shares. Interest was accrued between January 1, 2015 and December 31, 2016 at a rate of 7%, with a balance of $22,108 accrued as of December 31, 2016.

 

During 2015, DMD provided new loans totaling $194,026, and NWC repaid DMD $167,064. In addition, DMD deferred $156,600 in compensation during 2015. On January 2, 2015, NWC agreed to issue to DMD 2,000,000 10-year warrants to purchase HLKD common shares at an exercise price of $0.05 per share as compensation for interest accrued on loans made by DMD to NWC. The warrants had a fair value of $52,847 using the Black Scholes pricing model, using assumed volatility of 40% and a risk free interest rate of 2.12%. The Company accrued interest on amounts due to DMD of $7,837 in 2015.

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 5 – DUE TO RELATED PARTY (CONTINUED)

 

During 2016, DMD provided new loans totaling $176,500, and NWC repaid DMD $135,477. The Company accrued interest on amounts due to DMD of $14,270 in 2016.

 

SKS Consulting

 

In January 2015, the Company issued 1,200,000 shares of its common stock for services rendered by SKS Consulting in 2014. The shares of common stock were valued at $60,000, or $0.05 per share based on concurrent sales of HLKD common stock to third parties at that price. George O’Leary, the principal of SKS Consulting, was hired in July 2016 as the Company’s CFO.

 

In June 2016, the Company issued 900,000 shares of its common stock for services rendered by SKS Consulting in 2015. The shares of common stock were valued at $45,000, or $0.05 per share based on concurrent sales of HLKD common stock to third parties at that price.

 

MedOffice Direct

 

During 2016, MedOffice Direct, a company majority-owned by the Company’s CEO and largest shareholder, Dr. Michael Dent, paid a direct obligation of the Company in the amount of $25,000. The Company also paid direct obligations of MedOffice Direct totaling $13,808 in 2016, resulting in an amount payable to MedOffice Direct of $11,192 as of December 31, 2016. This amount was paid in full in January 2017.

 

NOTE 6 – NOTES PAYABLE INCLUDING CONVERTIBLE NOTES

 

Notes payable as of December 31, 2016 and 2015 are comprised of the following:

 

		As of December 31,
		2016				2015
Convertible notes payable		$	485,668			$	---
Note payable to FCB (Bank loan)			---				84,980
Note payable, New Everbank Lease (Capital leases)			58,102				76,450
Total notes payable			543,770				161,430
Less: convertible notes payable, current portion			(485,668	)			---
Less: note payable to FCB (Bank loan), current portion			---				(45,133	)
Less: note payable, New Everbank Lease (Capital leases), current portion			(18,348	)			(18,348	)
Notes payable, bank loans and capital leases, long-term portion		$	39,754			$	97,949

 

Convertibles Note Payable

 

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 was originally schedule to mature on April 11, 2017. During February 2017, the holder of the $550k Note agreed to extend the maturity date until July 7, 2017 in exchange for a five-year warrant to purchase 500,000 shares of HLKD common stock at an exercise price of $0.15 per share. The $550k Note is convertible into shares of the Company’s common stock at the discretion of the note holder at a fixed price of $0.08 per share, and is secured by all of the Company’s assets. The Company received $500,000 net proceeds from the note after a $50,000 original issue discount. At inception, the investors were also granted a five-year warrant to purchase 6,111,111 shares of the Company’s common stock at an exercise price of $0.09 per share. The fair value of the warrants was calculated using the Black-Scholes pricing model at $157,812, with the following assumptions: risk-free interest rate of 0.97%, expected life of 5 years, volatility of 40%, and expected dividend yield of zero. The net proceeds from the issuance of the $550k Note, being $500,000 after the original issue discount, were then allocated to the warrants and the convertible note instrument based on their relative fair values, of which $111,479 was allocated to the warrants and $388,521 to the convertible note. The intrinsic value of the embedded conversion feature of the $550k note was then calculated as $161,479. The original issue discount, warrants and embedded conversion feature were recorded as discounts against the carrying value of the $550k Note.

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 6 – NOTES PAYABLE INCLUDING CONVERTIBLE NOTES (CONTINUED)

 

The allocation of the proceeds at inception was as follows:

 

Original issue discount		$	50,000
Warrants			111,479
Embedded conversion feature			161,479
Convertible note			227,042
Face value of convertible note		$	550,000

 

The discounts resulting from the original issue discount, warrants and embedded conversion feature are being amortized over the life of the $550k Note. Amortization expense related to these discounts in year ended December 31, 2016 was $208,626. As of December 31, 2016, the unamortized discount was $114,332. As of December 31, 2016, the $550k note was convertible into 6,875,000 of the Company’s common shares.

 

On July 7, 2016, the Company entered into a 10% fixed convertible commitment fee promissory note with an investor with a face value of $50,000 maturing on July 11, 2017 (the “$50k Note”). The $50k note was issued as a commitment fee payable to the ELOC investor in exchange for the investor’s commitment to enter into the ELOC, subject to registration of the shares underlying the ELOC. The $50k Note is convertible into shares of the Company’s common stock at the discretion of the note holder at a fixed price of $0.10 per share. The embedded conversion feature did not have any intrinsic value at issuance. Accordingly, the full face value of $50,000 was allocated to the convertible note instrument. As of December 31, 2016, the $50k Note was convertible into 500,000 of the Company’s common shares.

 

During the years ended December 31, 2016 and 2015, the Company made no repayments on convertible notes. During the years ended December 31, 2016 and 2015, the Company recorded interest expense on the above convertible notes totaling $18,427 and $-0-, respectively.

 

Note Payable – Capital Leases

 

In March 2015, the Company entered into a capital equipment finance lease for Ultra Sound equipment with Everbank. There was no interest on this lease. The monthly payment is $1,529 for 60 months ending in March 2020. As of December 31, 2016, the Company owed Everbank $58,102 pursuant to this capital lease.

 

During the years ended December 31, 2016 and 2015, the Company made payments on capital leases of $18,348 and $15,290, respectively.

 

Future minimum payments to which the Company is obligated pursuant to the capital leases as of December 31, 2016 are as follows:

 

2017		$	18,348
2018			18,348
2019			18,348
2020			3,058
2021			---
Total		$	58,102

 

Notes Payable – Bank Loan

 

The Company signed a 60-month bank loan in November 2012 with Florida Community Bank (“FCB”) and a principal amount of $215,000 with a 4.75% interest rate with monthly payments of $4,033. The note was paid in full during the year ended December 31, 2016.

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 6 – NOTES PAYABLE INCLUDING CONVERTIBLE NOTES (CONTINUED)

 

During the years ended December 31, 2016 and 2015, the Company made repayments on this bank loan of $84,980 and $39,738, respectively. During the years ended December 31, 2016 and 2015, interest expense related to this bank loan was $2,121 and $4,695, respectively.

 

NOTE 7 – SHAREHOLDERS’ DEFICIT

 

Prior to September 5, 2014, NWC was owned by two members. On September 5, 2014, HLKD entered into the Share Exchange Agreement with NWC, acquiring 100% of the LLC membership units of NWC through the issuance of 50,000,000 shares of HLKD common stock to the members of NWC (the “Acquisition”). Following is a description of the capital stock of HLKD.

 

Common Stock

 

The holders of our common stock are entitled to one vote per share. In addition, the holders of HLKD common stock will be entitled to receive ratably dividends, if any, declared by the board of directors out of legally available funds; however, the current policy of the board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of common stock will be entitled to share ratably in all assets that are legally available for distribution. The holders of common stock will have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock will be subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock, which may be designated solely by action of the board of directors and issued in the future.

 

Preferred Stock

 

The Company’s board of directors will be authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders, to issue from time to time shares of preferred stock in one or more series. Each series of preferred stock will have the number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.

 

On September 4, 2014, the Company filed with the Nevada Secretary of State a certificate of designation for up to 20,000,000 shares of Series A Convertible Preferred Stock (the “Series A”). Each share of Series A Convertible Preferred Stock (“Series A”) issued in 2014 converts into one share of common, has voting rights on an as converted basis, and receives liquidation preferences. Series A shares are not redeemable and have no dividend rights.

 

Issuance of Common and Preferred Stock

 

In January 2015, the Company issued 1,200,000 shares of its common stock for payment of services rendered. The shares were valued at $0.05 per share or a total of $60,000, which was charged to general and administrative expense during 2014 when the services were performed.

 

In November 2015, the Company issued 1,000,000 shares of its common stock for payment of services rendered. The shares were valued at $0.05 per share or a total of $50,000, which was initially recorded as prepaid fees and charged to general and administrative expense over the period of the services from November 2015 to November 2016. During the year ended December 31, 2015, the Company charged $17,833 to the statement of operations, with the unamortized portion of $32,167 recorded as prepaid fees as of December 31, 2015.

 

On January 1, 2016, the Company made grants totaling 1,515,000 shares of common stock pursuant to the Company’s 2016 Equity Incentive Plan. The grants are subject to time-based vesting requirements and generally vest a portion upon grant and the balance on a straight-line basis over a period of four years. Shares vested and issued upon grant on January 1, 2016 totaled 600,000. The share grants were valued at $0.05 per share. Total expense recognized during the year ended December 31, 2016 related to these grants was $12,120.

 

On June 1, 2016, the Company issued 900,000 shares of its common stock for payment of services rendered in calendar year 2015. The shares were valued at $0.05 per share or a total of $45,000, all of which was charged to general and administrative expense during the year ended December 31, 2015.

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 7 – SHAREHOLDERS’ DEFICIT (CONTINUED)

 

During June 2016, the Company sold 3,980,000 shares of common stock to ten separate investors. The Company received $199,000 in proceeds from the sale. The shares were issued at a share price of $0.05 per share.

 

During June and July 2016, the Company sold 2,187,500 of common stock to three separate investors. The Company received $175,000 in proceeds from the sale. The shares were issued at a share price of $0.08 per share. The Company also issued a total of 2,187,500 five-year warrants to purchase shares of common stock with an exercise price of $0.10 per share to the investors.

 

On July 5, 2016, the Company made a grant totaling 37,500 shares of common stock pursuant to the Company’s 2016 Equity Incentive Plan. The grant is subject to time-based vesting requirements and vested a portion upon grant and the balance on a straight-line basis over a period of four years. Shares vested and issued upon grant on July 5, 2016 were 12,500. The share grant was valued at $0.08 per share. Total expense recognized during the year ended December 31, 2016 related to this grant was $240.

 

On July 30, 2016, DMD converted 2,953,640 shares of Series A convertible preferred stock into 2,953,640 shares of common stock. The Company did not receive any proceeds from the conversion.

 

On July 30, 2016, the Company issued 1,000,000 shares of its common stock for payment of services rendered. The shares were valued at $0.08 per share or a total of $80,000, all of which was charged to general and administrative expense during the year ended December 31, 2016.

 

Common Stock Issuable

 

The Company accrued $6,451 of professional service expense provided by a third party in 2016 that the Company is obligated to satisfy through the issuance of 80,643 shares of common stock. The shares of common stock issuable were valued at $0.08 per share based on concurrent sales of HLKD common stock to third parties at that price. As of December 31, 2015, $6,451 was recorded in “common stock issuable” related to these shares.

 

Stock Warrants

 

Transactions involving our stock warrants are summarized as follows:

 

		2016								2015
						Weighted								Weighted
						Average								Average
						Exercise								Exercise
		Number				Price				Number				Price
Outstanding at beginning of the period			2,000,000				0.05				---			$	---
Granted during the period			8,576,389				0.09				2,000,000			$	0.05
Exercised during the period			---				---				---			$	---
Terminated during the period			---				---				---			$	---
Outstanding at end of the period			10,576,389				0.08				2,000,000			$	0.05
Exercisable at end of the period			10,576,389				0.08				2,000,000			$	0.05

 

The weighted average remaining life of the warrants is 5.2 years.

 

On January 2, 2015, NWC agreed to issue to DMD 2,000,000 10-year warrants to purchase HLKD common shares at an exercise price of $0.05 per share as compensation for interest accrued on loans made by DMD to NWC. The warrants vested upon grant. The warrants had a fair value of $52,847 using the Black Scholes pricing model, using assumed market price of $0.05 per share based on concurrent sales of HLKD common stock to third parties at that price, volatility of 40% and a risk free interest rate of 2.12%.

 

During June 2016 and July 2016, the Company sold 2,187,500 shares of its common stock, along with 5-year warrants to purchase an additional 2,187,500 shares of common stock, for a total sale price of $0.08 per share to 3 separate investors.

 

On July 7, 2016, the Company issued warrants to purchase 277,778 shares of commons stock at an exercise price of $0.09 and a five-year term, in exchange for services provided. The warrants had a fair value of $7,173 using the Black Scholes pricing model with the following assumptions: risk-free interest rate of 0.97%, expected life of 5 years, volatility of 40%, and expected dividend yield of zero. This amount was recorded to general and administrative expense during the year ended December 31, 2016.

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 7 – SHAREHOLDERS’ DEFICIT (CONTINUED)

 

On July 7, 2016, in connection with the issuance of the $550k Note, the Company granted to the investors in the $550k Note a five-year warrant to purchase 6,111,111 shares of the Company’s common stock at an exercise price of $0.09 per share.

 

Employee Equity Incentive Plan

 

On January 1, 2016, the Company instituted the 2016 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 years ended December 31, 2016 and 2015:

 

		2016				2015
Outstanding at beginning of the period			---				---
Granted during the period			1,552,500				---
Terminated during the period			---				---
Outstanding at end of the period			1,552,500				---
Shares vested at year-end			612,500
Weighted average grant date fair value of shares granted during the year		$	0.04
Shares available for grant pursuant to EIP at year-end			11,601,184

 

The aggregate grant date fair value of shares granted pursuant to the EIP in the year ended December 31, 2016 was $63,000 (net of expected forfeitures). Grants made during 2016 were valued at $0.05 per share, which is the price at which the Company’s common shares were last sold. Total stock based compensation recognized for grants under the EIP was $12,360 during the year ended December 31, 2016. Total unrecognized stock compensation related to these grants was $50,640 as of December 31, 2016.

 

A summary of the status of nonvested shares issued pursuant to the EIP as of December 31, 2016 and changes during the year ended December 31, 2016, is presented below:

 

						Weighted
						Average
						Grant Date
		Shares				Fair Value
Nonvested at January 1, 2016			---			$	---
Granted			1,552,500			$	0.04
Vested			(612,500	)		$	0.04
Forfeited			---			$	---
Nonvested at December 31, 2016			940,000			$	0.04

 

Employee Stock Options

 

On July 1, 2016, the Company granted a total of 1,600,000 employee stock options to two employees with an exercise price of $0.08 per share and a legal life of 10 years. Of the total grant, 700,000 options vest over time for a period up to four years, and 900,000 vest based on future Company and individual performance measures. The aggregate grant date fair value of the options was $51,120 (net of expected forfeitures).

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 7 – SHAREHOLDERS’ DEFICIT (CONTINUED)

 

On November 28, 2016, the Company granted a total of 749,996 employee stock options to an employee with an exercise price of $0.20 per share and a legal life of 10 years. Of the total grant, 299,996 options vest over time for a period up to three years, and 450,000 vest based on future Company and individual performance measures. The aggregate grant date fair value of the options was $14,301 (net of expected forfeitures).

 

Grant date fair value was calculated using the Black-Scholes pricing model, using the following assumptions:

 

		Year Ended December 31,
		2016				2015
Volatility			40	%			---
Expected term (in years)			10				---
Risk-free interest rate			1.00 - 2.32	%			---
Expected dividends			---				---

 

Total stock based compensation recognized for stock option grants was $8,067 during the year ended December 31, 2016. Total unrecognized stock compensation related to these grants was $57,354 as of December 31, 2016.

 

The following table summarizes the status of options outstanding as of and for the years ended December 31, 2016 and 2015:

 

		2016								2015
						Weighted								Weighted
						Average								Average
						Exercise								Exercise
		Number				Price				Number				Price
Outstanding at beginning of the period			---			$	---				---			$	---
Granted during the period			2,349,996			$	0.12				---			$	---
Exercised during the period			---			$	---				---			$	---
Terminated during the period			---			$	---				---			$	---
Outstanding at end of the period			2,349,996			$	0.12				---			$	---
Options exercisable at year-end			100,000								---
Weighted average remaining life (in years)			9.6								---
Weighted average grant date fair value of options granted during the year		$	0.03								---
Options available for grant at year-end			11,601,184								---

 

The following table summarizes information about the Company’s stock options outstanding as of December 31, 2016:

 

Options Outstanding																Options Exercisable
								Weighted-
								Average				Weighted-								Weighted-
								Remaining				Average								Average
Exercise				Number				Contractual				Exercise				Number				Exercise
Prices				Outstanding				Life (years)				Price				Exercisable				Price
$	0.08				1,600,000				9.5			$	0.08				100,000			$	0.08
$	0.20				749,996				9.9			$	0.20				---			$	---
$	0.08 to 0.20				2,349,996				9.6			$	0.12				100,000			$	0.08

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 7 – SHAREHOLDERS’ DEFICIT (CONTINUED)

 

A summary of the status of nonvested options issued pursuant to the EIP as of December 31, 2016 and changes during the year ended December 31, 2016, is presented below:

						Weighted
						Average
						Grant Date
		Shares				Fair Value
Nonvested at January 1, 2016			---			$	---
Granted			2,349,996			$	0.12
Vested			(100,000	)		$	0.08
Forfeited			---			$	---
Nonvested at December 31, 2016			2,249,996			$	0.12

 

NOTE 8 – COMMITMENTS AND CONTINGENCIES

 

Service contracts

 

The Company carries various service contracts on its office buildings & certain copier equipment for repairs, maintenance and inspections. All contracts are short term and can be cancelled.

 

Litigation

 

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

 

Leases

 

The Company has three real estate leases; two in Naples, Florida and one is Estero, Florida. 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. 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.

 

The Company entered into an operating lease in a second location in Estero, Florida. The lease commenced on July 1, 2006 and expired on June 30, 2016, at which time this office was closed. The lease is for 3166 square feet space. The base rent for the term of the lease is $100,679 per annum.

 

Total lease rental expense for the years ended December 31, 2016 and 2015 were $336,385 and $377,248, respectively.

 

Future minimum lease payments (excluding real estate taxes and maintenance costs) as of December 31, 2016 are as follows:

 

2017		$	264,427
2018			267,180
2019			273,856
2020			162,055
2021			---
Total		$	967,518

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 8 – COMMITMENTS AND CONTINGENCIES (CONTINUED)

 

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 between 2016 and 2019, with early termination available upon a notice period of 30-90 days during which compensation is paid to the physician but NWC has no further severance obligation. During 2016, DMD retired from practice to focus on his duties as CEO of HLKD.

 

On July 1, 2016, HLKD 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 HLKD. If Dr. Dent’s employment is terminated by HLKD (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 separation.

 

On July 1, 2016, we entered into an agreement with Mr. George O’Leary, HLKD’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 HLKD. If Mr. O’Leary employment is terminated by HLKD (unless such termination is “For Cause” as defined in his employment agreement), then upon signing a general waiver and release, Mr. O’Leary will be entitled to receive his base salary and the Company shall maintain his employee benefits for a period of twelve (12) months beginning on the date of termination. In the event that Mr. O’Leary terminates the agreement, he shall be entitled to any accrued by unpaid salary and other benefits up to and including the date of termination.

 

NOTE 9 – SEGMENT REPORTING

 

The Company has two reportable segments: NWC and HLKD. 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. HLKD plans to operate an online personal medical information and record archive system, the “HealthLynked Network”, which will enable patients and doctors to keep track of medical information via the Internet in a cloud based system. Patients will complete a detailed online personal medical history including past surgical history, medications, allergies, and family history. Once this information is entered patients and their treating physicians will be able to update the information as needed to provide a comprehensive medical history.

 

The Company evaluates performance and allocates resources based on profit or loss from operations before income taxes. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 9 – SEGMENT REPORTING (CONTINUED)

 

Segment information for the years ended December 31, 2016 and 2015 was as follows:

 

		2016												2015
		NWC				HLKD				Total				NWC				HLKD				Total
Revenue
Patient service revenue, net		$	1,945,664			$	---			$	1,945,664			$	2,537,732			$	---			$	2,537,732
Medicare incentives			---				---				---				11,760				---				11,760
Total revenue			1,945,664				---				1,945,664				2,549,492				---				2,549,492
Operating Expenses
Salaries and benefits			1,338,572				221,153				1,559,725				1,429,013				30,154				1,459,167
General and administrative			1,023,691				520,175				1,543,866				1,054,551				89,415				1,143,966
Depreciation and amortization			16,461				---				16,461				20,910				---				20,910
Total Operating Expenses			2,378,724				741,328				3,120,052				2,504,474				119,569				2,624,043
(Loss) income from operations		$	(433,060	)		$	(741,328	)		$	(1,174,388	)		$	45,018			$	(119,569	)		$	(74,551	)
Other Segment Information
Interest expense		$	18,083			$	18,545			$	36,628			$	14,480			$	---			$	14,480
Amortization of original issue and debt discounts on convertible notes		$	---			$	208,626			$	208,626			$	---			$	---			$	---
Proceeds from settlement of lawsuit		$	43,236			$	---			$	43,236			$	---			$	---			$	---
Identifiable assets		$	240,115			$	89,396			$	329,511			$	459,453			$	33,431			$	492,884

 

NOTE 10 – INCOME TAXES

 

The following is a reconciliation of the statutory federal income tax rate applied to pre-tax accounting net loss compared to the income taxes in the consolidated statement of operations:

 

		2016				2015
Pre-tax loss		$	(1,376,406	)		$	(89,031	)
Statutory rate			34	%			34	%
Income tax benefit at statutory rate			(467,978	)			(30,271	)
Permanent and other differences			---				---
Change in valuation allowance		$	(467,978	)		$	(30,271	)

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 10 – INCOME TAXES (CONTINUED)

 

As of December 31, 2016 and 2015, the types of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts which gave rise to deferred taxes, and their tax effects were as follows:

 

		As of December 31,
		2016				2015
Net operating loss carryforwards		$	525,996			$	58,018
Stock based compensation expense			---				---
Total deferred tax assets			525,996				58,018
Valuation allowance			(525,996	)			(58,018	)
Net deferred tax assets		$	---			$	---

 

Due to the uncertainty of the utilization and recoverability of the loss carry-forwards and other deferred tax assets, Management has determined a full valuation allowance for the deferred tax assets, since it is more likely than not that the deferred tax assets will not be realizable.

 

Prior to 2014 HLKD was an S-Corporation, as defined in the Internal Revenue Code. As an S-Corporation, income/losses were passed through to the stockholders for each year. During 2014, the Company failed to meet the requirements of an S-Corporation when it authorized and issued a second class of stock other than common stock. The S-Corporation requirements allow only one class of stock, among other certain requirements, to maintain S-Corporation status, as defined. The Company upon failing to maintain its S Corporation status became a C-Corporation during 2014. Prior year losses and up to the date that the Company lost its S-Corporation status are not available to the Company, since they were passed through to qualified S-Corporation shareholders. The net operating loss (“NOL”) carryovers presented in this note are estimates based on the losses reported at December 31, 2016 and 2015. Such NOL carryovers could also be subject to IRC Section 382 change of ownership rules, but management has not reviewed the Company’s ownership changes at the date of this filing. Since the NOLs based upon management’s assessment have a full valuation allowance, no benefit has been taken for the NOL’s, as of the filing date.

 

Prior to September 5, 2014, the date on which NWC and HLKD completed the Restructuring, the Company’s business was comprised of the operations of NWC, which at the time was an LLC comprised of two members. All income taxes resulting from the operation of NWC were passed through to the personal income tax returns of the LLC members. Subsequent to September 5, 2014, HLKD reports the consolidated operations of NWC and HLKD in its tax returns. On a consolidated basis, HLKD did not have any tax liability for 2015 or 2016 due to its pre-tax losses. Such return filings are being reviewed by Management, based upon the Company failing to meet the S-Corporation status, as defined. The Company believes there would be no tax liability created for the S corporation failure, since the Company has had losses for the periods presented in this filing.

 

The Company has not taken any uncertain tax positions on any of its open income tax returns filed through the period ended December 31, 2016. The Company’s methods of accounting are based on established income tax principles in the Internal Revenue Code and are properly calculated and reflected within its income tax returns on the accrual basis. In addition, Management believes it has filed income tax returns in all applicable jurisdictions in which the Company had material nexus warranting an income tax return filing.

 

The Company re-assesses the validity of its conclusions regarding uncertain tax positions on a quarterly basis to determine if facts or circumstances have arisen that might cause the Company to change its judgment regarding the likelihood of a tax position’s sustainability under audit. The Company has determined that there were no uncertain tax positions for the years ended December 31, 2016 and 2015.

 

NOTE 11 – SUBSEQUENT EVENTS

 

On January 1, 2017, the Company’s note payable to its principal shareholder and CEO, Dr. Michael Dent, was amended to extend the maturity date from December 31, 2017 until December 31, 2018, to accrue interest on outstanding balances after January 1, 2017 at a rate of 10% per annum, and to fix interest accrued on balances between January 1, 2015 and December 31, 2016 at an amount equal to $22,108. All principal and interest is due at maturity of the note.

 

 

HEALTHLYNKED CORPORATION

(FORMERLY KNOWN AS NAPLES WOMEN’S CENTER)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

 

NOTE 11 – SUBSEQUENT EVENTS (CONTINUED)

 

During January and February 2017, the Company borrowed $135,000 from Dr. Dent in the form of four separate unsecured promissory notes dated January 12, 2017 ($35,000), January 18, 2017 ($20,000), January 24, 2017 ($50,000) and February 9, 2017 ($30,000). Each of the notes bears interest at 10% per annum and has a maturity date one year from the issuance date.

 

On July 7, 2016, the Company entered into a the $550k Note, which is a 6% fixed convertible secured promissory note with a face value of $550,000. The $550k Note was originally schedule to mature on April 11, 2017. During February 2017, the holder of the $550k Note agreed to extend the maturity date until July 7, 2017 in exchange for a five-year warrant to purchase 500,000 shares of HLKD common stock at an exercise price of $0.15 per share.

 

During February 2017, the Company sold 2,100,000 shares of common stock to three separate investors. The Company received $210,000 in proceeds from the sale. The shares were issued at a share price of $0.10 per share.

 

On March 22, 2017, the Company entered into an Amendment to Investment Agreement (the “Amended Investment Agreement”) with Iconic Holdings LLC whereby the parties have 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 shall grant, and has granted, to the investor warrants to purchase an aggregate of seven (7) million shares of common stock. The warrants shall have 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.

 

 

PART II - INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 13. Other Expenses of Issuances and Distribution.

 

The following table sets forth the costs and expenses payable by us in connection with the issuance and distribution of the securities being registered. None of the following expenses are payable by the selling securityholders. All of the amounts shown are estimates, except for the SEC registration fee. 

 

SEC registration fee		$	486.78
Legal fees and expenses		$	25,000.00
Accounting fees and expenses		$	5,000.00
Miscellaneous		$	5,000.00
TOTAL		$	35,486.78

 

Item 14. Indemnification of Directors and Officers.

 

Nevada Revised Statutes (“NRS”) Sections 78.7502 and 78.751 provide us with the power to indemnify any of our directors and officers. The director or officer must have conducted himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed to, our best interests. In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe his/her conduct was unlawful.

 

Under NRS Section 78.751, advances for expenses may be made by agreement if the director or officer affirms in writing that he/she believes he/she has met the standards and will personally repay the expenses if it is determined such officer or director did not meet the standards.

 

We are also permitted to apply for insurance on behalf of any director, officer, employee or other agent for liability arising out of his actions, whether or not the NRS would permit indemnification.

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

Item 15. Recent Sales of Unregistered Securities.

 

In September 2014 we entered into a share exchange agreement with Dr. Dent, Dr. Monaco and NWC pursuant to which we issued Dr. Dent and Dr. Monaco an aggregate of 50,000,000 shares of our common stock in exchange for all of their membership interests in NWC. Following this transaction, NWC became our wholly owned subsidiary. We issued Dr. Dent 46,900,000 shares of common stock in exchange for his 67.3% ownership interest in NWC and Dr. Monaco 3,100,000 shares of common stock in exchange for her 32.7% ownership interest in NWC.

 

Also in September 2014 we issued Dr. Dent 2,953,640 shares of our Series A Preferred Stock as payment for $147,692.40 in deferred compensation for services provided to NWC during the fiscal year ended December 31, 2013. He converted the Series A Preferred Stock into 2,953,640 shares of common stock on July 30, 2016.

 

In September, October and November 2014 we sold 1,920,000 shares of our common stock to certain accredited investors at a purchase price of $0.05 per share.

 

In January 2015, we issued 1,200,000 shares of common stock to George O’Leary as compensation for his services.

 

In January 2015, we issued to Dr. Dent 2,000,000 10 year warrants to purchase common shares at an exercise price of $0.05 per share as compensation for interest accrued on loans made by Dr. Dent to NWC. The warrants had a fair value of $52,847.

 

In November 2015, we issued 1,000,000 restricted common shares to Delaney Equity Group, LLC based upon our contractual agreement to do so.

 

 

In January 2016, we issued 612,500 shares of common stock as stock grants to our employees.

 

In June 2016 we sold 3,980,000 shares of our common stock to certain accredited investors at a purchase price of $0.05 per share.

 

In June 2016 we issued an additional 900,000 shares of common stock to SKS.

 

In July 2016, we sold 2,187,500 shares of our common stock to certain accredited investors at a purchase price of $0.08 per share and issued 5-year warrants at $0.10 per share.

 

In July 2016 we issued an additional 1,000,000 to Delaney Equity Group, LLC as per our contractual agreement to do so. We also issued Delaney warrants to purchase 277,778 shares of commons stock at an exercise price of $0.09 and a five-year term, in exchange for services provided.

 

In July 2016 we raised $550,000 of convertible debt, convertible into common shares at $0.08 per share and issued 5-year warrants with an exercise price of $0.09 per share. The investors were also granted a five-year warrant to purchase 6,111,111 shares of the Company’s common stock at an exercise price of $0.09 per share.

 

In July 2016, we entered into an Investment Agreement with Iconic Holdings, LLC pursuant to which it 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 (the “Put Right”), subject to certain discounts and adjustments. We also issued to the investor a warrant to purchase up to 6,111,111 shares of our common stock, at an exercise price of $0.09 per share.

 

On March 22, 2017, the Company entered into the Amended Investment Agreement whereby the parties have agreed to modify the terms of 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 shall grant, and has granted, to the investor warrants to purchase an aggregate of seven (7) million shares of common stock. The warrants shall have 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.

 

Pursuant to the Investment Agreement, the Company also entered into a Registration Rights Agreement with the investor whereby it agreed to register for resale 21,000,000 shares of the Company’s common stock issuable pursuant to the terms of the Investment Agreement.

 

In July 2016, we granted a total of 1,600,000 employee stock options our Chief Executive Officer and Chief Financial Officer with an exercise price of $0.08 per share and a legal life of 10 years. Of the total grant, 700,000 options vest over time for a period up to four years, and 900,000 vest based on Company performance measures. The aggregate grant date fair value of options granted in the nine months ended September 30, 2016 was $51,120 (net of expected forfeitures).

 

In November 2016, we granted a total of 749,996 employee stock options to an employee with an exercise price of $0.20 per share and a legal life of 10 years. Of the total grant, 299,996 options vest over time for a period up to three years, and 450,000 vest based on future Company and individual performance measures. The aggregate grant date fair value of the options was $14,301 (net of expected forfeitures).

 

In February 2017, the Company sold 2,100,000 shares of common stock to three investors. The Company received $210,000 in proceeds from the sale. The shares were issued at a share price of $0.10 per share.

 

 In February 2017, the Company issued a warrant to purchase up to 500,000 shares of common stock at an exercise price of $0.15 per share. The warrant shall expire on February 10, 2020 and may be exercised on a cashless basis. The warrant has a 9.99% beneficial ownership limitation.

 

In April 2017, the Company sold 1,850,000 shares of common stock to five investors. The Company received $185,000 in proceeds from the sale. The shares were issued at a share price of $0.10 per share.

 

Item 16. Exhibits and Financial Statement Schedules.

 

(a)

Exhibits.

 

The exhibits to the registration statement are listed in the Exhibit Index to this registration statement and are incorporated by reference herein.

 

(b)	Financial Statement Schedules.

 

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and notes thereto.

 

 

Item 17. Undertakings.

 

The undersigned registrant hereby undertakes:

 

(1)          To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

(i)           To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

 

(ii)         To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

 

(iii)        To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

 

(2)          That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(3)           To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

(4)          That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

(5)          Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Naples, State of Florida on the 12th day of May 2017.

 

	HEALTHLYNKED CORP. (Registrant)
	By:	/s/ Michael Dent
		Name:	Michael Dent
		Title:	Chief Executive Officer and Chairman (Principal Executive Officer)

 

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

Name		Title		Date
/s/ Michael Dent		Chief Executive Officer and Chairman (Principal Executive Officer)		May 12, 2017
Michael Dent
/s/ George O’Leary		Chief Financial Officer, (Principal Accounting Officer), and Director		May 12, 2017
George O’Leary

 

EXHIBIT INDEX

 

Exhibit No.		Exhibit Description
2.1		Share Exchange Agreement (Filed as Exhibit 2.1 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
3.1		Articles of Incorporation (Filed as Exhibit 3.1 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
3.2		Amended and Restated Articles of Incorporation (Filed as Exhibit 3.2 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
3.3		By-Laws (Filed as Exhibit 3.3 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
3.4		Certificate of Designation of Series A Convertible Preferred Stock (Filed as Exhibit 3.4 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
5.1		Opinion of Sichenzia Ross Ference Kesner LLP (Filed as Exhibit 5.1 to the Company’s Registration Statement on Form S-1 filed with the Commission on April 14, 2017)
10.1		Form of Private Placement Subscription Agreements (Filed as Exhibit 10.1 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.2		Series A Conversion Notice (Filed as Exhibit 10.2 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.3		Form of Notes Issued to Dr. Michael Dent (Filed as Exhibit 10.3 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.4		Form of Warrants Issued to Dr. Michael Dent (Filed as Exhibit 10.4 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.5		Advisor Consulting Banking Agreement with Delaney Equity Group LLC (Filed as Exhibit 10.5 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.6		Warrant Agreement with Delaney Equity Group LLC (Filed as Exhibit 10.6 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.7		Investment Agreement with Iconic Holdings LLC (Filed as Exhibit 10.7 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.8		Registration Rights Agreement with Iconic Holdings LLC (Filed as Exhibit 10.8 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.9		Security Agreement with Iconic Holdings LLC (Filed as Exhibit 10.9 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.10		Form of Intellectual Property Security Agreement with Iconic Holdings LLC (Filed as Exhibit 10.10 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.11		Secured Note Issued to Iconic Holdings LLC (Filed as Exhibit 10.11 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.12		Fee Note Issued to Iconic Holdings LLC (Filed as Exhibit 10.12 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.13		Warrant Issued to Iconic Holdings LLC in July 2016 (Filed as Exhibit 10.13 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.14+		Form of Employment Agreement with Dr. Michael Dent (Filed as Exhibit 10.14 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.15+		Form of Employment Agreement with George O’Leary (Filed as Exhibit 10.15 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.16+		Employment Agreement with Robert Horel (Filed as Exhibit 10.16 to the Company’s Registration Statement on Form S-1 filed with the Commission on March 13, 2017)
10.17		Loan Agreement with Florida Community Bank (Filed as Exhibit 10.16 to the Company’s Registration Statement on Form S-1 filed with the Commission on February 8, 2017)
10.18+		2016 Equity Incentive Plan (Filed as Exhibit 10.17 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.19		Form of Warrant Agreement with Investors in July 2016 Private Placement (Filed as Exhibit 10.13 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
10.20		Amendment #1 to Secured Note Issued to Iconic Holdings LLC (Filed as Exhibit 10.20 to the Company’s Registration Statement on Form S-1 filed with the Commission on March 13, 2017)
10.21		Warrant Issued to Iconic Holdings LLC in February 2017 (Filed as Exhibit 10.21 to the Company’s Registration Statement on Form S-1 filed with the Commission on March 13, 2017)
10.22		Amendment to Investment Agreement with Iconic Holdings LLC (Filed as Exhibit 10.22 to the Company’s Registration Statement on Form S-1 filed with the Commission on March 23, 2017)
10.23		Warrant for Four Million Shares of Common Stock Issued to Iconic Holdings LLC in March 2017 (Filed as Exhibit 10.23 to the Company’s Registration Statement on Form S-1 filed with the Commission on March 23, 2017)
10.24		Warrant for Two Million Shares of Common Stock Issued to Iconic Holdings LLC in March 2017 (Filed as Exhibit 10.24 to the Company’s Registration Statement on Form S-1 filed with the Commission on March 23, 2017)
10.25		Warrant for One Million Shares of Common Stock Issued to Iconic Holdings LLC in March 2017 (Filed as Exhibit 10.22 to the Company’s Registration Statement on Form S-1 filed with the Commission on March 25, 2017)
21.1		List of Subsidiaries (Filed as Exhibit 21.1 to the Company’s Draft Registration Statement on Form S-1 filed with the Commission on January 9, 2017)
23.1		Consent of RBSM LLP
23.2		Consent of Sichenzia Ross Ference Kesner LLP (Included in Exhibit 5.1)

 

+Management contract or compensatory plan or arrangement.

 

II-5