Attached files
| file | filename |
|---|---|
| EX-99.2 - UNAUDITED CONDENSED FINANCIAL STATEMENTS OF MEDOFFICE DIRECT LLC FOR THE NINE MO - HealthLynked Corp | ea132353ex99-2_health.htm |
| EX-99.1 - AUDITED FINANCIAL STATEMENTS OF MEDOFFICE DIRECT LLC FOR THE YEARS ENDED DECEMBE - HealthLynked Corp | ea132353ex99-1_health.htm |
| 8-K/A - AMENDMENT NO.1 TO FORM 8-K - HealthLynked Corp | ea132353-8ka1_healthlynked.htm |
Exhibit 99.3
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Basis of presentation
The following unaudited pro forma consolidated balance sheet and statements of income are presented to give effect to the acquisition of MedOfficeDirect, LLC (“MOD”) by HealthLynked Corp (“HealthLynked” or the “Company”). The pro forma information was prepared based on the historical financial statements and related notes of HealthLynked and MOD, as adjusted for the pro forma impact of applying the acquisition method of accounting in accordance with Generally Accepted Accounting Principles in the United States (“U.S. GAAP”). The pro forma adjustments are based upon available information and assumptions that HealthLynked believes are reasonable. The allocation of the purchase price of the MOD acquisition reflected in these unaudited pro forma consolidated financial statements has been based upon preliminary estimates of the fair value of assets acquired and liabilities assumed. The pro forma adjustments are therefore preliminary and have been prepared to illustrate the estimated effect of the acquisition.
The unaudited pro forma consolidated balance sheet has been prepared to reflect the transaction as if the transaction had occurred on September 30, 2020. The unaudited pro forma consolidated statements of income combine the results of operations of HealthLynked and MOD for the nine months ended September 30, 2020, as if the transaction had occurred on January 1, 2020 and for the fiscal year ended December 31, 2019, as if the transaction had occurred on January 1, 2019.
The unaudited pro forma consolidated financial statements were prepared using the acquisition method of accounting with HealthLynked treated as the acquiring entity. Accordingly, the aggregate value of the consideration paid by HealthLynked to complete the acquisition was allocated to the assets acquired and liabilities assumed from MOD based upon their estimated fair values on the closing date of the acquisition. HealthLynked has not completed the detailed valuations necessary to estimate the fair value of the assets acquired and the liabilities assumed from MOD and the related allocations of purchase price, nor has HealthLynked identified all adjustments necessary to conform MOD’s accounting policies to HealthLynked’s accounting policies. Additionally, a final determination of the fair value of assets acquired and liabilities assumed from MOD will be based on the actual net tangible and intangible assets and liabilities of MOD that existed as of the closing date. Accordingly, the pro forma purchase price adjustments presented herein are preliminary, and may not reflect any final purchase price adjustments made. HealthLynked estimated the fair value of MOD’s assets and liabilities based on discussions with MOD’s management, due diligence and preliminary work performed by third-party valuation specialists. As the final valuations are being performed, increases or decreases in the fair value of relevant balance sheet amounts will result in adjustments, which may result in material differences from the information presented herein.
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HealthLynked Corp.
Unaudited Pro Forma Consolidated Balance Sheets
As of September 30, 2020
| Pro Forma | Pro Forma | |||||||||||||||||
| HealthLynked | MOD | Adjustments | Consolidated | |||||||||||||||
| ASSETS | ||||||||||||||||||
| Current Assets | ||||||||||||||||||
| Cash | $ | 1,713,124 | $ | 53,621 | $ | (703,200 | ) | (1) | $ | 1,063,545 | ||||||||
| Marketable securities | 44,477 | 44,477 | ||||||||||||||||
| Accounts receivable, net | 193,744 | 193,744 | ||||||||||||||||
| Inventory | 105,200 | 105,200 | ||||||||||||||||
| Prepaid expenses | 80,552 | 80,552 | ||||||||||||||||
| Total Current Assets | 2,137,097 | 53,621 | (703,200 | ) | 1,487,518 | |||||||||||||
| Property, plant and equipment, net | 458,674 | 26 | 458,700 | |||||||||||||||
| Intangible assets, net | 2,585,330 | 4,828,801 | (2) | 7,414,131 | ||||||||||||||
| ROU lease assets, deposits and other long term assets | 314,992 | 314,992 | ||||||||||||||||
| Total Assets | $ | 5,496,093 | $ | 53,647 | $ | 4,125,601 | $ | 9,675,341 | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||||||||||||
| Current Liabilities | ||||||||||||||||||
| Accounts payable and accrued expenses | $ | 1,362,516 | $ | 627,535 | $ | (464,878 | ) | (3) | $ | 1,525,173 | ||||||||
| Deferred revenue | 51,714 | 51,714 | ||||||||||||||||
| Lease liability, current portion | 105,233 | 105,233 | ||||||||||||||||
| Due to related party, current portion | 300,600 | 300,600 | ||||||||||||||||
| Notes payable to related party, current portion | 936,500 | (936,500 | ) | (4) | --- | |||||||||||||
| Government notes payable, current portion | 595,669 | 595,669 | ||||||||||||||||
| Convertible notes payable, net of original issue discount | 1,153,279 | 285,000 | (285,000 | ) | (4) | 1,153,279 | ||||||||||||
| Notes payable | 112,382 | (4) | 112,382 | |||||||||||||||
| Contingent acquisition consideration | 548,069 | 548,069 | ||||||||||||||||
| Total Current Liabilities | 4,117,080 | 1,961,417 | (1,686,378 | ) | 4,392,119 | |||||||||||||
| Long-Term Liabilities | ||||||||||||||||||
| Notes payable, long term portion | 450,000 | 6,270 | 456,270 | |||||||||||||||
| Contingent acquisition consideration, long term portion | 378,528 | 1,193,469 | (5) | 1,571,997 | ||||||||||||||
| Lease liability, long term portion | 198,667 | 198,667 | ||||||||||||||||
| Total Liabilities | 5,144,275 | 1,967,687 | (492,909 | ) | 6,619,053 | |||||||||||||
| Shareholders’ Deficit | ||||||||||||||||||
| Common stock | 16,683 | 1,905 | (6) | 18,588 | ||||||||||||||
| Series B convertible preferred stock | 2,750 | 2,750 | ||||||||||||||||
| Common stock issuable | 182,092 | 182,092 | ||||||||||||||||
| Additional paid-in capital | 20,012,306 | 2,702,565 | (7) | 22,714,871 | ||||||||||||||
| Members’ equity | 3,780,420 | (3,780,420 | ) | (8) | --- | |||||||||||||
| Retained earnings (accumulated deficit) | (19,862,013 | ) | (5,694,460 | ) | 5,694,460 | (8) | (19,862,013 | ) | ||||||||||
| Total Shareholders’ Deficit | 351,818 | (1,914,040 | ) | 4,618,510 | 3,056,288 | |||||||||||||
| Total Liabilities and Shareholders’ Deficit | $ | 5,496,093 | $ | 53,647 | $ | 4,125,601 | $ | 9,675,341 | ||||||||||
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HealthLynked Corp.
Unaudited Pro Forma Consolidated Statement of Operations
For the Nine Months Ended September 30, 2020
| Pro Forma | Pro Forma | |||||||||||||||||
| HealthLynked | MOD | Adjustments | Consolidated | |||||||||||||||
| Revenue: | ||||||||||||||||||
| Patient services | $ | 3,502,836 | $ | $ | $ | 3,502,836 | ||||||||||||
| Medicare shared savings and consulting | 1,035,769 | 1,035,769 | ||||||||||||||||
| Product revenue | 862,231 | 862,231 | ||||||||||||||||
| Total revenue | 4,538,605 | 862,231 | 5,400,836 | |||||||||||||||
| Cost: | ||||||||||||||||||
| Patient services | 3,544,277 | 3,544,277 | ||||||||||||||||
| Medicare shared savings and consulting | 824,084 | 824,084 | ||||||||||||||||
| Product cost | 561,461 | 561,461 | ||||||||||||||||
| Total Operating Expenses | 4,368,361 | 561,461 | 4,929,822 | |||||||||||||||
| Gross profit | 170,244 | 300,770 | 471,014 | |||||||||||||||
| Operating Expenses: | ||||||||||||||||||
| General and administrative | 2,116,159 | 282,616 | 2,398,775 | |||||||||||||||
| Depreciation and amortization | 74,811 | (1) | 74,811 | |||||||||||||||
| Loss from operations | (2,020,726 | ) | 18,154 | (2,002,572 | ) | |||||||||||||
| Other Income (Expenses) | ||||||||||||||||||
| Loss on sales of marketable securities | (281,606 | ) | (281,606 | ) | ||||||||||||||
| Gain (loss) on extinguishment of debt | (1,347,371 | ) | 166,268 | (2) | (1,181,103 | ) | ||||||||||||
| Change in fair value of debt | (198,764 | ) | (198,764 | ) | ||||||||||||||
| Amortization of original issue and debt discounts on notes payable and convertible notes | (530,930 | ) | (530,930 | ) | ||||||||||||||
| Change in fair value of derivative financial instruments | 739,485 | 739,485 | ||||||||||||||||
| Change in fair value of contingent acquisition consideration | 687 | 687 | ||||||||||||||||
| Interest expense | (193,134 | ) | (100,511 | ) | 96,995 | (3) | (196,650 | ) | ||||||||||
| Total other expenses | (1,811,633 | ) | (100,511 | ) | 263,263 | (1,648,881 | ) | |||||||||||
| Net loss before provision for income taxes | (3,832,359 | ) | (82,357 | ) | 263,263 | (3,651,453 | ) | |||||||||||
| Provision for income taxes | --- | --- | ||||||||||||||||
| Net loss | $ | (3,832,359 | ) | $ | (82,357 | ) | $ | 263,263 | $ | (3,651,453 | ) | |||||||
| Deemed dividend - amortization of beneficial conversion feature | (63,862 | ) | (63,862 | ) | ||||||||||||||
| Net loss to common stockholders | $ | (3,896,221 | ) | (82,357 | ) | 263,263 | (3,715,315 | ) | ||||||||||
| Net loss per share, basic and diluted: | ||||||||||||||||||
| Basic | $ | (0.030 | ) | $ | (0.025 | ) | ||||||||||||
| Fully diluted | $ | (0.030 | ) | $ | (0.025 | ) | ||||||||||||
| Weighted average number of common shares: | ||||||||||||||||||
| Basic | 129,234,540 | 19,045,563 | (4) | 148,280,103 | ||||||||||||||
| Fully diluted | 129,234,540 | 19,045,563 | (4) | 148,280,103 | ||||||||||||||
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HealthLynked Corp.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2019
| Pro Forma | Pro Forma | |||||||||||||||||
| HealthLynked | MOD | Adjustments | Consolidated | |||||||||||||||
| Revenue | ||||||||||||||||||
| Patient services | $ | 4,018,818 | $ | $ | $ | 4,018,818 | ||||||||||||
| Product revenue | 675,081 | 675,081 | ||||||||||||||||
| Total revenue | 4,018,818 | 675,081 | 4,693,899 | |||||||||||||||
| Cost | ||||||||||||||||||
| Patient services | 4,239,024 | 4,239,024 | ||||||||||||||||
| Product revenue | 595,163 | 595,163 | ||||||||||||||||
| Total Operating Expenses | 4,239,024 | 595,163 | 4,834,187 | |||||||||||||||
| Gross profit | (220,206 | ) | 79,918 | (140,288 | ) | |||||||||||||
| Operating Expenses: | ||||||||||||||||||
| General and administrative | 2,915,419 | 250,527 | 3,165,946 | |||||||||||||||
| Depreciation and amortization | 73,385 | (1) | 73,385 | |||||||||||||||
| Income (loss) from operations | (3,209,010 | ) | (170,609 | ) | (3,379,619 | ) | ||||||||||||
| Other Income (Expenses) | ||||||||||||||||||
| Loss on extinguishment of debt | (1,229,777 | ) | 137,768 | (2) | (1,092,009 | ) | ||||||||||||
| Change in fair value of debt | (121,508 | ) | (121,508 | ) | ||||||||||||||
| Financing cost | (135,528 | ) | (135,528 | ) | ||||||||||||||
| Amortization of original issue and debt discounts on notes payable and convertible notes | (1,260,513 | ) | (1,748 | ) | (1,262,261 | ) | ||||||||||||
| Change in fair value of derivative financial instrument | 671,822 | 671,822 | ||||||||||||||||
| Interest expense | (244,085 | ) | (133,462 | ) | 133,462 | (3) | (244,085 | ) | ||||||||||
| Total other expenses | (2,319,589 | ) | (135,210 | ) | 271,230 | (2,183,569 | ) | |||||||||||
| Net loss before provision for income taxes | (5,528,599 | ) | (305,819 | ) | 271,230 | (5,563,188 | ) | |||||||||||
| Provision for income taxes | --- | --- | ||||||||||||||||
| Net income (loss) | $ | (5,528,599 | ) | $ | (305,819 | ) | $ | 271,230 | $ | (5,563,188 | ) | |||||||
| Net loss per share, basic and diluted: | ||||||||||||||||||
| Basic | $ | (0.056 | ) | $ | (0.047 | ) | ||||||||||||
| Fully diluted | $ | (0.056 | ) | $ | (0.047 | ) | ||||||||||||
| Weighted average number of common shares: | ||||||||||||||||||
| Basic | 99,059,677 | 19,045,563 | (4) | 118,105,240 | ||||||||||||||
| Fully diluted | 99,059,677 | 19,045,563 | (4) | 118,105,240 | ||||||||||||||
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HealthLynked Corp.
Notes to Unaudited Pro Forma Consolidated Financial Information
Note 1 – Purchase Price Consideration
On October 19, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, MOD FL, LLC, a Florida limited liability company and wholly owned subsidiary of the Company (“Merger Sub”), MOD and certain of the members of MOD. The Merger Agreement provided that the Merger Sub would merge with and into MOD, with MOD surviving as a wholly-owned subsidiary of the Company (the “Merger”). As consideration for the Merger, the members of MOD received consideration including (i) the issuance of an aggregate of 19,045,563 restricted shares of the Company’s common stock (the “Closing Shares”), (ii) the issuance of an aggregate of up to 10,004,749 restricted shares of the Company’s common stock over a four year period based on MOD achieving certain revenue targets as set forth in the Merger Agreement (the “Earnout Shares”), and (iii) the partial satisfaction of certain outstanding debt obligations of MOD in the amount of $703,200 in cash by the Company. The Company and MOD completed the Merger by filing the Certificate of Merger with the Florida Department of State. As a result of the Merger, with MOD surviving as a wholly-owned subsidiary of the Company, the Company acquired all of the assets of MOD.
The fair value of the 19,045,563 common shares issued at closing was determined using the average closing price of the Company’s common shares for the five days prior to the acquisition date. The terms of the earn out require the Company to pay the former members of MOD up to (i) $371,761 in shares of Company common stock if 2021 revenue from MOD’s business exceeds $1,500,000, with shares valued at $0.189 per share, (ii) $743,523 in shares of Company common stock if 2022 revenue from MOD’s business exceeds $1,875,000, with shares valued at $0.236 per share, (iii) $743,523 in shares of Company common stock if 2023 revenue from MOD’s business exceeds $2,344,000, with shares valued at $0.283 per share, and (iv) $743,523 in shares of Company common stock if 2024 revenue from MOD’s business exceeds $2,930,000, with shares valued at $0.329 per share. The fair value of the contingent acquisition consideration related to the four-year earn-out was estimated using a probability-weighted discounted cash flow projection.
The table below represents the total fair value of the purchase price consideration:
| Cash paid at closing to retire MOD debt | $ | 703,200 | ||
| Shares issued at closing | 2,704,470 | |||
| Shares contingent upon four-year earn-out | 1,193,469 | |||
| $ | 4,601,139 |
Note 2 – Pro Forma Adjustments
Following is a description of the unaudited pro forma adjustments reflected in the unaudited pro forma consolidated financial statements.
Adjustments to the pro forma consolidated balance sheet
| (1) | The pro forma adjustments to cash reflect the cash paid to retire debt of MOD. Prior to the closing, MOD debtholders holding debt with a total carrying value of $1,221,500 agreed to accept a reduced amount of principal in the amount of $1,172,000 and further agreed to convert 40% of such debt ($468,800) to equity units of MOD and accept 60% of such debt ($703,200) in cash from the Company at closing. The MOD debtholders also agreed to waive all interest and other rights under such debt. |
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| (2) | The pro forma adjustments to goodwill and other intangible assets reflect the following: |
| Cash portion of purchase consideration | $ | 703,200 | ||
| Stock consideration | 2,704,470 | |||
| Contingent purchase consideration | 1,193,469 | |||
| Forgiveness of debt principal by MOD debtholders | (49,500 | ) | ||
| Forgiveness of accrued interest by MOD debtholders | (464,878 | ) | ||
| Conversion of MOD debt to equity prior to closing | (468,800 | ) | ||
| Repayment of debt | (703,200 | ) | ||
| Eliminate equity and accumulated deficit of MOD | 1,914,040 | |||
| Total | $ | 4,828,801 |
The aggregate value of the consideration paid by HealthLynked to complete the acquisition was allocated to the assets acquired and liabilities assumed from MOD based upon their estimated fair values on the closing date of the acquisition. HealthLynked has not completed the detailed valuations necessary to estimate the fair value of the assets acquired and the liabilities assumed from MOD and the related allocations of purchase price. Accordingly, such excess is presented as “Goodwill and other intangible assets” on the accompanying unaudited pro forma consolidated balance sheets.
| (3) | The pro forma adjustment to accounts payable and accrued expenses reflects the forgiveness of accrued interest by MOD debtholders. |
| (4) | The pro forma adjustment to notes payable to related party, convertible notes payable and notes payables reflects repayment of certain outstanding debt of MOD by HealthLynked as described in the Merger Agreement. Following the Merger, MOD had a debt balance of $118,652 from debt that survived the merger. |
| (5) | The pro forma adjustments to contingent acquisition consideration reflect the fair value of future purchase price consideration that can be earned by the sellers based on achievement of specified milestones in the underlying MOD business as described in “Note 1 – Purchase Price Consideration” above. The fair value of the contingent acquisition consideration related to the four-year earn-out was estimated using a probability-weighted discounted cash flow projection. |
| (6) | The pro forma adjustment to common stock reflects the $0.0001 par value of the 19,045,563 consideration shares issued at closing. |
| (7) | The pro forma adjustment to additional paid-in capital reflects the following: |
| Number of shares | 19,045,563 | |||
| Average closing price for five days prior to October 19, 2020 | $ | 0.142 | ||
| Fair value of shares | $ | 2,704,470 | ||
| Less: portion of stock consideration allocated to common stock | $ | (1,905 | ) | |
| Portion of stock consideration allocated to additional paid-in capital | $ | 2,702,565 |
| (8) | The pro forma adjustments to members’ equity and retained earnings (accumulated deficit) is to eliminate the equity of MOD at closing of the Merger. The adjustment to Members’ Equity includes a pro forma increase of $348,110 resulting from $298,610 forgiveness of accrued interest and $49,500 reduction in principal on related party debt that are recognized into equity and subsequently eliminated at the acquisition. |
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Adjustments to the pro forma consolidated statement of operations
| (1) | No pro forma adjustment is recorded to reflect the amortization of purchased intangibles because HealthLynked expects these intangible assets to have an indefinite life. |
| (2) | The pro forma adjustment to gain (loss) on extinguishment of debt is to reflect the forgiveness of interest and principal by third party MOD debtholders prior to the Merger. |
| (3) | The pro forma adjustment to interest expense is to reverse interest expense recognized during the period on debt retired in connection with the Merger |
| (4) | The pro forma adjustments to weighted average common shares reflects shares issued as consideration at closing of the acquisition of MOD as if the acquisition had occurred at the beginning of the period presented. |
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